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David Rabbitt and Shirlee Zane
By BRETT WILKISON
THE PRESS DEMOCRAT
A proposed cap on pensions for all employees, a higher retirement age and less generous benefits for new county employees are among the recommendations being made by two Sonoma County supervisors studying pension system overhaul, according to an outline of a forthcoming report obtained by The Press Democrat.
Supervisors David Rabbitt and Shirlee Zane, who will release their report Thursday, are also proposing that employees share equally with the county in the cost of their pension contributions.
Other proposals would change the makeup of the county’s pension board and establish limits on county debt, including pension bond debt.
The moves are aimed reducing over a 10-year period the rise in taxpayer costs linked to the county’s retirement system. Those costs are up more than 300 percent over the past decade, and now represent 19 percent of the county’s total salary and benefit expenses of $504 million. They are set to climb to nearly 30 percent beyond 2015.
Rabbitt and Zane want that number back at 10 percent, where it was in 2000.
“We’ve got problems that we need to address,” Rabbitt said, adding that the report was aimed at “putting everything on the table.”
Public employee pensions have drawn increasing scrutiny in the county, statewide and across the nation as soaring obligations to retirees leave less taxpayer dollars for already-stretched public services.
Sonoma County supervisors, administrators and labor leaders launched several parallel efforts this year to deal with the issue.
The committee headed up by Rabbitt and Zane is the first to present its findings and goals, which were shared last week with labor leaders and county officials in a two-page outline leaked to The Press Democrat by a source who attended the meeting.
The larger 100-page report is set to follow last week’s unveiling of Gov. Jerry Brown’s 12-point plan for overhauling public pensions.
Based on the outline, some of the state and county proposals are similar, including a bid to end pension spiking, where employees boost their pension in their last year through extra pay and perks above their base salary.
The proposed increase in retirement age for new employees is another shared proposal. While the governor’s plan put forward new ages of 67 for general employees and something less for public safety workers, the county outline does not provide figures. Sources close to the discussion said they’d heard talk of a new standard of 55 for safety workers — up from 50 — and 65 for all other employees, up from 60.
Although not noted in the outline, Rabbitt also said the county is studying a shift of new employees to a hybrid pension plan that includes a traditional defined benefit guaranteed by taxpayers and a 401(k)-type account where employees bear most of the investment risk.
Rabbitt and Zane also put forward a proposal to limit benefits to 100 percent of an employee’s base salary, a measure not proposed by the governor.
The goal, Rabbitt said, was to find a mix of ways to reduce county costs both quickly and over the long-term and provide a retirement benefit “that is fair, competitive and sustainable for everyone in the county.”
Labor leaders say they agree with that stated goal and the need to address rising retirement costs.
But in interviews on Tuesday they questioned both the cost benchmark in the supervisors’ report and the impact of some of their reform proposals.
“We all feel the same. Something has to be done,” said Ray Leonard, chairman of the Sonoma County Administrative Management Council, a group of unrepresented administrative and middle managers. “The questions continue to be how it’s structured, how deep does it go?”
Other leaders stressed that any changes needed to come through agreements at the bargaining table. All but two county employee groups are set to enter negotiations next year.
Rabbitt and Zane conceded the point in the outline, saying that some of the proposals would be subject to bargaining and others to legislative changes.
In the latter group is the supervisors’ proposal to double the number of Board of Supervisors’ appointees on the county pension board. Currently the Board of Supervisors appoints four of the nine voting members. The four additional appointees would not be former, current or contract employees. Their inclusion, officials claim, would provide better, unbiased input on pension decisions affecting taxpayer money.
Rabbitt, who was elected last year and serves on the pension board, took aim at some of those past decisions, saying they had not served the county well.
“When times were good, people were offering the sky. I think we need to be cognizant that all those decisions had consequences. The evidence is in the annual costs,” he said.
Zane could not be reached by deadline Tuesday. The three other supervisors will get their first look at the report after its release Thursday.
Ed Clites, head of the Sonoma County Law Enforcement Association, was critical of the proposed changes to the pension board and suggested the county could face opposition on that front.
