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Pension and Retiree Health


Welcome to our “one-stop-shop” for community members interested in information on post-employment benefits. Below are links to literally hundreds of pages of financial data and information regarding our financial assets and liabilities, pension reform actions, and retiree health reform actions. Please see the box “By the Numbers” for a brief summary of current assets and liabilities.

In short, we offer our employees two post-employment benefits: a pension and a contribution towards retiree health care costs (also referred to as other post-employment benefits, or “OPEB”). Both of these benefits have been significantly reduced over the past few years.

We are committed to financial transparency and have provided this information to make available financial details and answer questions.

New Financial Reporting for Pensions

Beginning with our financial statements as of June 30, 2015, we implemented Governmental Accounting Standards Board Statement No. 68 (GASB 68), Accounting and Financial Reporting for Pensions. The purpose of this reporting requirement is to improve the decision-making usefulness of information in financial reports and enhance its value for assessing accountability and inter-period equity by requiring recognition of the entire net pension liability and a more comprehensive measure of pension expense.

As of June 30, 2017, we reported a net pension liability of $167.1 million. This calculation was prepared using the MCERA GASB 67/68 Report as of June 30, 2016, issued in November 2016. This report contained the most current Marin County Employees’ Retirement Association (MCERA) GASB 67/68 information as of the audit opinion date of September 28, 2017. Since that time, MCERA issued its GASB 67/68 Report as of June 30, 2017. That report presents our net pension liability at $120.6 million as of the report date. Read the City’s financial reports as of June 30, 2017.

Actuarial Valuations


The most recent pension actuarial valuation was prepared as of June 30, 2017. This valuation governs the employer and employee contribution rates for the fiscal year beginning July 1, 2018. This valuation (produced in March 2018) reports our pension funded ratio to be 74.6%.  The funding ratio is expected to improve over time, as the unfunded liability is paid down; however varying investment returns will result in fluctuations to the ratio.  We, via MCERA, have a funding strategy in place based on sound actuarial practices that will ensure the long term viability of the retirement plan.

Recently, the pension funding plan absorbed two significant changes:  Demographics show people living longer, which when plugged into a long-term funding plan, increases costs.  Also, the plan assumptions for investment returns have been reduced from 7.25 percent to 7.00 percent. The inflation assumption is 2.75 percent. The impact of these changes are fully incorporated in the City's annual budget.

The Great Recession had a very significant impact on the pension system due to severe investment losses.  At the same time, there was a large negative impact on City revenues as people bought fewer things and home values fell.  The first relates to the sales tax we received (1.5 cents for every dollar spent on taxable purchases) and the second to the property tax we received (11 cents for every dollar collected).   We responded to the Great Recession with significant cuts, totaling a 15% reduction in staff, in addition to many other measures such as:

  • significant pension and retiree health reforms;
  • regionalizing services such as Fire dispatch;
  • sharing services with nearby communities including Larkspur, Novato, San Anselmo, and the County of Marin;
  • implementing economic development strategies such as business retention and attraction;
  • setting user fees at cost recovery levels; and
  • pursuing state and federal grants and private investment.

OPEB (Retiree Medical)

The most recent OPEB actuarial valuation was prepared as of June 30, 2017. This report calculates the unfunded liability at $32.7 million at June 30, 2017. A GASB 75 Accounting Information report will be prepared for June 30, 2018 and used in the preparation of the City’s financial statements for fiscal year 2017-2018.

The information provided below is intended to demystify the impact of pension and retiree health benefits in San Rafael.

Just the Basics

We negotiate employee compensation agreements with multiple unions under a number of state and federal laws.  We strive to provide a competitive salary/benefit package to attract and retain a highly qualified workforce while maintaining a balanced city budget.

Over the past few years, benefits offered to new employees for pension and retiree health care have already been reduced.  In fact, the actuarial firm of Bartel Associates completed a March 24, 2013 analysis of our pension and retiree health reforms to date and found that our actions will result in a savings of $65 million over the next 30 years.  This number increases to a savings of approximately $132 million when recent State reforms that will impact San Rafael are included as well. Our reforms were largely negotiated at a time that employees were also experiencing salary reductions to assist in closing the budget gap.

More Information About San Rafael Pensions and Retiree Health Benefits

The City Council has taken a number of decisive steps towards reducing post employment benefit costs including significantly reducing employee pension and retiree healthcare benefits. Here are some facts in the form of frequently asked questions:

Beginning with the fiscal year 2011-2012 adjusted budget, our annual budgets have included the full, actuarially determined contributions to pension and retiree medical plans, without the use of reserves; further, our multi-year forecast assumes the continuation of this full funding approach.  In short, for the first time in several years, we are fully funding our pension and retiree health plans with current operating revenues.

We have also taken clear and decisive steps to reduce pension and retiree health liabilities and have put plans in motion to ensure sustainability of employee benefits while continuing to offer the services our community expects.  (Examples of steps include new, lower benefit tiers; employees pay an average of 12.0% of salary towards their pensions; changes to prevent “pension spiking;” creation of an irrevocable trust for retiree health assets; and reducing the retiree health benefit for new hires to the lowest level allowed by law).

For a complete summary of retiree healthcare reforms as of summer 2013,  see our response to a Grand Jury report on retiree healthcare throughout Marin.

In 2019, the City Council’s ad hoc Pension / Other Post-Employment Benefits (OPEB)  Committee , which includes Mayor Phillips and Councilmember Gamblin,  formed an advisory committee, referred to as the “Independent Committee on Employee Retirement Benefits” to review and prepare a written report that includes an analysis of the options available to the City to further our pension/OPEB reform goals. The 2019 report, which was presented to the City Council at the August 5, 2019 meeting, is a follow-up to an earlier report from 2014 regarding the same topic.

Yes.  The City Council approved a pension and retiree health reform resolutionon May 7, 2012.  This resolution not only includes pension policies going forward, but also a listing of the many pension reform measures taken as of the date of the report/resolution.

On June 3, 2013, the City Council approved a pension funding policy based on the Government Finance Officers Association (GFOA) recommended best practices.


We are projected to save approximately $132 million in future (30 year period) pension and retiree health benefit costs based on the changes made at the municipal and state level over the last several years.

Due to our reform efforts around retiree health, our unfunded liability has been reduced by 40% over the past few years.

Comparisons are useful only if the jurisdictions have similar pension models and employee make-up.  For example, CalPERS has historically amortized liabilities over 30 years and the Marin County Employees’ Retirement Association (MCERA) uses 17 years.  This means that MCERA members, such as the City of San Rafael, are required to pay a greater percentage of its liability each year than a CalPERS agency with similar unfunded liability.

Size and make-up of workforce (e.g., safety versus non-safety employees) can also distort the data.  Police and Fire employees (safety employees) generally have higher compensation structures, thus agencies with a greater percentage of safety employees have greater pension costs relative to agencies with lower percentage of safety employees.   These and other issues need to be factored to get a true “apples to apples” comparison.  Otherwise, the comparisons are misleading and can lead to inaccurate conclusions.

The average pension amount for San Rafael retirees was $45,480 as of June 30, 2014, and $47,735 as of June 30, 2015, per the participant data found in the Marin County Employee’s Retirement Association (MCERA) Actuarial Valuation as of June 30, 2015 (prepared on April 6, 2016).

By the Numbers

A full discussion of retiree obligations must include both pension and retiree health and consider assets as well as liabilities.  Below are the current approximate numbers for San Rafael as of the most recent actuarial valuations:

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