Thursday, December 8 , 2016, 2:32 am | Mostly Cloudy 47º


Local News

Santa Barbara’s Two-Tier Pension Program Set to Kick In

Under a new state law, the City of Santa Barbara will have a two-tier benefits program with smaller retirement payouts for employees hired after Jan. 1.

The legislation, Assembly Bill 340, will raise the retirement age and lower the California Public Employees’ Retirement System payouts for new employees. Benefits will be calculated using an average of someone’s three highest years of compensation instead of the single-highest year, to prevent “spiking” payouts.

The move comes as many jurisdictions have already implemented or tried to implement a two-tier system. Agencies have been addressing pension reform in a “hodgepodge” way, according to employee relations manager Kristy Schmidt, so the act is a good solution to the need for a two-tier system.

Santa Barbara has $267 million in unfunded pension liabilities, and the new law does nothing to forgive those, she added.

Currently, safety employees earn 3 percent of their highest year’s salary for each year of service and can retire at age 50. If they have 30 years of service, for example, they can earn 90 percent of their highest-ever compensation, including special pays.

New hires will be offered 2 percent at 50 years old or 2.7 percent if they wait to retire until age 57.

Non-safety employees earn 2.7 percent at age 55; new hires will be able to earn 1 percent at 52, 2 percent at age 62 or a maximum of 2.5 percent if they retire at age 67.

These plans are “significantly a less generous benefit” than the current plans, Schmidt told the Santa Barbara City Council this week.

Employees will still be able to include special pays and some other benefits in their compensation, but CalPERS will now cap compensation considered for pensions at $132,120.

The city’s pension fund was “superfunded” in the late 1990s but is now unfunded by $267.8 million, or about 38 percent, out of $700 million. Finance Director Bob Samario said it is likely to take 20 to 30 years to make up those losses.

A big piece of that came from the retroactive raises when public safety employees were changed from a 2 percent at age 50 to 3 percent at 50 formula, which increased pension payouts, according to City Administrator Jim Armstrong said.

In a presentation to the Finance Committee, Samario said the city paid $75.5 million in base salaries, $1.8 million in special pays and $5.7 million in overtime for the last fiscal year.

Click here for more information about labor group agreements with the city and specific compensation data.

Noozhawk staff writer Giana Magnoli can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

Reader Comments

Noozhawk's intent is not to limit the discussion of our stories but to elevate it. Comments should be relevant and must be free of profanity and abusive language and attacks.

By posting on Noozhawk, you:

» Agree to be respectful. Noozhawk encourages intelligent and impassioned discussion and debate, but now has a zero-tolerance policy for those who cannot express their opinions in a civil manner.

» Agree not to use Noozhawk’s forums for personal attacks. This includes any sort of personal attack — including, but not limited to, the people in our stories, the journalists who create these stories, fellow readers who comment on our stories, or anyone else in our community.

» Agree not to post on Noozhawk any comments that can be construed as libelous, defamatory, obscene, profane, vulgar, harmful, threatening, tortious, harassing, abusive, hateful, sexist, racially or ethnically objectionable, or that are invasive of another’s privacy.

» Agree not to post in a manner than emulates, purports or pretends to be someone else. Under no circumstances are readers posting to Noozhawk to knowingly use the name or identity of another person, whether that is another reader on this site, a public figure, celebrity, elected official or fictitious character. This also means readers will not knowingly give out any personal information of other members of these forums.

» Agree not to solicit others. You agree you will not use Noozhawk’s forums to solicit and/or advertise for personal blogs and websites, without Noozhawk’s express written approval.

Noozhawk’s management and editors, in our sole discretion, retain the right to remove individual posts or to revoke the access privileges of anyone who we believe has violated any of these terms or any other term of this agreement; however, we are under no obligation to do so.

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.

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 >