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 released a statement on Friday in which it said it “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, the city explained.
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 financial management strategy, which is referred to as Pension Stabilization.
“In Sierra Madre, unlike many other municipalities, we focused on solving the pension crisis without asking taxpayers for additional funding,” explained City Manager Gabe Engeland at this past Tuesday’s 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.
For more information, please contact Sierra Madre City Hall at (626) 355 -7135 or visit CityofSierraMadre.com/Transparency to view the CalPERS Obligation Stabilization presentation given to the Sierra Madre City Council.