Sunday, May 27 , 2018, 12:55 pm | Fair 63º

 
 
 
 

Local News

Santa Barbara Faces $1.6 Million in Unfunded Liabilities to Pension Holders

The City Council approves transferring more than $700,000 from a self-insurance fund to help make up for the shortfall

Facing $1.6 million in unfunded pension liabilities for 18 retirees, the Santa Barbara City Council voted Tuesday to approve transferring more than $700,000 from a self-insurance fund to help make up the difference.

Some of the city’s oldest workers are beneficiaries who, to put it bluntly, lived longer than expected, and returns on the pensions were less than officials had hoped for, creating a liability.

Unfunded liabilities aren’t unusual when talking about the state’s CalPERS program, which manages 1.6 million state workers and retirees and, subsequently, faces up to $100 billion in shortfalls.

Tuesday’s council item focused on three retirement programs that predate CalPERS, and were instituted in 1927 and 1937. They’re closed plans, which means no new members were added since the switch to CalPERS, but the 18 pensioners or their beneficiaries still involved in the plans receive monthly payments.

The first plan was created for police and fire personnel who worked with the city from 1927 to 1937, when the plan was updated. There’s one beneficiary left; he’s 92 years old and receives $3,790 monthly.

The second covers police and fire personnel who were hired from 1937 to 1965, when the city joined CalPERS. A separate trust fund was created for this one, and it’s independently managed and has eight members, who receive nearly $10,000 monthly, or $1,250 each.

Another group of pensions is for death and disability benefits for employees working during that time period, and there are nine members whose average age is 80. Those beneficiaries are expected to live another 10 years — a fact that has led to the liabilities, according to city Finance Director Bob Samario.

“The actuary told me that once you reach a certain age, you sort of miss all of the things that could go wrong,” he said to laughs, adding that someone who’s 70 is more likely to make it age 80 than a 50-year-old.

“We’ve been monitoring the situation,” Samario said, and the city has known about the liability for about five years. “The liability isn’t going away,” he said, and encouraged the city to contribute more than $700,000 to the trust fund, which could begin earning interest.

The money would come from the city’s self-insurance fund, which “has been doing better than expected,” Samario said, adding that the pensions aren’t expected to cause any problems in the 2011 budget.

The plans still will be short on funds, but the amount allocated Tuesday will make a substantial dent in the deficit, Samario said, and the council may be able to address the balance when the economy improves.

Noozhawk staff writer Lara Cooper can be reached at .(JavaScript must be enabled to view this email address).

Support Noozhawk Today

You are an important ally in our mission to deliver clear, objective, high-quality professional news reporting for Santa Barbara, Goleta and the rest of Santa Barbara County. Join the Hawks Club today to help keep Noozhawk soaring.

We offer four membership levels: $5 a month, $10 a month, $25 a month or $1 a week. Payments can be made through PayPal below, or click here for information on recurring credit-card payments.

Thank you for your vital support.

Become a Supporter

Enter your email
Select your membership level
×

Payment Information

You are purchasing:

Payment Method

Pay by Credit Card:

Mastercard, Visa, American Express, Discover

Pay with Apple Pay or Google Pay:

Noozhawk partners with Stripe to provide secure invoicing and payments processing.

  • Ask
  • Vote
  • Investigate
  • Answer

Noozhawk Asks: What’s Your Question?

Welcome to Noozhawk Asks, a new feature in which you ask the questions, you help decide what Noozhawk investigates, and you work with us to find the answers.

Here’s how it works: You share your questions with us in the nearby box. In some cases, we may work with you to find the answers. In others, we may ask you to vote on your top choices to help us narrow the scope. And we’ll be regularly asking you for your feedback on a specific issue or topic.

We also expect to work together with the reader who asked the winning questions to find the answer together. Noozhawk’s objective is to come at questions from a place of curiosity and openness, and we believe a transparent collaboration is the key to achieve it.

The results of our investigation will be published here in this Noozhawk Asks section. Once or twice a month, we plan to do a review of what was asked and answered.

Thanks for asking!

Click Here to Get Started >

Reader Comments

Noozhawk is no longer accepting reader comments on our articles. Click here for the announcement. Readers are instead invited to submit letters to the editor by emailing them to [email protected]. Please provide your full name and community, as well as contact information for verification purposes only.

Daily Noozhawk

Subscribe to Noozhawk's A.M. Report, our free e-Bulletin sent out every day at 4:15 a.m. with Noozhawk's top stories, hand-picked by the editors.

Sign Up Now >