Next CalPers Victim: City of Salinas

Oroville had to cut the pay of police by 10%, just to pay CalPERS.  The radical city of Santa Barbara, Socialism by the bay, is having financial problems due to CalPERS.  City after city is finally admitting the problem.  Simi Valley had to give contracts to the Police Union and SEIU for ZERO increases—due to CalPERS—you know it is bad when the Marxist SEIU agrees to a ZERO pay raise.

“Rising retirement costs combined with poorer-than-expected pension performance will strain Salinas city coffers by an additional $14 million over the next seven years, officials say.

CalPERS is phasing in a half-percent drop to its annual 7.5-percent expected return on investments, which means Salinas will have to close the gap, Randall Dziubek, deputy chief actuary, told the city council at a meeting last week.

That adds up to a $13.9 million hole spread out over the next seven years, said Ray Corpuz Jr., the city manager.

In the previous fiscal year, the total retirement costs for the city was $18 million, more than most departments’ budgets, he said.”

Salinas is one of Californians poorest towns—CalPERS is making it poorer.

Calpers headquarters is seen in Sacramento, California, October 21, 2009. REUTERS/Max Whittaker

CalPERS: Pension change to cost Salinas $14m over seven years

Joe Szydlowski, Salinas Californian, 10/2/17

 

Rising retirement costs combined with poorer-than-expected pension performance will strain Salinas city coffers by an additional $14 million over the next seven years, officials say.

CalPERS is phasing in a half-percent drop to its annual 7.5-percent expected return on investments, which means Salinas will have to close the gap, Randall Dziubek, deputy chief actuary, told the city council at a meeting last week.

That adds up to a $13.9 million hole spread out over the next seven years, said Ray Corpuz Jr., the city manager.

In the previous fiscal year, the total retirement costs for the city was $18 million, more than most departments’ budgets, he said.

“If police and fire are the no. 1 and 2 largest departments, and PERS was counted as a department, that $18 million would be the third largest one,” he said.

CalPERS originally forecasted a 7.5 percent return on investments, Dziubek told the council. But two bad years when the funds had a 2.5 percent and 0.6 percent returns, along with weaker growth predicted going forward, spurred the CalPERS board to trim that rate.

But as that rate goes down, the costs on the employers will rise and Salinas also had about $5.5 million in overtime, primarily police and fire departments.

Creekbridge residents Yolanda and Ken Hayes said the overtime is excessive for Salinas, one of the poorest communities in California.

She said she wants the state to look closely at the books and how much the city pays for its employees.

The CalPERS problem isn’t new, but the Great Recession worsened it, Corpuz said.

In the 2015-2016 fiscal year, the Measure G sales tax funded 55 positions, mostly police. But funding a position also means paying for an employee’s total cost, which includes retirement, health insurance, workers’ compensation, etc., said Matt Pressey, city finance director.

Any fixes will require action at the state, court and local level, he said. There are also questions about several cases winding through the court system that deal with California public employee pensions, he said.

“There may not be one silver bullet. There need to be several solutions,” he said.

In the long-term, the city is working on a pension stability plan, Pressey said.

While the problem is a growing one, it has not put the city on the verge of running out of money immediately, he said.

“It’s a big problem, it’s not a sustainable problem,” he said. “It’s important that we get ahead of this.”

In the short-term, the city will be “robbing Peter to pay Paul,” he said. In addition, it will look at what services it offers in-house that could be contracted with a third party, more employee contributions in the next round of negotiations and other investment opportunities, he said.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.