Supervisor Neil Derry
Point of View
Supervisor Neil Derry
Created: 07/21/2012 07:11:11 AM PDT
Over the last couple of years there has been growing discussion and dialogue about public employee pensions in San Bernardino County. My colleagues on the board have demonstrated leadership and expressed their support for the need to reform this growing financial burden on taxpayers – a liability that now exceeds $1.7 billion dollars. To put that in perspective, our general fund budget is $2.3 billion.
Between 1999 and 2011, the annual contribution made by the County of San Bernardino to the retirement pension fund has grown from $44 million to $232 million. In other words, in 1999 this expenditure accounted for just 3 percent of our county budget. In 2011, nearly one-tenth of our county budget was devoted to pension contributions.
This is an unsustainable pace and county taxpayers cannot be expected to backstop guaranteed pensions for public employees while they see dramatic reductions in services and simultaneously experience dramatic shortfalls in their own personal financial situation.
I do not desire to play the blame game nor do I seek to be an alarmist. The simple fact is that various actuarial and investment portfolio projections were inaccurate and the retirement fund is grossly underfunded by more than $1.7 billion. If the economy ends up entering a double-dip recession as many fear may happen, investment returns would significantly underperform projections and result in the fund becoming even more underwater.
My plan would be to place before the voters a pension reform measure that would do four things:
1.Increase the retirement age for new county employees
2.Decrease the amount of money employees could earn each year towards their pension benefit
3.Require all new and current employees to contribute to their pensions
4.Minimize the effects of pension spiking by averaging annual compensation over their final three years of employment versus the current single highest year.
Urgency is needed because state law and legal concerns preclude us from addressing the benefits given to current employees. Since the bulk of what we are legally allowed to reform only applies to future employees, there will be a significant lag between these reforms and the positive benefits that start to accrue. Waiting for the situation to become dire will be far too late due to the ticking time bomb aspect of these pension obligations.
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