Over the past decade, Sonoma County supervisors made long-term pension promises, counting on stocks and other investments to keep growing to cover the costs of retirement packages that aren't available for most taxpayers.
The county wasn't alone - cities, counties and states across the country took the same risk. Pensions were increased in lieu of pay raises that public agencies couldn't afford, and now the cost of those promises is spinning out of control.
Retirement contributions for Sonoma County have increased 250 percent over the past decade, a figure that jumps to an astonishing 340 percent when $820 million in pension debt is added to the equation. For every dollar in payroll, the county is spending 30 cents on retirement contributions and debt service on pension-obligation bonds.
According to a report presented to the Board of Supervisors on Tuesday, retirement contributions and pension debt now cost taxpayers $92 million a year, and that figure is on track to hit $110 million within three years.
"The one word that comes to mind is &‘alarming,'
" Supervisor Efren Carrillo said. Coming less than a week after the board adopted a budget for 2011-12 that includes more than three dozen layoffs and relies on across-the-board cuts for all county departments and another round of fee increases for public services, a more apt description might by "unacceptable."It's certainly unsustainable.The county has cut general fund spending by more than $40 million over the past two years, and this year the supervisors dipped into reserves and used other gimmicks to avoid deeper cuts, such as abandoning hundreds of miles of roads; closing the Sierra Youth Center, a probation camp for girls; and grounding the sheriff's search-and-rescue helicopter.Most experts agree that it isn't legally permissible to reduce vested benefits, but it's imperative for the county to find a way to control retirement expenses. County Administrator Veronica Ferguson is currently involved in talks with labor representatives on cost-saving options including a second tier of lesser pension benefits for new employees, an avenue already adopted by the state and many other public agencies.A two-tier system is a minimum need for the county, which also would be wise to investigate a hybrid retirement system that combines pension benefits with a 401(k)-type savings plan and, perhaps, Social Security. The county also should consider negotiating larger contributions from current employees to reduce taxpayer costs for the Sonoma County Employee Retirement Association.Making changes won't be easy. No one wants to give up benefits. But the county can't allow the current trend to continue.About the only good news in the pension report is that Sonoma County isn't as bad off as some other California counties, such as Fresno, where retirement expenses are more than 50 percent of payroll. In Sonoma County, the time has come to bend the curve.
Coming less than a week after the board adopted a budget for 2011-12 that includes more than three dozen layoffs and relies on across-the-board cuts for all county departments and another round of fee increases for public services, a more apt description might by "unacceptable."
It's certainly unsustainable.
The county has cut general fund spending by more than $40 million over the past two years, and this year the supervisors dipped into reserves and used other gimmicks to avoid deeper cuts, such as abandoning hundreds of miles of roads; closing the Sierra Youth Center, a probation camp for girls; and grounding the sheriff's search-and-rescue helicopter.
Most experts agree that it isn't legally permissible to reduce vested benefits, but it's imperative for the county to find a way to control retirement expenses. County Administrator Veronica Ferguson is currently involved in talks with labor representatives on cost-saving options including a second tier of lesser pension benefits for new employees, an avenue already adopted by the state and many other public agencies.
A two-tier system is a minimum need for the county, which also would be wise to investigate a hybrid retirement system that combines pension benefits with a 401(k)-type savings plan and, perhaps, Social Security. The county also should consider negotiating larger contributions from current employees to reduce taxpayer costs for the Sonoma County Employee Retirement Association.
Making changes won't be easy. No one wants to give up benefits. But the county can't allow the current trend to continue.
About the only good news in the pension report is that Sonoma County isn't as bad off as some other California counties, such as Fresno, where retirement expenses are more than 50 percent of payroll. In Sonoma County, the time has come to bend the curve.
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