Santa Rosa is considering putting $1.6 million into a "pension stabilization fund" to guard against future spikes in pension costs.
City finance staff suggested establishing the fund with money from a recent settlement with Sonoma County over property tax administrative fees.
The city received the settlement check last week, following the resolution of a related lawsuit between the city of Los Angeles and the state, City Attorney Caroline Fowler said.
The money would be set aside help pay down the city's $128 million unfunded pension liability, or put it toward future increases in the city's contributions to the state California Public Employee Retirement Fund, which have been steadily rising for years.
The fund has not yet been vetted or approved by the City Council, a point stressed by Vice Mayor Erin Carlstrom, who said she had "serious questions and concerns about it as a policy."
Chief Financial Officer Lawrence Chiu suggested once the fund is established, the council should plan to set aside an additional $660,000 per year to build it up.
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