Richmond among cities with growing retirement debts
A new look at the retirement debt of one Bay Area city places the financial burden at more than $4,100 per resident.
The figures come courtesy of Daniel Borenstein, who reported on the pension obligations of the city of Richmond.
Borenstein writes Richmond is among “the growing list of cities that have dug deep holes of debt by failing to properly fund workers' retirement plans, and must now make serious sacrifices to climb out.”
“Richmond has promised its employees pensions and retiree health coverage, but has only 61 percent of the invested assets it should to pay for benefits that have already been earned,” he writes. “The shortfall of $446 million works out to about $4,150 for every city resident.
“City officials have long-term plans to pay off the $320 million debt for pensions, but no idea how they will address the $126 million shortfall for retiree health benefits. Indeed, the city has set aside almost nothing toward that obligation.
“Think of it as a huge credit card debt. The city is not making even the minimum payments and, as a result, the balance owed is growing rapidly. The city should be contributing $9 million more each year.”
In Sacramento, Gov. Jerry Brown wants to renegotiate post-retirement health care benefits with new state workers. As part of a pension package passed in Brown’s first term, new public employees will not be eligible to retire until they are well into their 60s.
The legislative analyst has suggested that with the availability of MediCare at age 65, the state should consider getting out of the retiree healthcare business altogether.