HomeMy WebLinkAboutAgenda Packet - Finance & Human Resources Committee - 02/19/2026FINANCE & HUMAN RESOURCES COMMITTEE
FEBRUARY 19, 2026
East Valley Water District was formed in 1954 and provides water and wastewater services to
108,000 residents within the cities of San Bernardino and Highland, and portions of San
Bernardino County.
EVWD operates under the direction of a 5member elected Board.
COMMITTEE MEMBERSJames Morales, Jr.
Governing Board Member
Phillip R. Goodrich
Governing Board Member
Finance & Human Resources Committee Meeting
February 19, 2026 1:30 PM
31111 Greenspot Road, Highland, CA 92346
www.eastvalleywater.gov
PLEASE NOTE:
Materials related to an item on this agenda submitted to the Board after distribution of the
agenda packet are available for public inspection in the District’s office located at 31111
Greenspot Rd., Highland, during normal business hours. Also, such documents are available
on the District’s website at eastvalley.org and are subject to staff’s ability to post the
documents before the meeting.
Pursuant to Government Code Section 54954.2(a), any request for a disabilityrelated
modification or accommodation, including auxiliary aids or services, that is sought in order
to participate in the above agendized public meeting should be directed to the District Clerk
at (909) 8854900 at least 72 hours prior to said meeting.
In order to comply with legal requirements for posting of agenda, only those items filed
with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday
meeting not requiring departmental investigation, will be considered by the Board of
Directors.
CALL TO ORDER
PLEDGE OF ALLEGIANCE
ROLL CALL OF BOARD MEMBERS
PUBLIC COMMENTS
Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card
and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to
three (3) minutes, unless waived by the Chairman of the Board. Under the State of California
Brown Act, the Board of Directors is prohibited from discussing or taking action on any item
not listed on the posted agenda. The matter will automatically be referred to staff for an
appropriate response or action and may appear on the agenda at a future meeting.
APPROVAL OF CONSENT CALENDAR
All matters listed under the Consent Calendar are considered by the Board of Directors to be
routine and will be enacted in one motion. There will be no discussion of these items prior to
the time the board considers the motion unless members of the board, the administrative staff,
or the public request specific items to be discussed and/or removed from the Consent
Calendar.
1.Approve the December 1, 2025 Finance & Human Resources Committee Meeting
Minutes
INFORMATIONAL ITEMS
2.Unfunded Accrued Liability Policy Compliance Analysis
3.Inflation Reduction Act Investment Tax Credit
DISCUSSION ITEMS
4.Set the day and time for holding recurring meetings
REPORTS
5.Finance Activities
6.Human Resource Activities
ADJOURN
FINANCE & HUMAN RESOURCES COMMITTEEFEBRUARY 19, 2026East Valley Water District was formed in 1954 and provides water and wastewater services to108,000 residents within the cities of San Bernardino and Highland, and portions of SanBernardino County.EVWD operates under the direction of a 5member elected Board.COMMITTEE MEMBERSJames Morales, Jr.
Governing Board Member
Phillip R. Goodrich
Governing Board Member
Finance & Human Resources Committee Meeting
February 19, 2026 1:30 PM
31111 Greenspot Road, Highland, CA 92346
www.eastvalleywater.gov
PLEASE NOTE:
Materials related to an item on this agenda submitted to the Board after distribution of the
agenda packet are available for public inspection in the District’s office located at 31111
Greenspot Rd., Highland, during normal business hours. Also, such documents are available
on the District’s website at eastvalley.org and are subject to staff’s ability to post the
documents before the meeting.
Pursuant to Government Code Section 54954.2(a), any request for a disabilityrelated
modification or accommodation, including auxiliary aids or services, that is sought in order
to participate in the above agendized public meeting should be directed to the District Clerk
at (909) 8854900 at least 72 hours prior to said meeting.
In order to comply with legal requirements for posting of agenda, only those items filed
with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday
meeting not requiring departmental investigation, will be considered by the Board of
Directors.
CALL TO ORDER
PLEDGE OF ALLEGIANCE
ROLL CALL OF BOARD MEMBERS
PUBLIC COMMENTS
Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card
and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to
three (3) minutes, unless waived by the Chairman of the Board. Under the State of California
Brown Act, the Board of Directors is prohibited from discussing or taking action on any item
not listed on the posted agenda. The matter will automatically be referred to staff for an
appropriate response or action and may appear on the agenda at a future meeting.
APPROVAL OF CONSENT CALENDAR
All matters listed under the Consent Calendar are considered by the Board of Directors to be
routine and will be enacted in one motion. There will be no discussion of these items prior to
the time the board considers the motion unless members of the board, the administrative staff,
or the public request specific items to be discussed and/or removed from the Consent
Calendar.
