With all of the news about cities in or requesting bankruptcy protection, and each having high debt and a significant unfunded pension and retiree health obligations, articles in the media have included comments from analysts and think tanks extending these problems to other cities nationwide. In fact, the public sector – like the private sector – has challenges that make for good headlines, but those are too often erroneously extrapolated to all similar organization or industry types. In the case of the current interest in unfunded liabilities of pensions and retiree health benefit programs, there are certainly some governmental agencies that have significant problems, yet there are many that do not share those problems. Oakley’s conservatism in its financial management, in minimizing debt, in the employee benefits offered, and with a staffing model that is part contract staffing and part in-house staffing, helps keep the City of Oakley in the latter category of being essentially free of these unfunded obligations.
For example, here’s a summary of how Oakley is positioned on pensions, retiree health and debt:
- On the pension side, the City participates in CalPERS, which is a huge pool within which the City participates. It is true that, depending on investment returns and numbers of participants, there is an overall CalPERS unfunded liability. CalPERS does not calculate a separate unfunded liability for each participating city and Oakley’s share is very, very small. The pension plan for the City of Oakley employees is one of the least expensive and all new employees fall under the 2%@62 program, which has no unfunded liability.
- Oakley does not offer retiree health benefits at all. That means there’s no unfunded liability for that type of benefit. Like everybody else, employees are eligible for Medicare at age 65, with 100% of the cost falling on the employee and no City obligation.
- Oakley’s General Fund does not have any real outstanding debt. There is a Public Facilities Fund debt that is outstanding, but that small debt service is covered by Public Facilities Impact Fee funds, not the General Fund. (If the Impact Fee funds are not adequate, the General Fund would need to step in to assist).
While Oakley has experienced the effects of the recession like other cities, its conservative financial management approach has allowed it to navigate the difficult times making the necessary short-term adjustments without having to ask its residents for new taxes and still maintaining a strong fund balance (savings account) that represents a reserve of over 30%. This is all only accomplished with strong and prudent leadership from the current and previous City Councils, a lean and dedicated staff, and a community that works well together and doesn’t demand a level of service that can’t be afforded. Home values are up, crime is down, the Downtown and other neighborhoods are revitalizing – we are embarking on a growth phase and Oakley’s best years are certainly ahead of us.
If you would like you to see the budget here is a link.