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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slo Fact Finder

SLO County’s current unfunded pension liability appears to be a little more than twice the size of the City of SLO’s current unfunded pension liability as of June of 2014.


Perhaps this problem is prevalent in the local water systems even during the present severe water restrictions caused by our local “pension drought conditions” ! !


SLOBIRD

Yea, but wait until everyone’s water rates start going up (more money for the cities and counties) because people use less, will have to pay more and they will never come back down after the rains. SLO back in the 90’s raised their rates by almost 20% because they had a 20% deduction in usage. However, the City never lowered the rate saying the higher rate had nothing to do with using less water. Right!


NorthCountyGuy

Government employees should be required to pay for their retirements like everybody else.


Government employees should not be getting a free ride.


isoslo

All government employees should be included in Social Security. All government pension plans should be defined contribution plans (401k). Why do government employees get substantially better retirement plans than the public? This has to stop immediately!! We have all become slaves to whatever government says, it is the beginning of the end.


shelworth

They get such wonderful retirements because while they’re working, they make so much less than the average private worker. Huh?, what?, they make almost double the hourly wage of private workers you say? Never mind.


hijinks

Lost in all the predictable vitriol is a very interesting comparison. According to the article, the county’s annual average pension is $25,474. To get some perspective, one might ask how that compares to other local agencies? Is it reasonable? Well, the city of SLO’s annual average pension is $48,000. Huge difference. The city’s using Measure Y money to fund its out of scale pension benefits. That’s a really good reason to vote NO on Measure Y’s successor, Measure G.


wineguyjc

Another note, hijinks. County employees also get social security so that $25,474 a year amount is only for the County pension. When you add in their Social Security amount they are in line with the City of SLO people. Also, the City of SLO staff are the most highly paid in the County down to the low level field grunt in Utilities. With a simple GED one can make a $75k – $100k with overtime a year in Utilities. To provide a comparison of what that equates to. A new Med School graduate with over $225k in debt and 8 years of their life grinding makes on average in the US $46k, but yet the average SLO Utilities field worker makes $75k according to the out dated data on the City’s website. Now, that is something that should be ratcheted in.


SLOBIRD

Government is just plain evil, but unfortunately necessary.


You have the BOS and most City Councils reaping the same rewards as their employees. It use to be that serving your community was a public service and a rewarding position. How, they get pensions and health care for life, free benefits/tokens of appreciation daily from the business community and friends.


Look at what the City Council in Atascadero did for Wade McKinney regarding his vacation time. This practice is also going on today for other employees in Atascadero. They are closed on Fridays (are they working???). The liability builds and builds and then the bubble bursts and we need a new tax,


You can not beat City Hall. EXAMPLE: About two weeks ago at the start of the Council Meeting in Atascadero our deceitful Mayor went on forever about the great employees working in Atascadero (this is true for the most part), the big sacrifices they have made working for this City (no one held a gun to their heads to stay) and that he was looking for ways to reward them. Then, along comes the request to pass a 1/2 cent sales tax increase with no strings attacked as to where this money will actually be directed. Then, along comes their Contract Agreements which are for two years (about the time the sales tax increase will kick in if passed) and the contracts state the employees will pay more of their share for PERS, but wait, the City is rising their salary to cover the cost plus a little extra. No cost to employee, more cost for the City. WHAT?? The next raise will actually cost the City more because the net salary just went up.


SLO is trying to build up that big budget so that the Council and Mayor can become full time positions. We are still paying Jerry Reiss and other council/mayors PERS pensions from when they held sits on the council. Think about the City Council on a full time salary, their become eligible for lifetime pensions for minimum years of service.


This whole government thing is a scam, the beast of the devil, and their is no stopping it at this time. Unions have definitely defined the role of government: get, give and gift some more and make everyone dependent on government in some way.


hijinks

Your rant sounds reasonable till it’s fact checked. For example, yes, it is true we’re still paying Jerry Reiss a pension: $876 a year. He had to serve two 4-year terms to get that outrageous pension. Big deal. Rant, rant, rant away. But can’t you find something better to rant about?


Oh, and by the way, last time we checked Jerry wasn’t exactly a union partisan. You just string unrelated incoherent vitriol together to make your “points” :-( .


http://transparentcalifornia.com/pensions/calpers/?page=6&e=CITY+OF+SAN+LUIS+OBISPO


SLOBIRD

“Your rant sounds reasonable till it’s fact checked.”


It is always interesting when people only want to look through a crack in the window instead of looking through clean and clear window..


1) I have nothing against Mr. Reiss, don’t know him, never met him. Point was, he was a councilman for what, 8 years, starting drawing a pension in 1992 in the amount of $876.48 annually which to date is about $17950, for what. He was paid when he was a councilman, why pay him a LIFETIME PENSION for community service while he was still running his own business and still does today. It was not the amount it was the point I was trying to make, but I am sure that was difficult for you to understand through that crack.


2) Jerry Reiss, Consulting and Construction Resources probably does have some tyes to unions but the union reference was not directly pointed at him. If anyone thinks that the unions of day have not corrupted, manipulated, and bribed themselves into power, they are either ignorant or uninformed. Unions were great in the day and did a lot for employees, specially women, work rights, conditions, etc.


