City Beat

News, insight and discussion on Sacramento and its neighborhoods

January 11, 2012
City manager: Half of Sacramento's deficit could be wiped out by pension reform

It's more clear than ever that the top brass at City Hall has its eyes set on employee pensions as a way to slow the cycle of persistent budget deficits.

City Manager John Shirey told the City Council on Tuesday that roughly half of the city's budget deficit over the next two years could be eliminated if all city workers paid their employee share of their CalPERS retirement contributions.

While top city management, the mayor and the City Council pay their employee shares, no rank and file workers pick up the entire tab of their retirement contributions. Instead, the city handles those payments - an arrangement that cost the city $16.8 million in 2010, according to a recent Bee analysis.

Shirey said the city's $24.5 million deficit over the next two years could be addressed by simply laying off 240 workers - including 89 cops, 51 firefighters and 22 park workers - but "I don't think that's a very good approach and I'm not recommending it."

Instead, Shirey wants to look at pensions, health benefits and reorganizing the city bureaucracy.

By focusing on pensions, Shirey is setting the tone for negotiations that city officials will try to have with the labor unions in the coming months.

Top management officials - including department heads like the police and fire chiefs - recently agreed to pay their entire employee share toward CalPERS. The city's clerk, treasurer and attorney also are making those payments, and Shirey agreed to pay his entire share when he was hired over the summer.

The city Compensation Commission recently ordered the mayor and City Council to pick up their full retirement tab.

The money at issue is the share of retirement costs that are assigned to employees. The city also pays for part of retirement costs.

Most rank-and-file workers at City Hall contribute 4 percent of their salaries toward their retirements, with the city picking up the remaining 3 percent employee share, in addition to its regular pension contributions. Police officers do not pay any of their employee share, and firefighters will begin contributing 6 percent in January 2013.

The city is paying $51 million out of its general fund budget toward pensions this year. Five years ago, that number was $43 million.

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About City Beat

Ryan Lillis has covered the city of Sacramento, its 108 neighborhoods and its politicians since 2008. Prior to that, he covered crime at The Bee. A native of upstate New York, Lillis has a journalism degree from the University of California, Berkeley.

Contact reporter Ryan Lillis at rlillis@sacbee.com

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