Santa Barbara County Grand Jury • 2017-2018 • Agency Response
Response to: Pensions in Santa Barbara County

City of Carpinteria, California September 11, 2018 Received Honorable Patricia L. Kelly Sep 17 2018 Superior Court*

Published: September 11, 2018 3 pages
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Note: Missing finding numbers detected: F3, F4, F5, F6, F7

Findings and Recommendations 3 findings

F2
In Carpinteria, Guadalupe and Solvang, pension solvency risks are minimal to moderate, except in the closed Carpinteria Safety Plan. Pension liquidity risks in those cities are higher, with several years in all three cities having projected negative cash flows under projected CalPERS actuarial returns. Response: The City of Carpinteria disagrees partially. While there are liquidity and solvency risks with CalPERS pension plans, the City disagrees with the methodology used in the report to reach conclusions about risks associated with the City of Carpinteria pension plans. The classification of what a "high risk" solvency plan is a bit arbitrary, with the Carpinteria Safety Plan being labeled "high risk" at 68% funded, but a 70% funded (2 such plans in the report) classified as moderate risk. Furthermore, a closed plan like the Carpinteria Safety Plan will generally be less impacted by the discount rate changed to 7% that CalPERS has scheduled to include in the June 30, 2018 actuarial valuations. The City has an IRS Section 115 trust with Keenan for the Safety and Miscellaneous plans and has set aside additional funds in this irrevocable trust. The report does not include the impact of these additional committed trust funds.
Related Recommendations (1)
R2
That the governments of the cities of Buellton, Carpinteria, Goleta, Guadalupe, Lompoc, Santa Barbara, Santa Maria and Solvang and of the County of Santa Barbara issue public reports, to be discussed at open sessions of their respective governing bodies, on the potential revenue gain and cost-saving measures that may be necessary to ensure continued adequate funding of their pension plans. Response: The City of Carpinteria has implemented this recommendation. On June 11, 2018 City Council budget session, Council Members discussed the potential revenue gain and cost-saving measures that may be necessary to ensure continued adequate funding of their pension plans. Should you or the Grand Jury wish to discuss this matter further, please feel free to contact me or City Manager Dave Durflinger. Sincerely, Fred Shaw Mayor Honorable Patricia L. Kelly/Santa Barbara County Grand Jury July 24, 2018 small, but positive, sign that the PEPRA law is having the intended effect of strengthening the security of pension benefits in the County. Response: The City of Carpinteria agrees with this finding.
F8
The 12 PEPRA plans in the cities of the County of Santa Barbara have a funded ratio of 0.90 and the 20 non-PEPRA plans have a funded ratio of 0.68. This is 5775 CARPINTERIA AVENUE • CARPINTERIA, CA 93013-2603 (805) 684-5405 • FAX (805) 684-5304 www.carpinteria.ca.us Honorable Patricia L. Kelly/Santa Barbara County Grand Jury July 24, 2018 small, but positive, sign that the PEPRA law is having the intended effect of strengthening the security of pension benefits in the County. Response: The City of Carpinteria agrees with this finding.
No recommendations for this finding
F9
Funded ratios of the municipal pension systems in Santa Barbara County are sensitive to the discount rate applied by CalPERS. A cut in the rate of 6 percent, from the 2018-19 rate of 7 percent, would push the funded ratios several municipal systems close to 0.5 and might impose further increases in the employer's contribution in Lompoc, in the City of Santa Barbara and in Santa Maria. Response: The City of Carpinteria agrees with this finding.
No recommendations for this finding

* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.