California Taxpayers Expected To Nearly Double Public Pension Contributions Over Next 5 Years

Tyler Durden's picture

The California Policy Center (CPC) has just updated it's annual study on pension contributions required from local California municipalities and, to our complete 'shock', the conclusions are brutal for Cali taxpayers.  Among other things, the study found that California taxpayers will be forced to double their contributions to CalPERS over just the next 5 years alone from $5.3 billion in 2017/2018 tax year to $9.8 billion in 2022/2023.

  • In Fiscal Year 2017-2018, California local governments will make over $13 billion in pension contributions to CalPERS, county pension plans and single employer plans.
  • Local government pension contributions to CalPERS will total $5.3 billion in Fiscal 2017-2018 and are projected to rise to $9.8 billion in Fiscal 2022-2023 – an increase of 84%.
  • In Fiscal Year 2015-2016, at least 26 California cities and counties devoted over 10% of their total revenue to pension contributions. San Rafael, San Jose and Santa Barbara County shouldered the highest pension burdens – exceeding 13% of revenue.
  • Major local governments that have recently surpassed the 10% pension contribution to total revenue threshold include Contra Costa County, Berkeley and Newport Beach.

Meanwhile, 20 California cities were found to already spend more than 10% of their annual revenue on pension contributions, with San Rafael at closer to 20%.  And, given that it's highly unlikely these towns are willing to cut 10% of their budgets over the next 5 years, we can only assume that taxpayers are about to get slammed with massive tax hikes.



Unfortunately, as our readers are undoubtedly aware, the reality is even far more bleak than the numbers above would suggest because they use CalPERS' 7% discount rate to calculate underfunded levels.  But, as we pointed out back in December (see "CalPERS Board Votes To Maintain Ponzi Scheme With Only 50bps Reduction Of Discount Rate"), even CalPERS' finance committee chair admitted that 7% is too high and the decision to not move it lower was politically motivated to allow "municipalities and other government agencies some breathing room before they absorb the impact."

In its August 2016 actuarial reports, CalPERS included projections of future contribution rates through Fiscal Year 2022-2023. We used these documents to determine total contribution amounts and then recalculated the totals to reflect the impact of CalPERS’ recent decision to change the rate at which it discounts future liabilities from 7.5% to 7%. Although CalPERS did not update its projections, it provided employers with a circular containing guidance on how to adjust

the August 2016 amounts. We used this guidance in our own calculations.

So what's to blame for these skyrocketing pension costs?  Well, as CPC points out, in Newport Beach at least part of the problem is attributed to a gaggle of lifegaurd "captains" raking in over $100,000 per year which serves as the basis for calculating their massive pensions.

The city of Newport Beach contributes to CalPERS. Its net pension liability in 2016 was $264 million, and its plans were only about 68% funded. Pension contributions grew from $20 million in 2014-2015 to $31 million in 2015-2016, and are projected to reach $52 million in 2022-2023. One reason for the increase is that the city is accelerating its repayment of the unfunded liability. The new funding schedule is expected to save the city $129 million over 30 years.


One unusual contributor to Newport Beach’s pension burden is its team of lifeguards. While many of the city’s beach lifeguards receive relatively modest compensation, the city employed 10 Lifeguard Captains and Battalion Chiefs in 2015, all of whom received more than $100,000 in wages. Lifeguards hired before 2011 were eligible for the 3%-at-50 pension formula. That year, the city council voted to lower the benefit for newly hired lifeguards to 2%-at-50, but due to the California Rule, already employed lifeguards were unaffected. Lifeguards hired after the implementation of PEPRA are on the 2.7% at 57 pension formula.


In February, the Daily Pilot reported that the city was shelving several projects due to increasing pension costs. The projects in jeopardy include a new library and fire station in Corona del Mar, a new restaurant for the Newport Pier and new junior lifeguard headquarters.

