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Taxpayer contributions to Sonoma County pensions could rise by $13.6 million over next three years

By BRETT WILKISON
THE PRESS DEMOCRAT

A 49 percent spike in unfunded pension promises could drive up taxpayer contributions to Sonoma County government pensions by $13.6 million over the next three years.

The roughly 25 percent increase in county payments, triggered mostly by past investment losses, is contained in a new report accepted Wednesday by the board of the $2.05 billion county government pension system.

PensionIt comes on the heels of better recent earnings by the pension fund and overhauls last year by the state and county intended to lower taxpayer pension costs. Those costs are up 400 percent in Sonoma County since 2000 and have been a hot-button issue in political campaigns, with fiscal watchdogs decrying cuts to public services and staffing.

At least in the short term, taxpayer contributions to Sonoma County’s pension fund will continue to rise, pension officials reported Wednesday.

The increase in pension costs could extend through mid-2017, county officials said.

“We knew this was coming,” said Sonoma County Supervisor David Rabbitt, who also serves on the board of Sonoma County Employees’ Retirement Association. “It’s one of those things where it’s going to get worse before it gets better.”

The system covers six government agencies, of which the county is by far the largest. It pays benefits to 4,283 retirees and has about 4,150 current and deferred workers enrolled.

The report showed a sharp, one-year jump in long-term unfunded obligations to county retirees. Now at $527 million, that so-called unfunded liability — the difference between current assets and projected payments to retirees — is up from the $353 million reported last year.

The fund’s stock market losses from 2007 to 2009, totaling $671 million, are a main factor in the projected rise in annual employer contributions. The last layer of those losses, $109 million, was accounted for in the system in 2012. Pension officials said that step warranted some optimism, especially after earnings in three of the past four years have surpassed the fund’s target rate.

“Your deferred gains mean you have good news in the pipeline,” said Paul Angelo, senior vice president with The Segal Company and actuary for the county pension system.

But the continued rise in taxpayer contributions marks a new era, set to begin this year, when the county expects to pay an average of over 50 cents toward employee retirement — including pension, Social Security and medical benefits — for every dollar it pays on salaries. Public safety workers, who generally earn higher benefits, are on the leading edge of that trend.

Tom Lynch, a Guerneville contractor and county pension system critic, called the rising cost “unconscionable,” saying it has diminished the reach of government services.

“The county can’t afford to replace the people that are retiring, so they put more and more burden on the staff that remain,” Lynch said.

Reforms enacted last year by the county and state have not translated to immediate savings because they either affect new workers in 2013 — none of whom were hired at the time of the pension snapshot — or because some of the changes for current workers are still under negotiation, largely with public safety unions.

Those include moves to eliminate cashouts of accrued leave that can be factored into pensions. Those perks and other pension spiking maneuvers already have been ended for a majority of the county’s workforce.

Gary Bei, administrator of the county pension system, said the county could get credit for the savings when contract talks conclude with the remainder of employees.

The other major driver in the short-term cost increase and rise in long-term liabilities is the pension system’s recent change to a lower projected earnings rate of 7.5 percent. That change, from 7.75 percent, added $50 million to the unfunded liability and increased taxpayer contributions in the short term.

But it is intended to reduce market-driven shortfalls and taxpayer risk in the long-term.

“We knew that was a change we had to make moving forward,” Rabbitt said.

About $27 million in interest charges and $31 million from changes in life expectancy and other demographic factors added to the total unfunded liability. Offsets worth about $51 million came from salary increases that were lower than expected and the elimination of deferred compensation payments from pension calculations.

The report signaled a continued climb in annual county pension contributions — from nearly $51 million a year now to roughly $64 million in three years, according to county estimates.

Overall, including payments on pension bond debt, the county’s current annual pension costs are about $97 million, or 19 percent of total salary and benefits.

By July, the county expects to have finished paying off all of its 1993 pension bond of $97 million, which is expected to reduce current county costs by $1.5 million. That would leave about $472 million from a series of 2003 and 2010 bonds. Currently, Sonoma County has the highest per capita pension bond debt among the state’s 20 county retirement systems.

You can reach Staff Writer Brett Wilkison at 521-5295 or brett.wilkison@pressdemocrat.com.





31 Responses to “Taxpayer contributions to Sonoma County pensions could rise by $13.6 million over next three years”

  1. Redwood says:

    Look at the list of property tax defaults owners names, as published in the press democrat in August 2013 and you’ll find matches to resources cited in the article as reformers.

