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County pension liability tops $346 million

July 23, 2014
James Erb

James Erb

By DANIEL BLACKBURN

San Luis Obispo County employees’ pension plan has a $346 million unfunded liability, a matter of concern to the Grand Jury because of its breathtaking size and the suggestion that officials may have tried to camouflage the problem.

The Employment Retirement Plan imbalance was examined in a report just issued by the 2013-14 Grand Jury, which asserted “…this liability adds to a complex cash flow management burden that must ultimately be solved by the SLO Board of Supervisors.” Jurors called the county’s employee pension program “substantial” and “growing,” increasing in size nine of the past 10 years.

Noting a $25.2 million increase in the fund’s liability during 2012 alone, the Grand Jury worried the total will increase substantially over the next decade, citing a Jan. 2013 actuarial report prepared for the county by Gabriel, Roeder Smith & Company. County taxpayers pay about $8.7 million annually to service the debt incurred by the pension plan.

James Erb, the county’s auditor-controller-treasurer, said he is preparing a response to the Grand Jury’s report for supervisors “and they’ll have it soon.”

One issue raised by the Grand Jury was a lack of transparency in the accounting process.

Erb, commenting on criticism that pension plan data was difficult to locate in audits said, “the disclosure issue has been around for a long time.”

He has reportedly “embarked” on what the Grand Jury labels “a preemptive program with the goal of placing this county on a more fiscally prudent path while still fulfilling contractual obligations to its employees.”

County plans call for erasing the deficit during the next 24 years, and has a “two-tier” plan in place which reduces benefits for new employees. The Grand Jury noted, however, that “a clearer presentation of the plan… is lacking.”

Former Santa Barbara county administrator Mike Brown said the so-called “recovery plan” is based on the assumption that the pension program will enjoy a steady annual interest hike of more than 7 percent.

“Those figures of the county’s will take a big dive” if that interest should drop over the life of the program, Brown added.

The county’s credit rating for general obligation bonds was recently upgraded by Fitch to AAA, and pension obligation bonds to AA+.

Over the past five years, according to data provided to the Grand Jury by county officials, average annual benefits increased from $18,744 to $25,474, a 36 percent increase.

The total actuarial liability increased 39 percent over the same period, from $1.057 billion at the end of 2007 to $1.468 billion in Dec. 2012.

The fund’s Comprehensive Annual Financial Report “does not clearly identify the variances” nor does it “provide an understandable explanation of the changes” that caused the increase in the unfunded liability, the Grand Jury said in its report.


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It is time to cut pensions in half or loose them completely. Government employees put in their 40 hours, get paid OT for anything above and expect to get a big fat pension in this County. Time to cut our loses people. Reduce pensions for all existing, future and past employees and don’t believe the rhetoric about how small their pensions are, they get Social Security also at the County. So stop giving only partial facts out there.


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The shills for Big Government keep overlooking the public-sector unions that are killing cities, counties and states all over the country, and the UAW, who the taxpayers and GM shareholders just bailed out. The economy is getting worse because of global leftist policies which are in the process of imploding in Europe and Asia as well as North America.


Unions are dying because they made a deal with the devil (Democrats) and the Democrats sold them out for their contributions. Union shills used to cheer when “dirty” manufacturing jobs went overseas. Not so much anymore.


As has been stated before, government-employee unions are the most evil economic rip-offs known to man.


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Thank God for Hope and Change. Prosperity for One and All.


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The market is up, houseing prices are up, people are getting better health care.


The sky never fell, change is good.


Lack of education is still a problem.


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I just wonder how long it will be until we see the County, Cities, Water/Sanitation Districts selling off land, buildings, airport,water to pay for unfunded pensions and excessive salaries.


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A big part of the problem is that the people in charge of all government agencies want the people below them to have as much as possible, then when their supervisors determine how much they should get it is compared to the people below them and presto chango everyone gets a raise and the circle continues. Government salary and benefits should be determined by independent private citizens.


