By CLARK MASON
THE PRESS DEMOCRAT
Healdsburg city officials may turn to academia in an attempt to get a better handle on burgeoning employee pension costs.
The city is considering becoming part of larger study on pensions underway by Stanford University and the RAND Corporation, a leading non-profit think tank.
“We want to try and get a better understanding of what our obligations are and what our options are going forward,” City Councilman Jim Wood said Tuesday.
“Pensions are one of the biggest things confronting us,” said Mayor Tom Chambers.
Council members at their meeting this week indicated support for becoming part of the study, although Councilman Gary Plass said he wanted to wait until he could talk to Stanford professor Joe Nation, a former state assemblyman who is heading the project.
“It’s a pretty good opportunity for us,” Councilwoman Susan Jones said of being included in the non-partisan study.
Nation will be at a separate, previously scheduled pension reform workshop in Healdsburg, from 3 to 5 p.m. Aug. 11 at City Hall. Others scheduled to attend include representatives from the California Public Employees’ Retirement System and the League of California cities.
One area of controversy is disagreement over actuarial and investment assumptions used to estimate the funded status of the state pension system in which Healdsburg employees participate.
Even under the most optimistic assumptions, pension systems appear to be in poor financial condition.
Over the next 15 to 20 years, the amount of payroll needed to cover retirement costs for existing and former employees is likely to increase to about 50 percent, or half of payroll, excluding overtime and benefits, according to Nation.
“What we don’t know is exactly where we are as a city,” Wood said of the need to get a clearer picture of pension costs.
Heather Ippoliti, the city finance director, said Tuesday that Healdsburg’s contributions toward employee pensions is projected to be nearly $2.8 million this budget year, a 16 percent increase from the $2.4 million the past fiscal year.
That increase comes even though Healdsburg’s 100 employees a year ago began kicking in more toward their retirement benefits.
Ippoliti said there are a number of reasons that cities and counties face rising pension costs, including increasing life span of employees and decreased investment earnings for the pension funds in the recession.
“The market’s better, but it’s still recovering from past losses,” she said.
City officials say they are not in a worse position than other cities. Wood said that Healdsburg, like other cities, had to increase contributions to the state employees’ retirement system because of investment losses.
“We’ve had to dip into reserves to balance the budget and maintain the current level of services. We can’t do that further,” Wood said.
Even if hotel occupancy and sales taxes bounce back, “it won’t be enough to help us in the long run. We will still face deficits,” Wood added.
The Stanford study primarily is concentrating on larger cities and county governments. The objectives are to quantify the financial conditions for state and local pension systems, assess the impacts on other government expenditures, ensure sustainable pension systems and fair benefit levels and restore the system to long-term financial health.