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By JULIE JOHNSON
THE PRESS DEMOCRAT
In more robust economic times, it’s doubtful a forum on government worker pensions would have nearly filled the pews at the 300-seat Glaser Center on Mendocino Avenue in Santa Rosa.
But with taxpayer-paid retirement costs for county employees up 360 percent since 2000 by county estimates, people from all walks showed up Thursday to ask what can be done.
“Houston, we have a problem,” said Jack Atkins, Sonoma County Taxpayers Association president.
Atkins was among the panelists at the educational forum hosted by Sonoma County Supervisors Shirlee Zane and David Rabbitt.
Atkins and Rabbitt were joined on the panel by Assemblyman Michael Allen, D-Santa Rosa; Sonoma State University Professor Robert Eyler; Cynthia Murray, a former Marin County supervisor and head of the North Bay Leadership Council; and Bill Steck, former director of Service Employees International Union Local 1021. Zane moderated.
All agreed officials can’t wait for the economy to improve to address the ballooning costs. Something must be done, and soon, to put Sonoma County’s pension system on a more sustainable track.
The key is focusing on building long-term stability, said Eyler, who heads SSU’s economics department. Raising taxes would only mask the problem.
“Financial markets won’t solve the problem, don’t fixate on a point in time,” Eyler said.
Both employees and government employers need to negotiate compromises to get where they need to go, Eyler said.
“It’s good county employees are paying something but maybe it’s not enough to get us out of the hole,” said Murray.
Increased retirement ages for some employees, more flexibility for local governments to negotiate with unions and limiting post-retirement employment benefits are some solutions proposed by Gov. Jerry Brown that state Democrats believe will help, said Allen, who represents a portion of Sonoma and Solano counties and all of Napa County.
“We must protect lower-paid workers while being fair to higher-paid workers,” Allen said.
Supervisor Rabbitt recommended setting a county maximum debt policy and taking into account a person’s total compensation rather than just salary when setting limits.
“We need to be the generation not known as being selfish,” Rabbitt said.
But agencies can’t simply rescind compensation promises made to public employees, said Steck.
Atkins pointed out that all members of the Sonoma County Employees’ Retirement Association are pensioners themselves.
The audience broke into applause.
Audience questions addressed outcry over pensions that for some employees exceed their prior salary.
An audience member asked Allen why Democrats haven’t come out in favor of the governor’s plan, unlike Republicans who have shown outspoken support.
Andrea Regan, a private investor from Cotati, said she came as a taxpayer. “I’m concerned they’re going to raise our taxes and we’re not going to get services,” Regan said.
A former stock and commodities trader, Stephen Radeljic, 39, of Santa Rosa showed up because he said it’s everyone’s job to be informed.
“Two years ago no one wanted to touch this issue,” Radeljic said. “Now something will be done. I’m an optimist.”
You can reach Staff Writer Julie Johnson at 521-5220 or julie.johnson@pressdemocrat.com.
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@John Moore
Chapter 9? The unions and Political allies have thought of that. California legislature passed AB 506 last year that forces cities to go through arbitration first to prevent another Vallejo. In addition, Calpers just issued a policy document stating that city pension obligations can never be reduced, only increased, even those not yet earned, and regardless of the financial condition of the city. Therefore, the idea that bankruptcy is a path out of the pension debacle is erroneous. The only approach that might work is to change the law, and the courts and legislature have strenuously resisted that approach. But we keep electing people with the same allegiances.
Maybe instead of laying off senior employees, such as in the AGE discrimination currently underway at Sonoma County Water and Close Relatives Agency, you get rid of the unending stream of unqualified children, cousins, husbands/brothers etc!
Sonoma county is so under water that it is totally impossible to return to fiscal sanity except by a Chapter 9 in bankruptcy. I have been studying pension problems of Ca. cities for four years. Sonoma county, you are the champion. No other entity in Ca. comes close. 3% of salary x years served for all employees! How did that happen? The 400 million dollar unfunded deficit grows at about 32 million dollars per year compounded. And another 30 million per year for pension bonds. Even Stockton is better off than Sonoma County and its’ situation is hopeless. Pacific Grove Taxpayers Ass’n.
@ Larry – We could do that with every job. Private sector too. Just handle every opening that has more than one applicant like an auction but in this case the lowest bidder wins. We’ll start with yours.
Draft Unfunded Retirement Obligations 101
In order to fund the retirement benefits for past service of all 8000+/- SCERA (Sonoma County Employee Retirement Assocition) members, 4068 Retirees and 3500 Active employees, they need approximately $2.2 Billion in the investment fund earning 7.75% interest for the next 29 years.
SCERA presently has approximately $1.85 Billion in their portfolio, with $618 Million of that from Pension Obligation Bonds (POB), on which we still owe over $500 Million…approximately $800 Million unfunded retirement obligations paid back over the next 20 years +/- with interest of about $700 Million or a total of $1.5 Billion…IF SCERA averages 7.75% return over the next 20 years!
The above does not include the $258 Million unfunded liability for retiree medical based on what we would need in the portfolio earning 8.25% interest over the next 30 years to paying approximately $600 Million principal and interest).
On top of the above the County also pays into Social Security and upper tier managers/electeds get an additional 5-6% 401(a) that is included as part of their final year salary.
The taxpayers guarantee the 7.75% rate of return for SCERA. Unfortunately last year SCERA averaged a 1 % return on their investments thus incurring an “unfunded liability” of over $150 Million paid back over the next 20 years (SCERA policy) by the taxpayers at the rate of 7.75% adding another $150 Million in interest; i.e. $300 Million principal and interest paid back over 20 years on a payroll of $300 Million. Add to the above almost another $150 Million paid in on top of the $300 Million salary toward retirement benefits.
