Front Page  »  

SLO County’s unfunded pension liability soaring, nearly $1 billion

August 30, 2023

By KAREN VELIE

San Luis Obispo County’s unfunded pension liability is almost $1 billion, primarily because of huge pay raises and poorly performing investments.

The SLO County Pension Trust Board of Trustees reported an unfunded pension debt of $943 million on Jan. 1, up from $879 million a year earlier, according to the Annual Actuarial Valuation report released in June. The county is almost $1 billion short in the trust account set aside to pay former employees their monthly pensions and benefits.

For every dollar the county doles out for payroll, more than 50 cents currently goes into the pension trust. In 2022, the pension deficit grew by $64 million, or 7%.

UAL is the payment to cover the unfunded liability

The county pension fund generally receives money from employee contributions, employer contributions and returns on investments.

However, with a 7.7% loss in the market value of assets, “investment returns were less than favorable,” according to the report.

In addition, projected employee payroll grew by 8.1% to $242.1 million. Pension trust administrators had anticipated a 3% yearly increase in payroll. However, while in 2022 line-level employees received pay increases of 3%, county officials, administrators and management staff were given raises of up to 23%.

As the county’s unfunded pension liabilities soar, the number of retirees receiving more than $200,000 in pension and benefits a year is growing, according to Transparent California.

The top SLO County pensioners in 2022:

Frank Freitas, tax collector – $240,572

Jeff Hamm, health agency director – $225,021

Pat Hedges, sheriff-coroner – $213,496

Dan Hilford, assistant district attorney – $212,702

Gerald Shea, district attorney – $212,099

Gere Sibbach, auditor-controller – $207,584

Enn Mannard, medical director – $205,130

Sign up for breaking news, alerts and updates with Cal Coast News Top Stories.


Loading...
Subjects:     
Related:


26 Comments
Inline Feedbacks
View all comments

Government pensions should be done away with completely. All government employees should have 401(k) plans, linking their retirement income more directly to the economy. It may temper the way they interpret policy. They may even start considering intent versus process.


42

Easy to fix, simply take the income the pension investments make and divide that by the number of retired employees, send out checks. Next month do the same. Ta-daa.


13

This under-funded pension problem can be found in almost every government branch.


I have long argued that public pensions should be capped at $104,000 a year (that’s $2000 a week!), which could be implemented in the next three years. Those whose pensions would exceed that amount would need to retire by the deadline this goes into effect to get their full but promised amount. This gives them basically three years to plan their future: retire, find another job, move, whatever. This would also open up jobs for younger people, or possibly, some of these jobs could be eliminated upon their leaving. For the many employees whose pensions would not be so robust, no change.


This would right the fiscal ship in the long run without raising taxes or cutting services. $104,000 is a very generous pension; I really don’t see why someone making six figures (and benefits!) for years and years should expect us taxpayers to give him or her any more than $2000 a week for life upon retirement.


65

This a decent half baked idea. However in order to encourage people to take management roles in government and to retain experienced leadership you need appropriate compensation. We don’t live in a communist “from each according to their ability, to each according to their need”, employees, even government employees, need market rate compensation. If you cap pensions, you would need to increase salaries, otherwise expect an exodus to other employers and difficulty recruiting upper management. This is what they do in the private sector, no more pensions, but greater wages. It’s maybe worth experimenting in the public sector: higher pay, but lower pensions; a cost on today’s taxpayer, but not on tomorrows. (We’re partially in this mess because the past generations picked tomorrow)


-32

LOL you are absolutely delusional if you thinking the wages in the private sector in this area are higher than the public sector, even in upper management.


37

I’m sure I could find the figures to show that I’m less delusional than most, but how about this instead – if public sector wages are on par or better with private sector AND they get ludicrous benefits, why isn’t everyone trying to get these jobs? Why would anyone prefer the private sector? Do you hate government more than you hate money?


-19

Actually, a lot of people ARE trying to get these jobs. They don’t come up very often because a lot of government employees realize it’s a great deal! I personally know employers who lost competent people to government jobs because the government jobs paid more and had better benefits.


12

This is a classic bean counter argument; when applied, it only includes the people on the top. It would be easy to find good people who are interested in making a career out of local service and raise families here. Good people are not machines that bounce around looking for the highest salaries, like it appears most local administrators are. Some people are actually loyal to the people they serve rather than following dollar signs.


9

Your capping pensions is a good idea and also add full pension not until say 67+, retirement before that and pensions are scaled as with social security, earliest being say 62, for each year you wait you get a higher amount. Also, end double dipping and pension spiking.


