Following a public informational session in early October, City staff is gathering additional feedback from the public on how it should approach a projected $8.9 million budget shortfall related to rising pension costs, hoping to find solutions that will best serve the community.
Those suggestions, which can easily be offered to staff via a two-question online survey, will be presented to the City Council during its Dec. 12 meeting.
Like 3,000 other member agencies in the California Public Employees’ Retirement System (CalPERS), the City is facing significant financial challenges ahead due to increased pension costs. A variety of factors have contributed to the increased costs, including losses from the Great Recession, retirees living longer and past decisions around employee benefits, which are largely out of the City’s control. Most recently, CalPERS adjusted its investment strategy toward more conservative investment assumptions, and decreased the expected rate of investment return, further increasing costs.
For San Luis Obispo, annual costs for CalPERS will more than double in 10 years, from $7.8 million in 2014-15 to $19 million in 2024-25.
The $8.9 million reduction target represents $7.5 million from the General Fund and $1.4 million from the City’s Enterprise Funds, including Water, Waste Water, Transit and Parking.
While the City has committed to providing quality services to the community, it also has pledged to be financially responsible. And because it is legally required to meet CalPERS costs, it must find ways to offset the increases. Options include operational reductions, new ways of doing business, exploring revenue options and employee concessions.
On December 12th, City staff will present foundational information, including community input, for Council feedback on the components of a Fiscal Health Response Plan. In April 2018, the City will consider for adoption a Fiscal Health Response Plan, which will be applied to the City’s 2018-19 Supplemental Budget, to be adopted in June 2018.