Roseville close to having all employees pay CalPERS share
In an ongoing effort to lower pension expenses, the city of Roseville has been asking all employees to pick up their full share of CalPERS retirement costs.
If the city successfully negotiates with its last two employee groups, and once all changes go into effect, Roseville will save an estimated $4.5 million annually, said City Treasurer Russ Branson.
The most recent move came in December with Roseville’s management and confidential group agreeing to a new one-year memorandum of understanding that has these workers paying their full employee portion, resulting in a savings of $236,925 this fiscal year.
Three other labor groups have also agreed: International Brotherhood of Electrical Workers (IBEW) is paying the full 8 percent, Local 39 is paying the full 8 percent and Roseville Firefighters Association is paying its full 9 percent.
“The majority of employees realize things have to change,” said City Manager Ray Kerridge. “It’s happening all over the state, and the country.”
The city still has to negotiate with the Roseville Police Officers Association and Roseville Police Association, which represents non-sworn personnel.
But just because unions have agreed to this change doesn’t mean they’re happy about it. Roseville Firefighters Association President Scott Milligan said his group has already made sacrifices — such as previously giving up cost-of-living raises in exchange for the city paying their employee contribution to CalPERS.
In February, Roseville firefighters voluntarily agreed to start paying their 9 percent share.
“I think it is important to keep all things in perspective,” Milligan said. “When you compare the PERS pension costs paid by the city to the city’s total budget, the pension costs only represent between 4 percent and 5 percent of the annual budget. So if some had it their way we could eliminate all public pensions and we would still have to come up with 95 percent of our budget.”
Here’s how the system works: Cost of retirement is expressed as a percentage of salary, and how this is split up varies slightly. For instance, the non-sworn police employee share to CalPERS is 8 percent, plus 21 percent employer share, which the city is responsible for paying. Sworn police employee share is 9 percent, plus 32 percent employer share.
“It’s an expensive package, so having employees share in that cost makes sense in the long term,” Branson said.
The city previously agreed to pay some of their employees’ retirement portion, in addition to the employer share, instead of giving raises. This was common practice among government entities and a cost-saving measure.
But with the onset of the economic recession, Roseville began finding ways to reduce costs, including lay offs and early retirement incentives. The city has cut 15 percent of its general fund workforce and is now at 2004 employment levels, Branson said.
Although revenues have begun to climb back up, Roseville still has a $4 million structural deficit. And while sales tax and property tax revenues dropped with the economic recession, the need for services such as public safety and utilities stayed the same.
“With the services people really care about, there is no relationship with the money we get and the services we provide,” Branson said.
That’s why Roseville has turned to trimming labor-related costs. The city is getting some assistance with the California Public Employees’ Pension Reform Act, AB 340, which was signed into law in September and prescribes reduced benefit formulas and increased retirement ages for new members to CalPERS as of Jan. 1. City officials say this will produce significant cost savings over time.