1.Approve the December 1, 2025 Finance & Human Resources Committee Meeting
Minutes
INFORMATIONAL ITEMS
2.Unfunded Accrued Liability Policy Compliance Analysis
3.Inflation Reduction Act Investment Tax Credit
DISCUSSION ITEMS
4.Set the day and time for holding recurring meetings
REPORTS
5.Finance Activities
6.Human Resource Activities
ADJOURN
FINANCE & HUMAN RESOURCES COMMITTEEFEBRUARY 19, 2026East Valley Water District was formed in 1954 and provides water and wastewater services to108,000 residents within the cities of San Bernardino and Highland, and portions of SanBernardino County.EVWD operates under the direction of a 5member elected Board.COMMITTEE MEMBERSJames Morales, Jr.Governing Board Member Phillip R. Goodrich Governing Board MemberFinance & Human Resources Committee MeetingFebruary 19, 2026 1:30 PM31111 Greenspot Road, Highland, CA 92346www.eastvalleywater.govPLEASE NOTE:Materials related to an item on this agenda submitted to the Board after distribution of theagenda packet are available for public inspection in the District’s office located at 31111Greenspot Rd., Highland, during normal business hours. Also, such documents are availableon the District’s website at eastvalley.org and are subject to staff’s ability to post thedocuments before the meeting.Pursuant to Government Code Section 54954.2(a), any request for a disabilityrelatedmodification or accommodation, including auxiliary aids or services, that is sought in orderto participate in the above agendized public meeting should be directed to the District Clerkat (909) 8854900 at least 72 hours prior to said meeting.
In order to comply with legal requirements for posting of agenda, only those items filed
with the District Clerk by 12:00 p.m. on Wednesday prior to the following Wednesday
meeting not requiring departmental investigation, will be considered by the Board of
Directors.
CALL TO ORDER
PLEDGE OF ALLEGIANCE
ROLL CALL OF BOARD MEMBERS
PUBLIC COMMENTS
Any person wishing to speak to the Board of Directors is asked to complete a Speaker Card
and submit it to the District Clerk prior to the start of the meeting. Each speaker is limited to
three (3) minutes, unless waived by the Chairman of the Board. Under the State of California
Brown Act, the Board of Directors is prohibited from discussing or taking action on any item
not listed on the posted agenda. The matter will automatically be referred to staff for an
appropriate response or action and may appear on the agenda at a future meeting.
APPROVAL OF CONSENT CALENDAR
All matters listed under the Consent Calendar are considered by the Board of Directors to be
routine and will be enacted in one motion. There will be no discussion of these items prior to
the time the board considers the motion unless members of the board, the administrative staff,
or the public request specific items to be discussed and/or removed from the Consent
Calendar.
1.Approve the December 1, 2025 Finance & Human Resources Committee Meeting
Minutes
INFORMATIONAL ITEMS
2.Unfunded Accrued Liability Policy Compliance Analysis
3.Inflation Reduction Act Investment Tax Credit
DISCUSSION ITEMS
4.Set the day and time for holding recurring meetings
REPORTS
5.Finance Activities
6.Human Resource Activities
ADJOURN
Agenda Item
#1
February 19, 20261
Meeting Date: February 19, 2026
Agenda Item #1
Consent Item
1
7
4
9
Regular Meeting
TO: Committee Members
FROM: Chief Financial Officer
SUBJECT: Approve the December 1, 2025 Finance & Human Resources Committee
Meeting Minutes
RECOMMENDATION
That the Finance & Human Resources Committee approve the December 1, 2025
meeting minutes.
DISTRICT PILLARS AND STRATEGIES
V - Community Engagement, Advocacy, and Leadership
a. Utilize Effective Communication Methods to Foster Exceptional Community
Relations
FISCAL IMPACT
There is no fiscal impact associated with this agenda item.
________________
Brian Tompkins
Chief Financial Officer
ATTACHMENTS
December 1, 2025 Minutes
Page 1 of 3
2
3
7
9
Draft pending approval
EAST VALLEY WATER DISTRICT December 1, 2025
FINANCE & HUMAN RESOURCES COMMITTEE MEETING
MINUTES
PUBLIC COMMENTS
APPROVAL OF CONSENT CALENDAR
Page 2 of 3
2
3
7
9
LOCAL HAZARD MITIGATION PLAN
The Director of Administrative Services introduced Mr. Kilby of Navigating Preparedness
Associates (NPA), who provided an overview of updates to the District’s Local Hazard
Mitigation Plan (LHMP). The presentation addressed required updates, regulatory
compliance, and mitigation planning, including assessment of risks to District assets and
staff. Mr. Kilby noted that detailed assessments and financial information will be provided
for review by the Community Advisory Commission and District staff.
