“For the past four years, the city has been running in a budget deficit, and a significant reason for that is the growing cost of the city’s pension obligations,” according to Sunnyvale Pension Reform steering committee member Andy Frazer. “I don’t believe pension reform is a political problem; it’s simply a math problem, and I hope we can work together to resolve it.”
The Sunnyvale Pension Reform group has formed to represent the Sunnyvale taxpayers in dialogue between the City Council, city staff and city bargaining units to reign in unfair and unsustainable costs of the city’s pension plan.
According to Sunnyvale Pension Reform, in FY’2011/2012, the Sunnyvale taxpayers paid over $22 million to CalPERS (California Public Employee Retirement System) on behalf of the city employees. Sunnyvale taxpayers are obligated to pay under-funded city retirement pension liabilities that are estimated to be over $140 million over the next twenty years (note 1).
The impacts of this pension disaster will be felt as Sunnyvale struggles to meet its unsustainable retirement promises amid declining property tax revenue and unrealistic investment projections.
City retirement benefits have grown dramatically over the past ten years. City workers routinely retire at age 55 with pensions of 70-80% of the base salary of their last working year. The problem is that Sunnyvale is approaching a financial crisis. The City’s pension fund now has an unfunded actuarial accrued liability (UAAL) of over $140 million (note 2).
The cost of these benefits in Sunnyvale was over $22 million in 2011/2012. Meanwhile, city employees receive a very generous pension (often 70%-80% of their final year salary), but they are not paying their fair share of this expensive benefit. For example, for most non-Safety employees during FY’2011/2012, the taxpayers will pay 25% of each employee’s salary toward the employee’s pension. But the employee will pay less than 3% (note 3).
According to Sunnyvale Pension Reform, unless we address this problem immediately, the worst outcome for the taxpayers will be higher taxes and additional reduced city services. The worst outcome for the city employees would be furloughs, layoffs and the loss of earned pension benefits.
For more information email: firstname.lastname@example.org