City of Sierra Madre Reduces CalPERS Pension Obligations by 42%
CalPERS pension obligations have increased dramatically for local governments in California in recent years. The rapid growth in unfunded pension liabilities has caused many local governments to increase taxes or slash services which are vital to communities. Sierra Madre has chosen a more responsible path to managing its pension obligations, by reducing government spending, while protecting core municipal services.
Sierra Madre used a large one-time payment to CalPERS which resulted in $7 million in savings. When combined with the establishment of an investment fund aimed at the stabilization of pension obligations, Sierra Madre was able to reduce its overall pension payment and liability by more than 40%. These are the foundation of the City’s prudent financial management strategy referred to as Pension Stabilization.
“In Sierra Madre, unlike many other municipalities, we focused on solving the pension crisis without asking tax payers for additional funding.” Explained City Manager Gabe Engeland at the Tuesday July 24th City Council Meeting. “Instead, we reduced spending, while protecting services, and addressed our pension obligations through a mix of additional payments and changes to our investment strategy.”
This approach has stabilized and reduced the City’s CalPERS obligation by 42% ($12M) saving $7 million over the amortization period, an annual operational savings of more than $300,000.
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To view the CalPERS Stabilization Presentation slides Click Here
To View the CalPERS Stabilization Presentation given to the City Council Please Click Here (please forward video to 41:40)