Information only, no action required.
The Director of Administrative Services gave a presentation on the Wastewater Operator-
in-Training (OIT) Program that included program objectives and implementation. She
explained that the program will develop a pipeline for future wastewater operator
vacancies at the Sterling Natural Resources Center by providing comprehensive training
across all plant operations, including food waste processing, to meet state certification
requirements. Staff noted that the program is regulated by the State Water Resources
Control Board and requires 1,800 hours of experience for certification.
She further reported that the program offers paid training and benefits, including health
benefits and sick leave, and is designed to benefit both the District and participants by
providing meaningful work experience and career pathways. The District plans to initially
fill two paid OIT positions, with the potential to add volunteer positions in the future. The
program is also expected to reduce reliance on temporary agency workers and result in
improved operational performance and cost savings.
Information only, no action required.
The Finance Manager reviewed the authorization process to transfer unclaimed funds into
the District’s General Fund. He explained that the District will publish a notice in the local
newspaper and on the District’s website, allowing claimants 60 days to respond, which
exceeds the 45 days required by the State.
Information only, no action required.
Page 3 of 3
2
3
7
9
REVIEW THE DRAFT POPULAR ANNUAL FINANCIAL REPORT FOR YEAR ENDED
JUNE 30, 2025
The Chief Financial Officer presented the Draft Popular Annual Financial Report for the
year ended June 30, 2025. The report includes financial graphs, highlights of community
involvement, and project updates, with an emphasis on reader appeal and
understandability.
Information only, no action required.
The Chief Financial Officer provided updates on the Procurement Policy and pension
unfunded accrued liability.
The Director of Administrative Services reported on the status of the Classification and
Compensation Study, the Employee of the Year Award, and current recruitment
activities.
The meeting adjourned at 3:01 p.m.
James Morales, Jr. Phillip R. Goodrich
Governing Board Member Governing Board Member
Agenda Item
#2
February 19, 20261
Meeting Date: February 19, 2026
Agenda Item #2
Informational Item
2
6
2
3
Regular Meeting
TO: Committee Members
FROM: Chief Financial Officer
SUBJECT: Unfunded Accrued Liability Policy Compliance Analysis
RECOMMENDATION
That the Finance & Human Resources Committee recommend that the Board of
Directors approve a one-time additional discretionary payment of $4.5 million to reduce
the District's unfunded accrued liability.
BACKGROUND / ANALYSIS
On February 26, 2025, the Board adopted new fiscal policy 7.8 – the Unfunded Accrued
Liability Management Policy (Policy). This Policy was developed in collaboration with
District consultant California Municipal Advisors (CalMuni), to address the existing and
future unfunded accrued liability (UAL) associated with the District’s CalPERS pension
plans.
As part of the pension contract with CalPERS, the District is obligated to pay off any
pension related UAL, which is the shortfall between the amount that will be necessary
to pay benefits already earned by current and former employees covered by CalPERS,
and investments held in trust to pay those benefits. The District’s UAL has been volatile,
ranging from $6 million to $15 million over the last ten years. The current UAL is
approximately $13.3 million.
District efforts to address the UAL liability, such as adopting a level, annual pension
contribution that included contributions in excess of those required by CalPERS, had
limited success and a declining effect on the UAL. The UAL typically remained well
above $10 million. This made it clear that a multi-faceted strategy, combined with
significant additional discretionary payments (ADP) at opportune times, were needed to
have a lasting impact in reducing the UAL. Adoption of Policy 7.8 codified the different
types of tools available and displayed the District’s commitment to long-term financial
health.
Section 4.D. of Policy 7.8 requires ongoing Transparency and Reporting with respect to
the pension UAL, so to help satisfy this requirement CalMuni has prepared the attached
UAL Policy Compliance Analysis. This report denotes the fact that for years ending June
30, 2024 and 2025, CalPERS has realized investment returns of more than 9%,
exceeding their target rate of 6.8%.
Agenda Item
#2
February 19, 20262
Meeting Date: February 19, 2026
Agenda Item #2
Informational Item
2
6
2
3
To take full advantage of these two successive years of higher-than-expected returns,
the UAL Compliance Analysis suggests two strategies for the District to consider to
lower the UAL:
1. Make an Additional Discretionary Payment (ADP) – after two years of high
investment yields, the District is approximately $4.5 million from achieving an
85% funded status – the goal established with the adoption of the Policy. One
proposal included in the analysis is to make a one-time $4.5 million ADP out of
reserves to get to 85% funded.
2. Consider using Capital Replacement Reserves that have been accumulated to
cash finance certain projects to pay down the UAL, which essentially carries a
6.8% interest rate. The capital projects can then be financed with tax-exempt
bond proceeds which typically have an interest rate of 3.75% or lower. An
example summary of this strategy where the cost of a project is $5.0 million
shows savings of $746 thousand over an 18-year period.