    Then check again to a list of county officials and you’ll match again to “contractor” and “zoning adjustment board member.” Choose your sources wisely, or risk policital trickery.

    Go from zoning adjustment board member to supporters of recently embarrassed board of supervisor member, and you’ll find the political appointment to the zoning panel that recommends “exceptions.”

    Go from board member who approved the zoning commissioner, and you’ll find his backers, owners of the press democrat.

    It’s a big circle, but only has about four pieces.

    Thumb up 1 Thumb down 0

  2. Fiscal Conservative says:

    Actually….The Sonoma County Grand Jury has found the pension increases were not legal as there was not a vote.

    Before making ignorant entitlement statements, best check your facts.

    The Judge and Jury will decide in a few years.

    Thumb up 4 Thumb down 2

  3. County Worker says:

    Well,
    Since everything they are doing is legal, the DOJ would just say, “Investments go up and down in value, they change, it is called the market, nothing to investigate except maybe a few new money managers.

    Thumb up 2 Thumb down 7

  4. Fiscal Conservative says:

    I suggest writing the California Dept. Of Justice and requesting an investigation.

    Thumb up 11 Thumb down 2

  5. pete says:

    Cant we all just forget about the liberal/conservative crap that is getting blamed for this problem. It doesn’t matter if these guys are dem or rep, they are corrupt politicians, this didn’t just happen in the last couple of years, it’s been going on forever. They have finally just crossed a line, we no longer can afford them, they have ruined the state, and this is not just happening in california.

    Thumb up 13 Thumb down 1

  6. Gary says:

    In the United States, California, and Sonoma County, the people have the power. They just fail to utilize it.

    Without an activist population, others are allowed to manipulate the political system to their benefit. A smart politician will work for the people that manipulate the political system.

    I find it hard to cry (and listen to you cry) about the symptoms as opposed to the disease.

    The most powerful thing in this country is a united public. I’d welcome ideas on how we can do that in Sonoma.

    Thumb up 21 Thumb down 3

  7. Juan says:

    Any y’all expect anything less from your liberal government that you continue to vote into office and control your destiny and dictate the cost of living to y’all. Here in Texas we laugh because the mindset of Californians is like a mindless troll enabling the liberal government to control every aspect of your personal life. It would see by reading some of the posts here that you’d want to take control of your own destiny and form a strong stance against your liberal state and vote all of them out office and y’all control your destiny like we do in Texas.

    Here in the south we see California as breeding ground for the goofiest people in the world and wonder why y’all pay for liberal the tokens sucking off your entitlement programs that promote a baby making welfare society, gang bangers, dope dealers, meth heads, crack heads, illegals and any other criminal mindset that only in California flourishes.

    So y’all whining and complaining yet y’all continue to vote the liberal agenda into office knowing darn good and well that liberals seek nothing more than the control their mindless trolls and society ensuring the people succumb to whatever the liberal agenda mandates y’all follow. You like a cult group and many wonder how y’all able to function knowing that big brother controls every waking moment of y’all lives.

    Thumb up 19 Thumb down 12

  8. David Stubblebine says:

    @Steve Humphrey
    It is interesting how the slightest degree of fact checking makes such a huge difference. 50-cent on the salary dollar is a huge cry from the 50-cents on the tax dollar you originally (and irresponsibly) posted. Also, that 50-cents on the salary dollar includes healthcare which is chunk at least as significant as the pension chunk. Where’s the outrage about that?! The absurd costs of healthcare affect far more people far more deeply that public pension costs [and no whining about Obama-care here; Obama-care is an attempt at the solution that people may agree with or not but it is not the problem.]

    Thumb up 7 Thumb down 12

  9. Steve Humphrey says:

    @ county worker

    Your right. My apology.

    “the county expects to pay an average of over 50 cents toward employee retirement — including pension, Social Security and medical benefits — for every dollar it pays on salaries.”

    But even spending 50 plus cents of every salary dollar on pension/benefits is not a sustainable model. Just try that in the private sector and see how far you go.

    Thumb up 24 Thumb down 4

  10. Fed Up Taxpayer says:

    County worker add in Salaries and benefits with the pensions and you will get 50% and now you also need more money to cover it. We are NOT your cash cow.

    Thumb up 25 Thumb down 11

  11. Kathy Robler says:

    As that old song goes, “take this pension and shove it.” That is exactly what needs to be done. Nothing less will fix this monster. Tired of crying public employees, public unions and their lackies, the “elected officials” wringing their hands, oh what to do.

