Pension shortfalls in Santa Barbara County and California are getting worse rather than better.
We hate to play the part of Scrooge this holiday season, but there have been two recent developments in public finances that have not received the media attention they deserve given the negative impact they will have on Santa Barbara County families in the years ahead.
First, as we have recently highlighted, the county has more than doubled its pension contributions to its retired employees over the past decade. This spike in pension costs has led to decreased spending in other areas (e.g., parks, roads and infrastructure), which has had a negative impact on the quality of life in our county.
A reasonable person might wonder whether we at least have a fully funded pension scheme to go with our decaying infrastructure. The answer, sadly, is “no.”
The county’s unfunded pension liability now exceeds $1 billion. This means that the county will be forced to increase its already astronomical pension contributions in the years ahead and pay for these increased costs via significant spending cuts in other areas — areas that could soon include “sacred cows” such as social services and law enforcement.
Bah humbug!
Second, the news is no better at the state level. As we have graphically illustrated, the dramatic rise in state pension spending has been matched by the rise in tuition and fees in the UC and CSU systems.
This already negative trend is about to get even worse. CalPERS — California’s largest public employee pension — is seeking to decrease its investment rate of return. This means that its existing funding shortfall, which is already enormous, is going to grow substantially.
As a result, the state will be forced to increase its contributions to help offset this shortfall. Where will the state find this money? In the higher education budget, of course. Merry Christmas, present and future UC and Cal State students and your families.
What can you do about these two lumps of coal in your stocking? How about making a New Year’s resolution to pay closer attention to the sad state of our public finances and hold your elected officials accountable for the choices that negatively affect younger Santa Barbara County residents?
— Brian Goebel is editor in chief of the nonpartisan 2040 Matters, a Santa Barbara-based public policy blog dedicated to restoring the American Dream for “Generation X+” and future generations by combating declining civic engagement and offering alternatives to political polarization. Click here for previous columns. The opinions expressed are his own.