12/02/2021

When do CalPERS rates become ‘unsustainable’?

At the League news conference a reporter’s request for a definition of “unsustainability” was answered by Daniel Keen, a former Vallejo city manager with two decades of experience in five cities.

The ability to absorb rising pension costs varies from city to city, Keen said, but one thing unsustainable for all is the erosion of basic services. He said uncertainty causes reluctance to fully staff police, fire departments, and public works maintenance.

As discretionary services such as libraries, parks and recreation are threatened, long-term commitments are less likely. Though the economy is growing and unemployement is low, cities are forced to make tough budget decisions.

“That’s not a good model for sustainability, considering that we will probably see recessions again in the future that will be much more difficult to manage through simply because of these rates,” Keen said.

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