10:00 PM PDT on Monday, March 28, 2011
Cassie MacDuff

Whether to continue a monthly subsidy to San Bernardino County retirees is going to be a divisive issue.

That became clear at a Board of Retirement committee meeting last week.

The four-member committee split down the middle over whether to move $40.6 million of so-called “excess earnings” used for the subsidy into a reserve to offset a county budget shortfall.

Trustees Ellen Weisser and Don Neely voted to transfer the money.

Trustees Harry Hatch and Louis Fiorino voted to leave it alone.

For the past three decades, the retirement board has given retirees up to $230 a month to supplement their pensions. The county’s share of the pension fund has also been subsidized.

But this year, the county had to dip into its general fund to pay its pension share. The “excess earnings” are being eyed to fill the gap. Without the money, the county may have to lay off workers.

Employee union leaders pleaded with trustees not to discontinue the subsidy.

Bob Blough, head of the San Bernardino Public Employees Association, said eliminating it would have a “profound impact” on retirees, while helping the county only minimally.

He raised the specter of retirees choosing between their medications and paying rent.

Bill Abernathie, president of the Safety Employees Benefit Association, said his retirees already have suffered “dramatic changes” in their financial stability.

He called cutting the subsidy unconscionable.

Moving the money into the county reserve could prevent 89 workers from being laid off, County Treasurer Larry Walker said.

The subsidy was set up to help retirees pay for health insurance.

The retirement board wanted to give it only to retirees with the smallest pensions, said Weisser, its chairwoman. But legally, the same subsidy must be offered to all retirees, or none.

Public pensions are under fire throughout the nation, Weisser said, and the public — facing an uncertain economy — is “very angry” about seemingly generous benefits at taxpayer expense.

The idea that a pension fund’s investments could generate excess earnings at all has raised eyebrows.

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