STREAMING NOW: Watch Now

Rising pensions costs a statewide concern

Across California, cities are considering tax hikes, budget cuts .. many worried that bankruptcy looms in the not-too distant future.

Posted: Nov 20, 2017 5:56 PM
Updated: Nov 20, 2017 6:08 PM

"It's getting to be the big Gorilla in the room for negotiations - he increased costs to the employers as well as employees for pensions," said Dave Holly, the Teamsters (a diverse union group here in the North State) 137 Principal Officer .

For those who have union jobs with a city, county or the state, their retirement fund is all through the California Employee's Retirement System - or "CalPERS".

And it's a pretty good deal, used to recruit and keep quality public employees on board.

"It's close to their ending income, if they had 30 years in they'd get 60% of their ending pay toward retirement," said Holly.

"Before the great recession, CalPERS was super-funded, so there was some years where very little had to be put in and even a couple of years where nothing had to be put in," said Meegan Jesse, Deputy Administrative Officer for Butte County.

Post recession, the investments aren't cutting it.

"Now the employees are picking up a share of their investment costs and the county share has increased significantly," said Jesse.

In Butte County, employee's now putt in about 6-11% of their own salary, and the county is adding 15-31%; and that's after some serious statewide reforms that took effect in 2013, where newly hired employees took on a greater share of CalPERS demands.

Because the pensions are paid through investments, the cost keeps going up.

"Between actual investment loses and projections to have lower earnings, that significantly increases costs," said Jesse.

Employers - often cities and counties - are becoming more in debt.

In Butte County they can afford to fund 70% of their pensions.

In the city of Chico, the unfunded liability is 140 million dollars.

But the debt is set to get worse, not better.

"The county makes a contribution of 15-31% of employee pay to CalPERS .. We are expecting that to increase to something like 26-45% by the year '24-'25," said Jesse.

Across the state, cities are considering tax hikes, budget cuts , many with the threat of bankruptcy looming in the not-too distant future.

Trinity County Waterworks District No. 1 west of Redding could be the third government agency to break with CalPERS over the past 12 months, and a loss of employees to the system spikes rates for everybody else, so it's not feasible to buy out of the contract.

"It becomes so costly for an entity to leave that I think very few agencies have actually done that," said Jesse.

In Butte County at least, financial planners say bankruptcy is not on the table.

"The expenditures for pensions that could have gone for something else, that may very well create some difficult decision, but as we've done with other significant challenges, we are working on meeting those challenges," said Jesse.

"It's not a doomsday unless you don't want to pay into it anymore," said Holly. "Long-term it just takes allocating a little more assets, money toward the pension, and it's been happening from the employee side and the employer side, but it can be fixed."

California Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 284012

Reported Deaths: 6573
CountyConfirmedDeaths
Los Angeles1207643582
Riverside21101506
Orange18892369
San Diego17578399
San Bernardino15932272
Imperial7343121
Alameda6925140
Fresno692481
San Joaquin560058
Kern554384
Santa Clara5478165
Tulare5175139
Sacramento456676
Contra Costa409286
San Francisco402050
Ventura385850
Santa Barbara374230
San Mateo3692111
Marin298926
Stanislaus288945
Kings275537
Monterey223917
Solano182627
Merced162311
Sonoma146612
Placer93811
San Luis Obispo8082
Yolo72326
Madera7137
Santa Cruz5013
Napa4484
San Benito2922
Butte2753
Sutter2753
Lassen2670
El Dorado2640
Shasta1635
Humboldt1544
Nevada1511
Glenn1460
Yuba1392
Lake981
Tehama941
Mendocino920
Colusa860
Calaveras610
Del Norte581
Tuolumne570
Mono481
Amador340
Inyo341
Siskiyou320
Mariposa311
Plumas130
Alpine20
Trinity20
Sierra10
Unassigned00
Chico
Scattered Clouds
93° wxIcon
Hi: 97° Lo: 67°
Feels Like: 93°
Oroville
Clear
97° wxIcon
Hi: 98° Lo: 66°
Feels Like: 97°
Paradise
Scattered Clouds
93° wxIcon
Hi: 90° Lo: 66°
Feels Like: 93°
Chester
Clear
82° wxIcon
Hi: 79° Lo: 53°
Feels Like: 82°
Red Bluff
Clear
97° wxIcon
Hi: 98° Lo: 66°
Feels Like: 97°
Willows
Scattered Clouds
93° wxIcon
Hi: 100° Lo: 64°
Feels Like: 93°
Sunny skies and hotter temperatures are ahead for today. We'll be very dry and winds will be a little stronger out of the Northwest this afternoon. Fire danger will be elevated for some areas later today.
KHSL Severe
KHSL Radar
KHSL Temperatures

Community Events