This post was contributed by a community member. The views expressed here are the author's own.

Politics & Government

Council Pays Down Employee Debt

Move expected to save major amounts of money over next decade.

The Menlo Park City Council moved to pay down a big chunk of its police pension liability Tuesday night, a move that is expected to save the city roughly $1.5 million over the next 11 years.

The one-time $7.160 million payment to CalPERS at the end of this year means the city's ongoing annual payments will be $980,000 less, Finance Director Carol Augustine told the council in a whirlwind, number-crunching budget session Tuesday. 

If approved, she said, the money will come out of the city's general fund. Roughly eight percent of the payout will draw from the Community Development Agency. The city will miss out on about $200,000 in interest after spending the $7 million, but it pales next to the accruing interest the city racks up on its balance with the California Public Employee Retirement System, the Sacramento-based entity that handles public employee pensions.

Find out what's happening in Menlo Park-Athertonwith free, real-time updates from Patch.

Council Member Kelly Fergusson said her family would not think twice about making such a decision to save money in home finances.

"This is an easy decision," she said.

Find out what's happening in Menlo Park-Athertonwith free, real-time updates from Patch.

The payment goes specifically toward police pensions, much of which is paid for through the Community Development Agency. Acting as the agency board, the City Council also passed a resolution allowing the $7 million to be pulled from the Community Development Agency's non-housing fund. The transaction will take place late this year, Augustine said.

 

Update 3/18/2011: Menlo Park Patch originally reported that the entire payment to CalPERS would come from the Menlo Park Community Development Agency. The vast majority of the payment will actually come the city's general fund, while the CDA will pay just eight percent. We apologize for this. 

We’ve removed the ability to reply as we work to make improvements. Learn more here

The views expressed in this post are the author's own. Want to post on Patch?