Millbrae officials question, criticize pension cost report

But Millbrae officials assert the report is inaccurate in its claim, primarily citing the city’s slim payroll of $6.3 million makes the 59 percent owed in pension costs appear more severe than actuality.

Finance Director DeAnna Hilbrants said officials take great care to limit pension costs, and are able to trim the expense through contracting essential, and often expensive, positions in police, fire and public works departments.

“This has significantly reduced the city’s salary and pension costs, and the city’s salary costs are much lower than comparable cities. But, the report skews this fact by comparing the city’s pension burden as a percentage of salaries,” she said in an email. “Using this methodology, the city’s pension burden will always be higher because the city runs lean.”

Most notably, Hillbrants pointed to Millbrae joining the Central County Fire Department with Burlingame and Hillsborough and contracting with the San Mateo County Sheriff’s Office for law enforcement, as a means of reducing some ongoing costs through hiring a centralized source of labor. Administrative savings are among the biggest benefit to the city’s existing and future budget, she added.

She said in a subsequent conversation the city is cognizant of its retirement costs, and has adopted a variety of financial strategies specifically designed to address the issue.

“It is important to note that we have taken some very proactive steps over the past several years and we are continuing to look at that on an ongoing basis,” she said.

Establishing a pension trust to draw from during lean economic times, increasing employee contributions to the city’s pension cost and seeking opportunities to outsource suitable positions are among the city’s efforts to limit pension burdens, said Hilbrants.

“In addition to contracting, there is planning and forecasting and mindfulness in negotiations with our labor,” said Hillbrants, regarding the city’s approach to limiting costs.

The city’s criticism of the report is furthered through the belief that the California Policy Center is an advocacy agency known for frequently targeting CalPERS.

“Their primary mission is to oppose CalPERS,” said city spokesman Trent Sunahara, adding the city has not sought corrections to the report because “it doesn’t seem productive to reach out to them, because they have a clear agenda.”

California Policy Center is headquartered in Southern California and considers itself “an educational nonprofit focused on public policies that aim to improve California’s democracy and economy,” according to its website.

Ed Ring, a researcher for the center, defended the report’s findings, claiming the information came directly from CalPERS.

“This is using CalPERS’ own data. They look at Millbrae’s payroll and estimate how much Millbrae will have to pay in the future,” he said.

Many of the center’s reports focusing on pension reform, while also highlighting issues with unions and advocating for school choice. But Ring downplayed claims regarding the group’s alleged political leanings.

“We are not an advocacy group,” he said, while acknowledging he is an outspoken critic of pensions. Ring said while the center is confident in the report’s findings, he is willing to have a conversation regarding potential inaccuracies.

“If they can demonstrate we have made a mistake, we will immediately acknowledge that,” he said.

Millbrae joins Fremont, Pacific Grove and Newark as the other Northern California city listed among the top 20 cities in the report.

For his part, Ring said Millbrae is similar to many other cities across the state facing significant pension payments.

“Personnel costs and benefits and overtime are eating everybody up and Millbrae is as challenged in this as much as every city and county,” he said.

While Millbrae officials recognize the difficulties posed by pension liabilities facing most cities across the state, Hillbrants said perhaps the most effective strategy in trimming that cost is through a reliance on contract labor.

Outsourcing has been criticized by some Millbrae residents previously as an inefficient allocation of resources, but Hillbrants defended the practice in her email as a means for trimming the city’s long-term obligations.

“While there has been much debate in the community about the city’s use of contracted personnel, this strategy has only put the city in a stronger financial position,” she said. “The city will continue to evaluate the value of contracting certain roles and services versus employed staff in a continued effort to reduce present and future costs and liabilities.”

Visit californiapolicycenter.org/much-will-cities-counties-pay-calpers to read the report.

austin@smdailyjournal.com

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