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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Mr. Holly

Just take a look at what happened in Atascadero when the last city manager had his unfunded vacation leave in place for years ignoring the advice of the auditor. Now Atascadero is crying that they have no money and can not hire any new people. That money is going towards paying off the unfunded vacation leave or as what it really is a hidden retirement plan.

It appears that this is going on in the entire county and is accepted until someone really pushes it and the shield against transparency disappears.

The future will be interesting to watch what happens with all of these abuses. Glad we have Prop. 13 or all property owners would be getting robbed blind to pay for this. And those of you who do not own property and think Prop.13 should go away, that will only make your rents skyrocket too.


SLOBIRD

Mr. Holly, take nothing for granted in California. Just this week the San Jose Mercury had the following article… “Major water districts in California are quietly considering using property taxes — and possibly raising them without a vote of the public — to help fund Gov. Jerry Brown’s $25 billion plan to build two massive tunnels through the Sacramento-San Joaquin River Delta.”


http://www.mercurynews.com/science/ci_26198239/property-taxes-could-pay-25-billion-delta-tunnels


There is absolutely nothing sacred and government is going to take every last penny they can from taxpayers. They need, want and will take whatever they want. People need to pay attention to our government everyday as they continue to destroy the middle working class unless you are a government employee!


sloweb

With decades of indirect circumventing (new user fees, Cal Fire fees etc) of Prop13, I fully expect a direct overturn of Prop13 by the astronomically liberal Calif Govt. Not at all of the realm of possibility.


Government is a ravenous parasite that will increasingly feed off of the citizens, to the point of killing it’s host. Anyone who thinks otherwise has fallen for the lies and is naive. This parasite will not stop.


isoslo

Well Said!


AmericaBeautiful

Statists/Socialists/Democrats really do NOT believe that your money is your own. It is theirs. They lust after more and more power and control.

Vote EVERY democrat OUT.


achillesheal

Whoops! Better raise taxes!


Russ J

Same story in every town. A total 180 degree flip in benefits for public sector pay vs. private sector. When I entered the work force, private companies were king, now it’s the government. Legal bribing of elected officials by the largest unions in this country have in most cases made public employee benefits almost obscene. Only time will tell how close to insolvency we become. Fortunately for California government, the very wealthy will always want to live here and that is where the majority of revenue comes from.


wineguyjc

Simple solution, cut pensions by 50% and if the staff don’t like it they can go out and get a job in the private sector with no pension and often no benefits. End of story. There are so many county employees working as Realtors, private consultants on the City dime it is ridiculous. Just watch and see which employee is standing outside the Government Center during the day taking a consulting call on agency time.


TacomaRose

Does this article help explain Assessor Tom Bordonaro’s sudden increase in our property taxes? Inquiring minds want to know.


No_More_Anger

I’m sitting on the same property for the last 15 years. My taxes increase 2% every year. Even during the down years, taxes went up 2%, but that’s OK, I understand how it works and when my property doubled in value, taxes were still held to the 2% annual increase. Either you don’t own a home or you fail to understand property tax law, probably both.


Citizen

Bordonaro lowered property taxes when property values went down. Now, the values are going up and he will be raising taxes. He’s just doing his job.


taxpayer

Anyone who has ever dealt with Assesor Bordonaro knows that he is one of the most ethical people who have ever been elected to SLO County Government.


Perspicacious

Agreed…my comment below was obviously sarcastic.


Perspicacious

You bet! County runs short on funds…give ol’ Tom a call and up go your taxes. Brilliant!


Kevin Rice

Remember in the 2012 elections when Adam Hill claimed credit for a balanced budget?


reason

A balanced budget is an annual affair. A budget can be balanced every year. Unfunded pension liabilities are a long-term financing problems like the national debt.


How well is your firefighter pension funded by Los Angeles?


Kevin Rice

The annual affair is a sham when the bills go unpaid in order top give false appearance of financial prudence.


Exceptionally well, as we fortunately did not jump on the 3%@50 train.


Perspicacious

3% @ 50 is not ALL bad for some occupations where the exposures and hazards, both physical and mental cut short the amount of time the retirees survive.


Kevin Rice

3@50 was a tech bubble union scam when the Gray Davis PERS board predicted the Dow would be around 100,000 by now and that would fully fund the 3%. Twenty years ago, pension funds were largely self-sustaining. Now they are billions in debt. There are job security aspects to public employment and, if one knew what they were signing up for when they took the job, then I think 3@50 is too much. Job security is the traditional attraction to public employment.


Perspicacious

You make good points. But on the other hand, all those people griping about public safety pensions had the SAME OPPORTUNITY at those jobs back in the day but instead chose private sector jobs that at the time paid a lot more. Now that the private sector has tanked, they envy the public safety employees and are trying to bring them down. I have a close relative who is in public safety and he gets harassed all the time about his pay and benefits and he tells them the same thing, you had the chance to take this job too, why didn’t you?


Perspicacious

Adam Hill is the Al Gore of SLO county.


kettle

How insulting, Adam hill is not an environmentalist.


Also check out the Adam’s New plan for the homeless, all hail the Dee.


TaxMeAgain

By the way, for the TOTAL liability, its now $5,341 per person…and climbing.


TaxMeAgain

No problem. $1259 per person. I’m not sure what it will be with interest. About $2,000 or so? How about some new taxes to make sure we can keep our wonderful staff happy?


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