The right pension facts
By Carl Hilliard
Del Mar mayorRecently the U-T San Diego castigated Del Mar for unaddressed and unfixed pension issues.
Granted the U-T based its “Shame on the Cities That Won’t Fix Pensions” editorial on incorrect information from the San Diego County Taxpayers Association (SDCTA). But when the SDCTA sent a correction, the U-T did not print a retraction or my clarifying response.
The SDCTA’s correction acknowledged that Del Mar’s increase is only 5.79 percent for FY 2011 to 2012 – a very low increase necessitated by lower investment earnings on CalPERS’ assets over which we have no control.
As a member of CalPERS, the state’s defined-benefit retirement program funded through employee and employer contributions, and investment earnings on system assets, our contribution is based on projected actuarial cost. Del Mar has not increased employee wages enough to increase those actuarial costs.
CalPERS voted to lower its projected rate of return on investments from 7.75 to 7.50 percent, increasing Del Mar’s annual contributions from $56,130 to $99,540. Alarmingly, the true internal CalPERS’ rate of return is 5 to 6 percent so unless the fund improves performance, there will be further increases.
Another inaccuracy in the U-T editorial stated that Del Mar does not have a second-tier pension contribution for new hires. We do, implemented July 1, 2011 for fire and to go into effect July 2, 2012 for miscellaneous classifications.
We have instituted other pension cost savings, as well. We were one of the first cities to require employees to contribute the full employee contribution (8 percent for general employees). In October 2010, fire safety employees began contributing the entire 9 percent share, and by 2013, lifeguard employees will be contributing their entire employee contribution.
While the same SDCTA study lauded other cities for reducing pension-system costs, the U-T failed to add that some of those cities had, just prior to the review, a structural deficit with expenses greater than revenues. In order to balance the budget as required by law, those cities cut payroll by eliminating staff positions. Reducing salaries to balance budgets decreases pension costs.
We didn’t do that and just as much to the point, Del Mar has a balanced budget with surplus reserves plus a coveted Standard & Poors’ AAA bond rating. We do not pay big salaries or pensions to city employees.
Del Mar has done everything right. The U-T cartoon about Del Mar ignoring pension obligations could not be more wrong.