We are taking advantage of it for the first time at the City of Moreno Valley. It is going to provide substantial
savings if you have the up front cash to make the payment. We will realize almost $500,000 savings from our
budgeted estimates if we did not do the program.
We have not in the past several years since we were downsizing and laying people off. Now that we are stable, it
makes sense for us to take advantage of the program. Call Dena Heald on my staff if you have any questions at
951-413-3063.
Rick Teichert
Chief Financial Officer
City of Moreno Valley
When I was in Azusa and Covina in So Cal, several years back we did use the pre-pay, then the investments
started losing money and we opted not to pre-pay. We currently opt not to pre-pay, due primarily to cashflow.
Pre-paying did not really seem to help mitigate rate increases either.
Joan Michaels Aguilar
Deputy City Manager - Admin Services
City of Dixon
(707) 678-7000 x108
I was looking at that-looks like a great idea. When I mentioned it to our PERS actuarial she said they were
changing the rules (however, I am in a pooled fund with less than 100 employees).
Cathy Till
Finance Director
City of Lemon Grove
619-825-3803
Paul,
We’ve started looking at it annually. So far, it hasn’t proven to be cost effective because our actual budgeted
salary increases have been less than the CalPERS assumption.
Donna Silva, C.P.A.
Finance Director
2729 Prospect Park Dr.
Rancho Cordova, CA 95670
(916) 851-8735
If you are having major cash flow or budgetary problems, I would use the lump sum. Otherwise, you are
probably underfunding the plan since the data is considerably behind and most agencies' payrolls are lower than
CalPERS is aware of.
Lori Ann Farrell
Huntington Beach
Yes and a resounding yes….
Rod Greek
San Diego County Water Authority - Controller
4677 Overland Ave
San Diego, CA 92123
Office: 858-522-6679
Cell: 760-809-0681
Fax: 858-522-6561
Yes we have been doing this for the past several years. And yes, it is something I would recommend (see memo,
attached.) Every agency is different though. I made sure I spoke with our legal counsel, HR Manager and
auditor before I started this.
Deborah L. Sousa, CFO/Treasurer
West Valley Water District
855 West Base Line Road
P. O. Box 920
Rialto, CA 92377
(909) 875-1804, Extension 706
dsousa@wvwd.org
www.wvwd.org
Interesting question… we have not, but we have plans to for this upcoming fiscal year 2014/15. It will be
interesting to see what your survey shows.
Janice Mateo-Reyes jreyes@ci.laguna-hills.ca.us
We have in the past but if you are downsizing or reducing salaries I would not recommend it!! The
estimate is based on prior years and we ultimately ended up paying $1 million too much in that
year. We asked PERS for credit going forward in the next year and they said sure we are going to
amortize it over the next 20 years!!!!!
Deborah Cullen
Director of Finance
City of El Segundo
Paul,
I’m hoping that you get good answers for this one. I went to a CalPERS training in 2012 where they discussed
this very issue. Actuarials for CalPERS are actually trying to get rid of the option. The answer to your questions
depends on if you are in a grouped plan (multiple-employer plan) or your own plan (do you have more than 100
employees?).
The prepayment amount is based on estimated payroll for the future year. If you prepay and your payroll is less
than estimated in their actuarial, you end up paying more to CalPERS. If you are in your own plan, it will be
adjusted the following year. If you are in the group plan, the “plan” gets adjusted the next year but your entity
does not. If you prepay and your payroll is higher than they estimated in their actuarial, you end up paying less
to CalPERS. Same thing, if you are in your own plan, your plan will be adjusted the following year. If you are in
the group plan, the “plan” gets adjusted the next year but it does not go back directly to your entity.
So, if you know you are in your own plan (more than 100 employess)…you will recognize some savings. If you
are in the grouped multiple-employer plan and are going to hire or increase payroll…good idea; if your payroll is
going to go down, bad idea…and if you have people who will be on unpaid leave (we had a person out on
maternity leave for 4.5 months)…bad idea…unfortunately we didn’t know this before we prepaid 
Kindest Regards,
Dawn Jorge
Senior Financial & Administrative Analyst
dawn.jorge@bcvwd.org
Office Hours: Monday – Thursday 8am to 5pm
Closed Fridays and Holidays
Beaumont-Cherry Valley Water District
560 Magnolia Avenue
Beaumont CA 92223
Phone: 951-845-9581 ext 21
Fax: 951-845-0159.
www.bcvwd.org
Yes, CalPERS assumes they will earn the 7.5 percent, which is way higher than your portfolio earnings
indeed. However, a central issue to consider is that remitting your payments as a percentage of pay for the
entire persable payroll, using your employer rate, will likely result in you remitting more to PERS, which helps
your funded status (or at a minimum, helps mitigate the growth in your unfunded liabilities), than paying a
smaller, fixed lump sum. Remitting payments as a percentage of pay will likely improve your funded status and
reduce your liabilities faster, thereby saving you more in the long run.
