WatchSonoma Watch

SMART rail agency considers two-tier pension plan


The Sonoma-Marin commute rail agency, which expects to increase its workforce by five-fold within two years, is considering a pension plan for new employees that may be the stingiest among North Bay public agencies.

Farhad Mansourian

The plan would raise the age for full pension eligibility, eliminate the bolstering of pensions with such things as specialty pay and spread the risk of cost increases to employees.

“I think it’s a lower plan than what I see most agencies going to,” said Fran Elm, Santa Rosa’s human resources director. “But it is still a good plan. I think people would be able to have a benefit that is sufficient to live on once they retire.”

The proposal goes to the agency’s board of directors for approval on Wednesday.

Valerie Brown, chairwoman of the Sonoma Marin-Area Transit district, said with agency about to ramp up employment, the timing is important.

“This is in keeping with the direction that all government agencies are going in,” Brown said. “It is hybrid, it is probably what we will see throughout the state of California.”

The agency’s current employees, however, will continue with their existing plan, which provides more expansive benefits. SMART, by law and court rulings, cannot reduce promised pension benefits of workers already employed, said Amy Norris, a spokeswoman for CalPERS, the nation’s largest public pension fund.

“For new hires, they can create a new plan and a lot of agencies are doing that, creating a second tier as a cost-saving measure,” Norris said.

Public-worker pensions have become highly controversial because of rapidly escalating costs that burden tax-supported agencies, often forcing the curtailment of other services.

It has not become a crucial financial issue for SMART because the transit district has just 18 employees, said General Manager Farhad Mansourian.

Still, SMART’s 2011-2012 budget contains $550,000 in annual pension contributions for its those workers.

The agency expects to hire 100 more employees within the next 12 to 18 months as it rebuilds its track, starts testing a rail car, operates freight service for the North Coast Rail Authority and prepares to run its own passenger trains.

Service between Santa Rosa and San Rafael is scheduled to begin in late 2015 or early 2016.

“In June, the kinds of positions we will be hiring are operations manager, access control manager, accountant, engineers, safety people, community outreach, and probably a few months later we will begin hiring operations people,” Mansourian said. “The first trains will arrive in October 2013. It is right around the corner.”

Highlights of the proposed plan for new employees include:

Applying 2 percent-at-60 formula, meaning a pension of 2 percent of salary for each year of service with full eligibility at age 60. The County of Sonoma, for example, uses a 3-percent-at-60 formula for most employees, resulting in pensions 33 percent bigger. The current SMART plan is 2 percent at 55.

Calculating pension on base salary, thus excluding specialty pay and unused vacation, sick time and administrative pay that can spike pension benefits.

Using the average of the final three years salary to compute pensions, further limiting the spiking that can occur in plans that use the single highest year.

Requiring employees and the agency to split, 50-50, the costs of annual contributions to CalPERS and all future increases in cost.

The equal-sharing provision is a key departure from most public pension plans in California. Typically, taxpayers bear the entire burden of investment risks, such as occurred with the sudden drop in pension portfolios that began in 2008. Those losses have been a key factor in the recent rising annual costs of local government pensions.

If approved by the SMART board at its meeting in San Rafael, the pension plan for new employees would take effect June 1.

It also includes a cost-of-living increase of up to 2 percent a year for retirees and a 2 percent match of an employee’s contribution into a deferred salary plan.

“We are setting the rules going forward,” Mansourian said. “Every time we hire someone, when we give them a letter of hiring, we will spell out all of these things. We have one chance to get this right.”

For current SMART employees, the agency not only pays its share of annual contributions — 12.5 percent of salary — but also the workers’ share, which is 7.5 percent of salary. The exceptions to the formula are Mansourian and Chief Financial Officer Erin McGrath, who pay their own contributions.

Mansourian on Friday bristled at the SMART critics who focus on his salary and pension.

As SMART’s general manager, Mansourian receives a salary of $246,000. As a retiree from Marin County, where he was public works director, he receives an annual pension of $130,000.

“I worked for 31 years as a public servant, and I was promised a pension and I am receiving it,” Mansourian said. “It has nothing to do with SMART.”

You can reach Staff Writer Bob Norberg at 521-5206 or bob.norberg@pressdemocrat.com.

