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Benefit Plans | 12 Months Ended
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Dec. 31, 2023
Retirement Benefits [Abstract] |
Benefit Plans | Benefit Plans Pension Plans SJW Group maintains noncontributory defined benefit pension plans for its eligible employees. SJWC employees hired before March 31, 2008 and CWC and MWC employees hired before January 1, 2009 are entitled to benefits under the pension plans based on the employee’s years of service and compensation. For SJWC employees hired on or after March 31, 2008, benefits are determined using a cash balance formula based upon compensation credits and interest credits for each employee. Effective January 1, 2023, TWC employees became eligible to participate under SJWC’s cash balance plan. Interest is credited based on the annual yield on 30-year Treasury bonds as of October for the preceding plan year with a minimum annual rate of 3.25% and a maximum annual rate of 6.00%. For the year ended December 31, 2023, interest credits assumption was 4.00%. Certain employees hired before March 1, 2012, and covered by a plan merged into the CWC plan in 2013 are also entitled to benefits based on the employee’s years of service and compensation. CTWS employees hired on or after January 1, 2009 are entitled to an additional 1.5% of eligible compensation to their company sponsored savings plan. SJW Group does not have multi-employer plans. The pension plans are administered by their respective committees where the investment strategy of the investments of the various pension and postretirement benefit plans are reviewed and approved to achieve the goals of income generation and long-term capital preservation. SJW Group engages third-party investment consultants and managers to assist with, among other things, asset allocation strategy, investment policy advice, performance monitoring, and investment manager due diligence. Individual investment decisions have been delegated by the pension plan committees to the investment managers who are also monitored by an investment consultant. Investment managers are not permitted to invest outside of the asset class or strategy under the pension plans’ investment guidelines. The committees ensure that the plans establish a target mix that is expected to achieve its investment objectives, by assuring a broad diversification of investment assets among investment types, while minimizing volatility of the target asset mix, unless market conditions make such a change appropriate to reduce risk. The pension plans require a minimum portion of plan assets to be allocated to fixed income securities and provide guidelines and restrictions on equity investments for the assets. Plan assets are marked to market at each measurement date, resulting in unrealized actuarial gains or losses. Unrealized actuarial gains and losses on pension assets are amortized over the expected future working lifetime of participants for actuarial expense calculation purposes. Generally, it is expected of the investment managers that the performance of the assets held in the pension plans, computed on a total annual rate of return basis, should meet or exceed specific performance standards over a three-to-five-year period and/or full market cycle. These standards include specific absolute and risk-adjusted performance standards over a three-to-five-year period and/or full market cycle. The expected long-term rate of return on the pension plan assets is between 6.00% and 6.75% for the year ended December 31, 2023. SJW Group calculates the market-related value of defined benefit pension plan assets, which is defined under FASB ASC Topic 715—“Compensation—Retirement Benefits” as a balance used to calculate the expected return on plan assets, using fair value. The fair value is based on quoted prices in active markets for identical assets and significant observable inputs. Certain senior management hired before March 31, 2008 for SJWC and January 1, 2009 for CWC are eligible to receive additional retirement benefits under the supplemental executive retirement plans and retirement contracts (collectively, “SERP”). SJWC’s senior management hired on or after March 31, 2008 are eligible to receive additional retirement benefits under SJWC’s Cash Balance Executive Supplemental Retirement Plan (“Cash Balance Executive Supplemental Retirement Plan”). Both of the plans are non-qualified plans in which only senior management and other designated members of management may participate. The annual cost of the plans has been included in the determination of the net periodic benefit cost shown below. The SERP and Cash Balance Executive Supplemental Retirement Plan had a projected benefit obligation of $43,001 and $39,455 as of December 31, 2023 and 2022, respectively, and net periodic pension cost of $3,257, $4,400 