By Lisa Vorderbrueggen
Contra Costa Times
Posted: 06/01/2011 04:51:10 PM PDT
A month before labor contracts with the vast majority of Contra Costa County government workers expire, the county's civil grand jury has called for sweeping pension reforms that produce rapid dollar savings.
"It is not enough to make changes solely to the benefits of future employees," the grand jury wrote. "The savings from those changes are too far into the future to help curb rising pension costs. More immediate savings would be realized if steps are also taken to reduce the cost of current employee pensions."
The grand jury plowed well-tilled ground in its 10-page report but it neatly summarized the options and offers its recommendations.
"It was a good report," said Supervisor John Gioia, of Richmond, who also sits on the Contra Costa County Employees' Retirement Association board. "What I found most useful was that it was very educational both for public leaders and the community about the serious issues surrounding pension sustainability."
The jurists recommend the board of supervisors:
Seek immediate union concessions that offset pension increases.
Prioritize benefit changes that yield swift dollar savings, while pursuing legislative relief elsewhere. Examples include everything from switching from pensions to 401(k)-style retirement plans to increasing the retirement age to eliminating cost of living increases.
Require employees to pay more toward their pensions. The percentage varies by job type, but for most workers, the county pays 75 percent of the annual cost.
Seek laws that would permit the placement of pension caps so that no employee receives a retirement check higher than what he or she earned while on the job.
Two county union representatives took issue on several fronts.
County-paid portions of an employee's pension costs are "not gifts from management or irresponsible, reckless giveaways. In most cases, those were negotiated in lieu of pay raises. It costs the county less to do a pension pickup than a pay raise," said Public Employees Local 1 business agent Rollie Katz.
The jurists also failed to place into perspective the cyclical nature of investment returns or hold public agencies accountable for failing to set aside money during good times, said Deputy Sheriffs Association President Jim Bickert.
"Overwhelmingly, investment returns have outperformed the expected rate of return," Bickert said. "But what the employer did in the good years was take advantage of the lower contribution rates by spending the money elsewhere. It's poor budgeting. And now, they turn around say, 'What are we to do? We have to change the pensions!' "
Pension costs have long been fiercely debated in Contra Costa and elsewhere, but as local agency coffers suffer post-recessionary declines and lawmakers cut deep into public services, talk of reform nationwide is reaching a new sense of urgency.
The county will pay $202 million toward pension contributions out of its annual budget of $1.2 billion next fiscal year. County leaders estimate that figure will reach $279 million by 2015 as the pension fund regains the ground it lost after the 2008 market plunge.
The grand jury readily acknowledged the significant legal and political barriers to many of its recommendations.
While lawmakers have broad latitude in granting more generous pensions, courts have consistently sided with vested workers when employers sought to reduce retirement benefits.
As a result, almost all pension benefit reductions will require union amity.
Traditionally, unions are loath to give up any gains made during contract negotiations.
But some Contra Costa unions have already made wage and benefit concessions and most expect they will take more losses as the county heads into a sixth year of cutbacks.
Last year, the county required most of its nonpublic safety employees to take up to six unpaid furlough days, eliminated retiree health benefits for new employees and capped the benefit for existing workers.
Contact Lisa Vorderbrueggen at 925-945-4773, lvorderbrueggen@bayareanewsgroup.com, IBAbuzz.com/politics or at Twitter.com/lvorderbrueggen.
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