Pismo Beach pays $1 million to reduce pension liability
March 22, 2015
Pismo Beach City Council voted unanimously on Tuesday to approve a $1 million payment to reduce the city’s unfunded pension liability costs.
Currently, the city has an unfunded pension liability of $13.6 million. This includes $6.3 million in the safety police plan and $7.4 million in the city’s miscellaneous plan.
In Jan. 2014, the city council established a debt/pension reduction reserve of $1 million from the city’s general fund. City staff evaluated options on how to use the $1 million to maximize the city’s savings and reduce ongoing costs.
The payment approved Tuesday reduces the city’s unfunded pension costs by an estimated $670,000 and reduces the annual ongoing contribution of approximately $200,000 per year to CalPERS starting in fiscal year 2018-19. The unfunded pension liability is the difference between the estimated cost to pay retirement obligations and the market value of the assets currently set aside to fund those obligations.
“We are fortunate that we are in this position to pay down this unfunded liability,” Mayor Shelly Higginbotham said. “Although our revenues have improved, we have kept our costs down, set aside reserves for a rainy day and for these opportunities to reduce our debt. The early payment will save the city hundreds of thousands of dollars – money that can be put back into the community.”