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Board of Supervisors backs pension cuts

Annual taxpayer contributions to county pension system, including payments on pension debt. Left axis, in percent, reflects total county compensation going toward pension costs. CLICK TO ENLARGE

By BRETT WILKISON
THE PRESS DEMOCRAT

The Sonoma County Board of Supervisors on Tuesday unanimously endorsed a plan to overhaul the county’s pension system, saying that changes aimed to avoid soaring taxpayer costs and shift more of the burden onto workers will not come easily or overnight.

“To me, this is like trying to stop a freight train or turn a ship around. It’s going to take some time,” said Supervisor David Rabbitt, who along with Supervisor Shirlee Zane headed up a nine-month study that led to the 135-page report.

Its recommendations include a mix of proposals that would affect current and future employees. They include a cap on pensions for all employees, a higher retirement age and less-generous benefits for new employees, and a change in the makeup of the county’s pension board.

The proposals are expected to shape employee contract talks starting in March.

Overall, the plan seeks to save taxpayers $115 million to $150 million over the next 10­years by altering a sharply escalating cost curve.

But it hinges on deals at the bargaining table, which wouldn’t kick in until at least mid-2013. Other changes would require modifications in state law and some could result in legal battles.

Zane called those hurdles “daunting.”

But the report does more than any county effort so far to explain the problem and call for urgent action, supervisors said.

As is, taxpayer-paid pension costs for county employees, already up 360 percent since 2000, are set to more than double in the next decade, climbing to $209­million — or 28 percent of total compensation — by 2021. That would erode money available for public services, supervisors said.

“It’s obvious that continuing with the status quo could very well jeopardize the financial health of the county,” said Supervisor Mike McGuire.

Rabbitt, who serves on the pension board, gave a forceful presentation on the causes behind the rising costs, and the need to both share those expenses with employees and reduce investment-market risk.

He noted that in eight of the past 20 years, or 40 percent of the time, the pension system has missed its investment earnings mark, jeopardizing the main source of pension fund revenue.

The result has been three rounds of county borrowing since 1993 to pay off $617 million in unfunded pension obligations.

Those moves may have been useful at the time to refinance pension-system losses, county officials said. But in backing tighter limits on county debt Tuesday, leaders all but swore off such tactics going forward, citing public frustration over the county’s $1.25 billion debt load.

More than 60 percent of that figure comes from the pension bond debt, now at $515 million, and unfunded pension obligations, at $249 million, the report showed.

“Anyone who is part of the system has to be concerned about that,” Rabbitt said.

To address the issue, supervisors would reconfigure payroll pension contributions so that employees pay the same amount as taxpayers — a move that would essentially share market risk. Currently, the county pays more into the system than the employees.

A second move would look at further lowering the county’s discount rate, which is used to determine contribution levels needed to pay for future pensions. That change would increase contributions by employees and taxpayers in the short term but reduce market risk over the long term.

“Up until now we have assumed all of the risk,” Zane said. “That’s in comparison to private employers, which expect employees to bear all of the risk. I think there’s a happy medium between the two extremes, which is what we’re aiming for.”

Supervisor Valerie Brown said she was concerned that an emphasis on personal savings accounts and increased risk-sharing for employees would lead to faster workforce turnover and less income security for retirees.

“It’s a very slippery slope. There are long-term consequences to what we do,” she said.

Labor leaders who spoke Tuesday voiced some support for the plan, but said they were worried about changes with a disproportionate impact on current rank-and-file workers.

“Let’s not join the media frenzy and cry the sky is falling but instead work on long-term solutions,” said Marcia Barton, a field representative for Local 1021 of the Service Employees International Union, the county’s largest employee group.

Several county retirees urged the board to lead by example, with rollbacks to the extra pay and perks that that can spike pension amounts, especially for top officials.

Ron Piorek, a retired deputy county administrator, took aim at an ordinance that requires the county to pay 50 percent of the pension contributions owed by supervisors and to provide administrative leave, which elected officials and top managers get in lieu of overtime. Both groups can cash it out to boost pensions. The overtime worked by other employees is excluded from pension calculations.