I also personally fear giving PERS such a large lump sum all at once, given the volatility of the market and some
of their risky investment decisions in the past. I prefer the smoothed approach if you will of entering the market
slowly with each payroll so the City's plan is not subject to as much volatility.
Lori Ann Farrell
Huntington Beach
You get an assumed earnings credit of 7.5%, so doing the pre-payment option in this interest rate environment
is certainly advantageous from that standpoint. If you are in tight budget constraints and reducing staff lower
than what CalPERS assumed your annual payroll will be, then you can get some cashflow savings if you don’t opt
for the pre-payment. Ultimately, however, you’ll be obligated to pay into the fund, and the sooner you pay in,
the better.
We routinely take advantage of this; if you can, I’d recommend it.
Feel free to call if you want to discuss further.
Debby
Debby Cherney
Deputy General Manager
Eastern Municipal Water District
Office: (951) 928-6154
cherneyd@emwd.org
facebook.com/EasternMuni
twitter.com/EasternMuni
www.emwd.org
Hi Paul,
Our agency does. It saves us about 3.2 % on the annual obligation. This can add up to be a significant savings
over time. Our cash flow is steady from month-to-month, so the large expenditure in early July does not have a
negative impact on the agency. The lump sum prepayment works out good for us.
~Joe
Joseph Lillio, MPA
Finance Manager
Las Virgenes Municipal Water District
4232 Las Virgenes Rd., Calabasas, CA 91302
 (818) 251.2128 |  (818) 251.2179 |  jlillio@lvmwd.com
Paul
It depends. We have done it in the past and the discount was really good [First year discount was
$1.6M, second year 1.0M, third year -$350k]. However, when we started reducing staff and cutting
wages, our projected PERs expense was less than the prepayment, so you have to see how those
compare. If you do prepay, and it is actually more than your annual cost, the difference gets treated
as an contribution gain, so it does not go to waste, however, I would just assume have the $350K for
other costs.
Hope that helps.
Bob
Robert P. Elliot, CPA, Finance Director ● City of Glendale ● Finance Department
●141 North Glendale Ave., Glendale, CA 91206 ● (818) 548-2085 ● belliot@glendaleca.gov
If you work the numbers, we found that unless your rates and overall liability are steadily increasing, there is no
advantage to the pre-payment option. Simi Valley went this route in FY 2010, but didn’t recognize expected
savings.
Jody Kershberg JKershberg@simivalley.org
I have participated sometimes. I compare the amount requested for the lump sum to the amount we have
budgeted. Then I evaluate whether or not to participate. I also consider interest rates and the earning I could
have on the monies (although lately that hasn’t been much of a consideration).
Christy Pinuelas
Director of Finance
City of Agoura Hills
30001 Ladyface Court
Agoura Hills, CA 91301
cpinuelas@ci.agoura-hills.ca.us
(818)597-7319
(818)597-7352 fax
HI Paul,
Yes, we could afford to make the prepayment so we did. I think it is worth it since we get credit for 7.5%
annualized.
Thomas J. Mueller, CPA
Chief Accountant
Sanitation Districts of Los Angeles County
PO Box 4998
Whittier, CA 90607
Phone (562) 908-4288 ext. 1103
tmueller@lacsd.org
We have been for several years.
Depending on your City’s situation, it may or may not work for you.
You’re paying the employer contribution in advance. It’s calculated based on the actual PERSable comp from
two years ago brought forward by an inflation factor
If you’ve had material decreases in staff, you may be paying more based on the PERS estimate than you would
have based on actuals paid throughout the year.
I read that some agencies decided to stop prepaying based on this, but you’re always saving the discount and
everyone’s investment earnings are about zero these days.
Let me know if you have any other questions
Randy Chow
Financial Reporting Supervisor
City of Santa Monica
1717 4th St Suite 250
(310)458-8253 phone
It is worth doing the calculation, it was extremely advantageous when the Elk Grove prepaid for FY 13-14. I
doubt however that that will be the case when we do the calculations this year. One thing you need to be
careful of when calculating the impact of your various PERS tiers (each tier ‘stands on its own’ for the prepaid
calculation) is if you are losing members out of a particular tier (especially for the classic members) it becomes
more difficult to realize savings, because there is no credit given if a member terminates during the course of
the fiscal year when you have prepaid the pers.
