— A report released today by the League of California Cities, Retirement System Sustainability Study and Findings
, confirms that pension costs for California cities are approaching unsustainable levels, and that cities need more tools and options to ensure they are able to retain and attract public sector employees and continue to deliver high quality municipal services to residents.
Bartel Associates, LLC, a leading California actuarial firm serving only public sector clients, conducted the study that examines costs to cities over a seven-year period between FY 2018–19 and FY 2024–25. The analysis was based on two main sources: CalPERS’ June 30, 2016, public agency actuarial valuation data and the League’s Oct. 18, 2017, City Survey. The study was limited to pension liability only and does not reflect the costs to cites associated with active or other post-employment benefits such as health care.
“The League commissioned this study to put analysis and hard numbers to the realities that cities up and down the state are experiencing with growing pension costs,” said League Executive Director Carolyn Coleman. ”As the amount cities have to pay into CalPERS each year increases, it puts a great strain on their ability to maintain service delivery levels. The pressures are not only mounting, but will force cities to make very tough choices in the near future. This much-needed data will help inform ongoing discussions with all stakeholders about solutions that will ensure our public sector retirement system is sustainable and that cities have the resources needed to serve their residents.”
The study reveals three key findings:
- Rising pension costs will require cities over the next seven years to nearly double the percentage of their General Fund dollars they pay to CalPERS;
- For many cities, pension costs will dramatically increase to unsustainable levels; and
- The impacts of increasing pension costs as a percentage of General Fund spending will affect cities even more than the state because employee costs, including police, fire and other municipal services, are a larger proportion of spending for cities.
The complete report is available at www.cacities.org/pensions
Established in 1898, the League of California Cities is a nonprofit statewide association that advocates for cities with the state and federal governments and provides education and training services to elected and appointed city officials.