Recommended FY 2022-2024 Operating Budget and CIP

Furthermore, State law known as PEPRA (Public Employee Pension Reform Act), became effective in January 2013 and changed CalPERS pensions for “new employees.” Since the majority of Morgan Hill’s employees are not impacted by these changes, any cost savings will be realized over time as new employees, who are not current CalPERS members through another public agency, join the organization. Currently, 77 full-time employees (or 42% of the active full-time positions) are classified as new employees for pension purposes. In FY 22- 23, the City’s contribution to CalPERS for sworn police officers is 17.63% of pay for a Classic Member or those hired before January 1, 2013. This is in addition to a lump sum payment for the Unfunded Accrued Liability (UAL) of about $2.1 million. The City’s contribution is lower than the CalPERS required employer’s contribution due to the 6.12% shared by our employees. The projected City’s contribution for sworn police officers for FY 23 -24 is 17.68% on top of the lump sum payment for the UAL of about $2.2 million. These amounts are in addition to the employees’ 9% of pay contribution to their retirement. For all other employees, the employer’s required contribution is 5.09% of pay, net of the employee share of the employer cost of 6.12%. This is in addition to the lump sum payment of the UAL of $3.1 million for FY 22-23. These amounts are in addition to the employees’ 8% of pay contribution to their retirement. For FY 23 24, the forecasted rate, net of employee share of employer cost, is 4.78% of pay and the lump sum payment of the UAL in the amount of $3.4 million.

The chart below illustrates the CalPERS employer contribution rate of normal cost projections through FY 27-28:

CalPERS Employer's Normal Cost Contribution Rates by Plan Type

30%

25%

6%

6%

6%

6%

6%

6%

6%

6%

20%

15%

1%

1%

1%

2%

1%

1%

1%

2%

10%

4%

18%

18%

18%

18%

18%

18%

18%

18%

5%

6%

6%

6%

6%

6%

6%

12%

12%

12%

12%

12%

12%

11%

11%

5%

7%

6%

5%

5%

5%

4%

4%

4%

0%

FY20-21*

FY21-22*

FY22-23*

FY23-24

FY24-25

FY25-26

FY26-27

FY27-28

% Misc

% Misc Employee Share of Employer Rate % Safety Employee Share of Employer Rate % Safety PEPRA Employee Share of Employer Rate

% Safety

% SafetyPEPRA

*Actual

BUDGET MESSAGE 29