City Auditor Ann-Marie Hogan

The City of Berkeley’s unfunded liability for employee pension benefits will be the focus of a special City Council work session at 5:30 p.m. before the regular council meeting next Tuesday.

In an email about the session, City Auditor Ann-Marie Hogan wrote, “The City Council, City Manager, and City employees will have to take some very difficult actions. The decision makers and the community need rigorous analysis, clear communication, and realistic expectations. A commitment to collaboration can help us through these difficult times.”

The session will consider both Hogan’s November report Employee Benefits: Tough Decisions Ahead and City Manager Phil Kamlarz’s response. Hogan’s report said that the city must “reduce today’s expenses and tomorrow’s liabilities”. The auditor estimated that the city’s pension costs would rise nearly 60% between fiscal year 2010 and fiscal year 2016. Rising medical costs and other post-retirement benefits, particularly for police employees, are also concerns. Kamlarz’s response echoes Hogan’s concerns and further notes that short-term fixes may well be required in addition to the long-term solutions advocated by Hogan.

The issues surrounding pensions and other benefits are not unique to Berkeley (although the torrent of comments to any story on the topic on Berkeleyside might suggest otherwise). Many municipalities are wrestling with similar problems, brought on in part by the rapidly escalating rates set by the California Public Employees’ Retirement System (CalPERS) in response to the over-optimistic estimates on investment return made by CalPERS during market boom years.

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Lance Knobel (Berkeleyside co-founder) has been a journalist for nearly 40 years. Much of his career was in business journalism. He was editor-in-chief of both Management Today, the leading business magazine...