PLEASANTON -- A push by some residents during the spring of 2011 forced Pleasanton to become one the most proactive Bay Area cities in tackling an escalating pension problem.
Even with the concessions from two of its three employee groups that helped the city save just under $3.5 million through the 2013-2014 fiscal year, some residents said the city failed to capitalize on reducing its unfunded pension liability in the immediate future.
Concerns about the city's growing unfunded pension liability -- - which went from fully funded in 2001 to a debt of $135 million -- - forced the city to have its workers begin paying the full amount or part of their contribution to the state's Public Employee Retirement System, known as PERS.
It also led to the city establishing a PERS rate stabilization fund to deal with the rising unfunded liability. The fund was established in November because of a surplus in its 2010-11 budget. The city chose to put $1 million from the surplus in the newly established funds to help pay down its unfunded liability.
"The issue I have with the most recent contract is that even with sacrifices that (workers) did make the unfunded (liability) is continuing to grow," said Bart Hughes, a resident that began speaking out on the issue at council meetings two years ago. "It is an added cost that we are consuming today and shifting the cost to future generations."
Hughes and other residents pointed to the city's unfunded
Pleasanton and the Pleasanton Police Officer Association agreed to a new two-year deal that required all its officers to contribute 9 percent of their yearly salary in phases toward retirement. Officers will start paying 3 percent toward their pension once the deal is approved, and then 6 percent in July 2012 and the full 9 percent by July 2013.
The contract also includes a two-tier system for new employees who can retire at age 55 with 3 percent of their highest annual pay multiplied by their years of service, instead of the current 3 percent at age 50 rule. Changes to retiree medical benefits were also made.
Pleasanton's largest employee group, Pleasanton City Employees Association/AFSCME Local 955, agreed to pay 4 percent toward their retirement by July of this year and established a two-tier system.
Nelson Fialho, Pleasanton city manager, acknowledged that the city's unfunded liability had grown but said the increase does not reflect the concessions, including the two-tiered system and its two labor groups paying more of their share toward retirement.
"The only way that the city's unfunded liability will decrease long-term is through enhanced strategic payments to the PERS rate stabilization fund on an annual basis," Fialho wrote in an email to the Times. "To have a measurable impact it must occur over a sustained period of time."
Fialho also said the newly negotiated two-tier system for new hires, which extends the age of retirement and bases their pension on the three highest-paid years of their service, as opposed to the single highest year, would have minimal impact in the short term but will become significant over the long term when new employees enter the system.
It is the growing unfunded liability that is a concern for Hughes who said the city should have done more during the negotiations to tackle the problem.
State laws protect current employees from changes to the age of retirement but Hughes said the city could have done some things that would have addressed the unfunded liability -- like moving all employees to the three highest-years calculation instead of the single year and limit what is included in the calculation of those figures.
"We as a society don't like to think of this as intergenerational theft," Hughes said. "We are lowering our kids standard of living because of what we are doing right now."
The city is currently in negotiations with its fire department union, which had been paying 2 percent toward their retirement.
Contact Robert Jordan at 925-847-2184. Follow him at Twitter.com/robjordan127.