Three years after a highly controversial rollback in retiree medical benefits, Sonoma County government's costs for retiree health care and its long-term liabilities again are on the rise.
The increase is shown in a county report made public last week and headed to the county Board of Supervisors Tuesday for acceptance.
It reveals what one supervisor, Shirlee Zane, called a "disappointing" picture of escalating costs that the county sought to cap in 2008 with benefit reductions approved over the protests of current and former workers.
The reductions are the subject of a court challenge. Their full extent is not set to kick in for another two years, but figures in the new report show the rollback already has dropped the county's retiree health care costs by as much as 42 percent a year and decreased taxpayers' long-term unfunded liability for retiree benefits by almost $150 million.
Both figures, however, are now on the rise. Annual costs jumped from $21.8 million in the fiscal year 2009-2010 to $24.7 million in the current year, the report showed.
Over the same period, the county's unfunded obligations to retiree medical over the next 30 years also increased by more than 13 percent, or nearly $39 million, to about $298 million, the report showed.
"It's frustrating," Zane said of the new projections, which came in a biannual review by a county actuary.
The county also is struggling under the weight of mounting pension costs and other fiscal woes. Next month officials will begin budget discussions likely to result in a fourth consecutive year of spending cuts for public services.
A renewed rise in retiree health care costs could exacerbate that crisis, county officials said.
"That it's going back up, that's not good news," Zane said.
The report forecasts increases in retiree health care costs for the county extending to 2028, when they are projected to peak at $35 million a year and drop gradually thereafter.
Chris Thomas, a deputy county administrator, conceded the projections appear dramatic and said some of the figures have prompted concern at county headquarters in Santa Rosa.
But Thomas cautioned that the implications for county budgets now and into the future were not yet clear. The uncertainty has to do with accounting methods, he said.
Under standard government accounting rules, the county is required to put on its books all costs and long-term liabilities associated with its retiree health care program, he said. That includes liabilities expected to be borne by the retirees.
Under changes approved by the Board of Supervisors in 2008, retiree benefits were sharply reduced. For the current 2,700 retirees and roughly 1,200 beneficiaries and dependents, it meant the county contribution for premium costs would decline from 85 percent of the lowest cost plan for an entire household to $500 a month per household by 2013.
For employees hired after January 1, 2009, it meant a switch to an employee-managed health retirement account supplemented by a defined county contribution during employment but without any guaranteed county payment in retirement.
The changes will shift increasingly more — and eventually most — annual costs and liabilities onto retirees, Thomas said.
But because those retirees remain in the same overall program as current workers, with the option to purchase health care through the county — a provision called an "implicit subsidy" for retirees — the costs and liabilities associated with them show up on the county's books, he said.