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Why is the City's Pension Liability So High? Find Out at Tonight's Budget Workshop

San Leandro currently has the highest PERS rate for police and firefighters of any city in Alameda County.

Pension reform, pension sustainability — whatever you want to call it, public employee pensions and how to contain the costs of covering them is a top concern for state and local officials across the country.

Tonight, the City Council will take up San Leandro's pension problem at its second work session dedicated to the city's budget.

The payroll rate paid by the city to cover its public employees' retirement benefits is set to rise about 4 percent next fiscal year for both non-safety employees and safety employees (police and fire).

In fiscal year 2012, which starts July 1, San Leandro will contribute 17.6 percent of payroll to the (CalPERS) toward the pensions of its non-safety employees. It will contribute 46.7 percent of payroll to pensions for its safety employees, according to information from the city's Finance Department. 

San Leandro currently has the highest contribution rate for safety employees of any city in Alameda County, at 42.6 percent of payroll, according to data compiled by the Finance Department. The contributor with the next highest rate is Berkeley, at 36 percent.

Why so high? Finance Department staff were asked to figure that out at City Council's last finance meeting. They should have an answer at tonight's meeting.

For non-safety employees, San Leandro's rate falls somewhere in the middle compared to other cities in Alameda County. Oakland pays the highest payroll rate toward non-safety employee pensions, at nearly 20 percent. Emeryville pays the lowest at just under 10 percent. 

The city has made at least one effort to contain costs on this front. San Leandro recently implemented a two-tiered benefits program for its non-safety employees. As of 2010, upon retirement at age 55 new hires get 2 percent of their average salary over the highest three consecutive years of service.   

Previously existing employees (most of the city's staff) get 2.5 percent of their highest salary upon retirement at age 55.  

Republicans in Sacramento have held up state budget talks pending, in part, action from Gov. Jerry Brown on pension reform. Brown recently presented an initial proposal that would include: 

  • capping pensions at $106,000 annually;
  • mandating that pensions be calculated upon the average of the three highest consecutive earning years, thereby prohibiting pension "spiking" (note: San Leandro is already doing this for new employees); and
  • limiting post-retirement public employment. 

You can read more on Brown's plan on the Sacramento Bee's State Worker blog on Brown's proposal.

If you're wondering which of San Leandro's former employees get the highest pensions, the California Foundation for Fiscal Responsibility, a nonprofit group that advocates for pension reform, has compiled lists of the top pension recipients around the state based on CalPERS data obtained through Public Records Act requests.

Former city manager John Jermanis tops San Leandro's  list, at $225,357 annually, according to the data. Former police chief Dale Attarian is the recipient of the second highest yearly pension, at $171,630 annually, and another former police chief, Joseph Kitchen, is third at $169,208 annually. 

Tonight's City Council work session will take place at 6 p.m. in council chambers. 

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