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S.D. Pension Situation Called Worst In State

S.D. Pension Situation Called Worst In State
Public pension plans are creating enormous strain on budgets of cities across California. One expert believes San Diego is worse off than elsewhere.

The pension situation for public employees is looking pretty grim around California. And one expert believes San Diego is worse off than elsewhere.

San Diego got some good news recently when it found out this year’s annual pension payment dropped about $20 million to $230 million.

But Dr. Joe Nation, a Public Policy Professor at Stanford University, said if nothing changes the city can still expect, on average, 95 percent of its payroll over the next 18 years will go toward pensions and retiree health-care costs. In a recent study he found the statewide average is about 50 percent. And Nation said it’s not realistic for pension systems to expect a stock-market bailout.


“For example, for CALPERS (the state's pension fund) to get back on track, and I would assume for most funds around the state, they would have to earn about 13 percent a year for about the next decade,” he said.

Nation said the average annual stock return is about 6 percent. He said San Diego is acting faster than other places to fix its pension and is more creative about finding solutions.

And the city is actively working to keep its pension costs down. The San Diego Union Tribune reports the city council has opted not to pay its retirement board an additional $100 million to cover a special pension benefit for a group of current and former city employees. The workers were able to buy pension credits for years they didn’t work. The UT reports an appellate court found pension officials knew they were charging the workers too little for the credits.

The court ruled the pension board could not make San Diego pay the $100 million difference, but the board asked the city anyway. The city rejected the request and the 2,200 workers who bought credits must now pay a lump sum of up to $50,000 to keep their current pension, or accept lower benefits. The newspaper reported that lawsuits may be filed over the issue.