County implements state-mandated lower pensions for new hires
Published: Tuesday, December 11, 2012 at 8:30 p.m.
Last Modified: Wednesday, December 12, 2012 at 8:22 a.m.
A day after many of its signature overhaul proposals were rejected in a lopsided union vote, Sonoma County took action Tuesday to implement state-mandated changes to employee pensions.
Sonoma County pension changes
-- Lower benefit formulas for future hires: For public safety workers, maximum formula is 2.7% of salary for every year worked at age 57. For all other workers, 2.5% at age 67. (Current maximum formulas: 3% at 50 for public safety; 3% at 60 for all others)
-- For future hires, period on which final pension-eligible earnings are calculated goes to 3 years; stays at 1 year for current workers.
-- For future hires, pension eligible earnings are capped, starting at $113,700 in 2013.
SOURCE: County of Sonoma
The changes, most of which do not require labor's approval, affect mainly future hires and are expected to help curb rising taxpayer costs over the long run.
Annual savings are projected to top $1.2 million in the first year and grow to more than $17 million by 2022, according to a county actuary.
County officials cited those figures as progress despite other signs of a growing standoff with labor at the county government campus Tuesday.
"We're starting to move. It's really encouraging," said County Administrator Veronica Ferguson.
Meanwhile, union representatives were emboldened after the county's largest labor group on Monday overwhelmingly rejected a proposed contract that included pay concessions and pension rollbacks outside of the state-ordered revisions.
While not opposed to some pension changes, union representatives said they could not accept the contract's central one, a proposal that would have shifted an additional share of pension premiums, equivalent to 2.25 percent of pay, onto employees.
The result would be a reduction in take-home pay. The union has already experienced a five-year freeze in cost-of-living adjustments to wages. They have received pay increases based on merit and experience levels.
"We can't afford to keep cutting," said Tim Tuscany, a psychiatric nurse and bargaining team member with Service Employees International Union Local 1021.
The union's 1,700 county workers include mostly lower-paid line staff. On Monday, their voting ranks turned down a three-year contract with the county, with 83 percent of those participating in the election voting no.
Union officials would not say how many of the 1,250 workers eligible to cast votes did so, but described the turnout as "healthy."
Less than 12 hours later, a group of union leaders and workers turned out Tuesday morning at the Board of Supervisors meeting determined to reinforce their message.
"Some people might get the impression from reading the newspaper that this was a rejection of pension reform," Chip Atkin, a county social worker, told supervisors. "It's not. It's about take-home pay."
Union representatives told the board they were not likely to find consensus in their ranks without a cost-of-living adjustment. They also said additional county contributions to employee medical costs were not enough to offset a new insurance plan, with lower premiums but higher co-pays.
They echoed previous battle cries that management ranks have been largely untouched in budget cuts since 2008 and said those higher paid workers needed to give more in concessions before they would.
"The problem is fat management," Atkin said.
Another union leader fired an even stronger shot across the county bow.
Laura Strand, a representative of the International Union of Operating Engineers Local 39, with about 100 county workers, said the group would accept the pension changes for future hires but would move no further. The group is currently in negotiations.
"There will be no further economic diminishment of our members," she said to supervisors, reading a prepared statement.
The board did not respond to the comments and county officials interviewed later said they would be returning to the table with SEIU today and with other unions in the weeks to come to hear their concerns and work toward agreements.
But the county was not immediately revising its overall goal of cutting 3 percent of compensation for all employees, including line staff, management and elected officials.
The pension changes are also keyed to a long-term goal to reduce county pension costs to 10 percent of total payroll. Those costs, including payment on pension bond debt, are currently at $97 million or about 20 percent of total payroll and were on track to grow to 30 percent of payroll within 10 years without any changes.
"At this point we don't have any new direction to our labor negotiators," said Ferguson, the county administrator. "We'll be looking to move closer to understand what their needs are while not moving away from what our needs are."
The circling by the two sides overshadowed the actions taken by the Board of Supervisors to implement the state changes to pensions.
Those included votes authorizing a new, lower tier of pension benefits for future hires. For some of those workers with previous government service, the county will need union approval to change future benefits.
Another state revision for future workers will lengthen the period upon which final earnings, and thus pensions, are calculated -- going from one year to three years. The county will also cap the earnings on which pensions can be based for future workers, starting at $113,700 in 2013.
County officials have sought additional overhauls, including the reduction or elimination of various types of non-salary pension-eligible pay and perks.
Until contracts are changed, those practices are set to continue for current workers, with some limits under the state revisions, which are tighter for future workers.
The state changes take effect Jan. 1.
The county is currently in negotiations with nine of its 11 bargaining groups. Deals with those employees must be reached before approved pay and pension cuts to management and elected officials take effect.
You can reach Staff Writer Brett Wilkison at 521-5295 or email@example.com.
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