City Cancels Special Budget Hearing Due to Lack of Clarity

The City of Alameda has cancelled a planned special budget hearing for May 8th, citing lack of sufficient clarity on key general fund variables such as changes in investment assumptions by the California Public Employees Retirement System (CalPERS).

In February, CalPERS notified public agencies that it was considering changing its investment assumptions; when CALPERS lowers its anticipated rate of return, that increases costs for cities and school districts that participate in the pension plan, as their contribution rates go up to offset the loss of anticipated investment returns.

At a March 13th meeting, the CalPERS board reduced the pension fund’s investment assumptions, lowering the so-called discount rate from 7.75 percent to 7.5 percent.

According to CalPERS, the impact of that more pessimistic investment outlook will mean that “state and schools employer contributions will increase by 1.2 to 1.6 percent for miscellaneous plans and 2.2 to 2.4 percent for [public] safety plans beginning Fiscal Year 2012-13.”

In other words, pension costs for public safety workers, and non-public safety workers, in Alameda, are going up. Pension costs for the Alameda Unified School District will rise as well.

The City of Alameda says that the next budget hearing is scheduled for Tuesday, May 29, 2012 and the document package will be available on May 22.