The board reviewed the retiree health (OPEB) actuarial assumptions and voted to accept the presented assumptions except for the discount rate, which trustees asked staff to quantify in dollars before making a choice.

Staff presented the OPEB preliminary projections and said the trust is about 49% funded. Health-care trend inputs were updated using the Society of Actuaries' recent guidance and reflected short-term increases; staff recommended modestly higher initial trend rates for pre-Medicare and Medicare-eligible plans to reflect recent premium movements. Staff also recommended lowering the administrative-expense assumption to $33 per member for fiscal 2027, based on updated per-capita expense projections.

On the discount rate — the assumed long-term expected return used to discount liabilities — staff presented arguments for retaining the existing 6.0% assumption and for increasing to 6.25%. Trustees discussed trade-offs: a higher discount rate reduces current city contribution obligations but raises the risk of higher costs later if actual returns fall short. Given plan underfunding, several trustees favored prudence; others noted the plan's closed status and the practical limits to building an overly large surplus. The board voted to adopt all the other OPEB assumptions and to defer a discount-rate decision until staff returns with dollarized impacts of the two options. The motion to adopt the other assumptions and defer the rate was moved by Bato, seconded by Gretchen, and approved.

Staff will present the numerical funding impacts of a 6.0% vs. 6.25% discount-rate assumption at the next meeting to enable an informed vote.