Fortuna Council Approves $1.5 Million Pension Payment, Waives Reserve Policy
At its December 1 meeting the Fortuna City Council authorized a $1.5 million supplemental discretionary payment to CalPERS and approved a temporary waiver of the city 180 day operating reserve policy for fiscal year 2025 to 2026. The move aims to lower long term pension costs while reducing short term reserves, a trade off that will affect the city budget and fiscal flexibility in the year ahead.
The Fortuna City Council voted December 1 to make a $1.5 million discretionary payment to the California Public Employees Retirement System and to waive the city 180 day operating reserve policy for fiscal year 2025 to 2026 in order to permit the transfer. City staff estimated the action would reduce the city pension liability and cut future interest costs associated with the obligation.
City projections before the transfer showed roughly $5 million in reserves, with about $1 million set aside for a general plan update. After applying the $1.5 million payment, staff expected available reserves to fall to about $200,000 below the 180 day reserve target. Officials framed the decision as a calculated fiscal trade off, accepting a temporary exception to the reserve policy to stabilize longer range pension obligations and reduce estimated interest payments and annual pension costs in coming years.
The decision carries practical implications for municipal operations and fiscal management. Reducing reserves below the policy target narrows the cushion available for unanticipated expenses or revenue shortfalls during fiscal year 2025 to 2026. At the same time the supplemental CalPERS payment is designed to lower the city exposure to rising pension interest costs and to produce savings over future budgets. The council and staff positioned the action as balancing near term liquidity against lower long term liabilities.
For residents and local stakeholders the key questions are how the reduced reserves will affect service continuity and capital projects and how the projected pension savings will materialize in future budgets. The $1 million earmark for the general plan update remains an identified commitment within overall reserves, and council oversight of reserve replenishment will be a point of scrutiny during next year budget reviews.
Council approval of the payment and waiver sets a precedent for using reserve policy flexibility to address pension liabilities. Residents should follow upcoming budget hearings and council reports to track whether the anticipated interest payment savings occur and how the city restores reserve levels in the year ahead.
