City Pensions

By Dave G/ Weaver

Glendale is a leader in pension reform. Our employees have worked with council over the years to reduce the burden on the taxpayers as a result of PERS actions in the past and the realization of projected revenues to our City.

Our city workers pay more into their pensions than virtually any other city. They pay their share of their pension plans AND a portion of the city's share. Other cities wonder in amazement how we have accomplished it. It has been a partnership between the city council and an understanding workforce. I give our employees the biggest compliment that I can.

Today the gap between what employees are being asked to pay is caused by the fact that the number of retirees has increased by some 50% over the last decade while the number of current employees has decreased due to revenue shrinkages.

As you know, we have cut the City of Glendale workforce by some 500 full time employees. We have had to do that to match our expenditures to the revenue stream we anticipate. Our employees are having to work harder to continue to give you most of the services you have always had. Of course there are exceptions, such as in response time to various request of the city.

Currently, Glendale has an unfunded liability of $400,000,000, with assets of $1.1 billion and liabilities of !.5 billion.

My belief is that our problems with the CALPERS system that we pay into can be traced to the mismanagement of the CALPERS Board. In 2000, they told cities that we were "super funded". Then the Legislature granted some 20 new employee incentives that cities could offer to employees in labor negotiations. Cities did so with the belief that they were super funded and would not have to pay a higher percentage of revenue into CALPERS retirement system out into the future.

How wrong they were. That belief misled every city in the state. Reform on the CALPERS board has occurred in recent times. However, the damage has been done. Cities are bound by contractual obligations with their employees. They cannot be modified.

CALPERS has become more conservative in their investments strategies. For instance, just recently, they have begun to eliminate hedge funds from their portfolio because of the high fees, risks and modest returns. Board members accused of wrong doing have been remove. New members have been added to the Board.

The talk that we should get out of PERS and go into a 401(k) system would cost us a lump sum of about $1.4B immediately. That would mean selling bonds to make that lump sum payment. So in total with the bond sale, the city would pay out about $2.8B, including interest. Neither Glendale nor any other city is going to go that route.

In the years to come, we will climb out of this pension hole with prudent budgeting by the City. However, we have learned many lessons along the way. And the one lesson I've learned is how dedicated a staff of employees we have in our City, including fire, police, general employees and management staff. Remember them always. They are there to serve you to the best of their ability.