Encinitas’ budget surplus to go to employee pensions

ENCINITAS — The Encinitas City Council recently voted to use a portion of its unexpected budget surplus to help pay down the money it owes toward employee pensions.

The council’s vote appropriates 5 percent of the $5.2 million budget surplus, or $260,000, towards its unfunded pension liability, which stands between $27 million and $39 million.

The $260,000 is on top of the $1.7 million the city sets aside annually toward paying off its unfunded liability.

Councilwoman Lisa Shaffer originally proposed setting up a pension contingency reserve fund, in which the city would bank portions of surpluses and pay down the liability, but city staff recommended a direct payment to the state Public Employee Retirement System, known as CalPERS, because the city would avoid paying interest on the amount paid.

“Staff did a nice job explaining when their (proposal) would be a better solution, and I agree with that,” Shaffer said.

Technically, staff’s recommendation was discuss the use of a portion of the surplus during its capital improvement budget discussions in February, where the council could weigh using the money on other projects.

The council declined, opting to set aside the money now so, as Shaffer said, “we won’t be tempted to spend it on something else.”

Cities across the state have grappled with ballooning unfunded pension liabilities, which in some cases have brought cities to their fiscal breaking point. Stockton became the first U.S. city to declare bankruptcy largely due to its pension debt, and San Bernardino followed suit shortly thereafter.

Encinitas officials have assured its residents that its pension obligations are not overwhelming and the city has it under control.

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