HomeMy WebLinkAboutSS1 - Evaluation of Pension Funds - CorrespondenceReceived after Agenda Printed
January 27, 2026
Item No. SS1
From: Garrett, Errica
Sent: January 27, 2026 10:05 AM
To: Dept - City Clerk
Subject: FW: Study session on Pension Funding.
Errica Garrett
Administrative Assistant to
the Mayor and City Council
City Manager's Office
Office: 949-644-3004
100 Civic Center Drive
Newport Beach, CA 92660
From: Keith Curry <keithcurrvl@vahoo.com>
Sent: January 27, 2026 9:57 AM
To: Dept - City Council<CityCouncil@newportbeachca.gov>
Cc: Nancy Gardner <ngardner636@gmail.com>; Michael F. Henn <mike@mikehenn.com>;
mikehenn48@gmail.com; petrostony20@gmail.com; William O'Neill <wco@rossllp.com>; John
Moorlach <iohnmoorlach@gmail.com>
Subject: Study session on Pension Funding.
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Honorable Mayor and City Council;
At your study session tonight you will consider a proposal to form a Section 115 Trust to augment the
city's paydown of its unfunded pension liability. As you are aware, this is an issue that has been
considered and rejected by several city councils over the past decades.
The presentation provides multiple options for consideration by the city council: 1. Do Nothing, 2. Take
$5 million from the excess OPEB trust and use that money to fund a pension trust. and 3. Direct
additional funds beyond the $5 million to fund a pension trust.
To address number three first, the council should absolutely not, reduce its current level of pension
funding, including the designation of a percentage of budget surplus funds for pension liability
reduction. As shown on the chart in the presentation this has been a tremendously successful strategy in
place now for several years. Anything else is simply gambling with taxpayer funds and risks undoing the
progress the city has made over the years.
Turning to the second option, assuming this is additive to the existing level of pension paydown
payments, it is additional funding and therefore positive.
The real question is: "Is funding a Section 115 Trust a better option than simply directing the $5
million to CaIPERS itself?"
Credit for liability reduction happens when CalPERS receives the funds, the "meter continues to run"
unless and until that happens.
The presentation suggests that at best the city will receive a marginal gain and at worst will be
financially worse off by using the trust. Do you feel lucky today?
The three cited advantages are 1. Rate Stabilization. It is implied that if CalPERS experiences a decline
in earnings, you will have a pot of money, but in real life, if CalPERS is down, so too will the Trust
decline. 2. Diversification. The city will have a different investment mix than the CalPERS investment
portfolio. This is for funds whose ultimate purpose is to be turned over to CalPERS. This of course can
be good or bad. You are making a bet that overtime, you will beat CalPERS. This cannot be assured. 3.
Local Control. It this example, your "control" is limited to one of five investment strategies by PARS. Will
you encourage future city councils to take a spin at market timing?
continue to believe that the best way to reduce the unfunded pension liability to CalPERS is to payoff the
pension liability to CalPERS. After substantial review, this has been the position of the city councils that
have come before your time. I see little in the financial markets that would justify a change now;
Thank you for your consideration.
Keith Curry
Former Mayor