Special to the Town Crier
When the city of Los Altos decided in December 1996 to contract out its fire-fighting services to the Santa Clara County Fire Department, it stopped paying into the firefighters' pension fund.
Now, although Los Altos has had no firefighters on its payroll for almost three years, it still owes the pension fund $2.5 million for the years firefighters were on its payroll. According to a Sept. 23 letter to the city of Los Altos from the California Public Employees' Retirement System (CalPERS), $372,367 of that amount is interest for the two years when the city made no payments,
In a July 21 letter to the city, Rick Reed, senior pension actuary with CalPERS, wrote, "Contracting out fire services and terminating safety fire employees does not release the city from its obligation to its fire plan. The fire plan has other participants who had previously terminated, transferred and retired."
"Staff now understands that the city should have made annual or monthly lump-sum contributions to our fire safety plan following the separation of all employees," said Layne Long, assistant to the city manager, at an Oct. 12 Los Altos City Council meeting.
City officials question why CalPERS took two years to call attention to the city's oversight. The city first heard it owed on its fire pension funds in a Jan. 8, 1999, letter from the state.
That notification allowed the city time to put the $367,899 owed this fiscal year into its budget. The annual amount due the city retirement funds fluctuates annually based upon actuarial tables.
"We would love to have some stability," Long said. "We budget conservatively because we never want to have to go into reserves to pay (pension contributions)."
Since Los Altos Hills contracted with Los Altos for fire protection until Los Altos contracted out its own fire service, the Los Altos Hills County Fire District will be responsible for about one-third of this year's contribution, Long said.