The Weekly Newspaper of El Segundo
Herald Publications - El Segundo, Hawthorne, Lawndale & Inglewood Community Newspapers Since 1911 - (310) 322-1830 - Vol. 107, No. 42 - October 18, 2018
Inside
This Issue
Certified & Licensed
Professionals.....................14
Classifieds..........................10
Crossword/Sudoku...........10
Election 2018.................... 4-5
Entertainment....................11
Legals............................ 12,13
Letters...................................3
Obituaries.............................3
Real Estate.......................7-9
Sports.............................. 6,15
Weekend
Forecast
El Segundo PD’s Laurie Risk
Earns Service to the Flag Award
Congratulations to Crime Prevention Officer Laurie Risk, who was recently awarded the “Service to the Flag” award by the organization Women in Defense (WID). WID is an association that engages,
cultivates and advances women in all aspects of national security. Risk was recognized for her 30 years of service with the El Segundo Police Department and for her outstanding work in crime prevention
and community relationship projects. Source: ESPD.
City Council Gets More Bad News
on Escalating Pension Liability
By Brian Simon
Those assembled at Tuesday night’s El
Segundo City Council meeting heard more
sobering news about current and future pension
liability, as a presentation from an actuarial
firm representative revealed the hard numbers
in store. In a nutshell, the most likely projections
indicate that the City of El Segundo’s
annual pension contribution for combined safety
and miscellaneous employees will essentially
double by the year 2029/30 compared to current
levels – increasing from $12.5 million
to $24 million. By that time, the City will
have to pay out a buck in pension costs for
every dollar in salary for employees in police
and fire. Bartel and Associates Vice President
Mary Beth Redding’s summary revealed how
the City of El Segundo got into this difficult
financial situation as well as steps taken to
curb the damage over the long haul.
Looking at the culprits, Redding first pointed
to CalPERS itself. She explained that the
agency made a too-high assumption about its
future rate of return on investments. CalPERS
needs to make roughly 7.5 percent. Below that
leads to losses. Cities like El Segundo have
had to make up the difference, thus driving
up costs. A particularly huge loss in 2008/09
compounded the problem.
Secondly, the thought that CalPERS was in
great shape in the early 2000s with more than
enough money to go around led many cities
to offer enhanced benefits to employees. El
Segundo did so as well, though only for safety
employees – so today’s issues could have been
even worse had miscellaneous been included in
the package. The City eventually implemented a
second tier for new hires to control benefit costs.
El Segundo also has a larger retiree liability
than most other cities, with miscellaneous
inactive personnel at 62 percent and safety at
71 percent. As people continue to live longer,
that further drives up the costs.
To respond to the crisis, CalPERS has
instituted its own changes. Redding pointed
to a long-range plan to mitigate risk. The
agency opted to move to more conservative
investments over time to reduce volatility --
and also lowered its discount rate, dropping
it down to 7 percent. The rate will likely
reduce to 6 percent over the next 20 years or
so. CalPERS also adopted a new amortization
policy to help cities spend less money
on interest, though short-term costs will be
higher in the process.
In addition to escalating current costs, the
City also has an unfunded pension liability of
$136 million for those who retired or no longer
work here. To attack that, the Council over the
last two years began to make extra payments to
reduce future interest. Redding compared the
strategy as similar to paying off one’s mortgage
early. As examples, an extra $578,000 kicked
in towards miscellaneous will save $800,000 in
interest, while a $1.3 million additional check
towards safety will save $1.8 million in interest.
The City also set up a Section 115 trust where
it can control its own investment activity and
then use the monies saved in the account at
a time when CalPERS asks for a larger payment.
Redding applauded both strategies and
noted that they will help the City eventually
achieve much more manageable levels with
its annual contributions – but it will take over
20 years to get there. Redding concluded her
presentation with a brief overview of the longterm
OPEB liability (health care for retirees),
which the City began paying down a decade
ago. It is now one-third funded and markedly
less concerning than CalPERS.
For those wondering why the City doesn’t
simply doesn’t get out of CalPERS altogether,
Mayor Drew Boyles asked what the fee would
be to leave the agency. According to Finance
Director Joe Lillio, it’ll run somewhere between
$422 million and $499 million. So that’s not
an option.
The room was packed to start Tuesday’s
meeting, as scores of local volunteers were onhand
to receive their annual recognition from
the City. Recreation Supervisor Shawn Green
introduced the individuals by name and asked
them to come up for photos with the Council
members. The groups represented included
RSVP, The Friends of the El Segundo Public
Library, Library Board of Trustees, Senior Club
Outreach Volunteers, Youth Volunteers, Environmental
Committee, Technology Committee,
Youth Drama Volunteers, Planning Commission,
Economic Development Advisory Council
(EDAC), Recreation and Parks Commission,
Arts and Culture Advisory Committee, Senior
Housing Board, and Capital Improvement
Project Advisory Committee.
Emergency Management Coordinator Randal
Collins provided details about today’s
Great ShakeOut taking place at 10:18 a.m.
in conjunction with the date of Oct. 18. All
City employees will take part in the exercise
with the goal to build a “culture of preparedness.”
Drills will include “drop, cover and
hold” followed by implementation of safety
and evacuation plans as well as personnel accountability.
The City’s incident management
team will also be activated. Collins indicated
that future unplanned exercises may be in the
works with continued training to “build muscle
memory” so the City is ready in the event of
any disaster – earthquake or otherwise.
See City Council, page 14
Friday
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Saturday
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Sunday
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