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WatchSonoma
WatchSonoma Watch

Supreme Court ruling could be costly for Sonoma County

It’s no secret that Sonoma County is in about a $250 million financial hole in terms of meeting all the promises made to current and former employees in retirement.

But that hole could get significantly deeper following a state Supreme Court decision that severely limits the ability of counties to unilaterally cut health care benefits for retirees – as Sonoma County has already done.

First some background: In an effort to rein in soaring costs of health care benefits, Sonoma County in August 2008 significantly rolled back contributions for premiums for retired employees. Previously, the county had paid just about all the costs for medical benefits. Under the new plan, the county is cutting contributions 20 percent a year over five years until 2013 when it will reach a flat $500 a month per retiree, regardless of the number of dependents.

The fact is, if county supervisors hadn’t made those reductions at the time, Sonoma County would be in a far greater mess with its unfunded liabilities.

But the rollback was a bitter pill for those retirees who were not yet eligible for Medicare and were counting on those health care benefits for themselves and/or their dependents. As a result, the Sonoma County Association of Retired Employees sued in 2009 claiming the county had broken its implied contractual promise to retirees.

The retirees lost in federal court exactly a year ago this week when a federal judge ruled that retirees had not shown “any specific Sonoma County resolution or ordinance that granted its members this purported vested right” to these benefits.

But that case could be revived following a state Supreme Court on Nov. 21.

While reviewing a similar suit involving retirees in Orange County, a federal court asked the state Supreme Court “Whether, as a matter of California law, a California county and its employees can form an implied contract that confers vested rights to health benefits on retired county employees.”

The court answered that, yes, in some circumstances retirees could have a vested right to benefits even if the contract is an implied one. In its unanimous opinion, the high court said the right to such benefits could be conferred from something such as a county ordinance or a resolution.

In Sonoma County, retirees would still have to produce evidence of such an implied contract, evidence that U.S. District Court Judge Claudia Wilken ruled a year ago doesn’t exist.

Nevertheless, this could be a significant setback for Sonoma County as well as other counties who are seeking to control the costs of retirement benefits – especially if they’re to required to retroactively reimburse retirees for lost benefits. Needless to say, it would be a sizeable sum.

Here’s a link to the 28-page state Supreme Court ruling.

- Paul Gullixson





14 Responses to “Supreme Court ruling could be costly for Sonoma County”

  1. Serious Fish says:

    The Sonoma County Supervisors and respective city councils are failing the taxpayeing residents of Sonoma County. They are only concerned with re-election and keeping thier job. The “retired” union members would rather the county go bankrupct and are unconcerned about having the taxes raised on their neighbors to pay for their well deserved “hign end” middle class benefits. After all it’s the advantage of a high school education. Supervisors will skirt the issue until it’s critical so they can protect their foot soldier unions and special interests. They will look to increase taxes to pay for the bloated vested benefits and tell you it’s time to assume the position. In the mean time Sonoma county will deteriorate especially if the SMART train set in motion. It’s a true debacle and the supervisors are just playing thier cards.

  2. Juvenal says:

    Funny that those advocating reneging on promises to retirees cringe in horror when it is suggested that we also renege on municipal bond obligations.

  3. Common Sense says:

    The days of borrowing and blaming need to end. Current City and County leaders need to take responsibility for the here and now which means taking actions necessary to live within reduced means.

    http://www.youtube.com/watch?v=H1NDFP838AE

  4. Phineas Worthington says:

    Seems the only legal way to renegotiate the excessively generous retirement packages is by some means of bankruptcy proceeding by the over-encumbered municipalities.

  5. Money Grubber says:

    So, what are the plans of the various cities and county with regard to reducing government expenses?

    What have they done ?

    What are they doing?

    What are their plans for the near term?

    A lot of political hope means little.

  6. sarkyfish says:

    Skippy’s got the right idea, so Progressive Paul get some sleep. Let the county cut the pensions; as yet Judges have no power to tax. Hells-bells, shut it all down if necessary, and start all over again. Call it Costco County…whatever.

  7. Skippy says:

    A 19th century Supreme Court ruling said Pres. Andrew Jackson(Democrat)could not move Indian tribes from the SE to the SW.
    Jackson replied “OK, enforce it.”
    Ditto here.
    All the lifetime appointed judges on earth can rule that taxpayers must fund unsustainable pensions, but when the money’s gone, will our black-robed betters heat up the presses and print more?
    Such arrogance inspires revolutions…and municipal bankruptcies.
    Rule all you want, your honor.
    Reality is holding on line 2.

  8. Money Grubber says:

    More city, county, and state lay offs are clearly on the way.

    When the poverty rate is increasing at three times the national rate as measured by census date (today’s news), and when more people are leaving the state than moving here (yesterday’s news), there can NOT be any rise in tax revenue.

    Promised pensions to public employees who actually vested in their pension systems are now added to those who did not actually vest but who now are being recognized by the courts (today’s news) as having worked under an “implied contract” equal further fanancial chaos in government.

    OF COURSE, DO NOT EXPECT THE CITIES NOR THE COUNTY OF SONOMA TO TAKE EFFECTIVE ACTIONS NOW TO MITIGATE THE TROUBLE. EXPECT THEM TO KEEP SPENDING AND KEEP SPENDING UNTIL MASS LAY OFFS ARE THE ONLY ANSWER.

  9. Money Grubber says:

    GAJ:

    I gave you the thumbs down because you blamed the “baby boomer” generation rather than the specific criminal bureaucrats and politicians of government who lined their own pockets at the expense of taxpayers.

    That said, look at the following news. BAD news for California infrastructure because California is fast becoming a low wage state. And as badly as corrupt government screams that it wants more taxes, they can not squeeze the taxpayer any more than they already are.

    Public pensions are out of control and unsustainable. Time to switch them into social security.

    ——————–
    November 29, 2011
    California’s poverty grows three times as fast as population

    California’s population increased by 10 percent between 2000 and 2010 but the number of Californians living in poverty grew more than three times as fast, a new U.S. Census Bureau report reveals.

    Read more: http://blogs.sacbee.com/capitolalertlatest/2011/11/californias-poverty-grows-three-times-as-fast-as-population.html#ixzz1f7t4b900

  10. GAJ says:

    End result?

    More layoffs of current employees to support the unsustainable Baby Boomer benefits stupidly promised by lilly livered (and now retired) politicians buckling to Union pressure.

    Unintended consequences.

  11. Money Grubber says:

    Why worry?

    When the courts are involved, it means YEARS and YEARS and YEARS of political foreplay before the climax.

  12. Lets be Reasonable says:

    Hey Paul, are you looking at my posts in order to come up with new articles…!?
    .
    You didn’t mention that it could get even worse – there are many active employees who vested under the old retiree health benefit plan before it was changed who may also get almost the full health care insurance costs paid for when they retire.

  13. Pete says:

    Sonoma county future just looks brighter and brighter. NOT!