By BRETT WILKISON
THE PRESS DEMOCRAT
Critics point to the consequences of growing pension payments, including a reduced county work force and cuts in government services, as an urgent cause for change.
Across California, some 100,000 to 150,000 local and state jobs could be cut by 2020 to pay for increased pension and retiree medical benefits, said Girard Miller, a senior strategist with PFM Asset Management who specializes in public sector retirement plans.
“It’s the issue of the day,” said Sonoma County pension overhaul advocate Tom Lynch.
Experts warn that as the number of retirees swells, the attempts at reshaping the system can be overshadowed by the sheer size of the benefits already promised.
“It’s closing the barn after the horses are gone,” said Ethan Kra, chief actuary for Mercer, a global consulting company.
Options for overhauling public systems are limited compared with those available to private corporations, which can more easily freeze retirement benefits for existing workers, set higher employee contributions and lower benefits going forward.
As a result, public sector pension changes have focused on reducing benefits for future workers. Sonoma County this year began discussing possible changes along those lines.
That approach will fall short of solving the problem, experts and critics said, and it punishes new workers for the largess allowed their predecessors.
Those workers “should be waking up that they have money being taken out of their pockets to fund retirees,” said Marcia Fritz, a California pension overhaul advocate.
Employee representatives counter that county workers already make among the highest contributions to their pensions statewide. Critics ignore that in their calls for overhaul, union officials say.
“I think it’s a lack of understanding, especially about the Sonoma County system,” said Ed Clites, president of the Sonoma County Law Enforcement Association.
Employee leaders seethed last week when several speakers at an economic conference in Petaluma compared public sector pensions to fraudulent “Ponzi schemes.”
Robert Moffett, chapter president of Service Employees International Union Local 1021, the county’s largest union, called the comments “irresponsible.” He said they “trivialize the sacrifices of public servants.”
Still, support for wider changes appears to be growing.
California’s Little Hoover Commission last week recommended that more aggressive steps, including a freeze on benefits for current workers, be authorized and put to work at the state and local level to rein in pension costs.
At the heart of that push is a fundamental change to public sector pensions that would require government workers to share in the investment risk with taxpayers.
Seeing a threat to their bottom line, most private companies made similar changes to their retirement plans decades ago.
Pension overhaul advocates say the public sector should follow suit.
“The real danger continues to be, what if the investment tanks?” said Bob Andrews, a former private retirement plan administrator and Santa Rosa resident who has joined those calling for changes to public sector pensions.
“Discussions like this can make people’s eyes glaze over,” he said. “But if there’s something important to remember it’s that money going to pensions has skyrocketed. With falling tax revenues, what that means to taxpayers is that services will be curtailed.”