Strong water sales that exceeded projections by 12% in 2024-25, and a one-time tax
credit make option one above achievable at this time. A one-time ADP of $4.5 million to
boost the District’s CalPERS pension funded status to the recommended 85% and turn
a succession of recent positive fiscal events into a long-term financial benefit for the
District in the form of lower future contributions toward the CalPERS UAL.
This amount would reduce the UAL by more than 30% and would raise the funded
status of the District’s pension plans from approximately 79% to the 85% target.
DISTRICT PILLARS AND STRATEGIES
II - Sustainability, Transparency, and Accountability
a. Uphold Transparent and Accountable Fiscal and Resource Management
FISCAL IMPACT
Actions recommended in this item will result in the expenditure of $4.5 million from
reserves and will reduce future budget years pension contributions.
Agenda Item
#2
February 19, 20263
Meeting Date: February 19, 2026
Agenda Item #2
Informational Item
2
6
2
3
Respectfully submitted:
________________
Brian Tompkins
Chief Financial Officer
ATTACHMENTS
UAL Policy Compliance Update 2025
EAST VALLEY WATER DISTRICT
UPDATE JUNE 2025
East Valley Water District
2024 Pension Policy Compliance Analysis- UPDATE
Page 1
PENSION POLICY COMPLIANCE ANALYSIS
UPDATE
INTRODUCTION
California Municipal Advisors (CalMuni Advisors) has produced this Pension Policy Compliance
Analysis in accordance with the Pension Policy adopted by the East Valley Water District (the
District) Board of Directors. Management and staff are responsible for the preparation and fair
presentation of the financial statements and information used herein. CalMuni Advisors is
responsible for providing express opinions and recommendations based on the analysis of the
financial information provided by the District. A few key points of your existing Pension Policy
include:
- Target Funded Ratio of 85%;
- Recommendation to pre-pay the entire UAL payment by July 31st of each year;
- Monitor for annual actions that can proactively mitigate UAL;
- Utilize excess reserves, one-time revenues and fund surpluses to pre-pay UAL when
feasible; and
- Utilize the Pension Rate Stabilization Fund (115 Trust) to maintain Target Funded Ratio.
CalMuni Advisors has performed a in-depth review of the Unfunded Accrued Liability (UAL) that
District has outstanding with the California Public Employees' Retirement System (CalPERS) and
your compliance with the existing Pension Policy. While CalMuni Advisors strives to provide the
best analysis possible, this report utilizes forward-looking assumptions based on information
available to CalMuni Advisors at the time the analysis was prepared. Subsequent changes in the
investment performance or actuarial information may impact the recommendations of this report.
NOTES TO THE UPDATE
CalMuni Advisors has received a preliminary update from CalPERS on the anticipated
investment performance for FY 2024-2025. The currently forecasted return, while not final until
June 30 of this year, is anticipated to come in at approximately 9.7% which is significantly
higher than the required Discount Rate of 6.8%. The following materials have been updated to
include preliminary forecasts and recommendations based upon the 9.7%.
It should be noted that, while CalMuni Advisors can forecast the UAL changes based on
investment performance, and investment performance is typically the largest determinant of
UAL change, there are a range of factors that we cannot forecast. Therefore, these estimates are
only that and should be understood to be directional only and subject to change.
East Valley Water District
2024 Pension Policy Compliance Analysis- UPDATE
Page 2
This Pension Policy Compliance Analysis documents the results of the review and provides
recommendations that the District could take to reduce its future UAL costs, in accordance with
the best practices related to UAL management and the District's adopted UAL management policy,
which individually are:
Make Additional Discretionary Payments (ADPs) of approximately $4.5 million to achieve
the Policy Target compliance at 85% funded across all plans.
Consider making additional contributions beyond the $4.5 million to a 115 Trust to
continue to build resilience in the pension plans.
DISTRICT’S PENSION PLANS AND UNFUNDED ACCRUED LIABILITY
The District provides pension benefits to its employees and retirees through three pension plans
with CalPERS. As of 06/30/2023 (the most recent official information available as of the date of
this Pension Policy Compliance Analysis), the plans had a total accrued liability (the amount
necessary, as of the valuation date, to fund all earned pension benefits for current employees,
retirees, and beneficiaries) of approximately $61.1 million, held approximately $44.6 million in
assets, and its plans ranged between 72% and 87% funded. Overall, the pension plans were 73.0%
funded, as summarized in Table 1 below.
Graph 1 below shows the UAL and Pension Loan amortization schedule as of the 06/30/2023
valuation date.
