Redding wants its top executives, managers and supervisors to kick in a greater share of their retirement costs as the city tries to tackle its massive pension debt.
The changes come as Redding is trying to avert a looming budget shortfall that without action could hit in just a few years and swell to $28 million in the fiscal year ending in 2028.
The City Council on Tuesday may approve the mandatory hike for the city manager, city attorney, their Nos. 2, other department heads and employees not represented by a union — 52 total — requiring them to pay 2 percent of their pay toward retirement costs through the Public Agency Retirement Services (PARS) plan.
The move would save the city about $134,500 per year, Personnel Director Sheri DeMaagd said. Of that, about $38,000 would go to the city’s general fund, about two-thirds of which pays for police and firefighters, among other things.
PARS supplements California Public Employees’ Retirement System (CalPERS) pensions for certain workers, though only those who retire from Redding can draw on it. The city started eliminating new hires from PARS eligibility earlier this decade, officially closing it to all new hires after Dec. 31, 2012.
Redding currently picks up the full cost of the plan for unrepresented employees, about 30.07 percent of their pre-tax pay. The PARS unfunded liability — future debt without money set aside to pay it — is about $32 million, according to the city.
If it’s approved, the hike could be the first of many attempts to get city employees to pay larger shares of their retirement costs. City Manager Barry Tippin has said he’ll look to negotiations with city employee unions for possible future cost savings for the city.
The council on Tuesday will receive an update in closed session on negotiations with seven employee groups, including those representing police, firefighters, electric and maintenance workers, clerical workers and more.
The council will also respond to pension concerns raised by the grand jury in its mid-May report warning Redding all other local governments of severe financial problems — and possible service cuts — because of unfunded liabilities and retiree benefits.
The city’s unfunded CalPERS liability was about $207 million at the end of June 2015, according to the grand jury.
Redding isn’t committed to those recommendations, though, citing its own ongoing work to address the issue, according to a letter to the jury from Mayor Brent Weaver. The city is looking at prepaying unfunded liabilities and using a trust fund to stabilize rates and refinance debt, among other options, Weaver said in the letter.
Tippin is under council orders to either come up with or start implementing a plan to deal with the city’s finances by next year as part of an update to Redding’s 10-year financial plan.
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Weaver also said in the response to the grand jury that the city is looking across the board to raise new revenue sources and drop expenses.
“The city of Redding recently held a special meeting to receive public input on options relating to cultivation of marijuana for medical and/or recreational purposes,” Weaver said. “The city of Redding has also recently met with our labor partner groups to discuss strategies to assist the city of Redding in achieving savings. In addition, in the near future, the city of Redding will be hosting an impact fee workshop.”
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