23

Unfunded or underfunded pensions is nothing new. However, in San Luis Obispo it is a standard operating procedure. Don’t worry about it, you will move on or retire before it becomes an issue. Senior management have routinely managed their subordinates by gifting money to them (i.e. illegal bonuses to employees), raising salaries across the board regardless of the long-term debt. On top of that, senior management continuously secure huge salary increases for themselves routinely. We have some of the highest paid senior management personnel in government for a rural county in the country. All of this results in less services and unfunded liabilities for Joe taxpayer. Pensions should be limited to the same formula as Social Security, which is currently $4,555 a month at age 70 that is based upon 35 highest paying years. SLO government entitlees can make up to well, the sky is the limit in pension ($240,000 plus) based on 30 years of service, based on their highest 1 of 3 years of service and retire at age 55. Pensions should be limited to simply a maximum benefit of $4,555 a month, but not to exceed 75% of your highest pay. PG would suggest that these pensioners are poor, that they paid into the system (Fact is most didn’t, but that changed a few years ago where they now pay up to 7 or 8% of the total cost). In contrast, Joe taxpayer pays all of his social security costs. Time to clean house of these greedy pigs and get people on board who have a concept of fiscal responsibility and accountability. We need pension and salary reform of these over paid annointed government employees. Contact your congressmen, legislators today and demand pension reform before it is too late.


11

How are Hedges or Hamm on the top of the list? These two, one corrupt and one incompetent. We have to have better ways of holding bureaucrats accountable.


30

time to raise taxes and fees!!


0

I asked Google Bard AI to give me some comparisons to other California counties:


Per Capita:


San Luis Obispo $18,860

Los Angeles $3,120

San Bernardino $2,440

Orange County $2,220

San Diego $2,070

Riverside $1,920


Percentage of Budget:


San Luis Obispo 30%

Los Angeles 15%

San Bernardino 13%

Orange County 12%

San Diego 11%

Riverside 10%


YIKES!


54

These numbers are very plainly, very obviously wrong. Liability per capita $943,000,000 divided by county population 238,000 results in a figure that is only around $3,900. Not a preposterous $18k.


Your “AI” chatbots don’t actually “know” anything, they’re just scraping data and putting common words next to each other. Please don’t use them instead of your own brain.


5

I was curious what Google’s Bard would tell me about this, and the number matches exactly:


The unfunded pension liability of San Luis Obispo County is estimated to be $943 million as of January 1, 2023. This means that the county has promised to pay its employees $943 million in retirement benefits, but it only has $370 million set aside to pay those benefits.

The county’s unfunded pension liability has been growing in recent years due to a number of factors, including:



  • Low investment returns: The county’s pension fund has invested in assets that have underperformed expectations, which has reduced the amount of money available to pay out benefits.

  • High turnover: The county has a high turnover rate among its employees, which means that the fund has to pay out benefits to a larger number of retirees.

  • Changes in benefits: The county has changed its pension plan to provide more generous benefits, which has increased the cost of the plan.

  • Economic downturns: The county has experienced a number of economic downturns in recent years, which has reduced its tax revenue and made it more difficult to make pension contributions.


The county of San Luis Obispo is taking steps to address its unfunded pension liability. In 2022, the Board of Supervisors approved a plan to pay down the liability over a 30-year period. The plan includes increasing pension contributions, reducing benefits, and investing more aggressively.

It is important for the county of San Luis Obispo to address its unfunded pension liability sooner rather than later. If the county does not take action, the liability could become a major financial burden for the county. The county could be forced to raise taxes, cut services, or even declare bankruptcy.

Here are some additional details about the unfunded pension liability of the county of San Luis Obispo:



  • The county’s pension fund is called the San Luis Obispo County Employees’ Retirement System (SLOCRT).

  • The fund covers approximately 5,000 county employees.

  • The average pension benefit for a SLOCRT retiree is $60,000 per year.

  • The county’s annual pension contribution is approximately $80 million.


The county of San Luis Obispo is not alone in facing the challenge of unfunded pension liability. Many counties and states across the United States are struggling with this issue. It is a complex and difficult problem, but it is one that needs to be addressed.


39

Some people say its time to change Prop 13, if so its also time time to change these outrageous guaranteed pensions.


32

Prop 13 is not going to change. It works for everyone. But, what doesn’t work for everyone is paying people 240k in retirement. Typical over pensioned public ‘servants.’


59

Awful! Cut the high salaried employees, ALL departments, Cap pensions. BOS are lousy fiduciaries.


61
1 2