    Now that wasn’t so hard was it.

    Thumb up 24 Thumb down 12

  12. David Stubblebine says:

    @Snarky and BigJim: Both your posts equate Sonoma County’s pension situation with what’s going on in CalPERS. They are completely different systems experiencing completely different performances (PERS just posted a 13.3% rate of return for Calendar-2012). I get-it that you are both anti-pension and/or anti-public employee but at least blame Sonoma County’s problems on Sonoma County’s situation and PERS’ problems on PERS’ situation without blurring one onto the other.

    Thumb up 15 Thumb down 4

  13. The Hammer says:

    “It’s one of those things where it’s going to get worse before it gets better.”

    That’s because the supervisor have no guts. Or better yet, too stupid to solve the problem. It’s too easy to make the taxpayers pay because we don’t go to their offices and complain. I say recall all of them. Just tired of this crap.

    Thumb up 20 Thumb down 11

  14. County Worker says:

    Seriously?
    With pensions accounting for 8% of the budget, some of you
    Actually believe they are spending 50% of every dollar on pensions?
    One born every minute.

    Thumb up 23 Thumb down 20

  15. Joe says:

    I agree with you Mockingbird. Our local govt’s hire managers that are only allowed to manage 1-10 rank and file workers. This makes them very top heavy, look at the layers of management, the cuts need to be made at the top first, high wages for nothing in return except for a lot of paper pushing, meetings, and higher retirement costs passed along to the tax payer.

    Thumb up 23 Thumb down 11

  16. Joe says:

    Get out of the way, we have a Power Plant to buy and run we don’t have time for this!

    Thumb up 24 Thumb down 5

  17. Big jim says:

    Scrap defined benefit pensions now! Switch everyone to defined contribution and stop bleeding the taxpayer for Calpers and the politician’s incompetence.

    Thumb up 26 Thumb down 10

  18. Dan Drummond Sr says:

    Sooner or later, government retirement programs will need to go where non-government retirement programs went.

    Most non-government employers that offer a retirement program do not take the complete risk for growing their employee’s retirement funds. They match a percentage of what the employee wants to contribute to their own retirement program, and then let the employee manage their own account under the program, e.g. 401K. Many employees now have the freedom to choose a program based on how much risk they are comfortable with. After they retire, if they want a guaranteed income, they can invest in an annuity program.

    Taxpayers should not have to cover the investment risks for government employees!

    I respect the state workers and I respect their unions, but we simply can’t afford to pay benefits and pensions that are out of line with economic reality. ~Andrew Cuomo

    Thumb up 26 Thumb down 7

  19. James Bennett says:

    See, this is the globalist MO, through insideous permeation of government, and control/manipulation of currency, they orchestrate the crash.

    DELIBERATELY.

    Then, in the wake of the impoverishment, when that entity is dependent, out of options the globalists; which can take on many forms U.N., IMF, ICLEI, MTC/ABAG in our case basically say if you play ball our way complete with ‘strings’, we’ll give you money.

    Works on individual serfs.

    Works on ag. people, works on the dairy in Inverness.

    Works on Petaluma.

    Works on Portugal.

    Dependence, not independence.

    Next thing you know Petaluma’s a UN outpost.

    Next thing you know dairy land is a ‘conservation easement’.

    Next thing you know a lovely country like Greece or Portugal has a Gold Sachs socialist change agent running their show.

    This is the part that people much smarter than me don’t understand.

    Gives ‘em a headache because it requires a forfeiture of good will and common sense.

    Thumb up 16 Thumb down 10

  20. Grapevines says:

    MOCKINGBIRD, if I was one of the fools that voted for any of the current Board of Stupid-visors I’d be asking you how much for that bridge and where is it located??

    But something about them must not be so stupid. They managed to get themselves to be paid the highest in California for doing the least for the taxpayer. I guess they modeled themselves after Bell, California. It’s time for the revolt.

    Thumb up 27 Thumb down 9

  21. Snarky says:

    But, but, but……

    The public employee unions are always screaming that their contributions cover their massive public pensions 100%.

    Why do they need OUR money?

    Thumb up 27 Thumb down 9

  22. R.B. Fish says:

    Ladies and gentlemen you seem to be posting from a logical perspective that the BOS are actually concerned about the taxpayers. In terms of BOS leadership is defined as self preservation until my next political position. There are no plans but more business. The debt crisis is old news and it will get worst. Just wait until Obamacare, SMART and inflation when the funny money stops. The new power plan is just part of the conytrol process. There is really nothing taxpayers can do as there is no representative government nor intregrity in the process. The cops, fire and public empoyees don’t care. Just raise the taxes.It all over except for the continued screaming.

