Pension benefits show no signs of slowing

CITY HALL — As negotiations with city employee unions get underway, the city’s top pension advisor has warned that Glendale’s skyrocketing tab for retirement benefits could remain high for years.

Public safety employees who had retired in the past five years as of 2001 received an average of $35,400 annually for their years working in Glendale, according to a report by John Bartel, an actuary who advises more than 100 cities throughout the state. By 2009, the average had jumped to $78,400.

For non-public-safety employees — who Bartel said are more likely to have worked for multiple agencies — the average pension benefit for those who retired in the past five years rose from $24,700 in 2001 to $36,000 in 2009, according to his report.

The jump is fueled by increased salaries and benefits approved by the City Council in the past decade.

At the time of the benefit increases — negotiated with the unions and approved by the City Council — California Public Employees Retirement System officials had pledged that the city's annual contribution rate would not spike as a result.

But Glendale’s annual CalPERS contribution has jumped dramatically as city officials have been forced to make up for tens of millions in unfunded liabilities, or the difference between promised benefits and the value of the city's current pension investment portfolio.

“All I saw was things looking good,” City Councilman Dave Weaver said during a budget meeting last week. “We thought we were on top of the world and it would continue forever.”

But Bartel, who was addressing the City Council, said last week that at the time there were already warning signs that the stock market could turn.

“I think there is nobody who has no fault except perhaps taxpayers,” Bartel said. “And they’re the ones that have to foot the bill.”

Local governments statewide have seen their CalPERS rates skyrocket as the pension giant struggles to backfill investment losses. In Glendale, the city can expect to pay more than $135 million into CalPERS through 2014, according to an analysis of rate forecasts in the city’s annual financial report.

Bartel warned that Glendale’s pension obligations could remain at current levels or higher through 2017, even if the state system maintains improved investment returns.

The soaring pension costs have in recent years become increasingly burdensome on the city’s General Fund budget, which faces an $18-million deficit for next fiscal year.

“This is a very serious and devastating issue that I think we’re facing,” Councilman Ara Najarian said at the budget meeting.

Last year, the City Council approved landmark two-tiered retirement systems, with reduced benefits for new hires in the city's fire, management and general employee unions. While officials say the new system will make future pension obligations more sustainable, they will not help the city meet current obligations.

“You should not think of those as short-term mitigation strategies by any stretch of the imagination,” Bartel said.

City Council members will likely press employee unions to pick up more of the current rising costs, although they have also maintained that Glendale needs to be competitive with other cities in order to attract top talent.

Union representatives often note that Glendale employees — who already contribute between 8.5% and 11% of every paycheck into the state system — are among the highest employee contributors in the state.

Still, they have said they are willing to negotiate.

“We’re hoping to come to an amicable solution by the end of the fiscal year,” said Larry Ballesteros, president of the Glendale Police Officers Assn.

Other union representatives could not be reached, or declined to comment.

FOR THE RECORD: This corrects an earlier version that misspelled John Bartel's name.

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