Arcadia adopts comprehensive pension management plan, saving $85 million. It addresses the City's $154 million in unfunded pension liabilities. It focuses on:
-use of reserves to prepay existing liabilities
-refinancing existing debt to lower interest rates to free up cash flow
-prepaying costs with surplus funds from voter-approved Measure A sales tax increase
-financing long-term capital improvements
-using pension obligation bonds to lower the overall costs of pensions
-negotiating for more employee cost-sharing.
See also Arcadia Weekly, p. 3, February 27, 2020
Local city governments in the San Gabriel Valley and Whittier are realizing the future costs of pensions and retirement benefits for their employees. The costs will be enormous and city governments need to save money for their future obligations. Arcadia's retiree medical cost is $375,062 this year and its unfunded health liabilities for current employees and retirees is $10.3 million. Unfunded health liability is the amount that would be needed to pay for all health obligations to current employees if they were to retire today, and for all retirees. Other cities' obligations are shown in a chart.
Pension reform is happening with Arcadia city employees. Arcadia City Council approved an ordinance last week whereby police officers and firefighters hired by the city are now required to pay their full employee share, or 9 percent, of their pension costs--an amount previously covered by the city. In addition, tentative agreements are in place with 4 out of 5 employee unions, to have members pay their full share by the next 3 years. Annual increases in employee costs during that period would be offset by equivalent annual raises. Other San Gabriel cities may follow suit.
Public employees' retirement and pensions are costing cities up to 25% of the city budget. In March, CalPERS announced its stock portfolio had lost 39.8%. Costs for retirees are ballooning and El Monte and West Covina budgets have been hit hard from the recession. Arcadia, which had the fourth highest pension costs of the 24 cities surveyed, spent $6.7 million last year for its 357 current employees and retirees. The city's general fund budget is $46 million.