• VCTA.org

Can Ventura County Cities Afford CalPERS?

California's economy may be booming but cities throughout Ventura County, are feeling the financial pinch and asking their voters to approve new taxes of one kind or another.

While seeking more money from their voters to cover their ever-increasing retirement costs, local officials have been very reluctant to say it's for pensions, fearing backlash at the polls. Rather, on the advice of high-priced "consultants," they promise the new taxes will pay for popular services such as police and fire protection and parks.

Everybody has a feeling that pension costs are increasing for our cities, but how much are the costs going up?

Ventura County Taxpayers Association compiled data for each of the 10 cities in Ventura County. This data has been distilled to present two sets of numbers - current payments to CalPERS for the 2017-2018 fiscal year and estimated payments in 2024-25 fiscal year.

In calculating these results, the only assumption we made (apart from the assumptions made by CalPERS), was for estimated payroll costs in 2024. We used a 3% annual growth rate for payroll expenses, the rate most commonly used in official actuarial analyses on this topic.

So how much more will the 10 cities in Ventura County have to pay CalPERS between now and 2024?

Our best case scenario assuming 3 percent annual increase in payroll is that the 10 cities in Ventura County will be paying $61 million more to CalPERS in 2024 - that is only six years from now.

The table below presents two blocks of data - the set of columns on the left show current costs for pensions, and the set of columns on the right show the predicted cost for pensions. In all cases, the cost in millions is shown, along with the cost in terms of percent of total payroll.

Ventura's annual pension cost is expected to increase $15.2 million and Oxnard's is expected to increase $21.9 million - in just six years.

Take a look at Ventura on the graph below. Ventura is already paying 34 cents to CalPERS for every dollar it pays its active employees. But in six years, that amount will go up to an unsustainable 51 cents for every dollar of payroll to its active employees - the highest of any city in Ventura County.

We acknowledge that CalPERS, the public sector unions and even Governor Brown gave the cities overly optimistic projections in persuading them to increase pension benefits saying, "You can afford it."

Cities now face the reality that pension costs are beginning to crowd out essential services resulting in fewer police officers, fewer firefighters, more pot holes and a deteriorating infrastructure.

Ventura County cities are not going to be able to afford these higher pension costs without raising taxes or cutting needed services - or both.

Only when the money runs out will our cities be forced to find the necessary solutions.