Pension costs and other employee benefits continue to be a huge financial burden for Glendale, despite some gains in raising revenue and controlling costs, according to the most recent data available.
As of June 2012, the annual pension cost was about $30.6 million, up from $24.8 million the prior period. In June 2010, the pension cost was $23.8 million, according to the Comprehensive Annual Financial Report released last week.
As of June 2011, the city's unfunded pension liability — the difference between the value of the promises made to retirees and employees and the funds available to pay for those promises — had accrued to $227 million, up from $205 million in 2010 and $195 million in 2009, according to the report.
The long-range estimates are always a year behind due to actuarial calculations. Meanwhile, the annual costs jumped 23% last year due to the hit taken by the state pension system — effects that take about two years to ripple through.
Glendale's pension liability is currently 84% funded, said Finance Director Bob Elliot.
Over the years, the city has worked to increase the employee's share of pension costs, with bargaining groups agreeing to contribute between 8.5% and 12.5% of their paychecks toward their pension plans. That's more than Burbank, Pasadena and other similarly sized cities in the Southland, according to a city report released in July.
Officials plan to tackle other post-employment benefits, such as retiree healthcare, next fiscal year. Those costs keep rising due to higher life expectancies and an increasing number of retirees, yet the city has no funding mechanism for them over the long run.
“At some point, we'll probably have more retirees than active,” Elliot said.
This year, about 150 employees left the city following early retirements and layoffs. Those extra retirees will put pressure on benefit costs. But, with fewer hires being made under the city's new mandate to cut staffing costs, pension pressures could ease in the future.
As of June 2012, the post-employment benefits were at $191 million, up from $103 million the prior fiscal year.
“We'll be looking at ways to mitigate that,” Elliot said.
Comparatively, the city ended the year with $1.6 billion in net assets, of which $244 million is free to be used to meet obligations.
The loss of local redevelopment also caused big headaches at City Hall. Had state lawmakers left the system in place, Glendale's general fund, which pays for police, libraries and other public services, would have ended with a surplus of nearly $3.3 million last fiscal year. Instead, it ended with a net loss of about $2.8 million.
In February, the lawmakers in Sacramento dissolved local redevelopment agencies across California and shifted the property tax revenues to help cover a multibillion-dollar state budget gap. The loss of redevelopment led to an overall reorganization of City Hall and sparked the need to cut employees.
“It was a tough year trying to take in all the changes of the redevelopment agency and the accounting that had to go with it,” Elliot said.