Pensions in Santa Barbara County Require Vigilance
Source: Santa Barbara County Grand Jury
The 2021 Santa Barbara County Grand Jury conducted a follow up investigation to the 2017-18 Grand Jury “Pensions in Santa Barbara County” report to determine how the eight cities and the County have progressed since the 2017-18 Grand Jury issued its Pensions in Santa Barbara County report.
In 2017-18, the Santa Barbara County Grand Jury issued an investigative report that looked at the pension plans of Santa Barbara County and the eight incorporated cities within the County. That report found, among other things, that there were substantial liquidity and solvency risks to the sustainability of many of the public defined benefit pension plans in the County and that if there are additional fiscal shocks, such as a fall in tax revenues or a period of low returns on pension assets held by the California Public Employee Retirement System and County of Santa Barbara EmployeeRetirement System, then other actions may be required.
Salaries and benefits, including pension costs, are the largest annual operating expenditures of the County and its eight cities. In addition, the unfunded pension liabilities for future payments to current and former staff are also a significant portion of each of their balance sheets, totaling $1.8 billion dollars. Pensions and the related liabilities are an important part of the cost of operating all local governments. The Jury was told that governments often cannot provide the same level of wages and benefits, to attract and retain talented and capable staff, as “for profit” organizations, because of the need to balance providing required services to its residents against the burden of taxation or fees charged to those residents. Pensions, the Jury learned, provide away for local governments to attract capable staff while deferring some of the costs to the taxpayers to the future. Pensions are an attractive benefit for many as they help assure staff of income streams after retirement.
The County and cities need to make sure they are prepared to fund future pension obligations when due, without disrupting critical services or over-burdening their residents with extra fees and taxes.
The Jury discovered that, while risks continue to exist, especially for those cities that are suffering financial challenges, there are no immediate threats and that, with proper attention, all cities and the County should be able to deliver the necessary services to its residents and meet its pension obligations as they become due.
The complete report is posted on the Grand Jury’s website: www.sbcgj.org .
The Santa BarbaraCounty Grand Jury is an integral part of government within the judicial branch. The Grand Jury acts independently, yet it is under the general supervision of the SuperiorCourt Presiding Judge to assure that it acts in accordance with the Penal Code of the State of California.