Title
Proposed Ballot Measure: Sacramento City Employees’ Retirement System (SCERS) Termination Act (Charter Amendment)
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FileID
File ID: 2026-01119
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Location
Location: Citywide
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Recommendation
Recommendation: Adopt a Resolution approving Charter amendment ballot language regarding the Sacramento City Employees’ Retirement System (SCERS) Termination Act, for placement on the November 3, 2026 general municipal election ballot.
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Contact
Contact: John Colville, City Treasurer, (916) 808-8297, jcolville@cityofsacramento.org, City Treasurer’s Office; Matthew Ruyak, Assistant City Attorney, (916) 808-5346, mruyak@cityofsacramento.org, City Attorney’s Office
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Presenter
Presenter: John Colville, City Treasurer, (916) 808-8297, jcolville@cityofsacramento.org, City Treasurer’s Office
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Attachments
Attachments:
1-Description/Analysis
2-Resolution
3-Exhibit A: Sacramento City Charter Amendment Regarding the Sacramento City Employees’ Retirement System (SCERS)
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Description/Analysis
IssueDetail
Issue Detail: The Sacramento City Employees’ Retirement System (SCERS) is a defined benefit plan, created under the Sacramento City Charter, that provides retirement benefits for certain City member employees. It is a “closed” system: there have been no new members since 1977. The system’s actuary indicates that for every dollar of benefits due, SCERS has approximately $1.10 of assets available for payment. As the member, surviving spouse, and other beneficiary population declines, SCERS assets may continue to grow beyond the amounts necessary to pay all accrued benefits. Under the current City Charter, there is no mechanism to terminate SCERS or to address any surplus funds.
At the direction of Mayor Pro Tem Guerra and Councilmember Maple, a request was made to create a revolving loan program for housing. This proposal is a response to that request.
The proposed ballot measure - the “SCERS Termination Act” - creates a mechanism for SCERS termination in the City Charter. Voter approval of the Act does not, by itself, terminate SCERS; rather, termination may occur only after the city council makes the requisite findings and adopts the resolution of termination required by the Act. Prior to bringing the resolution of termination to the city council, a plan for the wind-down of SCERS operations shall be developed with city staff and, as appropriate, the SCERS board (the Administration, Investment and Fiscal Management Board). The development and completion of the wind-down plan is a condition precedent to the city council's adoption of the resolution of termination. No transfer of surplus funds out of SCERS will occur until the city council has adopted the resolution of termination and all accrued benefits, reasonable plan wind-down expenses, and administration expenses have been fully paid or secured on an actuarially conservative basis appropriate for plan termination.
The proposal provides that any surplus funds after plan termination could be used only for the following public purpose: to establish or contribute to a housing revolving loan fund and to finance affordable housing and market-rate housing with affordable financing components.
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PolicyConsiderations
Policy Considerations: The Act proposes to amend the city charter. Charter amendments, whether through the initiative process or council proposal, require voter approval.
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EnvironmentalConsiderations
Environmental Considerations: None.
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Sustainability
Sustainability: Not applicable.
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Commission/Committee Action
Commission/Committee Action: None.
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RationaleforRecommendation
Rationale for Recommendation: If the council approves the Act for inclusion on the November 3, 2026, ballot, then in accordance with the California Elections Code, it must adopt a resolution that will place the measure on the ballot.
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FinancialConsiderations
Financial Considerations: The estimated cost of the first election contest, including measures, on the November 2026 ballot is $421,714. There are sufficient funds in the elections budget to cover this cost. If approved, there is no appreciable financial impact on the General/Measure U Funds.
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LocalBusinessEnterprise
Local Business Enterprise (LBE): Not applicable.
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Background
Background: SCERS is a defined benefit plan in which retirement benefits for City member employees are based upon age, final compensation, and length of service. City employee members make contributions to the System and, until 1993, the City made a normal contribution which was a percentage of total City payrolls. These cash payments are held in trust and invested to meet retirement benefits of members. However, if these invested assets prove inadequate to meet the defined benefits, the City must contribute additional monies to pay benefits.
In 1977, with the passage of Measure E, SCERS became a “closed” system, i.e., there would be no additional employees participating in the plan. Since that time, all full-time and eligible part-time employees of the City participate in the California Public Employees’ Retirement System (CalPERS) rather than SCERS. In 1977, the average age of SCERS active members was 36 years.
In June 1989, the voters of Sacramento approved the transfer of SCERS active safety members to CalPERS. Effective December 30, 1989, SCERS active safety members were transferred to CalPERS with a cash transfer of $103.3 million in January 1990.
As of June 30, 2025, there is one active miscellaneous member and a total of 710 plan participants. SCERS’ Total Pension Liability (TPL) as of June 30, 2025, is approximately $231.205 million. TPL represents the present value of all future benefits that will be paid by SCERS. SCERS funding ratio using fair value of assets was 109.6% percent of TPL on June 30, 2025. The funding ratio is defined as that portion of the total TPL for which there are assets available for benefits. As such, the System’s actuary indicates that for every dollar of benefits due, SCERS has approximately $1.10 of assets available for payment. SCERS has a Net Pension Asset of $22.149 million. The plan is reviewed annually by the actuary, with the next review using data as of June 30, 2026. It is anticipated that the results of this review will be available in October 2026.
As set out in the Sacramento City Charter, the Administration, Investment and Fiscal Management Board (the AIFM Board) is comprised of five members, three of whom are City officials (or their designees), and two of whom are public citizen members appointed by the City Council. The Sacramento City Manager, City Treasurer and Director of Finance are the City officials designated to serve on the AIFM Board. By City Charter, the public citizen members must be residents of the City of Sacramento, not connected with City government, and at least one of these members must be qualified by training and experience in the management and investment of funds.
Pursuant to the Sacramento City Charter, the AIFM Board has exclusive authority to invest and manage the System’s funds. The AIFM Board, in turn, has selected the Sacramento City Treasurer and Treasurer’s Office investment personnel to manage the funds consistent with Board-approved policies and direction.
In the previous decade, SCERS’ funding ratio fluctuated from a low of 77.9% in 2016 to a high of 110.2% in 2021. In 2022 SCERS funded ratio dropped -17% to 93.9% after equity markets faced a headwind of rising inflation and a slowing economy. SCERS again returned to fully funded status in June of 2024 at 101.6%, and then, as mentioned previously, to 109.6% as of June 2025. Over the past few years, staff and council have expressed interest in protecting the funded status, ensuring that the City would not be required in the future to make annual contributions. Staff remains focused on maintaining a high funded status while simultaneously derisking the portfolio. As a result, staff has begun to analyze the eventual wind down of SCERS as its’ participant counts continue to drop against the background of an increasing funded status. The City Charter does not specifically address the mechanics of how to accomplish termination of the plan. The plan was advised in the 1990’s by outside consultants that specific language needed to be included in the City Charter to outline the criteria and procedures for eventual SCERS termination; however, no action was taken on that advice. This ballot measure will give authority to the City Council to terminate the plan only when certain criteria are met. When, and only when, all SCERS obligations are fulfilled, any excess funds in the plan will be deemed a surplus and will revert to the City.
The use of these surplus funds will be restricted to the public purpose described in the Charter Amendment, and funds will only be made available when the City Council passes a resolution after the specified findings are made.
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