You may be scratching your head and asking, “The City of Fresno?” Yes. The City of Fresno. The Retirement Security Initiative this week salutes Fresno for doing what no other California city, county, or even the state has been able to do, which is carry a surplus in its public pension system. In fact, the City of Fresno is only one of a few major public pension programs in the U.S. that is fully funded. (Perhaps some of their actuarial assumptions, like a 7.5 percent rate of investment return, are overly optimistic, but they are far better off than most other plans in the country, which also employ overly optimistic assumptions.)
A report released this week by Transparent California shows Fresno’s pension program has a surplus of $289 million. This is big news for a state that’s swimming in an estimated $300 billion worth of unfunded pension liabilities. Further, areas surrounding Fresno also find themselves in deep water when it comes to pension debt. For example, Fresno County’s unfunded pension liability is $980 million, Madera County’s is $136 million and King’s County is $82 million.
So, how does Fresno not only keep its head above water but manage to look like Esther Williams while doing it? According to Transparent California’s Research Director Robert Fellner, the city doesn’t make promises it can’t keep. “The reason for the unique success of the [City of Fresno Retirement Systems] is simple,” says Fellner. “They promised only what they could afford to pay for.”
To be able to do this takes collaboration, partnership and input from all stakeholders. According to the plan’s administrator, Robert Theller, that’s exactly what has helped Fresno maintain its conservative approach. “The city, the unions, management and the retirement boards have worked for many, many years at coming to fair compromises,” Theller told the Fresno Bee. “The pension benefits aren’t over the top, and they’re not underwhelming either. … It puts it much more in the realm of ‘comfortable.’ ”
“It’s nice to see a system just doing something right,” says Fellner. And RSI couldn’t agree more. Promising only what you can afford to pay and paying for all that you promised is rare but commendable. So, our hats are off this week to the City of Fresno and its retirement system administrator and board members, public officials and labor leaders who have contributed toward its long-term goal of maintaining a healthy and sustainable pension for its employees while looking out for its taxpayers.