By STEPHEN GALE
Stephen Gale is chairman of the Sonoma County Democratic Party
The focus of recent news stories about Sonoma County’s pension fund has been on the small number of retirees with outsize pensions of $100,000 or more. But a deeper look shows both that the size of most Sonoma County pensions is modest and the funding status of the system is solid.
It was concerning to see the revelation that the county’s top pension was more than 11 times the average annual county pension. But while they make for big news, the recipients of big pensions constitute small numbers — just 2.1 percent of the county’s total.
In reality, the average county pension is $22,500 a year, and about 64 percent of the retirees have pensions below that average. The county average is also on a par with the $22,000 average yearly pension for state workers.
Numbers released in its annual report last December show that Sonoma County’s pension fund is well-managed and profitable, with a healthy 9.7 percent annual return over the past 30 years. It is 88 percent funded, which is also very healthy by the standards of the major bond rating agencies. While outsized pensions deserve to be scaled down to fair size, and pension spiking needs to be ended, overall the condition of public pensions in California is not a crisis. The state’s yearly pension costs have actually fallen by $600 million over the past two years as collective bargaining has increased the share public workers contribute to their pensions and as CalPERS and CalSTRS have taken tougher lines in preventing pension spiking.
At the local level, a steadily increasing number of government and public worker organizations are negotiating similar changes. According to data kept by CalPERS, in more than 200 California cities, counties and local districts, public employees have agreed to increase their pension contributions, reduce formulas and lower public costs. City workers in Santa Rosa, Cotati and other jurisdictions have worked with their employers to make fair changes in retirement benefits that control costs and promote long-term sustainability.
Here in Sonoma County, employees already contribute 11.8 percent share of their salary to their pensions plus an additional 4 percent to offset the costs of benefit improvements, one of the highest levels in the state and much the same percentage as their employer contributes. Sonoma County’s public worker organizations have formed a study group with county officials to discuss ways to ensure pension fund remains strong, reliable and fair to workers and employers.
Public workers support tough action at the state level to curb pension spiking as well as legislation creating pension rainy day reserve funds and bringing an end to pension contribution holidays for employers.
Some foes of public pensions say the only way to ensure public pensions are fair to taxpayers is to do away with secure defined benefit pensions entirely — shifting those funds to insecure 401(k)-type savings — and end collective bargaining over pensions. But as with all American workers, people who devote their lives to public service deserve a fair and secure retirement when their working years are over. As anyone who has seen the crash of 401(k)-type defined contribution pensions in the market swings of the last two years knows, such insecure pensions can leave you out in the cold and without savings when you hit your retirement years.
Equally important, collective bargaining must remain central to the pension process. Public workers must continue to be able to sit down at the bargaining table and negotiate a wage and compensation structure including pensions that are fair to them and their employers.
We have already seen the huge erosion in retirement security among private sector workers who have mostly lost collective bargaining rights. A recent report by U.S. News & World Report shows how such workers have seen their pension security siphoned away to create higher corporate earnings. With only one in five private sector workers having a secure pension today, and with private sector companies continuing to slash pensions for their workers, it is understandable how much fury reports of large public sector pensions can arouse. But the real goal must be retirement security for all, rather than a race to the bottom where everybody loses.