If everyone is moving forward together, then success takes care of itself
— Henry Ford


Background: In FY 15, the City disclosed for the first time that it had $10 million of Unfunded Pension Liability under CALPERS. This is debt that needs to be paid over 20 years, and interest of just over 7% annually. In FY 17 the debt increased by $3 million and last year by another $1 Million -- thereby increasing the total liability/debt to over $14 million; of this, $10.8 million relates to the PVE PD. The total liability will continue to rise if CalPERS continues to fall short of their investment goal, and the City continues to not even pay all the interest due each year which causes the principal to increase. For more information, click here.

Question: What is your perspective on the pension issue, and what would you advocate doing about it?


Michael Kemps

Michael Kemps

”Our growing pension liability will bankrupt our City if we do not change our trajectory. It’s time that the Council face the truth, make difficult decisions, prioritize, and reduce our spending. With the passage of Measure E, our citizens spoke with a two-thirds vote – and they told us that they believe our PVE PD department is critical and needs to be funded. Because these additional property taxes are insufficient to cover the actual costs of compensation and pensions, the City will be forced to continue to deplete its reserves in order to fund this liability. Our voting citizens deserve full honesty, disclosure, and communication on the status of this issue. I am in support of the work the Financial Advisory Committee (FAC) is doing to look closely at the pension issue and our overall budget. I would seek – and likely vote to accept – their reasonable guidance and recommendations.”
Jennifer King

Jennifer King

JENNIFER KING (incumbent)
”All cities began reporting their entire pension liability as a result of government accounting rules that were changed in 2015, and all California cities are dealing with rising pension costs. There is no question that pension liability is a critical issue facing virtually every city across the state and country. PVE has undertaken several steps to address the issue, including prepaying the amount due annually to avoid additional interest, consistently increasing the contribution amount each employee pays and making periodic payments on the unfunded liability amount. The City has also eliminated employee positions and converted others to half-time to minimize future pension liability. There is no question that the City Council must continue to explore these and additional measures to contain this liability.”
Victoria Lozzi

Victoria Lozzi

”The pension issue is two critical issues: how to manage the Unfunded Pension Liability, which relates to former/retired City employees, and how to control future pension liabilities by managing the current employee base. I do not support any CalPERS-sponsored programs to pay down the unfunded liability, nor would I support funding a pension trust, as I feel that those alternatives lock us into structures that limit our future flexibility. I would like to see the new City Council establish a reserve fund so that when it is advantageous for the City to accelerate the pay down of the unfunded liability (e.g. based on favorable market conditions), funds would be available to do so. To manage the pension obligations of current and future employees, a city of our small size must be pragmatic and utilize part-time and contract workers whenever possible in order to minimize the number of “PERS-able” employees.”
Kevin McCarthy

Kevin McCarthy

”The pension issue is a concern. I would solicit support from my colleagues in asking staff for a status briefing. I would advocate the briefing include recommendations from the City Treasurer, the Citizens Financial Advisory Committee, hearing from the public and some best practices from around the State of small cities in similar circumstance. Based on those reports the Council would provide direction to staff in developing options and recommendations, including timelines with strategies and have measures of effectiveness. Throughout my law enforcement career, we plan for the worst and hope for the best.”
”The City is essentially “locked-in” to its current pension obligations. These programs were authorized over a number of years, and as with many governmental entities the programs were established with a lack of adequate financial forecasting. The City is obligated for past service costs; to compound the matter, its employees are living longer as mortality rates decrease.

As a member of the Financial Advisory Committee, we are currently analyzing the situation and will provide our results and recommendations to the City Council. Some of the options being considered include:

• Developing a strategy over the long term to pay down some of the unfunded liability
• Reviewing retirement plans for new employees and/or current employees to better define and manage pension obligations
• Managing internal headcounts and reviewing outsourcing opportunities

The City does not have the option of walking away from its existing obligations without significant negative financial impact.”
— David McGowan
Betty Lin Peterson

Betty Lin Peterson

”The City pays its invoices at the beginning of each year to avoid penalties and additional interest charges. Determining the cost benefits for paying extra proves to be complex. While extra monies paid may decrease liabilities in the short term, a rate change or additional retirees may increase the liabilities back to before. The good news is, although the City has approximately $14.9 Million in Unfunded Pension Liabilities, we are not being asked to pay it all at once. For the time being, the city needs to continue paying its invoice in full. In addition, the City needs to look into a dedicated fund to hold future pension payments and create a plan for this growing issue. Recently, both CalPERS and GovInvest have provided the City with softwares to study the effects of different payment options. Let’s utilize these tools to analyze our options.”

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