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Pension costs growing expense
Manteca forced to pay more for retiree costs
top photo LT
Pension costs help push the cost of employing one Manteca firefighter to $241,249 in 2013. - photo by HIME ROMERO

Public employee retirees are living longer.

That’s good news for retirees.

But it is news that doesn’t come cheap for Manteca taxpayers.

Manteca currently budgets over $1 million from various accounts — the general fund and enterprise funds for sewer, water, garbage collection and the golf course — to pay for the city’s share of their retirement health benefits.

But the big retiree cost continues to be pension funding.

And with the California Public Employee Retirement System striving to overcome the fact it is 52 percent underfunded, Manteca’s taxpayer’s financial burden — as well as that for existing city employees — will continue to climb. It has prompted a jump in rates for almost 1,600 local government agencies that translates into $1.518 billion. Even with the new rates going into effect, the pension plan is still $986.1 billion underfunded. That means with a plan being put in place by CalPERS to bridge that gap in 30 years rates are expected to continue climbing.

As it stands now between salary, overtime, other pay and benefits Manteca taxpayers are paying over $150,000 apiece a year for 88 of the city’s 365 workers. The highest based on 2013 numbers is for City Manager Karen McLaughlin. Her regular pay is $180,141 with other pay such as deferred compensation coming in at $43,835. Add benefits and the total cost to the taxpayers for her position is $241,703.

The cost to employ the city manager is just $454 more a year than a Measure M public safety tax fire battalion chief. Between a base pay of $121,104 and other pay — primarily state reimbursed pay for when he was working wildfires such as the Rim Fire — his gross pay was about $6,000 less than the city manager’s. But what really drove the additional expense was retirement contributions paid on regular pay (and overtime on the base of those employees that qualify for it.) 

As a non-public safety employee, the PERS contribution for McLaughlin was $23.45 in 2013 for every $100 she grossed. But for a firefighter is was $34.12 for every $100. The same rate in 2013 applied to police officers.

City employees do make PERS contribution — they agreed to increase what they pay out of their pockets during the Great Recession — but the lion’s share is still picked up by the taxpayers.

All PERS contributions paid for each employee increased in 2014 and again in 20015. Expectations are for annual increases at least through 2000.

In that year, it will rise by almost $9 ($30.90) more per $100 for every city employee for pension contributions going from $23.45 in 2013 to $30.90. Police are expected to go from $34.12 to $45.48 for an $11.28 per $100 jump and firefighters from $34.12 to $44.17 or a $10.05 per $100 increase.

The big difference in pension costs is due to police and firefighters being able to retire earlier and receive full pensions. Changes Manteca made means new public safety hires will have to work more years to become 100 percent invested in their pensions. But that isn’t expected to help effectively reduce costs to Manteca taxpayers for 20 or so years.

Finance Director Suzanne Mallory advised the Manteca City Council during Tuesday’s midyear budget review and workshop that CalPERS costs as well as retiree health benefits will continue to demand more general fund money effectively throwing a wrench into budget planning.

Salaries and benefits constitute 76 percent or $22.91 million of the city’s current $30.1 million general fund budget. There are 196 of the city’s 365 employees paid from general fund receipts. The general fund relies on property and sales tax for 60 percent of its funding sources. It is also what pays for police, fire, parks, streets, and other general government endeavors with public safety accounting for 62 percent of all expenditures. The other employees are covered either by Measure M public safety tax, the public safety endowment fund or the four enterprise funds.