November 15, 2011
CONTACT: Lani Lutar
619-234-6423 or email@example.com
Gayle Lynn Falkenthal, APR
619-997-2495 or Email Gayle
SDCTA Study Shows County of San Diego Pension Obligations Climbing
Additional reforms needed to reduce total pension costs, relieve pressure on the County’s budget
(San Diego) – The San Diego County Taxpayers Association (SDCTA) released the second in its series of reports examining the region’s government employee pension plans, focusing on their impact on local government budgets. Like many other local agencies, the County of San Diego has experienced an increase in pension costs over the past decade.
Within the report (“San Diego Pension Plans Phase II: County of San Diego”) SDCTA identified several significant trends related to County pension costs. Among the key findings:
- As of the end of Fiscal Year (FY) 2011, the County maintains a $1.9 billion unfunded pension liability.
- County contributions to the San Diego County Employees Retirement Association (SDCERA) increased dramatically in FY 2004 as a result of retroactive benefit increases in 2002 and investment losses, which resulted in an $870 million increase in the fund’s liability.
- As of August 15, 2011 the County has approximately $804 million of outstanding pension obligation bond debt. The County must pay $81.4 million annually until FY 2027 to address its current pension obligation bond debt.
- Total annual required pension costs have increased by over $190 million between FY 2000 ($98 million) and FY 2010 ($287 million).
- Pension costs as a percent of General Fund revenues have increased from 3.54% in FY 2000 to 8.74% in FY 2010, with a high of 10.42% in FY 2005.
- County pick-up costs have increased 63% for safety members and 27% for general members since FY 2000. The County would have saved $57.6 million in FY 2010 if employee pension costs were not subsidized and employees were required to pay their fair share.
As a result of its findings, SDCTA recommends that the County negotiate with its labor groups to achieve the following:
- Current employees should be required to pay contributions at least equal to the normal employee contribution rate. The County should negotiate via the bargaining process with labor unions to eliminate the “pick-up” of employee contributions as soon as reasonably possible.
- Creation of a new “Tier C” retirement benefit for new employees should be created which provides reduced pension rates and increased retirement ages for both safety and general employees, and which requires average monthly pay to be determined by the 36 highest paid consecutive months.
- The County should enter negotiations, seek amendments to state legislation, or use other methods required by law in order to require that pension payouts be calculated on base pay alone for new employees and not include ancillary benefits.
- The County should not increase pensionable earnings of employees unless the pension system is at least 80% funded, and remains 80% funded if any increase in pensionable earnings is adopted.
- The County should place a measure on the ballot amending the Charter to require voter approval of any increase to retirement benefits for employees where an actuarial projection of costs is presented to voters within the voter pamphlet for any proposed increase.
- The San Diego County Board of Supervisors should require its pension appointees to have relevant professional certifications, 15 years experience in pension administration, pension actuarial practices, investment management (including real estate), banking, or certified public accounting. Experience/certification requirements should be waived should one of the appointments be a member of the Board of Supervisors.
- The County should pay the normal cost of its pension benefits as determined by the system actuary each and every year.
Click here for a copy of the report or go to www.sdcta.org to access the report.
The San Diego County Taxpayers Association is a non-profit, non-partisan organization, dedicated to promoting accountable, cost-effective and efficient government and opposing unnecessary new taxes and fees. Founded in 1945, SDCTA has spent the past 66 years saving the region’s taxpayers millions of dollars, as well as generating information to help educate the public.