Like many governments, the city of Santa Barbara has not only promised lavish retirement benefits to government employees at the taxpayers expense, but is also falling short in paying for those promises. The city of Santa Barbara currently faces an unfunded pension obligation of $226,284,296. “For the first time, the City will begin making progress toward addressing the unfunded liabilities associated with post employment benefits,” reads a fiscal year 2014-2015 budget proposal. As part of the effort to address this shortfall, the city has asked members of the police union, representing 115 police officers and 20 sergeants, to contribute more to their pensions.
In 2012, Santa Barbara media reported on the story of a police captain who, upon retirement, “cashed in 2,240 hours of unused sick leave for $115,000.” This was only a lump sum payment in addition to his ~$100,000 pension. Between 2010-2012, the average police retiree earned $116,931 (not including overtime), retired at age 53, and received an annual pension of $98,848. For the pensions of 11 police officers who retired in that time, taxpayers can expect to pay over $1 million a year, probably for decades. For decades, police officers in Santa Barbara never had to contribute to their pensions. Taken together, generous pensions and decades of not having police officers pay into their pension plans mean the city is currently short $57 million in funding the pension plan for police officers.
Beginning with the three-year contract in 2010, police officers in Santa Barbara agreed to pay 2.266% into their pensions, under the condition that they receive pay increases that other city employees didn’t get. As important a step as this is, this still isn’t enough to adequately fund the pension program, and the city has asked police officers to contribute 9 percent of their salary towards their pensions.
According to a press release by the city, “Police pension benefits are generous with a police officer able to retire at age 50 with up to 98% of salary. With pension costs increasing steadily, the City will need to pay police retirement costs amounting to 50 cents for every dollar paid in salary by 2015 and an estimated 62 cents for every dollar paid in salary by 2020. The City is requesting the Police Union to pay 9 cents of this amount.”
As part of the pending contract, the city has proposed a 5% salary increase as well as asking police officers to contribute an additional $80 a month towards health benefits. The police union has countered with a proposal to agree to the pension increase on the condition that they receive a 6% general pay increase and an additional 6.734% pay increase to offset the increased pension contributions. In other words, the police union is proposing that taxpayers continue to bear the burden of an unsustainable and ultimately unfair system.
These contribution rates are all predicated on the assumption that promising police officers “up to 98%” of their final ($100k+) salaries after retiring, years before the rest of us, is a sustainable and sensible practice in the first place. Thankfully, it appears that some localities, including Santa Barbara are taking seriously the threat of further debt. It is unclear, however, what the police union will ultimately agree to and the extent to which taxpayers can have some breathing room before it becomes clear that there is still a mountain of debt to climb out of.
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