Local governments doing less at a higher cost

August 1, 2019

Local government agencies in California are offering fewer services and reducing employees numbers because of rising pension costs.

Median pension costs for local governments in California rose at a rate nearly six times that of local agencies nationwide between 2007 and 2016, according to data released by a UC Berkeley professor.

Sarah Anzia, an associate professor at UC Berkeley’s Goldman School of Public Policy, released a report compiling data on the pension expenditures of cities and counties across the United States. The report also discusses the impact of rising pension costs on local government budgets and services.

In a policy brief released in conjunction with the report, Anzia argued rising pensions costs, particularly in California, are resulting in the elimination of local government jobs.

“Local government is being transformed by rising pension costs, and as a result, citizens of California can expect a future in which city and county governments do less with more,” Anzia stated. “These changes are also not positive for government employees and their unions, because as local governments spend more on pensions, they are also cutting jobs.”

According to Anzia’s findings, local pension costs rose almost everywhere around the United States, but they increased at a much higher rate in California. Between 2007 and 2016, median pension costs nationwide increased by $1,216 per employee, while they rose by $7,022 per employee among California cities and counties.

Anzia attributes high public sector union membership and collective bargaining as major factors in pensions costs rising at a faster rate in California than across the country. Still nationwide, policymakers have made public employee pensions more generous and have failed to set aside enough money to pay for them, Anzia said.