Noerr want city to set aside money to cover increasing PERS costs

Taft's mayor wants the city to put a line item in the city budget to start setting aside money as a cushion against the increasing cost of paying for retired employee pensions.

Dave Noerr made the request at a meeting of the city's finance committee last week.

A frequent and vocal critic of California public Employees Retirement System (CalPERS), Noerr

said the city is going to be hit with a increased costs as the CalPERS lowered its expectations for earnings on its investments from 7.5 percent to 7 percent, a figure Noerr says is still "unrealistic."

Rising pension costs are a major concern for government agencies in California and a recent study by the League of California Cities shows that CalPERS is taking an ever-growing amount of money from city's general funds and that is going to take a big leap when cities start making the bigger contribution to account for the drop in investment revenue.

"We don't want to get caught flat-footed when we have to do this," Noerr told the Finance Committee. "We have the capability to start putting money away for this when it goes into effect in two years."

The League of Cities study, cited in a recent Sacramento Bee article, said cities are already spending more than 8 percent of their budgets on employee retirement benefits and anticipate that by 2024 that will double to more than 16 percent and cause a major impact on financing city operations.

“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," said League of California Cities Executive Director Carolyn Coleman. “The pressures are not only mounting, but will force cities to make very tough choices in the near future.”

The Retirement System Sustainability Study and Findings the study, released on Feb. 1 by the League of Cities, had 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.