Santa Cruz
>> The county of Santa Cruz, its four cities and the Soquel Creek Water
District have significant unfunded retirement obligations, according to one of
two grand jury reports released Thursday.
In addition
to investigating homelessness, the Santa Cruz County Grand Jury analyzed the
past, present and future retirement costs for the six jurisdictions, including
the cities of Santa Cruz, Watsonville, Scotts Valley and Capitola, and
recommends that they take further action to reduce their unfunded obligations
and explain the issue plainly in their budgets for the community and governing
bodies.
“This should be known by the public and the
cities, so we don’t face ballooning or surprise costs that impact the services
that government can provide,” said jury forewoman Sara Cordell.
Rising
pension costs are an especially important issue in Santa Cruz County, where 1
in 6 workers is employed by the government. It’s also a well-known statewide
problem that emerged after the worst recession in half a century
In 2008, the
California Public Employees Retirement System, which provides benefits to about
1.7 million state and local government workers, retirees and their dependents,
lost a jarring 27.8 percent of the value of its portfolio.
Local
government pension plans took a nosedive with it. Some have declined from more
than 100 percent funded to as low as 60 percent funded in the past eight years,
according to the grand jury report. As of 2014, the six jurisdictions are in
the 70 percent range.
But even
with legislation reform, the costs for retirement obligations continue to rise.
The grand jury recognizes that the six jurisdictions have made efforts to
manage retirement costs, but they still fight an uphill battle.
“I would
agree that there’s more to be done,” said Michael McDougall, the county’s
director of personnel. “But I don’t think the report gave the county anywhere
near the credit that we and our labor unions deserve.”
In addition
to a number of actions in recent years, the county made changes to its retiree
health care program in 2011, which reduced unfunded liability by more than $40
million, and asked employees to contribute more, which saves $4 million
annually.
Both the
county and city of Santa Cruz adopted a second tier retirement program prior to
the state reform in 2013 and are reviewing trust fund programs for retiree
health, which the grand jury recommends.
“Some of the
recommendations that they’re making are consistent with what we’re already
doing or planning on doing,” said Santa Cruz City Manager Martín Bernal.
Bernal and
Capitola City Manager Jamie Goldstein also intend to explain their city’s
retirement obligations for the public in the adopted budget document.
Goldstein
said Capitola’s Finance Advisory Committee recommended reserving $300,000 from
a $934,500 fund balance for pension costs, which the City Council plans to do.
The increase stemmed from a change in the way CalPERS calculated city
contributions for pensions. Previously, similar cities were pooled together.
Now contributions are calculated for each city.
Similarly,
the Soquel Creek Water District can manage its retirement obligations
individually and is proposing to pay off its $6 million of unfunded liability
in 10 years rather than 30 years to save money, said Michelle Boisen, financial
and business services manager.
Watsonville
interim City Manager Marcela Tavantzis said she hasn’t reviewed the grand jury
report yet and will prepare a response for City Council approval in August.
Scotts Valley City Manager Stephen Ando did not respond to requests for
comment.
June 11, 2015
Santa
Cruz Sentinel
By
Samantha Clark
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