Union Leaders Rankled Over Proposed County Employee Pension Reform

4/5: UPDATE:

A proposal to shift a greater share of future Riverside County employees' pension costs onto those workers to save money was unanimously approved Monday by the Board of Supervisors -- in the face of unions' threats to wage a legal battle against the plan.

"Few people would say that we're not on the abyss fiscally,'' said Supervisor John Benoit. "It's unconscionable to continue to do this and drive the bus off the cliff. Dramatic and significant changes ... have to happen.''

The board conceptually approved a plan in which the county would no longer be responsible for covering a new employee's share of payments into the California Public Employees Retirement System. The county would still pay its share.

In all cases, except for the first three to five years of service -- depending on the collective bargaining agreement -- the county currently covers an employee's pension contributions -- 9 percent for public safety workers, and 8 percent for "miscellaneous'' workers such as clerks, technicians, nurses, custodians, administrators and others. Each group has its own defined-benefit plan.

Under the current scheme, public safety workers 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 receive benefits based on a "3 percent at 60'' formula.

A $197,000 county-funded 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 that examined how much the county might save by modifying retirement plan options.

Representatives from those firms briefed the board today.

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 about $306 million in 2020.

"Every dollar wasted on an excessive pension is a dollar that can't go into saving an employee's job and protecting service levels,'' said board Chairman Bob Buster. "We're going to have to do some things not only for the benefit of now but 10 to 15 years from now. Reality is staring us in the face, and it's not good.''

Supervisor John Tavaglione said the current retirement system was unsustainable,'' making a "second-tier'' system essential.

The heads of collective bargaining units lambasted the board for acting "unilaterally.''

"We've worked together. Don't throw it away. Don't go backwards,'' said Service Employees International Union Local 721 Regional Director Steve Matthews. "Don't step into a legal morass that will blow up bargaining with us. We're ready to address these problems. Don't try to get into this slice of Wisconsin cheese that we will not swallow.''

Laborers' International Union of North America Local 777 attorney Victor Gordo said the county ``has a duty to meet and confer'' with bargaining units, even though the changes under consideration would affect only future workers -- not existing ones.

The board nevertheless tentatively adopted the following benefit formulas for new hires:
   -- 2 percent at 55 for safety employees; and,
   -- 2 percent at 60 for miscellaneous employees.

Public hearings will be held before the new formulas are enacted, probably in June.

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 be untenable, according to the researchers.

The Executive Office is expected to come back with recommendations on changes for existing employees' retirement benefits. --City News Service

4/4 ORIGINAL POST:

A proposal to shift a greater share of future Riverside County employees' pension costs onto those workers to save money could lead to a "blow-up'' in relations with collective bargaining units, union heads told the Board of Supervisors today.

During a meeting on pension reform that began this morning and was expected to stretch well into the afternoon, several union representatives criticized the board for its possible "unilateral'' action to make new county employees pay their own contributions into the California Public Employees Retirement System.

"We've worked together. Don't throw it away. Don't go backwards,'' said Service Employees International Union Local 721 Regional Director Steve Matthews. "Don't step into a legal morass that will blow up bargaining with us. We're ready to address these problems. Don't try to get into this slice of Wisconsin cheese that we will not swallow.''

SEIU Local 721 President Bob Schoonover warned that any attempt to change benefit formulas without the union's consent would be met with hostility.

"When things appear to try to be done not at the collective bargaining table, you'll not only end up with a bad product, but with a bad taste in our mouth,'' he said.

Laborers' International Union of North America Local 777 attorney Victor Gordo said the county "has a duty to meet and confer'' with bargaining units, even though the changes under consideration would affect only future workers -- not existing ones.

"Any unilateral action is not an option available to you,'' Gordo said.

The Executive Office is recommending that the board conceptually approve a plan that would no longer make the county responsible for covering a new employee's share of retirement payments into CALPERS. The county would still pay its share.

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 public safety employees, and 8 percent for "miscellaneous.''

A $197,000 county-funded 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 that examined how much the county might save by modifying retirement plan options.

Representatives from those firms briefed the board today.

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 about $306 million in 2020.

The county maintains two defined-benefit pension plans, one for public safety employees and another for miscellaneous employees, such as clerks, technicians, nurses, custodians, administrators and others.

Under the current scheme, public safety workers 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 receive benefits based on a "3 percent at 60'' formula.

The Executive Office is recommending a revision to the benefit formulas as follows:
   -- 2 percent at 55 for safety employees; and,
   -- 2 percent at 60 for miscellaneous employees.

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 future employees.

The Executive Office is expected to come back with recommendations on changes for existing employees' retirement benefits.

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