Earlier today I appeared on the Armstrong & Getty radio program in San Francisco, where the host started off by asking me whether the pension problems of the state and its municipalities weren't exaggerated, as some of his listeners who are government employees often claim. There's plenty of money to pay pensions, they say. I told his listeners that to answer that question for themselves they should simply look at how much more of municipal, school and other government budgets that required pension payments were consuming. They might be shocked, I suggested.
As I've pointed out before, we've seen big increases in annual retiree costs in numerous cities, including San Jose, Costa Mesa, Stockton and Los Angeles. Meanwhile, CalSTRS, the state's teacher pension system, anticipates big upcoming increases in contributions from employers (school districts) as a further burden on taxpayers. David Crane, a former adviser to Gov. Schwarzenegger on pensions, predicted as much of an additional burden on taxpayers last year.
But there's more. The San Diego County Taxpayers Association just issued a report looking at the annual cost of pensions to area government budgets. Let's take Escondido as an example.
According to the association report, in fiscal 2013 the city will be required to pay $16.2 million toward pension funding. That's an estimated 10 percent of the total operating fund that Escondido expects to be available in the fiscal year.
On the city's finance website it also lists its previous pension valuations, including required annual contributions, going back six years. In fiscal 2007, its annual pension costs to the budget were $9.3 million. That's a 75 percent increase in six years. Back then, pension costs were about 5.5 percent of total operating funds, including the general fund and so-called enterprise funds. So in just six years time thanks to rapidly rising pension costs and flat revenues, the bite that pensions alone take out of Escondido's revenue base has doubled.
Escondido isn't alone. It's rather typical. The crowding by retirement costs (we haven't even begun to discuss retiree health care bills) of spending on other services, including essential services like public safety, has already taken a toll in places like Stockton and San Jose.
According to the association report, in fiscal 2013 the city will be required to pay $16.2 million toward pension funding. That's an estimated 10 percent of the total operating fund that Escondido expects to be available in the fiscal year.
On the city's finance website it also lists its previous pension valuations, including required annual contributions, going back six years. In fiscal 2007, its annual pension costs to the budget were $9.3 million. That's a 75 percent increase in six years. Back then, pension costs were about 5.5 percent of total operating funds, including the general fund and so-called enterprise funds. So in just six years time thanks to rapidly rising pension costs and flat revenues, the bite that pensions alone take out of Escondido's revenue base has doubled.
Escondido isn't alone. It's rather typical. The crowding by retirement costs (we haven't even begun to discuss retiree health care bills) of spending on other services, including essential services like public safety, has already taken a toll in places like Stockton and San Jose.
So when public employees say there's plenty of money to pay for pensions in California, what they mean is that California's taxpayers have had to open their wallets in the last decade to keep the funds solvent, and there's every indication they'll have to keep doing that.
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