The word “crisis” keeps appearing hand in hand with the word “pension.” And yes, I can certainly understand the linkage of these two words. But let’s clarify a few things in that regard.
First, as I said in my first post, SDCERS has plenty of money to pay benefits for decades to come. There is no “payment crisis.” And don’t just take my word for it, our actuary and the city’s actuary have said the same thing in very unambiguous terms!
So, do we have a “debt crisis” in how we handle the $1 billion unfunded liability (UAAL)? I don’t believe we do. Keep in mind, we didn’t get into this situation overnight, and we are not going to solve it overnight either. The pension board adopted a 20 year amortization plan for the city’s UAAL — and mandated additional payments for negative amortization that would occur in the first few years. This means that the principal amount of the debt will not increase, and the UAAL will be paid off during this period. The city is committed to pay each year’s current cost plus the annual payment on the UAAL. Once again, I commend Mayor Sanders and the City Council for their commitment to address this problem.
How about a “pension system crisis” at SDCERS? As I outlined in my first post, we have made great strides in getting our house in order. I can proudly say that the SDCERS staff and board have accomplished much in the past two years, and I think we are absolutely on course to resolve any remaining issues out there.
So, it would appear that where people may believe we still have a “crisis” is in the area of the benefits themselves. Can the city of San Diego afford the benefits currently on the books on a go forward basis? That discussion I will leave to others and to the appropriate forums (keeping in mind SDCERS is an administrative, not policy-setting body).