Santa Barbara Police Agree to Pay Their Fair Share of Pension Costs

On September 17th, the city of Santa Barbara and city police officers agreed to a three-year contract, one month after negotiations were reportedly at a standstill over proposed reforms to pension contributions.

The city police union, which ratified the contract on September 10th, agreed to make the statutorily required 9% contribution to CalPERS, which manages their pensions. Until 2010, Santa Barbara taxpayers footed the bill for not only the city (“employer”) contribution to CalPERS but also “picked-up” the full “member” contribution on behalf of police officers. In 2010, the police union agreed to pay 2.266% of the 9% contribution in exchange for pay boosts.

With the expiration of the 2010-2013 contract, the city and the police union found themselves at a stalemate over the remaining 6.734% member contribution level. In exchange for making the full 9% contribution, police officers will receive: a 5% salary increase over the next three years, higher city-paid contributions to health insurance, and other benefit increases. Taken together, the city projects higher labor costs through 2015 of $190,000 in FY 2014 and $122,000 in FY 2015. The increased costs are estimated to then “level off thereafter to approximately no net increase to ongoing costs.”

In other words, Santa Barbara more or less punted on seriously addressing the systemic problem of police pensions.

Currently, the city of Santa Barbara’s police pension plan is underfunded by $57 million, doubtlessly a consequence of an overly generous pension plan by which officers can retire at age 50 with up to 98% of salary paid to them for life.

At the expense of taxpayers, the city of Santa Barbara has been generous with police pensions. The average pension for police officers who retired between 2010 and 2012 was $93,965, and for police sergeants who retired in the same time period, the payments they will receive for life averaged $107,422.

It wasn’t until 2010 that police officers and sergeants, who respectively earned $99,084 and $130,476 in 2012 in salary and overtime pay, even contributed to their pensions. The city, meaning taxpayers, has long had to foot the bill for an unsustainable and unaffordable system. Instead of paying, perhaps, for services or additional police officers, the city has had to allocate increasing amounts of money to pay for lavish retirements.

That police officers will be making their contributions is welcome news, as it means that taxpayers will no longer be bearing the full burden of pensions. However, that development, tied to other benefit and salary increases, is hardly a serious step towards the more difficult question of the large unfunded liability that the city has amassed. City officials unfortunately chose a strings-attached deal that taxpayers simply can’t afford.

Stay in Touch with Our Pension Experts

Reason Foundation’s Pension Integrity Project has helped policymakers in states like Arizona, Colorado, Michigan, and Montana implement substantive pension reforms. Our monthly newsletter highlights the latest actuarial analysis and policy insights from our team.

This field is for validation purposes and should be left unchanged.