Neil Nisperos, Staff Writer
Created: 03/18/2012 03:36:06 PM PDT

Related story: Lawmakers react to CalPERS struggles

Local officials say funding for services are expected to take another hit with the California Public Employee’s Retirement System lowering investment return forecasts last week.

CalPERS, the nation’s largest public pension fund, has requested state, local government and school districts increase contribution rates.

Return projections were lowered from 7.75 percent to 7.5 percent.

Cost calculations have yet to be made for local governments, still reeling from the economic downturn of 2008 and the loss of redevelopment agencies this year.

Under the plan, school districts would contribute another $137 million to cover the pension costs for nonteaching personnel.

Cities, counties and local agencies will see an increase in contributions of 1 percent to 2 percent for civil workers and 2 percent to 3 percent for public safety employees beginning in 2013.

The CalPERS adjustment is expected to add to financial woes in the Inland Empire.

San Bernardino Mayor Pat Morris said his city is in a precarious financial situation, with a 40 percent reduction in the budget in recent years and a minuscule amount left in reserves.

Morris said increasing contributions to the public employees’ retirement system will be an intolerable burden.

“We’ve lost tens of millions from our city’s budget since the economic meltdown, and we’ve had to reduce our work force by hundreds,” Morris said.

“The state then dissolved our redevelopment agency, which cost us $35 million a year in income to the city. Now we have this recalculation of the return rate for the PERS retirement account, and that decrease in the return rate will likely cost us millions more.”

Montclair City Manager Ed Starr said the move could mean city service reductions.

“In the case of our community, it will simply mean absorbing it into our general fund budget, and that might mean looking at service level reductions,” Starr said.

“We think we can build it into the general fund budget, but it limits the amount of money for services, supplies, and capital outlay.”

Chino Mayor Dennis Yates echoed the financial concern.

“It’s another expenditure coming out of the general fund and, of course, it finances fire personnel, police, and different activities in the city. We continue to bear the brunt. From what I gather, (CalPERS) has got some very poor investment practices. They’ve been under investigation, and the public has to pay for it.”

The CalPERS action came amid increasing scrutiny of the cost of providing for government retirees, who receive the types of defined-benefit pensions that are unavailable in the vast majority of the private sector.

To read entire story, click here.