“Why are county supervisors accruing administrative leave?” Piorek said. “It should have been looked at.”

Among their proposals, Zane and Rabbitt called for an end to pay practices that can lead to pension spiking.

At the bargaining table next year, that would require a rollback in the 114 county job premiums, including special duty pay, uniform and auto allowances, most of which apply toward pensions and would continue to do so without any change to state law, said County Counsel Bruce Goldstein.

Supervisors nodded and made notes on his answer.

“I think what we’re seeing here is a board committed to seeking a different path,” Chairman Efren Carrillo said in his closing remarks.

The board’s vote gave direction to staff to implement the package of proposals. The first proposal to return to supervisors will be the tighter debt limits, due back in January.

At that time county staff members are set to review a similar set of proposals put forward last month by Gov. Jerry Brown. That overhaul effort would affect county employees as well as state workers, city employees and teachers. Parts of it could go voters next November.

—–O—–

DIG DEEPER

Read the 135-page report by the supervisors’ Committee on Pension Reform





27 Responses to “Board of Supervisors backs pension cuts”

  1. Canthisbe says:

    Another Union Guy:

    I find it statistically questionable that the commentators on this site that you praise for actually thinking for themselves prior to commenting all think alike, all think like you and all (or least most) profess to be lower or middle level unionized government employees (as opposed to the top level guys – union and non-union – whom – it seems everyone here abhors for raping and plundering the system and the taxpayers for their own personally agendas and financial gain and playing Sim City).

    By the way, if Rolling Stone is someone’s historical and political reference guide, they may not be a critical, independent thinker.

    While the Republican Party may be “the Party of the Rich”, the Democratic Party is the party of the very rich people or at the very least, the part of the other rich people. (Look at the billions Obama is shoveling out to his Wall Street and green energy buddies.) Neither party cares much about the poor or middle class except when its time to get pander for their votes.

    That said, I think most commentators on PD are capable of and do distinguish between the lower and middle ranks of public employees and officials and the uppermost ranks of public employees and officials, and while not necessarily willing to give the lower and middle ranks a free pass, direct most of their criticism at the upper ranks that are the ones who are gaming the system, including the pension system, the most.

    While the private sector is different in some ways than the public sector, the public sector should be constantly analyzed in comparison to the private sector for many reasons, including market conditions, including salaries and pensions, and best practices, to name a few. If the private sector can do something better and / or for less than the public sector then that function should probably be privatize.

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  2. Ricardo Sorentino says:

    RE: Another Union Guy

    “Ok, enough of the niceites and jocular mentions, it’s time to say what I think needs to be said. That is…shame on those that take the time out of their day to bash those who have endeavored to be a “Public SERVANT.”

    “why don’t we start holding those in elected office accountable to do the work we elected them to do in the first place!”

    So which is it? First, you complain that people ‘bash’ public servants and then end your tirade by doing just that with the elected officials.

    Some people stand to the ‘right’ of a line, some people stand to the ‘left’ of the line. Guess you like to stand on top of it and just lean back-and-forth so you can have it both ways.

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  3. Another Union Guy says:

    It seems as though there are very few commenters on this site that actually think for themselves prior to commenting. I found it refreshing to read a few of the comments to this article that actually showed someone with an ability to think for themselves, as well as the ability to do a little research into statistics and those annoying little things called facts. I won’t carry on much with more of this drivel, I will finish this part of my commentary with a hearty, “well said” and proper slaps on the backs to Union Guy, Bear, County Worker, Let’s be reasonable and of course, Mockingbird.
    Ok, enough of the niceites and jocular mentions, it’s time to say what I think needs to be said. That is…shame on those that take the time out of their day to bash those who have endeavored to be a “Public SERVANT.” It is unfortunate that those that partake in the Public SERVANT bashing have no compassion for those who are true Public SERVANTS. I am not talking about those who have stepped on backs and gotten their noses brown to get into the ranks of management who make SIX FIGURE incomes. I am talking about those who work an honest 40+ hours a week to make sure WE ALL have clean water to drink, somewhat safe roads to drive on, children who are educated (unfortunately those public servant bashers have affected this as well, you know, less revenue in the government is less revenue to spend on our children’s education), public safety, rules and laws to help us stay a little less unruly, and basically to provide US ALL with our current way of life. Instead of bashing on them, turn your ire towards those that deserve it…those that continue to make the same decisions because they are provided the same information by the same staffers who have been in the same positions since the economic issues have started. In lehman’s terms, CUT FROM THE TOP, MAKE CHANGES AT THE EXECUTIVE AND DEPARTMENT HEAD LEVEL, FIND LEADERS WHO ARE WILLING AND ABLE TO LISTEN TO THOSE DOING THE WORK DAILY! And, finally, instead of trying push a square peg through a round hole, I mean instead of comparing Private Sector For Profit Business models with Public Sector NOT FOR PROFIT Government Models, why don’t we start holding those in elected office accountable to do the work we elected them to do in the first place!

