State & Local Government Policy, Business and Technology

Cities struggle under weight of rising pension costs

American City and County: Several cities across the U.S. are grappling with rising municipal and state pension costs, being forced to pass legislation or abstaining from reinstating previously cut government programs.

The Sacramento (Calif.) Metropolitan Fire District is expected to pay 26 percent more in retirement costs — $34 million total — than it did 10 years ago, according to the Sacramento Bee. That retirement plan is among 10 others in its region that will cost local governments on average 42 cents for every dollar in current employee salary costs next year.

Over the past several years, increased pension costs during the Great Recession led Sacramento to close three of its fire stations, the Bee reports. What’s more, the state’s retirement system decided to forecast lower investment returns starting in December, making governments and certain employees increase their pension contributions. The most expensive pension plans tend to be those of police and fire employees.

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