Prospects dimmed Friday for $100 million in extra annual cash San Diego officials had been hoping to get by paying off nearly $3 billion in pension debt much more slowly.
Board member Clifford Schireson said he was particularly troubled by this year’s sluggish stock performance and the recent employee pay raises. Lower investment returns raise pension debt because the greater the return on pension system investments, the less taxpayer money the city needs to spend long term covering pension payments to retired employees.
“In our opinion, it’s kind of premature to worry about a cliff that far out,” said Kalwarski, stressing that 14 years is a long time. “Who knows if that cliff is going to be there? So you’re fixing a theoretical problem.” Some estimates say this kind of revamp would hike the long-term payoff costs for the city’s pension debt by somewhere between $300 million and $1 billion.
Bartolotta, a deputy city attorney, said the last two revamps have worked well. The city has come steadily closer to fully funding the pension system despite scaling back projected investment returns and changing employee longevity estimates.