Most counties and local governments are going to see a large increase in what they have to contribute to public employee pensions after July 1, 2011. But Sacramento County, which is not part of CalPERS, is going to actually see a decrease in pension contributions after July 1st. This is a mix of good and bad news.
For Sacramento County specifically this is good news. It shows that when county governments don't increase benefits without also increasing what they contribute to the system, public employee pensions don't become the bane of local budgets. There is an actual way to manage public pension systems responsibly. And so the answer, as Sacramento County shows, is that public employees don't need to be punished for the pension funding crisis, but local governments need to learn how to better manage their financing in the future and not rely upon large investment returns which may not be there tomorrow.
The bad news though is that counties just outside of Sacramento, Woodland and Yolo County in particular, are facing higher pension contributions starting July 1st. The ways both of these local counties are dealing with this pension crisis is by trying to unite in rolling back pension benefits of public employees. Right now the proposals of benefit cuts by county officials seem reasonable, but with the deteriorating state budget situation one has to worry about what further strain local government budges might be in if the state has to cut aid it gives to local governments. And if local governments have to face more financial pain, they may look to do more benefit roll backs and balancing their budgets more and more on the back of public employees.
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