SJ’s unfunded pension debt threatens market stability
The East Bay Times’ Katie Lauer examines California’s pension liability dashboard, in which San Jose is CA’s 2nd worst in funding for existing arrears. Boasting $9.5 billion in accrued pension debt (only $3.6 billion of which is funded), SJ’s economy may face a “looming crisis” barring intervention, says Lauer.
After swimming in cash following the halcyon dot-com boom in the 1990s, the state promised public employees more money and benefits than could realistically be paid out decades later, especially since many plans pledged to support retirees until their deaths. Overall, reports indicate that CalPERS – the California Public Employees’ Retirement System – is now hundreds of billions of dollars short….
It’s a statewide dilemma, but several Bay Area cities now face “moderate risk” of strained financial futures because of their unfunded pension obligations, according to the state auditor’s latest ranking of California’s 482 cities….
Crafting a solution to looming unfunded pensions has plagued San Jose for years, resulting in two ballot measures to lower costs to taxpayers. San Jose’s pension and retirement costs declined with high returns on its investments, but funding to fulfill its current pension liabilities ranks second worst in California — only behind Compton.
The city’s $3.5 billion in pension liabilities accounted for 132% of the $2.7 billion the city collected as revenue in 2020-21 and last fiscal year’s $385 million contribution to the city’s two pension plans — Police and Fire, and Federated — swallowed up 14% of the city budget’s revenue.
Additionally, San Jose has only funded $5.9 billion of its $9.5 billion in accrued pension liabilities.
This article originally appeared in the East Bay Times. Read the whole thing here.
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