Plan Name Total Accrued
Liability
Market Value of
Assets
Unfunded
Accrued
Liability
% Funded
Miscellaneous $57,941,625 $41,831,350 $16,110,275 72.2%
PEPRA - Misc $3,198,230 $2,794,448 $403,782 87.4%
TOTAL $61,139,855 $44,625,798 $16,514,057 73.0%
Source: CalPERS Actuarial Valuation Reports as of June 30, 2023
Table 1
East Valley Water District
Pension Plans Summary
East Valley Water District
2024 Pension Policy Compliance Analysis - UPDATE
Page 3
Graph 1
East Valley Water District
Current UAL and Pension Loan Amortization Schedule
Source: CalPERS Actuarial Valuation Reports as of June 30, 2023
Historic Payments
-
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
$2.0
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044
Mi
l
l
i
o
n
s
Baseline Miscellaneous PEPRA - Misc
East Valley Water District
2024 Pension Policy Compliance Analysis- UPDATE
Page 4
CALPERS INVESTMENT PERFORMANCE FOR FYE 2023
In August 2024, CalPERS announced its FYE 2024 investment gain estimate of 9.3%. This
represents an over performance of the investment target of 2.5% and will result in the reduction of
UAL. Further, in June of 2025, CalMuni was made aware that there is a preliminary estimate that
CalPERS anticipates achieving an investment gain of 9.7% for FYE 2025 which also will result in
the reduction of UAL. Graph 2 below shows the history of CalPERS' annual investment returns.
Graph 2
History of CalPERS Annual Investment Returns FYE 1993-2023
Preliminary 2024-25
Source: CalPERS
The historical average annual investment returns, with 2024 and 2025 estimates as reported by
CalPERS are as follows:
5 years: 7.7%
10 years: 7.1%
20 years: 7.1%
30 years: 8.0%
The average returns indicate that historically CalPERS has been able to achieve the long-term
investment target rate of 6.8% (the current discount rate). CalPERS has been lowering the target
rate over the last several decades. It appears that the current target rate favorably corresponds to
the past performance. However, past performance is not a guarantee of future results.
2.0%
3.7%
1.0%
2.4%
0.6%
6.7%
4.7%5.8%
- -
14.5%
16.3%15.3%
20.1%19.5%
12.5%
10.5%
16.6%
12.3%11.8%
19.1%
13.3%
21.7%
13.2%
18.4%
11.2%
8.6%
21.3%
9.3%9.7%
-7.2%-6.1%-5.1%
-24.0%
-7.4%
- -
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
-
5.0%
10.0%
15.0%
20.0%
25.0%
East Valley Water District
2024 Pension Policy Compliance Analysis- UPDATE
Page 5
IMPACT OF CALPERS' INVESTMENT PERFORMANCE ON THE District
To assess the impact of CalPERS' investment performance on the funded status of pension plans,
it is important to remember that in order to maintain an unchanged funded ratio, among other
things, CalPERS needs to achieve an investment gain equal to the discount rate, which is currently
6.8%. Any time that the investment returns are below the discount rate, the funded level of the
pension plans decreases and additional UAL is created.
Conversely, whenever the investment returns are above the discount rate, the UAL amount is
reduced, and correspondingly, the funded level increases. With the 2024 9.3% and estimated 2025
9.7% investment returns, the full funding impact is 2.5% and 2.9% respectively. This windfall
translates into a reduction of approximately $3.5 million of UAL for the District.
Table 3 below shows the 2024 investment gain impact estimates for each of the District's pension
plans.
The investment return impact is estimated based on the FYE 2023 market value of assets within
each pension plan multiplied by 2.5% for 2024 and 2.9% for 2025. CalPERS may make additional
adjustments and reconciliations to account for actual vs. projected plan experience and any
methodology changes.
While CalPERS' prior investment returns history indicates that steady reduction of UAL is possible
the District may want to consider additional steps to reduce the long-term interest costs associated
with the remaining UAL. Suggested pension cost reduction strategies are discussed below.
DISTRICT'S ESTIMATED FYE 2025 PENSION PLAN FUNDED LEVELS
CalPERS will publish the 2025 Pension Plan Reports for FYE 06/30/2026 for the District in or
around August 2026. The reports will reflect any changes that have taken place during the fiscal
year, including the 2.5% investment gain for 2024 and 2.9% for 2025, the District's and its
employees' contributions, benefit payments to plan beneficiaries, and any adjustments made by
Plan Name Estimated UAL
Change
Miscellaneous ($3,291,812)
PEPRA - Misc ($175,817)
TOTAL ($3,467,630)
Source: California Municipal Advisors
East Valley Water District
Table 2
Estimated Investment Return Impact
East Valley Water District
2024 Pension Policy Compliance Analysis- UPDATE
Page 6
CalPERS to reconcile the actual vs. projected plan experience and to account for any actuarial
methodology changes.
