On Saturday the California Political News and Views reported on Simi Valley, as part of the series, “The Next Victim of CalPERS”. My hometown is paying 15% of its budget to CalPERS—and that is going up due to the doubling of CalPERS mandatory contributions. And that does not include the $500 million Guv Brown is giving CalPERS to continue sending out checks. Nor does it include stealing $6 billion from a reserve fund, to keep the doors open. Now the City of Sacramento is the next victim.
“The City of Sacramento currently pays about $67 million for pensions from its general fund. Within eight years, it will be paying about $148 million.
City officials are trying to figure out where the money will come from. Its unfunded pension liability is currently $718 million. Half of CalPERS’ pension investments are in stocks.
Two years ago, Ted Eliopoulos, CalPERS’ Chief Investment Officerit, says those investments earned 18 percent. Last year, that number fell to six-tenths of a percent.
The city of Hayward passed a sales tax increase for police and roads—now the truth came out—ALL the money went to finance the pension crisis, not a dime for local services. Government officials lied to the public to steal from families to finance a collapsing system. Sacramento is about to face the same choice—expect a sales tax increase for public safety, libraries and roads—then steal the money for what is left of the CalPERS system.
Pension Problem Looms For Sacramento
Capitol Public Radio, 5/24/17
The City of Sacramento currently pays about $67 million for pensions from its general fund. Within eight years, it will be paying about $148 million.
City officials are trying to figure out where the money will come from. Its unfunded pension liability is currently $718 million. Half of CalPERS’ pension investments are in stocks.
Two years ago, Ted Eliopoulos, CalPERS’ Chief Investment Officerit, says those investments earned 18 percent. Last year, that number fell to six-tenths of a percent.
On Tuesday, he was before the Sacramento City Council with a positive message for the long haul, if not for any specific year.
“For any given one year time period, you’re really dependent on the volatility of the global stock market,” Eliopoulos says.
The system has about 64 percent of the money that it is supposed to have in order to pay current and future retirees.
Eliopoulos says fund managers are now selling assets to meet obligations while keeping cash on hand for an anticipated economic downturn.
“It is challenging and requires a very disciplined look, not only at the risk within the portfolio but the liquidity of the portfolio to ensure that you are selling at times that you want to be selling and that you have ample liquidity to invest in downturn periods,” he says.
Leyne Milstein is the City Finance Director. She says the California Public Employees’ Pension Reform Act, known as PEPRA, will help, but not for another two decades.
“It will mean that new employees who started January 1, 2013, will earn actually a lesser benefit and pay more of the costs. So, when those folks start retiring, pension costs should begin to level out. But there will be that challenging 20-year period for us where we need to pay for the unfunded liabilities of existing members and that’s really where the cost is going to be a challenge for us,” she says.
New employees will likely pay a significant portion of the amount required to make payments in and out of the system equal.
To increase payments into the retirement system, the council is considering putting money into a 115 Trust. It allows cities to set aside money for a specific purpose and could earn more money than would be earned leaving it in a general fund.
The City Council has proposed spending $5 million this year to bolster a rainy day fun or to help pay down the pension debt.
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