Sunday, May 27 , 2018, 8:44 am | Fair 59º


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City of Santa Barbara Facing Soaring Retirement Costs

The City of Santa Barbara expects its retirement costs to increase 33.7 percent by 2020 due to the massive investment losses that the California Public Employees Retirement System suffered in 2008.

CalPERS rates will have significant increases starting in 2015 for the three city employee groups: sworn police, Fire Department employees and miscellaneous employees.

The city has budgeted $16.8 million in retirement costs — for 594 people — for the 2013-14 fiscal year, which is expected to rise to $22.4 million by 2020.

Santa Barbara’s retirement program is already underfunded by $226 million, Finance Director Bob Samario said at a Finance Committee meeting Tuesday.

The CalPERS board adopted some policy changes in April, and has announced its plans to raise rates, since the $100 billion investment loss needs to be made up.

The system will now spread gains and losses over five years as a “smoothing” policy to prevent too much rate volatility; in the past, it spread the gains and losses over 15 years, Samario said.

Santa Barbara’s current costs hover around 35 percent for union members, which translates to 35 cents going to CalPERS for every dollar of salary. Public safety union employees only pay 3 percent of the 9-percent employee share as well, so the city really pays an additional 6 percent for police and fire.

In 2020, police rates are expected to be 48 percent, fire at 51 percent and miscellaneous employees at 30.9 percent.

If revenues increase 3 to 4 percent every year, as they typically do, the CalPERS rate increases alone will take up about one-third of revenue growth every year, Samario said.

That doesn’t include the ever-increasing health insurance and salary costs, he noted.

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.

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