Cost to leave CalPERS "astounding," city manager says

By: Stephanie Dumm News Messenger Reporter
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Leaving the California Public Employees? Retirement System could mean a price tag of between $60 and $80 million for the city. In fiscal year 2011-12, the city contributed $1.9 million into CalPERS for its employees. City Council gave direction Tuesday night to city staff to ?receive and file? data received from CalPERS about terminating the city?s contract with the agency. The California Public Employees? Retirement System (CalPERS) provides retirement benefits for the city of Lincoln?s employees. ?Council directed staff over a year ago to contact CalPERS and passed a resolution of intent to terminate so we could get the information necessary to see if it?s feasible for the city to leave PERS and essentially go it along on a retirement program,? City Manager Jim Estep said during Tuesday night?s City Council meeting. The cost to leave CalPERS was received by the city last month, according to Estep, and the city was given two scenarios: freeze compensation increases for city employees or city employees receive compensation increases until they retire. ?Frozen compensation would be an astounding $58 million (to leave CalPERS),? Estep said. ?Alternatively using projected compensation, we could leave for $79 million.? Estep pointed out that those figures ?is not the limit of the cost.? ?Should we actually move forward and terminate, they would recalculate and come up with a firmer number,? Estep said. ?Given the cost and that I don?t believe we have $60 or $80 million to contribute, I cannot recommend that we pursue this any further, however the numbers are quite astounding.? Councilman Gabriel Hydrick said the city ?should still continue to look for creative ways and solutions.? ?Really folks, this is what we have, this is what we are facing, not only in Lincoln, but the region,? Hydrick said. ?I hope we continue to be creative in exploring options.? Councilman Stan Nader asked if the city has ?reached out to the league to see if there are any organized efforts by cities to deal with these issues.? ?If we just sit back and say, well, PERS has got us in the lock box and we?re going to ride this ship into whatever, we?ve got to do something,? Nader said. Pointing out that the city ?has taken steps to reduce our liability,? Councilman Tom Cosgrove said the city ?are not sitting back.? ?We?ve made changes. We?ve negotiated with labor groups and labor groups have made concessions and changed their formula for retirement,? Cosgrove said. Resident David Gordon asked that the city provide Lincoln residents with more information about the city?s situation with CalPERS ?so that the dummies in the audience like me who think they understand, get the information so I can understand the extent of the problem.? In other city news, council was asked by city staff for direction about what to do with the former Lincoln Arts building (580 Sixth Street) and the former city hall/police station (640 Fifth Street). According to Housing and Special Projects Coordinator Amanda Norton, the former Lincoln Arts building is currently vacant, and the Lincoln Area Archives Museum occupies a portion of old city hall/police station?s first floor. Norton posed the question of whether the city should ?be a landlord and rent the properties,? sell them, land bank them ?and wait for the economy to improve? or ?reserve the buildings for use by a non-profit.? Direction was given to ?explore both leasing and selling? the buildings, said Estep, after at lease a half-hour of discussion as councilmembers debated what to do with the buildings. Cosgrove and Councilman Paul Joiner both said they?d like to see the buildings leased or sold as long as the city competes fairly with private landlords or those selling property. Joiner said he wanted to see the city not ?undercut? the private sector and lease or sell the buildings ?at market value.? Jean Cross, executive director of the Art League of Lincoln, asked about the possibility of her organization occupying ?the west wing of the former city hall.? ?There are financial savings for the city in that we will pay our part of the utilities, and it will also increase safety in the area of downtown,? Cross said. ?I believe we can work very well with the Lincoln archives, and we?d like to create an exhibit or gallery of Gladding, McBean historic memorabilia and provide an opportunity or place where people can get an idea of the history of Gladding, McBean and the part of art in the city of Lincoln.? Shirley Russell, executive director of the Lincoln Area Archives Museum, spoke positively about sharing the building with the Art League of Lincoln. ?Unofficially, because I don?t have the board?s approval, I personally am looking forward to having the art league next door because we could work together,? Russell said. ?I think it?s for the good of Lincoln and for the downtown merchants and for the good of the complete community to have both organizations in the city hall.? Cosgrove pointed out that before a decision is made to move the Art League of Lincoln into the former city hall, ?I think we have to allow the other nonprofits that could have an interest to pitch their case as well if they are interested.?