San Diego’s pension tab just shot up again, and City Hall’s budget writers are not exactly popping champagne over it. An outside actuary told the retirement board this week that the city’s required annual pension contribution is on track to hit a new record, driven by recent pay raises and tweaks to the long-term liability math. The revised figures are landing right as Mayor Todd Gloria and his finance team scramble to lock in a tough budget for the coming fiscal year.
Gene Kalwarski, the Cheiron actuary who briefed the San Diego City Employees’ Retirement System board, now pegs the citywide actuarially determined contribution at about $563.2 million. As reported by The San Diego Union‑Tribune, that is up from last winter’s projection of roughly $540.1 million and would push the General Fund’s share to about $410 million, up from an earlier estimate near $383 million. Kalwarski told trustees that salary hikes above what the system had built into its models are doing most of the damage.
Budget backdrop
The mayor’s final proposed budget has already flagged a structural deficit, and ballooning pension costs are high on the list of pressures. Documents from the City of San Diego cite softening franchise and sales-tax revenues, along with rising personnel expenses, as major drivers. National coverage has warned that San Diego is staring at multi-year shortfalls that could mean dipping into reserves, slowing or shelving projects, or trimming services, with analysts pointing to pension growth as a central factor. Governing walks through those tradeoffs.
Why the payment jumped
Kalwarski told the board that the spike largely traces back to pay increases that overshot earlier assumptions, including last summer’s raises for general employees and safety workers, plus recent step increases. Together, those moves added more than $140 million to the system’s long-term liabilities. The fund is currently in the mid-70s on its funded ratio, and the unfunded liability still sits in the billions, with the gap reported at about $3.46 billion. Those shifts, Kalwarski said, pushed total long-term liability projections above $14.5 billion while the assets used to calculate the funded rate came in lower, resulting in the larger near-term bill, according to The San Diego Union‑Tribune.
What officials will do next
The SDCERS board is sticking to its regular meeting schedule and posts agendas and backup materials for the public. Trustees are expected to formally adopt the new payment amount at a March board meeting. The system’s website for SDCERS shows where agendas, actuarial reports, and staff packets will be available once they are finalized. After the board signs off, the pension number gets folded into the mayor’s and City Council’s budget talks this spring, when officials decide how to scrape together savings or drum up new revenue.
What this means for neighborhoods…