and $4,456 for 2023, 2022 and 2021, respectively. For the years ended December 31, 2023, 2022 and 2021, the amounts not recognized as a component of net periodic benefit cost was $314, $1,640, and $901, respectively, recorded as other comprehensive income on the consolidated financial statements. SJWC’s non-qualified plans are unfunded while CTWS’s SERP is funded through investments consisting primarily of life insurance contracts and assets in a Rabbi Trust. As of December 31, 2023 and 2022, total investments made to fund CWC’s SERP was $6,843 and $6,395, respectively, which is included in “Investments” in SJW Group’s Consolidated Balance Sheets. The life insurance contracts are valued at cash surrender value of the policies as reported by the insurer. As of December 31, 2023 and 2022, the value of the life insurance contracts was $3,937 and $3,420, respectively. The following tables summarize the fair values of the Rabbi Trust investment assets to fund CWC’s SERP by major categories as of December 31, 2023 and 2022:
|  |  |  | Fair Value Measurements at December 31, 2023
Asset Category |  | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Money market funds |  | $ | 71 |  |  | 71 |  |  | — |  |  | — |
Mutual funds |  | 2,053 |  |  | 2,053 |  |  | — |  |  | — |
Fixed income |  | 709 |  |  | 709 |  |  | — |  |  | — |
Total |  | $ | 2,833 |  |  | 2,833 |  |  | — |  |  | — |
|  |  |  | Fair Value Measurements at December 31, 2022
Asset Category |  | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Money market funds |  | $ | 49 |  |  | 49 |  |  | — |  |  | — |
Mutual funds |  | 2,032 |  |  | 2,032 |  |  | — |  |  | — |
Fixed income |  | 728 |  |  | 728 |  |  | — |  |  | — |
Total |  | $ | 2,809 |  |  | 2,809 |  |  | — |  |  | — |
Other Postretirement Benefits In addition to providing pension and savings benefits, the company also provides health care and life insurance benefits for eligible retired employees under the respective employer-sponsored postretirement benefits other than pension plans. The benefits are paid by the company and not from plan assets due to limitations imposed by Internal Revenue Service. Flexible Spending Plan SJW Group sponsors flexible spending account plans for its employees for the purpose of providing eligible employees with the opportunity to choose from among the fringe benefits available under the plans. The flexible spending plan is intended to qualify as a cafeteria plan under the provisions of the Internal Revenue Code Section 125. The flexible spending plan allows employees to save pre-tax income in a Health Care Spending Account (“HCSA”) and/or a Dependent Care Spending Account (“DCSA”) to help defray the cost of out-of-pocket medical and dependent care expenses. The annual maximum limit under the HCSA and DCSA plans is $3.1 and $5, respectively. Savings Plans for Employees SJW Group also sponsors salary deferral plans which are defined contribution plans that allow employees to defer and contribute a portion of their earnings to the plan. Contributions, not to exceed set limits, are matched by the company. SJW Group contributions were $3,902, $3,003 and $2,822 in 2023, 2022 and 2021, respectively. All of the company’s contributions are invested at the direction of the employees in funds offered under the plans. Special Deferral Election Plans and Deferral Election Program SJW Group maintains a special deferral election plan and a deferred compensation plan and agreements for senior management and a deferral election program for non-employee directors allowing for the deferral of a portion of their earnings each year and to realize an investment return on those funds during the deferral period. Senior management and non-employee directors have to make an election on the deferral and distribution method of the deferrals before services are rendered. CWC’s deferred compensation plan allows the company to make discretionary contributions. Senior management and non-employee directors had deferred $8,148 and $6,197 under the plans as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, $6,223 and $4,508, respectively, of the total amount deferred is related to CWC agreements. Assumptions Utilized on Actuarial Calculations Net periodic cost for the defined benefit plans and other postretirement benefits was calculated using the following assumptions:
| Pension Benefits |  | Other Postretirement Benefits
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
| % |  | % |  | % |  | % |  | % |  | %
Discount rate | 4.95 - 5.24 |  | 2.65 - 2.82 |  | 2.29 - 2.48 |  | 4.96 - 5.21 |  | 2.61 - 2.76 |  | 2.18 - 2.41
Expected return on plan assets | 6.00, 6.75 |  | 6.50, 6.75 |  | 6.50, 6.75 |  | 4.20, 6.00 |  | 4.20, 6.00 |  | 4.20, 6.50
Rate of compensation increase | 4.50, 5.00 |  | 4.00, 4.50 |  | 4.00 |  | N/A |  | N/A |  | N/A
