COUNTY PENSIONS

We all agree that current public employee retirement costs are unsustainable without reform. Given the economic downturn and changing demographics, the increased costs of post-employment benefits compete with limited public resources for vital services to our residents including health and human services, public safety, parks, roads and transportation.

I am working to achieve pension reform that is fair to our employees and fiscally responsible to our residents.

Successful Efforts for Reform
The County has taken several steps to control our pension costs, and I am proud of these efforts to reduce costs through meaningful reform, including:

• Enacted reform to base the calculation of pension benefits on a three year average
• Capped annual cost of living adjustments at two percent
• Created a new, lower cost retiree health plan for employees hired in 2008 or later
• Limited growth in existing retiree health plans, reducing the long-term liability for retiree health by $18 million over the past 4 years
• Raised the retirement age with a new Miscellaneous retirement tier of 2% at 61 ¼ (previously 55) negotiated with all Miscellaneous bargaining groups
• Set aside and budgeted for unfunded retiree health liabilities above ‘pay as you go’
• Require employees to pay 50% of the cost for any COLAs and 50% of the cost for enhanced formulas

Current Efforts for Additional Reform
The County is undertaking several efforts to continue pension reform. Our county administrator gave an excellent summary of the County’s current status in this process, and the next steps we are working on at a workshop in May 2011. I encourage you to view that presentation at: www.co.marin.ca.us/depts/AD/Main/pension/MarinCountyPublicPensionForum051611c.pdf

We are currently negotiating with our safety bargaining groups for new, lower cost pension tiers. In addition, we will begin work this spring to create a trust to more proactively address our unfunded retiree health liabilities.

Our Board supports statewide efforts to create more sustainable benefit levels. Although we would prefer statewide solutions, we are also willing and expect the need to pursue Marin-specific solutions. Our support of pension reform includes, but is not limited to:

• Creating lower cost hybrid defined benefit/defined contribution pension options
• Prohibiting unfunded retroactive pension increases
• Providing employers new options to exclude certain pay types from being pension-eligible to prevent pension “spiking”
• Prohibiting retirement systems from granting ad hoc COLA’s to retirees without the support of the Board of Supervisors or the employer’s governing board
• Exploring limits on so-called ‘double-dipping’ between other government agencies
• Capping pension benefits to a certain percentage of pay or dollar amount

We welcome participation from all stakeholders to help us influence change at the State level to provide further options for the County to control costs.

Governor’s 12-Point Plan.
The Board supports the Governor’s 12-Point Pension Reform Plan, as it contains many of the policy options for which we have been advocating to make pensions more sustainable. For example, the plan includes:

• A comprehensive statewide plan for all public employees to enable a fair and even playing field for recruiting future talent
• Options that would better share costs between the employer and the employee
• Prohibition on retroactive pension benefit enhancements that create unfunded liabilities
• Increases to the retirement age for new employees
• Three-year averaging for benefit calculations
• Limitations on pensions to base pay to control spiking
• Prohibition of “air-time” purchases of service credits and pension holidays

However, other elements require further details in order to take a fully informed position. For instance, we need to better understand the estimated normal costs of the proposed hybrid pension plan for new employees, and the legal viability of requiring a 50-50 contribution split of normal costs for existing employees. Once these details are available from the Governor’s Department of Finance, we will review them to ensure they are consistent with the County’s goals.

For more information about County pensions, visit
http://www.co.marin.ca.us/depts/AD/Main/pension/index.cfm