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  4. bear says:

    @county worker

    I was there with you.

    If you need help, ask the old-timers how to find a bear.

    Thumb up 5 Thumb down 3

  5. Environmental SCWA Guy says:

    Not to mention the dozens of FAKE jobs the water agency has instituted in the last few years; many at $125,000 /year plus. And you are looking to hose the folks making $35,000/ year? Shame on all of you! I guess Snoma County will looklike MEXICO soon; the wealthy Fountain Grove bunch and the peasants…

    Thumb up 11 Thumb down 5

  6. Alex says:

    And in the meantime they increase spending for more social programs but taking from the working class and giving to the poor and the illegals…great move!

    Thumb up 10 Thumb down 5

  7. Union Guy says:

    There are some interesting “statistics” being thrown around. Since 2008, the frontline workers for Sonoma County have received a one time 1.75% increase in pay. They have absorbed 3 increases in their cost of medical insurance and an increase in their portion of pension costs. In addition, they have taken 2 ½ weeks off without pay each year, including 40 hours this fiscal year. I hope reality isn’t interfering with anyone’s opinion of this gravy train. Except for a few overpaid Department heads, I don’t know any County employees who are making bank. Yes, there is a lot of overtime worked in some divisions due to staffing vacancies. That doesn’t count towards retirement, just taxes.

    Thumb up 6 Thumb down 4

  8. Frank Gard says:

    Higer taxes is not a solution. Even in the flush days of 2007 the government spent more than was coming in and agrred to bloated salaries and benefits, especially for public safety workers. The public workers must realize their compensation is unsustainable, and rollbacks are inevitable.
    If you think banks and CEOs are to blame, get them to pay the shortfall. Otherwise realis\ze that taxpayers are hurting and have no more to give, the gravy train is at the end of the line.

    Thumb up 7 Thumb down 6

  9. Lets be Reasonable says:

    @Jim – “The roll-back of Prop 13 isn’t the answer.”
    .
    I agree, pensions need to be fixed all on their own, but Prop 13 does lead to some problematic situations – new businesses are at a disadvantage against established businesses, since the latter pay artificially low property taxes, while new businesses must pay the higher current rates.

    Thumb up 8 Thumb down 5

  10. Lets be Reasonable says:

    @Mockingbird – just got around to reading your article. Fabulous. It basically shows the evolution of the Republican party over the last 50 years or so. Here is the link again for those of you who have not yet checked it out.
    .
    http://www.rollingstone.com/politics/news/how-the-gop-became-the-party-of-the-rich-20111109

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  11. concerned citizen says:

    What about the Voluntary Separation Incentive Program where employees were offered up to $20,000 to retire voluntarily. All the supervisors (Supervisor Shirlee Zane agreed too)approved this program. What a sweet deal or was this program just a scam? For example Gail Davis, retired in the Spring of 2010. Ms Davis received a $20,000 separation package, a $71,000 pension and she was hired back by Supervisor Carrillo to work in the Agricultural Commissioner’s office. Now Gail Davis was able to keep her $20,000 package, she receives her $70,000 pension and is also paid her full salary of up to $95,000. Employees that took the incentive money signed off on waivers to not come back to work or file any complaints against the county, How many other county employees were offered this sweet deal? What did Ms. Davis do for Supervisor Carrillo to deserve this payout with taxpayer dollars. Will anyone from the Press Democrat follow up on this? Why is the Press Democrat not following up on this.