The expected rate of return on plan assets was determined based on a review of historical returns, for the pension plans and for medium- to large-sized defined benefit pension funds with similar asset allocations. This review generated separate expected returns for each asset class. These expected future returns were then blended based on the pension plans’ target asset allocations. Benefit obligations for the defined benefit plans and other postretirement benefits were calculated using the following weighted-average assumptions as of December 31:
| Pension Benefits |  | Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
| % |  | % |  | % |  | %
Discount rate | 4.99 - 5.03 |  | 4.95 - 5.24 |  | 4.95 - 5.01 |  | 4.96 - 5.21
Rate of compensation increase | 4.50, 5.00 |  | 4.50 - 5.00 |  | N/A |  | N/A
SJW Group utilized each plan’s projected benefit stream in conjunction with the FTSE Pension Discount Curve in determining the discount rate used in calculating the pension and other postretirement benefits liabilities at the measurement date. SJW Group has adopted MP-2021, Mortality Improvement Scales to determine mortality assumptions. The tables and scales reflect increasing life expectancies of participants in the United States. See also “Reconciliation of Funded Status” below. For other postretirement benefits, the assumed healthcare cost trend rate for 2024 is 8.00%, grading down gradually to 4.50% by 2030. Net Periodic Pension Costs Net periodic costs for the defined benefit plans and other postretirement benefits for the years ended December 31 was as follows:
| Pension Benefits |  | Other Postretirement Benefits
| 2023 |  | 2022 |  | 2021 |  | 2023 |  | 2022 |  | 2021
Components of net periodic benefit cost |  |  |  |  |  |  |  |  |  |  |
Service cost | $ | 7,569 |  |  | 9,359 |  |  | 9,730 |  |  | $ | 638 |  |  | 1,032 |  |  | 1,115 |
Interest cost | 14,234 |  |  | 10,708 |  |  | 9,415 |  |  | 1,268 |  |  | 883 |  |  | 806 |
Expected return on assets | (15,440) |  |  | (18,841) |  |  | (18,019) |  |  | (860) |  |  | (1,047) |  |  | (970) |
Amortization of prior service cost | 15 |  |  | 17 |  |  | 41 |  |  | — |  |  | — |  |  | — |
Amortization of actuarial loss (gain) | 2,210 |  |  | 4,620 |  |  | 6,901 |  |  | (350) |  |  | (115) |  |  | 257 |
Recognition of significant event | — |  |  | (1,595) |  |  | — |  |  | — |  |  | — |  |  | — |
Net periodic benefit cost | $ | 8,588 |  |  | 4,268 |  |  | 8,068 |  |  | $ | 696 |  |  | 753 |  |  | 1,208 |
Reconciliation of Funded Status For the defined benefit plans and other postretirement benefits, the benefit obligation is the projected benefit obligation and the accumulated benefit obligation, respectively. The projected benefit obligations and the funded status of the defined benefit pension and other postretirement plans as of December 31 were as follows:
| Pension Benefits |  | Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
Change in benefit obligation |  |  |  |  |  |  |
Benefit obligation at beginning of year | $ | 289,123 |  |  | 383,838 |  |  | $ | 25,830 |  |  | 34,412 |
Service cost | 7,569 |  |  | 9,359 |  |  | 638 |  |  | 1,032 |
Interest cost | 14,234 |  |  | 10,708 |  |  | 1,268 |  |  | 883 |
Actuarial loss/(gain) | 5,794 |  |  | (94,793) |  |  | (2,645) |  |  | (9,360) |
Implicit rate subsidy | — |  |  | — |  |  | (237) |  |  | (236) |
Plan participants contributions | — |  |  | — |  |  | 179 |  |  | 207 |
Administrative expenses paid | (137) |  |  | (136) |  |  | — |  |  | — |
Benefits paid and settlements | (18,749) |  |  | (19,853) |  |  | (769) |  |  | (1,108) |
Benefit obligation at end of year | $ | 297,834 |  |  | 289,123 |  |  | $ | 24,264 |  |  | 25,830 |
Change in plan assets |  |  |  |  |  |  |
Fair value of assets at beginning of year | $ | 251,960 |  |  | 310,176 |  |  | $ | 17,952 |  |  | 21,767 |
Actual return on plan assets | 41,285 |  |  | (49,939) |  |  | 3,136 |  |  | (3,606) |
Employer contributions | 11,145 |  |  | 11,712 |  |  | 920 |  |  | 626 |
Plan participants contributions | — |  |  | — |  |  | 179 |  |  | 207 |
Administrative expenses paid | (137) |  |  | (136) |  |  | (67) |  |  | (65) |
Benefits paid and settlements | (18,749) |  |  | (19,853) |  |  | (913) |  |  | (977) |
Fair value of plan assets at end of year | 285,504 |  |  | 251,960 |  |  | 21,207 |  |  | 17,952 |
Funded status at end of year | $ | (12,330) |  |  | (37,163) |  |  | $ | (3,057) |  |  | (7,878) |
For the year ended December 31, 2023, the net actuarial loss on the benefit obligation was related primarily to a loss from changes in the discount rate of $1,188, a $1,993 loss from pension data changes, and a loss from mortality changes of $168. For the year ended December 31, 2022, the net actuarial gain of the benefit obligation was related primarily to a gain from changes of discount rate of $116,372, a $12,422 loss from pension data changes, and a gain from mortality changes of $4. The amounts recognized on the balance sheet as of December 31 were as follows:
