City of Simi Valley reaches settlement with taxpayer groups, rescinds authorization for pension obligation bonds
The Simi Valley City Council voted 5-0 on April 6, 2020, to rescind a December 2019 resolution authorizing a $150 million pension obligation bond and future similar bonds, thanking the Ventura County Taxpayers Association for working with the City in avoiding what could have
been a lengthy battle over legally questionable bonds. The rescission was part of a settlement agreement with the VCTA and the Howard Jarvis Taxpayers Association.
The bond would have formally quantified a current estimate of the City’s unfunded pension debt – the unfunded accrued actuarial liability (UAAL) owed to the California Public Employees’ Retirement System (CalPERS) in the future.
In the face of concerns raised by the Ventura County Taxpayers Association, the city council had filed a lawsuit asking the Ventura County Superior Court to validate its 2019 resolution. VCTA then joined with the Howard Jarvis Taxpayers Association in answering the lawsuit by the City’s deadline.
In settling, the Simi Valley City Council recognized the constitutional concern in the VCTA/HJTA answer to the City’s lawsuit — whether the California Constitution requires two-thirds voter approval of any such bond. Agreeing to wait for legal clarity, and with each side bearing its own costs, the City agreed to dismiss its lawsuit with prejudice, and rescind the bond authorization resolution.
Jon Coupal, president of the Jarvis Association, was glad for the quick resolution. “Incurring bond debt to pay pension debt is like using Master Card to pay your Visa bill,” he said. “It is unsound fiscal policy, and clearly something that should not be done without input from the taxpaying voters who will be responsible to repay the debt.”