Legal battles could tie up other proposals, especially any move to change benefits for current employees.
California courts have been fairly consistent in upholding retirement benefits as vested rights for existing workers. The state’s current legal standard also holds that any change that results in a disadvantage to workers must be accompanied by a comparable, offsetting advantage.
Some fiscal watchdogs calling for more aggressive pension changes admit frustration with those legal protections, looking fondly at more permissive laws in other states.
At least one county critic shown the recommendations Tuesday called the proposed cost benchmark “unrealistic.”
Tom Lynch, a Guerneville resident and county planning commissioner, said the projected rise through 2023 in payments on existing pension bond debt of $515 million will prevent the county from reducing its pension costs to anything close to 10 percent of total compensation.
“There’s no way,” said Lynch.
He said more “dramatic changes” affecting the current workforce were needed. A ballot measure could be the only way to force the issue, he said.
The cities of San Francisco, San Diego and San Jose may take that path this year and next, following similar moves by San Luis Obispo, Los Angeles and Redding to contain pension costs by putting measures before voters.
“I don’t see a lot of hope for change with what they’re proposing so far,” said Lynch. “We can’t afford any more time wasted.”
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GAJ thinks retirement planning is dumb? That doesn’t sound reasonable. If you sit down with a financial planner and make a retirement plan to include investments, retirement and eventually social security, you plan for 100%. You offset reduced income with investment income, gee, sounds reasonable. When a company offers you matching 401k contributions, you would be dumb to pass it up. If you are not trying to have more in retirement, why are you planning at all? Any gov’t employee who plans to retire does the math and figures out how much they want to retire with. Mine will be a combo of investments and pension. I suppose if a gov’t employee has an investment account, they should be considered greedy for wanting more than just their pension in retirement. Of course they considered greedy for planned on the pension. However is a small business owner puts money away and plans for retirement, he is being prepared. He does the math and makes a plan. I suppose since he got all his money from taxpayers, through running a business and providing goods and services to those taxpayers means he owes it all to the taxpayers? Should he settle for less than his plan and give the money to the occupyers?? I think not. Plan well people. 60% is never a good retirement goal. If youre not shooting for 100%, why plan at all? Just let the chips fall.
@GAJ -”I think we agree LBR”
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How could that have possibly happened!?
I think we agree LBR; the massive over reaching by Public Safety (and their administrators) has screwed the pooch for other County/City workers and resulted in job loss for other employees and service loss for the taxpayer.
Leaving things “as is” for the chosen few, (which seems to be the consensus), will lead to less job opportunities for others in future who wish to work for the County/Cities in non Public Safety positions.
Anyone who has not arrange their affairs to a point where at retirement they are incapable on living with “only” 60% of final years’ pay has been living well above their means for year; which is plain dumb.
@GAJ – What you say is true, but the 60% figure is misleading. Also, much of this increase is due to safety employees being a larger share of a smaller workforce – their pension costs are about double what a non-safety pension costs. And yes, this is not sustainable. I think going back to the pension plans from the 90s makes sense. Easy enough to do for new employees, but how do you do it fairly for existing employees?
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James M – “Meanwhile the corrupt govenment workers use all kinds of gimmicks in their contracts to spike their pensions, double dip with working second jobs while getting pensions or government pay, take paid leaves of absense, and don’t have to pay huge education costs to get their jobs in the first place.”
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First off, not all public agencies are the same – Santa Rosa employees have little ability to spike their pensions. Likewise, the only “paid leaves” are for vacation and sick leave, unless you’ve been suspended pending an investigation and you are put on Admin Leave. And you just don’t know what you are talking about in terms of education – the average level of education in the public sector is higher than in the private sector. Lastly, while I agree there are the occasional corrupt manager, labeling all the hard working public employees as corrupt is just plain wrong.
