The Silicon Valley Voice

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Growing Pension Cost “Crowd Out”

Santa Clara’s increasing costs aren’t just taking a bigger bite out of the City’s budget. Money that’s spent for growing pension costs is money that’s not available for public services—in effect, they “crowd out” public services.

Last year Joe Nation of the Stanford Institute for Economic Policy Research (SIEPR) analyzed the impact of soaring public pension costs in, Pension Math: Public Pension Spending and Service Crowd Out in California, 2003-2030.

For example, Nation found that while State of California’s pension costs grew from 2 percent of budget in 2002-03 to 7 percent in 2017-18, the state Department of Social Services’ budget fell from 11 to 7 percent.

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In another example, the City of Pacific Grove saw pension costs soar from 2 percent in 2002-03 to 23 percent in 2017-18—while budgets for parks, recreation programs, libraries and museums declined by almost the same amount, Nation reports.

Here’s what Santa Clara’s increased pension costs over the next five years could provide in terms of community amenities and public services for City residents.

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