Board accepts final OPEB valuation showing short-term funding uptick and long-term amortization plan

Actuarial consultants presented the final OPEB valuation and five-year contribution projections to the San Jose retirement board, and trustees voted to accept the final valuation.

Presenters said the valuation will set city contribution amounts for the fiscal year ending 2027. Actuaries reported that liabilities increased somewhat more than assets this cycle, producing a modest decrease in the funding ratio. Key drivers included higher-than-expected health insurance premiums (including a CMS risk-model change affecting Medicare‑eligible portions), investment returns (a net positive that reduced the unfunded actuarial liability by about $21 million) and an assumption change that moved the discount rate from 6% to 6.25%, which reduced the UAL by roughly $23 million. The consult noted a loss base created for 2025 that will be phased in over three years under the board's 20-year layered amortization schedule; once a large 2017 amortization base is paid off (projected 2038), the plan is expected to approach full funding.

Trustees had no further comments and accepted the report by roll call.

The actuaries also highlighted that the plan's active population eligible for full benefits is declining while the catastrophic-disability-only portion remains; projected benefit payments will increase for the next 17 years before declining as the plan closes.

The board recorded no public comment on the valuation.