Some Santa Rosa City Council members are understandably vexed about the pace of discussions concerning the city's $100 million pension problem. Confronting a bill of that size - a bill the city still doesn't know how it's going to pay - should come with a sense of urgency.
But what Santa Rosa needs more than speed is vision, a sense of where it's going and what it needs to achieve during the meet-and-confer process with employee unions. What it needs is a master plan that identifies what financial sustainability looks like, a bottom-line scenario that spells out the city's needs in collective bargaining.
The report the City Council discussed on Wednesday provides a good foundation for such a plan. Created by the Mayor's Task Force on Pension Reform, the report lays out the problems associated with the city's pension crisis and options for what can be changed to achieve savings.
Here's the problem in a nutshell: Firefighters and police officers are allowed to retire at age 50 with up to 90 percent of their highest year salary. All other employees may retire at age 60 with no cap. For all, the final "salary" typically includes not just base pay but all incentive payments, overtime, car allowances, uniform allowances, holiday pay, contributions to health plans and retirement, paid leave, etc. Everything.
The employee contribution is 8 percent for miscellaneous employees and 9 percent for public safety employees. But since 1998, the city has paid the full
9 percent for rank and file public safety employees as well.
Right now, for every dollar that the city spends on payroll, it's spending an additional 15 to 30 cents on retirement benefits. Within 10 years, that's expected to climb to more than 50 cents - which means an ever-shrinking pot of funds for taking care of parks, streetlights and community centers.
The bottom line is that the city is roughly $100 million short of meeting these generous commitments. Furthermore, the city's hands are tied by the fact that many rules on pensions are set by the California Public Employees Retirement System system, and the city is bound, by its charter, to stick with CalPERS. Furthemore, to make any changes to retirement benefits, the city is required to meet and confer with employee bargaining units.
Among the options the city is exploring are: creating a second-tier pension system with lesser benefits for new hires; increasing employee contributions to pensions; changing the final pay calculation to an average of the three highest pay years as opposed to the single highest year; raising retirement age; changing the city charter, etc.
All of these options should be on the table. But what the city needs first is a sense of what it needs and what it can afford going forward. City Manager Kathy Millison has pledged to come back to the council in September with estimates of how much the city would save with each of these options. We hope that analysis will also include an overall recommendation on what the city's bottom line needs to be moving forward.
The task force did a commendable job in coming up with these options. But in the end, they are just tools to help the city get where it needs to go in collective bargaining.
Where that is is not clear. But where we don't want to be is back where we are, bound by employee contracts that leave city officials hoping they match tax revenues - and turning out more streetlights when they don't.
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