    Thumb up 31 Thumb down 11

  23. Steve Humphrey says:

    So now over 50 cents of every tax dollar collected pays for retirement benefits and pensions?
    One would think that the majority of monies collected would go towards salaries, materials and other costs neccessary to provide services to taxpayers….like road improvement, sewer and water, police services, etc..
    Unfortunately, those now living off the county pension system were just plain lied to. The money isn’t there. Just admit it, tell them, make adjustments and move on.

    Thumb up 36 Thumb down 12

  24. Steveguy says:

    Ohh, some math:

    2 Billion divided by the 8,400 covered employees equals around $240 thousand per person.

    I know, statistics.. However there are some that get that in ONE YEAR yet we expect them to be able to cover it all?

    Yes, there are many other factors, but the facts are that what they are doing now and have done in the past is unsustainable.

    Bankruptcy will happen, it is inevitable. We don’t have enough money to satisfy their greed.

    Thumb up 33 Thumb down 13

  25. MOCKINGBIRD says:

    Grapevines-just remember that being in the power business means MORE MANAGERS. Always MORE MANAGERS. The BOS promised the rank and file they would look FAIRLY at the ratio and get rid of some managers. But they are hiring new positions, not eliminating. This goes along with contracting out. I’m wondering how many managers they are hiring or hired to negotiate and manage the garbage contract while rank and file who worked at the dump are being laid off. And they keep saying it will be cheaper.

    And I have a bridge to sell you, too.

    Thumb up 25 Thumb down 15

  26. MOCKINGBIRD says:

    The current board aren’t doing anything to change their own income which they keep saying are the “mistakes” of previous BOS including the vote to align themselves with the judges raises AND any raises the rank and file gets PLUS. They and the managers are still keeping some of their county paid deferred comp renegging on their agreement in August to give it all up if SEIU bargained in good faith. SEIU did they didn’t.

    In the meantime they are contracting out and hiring more and more managers. Just heard yesterday that DHS is creating 2 more management positions to add to the at least 12 they’ve created since the beginning of 2012. I imagine this is going on throughout the county.

    When all the contracts are said and done the PD should make sure to let we the public know just what those contracts consists of LIKE THEY DID WITH THE SEIU CONTRACTS. The safety employees, the managers, AND THE BOS OWN SALARIES AND COMPENSATION. I will be expecting that the PD will be fair and spread all of it across its front pages. The rank and file ARE NOT THE TAKERS, they ARE THE WORKERS AND THEY WORK FOR YOU.

    Thumb up 24 Thumb down 18

  27. Steveguy says:

    The pensions are unsustainable, yet they are trying to sustain the system.

    Now they want to control our electricity through Sonoma Greed Power. There is NO provision for stopping rate hikes like we have with PG&E.

    I highly suspect that they see Sonoma Greed Power as a cash cow with us being the cows.

    Just say moo.

    Thumb up 35 Thumb down 11

  28. Keith Rhinehart says:

    As I have said before, more aggressive action on the part of the BOS is required to reel in this debt. Go on, take a shot – reduce Dole, Lewis et al’s pensions and see what happens at the table.

    Thumb up 32 Thumb down 12

  29. Beef King says:

    So David Rabbit says it will get worse before it gets better?
    How is it going to ‘get better’ David?
    Wishing? Hoping?

    We clearly need a BOS that has the courage to stand up to the Unions before our County goes belly up.

    Thumb up 38 Thumb down 13

  30. GAJ says:

    Had the Pension administrators not panicked and sold on the dip we wouldn’t have such a large problem.

    Idiots.

    Any Pension administrator worth their salt takes a long view and doesn’t panic on drops in the market.

    Thumb up 39 Thumb down 9

  31. Grapevines says:

    “Currently, Sonoma County has the highest per capita pension bond debt among the state’s 20 county retirement systems.”

    Just think of that last statement when your deciding what the BOS are doing when they are talking about getting into the power business. Sounds like sticking their heads in the sand and hoping that we do the same to not notice that they are not addressing the real problems at hand to me.

    Oh, don’t mention that to Efren Carrillo though, he’s busy trying to get to Sacramento where incompetency seems to be an expected quality.

    Thumb up 48 Thumb down 10

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