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I have a couple issues to clarify with the San Diego Unified School District, so we’ll get back to the school district a little later today.
You can look at the California Public Employees’ Retirement System contribution rates for a few of our local government entities here.
La Mesa’s general fund budget is about $36.5 million. Their $3.6 million PERS employer contribution payment accounts for approximately 10 percent of the general fund budget or 20 percent of total payroll.
Okay, now here’s where things get ugly.
If you thought that the city of San Diego pension deal was a scam, you ought to take a close look at La Mesa. As we outline in our comprehensive analysis of Proposition L, La Mesa picks up every penny of the “employee” contribution. So in the scenario where CalPERS raises its rates by 2 percent, La Mesa’s total PERS payment would actually increase from around $5.4 million to almost $5.8 million.
As Larry points out (in response to my post first), it’s bad enough that taxpayers have to make up for the difference in the market decline. In cities like La Mesa, taxpayers get a double whammy.
Just how sweet is the pension plan for La Mesa public employees? Well, in addition to social security benefits, general employees earn 97.2 percent of their highest year’s salary annually after retirement. This is because the “employee” contribution I referenced earlier (which is being paid by taxpayers) is considered a component of compensation. Oh, and by the way, an employee’s single highest year salary is used to determine these lifelong pension benefits.
Going back to the original point of the discussion, what would a 2 percent PERS increase mean to a small municipality like La Mesa? Short answer: Approximately $356,000 in increased payments.
Instead of grabbing the bull by the horns and addressing the key factor that has led to their structural budget deficit, La Mesa officials have proposed a pension tax (also known as a sales tax). This is despite their understanding that the city could save a tremendous amount of money simply by reforming their pension plan. Instead, officials are intent on depleting reserves and pushing themselves into bankruptcy.