League of California Cities Study Warns Pension Costs Are Becoming Unsustainable

A new study conducted by Bartel Associates and commissioned by the League of California Cities predicts pension costs to nearly double over the next decade for the state’s 482 cities. By 2024-25, the researchers predict pension costs will eat up 15.8 percent of general fund budgets.

While state and county agencies will also share in the financial burden wrought by unsustainable pension costs, the study says cities will be the hardest hit. They’re also limited in their options to respond due to constitutional limitations on their revenue raising powers.

The report did lay out some recommendations, including developing plans to pay down Unfunded Actuarial Liability (UAL); local ballot measures aimed at raising revenue; changes to public services; and encouraging increased employee pension contributions.

Time is of the essence.

“The results of this study provide additional evidence that pension costs for cities are approaching unsustainable levels,” the report warns, noting that “many cities face difficult choices that will be compounded in the next recession.”

Read the entire study here and further discussion by Dan Walters at CalMatters