With only 75 public employees, Carmel is a small player in the California Public Employees’ Retirement System (CalPERS). But with an annual budget of $13 million, a financial obligation in the multiple millions of dollars may have a profound impact.


In an effort to identify retirement alternatives, Mayor Sue McCloud appointed a five-person citizen advisory committee this fall at the request of Council Members Jason Burnett and Ken Talmage. The committee is designed to “draw on some of the great financial minds we have in the community,” says Burnett. 


Among these minds is William Sharpe, Emeritus Professor of Finance at Stanford University and recipient of the 1990 Nobel Prize for economics for development of a model that helps quantify risk. Sharpe, now a fulltime Carmel resident, sees strengths and drawbacks to public and private retirement plans. “People who go into public service tend, generally, to accept lower pay while they are working for the benefit of defined retirement contributions,” Sharpe says. 


Sharpe’s career focused on lifetime finance; now he conducts the majority of his research on post-retirement, asking, “How do we manage finances for this changing demographic?”


The committee’s recommendation is expected in early 2011, and the city council hopes to use it in negotiations in June with two of Carmel’s three labor organizations. Until a solution is determined, a de facto hiring freeze is in effect because “we’re in a hole and we need to stop digging,” says Burnett.


Digging out of the hole could potentially mean buying out of CalPERS entirely. 


Finding a retirement plan public employees will accept may require modifications to overall compensation. Carmel Fire Department Captain and president of the Carmel Professional Firefighters Union Ian Watts says, “We feel we receive a good retirement, based on the sacrifices we make throughout our careers.”