Brad
Brad Koehn
Director of Finance and Administrative Services
City of Elk Grove
8401 Laguna Palms Way
Elk Grove, CA 95758
916.627.3221 (office)
916.691.3182 (fax)
bkoehn@elkgrovecity.org
www.elkgrovecity.org
Hi Paul,
The City of Del Mar did take advantage of the annual lump sum prepayment option last year.
I would only recommend it, if you take the time to analyze each plan individually. We
analyzed each plan individually. We reviewed each employee based on their current rate of
pay and any “highly possible” increases, we then multiplied their base pay by the
employer/employee rate. If the actual amount was substantially more than the amount for
the prepayment option, then we would do the prepayment option. This is time consuming, but
since Del Mar is a relatively a small agency (no more than 40 employees per plan), then it was
easier to do.
Be very careful, the savings has to be substantial. In our case, after completing the analysis we
found that we would save about $40,000 in the miscellaneous plan if we prepaid. But due to
vacancies that occurred during the year, and re-hires at a lower salary rate, at the end of the
year, the savings was only $3,000. This year, after completing our analysis, we determined that
it wasn’t in the best interest of the City to take advantage of the prepayment option.
Hope this helps.
Monica Molina
Senior Accountant
City of Del Mar
1050 Camino del Mar
Del Mar, CA 92014
858-704-3658
Hi Paul,
Two or three years ago, the District did the prepayment options offered by CALPERS and ended up paying more
if we had paid the contribution on a monthly basis. The District did not elect the prepayment options after that
year.
Lilian Ramirez
Santa Clara Valley Water District
5750 Almaden Expressway
San Jose, CA 95118-3686
Telephone # 408-630-2382
FAX # 408-979-5612
Paul:
We analyze this each year and decide whether or not this makes financial sense. The calculation, if done
correctly, is fairly involved. Our model is more refined now than when we first start doing this about 10 + years
ago. I am attaching my work papers and am available to walk you through this if that will be helpful. My direct
line is 650.780.7072 Good luck.
Brian Ponty, Finance Director
City of Redwood City
1017 Middlefield Road
Redwood City, CA 94063
voice 650.780.7070
fax 650.556.9206
Hello,
Of the past 8 years we have prepaid our employer contribution each year except for 1. Each year I do an
analysis of our projected payroll for the next fiscal year vs the payroll that CalPERS is using to calculate our
prepayment. CalPERS calculation is typically based on payroll data from 2 years ago. So, we have typically found
it advantageous to prepay rather than pay biweekly with our payroll. Also, the funds are earning a better rate of
return with CalPERS than what we get by letting it sit in LAIF.
Attached is a copy of the memo I did for this current fiscal year to recommend prepaying.
The one year that we did not prepay; the CalPERS calculation was based on a payroll that was higher than the
projected payroll for the next fiscal year due to layoffs that had occurred.
Karen Vaden / Accountant II
Accounting/Finance Division
925.875.2276 direct / 925.829.1180 fax
We have worked extensively with analysis of these lump sum offers. I would be happy to discuss.
One of the critical details is how your estimate of payroll for the fiscal year compares to CalPERS. Other relevant
factors include: whether you would pay the lump sum from cash, or borrow via a TRAN or bank loan; if
borrowing, the size of the borrowing and credit rating of the issuer; whether you are willing to pay slightly more
in the current year in order to obtain longer term savings if your estimated payroll is slightly less than CalPERS’
estimate; and if you need separate approval of other related entities such as utilities or authorities. Present
value savings are very common. The amount of savings during in the budget year varies, and could easily be
either a savings or additional cost depending on your circumstances.
Since the details of other employers could be rather different, be cautious about assuming the situation would
be the same for Reedley as for another employer who does or does not like the lump sum offer.
Best Regards,
__________________________________
Brian Whitworth
Senior Vice President
FirstSouthwest
direct 310.401.8057 cell 214.649.0171
1620 26th Street, Suite 230 South, Santa Monica, CA 90404
Yes, we use it. It’s easy and we get a nice little savings on what we would pay if we paid it monthly.
I would recommend it.
Michelle Danaher
Finance Director, City of Villa Park
17855 Santiago Blvd.
Villa Park, CA 92861
Phone (714) 998-1500
Fax (714) 998-1508
mdanaher@villapark.org