Pension Reform For County Employees To Be Debated Monday

A pension reform proposal to end employer-paid contributions to newly hired employees' retirement accounts will be debated Monday by the Riverside County Board of Supervisors.

A 60-day study by three firms into the legal and financial ramifications of revamping the county's retirement system will be presented to the board, along with several recommendations by the Executive Office.

The $197,000 research project undertaken by San Mateo-based Bartel Associates Inc., Los Angeles-based Buck Consultants and San Francisco-based Hanson & Bridgett resulted in a roughly 140-page report -- not including appendices -- that examined how much the county might save by modifying retirement plan options.

Moves toward a pension overhaul began last year after internal studies showed the county's pension liabilities ballooning over the next decade. The county has an unfunded pension obligation of more than $700 million, and analyses show the county's annual pension costs growing from $155 million next year to around $306 million in 2020.

The county maintains two defined-benefit pension plans -- one for public safety employees and another for "miscellaneous'' employees.

Under the current scheme, public safety workers -- deputies, district attorney's office investigators, probation officers -- receive benefits based on a "3 percent at 50'' formula, fixing compensation on 3 percent of the average of the three highest-paid years of an employees' career, multiplied by the number of years on the job.

Miscellaneous workers -- clerks, technicians, nurses, custodians, administrators and others -- receive benefits based on a "3 percent at 60'' formula.

The pension plans went into effect in 2002 and are anchored in the California Public Employees' Retirement System.

In all cases, except for the first three to five years of service -- depending on the collective bargaining agreement -- the county covers an employee's pension contributions -- 9 percent for safety employees, and 8 percent for miscellaneous.

According to an analysis by Bartel, Riverside County's average total compensation -- salary, health insurance coverage, paid time-off, retirement -- generally compares to public sector compensation offered by surrounding counties.

For instance, the average aggregate benefits for administrative support workers in Riverside County total $84,433 a year, compared to $78,474 a year for a similarly placed worker in the Los Angeles-Long Beach-Glendale metropolitan area.

The study found that the county would realize immediate savings by eliminating employer-paid retirement contributions for all current employees, estimating a reduction of $59 million in costs in the first year and a cumulative savings of $344 million over a decade.

However, because of contractual commitments and union agreements, a wholesale switch would probably be untenable, according to the researchers. They noted the county would not have the same concerns with regard to new hires.

Based on that, the Executive Office is recommending that the board on Monday conceptually approve the elimination of employer-paid contributions for new employees, and revise the benefit formulas as follows:
   -- 2 percent at 55 for safety employees; and,
   -- 2 percent at 60 for miscellaneous employees.

According to a Calpers study, the new formulas should still provide more than enough post-retirement income.

The Executive Office is expected to come back with recommendations on changes for existing employees' retirement benefits. According to the study, one option the county might consider is de-coupling from CALPERS altogether and devising a stand-alone retirement plan, though that would likely face legal challenges.

None of the recommended or proposed actions can be taken without public hearings. --City News Service