A new lawsuit seeks to roll back generous pension benefits granted to Sonoma County government employees more than a decade ago that are blamed for spiraling debt and eating away at funding for basic services.
The suit filed by retired Santa Rosa attorney George Luke accuses elected officials and other county leaders of conflict of interest for approving increases in 2003 that benefited them directly and of failing to disclose long-term pension costs to taxpayers, now estimated at more than $99 million a year for the county.
It asks Sonoma County Superior Court Judge Rene Chouteau to declare the increases “illegal” and prohibit the county from making payments to fund them. It names as defendants the Board of Supervisors, the county administrator, the auditor-controller-treasurer tax collector, the human resources director and the Sonoma County Employees’ Retirement Association and its chief administrator.
“When everyone who is supposed to represent the interest of the taxpayer has their hand in his pocket, his only recourse is to seek the protection of the courts whose solemn duty is to require compliance with the law,” Luke wrote in his suit filed Aug. 28.
The legal challenge — which could affect thousands of current and retired county employees — comes amid continuing controversy statewide about pension benefits granted years ago that have threatened the financial well-being of local governments and strained their ability to pay for things like road repair and the hiring of more sheriff’s deputies.
Earlier this year, Sonoma County annual pension costs were projected to hit $146 million by 2023, a 700 percent increase since 2000. County debt from past pension bonds and long-term unfunded obligations tied to the retirement system total about $778 million, equivalent to 49 percent of the county’s annual budget.
Although reforms have been enacted over the past five years at the state and local level mandating lower benefits for new employees, critics continue to sound alarms over pension costs. A similar case pending before the California Supreme Court that arose in nearby Marin County seeks to overturn the so-called “California Rule” guaranteeing workers get the pension that was in place at the time they were hired. The legal challenge was previously struck down by two lower court judges who deemed it was filed too late or did not include employee unions. They did not rule on the merits.
Supervisors Shirlee Zane and David Rabbitt, who've been active on pension reform since joining the board in 2009 and 2011, respectively, did not respond to interview requests on Friday and instead issued a joint, written statement.
“While we share the desire for a sustainable pension system, this lawsuit is without merit and a waste of taxpayer dollars given results in Marin cases, public independent analysis of law following 2012 grand jury report, and new separate analysis of counsel,” the statement said. “Efforts to achieve policy changes should really be directed to the state Legislature.”
Luke’s suit targets the way benefits were adopted. It says the Board of Supervisors failed to comply with state law requiring it to conduct an actuarial analysis of the costs of new pension benefits and publish the findings two weeks before any vote. The allegation was raised in a past county grand jury report about procedural mistakes and was formally acknowledged by a new group of elected supervisors in 2012.
The suit also accuses the highest paid county officials, including the supervisors and retirement system executives, of failing to recuse themselves from the process and not disclosing any personal gain to the public.
County officials and union leaders at the time agreed on the benefit increases to settle a class-action lawsuit brought by employees in 2002 demanding retroactive pay increases to match those in other counties.
“All of these participants in this settlement stood to make a lot of money,” the suit said. “And the taxpayers were set up to pay the bill.”
County lawyer Michael G. Colantuono rejected the allegations and will seek to have the case dismissed at an early stage.
He said a “rule of necessity” law negates any conflict of interest, allowing public agency managers to work on employee benefits decisions that affect them, essentially “because there’s no one else to do it.”
And he said the county disclosed the costs of the benefits increase prior to the vote. An actuarial analysis conducted by the retirement association was part of the staff report that was circulated in the weeks leading up to adoption, he said.
Further, Colantuono said the suit is barred by the statute of limitations, which he said protects thousands of employees who made career decisions based on expectations of a certain level of salary and benefits.
Luke argues there is no defense based on timing because taxpayer costs are calculated annually.
The county disagrees.
Colantuono said a realistic solution must be statewide because any county that goes it alone will find it difficult to recruit and retain qualified employees who will simply go where the benefits are higher.
“California’s pension problem is a serious issue and it needs serious attention, but this lawsuit is a false promise of an easy fix to a complicated problem,” Colantuono said.
If Luke’s suit is successful, it would be the first in the state. The county could renegotiate contracts but it would likely face lawsuits from employee unions.
Jack Buckhorn, executive director of the North Bay Labor Council, said his 70,000 member affiliates including county employees would oppose any changes.
“To go back 14 years and attempt to reopen negotiations that have already been settled in good faith does not seem fair or just,” Buckhorn said. “We would do everything in our power to make sure benefits agreed to were maintained.”
You can reach Staff Writer Paul Payne at 707-568-5312 or firstname.lastname@example.org. On Twitter @ppayne.