Any municipal employee who works five years or more for the city of Santa Barbara is eligible for a defined benefit plan pension through the California Public Employees Retirement System, putting the burden of providing the pension on the employer, not the employee.
After poor investment years such as 2009, the whole system struggles and city rates increase by millions of dollars to cover payments to retirees.
Noozhawk’s reader suggestions have echoed changes already made by other cities and ones that city Finance Director Bob Samario says may be coming to Santa Barbara in the next five years.
Salaries and benefits make up 78 percent of the city’s costs, so there’s no doubt that changes in this area would have the biggest fiscal impact. City staff estimate that CalPERS costs will increase to $21 million in 2014.
All changes to existing employee salary and benefits have to be negotiated with unions, but Samario said the City Council can make policy changes for future hires.
A two-tier system, which the Ventura City Council voted to implement in April 2010, includes a first tier of current employees and diminished benefits for the second tier.
A second tier could include a 401(k), defined contribution plan, putting the burden of gains and losses on the individual instead of the employer. Samario predicts that a large percentage of California cities will implement two-tier systems soon since there is so much political pressure to reform.
“This is the time to pick on them and say they’re unsustainable,” he said of public employee salaries and benefits.
Pension reform suggestions also include raising the retirement age — currently 50 for public safety employees and 55 for everyone else — or eliminating vacation and sick day cash-outs, which has been implemented as part of labor union concessions on a temporary basis.
Other cities have changed their retirement formulas as well.
As it stands, employees of Santa Barbara’s police and fire departments receive “3 percent at 50.” For each year they’ve worked for the city, they receive 3 percent of their highest annual salary as a pension. A firefighter who has been with the city for 30 years will receive 90 percent of that last paycheck every year for the rest of his or her life.
Nonsafety department employees get “2.7 percent at 55,” which is calculated the same way. While earlier retirement is allowed, it comes with a lower benefit — of 2 percent at 50, for example.
Even City Council members get pensions if they serve two terms, since that pushes them over the five-year minimum.
The city’s fleet of vehicles includes public safety vehicles, public works vehicles and sedans for administrative purposes. Noozhawk’s reader suggestions have included reducing the size of the fleet and leasing instead of buying the vehicles.
Since the city pays cash — and therefore no financing fees — leasing most likely wouldn’t save much money, but Samario said there has been an effort to reduce the size of the fleet in recent years.
The sedans are checked out from a pool now instead of assigned to individuals, since many vehicles had just 40,000 miles at 10 years and had to be replaced because of age, he said.
City staff members have said structural changes or reorganization doesn’t save much, but some Noozhawk readers have suggested eliminating services that duplicate Santa Barbara County’s — from animal control to the fire department — or push more services to contractors instead of full-time employees.