The City of San Luis Obispo is facing an $8.9 million budget gap, which could result in cuts to city services.
According to San Luis Obispo City Manager Derek Johnson, due to policy changes, the city is having to pay more money into CalPERS, the agency that manages the pension city employees receive.
"CalPERS had historic losses during the great recession," Johnson said. "The fund lost 27 percent of its value, or over $60 billion, so those investment losses meant that we have an unfunded liability status and so as a result of those investment losses and policy changes."
Johnson says San Luis Obispo isn't alone and that the agency is asking for all 3,000 members to increase their contributions.
Those losses are impacting San Luis Obispo and resulting in that $8.9 million gap in the budget. That could mean the city might have to change the way it does business or reduce certain services, such as community planning, public safety, and building maintenance. However, Johnson says the city has made a dent in the payments to CalPERS.
"The city has done a lot over the last few years. We've made headway, we've paid nearly $2.5 million towards that unfunded liability," Johnson said.
As a result, Johnson says the city has reduced the pension benefits for new employees.
No reductions in city services have yet been determined. The city is asking for public input as it makes those decisions.
"They should care about the way we provide those services and ultimately should participate in the discussion to make sure that the services that they value are here for tomorrow," Johnson said.
Next month, the city council will start looking into ways to reduce those services.
"Then based upon that direction, we'll return in April of 2018 with a plan and then that plan will carry forward for the next decade or so, so that we make sure we have fiscal sustainability," Johnson said.
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