Tuesday, May 31, 2011

Tulare Grand Jury: Pension fund scrutiny is worth a look

Tulare County took the unusual step last week of weighing in on an issue before it had even been asked.

That might be some indication of the importance of the issue — public employee pension reform.

The Grand Jury recommended that Tulare County examine its employee pension plans and consider having employees increase the amount they contribute.

That recommendation simply goes along with the trend that has been prevalent in the private sector for decades and which is gaining sure and progressive traction in the public sector from the federal level on down. Organizations are coming to the same conclusion: They cannot fully fund the contributions to their employees' pension plans and are seeking a larger share from the employees.

Some commenters have questioned why the Grand Jury is even considering this issue. We believe that it is both pertinent and relevant. Rising expenses for retirement benefits threaten the solvency of all our public institutions. The appropriate agencies ought to make review of those finances their priority.

It is not a coincidence that several local public agencies in Tulare County have recently changed their policies regarding employee contributions for retirement benefits.

In the case of Tulare County employees, the Grand Jury's assessment of the pension fund indicated that the fund can only pay 91 percent of its obligations at present, a decrease from 116 percent 10 years ago. Projecting current returns on investment, the Grand Jury estimates that ratio will decline to about 76 percent by2018. Meanwhile, at current levels, the amount the county is contributing to the fund will nearly triple in that time.

Those numbers ought to make our policymakers take notice. These are significant expenditures of taxpayer dollars that could jeopardize the county's ability to deliver services.

As remedies, the Grand Jury recommended:

ª Consider seeking higher contributions by employees to their pension plans.

ª Raising the age for eligibility for receiving pension benefits.

ª Eliminating practices that allow employees to "spike" their pension benefits by counting other benefit contributions as their salary.

ª Changing the conditions for employment of new hires.

Those also are all strategies that are being recommended with other public agencies. They have generally been adopted already by private businesses.

There is some disagreement over the picture painted by the Grand Jury. Supervisor Phil Cox, who also serves on the Tulare County Employees' Retirement Association (TCERA), said the county's pension fund is sound and has all the money it needs to fulfill its obligations.

It's not surprising that there is some disagreement over the fund's financial health. It is subject to many changing factors. The Grand Jury is right, however, to raise the issue. Supervisors would be wise to at least consider some examination and review of the pension funds and to consider strategies to protect it.

This shouldn't be seen as an attack on the retirement plans of employees. It should be seen as a way to protect the integrity of those plans. Prudent management of pension funds is a safeguard for employees just as much as it is for taxpayers.

Other agencies have faced the same issues. They have also learned that it does not take that long for the assets in a fund to deteriorate. There have been plenty of casualties in recent years to the lack of proper planning.

The county's fund might be fine now, but will it always be?

It wouldn't hurt for the county to take the steps to find out.

http://www.visaliatimesdelta.com/article/20110531/OPINION/105310308

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