Monday, June 26, 2017

CalPERS rate increase = layoffs +

CalPERS plans rate hike, third in last two years

When the third rate hike is combined with the previous two, the rates will rise about 50 percent above current levels. Note that some of the assumptions, such as a (currently estimated) ROI of 7.5% remain the same. Since the best that “lean and mean” private investment firms expect is 5% to 6%, even the 50% increase is unlikely to correct the deficit.

What will that mean in Costa Mesa? That’s not clear yet, but we have estimates for a larger city, Sacramento. The rate hike(s) will cost them $12.2 by the fifth year, which is the equivalent of 102 full-time positions, according to Leyne Milstein, their Finance Director.

A chart Milstein gave the committee showed the five-year $12.2 million cost potentially reducing 34 police officer positions ($135,000 each), 30 firefighter positions ($131,000) and 38 miscellaneous employee positions ($97,000).

“I would believe well into the fifth year that we are talking about (un) filled positions and more than likely actual layoffs,” she said.

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