Santa Rosa's pension costs are continuing to climb and probably will for several years despite state and local reform efforts, but officials say healthy investment returns and lower benefits for new workers may eventually help rein in costs.
The city recently learned that its largest annual retirement cost, its payment to the California Public Employees Retirement System, is set to increase by about $1 million next year, to $20.4 million.
In addition, the city was informed that its unfunded liability — the amount its pension funds are underwater — has soared by $15 million, to $127.5 million, according to annual reports on the health of its three CalPERS pension funds. The figure represents the difference between the amount the city will owe its current and retired employees in coming years and the value of the assets in the city's CalPERS funds.
Two years ago, that shortfall was pegged at $100 million; last year it stood at $112 million.
Councilman Gary Wysocky called the new figures further evidence of a "benefit bubble" threatening the city's financial health.
"With numbers like this, I really am concerned about the future of this system for people 10 to 15 to 20 years down the road when they really need those benefits," Wysocky said this week. "It's a big number."
City Manager Kathy Millison cautioned against reading too much into the new CalPERS figures, saying that the full impact on the city's budget remains unclear.
"I don't think we have the complete information just yet," Millison said.
She said she expects greater clarity in February after a financial analyst has the chance to assess a variety of factors, including the impact of employee concessions and lower benefit levels set by the city and state for new workers.
The city's pension costs are poised to rise despite its reform efforts for two reasons.