    Thumb up 17 Thumb down 2

  12. Jim says:

    The roll-back of Prop 13 isn’t the answer. The answer to out-of-control government spending and excessive government pensions isn’t MORE revenue from the economy/people. Prop 13 went into effect in the late 70′s, so what explains the 360% increase in pension liability from 2000 on? I’ll answer that…out-of-control spending, unions bribing politicians to keep increasing benefits and hiring. If prop 13 goes away, the government would just spend more. It wouldn’t solve the problem.

    Regardless of what the media and White House says, the problem is not revenue. The government, at every level, has proven that every dollar they steal from the people is spent one and a half times.

    Thumb up 12 Thumb down 7

  13. Union Guy says:

    Jim,
    In 1991 SRPD officers were paying their share, 9% of the 18% to CalPers. They bargained with the City for the City to pick up 3% each year of a 3 year contract and take NO raise for 3 years to their salary. The same type of deals were made for medical. It has always been give and take. Nothing was a gift. Anything received in bargaining was for something given up. If there is to be changes, they should occur at the bargaining table and be gradual.

    Thumb up 5 Thumb down 11

  14. brown act jack says:

    It is easy to blame the elected officials for the problems. But, remember this, they take the advice of the bureaucrats in the government.

    They, the elected, have never seemed to grasp the fact that the information that they have been provided with has been analysed, scrutinized, pored over, adjusted, redacted, and otherwise managled to hide the actual facts about the proposals!

    If you are elected and don’t know a darn thing about actuarial processes, and there are only about 2 people in the audience that are criticizing your actions, and the rest are supporting your actions, and you don’t realize that you are being misinformed about this stuff, what would you do?

    When they adjusted the pension stuff a while back the audience in the City Hall was 99% in favor, and there was one person in opposition, and that was this writer.

    the weight of numbers over-rides the opposition some times.

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  15. Dusty says:

    If the County wants to be fair about sharing the pain of balancing the budget, then reform Proposition 13 and stop putting the load on the shoulders of public servants.

    Thumb up 6 Thumb down 17

  16. Jim says:

    Someone explain to me why I, as a taxpayer, has to pay for the retired cop (at 50, while he most likely double dips with the Sheriff’s Department), and the current cop? I never had a say in the massive pensions Santa Rosa gives to them. Look at the benefits…NO contribution to medical, NO contribution to their pension, NO co-pay for their medical, up to 25% on top of their salaries for things like a college degree or working nights, etc, etc, etc.

    It is a complete joke. This has nothing to do with morals. It has everything to do with simple math. The cities are broke. The state is broke. The country is broke. All because of overpromised handouts and government waste.

    Thumb up 21 Thumb down 7

  17. County Worker says:

    @ Bear

    Shem is still singing :)but he misses Chuck

    Sounds like you worked in the best of times in the 90′s. Those must of been the days.

    I started in 03

    Thumb up 8 Thumb down 5

  18. In Rod We Trust says:

    Why don’t the Supervisors just ask Tom Drumm and Rod Dole to the next meeting to explain that it’s the long term performance of the pension fund that matters and everything will be fine…the pension obligation bonds will “save us money”…

    Oh wait, they both retired….and somehow they both left right around the same time…hmmm?

    Thank goodness Rod’s protege Mark “Double Dipper” Walsh will soon take over as Auditor….maybe he can financially engineer a pension obligation bond of a pension obligation bond. It will save us more money!

    Thumb up 21 Thumb down 3

  19. Doug Floyd says:

    The county Board of Supervisors will have to dig a lot deeper into their barrel of tricks to get the pension mess even partially resolved. The numbers look bad and getting worse.

    The question is do they have the stomach to do it and will SEIU and the other unions let them do it? The Board needs to point out to the unions and the public what the options are if a drastic change is not made in the county pension plan.