| Pension Benefits |  | Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
Noncurrent assets | $ | 30,671 |  |  | 16,005 |  |  | $ | 3,123 |  |  | 679 |
Current liabilities | (2,365) |  |  | (2,089) |  |  | (113) |  |  | (139) |
Noncurrent liabilities | (40,636) |  |  | (51,079) |  |  | (6,067) |  |  | (8,418) |
| $ | (12,330) |  |  | (37,163) |  |  | $ | (3,057) |  |  | (7,878) |
As of December 31, 2023 and 2022, the accumulated benefit obligation of the defined benefit pension plans was $270,209 and $259,838, respectively. The following table provides selected information about plans with projected benefit obligation and accumulated benefit obligation in excess of plan assets as of December 31:
| 2023 |  | 2022
Pension Benefits: |  |  |
Plans with projected benefit obligation in excess of plan assets: |  |  |
Projected benefit obligation | $ | 43,001 |  |  | 217,358 |
Fair value of plan assets | — |  |  | 169,077 |
Plans with accumulated benefit obligation in excess of plan assets: |  |  |
Accumulated benefit obligation | 39,652 |  |  | 35,813 |
Fair value of plan assets | — |  |  | — |
Other Postretirement Benefits: |  |  |
Plans with accumulated benefit obligation in excess of plan assets: |  |  |
Accumulated benefit obligation | 15,580 |  |  | 16,411 |
Fair value of plan assets | 9,401 |  |  | 7,853 |
SJW Group recognizes regulatory assets and liabilities that represent actuarial losses and gains and prior service cost that have not yet been recognized as components of net periodic benefit cost for certain of its pension and other postretirement benefit plans. In accordance with ASC 980. SJW Group recorded regulatory assets of $24,593 and $45,799 as of December 31, 2023 and 2022, respectively and regulatory liabilities of $20,196 and $14,307 as of December 31, 2023 and 2022, respectively. As of December 31, 2023 and 2022, the amounts deferred in regulatory assets that have not yet been recognized as components of net periodic benefit cost include net loss of $24,552 and $45,743, respectively, and prior service cost of $41 and $56, respectively. As of December 31, 2023 and 2022, the amounts deferred in regulatory liabilities that have not yet been recognized as components of net periodic benefit cost include net gain of $20,196 and $14,307, respectively. Plan Assets Plan assets as of December 31 were as follows:
| Pension Benefits |  | Other Postretirement Benefits
| 2023 |  | 2022 |  | 2023 |  | 2022
Fair value of assets at end of year: |  |  |  |  |  |  |
Debt securities | $ | 101,498 |  |  | 90,914 |  |  | $ | 5,596 |  |  | 5,330 |
| 36 | % |  | 36 | % |  | 26 | % |  | 30 | %
Equity securities | 174,155 |  |  | 147,864 |  |  | 14,424 |  |  | 11,711 |
| 61 | % |  | 59 | % |  | 68 | % |  | 65 | %
Cash and equivalents | 9,851 |  |  | 13,182 |  |  | 1,187 |  |  | 911 |
| 3 | % |  | 5 | % |  | 6 | % |  | 5 | %
Total | $ | 285,504 |  |  | 251,960 |  |  | $ | 21,207 |  |  | 17,952 |
The following tables summarize the fair values of plan assets by major categories as of December 31, 2023 and 2022:
|  |  | Fair Value Measurements at December 31, 2023
Asset Category | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Cash and cash equivalents | $ | 11,038 |  |  | 11,038 |  |  | — |  |  | — |
Equity securities (a) | 188,579 |  |  | 188,579 |  |  | — |  |  | — |
Fixed Income (b) | 107,094 |  |  | 39,048 |  |  | 68,046 |  |  | — |
Total | $ | 306,711 |  |  | 238,665 |  |  | 68,046 |  |  | — |
___________________________________ (a)Actively managed portfolio of equity securities with the goal to exceed the benchmark performance. (b)Actively managed portfolio of fixed income securities with the goal to exceed the benchmark performance
|  |  | Fair Value Measurements at December 31, 2022
Asset Category | Total |  | Quoted Prices in Active Markets for Identical Assets (Level 1) |  | Significant Observable Inputs (Level 2) |  | Significant Unobservable Inputs (Level 3)
Cash and cash equivalents | $ | 14,093 |  |  | 14,093 |  |  | — |  |  | — |
Equity securities | 159,575 |  |  | 159,575 |  |  | — |  |  | — |
Fixed Income | 96,244 |  |  | 30,863 |  |  | 65,381 |  |  | — |
Total | $ | 269,912 |  |  | 204,531 |  |  | 65,381 |  |  | — |
In 2024, SJW Group expects to make required and discretionary cash contributions of up to $8,744 to the pension plans and other postretirement benefit plans. Benefits expected to be paid in the next five years and in the aggregate for the five years thereafter are:
| Pension Plans |  | Other Postretirement Benefit Plans
2024 | $ | 16,727 |  |  | $ | 1,461 |
2025 | 17,455 |  |  | 1,549 |
2026 | 22,753 |  |  | 1,619 |
2027 | 18,977 |  |  | 1,691 |
2028 | 19,121 |  |  | 1,647 |
2029 - 2033 | 104,931 |  |  | 8,580 |

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