A problem that’s been known as the “pension tsunami” across many California cities over the past two decades is now hitting home, albeit in more manageable proportions, in Woodside.
The town has at least $3.5 million — and as much as $5 million — in unfunded liabilities for what it owes toward covering pension costs for its 20 employees who are members of CalPERS, the state employee pension plan for their retirements.
“Every city is facing a pension crisis, with increasing costs,” Town Manager Kevin Bryant told the Town Council at its March 26 meeting.
Bryant is proposing two options to solve the problem: Contributing reserve funds to a trust fund to augment its current level of support for CalPERS, or simply increasing its contribution to the pension plan directly.
“We’re looking for things to cut (to pay for the added contributions), including limiting salaries and negotiating with employees for higher contributions,” Bryant said.
Woodside was part of a pool of state towns, cities and agencies that were evaluated on how they were managing their pension costs, he said. However, new regulations require each city to come up with a figure for its own pension liability.
According to a San Mateo County Civil Grand Jury report, Woodside was in the danger zone of unfunded liabilities in 2016-17 with a funded portion of 70.5 percent, nearly 10 percent short of the 80 percent that is considered healthy by state standards.
Governments are advised to increase their contributions when the economy is good to create a kind of rainy day fund against future economic slumps.
The League of California Cities has predicted that the $3.1 billion in pension costs statewide in 2017-18 will almost double to $5.8 billion by 2024-25.
These costs are based on estimates of return on investment for the cities’ funds invested in the retirement system.
A survey of 15 California cities showed an average increase of 13.3 percent per year predicted over the same period.
“As payments consume a larger share of cities’ budgets, it becomes more difficult to maintain much less improve city services,” according to the league report.
The council agreed to move ahead with the adjustments when Bryant presents a specific funding proposal.
Overall, the council seemed to be in favor of solving the shortfall through a trust.
Sea level rise
Earlier, the council declined to contribute an initial $75,000 over three years to a San Mateo County pilot project that would protect low-lying areas of the coast and San Francisco Bay from sea level rise caused by climate change. San Mateo County public works chief Jim Porter said the effort would help to prevent a potential disaster such as flooding that would make Highway 101 impassible during a major storm.
Woodside Mayor Daniel Yost, who voted yes on the proposal, promised that the council will revisit the issue in the future.
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