Unique Characteristics of Project: NHA helped translate the complex and challenging CalPERS situation to the city council and residents and ultimately assisted in the approval of the “5,10,25 Plan,” which was based on the City using $5 million in reserves to dedicate towards pension. It was estimated to allow the City to pay down the UAL 10 years early and save nearly $25 million (based on assumptions at that time).
Executive Summary: NHA has historically provided financial advisory and consulting services on several budgeting and capital projects to the City of Paso Robles. A recent multi-phased pension engagement included a detailed review of the City’s historical and current CalPERS obligations, requiring coordination with the City’s CalPERS actuary. In the first phase, NHA analyzed historical trends, developed 30-year projections, and worked with staff to develop a comprehensive presentation to educate City council and the community. In the second phase, NHA developed the “5, 10, 25 Plan” to allocate $5 million of reserves to pension liabilities (50% to a Section 115 Trust and 50% to pay down the City’s CalPERS UAL). The funds in the Section 115 Trust were projected (using assumptions at that time) to enable the City to pay off its UAL 10 years early, saving nearly $25 million.
Additionally, the City put into a place a new policy to set aside a certain percent of its annual general fund surplus to dedicate to either direct pay-downs with CalPERS or for allocation to its Section 115 Trust. NHA works with the City annually to help determine the most optimal allocation, and for the pay down portion, the most optimal amortization base to pay off.