Saturday, October 7, 2017
[Sonoma] County pension debt subject of new Superior Court lawsuit
Blog note: this article references a 2011-12 grand jury finding.
Few issues are as complex — or the numbers bigger — than the critical status of the County of Sonoma’s pension plan that lacks as much as $831 million to fund current and future retiree payments.
The uncovered expenses were declared a “crisis” almost a decade ago and have been the subject of two civil grand jury investigations and a 2011 county supervisor’s ad hoc committee.
Unable to implement adequate fund reforms or satisfy continued public concerns, the supervisors appointed an Independent Citizen Advisory Committee on Pension Matters in 2015. That original oversight board was just replaced by a new permanent citizen’s pension board, which has yet to meet.
Meanwhile, a bold and sweeping lawsuit has been filed in Sonoma County Superior Court seeking a rollback of all county pension benefits and debts to levels set in 2002, 15 years ago.
At the center of the lawsuit filed by retired local attorney George Luke, of Larkfield, is a series of county actions in 2002 that greatly enhanced pension benefits.
Undisputed by all the reviews listed above is the fact the county’s unfunded pension obligations has grown from $10.8 million in 2000 to $449 million by 2014, an increase of 700 percent. Two pension bonds borrowed by the county in 2003 and 2010 added another $500 million to the debt.
What is in dispute is the legality of the action taken by supervisors in 2002 when employee pensions were increased during a series of labor negotiations and actuarial reviews.
Luke’s lawsuit, filed Aug. 28, also alleges conflicts of interest by then-supervisors and top administrators who were part of the pension plan.
County supervisors Shirlee Zane and David Rabbitt, members of the ad hoc committee issued a statement last week calling Luke’s claims, “without merit and a waste of taxpayers dollars.” They said any ultimate pension fund fix must come from state legislative action. Almost all local governments and school districts currently face growing pension fund crises.
The county’s pension plan covers almost 9,000 retired and current employees and is managed by the Sonoma County Employees' Retirement Association (SCERA). The fund has a current value of $2.3 billion, according to the county treasurer-auditor office. Current employees contribute three percent or higher to their future retirement and taxpayers this year will contribute an additional $113 million from the general fund.
A series of reforms were enacted by the supervisors based on recommendations by Zane and Rabbitt. Newer county employees now receive a lesser tier of pension support and rules have been tightened on eligibility and required years of service. The reforms have been credited with saving as much as $169 million in added debt over the past four years.
A major complaint about the escalating debt in the pension fund has been about the loss of general funds to pay for other county services, such as road repairs.
The Independent Citizen Advisory Committee found that $269 million could have been available for such services over the past 10 years without the expanded pension debt.
Ken Churchill, a critic of the county’s pension fund management and a member of the Sonoma County Taxpayers Association, has filed written testimony in support of Luke’s lawsuit.
He cites a previous complaint he made against the county’s actions in 2002 when pensions were greatly increased. He continues to allege the county violated state code and public disclosure laws.
In a response to a 2011-12 grand jury finding, the county supervisors and their counsel “agreed in part” that not all disclosure laws were met. But they said there had been “substantial compliance.” When asked by Churchill later for original minutes and records, county counsel said that “records could not be found.”
Now Luke is asking Superior Court Judge Rene Chouteau to force the county to dig deeper into its records.
Luke and Churchill want Judge Chouteau to wipe out all increased pension amounts for all retirees retroactive to 2002. They are seeking the retirees to make full restitution of the increased amounts, which could total in the billions.
Similar citizen-led lawsuits against pension funds in California also are advancing through various courts. Each would offer differing test cases as not all local governments have the same type of pension funds.
October 3, 2017
The Windsor Times
By Rollie Atkinson