Quantcast
 
Loading
WatchSonoma
WatchSonoma Watch

Santa Rosa pension costs, debts continue to climb

By KEVIN McCALLUM
THE PRESS DEMOCRAT

Santa Rosa’s pension costs are continuing to climb and probably will for several years despite state and local reform efforts, but officials say healthy investment returns and lower benefits for new workers may eventually help rein in costs.

The city recently learned that its largest annual retirement cost, its payment to the California Public Employees Retirement System, is set to increase by about $1 million next year, to $20.4 million.

In addition, the city was informed that its unfunded liability — the amount its pension funds are underwater — has soared by $15 million, to $127.5 million, according to annual reports on the health of its three CalPERS pension funds. The figure represents the difference between the amount the city will owe its current and retired employees in coming years and the value of the assets in the city’s CalPERS funds.

Two years ago, that shortfall was pegged at $100 million; last year it stood at $112 million.

Councilman Gary Wysocky called the new figures further evidence of a “benefit bubble” threatening the city’s financial health.

“With numbers like this, I really am concerned about the future of this system for people 10 to 15 to 20 years down the road when they really need those benefits,” Wysocky said this week. “It’s a big number.”

City Manager Kathy Millison cautioned against reading too much into the new CalPERS figures, saying that the full impact on the city’s budget remains unclear.

“I don’t think we have the complete information just yet,” Millison said.

She said she expects greater clarity in February after a financial analyst has the chance to assess a variety of factors, including the impact of employee concessions and lower benefit levels set by the city and state for new workers.

The city’s pension costs are poised to rise despite its reform efforts for two reasons.

One is that CalPERS calculated the city’s costs for next fiscal year based on 2011 data, the latest available to it, said Laurence Chiu, the city’s chief financial officer.

This means the city and state pension reform efforts are too new to immediately impact the city’s costs, he said.

The reason they will likely continue to go up in the near future is that the changes passed by both the city and more recently the state mostly apply to workers who haven’t been hired yet.

The city’s costs likely won’t begin decreasing until a significant number of new employees earning the lower benefits are employed by the city, he said.

“I think we won’t see any real movement for the next five to 10 years,” Chiu said.

Not only did CalPERS inform the city that it will face higher costs next year, it boosted its estimates for what the city will need to pay the following two years, as well.

That’s in part because CalPERS earlier this year lowered its estimate for how much it expects to earn from investments, from 7.75 percent to 7.5 percent. That will force the cities to make up the difference.

Millison called the change in the CalPERS investment assumption “an obvious concern.” The city has previously estimated the change could cost it $1.3 million to $1.7 million per year.

On a positive note, the investment returns for CalPERS were very healthy in 2011. The value of the pension giant’s assets increased 22 percent to $242 billion.

For the city’s three funds, that meant a $114 million increase, pushing the market value of the assets to $635 million. While the plans remain $197 million underwater on a market basis, the strong returns have improved the assets and the obligations, bringing what is known as the funding ratio to 76 percent, up from 68 percent the previous year, according to the reports.

Pensions with ratios of 100 percent, which is almost unheard of today in public pension plans, are considered fully funded.





15 Responses to “Santa Rosa pension costs, debts continue to climb”

  1. Snarky says:

    The biggest expense to the taxpayer is the “public safety pension” that allows cops, firemen, and other public employees to collect 90% of their final pay at only age 50… a full 17 years before anybody in the private sector can collect social security.

    And, what does the taxpayer get for all that money paid to law enforcement such as the Sonoma County Sheriff’s Office?

    Read today’s news from the SF Chronicle. Its a daily news item,,,, these corrupt California cops.

    ————————-

    San Mateo Probation Chief In Porn Inquiry
    Benny Evangelista
    S.F. Chronicle online
    Saturday, December 22, 2012

    “San Mateo County’s chief probation officer is under investigation by federal law enforcement officials for possession of child pornography, county officials said Saturday.”

    Thumb up 2 Thumb down 0

  2. BigJim says:

    Sorry folks, there was a typo in my previous post, it should have read

    From the Calpers website, the value of the fund at year end 2010 was $225.7 billion, and at the end of 2011 was *225.0* billion. My math shows that as a $700 million LOSS for 2011.

    This includes the contributions of government employers, investment returns, payouts and fund costs.
    This year the fund is up about 6% net so far.
    http://www.calpers.ca.gov/eip-docs/about/facts/november-2012.pdf

    Thumb up 5 Thumb down 2

  3. Follower says:

    Based on last months election, it’s likely going to take a few (or several) years for the voters to “get it”. But what then?
    Vote Republican?
    Even if there were any fiscally conservative candidates running, they will always be running against a field of “vote for me & I’ll raise your rich neighbours taxes so you can have some”.
    I don’t see any way this ends well.

    The voters are just too easily lead to the polls by their emotions. Greed & jealousy.

    Thumb up 16 Thumb down 5

  4. Brown Act Jack says:

    Well, where were you guys in 2003 when the balloon went up in the air, and everyone was in the money?

    I was at the city hall telling them they could not afford to pay 3% at 55 in the audience was not cheering my efforts.

    Everyone wanted in on the big deal to raise salaries , benefits, and pensions and no-one wanted to hear that it could not be done
    But the past is the past, and now, with the loss of value of the dollar things are coming to a hear, and we will live or die with the results of the craziness of those years.