Table 3
East Valley Water District
2025 Pension Plan Funded Level Estimate
It should be emphasized that the amounts calculated in Table 3 are estimates only and can
only be finalized once CalPERS publishes the FYE 06/30/2025 actuarial reports.
Description Miscellaneous PEPRA - Misc Total
FYE 2024
Market Value of Assets
2023 Balance $41,831,350 $2,794,448 $44,625,798
Normal Cost Contribution $636,372 $251,950 $888,322
UAL Payment $1,384,944 $22,734 $1,407,678
UAL Discretionary Payment - - -
Investment Gain / (Loss) $1,096,317 $76,728 $1,173,045
Benefit Payment ($2,778,678) ($5,770) ($2,784,448)
2024 Balance $42,170,305 $3,145,860 $48,094,843
115 Trust Fund Balance - - -
Unfunded Accrued Liability
2023 Balance $16,110,275 $403,782 $16,514,057
UAL Payment ($1,384,944) ($22,734) ($1,407,678)
Interest $1,001,323 $25,911 $1,027,234
UAL Discretionary Payment - - -
Investment (Gain) / Loss ($1,096,317) ($76,728) ($1,173,045)
2024 Balance $14,630,337 $330,231 $14,960,568
Pension Plan 2024 Funded Level 74.2% 90.5% 76.3%
Funded Level with 115 Trust 74.2% 90.5% 76.3%
FYE 2025
Market Value of Assets
2024 Balance $42,170,305 $3,140,090 $45,310,395
Normal Cost Contribution $652,970 $274,896 $927,866
UAL Payment $1,426,492 $23,416 $1,449,908
UAL Discretionary Payment - - -
Investment Gain / (Loss) $1,283,243 $99,714 $1,382,957
Benefit Payment ($2,778,678) ($5,770) ($2,784,448)
2025 Balance $42,754,332 $3,538,116 $49,071,126
115 Trust Fund Balance - - -
Unfunded Accrued Liability
2024 Balance $14,630,337 $330,231 $14,960,568
UAL Payment ($1,426,492) ($23,416) ($1,449,908)
Interest $897,861 $20,863 $918,725
UAL Discretionary Payment - - -
Investment (Gain) / Loss ($1,283,243) ($99,714) ($1,382,957)
2025 Balance $12,818,463 $227,965 $13,046,427
Pension Plan 2025 Funded Level 76.9% 93.9% 79.0%
Funded Level with 115 Trust 76.9% 93.9% 79.0%
Source: CalPERS Actuarial Valuation Reports as of June 30, 2022 & CalMuni Estimates
East Valley Water District
2024 Pension Policy Compliance Analysis - UPDATE
Page 7
The Normal Cost contributions, UAL payments, and benefit payments estimates were generated
by CalPERS. The investment gain / loss and UAL interest estimates were generated by CalMuni.
It is estimated that the District's Miscellaneous, and PEPRA Miscellaneous plans will be
approximately 76.9%, and 93.9% funded as of FYE 06/30/2025, respectively, before any
additional adjustments that could be made by CalPERS.
The District has adopted a pension liability management policy with a target plan funded level of
85.0%. As demonstrated in Table 4, with the addition of the reduced 2024 UAL the District is
projected to be below the 85.0% target objective. The Policy also recognizes the goal of ultimately
achieving and maintaining a fully funded status of 100% (with the difference between 85.0% and
100.0% being managed through a Section 115 Trust).
AMORTIZATION OF NEW UAL
The reduction in UAL in 2024 and 2025 will be amortized over a 20-year period with a 5-year
ramp-down which can be seen in the two red shaded bases in the graph below.
East Valley Water District
2024 Pension Policy Compliance Analysis - UPDATE
Page 8
Graph 3 illustrates how these amortization payments will impact the District's UAL repayment structure.
Graph 3
East Valley Water District
UAL Repayment with 2024 and 2025 Projected Base Amortizations
Historic Payments
-
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
$2.0
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044
Mi
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i
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s
Baseline Miscellaneous PEPRA - Misc -2024 Base 2025 Base
East Valley Water District
2024 Pension Policy Compliance Analysis - UPDATE
Page 9
PENSION COST OPTIMIZATION STRATEGIES
The District adopted the UAL Management Policy, which provides guidance on how the District
should approach managing future UAL.
In addition to following the historical practice of prepaying the UAL payments by July 31 of each
year, there are several pension cost optimization strategies that the District may want to implement
to lower its future UAL-related costs pertaining to the outstanding UAL:
- Strategy A: Additional Discretionary Payments to a CalPERS
- Strategy B: Capital Projects
Strategy A: Additional Discretionary Payments
In order to achieve the 85% funded level for each plan, the District would need to make an ADP
to the Miscellaneous plan of approximately $4.5 million to remain in compliance with the policy.
