Joe Nelson, Staff Writer
Posted: 07/31/2012 06:21:44 PM PDT

The San Bernardino County Board of Supervisors on Wednesday will hold a special meeting to discuss proposed pension reforms and to consider forming a special panel to provide input on assisting businesses in low income areas.

Supervisor Janice Rutherford is proposing that any increases to county employee retirement benefits or changes to formulas used to determine benefits first be approved by voters.

In addition, Rutherford wants an ordinance prohibiting the county from taking “pension holidays,” a practice in which the county, particularly during boom years, does not pay into its retirement system because its return on investment exceeds what it pays into the system.

The practice has been detrimental to the county in years’ past, said Rutherford, because instead of saving that surplus money for a rainy day the county spent it.

“The problem is, when the investor return doesn’t cover what’s going to be needed, then the employer has to pay more,” Rutherford said. “We all know that investment returns are cyclical and the boom doesn’t last forever.”

Supervisor Neil Derry is proposing to change the retirement formula for public safety employees from 3 percent at 50 to 2 percent at 50. In other words, once the employee becomes eligible for retirement at age 50, their annual pension benefit would be based on 2 percent of the average of their three highest paid years on the job, multiplied by the number of years on the job.

For general employees, Derry is proposing their retirement formula change from 2 percent at 55 to 2 percent at 62. Furthermore, all employees would pick up the 7 percent share of what the county now pays into their pensions.

To avert pension spiking, the county, under Derry’s proposal, would average a retiring employee’s annual compensation over their final three years on the job instead of their single highest paid year.

Poor market performance has contributed to the county’s pension fund being underfunded by more than $1.7 billion. Pension costs in the county have grown from 3.1 percent of total county expenditures in 1999 to 9.5 percent in 2011, when the county contributed $232.3 million to its retirement system, Derry said.

Derry and Rutherford are both proposing their recommendations be decided by voters in the Nov. 6 general election. The board, if it approves the measures, has until Aug. 9 to submit them to the Reigstrar of Voters.

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