Last week, a two-year pay cut of 4 percent for all city staff and a reduction in pension benefits for new hires.
“The compensation reduction will help balance our current budget, but the pension cost savings will help us reduce costs over the long term,” Mayor Al Boro last week adding that it will contribute to a reduction in pension liability over time.
In 10 years, the city is estimated to gain approximately $500,000 in savings from the pensions changes, Assistant City Manager Jim Schutz told the Marin Independent Journal.
In May 2011, the Marin County Civil Grand Jury called for changes that would make pensions more sustainable, stating “San Rafael is now paying 50% of payroll, or nearly 20% of General Fund revenue, just to fund its annual pension obligation.”
San Rafael has had to take aggressive action balancing the budget due to pension plans increased cost to employers and loss of income, the report stated.
Former Marin Supervisor Denis Rice told the Marin Independent Journal San Rafael used $1 million in pension reserves this fiscal year to balance the budget, despite pay cuts.
"Even with these reductions, they (San Rafael) have to raid their reserves for $1 million, and the system is still unsustainable," he told reporters.
Do you think reducing pension benefits will decrease pension liability and save money over time?