To meet pension contribution obligations to its 180 full-time
employees, the city spent 12 percent, or $2.7 million of its $22.5
million operating budget in fiscal year 2006-07.
Morgan Hill
To meet pension contribution obligations to its 180 full-time employees, the city spent 12 percent, or $2.7 million of its $22.5 million operating budget in fiscal year 2006-07.
And that means California Public Employees Retirement System contributions are the costliest benefits to the city’s bottom line, according to earnings and benefits data for fiscal years 2006 and 2007 obtained by the Morgan Hill Times through a public records request.
The contributions totaled $2.4 million in 2005-06, or 13.3 percent of the city’s $18.1-million operating budget, and $2.7 million, or 12 percent of the $22.5-million city budget, in 2006-07.
City executives, who earn the highest wages, also receive the highest contributions because they are based on the wages. There are two categories for PERS contributions: public safety and miscellaneous. Public safety employees pay 9 percent of each paycheck to PERS and miscellaneous contribute 7 percent.
“We’re fortunate to have a very stable and dedicated group of employees,” said City Councilman Greg Sellers. “That experience and consistency ends up saving the city a whole lot of money, not only because every time you have turnover … but if you have employees who stay a longer time, you’re able to save money on everything you do.”
The highest PERS contribution in Morgan Hill in 2007 was the $44,425 the city paid into the system for police Chief Bruce Cumming. The second highest was the $35,728 sum for City Manager Edward Tewes. City leaders and department heads, whose annual salaries range from $150,000 to $180,000, had comparable contributions. More than half of the benefits paid to Stephen Rymer, director of recreation and community services, were in the form of pension contribution, which was $17,925 in 2007. The city also paid $4,047 in 2007 into Rymer’s ICMA Retirement Corp. account, the city’s equivalent to a 401(k). Other city officials also received ICMA funds.
City Clerk Irma Torrez’s PERS contributions were between $13,000 and $15,000 in 2006 and 2007 fiscal years. For James Ashcraft, public works director, the city’s PERS contributions were $17,887 and $19,745 in 2006 and 2007, respectively, and payments of $7,131 and $7,431 were made to his ICMA account in the respective years.
Before the dot-com bubble burst in 2000, cities didn’t contribute to CalPERS because the fund made enough in investment income to pay itself. Those days are gone.
“The rates started to change back in 2003 because of the dot-com decline,” said human resources Director Mary Kaye Fisher. “PERS investment income plummeted, which caused employer contribution rates to grow since. It’s pretty much stabilized the last several years and it’s expected to remain relatively stable.”
CalPERS, one of the largest retirement pension systems of its kind in the world, charges cities different rates, which it adjusts annually based on “historical actuarial studies,” Fisher said. A slight change in the rates can costs cities hundreds of thousands of dollars. In Morgan Hill, the 2006 employer contribution rate was 28.2 percent for public safety employees and 12.5 percent for all others. In 2007, when the rates went up 29.7 percent and 13.3 percent, the city paid $300,000 more in CalPERS contributions, said Christine Reza, assistant finance director.
LARGEST CalPERS CONTRIBUTIONS TO MORGAN HILL CITY EMPLOYEES, 2007
- Bruce Cumming, police chief, $44,425
-
Edward Tewes, city manager, $35,728
-
Shane Palsgrove, police sergeant, $32,322
-
Janet C. Kern, city attorney, $30,427
-
James Ashcraft, public works director, $19,745
-
John Dilles, finance director, $19,745
-
Garrett Toy, business assistance director, $19,625
-
Kathleen Molloy Previsich, community development director,
$19,477
- Stephen J. Rymer, recreation and community services
director, $17,925
Source: City of Morgan Hill