The only power we as citizens seem to have is to cut back the funding to all government agencies so that they are forced to be more fiscally responsible. But there are too many stupid people who keep falling for the sales pitch given with each new tax increase. Vote NO on all taxes and fees, and stand up and fight when the government tries to get more money via non-tax revenues.


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That is indeed the best way. However, the government agencies will then “punish” the voters by cutting back programs that make the biggest political impact but saving little money, such as closing national parks and tours of the White House, or by making cutbacks that inconvenience you the most. That is how the government gets revenge on those trying to get our leaders to be more efficient-by becoming more inefficient.


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True, that is their technique to get fools to vote for a never ending series of tax increases. If the agency continues to cut service in retaliation for us refusing to give them more money, then eventually the agency will be terminated since they no longer serve a purpose.


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So fess up who gave the thumbs down to this common sense ideal?


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I have an Idea! Let’s pay people not to work. Let’s take care of their every need after they retire. That’s a really great Idea!


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Well, we already do that for millions of people who haven’t worked in their life for the most part, it is called welfare. What is wrong about doing it for people who have given years of their life to the workforce, in many cases directly to public service?


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At one point in time the pie is all gone and we don’t! “do it” for everyone that has given years of their life to the workforce. We give it to some! of the people that have given years of their life to the workforce. Not everyone is a member of a workforce that has retirement benefits. However when public employment is concerned we all pay for it whether we receive the benefit or not. It may be time to reduce the size of the “workforce”.


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” Not everyone is a member of a workforce that has retirement benefits.”


And whose fault is that?


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What’s wrong with it is that they don’t have the money to pay for their promises based on a pre-determined formula.


What they should do if they want to provide defined benefit plans is, have worker and company contribute to the plan (as they do now), but then buy an immediate annuity and the retiree will get exactly what they have saved and invested for.


Making up figures based on negotiation (2% at 55 etc..) makes no sense in the real world.


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Then change it from this point forward, which a lot of agencies and departments have already done. You CANNOT take it back from people who have worked their whole life being promised it and planning on it.


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Yes you can take it back if the agency is forced to declare bankruptcy.

Is that unfair? You bet it is but it’s an issue between the retiree and their former employer/labor union. Is that any more unfair than asking the taxpayer who paid for the employers contribution originally to dig into their pockets again to make up the unfunded pension liability?

If someone is going to swing in the wind let it be the pie in the sky pension experts that decided a 7% return on investment made sense combined with a defined benefit and early retirement age.


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Here’s another main reason for the unfunded SLO Co pension liability.

Here’s a list of public employees retired from local agencies that draw more than $100,000.00 per year…..for the rest of their lives.

Guys like Bob Rutledge, a retired SLO Fire Captain drawing $9,800.00 per month. Chillin at home and laughing all the way to the bank. In 8 1/2 years he will have become a millionaire.


http://www.fixpensionsfirst.com/calpers-database/?first_name=&last_name=&employer=SAN+LUIS+OBISPO


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Yeah a retired millionaire…WTF?


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Fix the problem now, that was created by the people who are there now. Don’t make the next generation pay for the piss poor planning of the generation before. Lower the rates for new hires, but also adjust the pension formula for existing and former employees to a figure that is financially manageable. For example, at the City of SLO employees had their pension bumped up to 2.7% at 55 in 2002 and if you had been there for 30 years at 2.0% at 55 you were going to get 60% of your highest year at retirement. With the bump, overnight your pension increased to 81% of your highest year pay. Now this is what created the pension gap. In addition, many employees new that by banking their vacation days until retirement they would cash out all that back pay during their last year and whalla another pension spike. This is what created the issue. Detroit has implemented a retroactive pension adjustment. GM adjust pensions in the early 80’s and Hughes Aircraft also did it. It is called life.


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Add ” sarc” to your comment or people will take this seriously.


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