@ Lets Be reasonable
As a taxpayer, I don’t care why salaries have gone up 60% for government, that’s bad government management. What I do care about is the drop in services and the continuing call for higher taxes. In the private sector, I get no COLA as the government folks like to get, and don’t even want counted as a raise. My pay was cut and then raised, but not back to the level of the pre-cut. Meanwhile the corrupt govenment workers use all kinds of gimmicks in their contracts to spike their pensions, double dip with working second jobs while getting pensions or government pay, take paid leaves of absense, and don’t have to pay huge education costs to get their jobs in the first place.
Government services should be maintained, and pay & benefits cut to match what a reasonable tax take can fund, end of story.
@LBR, do you refute that before 1999 Pensions were 10% of the County budget and that in 2014 they are expected to eat up 30% of the budget?
20% of the budget “evaporating” is a stunning number.
@Tom Lynch – that 60% figure is bogus. Salaries have not gone up 60%. There has been some Cost of Living increases, though I don’t know the exact amount for the County. Beyond the COLAs, there are at least two reasons why the Current average salary is 60% higher than 10 years ago. First, the makeup of the workforce has changed as a result of layoffs. The percentage of safety employees has gone up, and because last in, first out method of layoffs, the workforce that is still there tend to be more senior and higher paid. second, in an effort to save on health care costs, the County reduced to $500 what they will pay for healthcare, regardless of plan or number of dependents. To make it more palatable for employees, they also gave everyone an extra $600 in salary. Somewhat of a break even for employees at the start, but they assume ALL increases in healthcare from now on. What the County failed to think about was that this $600 was now taxable and part of retirement pay calculations, increasing retirement costs for both employees and the County. This $600 makes up about 1/4 of the 60%. It would be nice to know what the actual COLAs have been at the County during this period. If I’ve done my math correctly, for Santa Rosa non-safety employees have seen a 23% increase in 10 years – exactly that of inflation.
Once again, who made Tom Lynch an expert in pension reform? This is a guy whose only claim to fame is dumping manure on City Hall. What makes him qualified to spout off on policy he knows nothing about?And why does the PD constantly quote him as if he is qualified and knowledgable, meanwhile NEVER getting anyone from the workers standpoint to comment? The Pd is always quoting the same “pro business” (spare me the Tom Lynch is progressive propaganda please) talking heads like Eyler, Sobel, Lynch etc..is it ideology or just laziness and poor journalists?
Tom Lynch-The county hiring at the bottom is frozen, but there will ALWAYS be non union management positions open and even newly added management positions approved by the BOS. Check the job listings. There are so few workers left on the frontlines that services to the public has been greatly affected but all the managers retained their jobs.
YOU KNOW THIS IS TRUE. The federal clinics were supposed to be expanded to provide the services the county public health closed. Now those federal clinics aren’t getting the expected money and are laying off employees. This is a public health matter. The BOS needs to make sure the ratio of managers to rank and file workers is higher. Managers need to be LAID OFF, NOT NEW POSITIONS ADDED.
Jim, our police force may only require a high school diploma to be eligible but they are NOT handed a gun and put to work. The go through all kinds of rigorous training. Many are college educated by choice, and/or received training in the military. I think the Santa Rosa Police force is full of smart, educated police and is, by and large, only out there to do the best job they can.
Except for that young whippersnapper motorcycle cop that gave me a jay walking ticket when I wasn’t jay walking. He needs to know the regulations better.
We should all be proud that there is a movement towards pension reform. It only took a unfunded liability of $500 billion and complete outrage by the taxpayers on the hook for it to make them consider making changes.
I’m also glad that those who are considering changes are already in the system so their pensions won’t be affected. This is kind of like Warren Buffett, after 35 years of growing his massive wealth under the capital gains tax, coming out and saying taxes should be higher. Oh wait, he did that. Guess what is good for the goose isn’t good for the gander.
A cop can start at 18. There is no education requirement beyond a high school diploma to be handed a gun and power to harass citizens while allowing illegal aliens to break the law.
I am proud of all our Board of Supervisors for their efforts to reform Sonoma County retirement benefits. The difficulty for them is the power of the first wave of retiring baby boomers in management and labor that control an unsustainable system.
