Fortuna council authorizes $1.5 million discretionary payment to CalPERS, waives reserve policy

Fortuna's City Council on Dec. 1 authorized the city manager to execute a $1,500,000 supplemental budget payment to CalPERS aimed at lowering the city's pension liability and reducing future interest payments.

City staff told the council the payment would be taken from general fund reserves. "The $1,500,000 would be required to take out from general fund reserves," said a staff presenter. Staff outlined reserve balances and constraints, saying general fund reserves are approximately $5,000,000 with $1,000,000 set aside for the general plan update, leaving about $4,000,000 available. The city's adopted reserve policy calls for 180 days of operating expenditures, which staff said equates to about $4,200,000; making the CalPERS payment would leave reserves roughly $200,000 below that target unless the council waived the policy.

Staff estimated the supplemental payment would produce interest-payment savings and projected an estimated $1,250,000 in interest-payment savings, with an annual savings beginning at about $130,000 next fiscal year. "The annual amount saved will start at approximately a $130,000 beginning next fiscal year, which is slightly better than what we originally estimated of a 106,000," the staff presenter said.

A councilor moved to authorize the payment and to waive the 180-day reserve requirement for fiscal year 2025-26; the motion was seconded and approved by voice vote with no recorded opposition.

The action is a discretionary use of general fund reserves, not an automatic policy shift: the council expressly waived the stated reserve policy for one fiscal year to permit this payment. There was no separate public comment on the item.

What happens next: the city manager will execute the supplemental budget action, and staff will report savings in future budget documents as amounts and timing are realized.