    Reminds me of my arguments 30 years ago when I used to ask people to say exactly what services they wanted to have stopped to save money.

    They never suggested cutting the ones from which they were getting benefits, just the ones that the other people were getting!

    How about this, suggest that the CC cut the benefits you use, such as the golf course, the library, the bike paths, the parks, the schools, etc.

    Thumb up 5 Thumb down 4

  5. Grapevines says:

    Good Ol’ Valerie Brown. Ran the pension plan up to maximum and then retired on it.

    Hope all of you are enjoying what your getting because the only kiss you’ll see coming from her, is the one she throws you as she walks out dancing all the way to the bank.

    Just as bad as Bell, California. If fact she could probably teach them how to do it and not get caught.

    Thumb up 25 Thumb down 3

  6. Snarky says:

    To the clown on this board who denied that police were planning on using un-manned drones to spy on the public, I suggest you read this article.

    The drones are coming to the BAY AREA.
    —————–

    http://www.sfgate.com/bayarea/johnson/article/Get-ready-Drones-will-come-to-Bay-Area-4125934.php

    ———————-

    Thumb up 10 Thumb down 5

  7. MendoTech says:

    Headline:
    “Santa Rosa pension costs, debts continue to climb”

    And they will continue to climb so long as the public employee unions, along with the CalPERS Board are are allowed to run things.

    No elected official is going to allow a strike or other labor unrest while they are in office. Couple that with the fact that virtually all government officials act as if there is an unlimited pool of taxpayer money available, and it winds up being a case of, “. . .and the band plays on!”

    On top if their totally bogus return on investment projections, CalPERS is also on a hiring spree: 86 new positions will be created and filled at a cost of $16,300,000 / year! That’s an average direct salary of ~$190,000 / employee. It is also a sure bet that many of these new employees will get car, housing and other allowances, along with their own huge future retirement benefits.

    Guess who is going to pay the bill for this largess?

    Thumb up 32 Thumb down 5

  8. BigJim says:

    From the Calpers website, the value of the fund at year end 2010 was $225.7 billion, and at the end of 2011 was 255.0 billion. My math shows that as a $700 million LOSS for 2011. What math is the Press Demo using – union math?

    PS: an increase is total assets also includes contributions from government employers as well as investment returns, so the investment piece is much worse than this.

    http://www.calpers.ca.gov/eip-docs/about/facts/november-2012.pdf

    Thumb up 19 Thumb down 5

  9. Rick says:

    Most people forget, or never knew, that most municipalities in CA took a pension holiday and did not make their contributions to the retirement fund for 15 to 19 years. YEARS. The employees put in their shares, every payday and the governments did not. This bill is coming due and their rates are rising to cover it. Had they put in their shares, those shares would have grown and compounded and most of this would not even be an issue. Yes, the bill is due, it was predicted and the politicians kicked the can down the road until it got to big to kick. They were warned, they knew it was coming and they did nothing to prevent it, until now. Now they want to gut the system to fix it. Might work, might not. Based on a previoud post, I did some research. Interesting. Sonoma county may not like their situation, but they have a balanced budget and not in any danger of default on anything. BK is not even a consideration. Besides, if you know what you are talking about, you know the retirement system they use is a seperate entity from the county government. Sure, they have some appointed positions on the board, but they are not the same thing.

    Thumb up 9 Thumb down 17

  10. Que Sera says:

    When is the PD going to list the supervisors that increased the bennies of workers to current levels? These dimwits should be celebrated and honoured by citizens of Podunk! Can you say Liberal Democrats? or
    tax and spend?

    Thumb up 29 Thumb down 5

  11. The Hammer says:

    Fix the roads or pay into the pension funds. I pick fix the roads.

    Thumb up 30 Thumb down 6

  12. Nora Gonzales says:

    Would you hire city manager Millison and CFO Chiu to head your company’s new plan to turn things around?

    The house is on fire and they are advocating buying more gasoline and dynamite to use on the fire.

    They say you can’t trust the numbers and “its not as bad as you think.” Well, its their numbers and secular prayers to their socialist gods of modern government financing that will make everything O.K.

    After all, its not their money and all they need to do is move on to a new city to bring their financial talents and optimism to another unsuspecting community.

    It is long past time to have a real plan in place to fix Santa Rosa’s pension and deficit crisis.

    Thumb up 26 Thumb down 4

  13. Taxpayer says:

    This is crazy.I thought this only happened in third world countries.

    Thumb up 26 Thumb down 4

  14. Snarky says:

    Beware of government attempting to manipulate you. The San Diego Union Tribune Newspaper just busted the County of San Diego as attempting to do just that..

    ————————-

    http://www.utsandiego.com/news/2012/dec/16/government-pr-thrives-amid-media-cuts/

    ————————-

    Interesting because the Press Democrat and the local cities and county government are notorious for acting mostly hand in hand on what news gets presented to Sonoma County readers.

    Thumb up 27 Thumb down 4

  15. GAJ says:

    So CalPers claims its investments increased in value by 22% last year yet Santa Rosa has to pay a million bucks more than last year and the unfunded liability has increased by 15 million?

    The problem is much much worse than even I thought.

    Thumb up 36 Thumb down 4

Leave a Reply