Last year, on a payroll of $300 Million, Sonoma County paid in $150 Million toward retirement benefits and incurred another $300 Million principal and interest over the next 20 years…$450 Million on a payroll of $300 Million or about $1.50/$1.00 of payroll…compare that to most in the private sector lucky enough to have a job, that their employer is simply paying in the 7.65% toward Social Security. Sonoma County is paying in almost 20 times most of the private sector and rising.
Last year a $100K/year middle manager received another $150K/year in retirement benefits, 2/3 paid over the next 20 years by our children and through loss of services this County once was able to provide for generations. Perhaps “generational equity” should be the next human rights movement, akin to the Suffragettes of the early 20th Century and the Civil Rights Movement of the 1950’s and 60’s.
We are in the midst of a debacle, a disaster; and we are doomed without a solution. Most of our elected officials, administrators and union heads have been willfully blind to the problems we boomers have created. And as others have noted this is NOT a struggle against our public servants, unions and retirees…this is a math problem that we all have to work collaboratively together toward sustainable solutions.
There are these great TV ads now.
Didn’t pay your taxes? We’ll get you out of it – for a minor fee.
Overspent your credit card? Hey, we’ll get you out of it – for a minor fee.
Buy a house on terms you didn’t think out? Hey, there’s a program that will rescue you from your poor judgement.
For a minor fee.
Paying 15% tax on your investments could be too high? We’ll help you out.
For a minor fee.
In the end, a promise broken is simply that – a promise broken.
Can I park my future RV on your street?
I agree with Big Jim, when you get 100 applicants or more for every Santa Rosa City or Sonoma County job opening, the salaries and benefit packages are way too high. Lay off existing workers at the highest salary levels and give them a chance to complete for their old jobs at the lower salary and benefit levels. I think that this approach should also be applied to elected or hired officials. Do we need $160,000 per year County Supervisors or county and city administrators that are paid $300,000 yearly salary and benefit packages.
“No economy can thrive when there comes a day when any employer pays more for employees who don’t work versus employees who do.”
And that was recently proven by GM, who was paying far more in rtmt. to non-workers than to current employees.
Then Big Govt came in; screwed the bondholders; handed the company to the unions; and paid for it with hundred$ of billion$ in confiscated tax dollar$.
When Sonoma Co goes belly-up, the Big Pig in DC will have no teats available to feed the unsustainable Big Govt pension beast.
But you folks go ahead and whistle past the graveyard!
Nothing to see here!
Fiddle-dee-dee!
No economy can thrive when there comes a day when any employer pays more for employees who don’t work versus employees who do. The idea that we can continue to pay and promise an unlimited future to government workers will help us arrive in a place where we pay taxes to support retired people with no way to support folks working today. That’s not a union thing. That’s a math problem.
I was there too last night. All the panelists were well-spoken. But I think Mr. Steck did his argument to disadvantage by trying to downplay the seriousness of the pension situation. Sup. Rabbit is right that this is something we can’t delay on. Mr. Atkins (and others) gave some solid statistics that we can’t ignore. Pensions have been going up at an unacceptable rate and this is just unsustainable. We cannot corner ourselves into having to pay out so much in pensions that we have nothing left for other vital services.
As for the hen house comment, I was at the meeting last night. Plenty of people from both sides on the dais. I don’t count Rabbitt as a union lover. So 2 union people were there. And they were the best spoken and most reasonable.
Don’t guess if you don’t know.
Big Jim, kind of callous of you. How would you feel being laid off after doing 27 years on the job? After putting in 27 years worth of pension money and social security too? What is exactly wrong with people these days that this is the kind of response we are getting on this website?
“Santa Rosa foxes focus on Hen House problem.”
Sorry Jim, That is illegal and the can’t. Next.
@Big Jim…
You sound like me. The problem is that no one will stand up to the unions. Union contracts have promised wages and benefits that could never be paid and yet, for some reason, nothing changes. The current hidden unfunded pension liability in CA is $500 billion. In Santa Rosa it is over $110 million. There isn’t enough money in CA to pay for these promises. Left, Right or Independent….the money isn’t there.
Look at the Federal level. Obama lies to the sponge-heads that the “Buffett Tax” should be passed. Non-partisan estimates of taxes generated by this “tax on millionaires and billionaires” are that a whopping $47 billion will be collected OVER TEN YEARS! The annual interest on the ever increasing deficit is about that much. Yet voters think this is even worth discussing? No mention of eliminating worthless departments, and worthless programs, even programs that are rated as “POOR” and/or “INEFFECTIVE” by the feds themselves.
The issue is really a non-issue. Unnecessary departments will continue to waste taxpayer money (e.g. like $1,000,000 trips to Las Vegas…Google the story on the GSA’s Vegas party!), the deficit will continue to grow because the voters are so easily manipulated into thinking ‘contraception’ is a real issue and the unions will continue to bribe the politicians.
Don’t fool yourselves…We taxpayers are just a source of revenue to fund their lifestyle, regardless of what side of the spectrum you fall.
If we can’t renegotiate any existing agreements, even when not earned yet, then there is only one option: lay off all current workers and replace with new workers at sustainable salary/benefit rates. The current stance by Calpers that existing employee agreements are untouchable will drive cities into the ground, and eventually will lead to no services being provided, just retirement benefits to past workers, becasue Calpers is not earning enough return to pay the promised benefits. I don’t want my kids to grow up in that kind of city, and I can’t afford to pay more taxes.