last winter<\/a> that the city\u2019s payment would rise by less than $7 million this winter \u2014 from $533.2 million up to $540.1 million.<\/p>\nBut Kalwarski more than quadrupled his estimate of the jump\u00a0this week to $30 million.<\/p>\n
The sharp hike comes despite a notably strong year for the stock market and the pension system\u2019s investments, which gained $89.2 million in value.<\/p>\n
Stock gains typically shrink the city\u2019s annual payment because a crucial part of the city\u2019s long-term payoff plan is significant growth in the value of investments made by the pension system.<\/p>\n
But those stock gains were overpowered by large employee raises that kicked in last July and this month. Those raises increased the pension system\u2019s long-term liabilities more than $140 million, Kalwarski said.<\/p>\n
The city doling out pay raises larger than Kalwarski expects has become a recurring theme \u2014 and a recurring problem for the pension system\u2019s long-term finances.<\/p>\n
\u201cThere have been extra salary increases above and beyond our assumptions during many of the past seven years,\u201d Kalwarksi told the board of the San Diego City Employees Retirement System.<\/p>\n
City officials have repeatedly said large pay hikes are necessary to counteract the effects of a wage freeze that extended from 2013 to 2018, contending that frozen wages had left municipal salaries in San Diego far below those in other cities.<\/p>\n
The average salary for city employees has reached $113,800, up 7.4% from just under $106,000 last year.<\/p>\n
General employees received 5% raises last July, police officers and lifeguards got 4% last July and firefighters got 3% last July and 1% on Jan. 1.<\/p>\n
Those raises are in addition to automatic pay hikes city employees receive when they hit certain years-of-service milestones.<\/p>\n
The higher payment comes despite the city\u2019s unfunded pension debt shrinking slightly, from $3.49 billion to $3.46 billion.<\/p>\n
Smaller debt would normally mean a lower payment, but Kalwarski had predicted the debt would drop by $131 million this year \u2014 more than quadruple the actual drop of $27.9 billion.<\/p>\n
On a positive note, Kalwarski noted that the funded rate of the city\u2019s pension system climbed this year to 76.1%, the highest since 2008.<\/p>\n
That rate, and the unfunded debt, are based on Kalwarski\u2019s long-term liability projection of $14.51 billion compared to his long-term asset projection of $11.05 billion.<\/p>\n
He said officials could argue that the 76.1% ratio in 2026 is far better than the 78.1% ratio in 2008. That\u2019s because the city has scaled back investment and employee longevity projections used back then that critics called overly optimistic.<\/p>\n
Kalwarski is projecting the city\u2019s annual payment to rise again next year to $573.2 million. The payment is then projected to drop sharply to about $500 million for five consecutive fiscal years: 2029 through 2033.<\/p>\n
Last year was the first time the payment had ever surpassed $500 million.<\/p>\n
Not all of the higher pension payment will affect the city\u2019s projected general fund deficit of $110 million.<\/p>\n
That\u2019s because only 73% of workers in the city\u2019s pension system are paid by the general fund. The other 27% work for enterprise funds like sewer, water or the municipal golf courses.<\/p>\n
The city\u2019s latest projection for its general fund pension payment \u2014 before Kalwarski revised the overall payment upward \u2014 was $383 million. The new number will likely increase the general fund pension payment to about $410 million.<\/p>\n
The $110 million is already considered an understatement of the budget hole the city faces.<\/p>\n
Last month, city finance officials announced a new $23 million deficit in the budget for the ongoing fiscal year, based on revenues coming in lower than expected and some expenses coming in higher than expected. They said that shortfall<\/a> could force the city to consider emergency cuts this winter.<\/p>\nKalwarski presented the new payment to the SDCERS board on Friday for discussion, but the board is not scheduled to formally adopt the payment until its March meeting.<\/p>\n","protected":false},"excerpt":{"rendered":"San Diego is facing a record-high annual pension payment of $563.2 million thanks to larger-than-expected employee pay hikes,…\n","protected":false},"author":2,"featured_media":399757,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[39],"tags":[28,2558,983,2559,3,147,530,111,2557],"class_list":{"0":"post-399756","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-latest-headlines","10":"tag-local-news","11":"tag-local-politics","12":"tag-news","13":"tag-personal-finance","14":"tag-personalfinance","15":"tag-politics","16":"tag-top-stories-sdut"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/399756","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=399756"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/399756\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/399757"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=399756"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=399756"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=399756"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}