The District is currently contemplating making a $5 million contribution toward it’s CalPERS
liabilities. Were this to be manifested, CalMuni would recommend making the $4.5 million
payment as an ADP to CalPERS and contributing the remaining $500,000 to a 115 Trust
account.
Payments of these amounts would leave approximately $8.5 million in outstanding UAL across
the District’s plans with CalPERS (See Table 4 below) and would generate approximately $2.7
million in savings to the District.
Table 4
East Valley Water District
Estimated UAL ADP to achieve 85%
The remaining UAL after the ADP would have an approximate amortization structure as shown
in Graph 4 below. This structure is only approximate and assumes a level Base paydown with the
ADP noted above. The structure could be adjusted based upon targeting certain bases for
repayment.
Plan Name ADP Remaining
Balance Funded %
Miscellaneous $4,482,543 $8,335,919 85.0%
PEPRA - Misc - $227,965 93.9%
TOTAL $4,482,543 $8,563,884 86.2%
Source: California Municipal Advisors
East Valley Water District
2024 Pension Policy Compliance Analysis - UPDATE
Page 10
Graph 4
East Valley Water District
UAL Repayment with 2024 and 2025 Projected Base Amortizations & ADP
-
$0.2
$0.4
$0.6
$0.8
$1.0
$1.2
$1.4
$1.6
$1.8
$2.0
2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044
Mi
l
l
i
o
n
s
Baseline Miscellaneous PEPRA - Misc -2024 Base 2025 Base
East Valley Water District
2024 Pension Policy Compliance Analysis - UPDATE
Page 11
Strategy B: Capital Project Considerations
The District has various capital projects that are required for efficient operations. Should it have
sufficient reserves available to fund those projects and recognizing that UAL carries a 6.8%
interest cost, the District should consider using the accumulated reserves to pay down UAL and
then finance the needed improvements with low-cost tax-exempt funds (see Graph 5 and Table 7
below for savings impact).
While each project would need to be analyzed in more detail to determine financing viability, a
preliminary analysis suggests that there would be significant savings generated for the District
were it to borrow sufficient funds to pay for the projects.
Table 7 provides the annual detailed comparison between the cash flows associated with UAL and
a 12-year financing of a $5 million capital project. By utilizing the capital dollars to pay off UAL
or make contributions to the 115 Trust and financing the capital projects this analysis suggests that
the District could save approximately $746,000 which can be seen in Graph 4 and Table 5 below.
If the District is interested in further analysis on this strategy, CalMuni Advisors is available to
assist with any related financial analyses and financing.
Graph 5
East Valley Water District
UAL Repayment vs Capital Project Cash Flow Comparison
$0
$100,000
$200,000
$300,000
$400,000
$500,000
$600,000
$700,000
2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043
UAL Cost Capital Project
East Valley Water District
2024 Pension Policy Compliance Analysis - UPDATE
Page 12
Table 7
East Valley Water District
Capital Financing Alternatives
Capital Financing
UAL Period 18 2026 $582,801 $536,084 $46,718
Capital Financing Period 12 2027 $604,145 $536,084 $68,061
Tax-Exempt Rate 3.750% 2028 $648,081 $536,084 $111,997
Financed Amount $5,000,000 2029 $630,829 $536,084 $94,746
Cost of Issuance $150,000 2030 $611,199 $536,084 $75,115
2031 $591,930 $536,084 $55,847
2032 $567,936 $536,084 $31,853
2033 $561,209 $536,084 $25,125
2034 $545,920 $536,084 $9,836
2035 $520,151 $536,084 ($15,933)
2036 $266,630 $536,084 ($269,454)
2037 $233,974 $536,084 ($302,109)
2038 $199,346 - $199,346
2039 $171,628 - $171,628
2040 $152,885 - $152,885
2041 $104,144 - $104,144
2042 $52,065 - $52,065
2043 $134,181 - $134,181
Total $7,179,054 $6,433,003 $746,050
Date UAL Cost Capital Project Savings
East Valley Water District
2024 Pension Policy Compliance Analysis- UPDATE
Page 13
CONCLUSION
Proactive pension liability management practices are essential for keeping the District's future
UAL balances and the associated interest costs under control.
Individually, each action provides long-term value to the District. Whether making Additional
Discretionary Payments, utilizing CIP reserves to pay UAL and borrowing the needed funds for
the project or refinancing a portion of the UAL on a taxable basis reducing the District’s exposure
to UAL incrementally each year is important. Each action should be considered and balanced with
other fiscal considerations that the District needs to address but having a goal of incrementally
addressing UAL on an annual basis will support the District’s efforts to build long-term fiscal
resilience.
