AgdaPkt 2019-02-25 Joint SA PFA - Laserfiche WebLink

Browse Search

8.B. - Page 73 of 122 CalPERS' adoption of new mortality rate assumptions. In 2014, CaIPERS adopted new mortality rate assumptions reflecting the fact that retirees are expected to live longer. These assumption changes were projected to have the effect of increasing Agencies' pension contribution costs. " CalPERS' reduction of Amortization Period. In February 2018, CalPERS reduced its standard Amortization Period from 30 to 20 years.69 To "avoid undue disruption" to Agency budgets, CalPERS proposes to implement the new period prospectively only, starting with amortization bases established by its June 30, 2017 valuation. Amortization bases established prior to that date would continue as scheduled under current policy.70 Although this change will decrease the Cities' pension costs over the long run (see, Table No. 5 below for examples of such savings), in the near term shortened Amortization Periods will increase their contribution payments. DISCUSSION Why are Unfunded Liabilities and Funded Percentages so important? The Grand Jury chose to study public pension costs and Unfunded Liabilities because they represent a serious threat to public services county -wide and are already eating into public agency budgets. 71 The League of California Cities recently warned: "Rising pension costs will require cities over the next seven years to nearly double the percentage of their general fund dollars they pay to CaIPERS ... [U]nder current law, cities have two choices — attempt to increase revenue or reduce services. Given that police and fire services comprise a large percentage of city general fund budgets, public safety, including response time, will likely be impacted. ,72 The effects of increasing pension costs are clear: • As payments consume a larger share of cities' budgets, it becomes more difficult to maintain, much less improve, public services. Bianca and Yang Kevin, Redwood City Miscellaneous and Safety Plans, CaIPERS Actuarial Issues — 6/30/15 Valuation Preliminary Results, Bartel Associates LLC, February 13, 2017, slide 7. 68 Bartel Associates, LLC, New CaIPERS Assumptions Will Increase Rates, February 23, 2014, <hgp://www.bartel- associates. com/news/2014/02/23 /new-calpers-assumptions-will-increase-rates>. 69 Lowe and Rogers, CaIPERS Reduces Amortization Period. CaIPERS, Agenda Item 7a, Amortization Policy, p. L. 70 Ibid., p. 4. 71 Nation, Pension Math: Public Pension Spending and Service Crowd Out in California, 2003-2030, October 2, 2017, p. xi, <htWs://sior.stanford.edu/research/publications/pension-math-public-pension-spending-and-service- crowd-out-california-2003>. League of California Cities, 2018 Retirement System Sustainability Study, p. 5. 72 League of California Cities, 2018 Retirement System Sustainability Study, p. 1. 2017-2018 San Mateo County Civil Grand Jury 15 299