Pension Scandal

The Public Was Never Notified and the Agreement Was For Employees to Pay for the Increase

Accoding to the County Employee Retirement Law (CERL) and the California Government Code before they increased benefits, the Supervisors were required to:

1) Hire their own actuary to perform a study to determine the annual financial impact of the increase

2) Provide the actuary's study to the public at a regular meeting at the Board of Supervisors

3) To place the approval as an item on the meeting agenda so people could comment on the increase

4) To adversise the meeting in the local newspaper two weeks in advance

Basically, the County admitted to the Sonoma County Civil Grand Jury during their investigation that none of these things happened, but there was nothing they could do about changing the benefits.

Also, the Memorandium of Understanding's with all the unions stated that the General employees would pay the entire costs of the increase and Safety employees would pay half the costs. However, that has not happened. Since the increases were enacted, employee contributions have only increased by 3% from 9% to 12%, but the County’s contributions have grown from 10% to 40%.

And not only did the 3% not pay for the increase, but in 2008 the County Supervisors agreed to pick up 2.25% of the additional 3% contribution meaning the employees were paying less than 1% of salary towards the increase.

The agreement for the employees to pay was found in numerous public documents:

  • Board Resolution No. 02-1305 Dated December 10, 2002: WHEREAS, 3% @ 60 retirement program will be effective 6/22/04 and employees are paying for prospective normal cost and past service, primarily through increased retirement contributions.
  • Agenda Item Board Date 12/10/02: 3% at 60 retirement program effective 6/22/04. All unrepresented employees will be paying for costs of prospective and past service through increased retirement contributions and other offsets similar to the arrangements with represented employee groups.
  • In the Agenda Item Summary Report for the 2003 Pension Obligation Bonds on April 29, 2003: “It should be noted that the additional cost of these negotiated benefits are to be fully paid for by employees starting in July 2004.”
  • On the financial summary of SEIU MOU from Board Minutes for May 4, 2005: “The County Board of Supervisors established direction to staff that the marginal increase in costs associated with the “3% at 60” plan be borne by the employees.”
  • For Safety employees: Agenda Item Board Date 12/17/02: Retirement: 3% at 55 retirement program effective in July 2003, and 3% at 50 retirement program effective in February, 2006 with employees paying approximately one-half of the anticipated total cost primarily through increased retirement contributions.

So why is the County paying for the increase?  Our research has shown it is because the County’s former actuary Rick Roeder, at the request of the Sonoma County Retirement Board (SCERA), created a study that said it would cost the County $93 million over 20 years when in fact it has cost the County already $323 million in the first 8 years of the increase alone. Why were the costs so far off? It is becaue the study, performed by SCERA did not include the impact of accelerated retirements even though the actuary recommended including them. We believe these issues deserve further investigation by the Sonoma County Civil Grand Jury or District Attorney.

Now money never authorized to be taken from the General Fund is going to pay for something the employees agreed to pay for. Several attorneys we have talked with believe taking the money from the General fund to pay for the increase without proper approval is essentially a gift of public funds and a violation of the California Constitution.

The bottom line is that the records show that the employees should be paying much more towards their pensions and County tax revenues are being misused. Serious violations of the laws governing pensions and use of public funds have occurred and the current Supervisors need to address this situation.