Sunnyvale Taxpayers Liability to City Worker Retirement Pension Plans Exceeding the City Budget?

Are the current, rapidly rising Sunnyvale Pension Employee Plan sustainable? And, if so, at what cost and sacrifice to Sunnyvale Taxpayers?

Please review the comments comparing 2010 vs. 2011 from Andy Frazer presented to the Sunnyvale City Council Meeting on 11/15/11:

My name is Andy Frazer. Madame Mayor and City Council Members… A year ago I spoke here a few times about the biggest problem in Sunnyvale. The city’s employee pension program was too expensive, and absolutely unsustainable. Now, one year later, things have gotten much, much worse.  

Last year we had 72 retired city employees earning a pension of over $100,000 per year, all guaranteed by the taxpayers. This year we have 86 retired city employees earning a pension of over $100,000 per year. Plus medical insurance. Plus cost of living increases each year.

Last year the city’s unfunded pension liability was over $100 million. This year the city’s unfunded pension liability is estimated to be over $140 million. That means our unfunded pension liability is more than our annual city budget.  

Last year the taxpayers had to chip in $18 million dollars toward the city employees’ pensions. This year the taxpayers are forced to pay $23 million dollars toward the city employees’ #pensions.

To pay for these pensions we’ve cut back on street repairs. We’ve cut back on library hours. We’ve cut services at the Senior Center. We’ve closed the Lakewood swimming pool.

From the taxpayers’ point of view, one of the biggest problems with these pensions is the employees pay almost nothing towards their pension.

For example, for a non-Safety employee earning $100k per year. The employee contributes less than $3,000 of his salary towards his pension. But the taxpayers have to contribute over $25,000 into his pension.

CalPERS specifies that the Employee Contribution Rate should be 8%. However, previous City Councils have generously awarded bargaining agreements that promise to pay most of that. The taxpayers never had any say in that.

There are three state-wide pension reform proposals coming down the pike. One from Governor Brown, and two voter-initiative proposals. All of them require the employees to shoulder at least half the cost and half of the risk of pension costs. For Sunnyvale, that would mean an employee contribution rate of 14% for miscellaneous employees, and over 20% for Safety employees.

So while the City staff and City Council are aiming for increasing the employee contribution rate to only 3%, keep in mind that even Jerry Brown, the man who owes his election to the public employee unions, even Jerry Brown is shooting for an employee contribution rate over 3 times higher that we’re shooting for right now.

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