To me the “miners canary” are our younger workers, the next generation of planners, teachers, sheriffs and human services; if we continue to cannibalize our work force and not rehire after some retire, how much longer can this system serve ALL it’s members and stakeholders?
This is certainly not a fight against our public servants but for them; without reforms we will see a continuing erosion of the jobs and services Sonoma County used to provide for generations. Ultimately we risk insolvency and a Malthusian meltdown similar to what my wife lived through with the collapse of the Soviet Union.
Thank you to the Press Democrat and Brett Wilkison for their great job in presenting a very difficult issue understandable. To me the below links illustrate the problem. Since 1999 the average household income in Sonoma County has declined 7% while the salaries at the County has increased 60% and the pension costs have risen more than 300%. Much of this to the upper tier not the rank and file line workers:
“The average county salary has increased 60 percent over the past 10 years, retirement system records show.”
“With that debt factored in, the rise of pension costs is more than 300 percent for the past decade.”
http://www.pressdemocrat.com/article/20110925/ARTICLES/109251051?p=all&tc=pgall
“Median household income continued its steady decline in 2010, falling 2.3 percent to $49,400. That’s a drop of 7.1 percent from its 1999 peak of $53,250.”
http://www.pressdemocrat.com/article/20110915/opinion/110919703?p=all&tc=pgall
I think John T is stretching the truth. His quote, “A close relative retired on a public safety pension of 90% of her salary at the ripe old age of 50.” That would mean the close friend was hired when she was 20 years old. No one hires a cop or fireman at 20 years of age. Or did she win a settlement to go away. John T start naming names.
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. 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?
I love how Lynch tries to ‘project’ the payments on pension bonds through 2023. Hey Tom, we could have used someone like you about a decade ago to ‘project’ the crash of the economy. By the way, the value of the pension fund fluctuates with the economy, so we don’t need to hear from those who couldn’t predict this recession, since you probably also can’t tell when the economy will recover. The only people who could project the direction of the economy were too busy screwing people out of money.
I work for the County and I support pension reform. What I don’t support are the people who are trying to make me and my fellow employees / retirees feel like criminals. I was hired by an employer that had a pension system, that does not make me a bad person. Some of my friends are retired and they are getting anywhere from 75% to 100% of what they were making when they were active. That does not make them bad people. The people who want the reform need to focus on the issues and stop blaming the recipients. The Retirement Board is processing retirements based on what the 37 Act states and what the BOS implemented. Stop blaming them for the problems. I find it ironic that David Rabbitt is now trying to steer the blame to the Retirement Board when it was his predecessors who implemented these rich plans. Perhaps he should do a little more research before he spouts off about things and makes himself look like an idiot. Put the focus where it belongs…on the Board of Supervisors. The changes need to be made at the County and MOU level.
I’d still like to see the number of public safety vs non public safety members in the $100,000+ pension club. Do the math on the cost increases there since Grey Davis bought off the public safety unions with the 3%@50 payola.
Brown doesn’t go far enough. If the non safety folks must work until 67, then the safety folks need to work until at least 62.
A close relative retired on a public safety pension of 90% of her salary at the ripe old age of 50. She’s now vested with 10 years in a second law enforcement pension…and laughing all the way to the bank as she makes $100k salary, PLUS her 90% pension.
So much for the claim that public safety can’t work past 50 because of the demands of their jobs.
Many folks are unaware that the distinction between “independent” public retirement systems like Sonoma County and CALPERS allows you to draw a retirement in one, while going back to work in the other. Then you can collect two pensions.
@GAJ – limiting pensions to 100% of BASE salary at least prevents much of the spiking that currently goes on at the County. Having employees pay 50% of the cost will likely lead to negotiations to reduce the overall cost of pensions, especially for safety employees, who generally pay little if any of the cost currently.
Pathetic little steps; “limiting” pensions to 100% of pay is not exactly reform…it should be more like 60% of pay maximum.
