Sonoma County government is poised to press its employees to agree to new set of cost-sharing measures for pensions, aiming to curb taxpayer expenses that have continued to rise even after a wave of state and local reforms set in motion six years ago.
The Board of Supervisors agreed this week to advance several new policies that could result in ongoing savings toward county pension costs, which skyrocketed over the past 15 years as a result of a controversial, statewide move to enrich retirement benefits for a generation of local and state government employees.
The higher-cost pensions proved too expensive in the wake of the recession for many California municipalities, forcing several into bankruptcy. Others, such as Sonoma County, chose to borrow hundreds of millions of dollars to fill gaping holes in their pension investment funds.
“We’re still paying the price for that,” said Supervisor David Rabbitt, speaking Friday in an interview with The Press Democrat editorial board about the cost of the enhanced benefits after the stock market downturn a decade ago.
At that time, county pension costs had already doubled from the early 2000s when the new, more lucrative pension benefits were approved by the Board of Supervisors. Between 2008 and today, taxpayer costs for county employee pensions have more than doubled again, to an estimated $116.8 million this year.
State and local reforms enacted in 2012, including reduced pension benefits for new employees, have slowed the rise somewhat. Pension costs for the county are set to peak next year at more than $117 million.
To further reduce those costs going forward, the county wants workers to share more of the expenses tied to the pension system’s unfunded liabilities. Labor groups representing the bulk of county employees would need to agree to such a change.
A crucial cost-sharing provision the county already has in place with employees could be a decisive factor in those conversations. As part of the enhanced pensions approved in the early 2000s, workers agreed to pay more toward pensions, but that arrangement expires in 2023 and county leaders may look to extend it.
At the same time, the county continues to back legal efforts that would give it more flexibility to change retirement benefits after workers are hired and devise a new system that would combine elements of defined pension- and 401(k)-style plans.
At the outset of its pension reform efforts seven years ago, the county sought to bring pension costs down to 10 percent of its total payroll expenses by 2021. It later pushed that date back to 2024, a goal it is not expected to meet. Currently, pension costs account for 18.7 percent of payroll expenses. They are not projected to drop below 10 percent until 2029.
“I wish we were at 10 percent,” Supervisor Shirlee Zane said Friday in the interview with The Press Democrat editorial board. Since 2011, she and Rabbitt have led the county’s pension reform efforts. “It’s a little disappointing that we’re not getting there faster.”
County officials note that state law limits their ability to make lasting cuts to pensions for current workers. That limited authority, a constitutional protection known as the California Rule, is being challenged in several pending lawsuits and may end up before the state Supreme Court.