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City addresses pension shortfall

DEL MAR — Facing a potential shortfall of approximately $16.5 million in its pension fund in the coming years, Del Mar is taking small steps now to help solve the problem.“Our effort is to anticipate a problem and make sure that we don’t fall off the cliff,” Councilman Terry Sinnott said. “We need to ensure that our obligations to our employees and our ability to attract good folks is maintained and, bottom line, to maintain the long-term financial health of the city.”

In June 2011, City Council expanded the Finance Committee from seven members to nine to create a subcommittee to analyze the city’s long-term pension obligations and provide solutions.

At the April 2 meeting, council members authorized staff to spend 40 hours reviewing the findings of the finance subcommittee, which were presented by James Eckmann, the subcommittee chairman, and identify possible solutions.

Sinnott said the findings were not a final analysis, but rather “a description of something that is very important that we need to begin analyzing and coming up with a Del Mar solution.”

Del Mar’s miscellaneous employees, firefighters and lifeguards participate in the California Public Employees’ Retirement System, better known as CalPERS. The city contributes varying amounts annually, which represent about 27 percent of the city’s payroll.

The statewide average is 17.6 percent.

Miscellaneous employees, or essentially all city staff members, use a retirement formula of 3 percent at 60. That means someone who retires after 25 years with a salary of $80,000 is paid $60,000 when he or she stops working.

City employees contribute 8 percent to their compensation and lifeguards and firefighters contribute 9 percent. They also contribute 1.45 percent to Medicare because the city doesn’t provide health benefits to retirees.

Options to address pension costs include wage and salary freezes, which the city has implemented in the past, reducing staff, outsourcing functions and reducing City Hall hours.

City Manager Scott Huth said he would prefer to spend the 40 hours looking at strategies to reduce the city’s liabilities rather than analyzing the figures presented by the subcommittee.

“We have a big liability that’s out there,” he said “We’re managing it right now.

“Let’s look at the issue long term and look at the solutions that we have in front of us and how to deal with that,” Huth said. “There are several other solutions that haven’t been studied.”

“This is a problem,” Councilman Mark Filanc said. “This isn’t going away. It’s going to continue to erode our services … and we need to solve it … to make sure that we provide the best place for our employees to work and benefits that go with that.”

1 comment

Paretofp April 17, 2012 at 3:33 am

Often city officials avoid issues like this in order to block out media coverage, but that just makes the problem get worse. It might be tough for a few years but addressing the problem now can mean that it won’t get worse over time.

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