Mr. Lynch is right:
“He said more “dramatic changes” affecting the current workforce were needed. A ballot measure could be the only way to force the issue, he said.
The cities of San Francisco, San Diego and San Jose may take that path this year and next, following similar moves by San Luis Obispo, Los Angeles and Redding to contain pension costs by putting measures before voters.”
“I don’t see a lot of hope for change …” said Tom Lynch,
- Sounds like a great campaign slogan
Slowing down the sink rate as you head out to sea is fatal.
Reverse course & head for dry land now & salvage this thing in more manageable waters
@ Money Grubber – Define “UNfunded liability” for me.
Why is everyone infatuated with the $100,000 amount? I know many who make much more that this in retirement. If they only wanted a social security income, they would work 40 years for minimum wage and call it good. Obviously they wanted more. I still remember people belittleing public employees during the boom. Now th tables have turned for a vocal minority and they declared war on an easy target. Envy never solved a problem…
@Canthisbe – “Three of the new six-figure pensions provide the retired recipients with more than $260,000 annually”
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Yes, and the CEO of Nabors just got a $100 million payout to leave after their stock lost 50% of its value. Let’s put things in perspective, shall we?
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Yes, we need to see pension reform, and as I’ve said recently, Gov Brown’s plan seems reasonable, as does what little we got from this article. It would have been nice to see what the break down was for Safety vs Non-Safety employees. At Santa Rosa, non-safety employees have a median income of around $65,000, and so even under current terms, the median pension (assuming they retire at age 60 after 30 years) would be $58,500. If Brown’s reforms were enacted, that would go down to $48,750. Sure, there are some non-safety employees making over $100,000, but they are a small minority. There is also little spiking abuse at SR – any vacation payouts, etc are not considered when calculating retirement like is the case at the County for managers. Not all public agencies are the same, and within an agency, not all employees are the same – so let’s not lump them all together.
The county needs to end the pension plan and end it now. Most private sector companies realized employer paid pensions cannot be funded in this new economy. That is a reality. It is not a necessarily a good thing, it is a reality.
That is why companies are offering 401k plans. The county supervisors can sharpen their pencils, recalculate, talk and take a second look, but the reality is the county pension plan is a ponzi scheme.
It is unsustainable because the retirees are rapidly out numbering the county workers in the plan.
There is only one exit off this highway to a financial disaster and that is to end the pension plan for county employees.
oney Grubber is right. The unfunded liability in CA is around $500 billion. Look at the statistic noted in the article…”Those costs are up more than 300 percent over the past decade, and now represent 19 percent of the county’s total salary and benefit expenses of $504 million. They are set to climb to nearly 30 percent beyond 2015″
Pensions are county and state versions of Social Security and Medicare…an ignored problem that will eventually be the whole budget. How much longer will these ‘discussions’ and ‘suggestions’ be made but NO change put in place? Maybe when the annual pension liability is 50% of the budget? 75%? This is so ridiculous.
Unions control the state so nothing will change.
It’s terrible that retirees have to sit and worry that promises made to them will be inevitably broken. It’s also terrible that taxpayers assumed our government was acting in financially reasonable and sustainable ways. This is clearly not the case. What a mess.
“More than three thousand California public employees have retired since 2010 with six-figure tax-paid pensions, even as the U.S. Department of Health and Human Services (HHS) provided the pension system up to $200 million in health insurance subsidies.
As of July 2011, 12,199 retired California employees draw six-figure pensions, according to the watchdog group, California Foundation for Fiscal Reform (CFFR), up from 9,111 in March of last year. Three of the new six-figure pensions provide the retired recipients with more than $260,000 annually, with the most generous of the three worth $271,157 per year, according to CFFR”.
http://campaign2012.washingtonexaminer.com/blogs/beltway-confidential/3000-more-six-figure-pensions-calif
If your not on the State Pension Gravy Train, plan on working an extra 5 years to pay for it.
Wait until that new accounting rule takes effect next year and everyone discovers the astounding size of the UNfunded pension liability that the County of Sonoma has to pay. Ouch ! Whoa ! Anger !