SACRAMENTO, Calif. (AP) — Two dozen city and county governments in California face a combined $135.7 billion in unfunded pension liabilities, according to a study released Tuesday that also found the problem is growing.
The Stanford Institute for Economic Policy Research evaluated 24 local government pension systems that are not part of the California Public Employees' Retirement System, the state's main pensionfund. The funds ranged from those for smaller entities, such as Santa Barbara and Stanislaus County, to the largest local governments in California, including Los Angeles, San Diego and San Francisco.
The report found that none of the systems is at least 80 percent funded, which often is used as a benchmark for the minimum funding level of pension funds. The study assumed a 5 percent annual rate of return for the funds' investments, much more conservative than the 7.75 percent or greater annual return rate assumed by many of the funds.
The two retirement systems operated by the city of Fresno came close, with a funded ratio of 78.5 percent, while the pension system in neighboring Kern County was only 41.5 percent funded.
"Each system substantially understates liabilities and overstates funded ratios," the report stated.
The benefits paid to retired workers also vary.
Government retirees in the city of Los Angeles received the highest pensions in the 2009-2010 fiscal year, with an average annual benefit of $46,211. Stanislaus County was the lowest at $24,179 a year.
Public safety employees retire with more generous benefits. The average pension for a retired peace officer or firefighter in Fresno County was $48,732, while the average in San Jose city was $90,612.
The study found that spending on public employee pensions has grown 11.4 percent a year since 1999, making it the fastest-growing cost for cities and counties.
Los Angeles County spokesman David Sommers said the county has been careful to protect taxpayers and disputed some of the report's findings. He estimated that Los Angeles County'spension system is 90 percent funded.
He also said it has been revised four times since 1977, including four separate benefit rollbacks and increases in employee contributions.
"We've been very conservative over the decades, not spending in good years to the detriment of bad years," Sommers said.
Los Angeles County pulled out of the Social Security system three decades ago, he said. The county also negotiated no cost increases in its current labor contract, which will save taxpayers in the future, Sommers said.
The report's authors said their study represents 99 percent of the independent public employeepension systems in California. It is being released at a time when Gov. Jerry Brown seeks to bring public-sector retirement benefits more in line with those in the private sector and as weak investment returns are adding to the unfunded liabilities of many government pension funds.