The Press Democrat has done an excellent job in keeping us informed about the mounting pension crisis in Sonoma County. But there is an important part of the story that is being left out.
In 2002, the Sonoma County Board of Supervisors agreed to increase pension benefits by 50 percent back to the date people were hired, but the deal approved stated the employees would pay for the increase. However, since the increases were enacted, employee contributions have only increased by 3 percentage points from 9 percent to 12 percent, but the county's contributions have grown from 10 percent to 35 percent when adding in the county's cost for pension bond debt as a result of the increase.
In my investigation of the pension crisis (the full report can be found by Googling "Sonoma County pension crisis") I dug into the county archives to find out what happened. I was able to find the following information:
<BL@199,12,11,10>Board of Supervisors resolution dated Dec. 10, 2002: "Whereas, 3 percent at 60 retirement program will be effective 6/22/04 and employees are paying for prospective normal cost and past service, primarily through increased retirement contributions .<TH>.<TH>."
<BL@199,12,11,10>Agenda item for Dec. 10, 2002: "3 percent at 60 retirement program effective 6/22/04. All unrepresented employees will be paying for costs of prospective and past service through increased retirement contributions and other offsets similar to the arrangements with represented employee groups."
<BL@199,12,11,10>A board summary report for the 2003 pension obligation bonds on April 29, 2003: "It should be noted that the additional cost of these negotiated benefits are to be fully paid for by employees starting in July 2004."
<BL@199,12,11,10>On the financial summary of the SEIU memorandum of understanding from board minutes for May 4, 2005: "The county Board of Supervisors established direction to staff that the marginal increase in costs associated with the &‘3 percent at 60' plan be borne by the employees."
<BL@199,12,11,10>For public safety employees: Board of Supervisors agenda item of Dec. 17, 2002: "Retirement: 3 percent at 55 retirement program effective in July 2003, and 3 percent at 50 retirement program effective in February 2006 with employees paying approximately one-half of the anticipated total cost primarily through increased retirement contributions."
So why is the county paying for the increase? The reason is that in 2002, the county's actuary Rick Roeder, at the request of the Sonoma County retirement board created a study that said a 3 percent increase in general employee contributions for all current and future employees would cover the entire cost of the 50 percent increase.
However, the study warned SCERA that the cost estimate did not include the impact of accelerated retirements and recommended performing a separate study to determine the cost impact of the higher benefit formula and the lowering of the retirement age by five years for general employees and 10 years for public safety. SCERA did not follow the actuary's advice and took a flawed 3 percent number to the Board of Supervisors, which it approved.
I should also point out that when the supervisors approved the increase, they also received an increase to their retirement formula.
What the Board of Supervisors has been doing for the past decade may be illegal because it is not following the board resolutions, which require general employees to pay for the entire cost of the increase and for public safety to pay for 50 percent of the cost. Several attorneys I have talked with believe taking the money from the general fund to pay for the increase is essentially a gift of public funds and a violation of California civil code.