The Board of Supervisors recently completed negotiations with the various unions. According to the Press Democrat the 10 year savings from the changes totaled about $12 million per year over 10 years for a total savings of $120 million. Most of this savings comes from eliminating the pickup by the County of employee contributions. How far will this savings go? In 2012 the unfunded liability of the pension fund grew by $127 million. The interest the County will pay on this increase will wipe out any savings achieved through contract negotiations. In other words, it was another example of the failure of our Supervisors to solve the pension crisis.
We believe the County should implemented the following measures which would save the County $80 to $100 million per year in salary and pension costs and enable the County to restore essential services to taxpayers.
1. Lower salaries by 10% and freeze them for 5 years or as long as necessary to avert a financial crisis. This would save the County $43 million the first year and an additional $12 million per year over 5 years.
2. Have all pension costs shared equally between the County and the employees. This would save the County $45.5 million per year.
3. Compare County salaries with those provided to private sector employees in Sonoma County and adjust them to those levels for all new hires. This could lower salaries for new hires by 30% to 40%.
4. If possible, place a cap on pensions.
5. Eliminate the County's 401 (k) contributions for current County Managers and Supervisors. This is over the top considering most retirees are receiving 3% per year of service plus social security. This would save the County $5 million per year.
6. Eliminate “spiking” by averaging of the final 3 years of employment to calculate pensions. This would save the County about 10% to 15% on new retiree pensions.
7. Eliminate the defined benefit pension plan prospectively for all elected officials so they won't have a conflict of interest and will be more willing to reduce benefits.
8. Require voter approval for future pension obligation bonds and any changes to pension benefits.
9. Allow current employees to opt for a lower benefit in exchange for a lower contribution level or allow them to move their current account balance into a 401k plan and have the County place 10% of their salary into their 401k plan.
10. Eliminate the ability to purchase service credits. These made sense when the employees and County were sharing pension costs, each paying 7% of payroll, but since the County contribution has grown to 40% of payroll, they are unfair to the County and a windfall for employees.
There are legal questions that the courts need to decide regarding changing benefit formulas for existing employees going forward, but most of the above measures can be legally implemented.
The Citizens Advisory Committee believes that if the Board of Supervisors refuses to implement the measures that are clearly legal, New Sonoma will create a proposition and allow the voters to implement them.
More information on Pensions can be found on the White Papers and Articles page.