Welcome to New Sonoma
We are an organization of financial and business experts and concerned citizens dedicated to working together to solve our County’s serious financial problems.
We have just completed our analysis of the County's pension crisis. The report provides a first-of-its kind rating and assessment of the financial impacts of hundreds of millions of dollars in unfunded retiree debt owed by the County. It also compares Sonoma County with our neighboring counties and Tulare County, a county with a sound retirement system to demonstrate how our retirement system compares with others.
Here is the full document: New Sonoma's Report on the County's Pension Crisis, February 2013.pdf
Here are the highlights:
Sonoma County is approaching balance sheet insolvency. Currently, the County lists $1.4 billion in net assets on its balance sheet. When new accounting standards become effective that require the County to list its pension and retiree healthcare unfunded liabilities on its balance sheet, its net assets will drop by 85% to $200 million.
The key driver of the pension problem was the retroactive increases which lead higher pensions and accelerated retirements at younger ages.
The retroactive increase combined with the new compensation rules as a result of the Ventura Settlement increased pensions by 66% for General Employees and 69% for Safety Employees the year after they were enacted.
Even thought the Board Resolutions required the General Employees to pay the entire past and future cost of the increase and Safety Employees to pay the past cost, the resolutions were never enforced. In fact, in the 2008 contract negotiations the County picked up all but 1% of the employees contributions to the increase.
The County's pension costs have climbed from $28 million in 2000 to $122 million in 2012. The interest and principal payments on the unfunded liability and pension bonds total $233,000 per day for benefits already earned. These payments will continue for the next 20 years resulting in continued service insolvency and the inability of the County to fund even basic services like road maintenance.
The County currently has a funding ratio of 60% for pension and retiree health care benefits. That means there is only 60 cents available for every dollar for benefits already earned. This percentage uses a 7.5% return on investments. If a more conservative 5.5% return is used, the funded ratio drops to 50%.
Sonoma County employees receive on average $110,000 per year in salary and pension benefits. This is double the average salary and retirement benefits of Sonoma County residents.
We are also working on various strategies to solve the crisis since we don't see any serious efforts on the part of our Board of Supervisors. The options are to place an initiative on the ballot to reform the system or create a Citizens Review Board to work with the Supervisors to try to solve the crisis.
This document is a draft of what we envision a Citizens Review Board would consist of and what it's duties would be. We plan on presenting this idea to the Board of Supervisors but due to past experience believe they won't want anyone looking over their shoulder even though they have demonstrated over and over again, they cannot be trusted to follow the law or even their own resolutions when it comes to pensions.
To view, simply click on this link: New Sonoma's Citizens Review Board Recommendation.pdf