Tonight, the San Leandro City Council meets for a work session on pensions and unfunded liabilities. Unfunded liabilities for current pensions are estimated to be at least $50 million.
An unfunded liability can be defined as a known future cost that is not covered by expected future revenue.
The City of San Leandro has been tracking pension-related unfunded liabilities since 2002 and is documented in its Comprehensive Annual Financial Reports, which can be found at http://www.sanleandro.org/depts/finance/reports.asp
In June 2002, the City's unfunded liability for public safety personnel was $13 million, which translated to 9.7% of the City's obligation. However, for other personnel, the City was actual over-funded by $4 million or 3.2%.
In 2003, the City joined with a group of other entities to pool its risk for public safety pensions. Since then, the City has reported only the collective unfunded liability for the entire risk pool and not the City's obligation. Based on information in CAFR reports, the City's unfunded liability for public safety pensions has increased from 9.7% to 17.43% as of June 2009. That translates to an unfunded liability of at least $24 million, but likely much more, since the size of the unfunded liability of the entire risk pool has increased from $693 million in 2003 to $1.69 billion in 2009.
Tonight's work session will likely clarify the extent of the City's unfunded liability for public safety pensions.
For non-public safety employees, the City has gone from having over-funded pensions to an unfunded liability of $26 million in 2009.
According to the City's CAFR for 2009-2010, "For fiscal year 2009-10 the City’s annual pension costs of $7,339,843 for PERS [Public Employee Retirement System] was equal to the City’s required and actual contribution." Page 77 of the report notes, "Active plan members [city employees] are required by state statute to contribute 8% for miscellaneous and 9% for safety employees of their annual covered salary. The City makes the contributions required of City employees on their behalf and for their account, which amounted to $2,692,173 for the year ended June 30, 2010."
The work session begins at 6pm in the City Council Chambers at 835 E. 14th Street.Posted by Mike Katz-Lacabe at April 11, 2011 5:16 PM | TrackBack