It is pretty sad when the City of San Luis Obispo has a recreation leader retiring with a $71,000 pension for 34 years of service, or a Public Works Director with 19 years of service getting a pension of $70,000, or a City Attorney with 17 years of service getting $70,000 for life…. And none of these people were 65 when they retired. The taxpayers are obligated to pay these pensions for years and years while they have to continue working until 70 plus. Do you not see anything wrong with this picture, hijinks?


Perspicacious

No, nothing wrong with it as all the people complaining about it had an opportunity at the same type of retirement. 71k for 34 years of service isn’t all that great in this county with the cost of living. So he collects that for ten years before he dies. Big deal.


SLOBIRD

Perspicacious, really, 10 years! Ten years if you are in private employment because we will retire at 70 years of age unless you hit the lottery.


The City of SLO offers retirement for a general unit employee is 2.7% at the age of 55 x years of service. A recreation leader, retiring with 34 years of service, at age of 55, getting 71K for at least 20 is a lot more than private enterprise will get.


The City of SLO offers retirement for a public safety employee at 3.0% at the age of 50 x years of service.


10 years, really!


Perspicacious

Look at the average life expectancy after retirement for public safety employees, especially law enforcement. Hey, why are your panties all in a bunch over it? You could have had the same job if you had tried.


SLOBIRD

That is an insane response!


Mr. Holly

Great comments regarding Atascadero and it’s self promoting mayor, who wants their support for his upcoming re-election campaign. Remember it’s an election year and where are you for those that continually raise your fees, taxes and penalties so that they can prosper?


achillesheal

Simple solution – raise our taxes by $346 million and in 10 years when there is another $500M shortfall because the structural issues of promising benefits without having enough money to back it up in the Retirement system have not been fixed – raise taxes again!


SLO_Johnny

The current SLO population is about 280,000. $346,000,000 / 280,000 = $ 1235 per person. Each one of us will have to take $1235 out of our pockets just to pay the unfunded liabilities of the pension fund. Our household has 4 people so we owe $4943. I have to delay my retirement so they can retire early. MAKE THE EMPLOYEES FUND THEIR RETIREMENT PROGRAM just like the rest of us.


achillesheal

Great solution!! Where can I send in my check?


achillesheal

Oh shoot, I support a family of 5 so that’s $6175 that I owe. No HSA contribution this year, this is a more worthy cause.


hijinks

Well, you math is incomplete. Take that $1235 “per person” and divide it by the 50 years it’s spread over, and it comes out to $25 a year, reduced further by additional divisors due to population increase. Are you really that cheap and nasty?


SLOBIRD

But you forgot to add the new retirees with their higher salaries.


Yes, I am that cheap.


Got my letter from Cuesta College today already soliciting for their useless bond support. Oh yea, don’t forget, San Luis Coastal is coming with their.


Anyone see the common thread with these three….common, you can see, you can feel, you can smell it…


GOVERNMENT WANTS MORE OF YOUR MONEY.


Obama is buying a $4 million house in Rancho Mirage, you know the guys that wants redistribute of wealth, so solicit him.


Or, James Moore, who got on TV and denied his wealth. Go solicit him, because it was just revealed in divorce proceedings he is worth $54 million and has 9 HOUSES. Amazing how these lefties talk, promote, produce the redistribution of wealth for you and me, but not for them! Nancy Pelosi has a new worth of $100 million, Harry Mason Reid is only worth $5 million (not bad for someone who was worth $100,00 when he went in Washington), and then we have Jerry Brown with his mutli-pensions California pensions, $4 million and 27% ownership of a 2,700 family ranch in Colusa County handed down from his grandmother.


achillesheal

hijinks – for which government agency do you work?


SLOBIRD

My guess is City of San Luis Obispo from past posts!


isoslo

I have a family of four so I guess I am responsible for $4,940.


Julie

Hey Bruce Gibson, tell me again how mentioning Paavo Ogren’s name at the podium is not “County Purview.”

In this regard Ogren has a few options:

1. Collect pension from the County, since he’s over age 50, and continue to work for OCSD.

2. If there is reciprocity then he could continue building and upon retirement the County would have a piece and OCSD would be responsibly for a piece.


Thank the taxpayers for his lifelong pension.


falconbh

This has become a Major Problem for the County, Cities, the State and Special Districts.

When you have 80%, or more of the budgets, in Salaries, Benefits, and Retirement you have one large unsustainable fiscal problem.


One look at the November Ballot;” Temporary” Sales Tax Increases, Road Taxes, School Tax, College Tax. Then add + Automatic Water Rates Increases and +Automatic Sanitation Rate Increases + Property Tax Increases and We all have one Big Tax Increase that is growing. If they are successful in November more will come in 2015 $. It will not solve this structural budget problem. CalPers is already raising contribution levels for the State, local cities and districts. This will mean more Tax Funds” diverted” from the budget to pay for employee retirement, pay increases, and health benefits.


We have options; Vote in November, Support Tax/Rate Relief Leaders, Then “reduce/freeze’ current salary levels, have employees contribution levels increase for benefits & retirement. Cap Water and Sanitation “Automatic Rate Increases” to 2% per year and use Voter Approved Bonds for infrastructure improvements.


I encourage others to put their good ideas forward, so we can all work together to solve these problems.


In this case the Grand Jury is doing it Civic Duty, now can we please get you to do the same in the Oceano Community Services District and others ?