17 Responses to “SMART rail agency considers two-tier pension plan”

  1. Jim says:

    @Not a Chance…

    You make an interesting point. Whether the figure is accurate ($2 trillion in cash), the “private sector” includes businesses of all sizes and industries. So the “$2 trillion” is spread across a multitude of companies. Aggregating the “cash” makes no sense.

    Also, $2 trillion in cash wouldn’t “bankroll” the current unfunded pension liability in this country. CA alone has an unfunded pension liability of over $500 billion.

    So saying the private sector can “bankroll” pensions is wrong because (1) a private company can decide how it wants to spend its “cash” and (2) the aggregated “cash” doesn’t cover the current pension liability (let alone the ever expanding government’s future liability), and the private sector has more workers.

    I’m assuming you are suggesting that all the “cash” be pooled so everyone in the country gets a lifetime pension from it. Sounds like Social Security to me, which is bankrupt (will soon be anyway). Another big government program, Medicare, is also bankrupt. Thinking pooling private sector cash is a good idea is ridiculous.

  2. Grapevines says:

    Take a good hard look at the smirk on Farhad Mansourian’s face as his picture leads off this article. He knows that he’s pulling one over on the taxpayers who are going to continue to pay his overpriced salary for the rest of his life.

    Thanks Valerie Brown for hanging this albatross around all our necks.

  3. Skippy says:

    “Eventually it has to be about people, I for one am happy that our government is responsible to its citizen workforce.”

    Or in other words, “I got mine suckas!”

  4. I hope someone is watching says:

    Look at who is on this board and vote them out of the towns and cities they repersent! Until we use the voting box as THE TOOL to fix this mess nothing will change. Do not try to stop the tax and go after the group that is running this into the ground! Put the names in print so the county can see what they are doing.

  5. GAJ says:

    @Not A Chance.

    My IRA and 401k, which I started at age 21, when I was dirt poor, are doing just fine thank you.

    If the Federal Government, which can print money, feels FERS Pension Benefits are good enough for their reasonably well paid employees, then the fact that California State and Local Governments offer benefits double or triple those offered by the Feds is simply insane.

    In 20 years this State and this County will be VERY different places than when I moved here 30 years ago and local government employees got fair pay and a fair and sustainable Pension.

    The taxpayer, (the vast majority who work in the private sector which you seem to abhor), are not a resource that can endlessly be expected to sacrifice more to support the unbridled greed exhibited by current unsustainable benefit levels of government.

    The cuts in service have barely begun…and the younger generations will be shouldering the debt created by the Baby Boomer generation.

  6. Not A Chance says:


    Private sector private sector private sector.

    Lets be honest, the ONLY reason your beloved private sector doesn’t equal public sector retirement is GREED. They are still sitting on 2 trillion in surplus cash, they could easily bankroll the retirement for their employee’s but as we know, the private sector is like horse racing once your employee is useless to you, you’d rather blow their head off than give them a quality end to their life.

    401Ks are useless and have failed to give quality retirement for decades, and when the economy tanks so does retirement. My father for instance is a truck driver, non union, and will have to work until he is 75 for his retirement to be suitable, that’s BS in my book.

    Eventually it has to be about people, I for one am happy that our government is responsible to its citizen workforce.

  7. Commonsense says:

    So, the Chief is currently receiving a $130,000 pension from the County of Marin and will be eventually receive a second pension after retiring from SMART, for an unknown sum, but one can estimate that it will be relative to his current $246,000 annual salary and years of service, so the amount won’t be insignificant.
    There needs to be a mechanism to address this type of situation, as these are the most costly. Compared to the general non-management county employee, these are the pensions that cost the most and are frankly the most abusive.

  8. Jack Wilson says:

    SMART will be broke in less than 10 years so pensions will not be needed.

  9. Graeme Wellington says:

    Sonoma County… it’s YOUR fault.

  10. Jim says:

    Given the track record of government departments in funding their pensions (see Santa Rosa at $112 million unfunded, CA unfunded by over $500 billion, federal over one trillion unfunded, etc), how can anyone actually make a reasonable argument to offer pensions for SMART employees? The Train itself will run significantly in the negative. Where will the pension contributions come from? Oh yeah, from the ENDLESS pool of taxpayer money. The same pool of money that will fund the $500 billion unfunded pension liability at the state level. Yeah, there is ALWAYS money in the taxpayer’s wallet to steal.

