Public agencies in Santa Barbara County don’t know their unfunded retirement benefit obligations because they participate in pools, the county grand jury has concluded.
Most local public agencies — cities, school districts and special districts — have defined benefit pension plans, which place the burden of providing benefits on the employer, regardless of cost increases.
By the grand jury’s calculations, the Santa Barbara County Employees’ Retirement System has $689 million in unfunded pension liabilities: the deficit between the system’s assets and the total dollars needed to fund benefits earned by current members.
The nation’s biggest pension system, the California Public Employees’ Pension System, or CalPERS, and the California State Teachers’ Retirement System, or CalSTRS, have more than $42.4 billion in unfunded pension liabilities between them.
“As stable as the current funding situation may be for current retirees (and those nearing retirement), there is a serious potential shortfall of funding for future retirees,” the report stated.
Within Santa Barbara Cunty, employers’ 2009-2010 rates for nonsafety members ranged from 5.123 percent to 18.564 percent of payroll, the grand jury found. For safety members, rates ranged from 10.256 percent to 30.833 percent, it said. Employee contribution rates were between 5 percent and 9 percent, and in some agencies, an employer pays some, or all, of the employee’s share, too.
Individual pension formulas range in retirement age from 50 to 60 years old.
Local public agencies collectively have $316 million in unfunded liabilities for retirement health-care benefits and 48 agencies have $60.7 million in unfunded liabilities for paid absences, including sick and vacation days, which are paid when someone leaves the job. The city of Santa Barbara has $3.8 million in accrued sick leave benefits.
The report concluded that agencies involved in multiple-employer pools should know what their individual unfunded liabilities are, but they don’t. Agencies, ratepayers and taxpayers need to know, the grand jury said.
The grand jury recommended that agencies reduce contributions into retirement health-care plans and start pre-funding the existing liabilities instead of following a “pay-as-you-go” model. The grand jury also recommended that agencies reduce their liabilities from paid absences.
New Governmental Accounting Standards Board rules — due soon — are expected to increase unfunded liabilities, the report added.