CalMuni Advisors appreciates the opportunity to serve the District. If you have any questions
about this Pension Policy Compliance Analysis or suggested strategies, do not hesitate to contact
us.
Prepared by:
Andrew Flynn
Managing Director
(415) 310-1255
aflynn@calmuniadvisors.com
Agenda Item
#3
February 19, 20261
Meeting Date: February 19, 2026
Agenda Item #3
Informational Item
2
6
2
1
Regular Meeting
TO: Committee Members
FROM: Chief Financial Officer
SUBJECT: Inflation Reduction Act Investment Tax Credit
RECOMMENDATION
This agenda item is for informational purposes only, no action is required.
BACKGROUND / ANALYSIS
The Inflation Reduction Act of 2022 was signed into law on August 16, 2022. That
legislation included funding for tax credits on clean energy projects, and introduced
Elective Pay, a method for non-profit organizations and government agencies to benefit
from clean energy credits by receiving a direct cash payment, rather than applying the
credit against federal tax liabilities, which NPO’s and governments do not have.
In order to qualify for the tax credits and cash payment, tax exempt organizations
applying for a clean energy credit had to meet the following six criteria:
•Identify a qualifying project.
•Determine an agency tax year, typically the same as the fiscal year.
•Complete and place the project in service during the tax year.
•Register the project with the IRS prior to filing for a credit.
•Satisfy all eligibility requirements for the tax credit.
•File Form 990-T to claim the credit.
Staff enlisted the help of consultants to help determine that the digesters at the SNRC
qualified for the credit, and also to help file an Exempt Organization return, form 990-T,
claiming a credit for the tax year (fiscal year) ended June 30, 2024. In addition, the
District was eligible for additional credit due to a majority of the equipment being
manufactured or assembled domestically. The return was filed in January 2025, and the
District received the tax credit in late December 2025.
The tax credit was in the form of a refund and was deposited into the District’s LAIF
and CalCLASS investment accounts to build the required Reclamation fund reserves.
Reclamation has struggled to stabilize the digester operations and realize the related
revenue streams, while at the same time building the fifth membrane (MBR) train and
building a debt reserve as required by the state funding agreement.
Agenda Item
#3
February 19, 20262
Meeting Date: February 19, 2026
Agenda Item #3
Informational Item
2
6
2
1
Staff proposes the following four uses of funds received from the IRS to help stabilize
the Reclamation fund:
•Create a Replacement reserve to help with the replacement of membranes and
other short-lived assets in the near future and assist with funding for the MBR
Filter Expansion Project if capacity fees and other funding sources are not
sufficient.
•Replenish an Operating reserve which has been depleted by three years of
higher-than-expected operating costs and lower than projected non-rate
revenue.
•Set aside funds to pay the remaining eight years of City of SB settlement
payments, by December 31, 2034.
•Contribute to an Additional Discretionary Payment (ADP) to CalPERS against the
District’s UAL. Barring future years of significant losses on PERS investments,
making an ADP now, after two successive years of positive returns by PERS,
could save the District hundreds of thousands of dollars annually in required
contributions to PERS for the next seventeen years.
The credit refund from the IRS has helped solve some immediate issues for the
Reclamation Fund, such as paying the annual settlement installment to the City, but
rising operating costs and revenue instability will require a Cost of Service Analysis and
Rate Study next fiscal year to ensure financial stability of the SNRC for the next ten
years and beyond.
DISTRICT PILLARS AND STRATEGIES
II - Sustainability, Transparency, and Accountability
a. Uphold Transparent and Accountable Fiscal and Resource Management
c. Pursue External Beneficial Funding Sources
Agenda Item
#3
February 19, 20263
Meeting Date: February 19, 2026
Agenda Item #3
Informational Item
2
6
2
1
FISCAL IMPACT
This item is for information only.
Respectfully submitted:
________________
Brian Tompkins
Chief Financial Officer
ATTACHMENTS
No Attachments
Agenda Item
#4
February 19, 20261
Meeting Date: February 19, 2026
Agenda Item #4
Discussion Item
1
7
5
1
Regular Meeting
TO: Committee Members
FROM: Chief Financial Officer
SUBJECT: Set the day and time for holding recurring meetings
RECOMMENDATION
That the Finance & Human Resources Committee set the day and time for holding
recurring meetings.
DISTRICT PILLARS AND STRATEGIES
V - Community Engagement, Advocacy, and Leadership
a. Utilize Effective Communication Methods to Foster Exceptional Community
Relations
FISCAL IMPACT
There is no fiscal impact associated with this agenda item.
Respectfully submitted:
________________
Brian Tompkins
Chief Financial Officer
ATTACHMENTS
No Attachments