To put it simply, Sonoma County is broke and broken. Our financial situation is the result of extremely poor decisions by County management and the Board of Supervisors to increase employee salaries and benefits during a time when property and sales tax revenues were falling and the pension system was not making its assumed rate of investment return. As a result, over the past 10 years the County has had to borrow $500 million to meet pension funding requirements and the pension fund still has $824 million in unfunded pension and health insurance liabilities. This is money that will need to be paid back over the next 20 years, causing a drastic reduction in the County's ability to provide critical services over the next two decades.
- Sonoma County is one of the 20 California Employee Retirement Act counties. New Sonoma performed an analysis of salaries and benefits for the 20 counties and this is what we found:
- Sonoma County pays the highest average pensionable salary of $85,313 per year, 26% higher than the $67,745 average.
- Sonoma County is one of 4 counties that use a 3% @ 60 formula for General employees, but the salaries for the other three average 43% less than Sonoma County's.
- The average maximum pension multiplier for all counties is a 2.27% per year of service versus 3% or 32% more for Sonoma County.
- Sonoma County's debt per capita is $3,200, also the highest of the 20 counties.
- In addition to the most generous pension benefits of the 20 counties, Sonoma County managers and supervisors receive a 5% contribution to a 401k plan and all County employees receive Social Security benefits in addition to their pensions.
How This Happened
About a decade ago, the County managers and Supervisors enacted very generous pension increases and now we know it was not performed in accordance with the law. Before increasing benefits, the County is required to hire an actuary to prepare a study to determine the cost impact of increase and to provide that information to the public at a meeting of the board of supervisors before they approve the increase. None of that happened.
The illegally enhanced benefit formulas and new definition of pensionable salaries increase pensions by 66% for new retirees the year after they were enacted and caused employees to retire 5 years earlier, creating a flood of new retirees with pensions that were not properly funded and leaving the taxpayers holding the bill.
The second cause was salary increases. Even though County tax revenues were dropping, the County Supervisors continued to provide salary increases to themselves and staff at double the rate of inflation.