    It is all going to start with the Board of Supervisors eliminating their “overtime,” their county pension benefits and lots of the perks that have become enshrined in their benefit packages.

    This Board has treated their positions like they are part of a union rather than elected officials who are suppose to service the public.

    Being on the Board was never intended to be a life time career. That honor is reserved to latin american dictators who serve until deposed in a coup or assassinated. It is a different system of government.

    The county board will have to man up to meet the challenges. Will they have the courage and the willingness to face the heat?

    Thumb up 15 Thumb down 4

  20. Political Dribble says:

    Nothing new or novel here. Instead of taking months and wasting countless staff hours the County could have held one meeting to review the Governor’s proposal and added their “ditto”. That of course would be efficient… something the County is not known for.

    Thumb up 8 Thumb down 6

  21. Marc says:

    The Local government waited as long as they could before doing anything. This problem has been going on for years and all they have really done is pass a bond to support their inactions. Do not expect any Real change from the politicians since they are in the pocket of all the unions. Sorry if I offend some of you but the Truth hurts all of us.

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  22. bear says:

    Take the worst 12 years in economic history since the 1930s. Then extrapolate the status of pensions, Social Security and Medicare. Then change everything to make the numbers come out to your advantage, and screw the workers.

    Do your parents and grandparents get to park their RVs in your front yard? Will you buy out houses at fire sale prices to enrich yourselves? Will you keep your promises or break them?

    Low taxes and zero morality is what I hear. But should the economy recover, these cuts would still be moral.

    Call 1-800-no morals and some parasite will be happy to help you with your credit card debt.

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  23. County Worker says:

    Thank you Jim… Now I know my retirement is safe.

    Thumb up 0 Thumb down 10

  24. MOCKINGBIRD says:

    For all you rightwingers who think the rich are getting a raw deal from ALL the taxes they have to pay (I call this “rich envy” by some of the people on this post that attack public employees for their pensions) read this. READ IT. Be smart. Have a few facts from history.

    http://www.rollingstone.com/politics/news/how-the-gop-became-the-party-of-the-rich-20111109

    Thumb up 6 Thumb down 20

  25. JP says:

    San Francisco has just passed prop. C which adjusts city employee contributions towards health and retirement.

    Jerry Brown is on the verge of doing the same at the State level!

    Common Supervisors! You can do it!

    Ya know, it used to be that Gov. jobs had lower salaries and the way they compensated was with better benefits.
    Now the salaries are virtually the same and they still get the better health and retirement benefits..

    Somethings gotta give!

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  26. Jim says:

    Not much more needs to be said beyond the numbers in this article. This same problem is echoed across every county, city and state in the country. Ridiculous promises by the government with the complete lack of planning to pay for them. The unions buy the politicians, who also benefit from the excessive pensions. Look what happened in Ohio when an attempt to lessen union power was made. The Sheeple were too stupid to see through the millions of dollars the unions paid to brainwash them.

    Until REAL cuts are made, not a few million over a decade, nothing will change. So pension costs went up 360% since 2000, to $209M but in the next decade, IF changes are made, these IDIOTS want to cut $125M?? Over 10 years? That won’t change anything. Unless cuts to CURRENT ‘retirees’ (including double dippers, “disabled” police, pension padders, etc) are made, nothing will change.

    What am I saying? NOTHING will ever change. Any time a mention of cutting ‘benefits’ is made, the welfare recipients (free money from the government, regardless of what program it comes from, is WELFARE) riot in the streets. The politicians, being too afraid to stand up to their gravy train (i.e. union paid for election campaigns), will cower. The idiot voters will re-elect the same people, and the most corrupt system on Earth will continue.

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  27. Money Grubber says:

    As usual, government only reacts AFTER the public pension crisis is entrenched.

    The first goal is to allow as many public employees locked into the benefits before any adjustments are made.

    I might add, in case you all missed it, that the BofS is only acting now because of a new accounting requirement that is being imposed upon California state and local governments which REQUIRES them to make public exactly how many billions of dollars short the public pensions really are.

    Note to BofS: you are just too clever.

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