In conclusion, CPC offered this sobering reality check to California taxpayers:

Despite the strong economy and a buoyant stock market, pension cost burdens faced by California local governments have continued to grow – with many now devoting more than 10% of revenue to retirement contributions. With the Great Recession now eight years behind us, the risk of a new downturn is increasing. The result would be a further spike in pension burdens on local governments. Unless the state enables more aggressive pension reforms than those allowed under the 2013 PEPRA legislation, several California cities and counties will find themselves forced to slash other spending. The less fortunate will simply be unable to pay the bills they receive from CalPERS or their local retirement system.

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Stan522's picture

My San Diego home sold over the weekend and is in Escrow today...



Winston Churchill's picture

What took you so long ?

Just don'ttake any old ideas with you.


ares_xtreme's picture

I wonder if they use those taxes to also finance  MUSLIM TRAINING CAMPS as those found in New-York:

Welcome to Islamberg

22 Muslim Camps you Never Heard of. All in the United States

Donald Trump's picture
Donald Trump (not verified) ares_xtreme Apr 10, 2017 9:16 PM

Commiefornia is shit

Please avoid.


- I am Donald Trump and I approve this message -


ares_xtreme's picture

Can we have a wall ALL around California?


PLS Mr President.


847328_3527's picture
Lifeguarding in OC is totally lucrative; some make over $200k This is from 2011...has to be worser now.  Let them raise property taxes to pay for the bloated city employees.
philipat's picture

I have an alternative proposal: phase out "Defined Benefits" gold-plated public sector pensions and use "Defined Contributions" plans, or nothing, like 401K's or nothing in the private sector, a/k/a "the real world".. Of course, in Libtard California, that wouldn't be "fair" so will never happen. Unless it all collapses, which now seems likely?

Boris Alatovkrap's picture

Pension that is pay for current beneficiary with premium of future enrollee is call, how are you say, scheme of Ponzi?

Implied Violins's picture

Wasn't Ponzi a sitcom character who jumped the original shark? Or am I simply pining for happier days?

Boris Alatovkrap's picture

You are think of Arthur Ponzerelli, maybe yes?

bob_bichen's picture
bob_bichen (not verified) Boris Alatovkrap Apr 10, 2017 10:34 PM

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Manthong's picture

Don’t those state employees deserve six figure pensions even though the entire private sector pension system has collapsed?

It’s just a good thing the average California taxpayer is swimming in cash.

They all have pools full of one hundred dollar bills, don’t they?

And I hear they have very permissive firearms regulations there, too.

MalteseFalcon's picture

If you ever modeled the pension situation, you know that the return on assets is the only thing that matters.

Increasing contributions and cutting benefits don't solve the problem in a way that is politically feasible.

We need more sugar from the FED.


Implied Violins's picture

Yes, that's him. Things get a little squiggy after that, but I'm sure Ponzi is still getting his pension check in the mail. I hope he has a good recipe for shark fin soup, though. That would supplement his check nicely.

bob_bichen's picture
bob_bichen (not verified) winged Apr 11, 2017 11:09 AM

"winged"   <<<   Biblicism,com  SPAMMER  WHACK-JOB !!!

yogy999's picture

Holy Crap...Boris is back. Missed you. Almost gave up on ZH due your absence.

HedgeJunkie's picture

Great to see you again, Boris!

Mr Blue's picture
Mr Blue (not verified) HedgeJunkie Apr 11, 2017 4:13 AM

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do...

booboo's picture

David Hasselhoff made out like a bandit, he got all that sweet ass and a bloated pension and then blew on booze and hamburgers.

Stuck on Zero's picture

They want to raise our sewer fees by 40% here in SoCal. I checked the salaries for the munipal sewer system workers and found them to be outrageous by any standards.

847328_3527's picture
Hundreds Of California Government Employees Are Paid Over $400,000 A Year (2014)




Anon2017's picture

How many Facebook or Google employees have made over $400,000 a year because of stock options? 

When the State reaches the financial breaking point, the courts will lower the pension benefits to a more reasonable level.

In the meantime, my state income taxes and local property taxes combined are lower than they would be in Texas cities such as Dallas or Houston for a similarly valued house. Texas has no state income tax. Many older California property owners receive substantial tax benefits from Proposition 13 passed in 1978. There appears to be no shortage of buyers for homes located in good neighborhoods in major metro areas in the state and these buyers are paying top dollar for their properties.




