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By: @Aaron Avery

CalPERS is engaged in a regulatory rulemaking that seeks to clarify operational procedures for maintaining risk pools and to refine the criteria for rate plans to enter and cease participation in a risk pool. The written comment period will close at 11:59 p.m. on January 2, 2026, as described in greater detail below. Several of the proposed changes are highlighted below. However, interested special districts should consult the rulemaking materials for detailed information: Notice of Proposed Rulemaking; Text of Proposed Regulation; and, Initial Statement of Reasons.

The purpose of risk pools is to mitigate demographic risks for smaller contracting agencies and reduce the likelihood of large changes in required contributions for smaller contracting agencies. According to CalPERS, under current regulations, a non-pooled plan is required to enter a risk pool if its active member count is less than 100 on any valuation date. Once a plan enters a risk pool, there is no provision for CalPERS to cease its participation in the risk pool and reinstate it as a non-pooled plan, even if its active member count later far exceeds 100. Some plans within risk pools have active member counts that have grown to several hundred. This is problematic because risk pools were not originally designed to accommodate plans of this size, which can affect overall performance and outcomes of the risk pool. 

The rulemaking proposes to define new thresholds and criteria for determining risk pool participation, as well as other procedural and substantive changes. Some highlights include:

• A change to specify that participation in a risk pool for existing contracting agency plans with less than 100 active members is contingent upon the actuary determining that such participation will not be unfavorable to other agencies in the risk pool, mirroring a qualification for new contracting agencies.
• Creating a limit of 150 active plan participants (currently, no limit) for a contracting agency to optionally enter a risk pool, provided that the actuary determines such participation will not be unfavorable to other agencies in the pool. Following optional participation, a plan cannot be removed from a risk pool except through the mandatory removal provisions.
• Creating a framework for a pooled plan to voluntarily remain pooled after its active member count grows to between 150 and 199.
• Creating a framework for mandatory removal from a pooled plan from risk pools after its active member count meets or exceeds 200.
• Changes related to transfers applicable to pooled plans.
• Changes to classification of benefits provisions.
• Changes to outdated terminology post-enactment of the California Public Employees’ Pension Reform Act of 2013 (PEPRA).
• Conforming regulatory changes to account for procedural changes to side funds, deleting reference to those funds.
• Various other conforming and technical changes.

CalPERS asserts: That the proposed regulatory action will not result in any additional overall costs to any local agency or school district. CalPERS contracting agencies may experience shifts in future employer contribution requirements, depending on changes in experience between contracting agencies that cease participation in a risk pool and contracting agencies that remain in that risk pool. Future contribution requirements for contracting agencies that cease participation in a risk pool will be based on the actuarial experience of members within that plan. The change in employer contribution rates after ceasing participation are similar to the fluctuations employers are already subject to in a risk pool. Based on preliminary 2025 data, CalPERS further asserts that approximately 14 contracting agencies  would be subject to mandatory removal from a risk pool.

Any interested special district, or their authorized representative, may submit written comments relevant to the proposed regulatory action. The written comment period will close at 11:59 p.m. on January 2, 2026. Comments may be submitted by e-mail to Regulation_Coordinator@calpers.ca.gov or mailed to the following address: Andrea Peters, Regulation Coordinator California Public Employees’ Retirement System P.O. Box 942720 Sacramento, CA 94229-2720 Telephone: (916) 795-3038. If you plan to submit comments, please CC CSDA at aarona@csda.net. 

A public hearing will not be scheduled unless an interested person, or their duly authorized representative, submits a written request for a public hearing to CalPERS no later than 15 days before the close of the written comment period.