This is a half truth story. Yes, the city of Ventura is going to pay down $10 million in pension fund debt. But, you have to go into the middle of the story to find the total pension debt is over $190 million. By paying down the $10 million, they save in interest cost.
Importantly, they do not say what the interest payments each year is on the unpaid debt? Why would they leave that out if they were totally transparent?
Ventura allocates $10.5 million from general fund to lower its pension debt
Wes Woods II,, Ventura County Star, 3/9/23
Ventura has allocated $10.5 million from its general fund for a one-time payment to lower its pension debt.
In making the payment now, Ventura will save $2.2 million in fiscal year 2024 and fund City Council initiatives and priorities, said Pam Townsend, financial services manager for the city. The savings come from paying less interest on the debt.
City employee pensions are managed by the California Public Employees’ Retirement System. The city’s total unfunded liability for its 1,722 employees and retirees is $190.2 million.
Unfunded liability occurs when investment earnings don’t produce the expected rate of return or when benefit costs go up, creating a shortfall for future payouts to retirees, according to a city report.
Ventura has two plans with CalPERS. The safety plan covers sworn police and fire personnel. The miscellaneous plan covers non-sworn employees, from City Hall executives to parks workers.
Unfunded liability for the safety plan, which has 565 members, is more than $137.4 million, the most recent CalPERS actuarial report shows. The plan is 69.6% funded.
For the miscellaneous plan, which has 1,157 members, unfunded liability is about $52.8 million and the funded ratio is 84.2%.
Unfunded liabilities are costly because CalPERS charges interest on them, Townsend said. CalPERS is charging 6.8% on the $190.2 million, she said.
On Feb. 27, city staff presented an update on pension debt and the City Council agreed to the one-time $10.5 million payment.
At the meeting, Mayor Joe Schroeder said he understood concerns about using money for pension debt instead of “meat and potato things” such as sidewalks and repairing roads.
“I get that, but I’m tired of us kicking the financial can down the street on pensions,” Schroeder said. “I know that it’s not a sexy thing to do but I think it’s the right thing to do financially.”
In October, the council revised its policy on pension obligations to better address the debt by using available general fund money at the end of a fiscal year.
David Grau, president of the Ventura County Taxpayers Association, said Monday his organization approved the one-time payment to lower pension debt.
“The fiscal health of Ventura has improved and given them the ability to make this contribution, which was a great idea,” Grau said.
