The City of San Luis Obispo will be contributing more money for its employees’ pensions. Due to a reformulation of actuarial rates by the California Public Employees’ Retirement System (CalPERS), the city will have to spend about 3 percent more for SLO employees in the next financial year, according to a city report.
In a discovery that will likely signal unfortunate news for the future of the city’s finances, a CalPERS study released in late November found that life expectancies for retirees are higher than previously estimated. Perhaps more foreboding than that, CalPERS has signaled it may downgrade its assumed annual investment return of 7.75 percent. These revelations, along with signals from CalPERS that its low level of funding—one of its mammoth funds is only 51.4 percent funded—may require “an additional contribution,” meaning further dramatic hikes in pension rates are possible.
The city also reported property taxes were down .32 percent, the first time property tax income has gone down since the implementation of Proposition 13 in 1978. The staff said the city would likely have $1.2 million left over at the end of this financial year. Whether the city uses this money to help bridge the estimated $3 million shortfall projected for the next financial year or spends it on other projects remains to be seen.