The Sonoma County Board of Supervisors on Tuesday unanimously endorsed a plan to overhaul the county's pension system, saying that changes aimed to avoid soaring taxpayer costs and shift more of the burden onto workers will not come easily or overnight.
"To me, this is like trying to stop a freight train or turn a ship around. It's going to take some time," said Supervisor David Rabbitt, who along with Supervisor Shirlee Zane headed up a nine-month study that led to the 135-page report.
Its recommendations include a mix of proposals that would affect current and future employees. They include a cap on pensions for all employees, a higher retirement age and less-generous benefits for new employees, and a change in the makeup of the county's pension board.
The proposals are expected to shape employee contract talks starting in March.
Overall, the plan seeks to save taxpayers $115 million to 150 million over the next 10years by altering a sharply escalating cost curve.
But it hinges on deals at the bargaining table, which wouldn't kick in until at least mid-2013. Other changes would require changes in state law and some could result in legal battles.
Zane called those hurdles "daunting."
But the report does more than any county effort so far to explain the problem and call for urgent action, supervisors said.
As is, taxpayer-paid pension costs for county employees, already up 360 percent since 2000, are set to more than double in the next decade, climbing to $209million — or 28 percent of total compensation — by 2021. That would erode money available for public services, supervisors said.
"It's obvious that continuing with the status quo could very well jeopardize the financial health of the county," said Supervisor Mike McGuire.
Rabbitt, who serves on the pension board, gave a forceful presentation on the causes behind the rising costs, and the need to both share those expenses with employees and reduce investment-market risk.
<CW-11>He noted that in eight of the past 20 years, or 40 percent of the time, the pension system has missed its investment earnings mark, jeopardizing the main source of pension fund revenue.</CW>
<CW-16>The result has been three rounds of county borrowing since 1993 to pay off $617 million in unfunded pension obligations.</CW>
Those moves may have been useful at the time to refinance pension-system losses, county officials said. But in backing tighter limits on county debt Tuesday, leaders all but swore off such tactics going forward, citing public frustration over the county's $1.25 billion debt load.
More than 60 percent of that figure comes from the pension bond debt, now at $515 million, and unfunded pension obligations, at $249 million, the report showed.
"Anyone who is part of the system has to be concerned about that," Rabbitt said.
To address the issue, supervisors would reconfigure payroll pension contributions so that employees pay the same amount as taxpayers — a move that would essentially share market risk. Currently, the county pays more into the system than the employees.
A second move would look at further lowering the county's discount rate, which is used to determine contribution levels needed to pay for future pensions. That change would increase contributions by employees and taxpayers in the short term but reduce market risk over the long term.