PD Editorial: Pension costs must be factored into Sonoma County employee contract talks

It's easy to feel a little sympathy for Sonoma County employees, about 1,500 of whom ended a three-day strike Thursday.

Their grievances — stagnant wages and costly health care — aren't unique to county employment, or even the public sector.

Adjusted for inflation, U.S. wages have been flat since 2009, according to the Bureau of Labor Statistics. And it shouldn't be news to anyone that rising health insurance premiums and higher deductibles are taking a bigger bite out of family budgets. Experts say those out-of-pocket costs are likely to keep climbing, probably at a faster rate.

Who wouldn't benefit from a raise in this economic climate?

But, as Supervisor Susan Gorin said this week, county leaders must balance competing demands for limited resources.

Firefighting agencies are asking for more money, so are in-home care workers, and a $13.5 million boost this month for road maintenance covers only a small fraction of the county's needs. The supervisors also have identified homeless services and affordable housing as priorities, and the county must negotiate new contracts with several other employee groups. (SEIU Local 1021, the union that went on strike Tuesday, represents about half of the county's 4,100 employees.)

'It really comes down to reaching the compromises necessary with the funding we have available,' Gorin said.

The supervisors should reconsider the $500-a-month cap on health care for county employees. At the same time, however, they need to focus on total compensation costs. In addition to wages and health care, that means factoring in the county's $105 million a year expenditure for retirement benefits and pension bond debt. SEIU can't wish those costs away as it pushes for pay raises at the bargaining table.

The county's pension obligation has increased sixfold since 2000, in large part because retroactive benefit increases cost far more than anticipated. A sharp decline in stock prices during the Great Recession exacerbated the problem.

Sonoma County presently has a $343 million unfunded pension liability and $459 million in pension bond debt.

This week, the California Public Employee Retirement System reduced its estimated return on investments, a change in strategy that will lessen the risk of big losses in a future economic downtown while requiring taxpayers to contribute more money for public employee pensions.

Sonoma County isn't a member of CalPERS, but its pension fund faces many of the same circumstances, including an aging workforce that is outnumbered by the number of retired employees collecting benefits. So it would be unsurprising for the Sonoma County Employee Retirement Association to reduce its estimated return on investment. Indeed, it would be prudent. It also would push up taxpayer costs for retirement benefits. The supervisors must be mindful of that during labor negotiations with county workers.

Would Sonoma County employees trade some deferred compensation, i.e. pension benefits, for better wages and health insurance today?

They can't, barring an amendment to the state constitution, and public employee unions have fought hard to prevent such an amendment from reaching the ballot. As we've said before, benefits already earned should be protected. But if future accruals can't be negotiated, pressure will mount to keep other expenses in check.

That's already happened with many public services. Sonoma County employees are feeling the pinch, too.