Editorials: Our Opinion: County pension fund cited in state, national media an Magic's Blog!The issue of public employee pensions is a state and national problem, but it requires a solution in Santa Barbara County.
December 5, 2010 7:53 AM
Santa Barbara County's pension fund is increasingly mentioned in national and state media as one of the public pension funds in California that is in particularly bad shape.
Steve Malanga is one of the top business and urban writers in the nation. He is an expert on public employee union pensions. A senior fellow at the Manhattan Institute in New York, he recently identified Santa Barbara County's pension fund as among those in California that bear attention.
Discussing the issue of public employee pension funds generally in the United States, Mr. Malanga wrote:
"California is in particularly bad shape. San Francisco and Los Angeles are among the places with the greatest liabilities among cities, amounting to $34,940 and $18,643 per household, respectively. Their combined pension debt of $33 billion is in addition to some $600 billion in Golden State unfunded liabilities. Also on the watch list from California are a host of other cities and counties, including Contra Costa County, Santa Barbara County and the city of San Jose. Los Angeles County . . . has its own woes with a staggering $27 billion in unfunded liabilities."
The issue of public employee pensions is a state and national problem, but it requires a solution in Santa Barbara County. A recent report by Joe Nation of the Stanford Institute for Economic Policy Research on unfunded local government liabilities also is of interest.
Dr. Nation is no conservative. He is a former member of the California Assembly who was principal co-author of Assembly Bill 32, the Global Warming Solutions Act.
According to the Stanford report, in June 2008 Santa Barbara County showed $245 million of unfunded liabilities in its pension fund, but if the rate of future return on investment were lowered from 8.16 percent (the current figure) to 6 percent, then unfunded liabilities ballooned to $1.177 billion. If the rate of return were lowered to 4 percent, unfunded liabilities would increase to $2.433 billion.
Moreover, these data were from before the stock market crash of 2008 and 2009. Unfunded liabilities are even more now.
Both Republicans and Democrats should support public employee compensation reform, especially of pensions. What sense will it make to have a county pension program paying out $200 million per year — which will be the case in another 15 or so years — when the county general fund is now only $200 million per year?