Monday, December 27, 2010 – 10:00 a.m.
The arrival of 2011 brings with it a new round of budget problems for San Bernardino County officials.
The annual question of layoffs or ? is coming to an employee union near you.
County unions will once again be asked by the county to go to their memberships and extract concessions in an effort to avert layoffs.
Layoffs being a remedy the county seems to view as a bogeyman in a dark closet.
However this time around the questions employees are to face will most likely be much simpler.
Will employees agree to increase their pre-tax pension system contributions? (A defacto salary cut)
Will current employees agree to subject new employees to a reduced pension formula?
It’s plain and simple.
San Bernardino County has a huge increase in what it contributes to its pension system coming in each of its next two fiscal years, and it doesn’t have the money to pay for it, without cutting positions or having employees pickup the bulk of the increase.
We’re talking well over one hundred million dollars over two years.
The concessions that employees will be asked to give will likely be permanent. Meaning employees won’t be providing a band-aid on a temporary fix.
The aforementioned increase in pension contribution rates, which will reduce net pay, will be permanent.
Another longer-term fix will also be on the table.
Altering the pension formula for new employees is a move occurring throughout the state.
San Bernardino County’s general employees never advanced to the 3% at age 60 formula, but instead have remained at the 2% at age 55 level for decades.
About seven years ago the safety employees shifted from a 2% at age 50 formula to the 3% at age 50 level.
The group rejected a county proposal to create a 3% at age 55 level for new employees last summer.
Both groups can expect pressure to subject new employees to new formulas requiring longer service periods for the same benefit.
Altering the pension benefit formulas will not help the county now, but will do so over time. The county will see a gradual increase in savings as current employees retire and are replaced by new employees subject to the modified formulas.
The modified formula for new hires stands the best chance of gainng traction, since union members have a history of throwing their future brethren under the proverbial bus.
A tougher sell to employees?
Earlier this year, employee unions suffered mixed results in obtaining concessions from their memberships. This time around the same path will likely be even harder.
Lack of trust.
In general, the unions made significant missteps in communicating with their members, causing a loss of confidence and lack of trust.
Two problem areas not easily smoothed over.
County union members will be suspect of any proposals that cut their net earnings. And with the memberships of most of the county’s unions feeling like they were lied to or deceived last spring, the situation could get pretty rocky.
A bad situation for the county.
County officials have been on a path of trying to maintain the numbers in its workforce by asking employees to take concessions. Kind of like an altruistic “for the good of the economy” logic.
No matter how you slice it, affecting the standard of living of 19,000 employees takes its toll on the local economy.
Whether you have 19,000 earning and spending 10% less, or 17,100 spending the same, there is still a potential for greater impact from the larger number spending less
Especially if you place a large number of the larger group into financial distress.
This time employees may give the layoff signal.