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San Diego government pension costs continue to spike

SAN DIEGO – Pension costs for local governments around the region are continuing to increase, the San Diego County Taxpayers Association reported Thursday.

In an annual study of employee retirement expenses for the 18 local cities and county of San Diego, the association’s educational foundation determined that obligations are edging higher, though a few localities have made progress on pension funding.

“As the report indicates, governments throughout San Diego County need to reduce unfunded pension liabilities and provide defined contribution retirement plans to lower future risks to taxpayers,” said Haney Hong, the SDCTA’s president and CEO.

“High pension debt means higher annual costs, tying up tax dollars that could instead be used for police and fire protection, road repairs and other vital community services,” Hong said.

Defined contribution retirement plans are more like what’s offered in the private sector, like 401(k)s.

Hong said the combination of rising pension payments and large unfunded liabilities puts younger taxpayers at significant risk, because they could eventually make it difficult for municipal governments to deliver services.

“We don’t want cities in our region to be like Detroit in the future, filing bankruptcy and not making good on promises kept,” Hong said.

Among the findings:

— in El Cajon, Escondido, San Diego and La Mesa, pension costs make up more than 10 percent of their operating budgets;

— pension contributions comprise less than 4 percent of the budgets in Imperial Beach, Lemon Grove and Solana Beach;

— residents of Del Mar have the highest pension liability per capita at $1,582, but also have the largest number of municipal employees per 1,000 residents at 44;

— residents of Carlsbad, Coronado, El Cajon, Escondido, La Mesa, National City and San Diego also have pension liabilities of over $1,000 per resident;

— Lemon Grove and Imperial Beach have the lowest per capita pension liabilities at $225 and $226, respectively, and also have among the fewest employees per 1,000 residents;

— Coronado’s funding ratio is the highest in the county at 81 percent, with the county of San Diego, Solana Beach and Del Mar right behind at about 80 percent;

— Chula Vista, San Marcos and El Cajon have the lowest funding ratios at around 69 percent; and

— San Marcos’ funding ratio has improved by 12 percent in the last five years, and most localities are doing better in that regard, though the county of San Diego, Solana Beach and Imperial Beach have actually lost ground during that period by a few percentage points.

Besides offering different types of retirement plans for employees, the taxpayers group recommended that area governments stop making contributions for employees hired after 2013, and pay down their unfunded liabilities as soon as is financially practicable.