Blankenstein's picture

The amount is infinitesimal compared to the whole population. 

Stan522's picture

We decided a couple years ago. Early on, I chose to stay behind enemy lines and FIGHT. However, this vote and all the others last year that has my legally purchase fire arms now stand to be illegal as well as lunacy that has ranchers being forced to put flatulent catching backpacks on cows so that global warming is reduced...

Only in this state.... Pray that this lunacy remains here and does not travel to other states.

Miffed Microbiologist's picture

Lucky asshole. I'm stuck here for the present. Hopefully I'll make it out before the Big One hits and the resulting tsunami provides the long awaited karma to the coastal communities.


CaptainObvious's picture

Miffed, honestly, what is tying you down to that festering craphole of a state?  You have mad skills, woman.  Take those skills on the road with you.

Stan522's picture

To a conservative state that will appreciate my core belief system and stay out of my business.....

Hitlery_4_Dictator's picture

If I see one more Calie plate on the road I may open fire.  Texans don't like the CA retards.  The good news is, I live an hour away from anywhere near where a CA transplant would even dare to venture. 

Stan522's picture

This Californian sits firmly to the right of Rush Limbaugh and appreciates all of my Amendment rights and will get to practice them freely to where I will be residing soon.... which, btw, is not Texas.

Gen. Ripper's picture

Lucky fucker - I've got 3 years left in this state, then I'm outta here

Robocop5626's picture

Welcome to the other 49....choose wisely!

soulcalibur's picture

Fuck me, damn California 

HRH Feant's picture
HRH Feant (not verified) Apr 10, 2017 9:05 PM

One word that California will learn the hard way (no lube): UNSUSTAINABLE.

Oops, and the second word? Bankrupt.

CaptainObvious's picture

Just translate those words to Spanish, Tagalog, Japanese, Chinese, Arabic, Somali, etc. and you're good to go.

philipat's picture

You overlooked Vietnamese and Korean but I get the point!!

Fascal rascal's picture
Fascal rascal (not verified) Apr 10, 2017 9:08 PM

Ha ha! Ain't gonna cut it. Taxpayers lube up and ban sandpaper rubbers with one of your thousands of SB###.

Keep democrats driving state government.

Ha motherfucking ha!

gregga777's picture

Privately employed, working productive citizens will continue moving out of Kalifornia to other states.  That will require even higher levels of taxation on the few remaining privately employed Kalifornians to pay pensions to their $100,000 per year lifeguards.  What kind of taxes can they squeeze of their $15 per hour wage slaves?  ROTFLMAO.

just the tip's picture

don't move to flyover country.  it's really really awful here.  hear?

wisehiney's picture

California has at least 35 socialist billionaires.

Come on you low life scum bag mother fuckers.

Put you money where your mouth is.

What's that?

I didn't think so.

Miffed Microbiologist's picture

The California senate just recently passed a bill to raise gasoline taxes significantly to " improve roads." Im sure these funds will be exclusively used in such venture and CALPERS will just SOL.


Lost in translation's picture

Re-read the bill, Miffed. It isn't a one-time tax increase, nooo...

The increases are programmed in, year-after-year. Gas tax is set to increase automatically, EVERY year.

WOW101's picture

I want to know where the last tax increase to improve roads went?  San Diego increased sales taxes, by vote, to fix their roads. The sheep here just keep voting for moor taxes.  It is insane and it cannot last!

hotrod's picture

So guys like THE HOF of Baywatch get paid 6 figures.  Damn, Bikinis Babes and Bucks.

bugs_'s picture

I owe my soul to the company store

LetThemEatRand's picture

You would think with all of those multi-billionaires in California who advocate for moar public pensions, that they would pay up.  A few silicon valley billionaires could make Cal-Pers right as rain if they were willing to hand over just 75% of their wealth.  Oh, right.

401K of Dooom's picture

Wow!  The first time I upvoted you.  This is an augury that the end is near.