  11. RAW says:

    There is no place to complain here. The sheeple were lied to about all the costs. When it was pointed out, the sheeple were fine with it, voted to fund it at twice the cost. Now a handful of you who may or may not even vote are griping? This is not news. This was headlines last year and nearly every was OK with it. Stop whinning, you are in the miniscule minority, nearly everyone else is just fine with this. If I wouldn’t feel slimy, I would even consider applying for a SMART job. It would be like working for the media, needing a shower every 5 minutes, or having no morals or spine. For the record, I don’t like it, but too many do.

  12. Friendly Advice says:

    Everything SMART touches is golden and very expensive for those chumps, the taxpayers, who pay the bills for this 1% welfare program.

    18 employees receiving $550,000 in annual pension contributions! Now they want to make a little modification to the pension plan. Why do they offer a pension plan at all? Startups don’t offer pensions, they can’t afford them. Private sector employers don’t offer pensions these days. You get a 401k if you are lucky.

    The unsmart people’s commissariat running the little train to nowhere has not idea of cost savings because they are spending state monies, not their money so why bother. The commissariat is not elected and not really accountable to anyone except their excesses.
    The unsmart board, their chief commissar and the bureaucrats operating under them are all taken care of with pay and benefits that would shock most people in the private sector.

    One wonders if they are planning on special coaches for the unsmart officials who will be riding the train from San Rafael to Santa Rosa to attend smart meetings.

    There is no end to the ways these bureaucrats can spend money. They have plans.

  13. Tom Lynch says:

    This is a ridiculous debacale, a disaster; and we are doomed without resolution.

    In the private sector most lucky enough to have a job get 7.65% from their employer for Social Security and Medicare.

    Last year in Sonoma County on a $300 Million payroll, there was an additional $150 Million paid in toward retirement obligations, NOT including another $300 Million principal and interest over the next 20 years toward increases in unfunded retirement liabilies.

    Last year SCERA (Sonoma County Employee Retirement Assn.) needed a 7.75% return on a $2.2 Billion pension libility, over the next 29 years to fund retirements. Their actual return on a portfolio of $1.8 Billion was 1% !

    Taxpayers guarantee the 7.75% return so we have to pay the 6.75% shortfall with an additional $300 Million over the next 20 years, principal and interest, to fund last years retirement benefit.

    $450 Million paid in and incurred principal and interest over the next 20 years on a $300 Million payroll. That $100K/year employee with $50K retirement benefit cost an add’l $100K over the next 20 years…i.e. $250K/year.

    We need a new social contract, a new operating system, a dramatic change over the willful blindness endemic to this whole system that is destroying all of the essential services local government used to provide for generations.


  14. Grapevines says:

    Has anyone done the math on this little claim? SMART says that for the 18 employees it has, it pays $550,000 a year towards the retirement for those EIGHTEEN EMPLOYEES! EIGHTEEN, NOT 30 OR 50, EIGHTEEN!!

    $550,000 divided by 18 equals $30,550 and change PER EMPLOYEE, PER YEAR!! Work for 15 years and you could have $458,000 dollars per person in their pension stockpile. Almost one half million in 15 years!!

    Anyone else see the graft, greed, and wool being pulled over the eyes of the taxpayer here? People we are being screwed here, and I doubt if any of us will see or feel the kiss afterwards.

  15. former taxpayer says:

    … For current SMART employees, the ‘AGENCY’ the AGENCY DOES NOT PAY THIS ..
    TAXPAYERS DO (as usual) !

  16. GAJ says:

    This very generous new plan is far more generous than anything you can expect to find in the Private Sector. It even has a 2% cost of living increase for retirees!

    If this is what “cutting” is defined at in Government we are in very, very dangerous fiscal times.

    They should use the FERS calculations (Federal Employee Retirement System, where the plan vests at 1% per year.

  17. Reality Check says:

    Sometimes a word stands out as inappropriate to the context of the subject. Using the word “stingy” in the same sentence as public employee pension is a textbook example.

    Describing the proposed plan as less generous would be a better descriptive choice, and more accurate. Any plan that pays 60-80% after a full career is not stingy. In fact, compared to the real world, it’s quite generous. And expecting an employee to share in its costs is not stingy, it’s reasonable, fair, and long overdue.