County must grapple with $16.4 million debt
Joe Nelson, Staff Writer
Posted: 01/18/2011 08:39:39 PM PST
Rising pension rates for San Bernardino County’s employees will wield a $16.4-million blow to the county’s budget and likely result in more layoffs and reduction of services, county Chief Executive Officer Greg Devereaux said Tuesday.
Compounding the issue, Devereaux said, is that the county’s contracts with its two biggest labor unions, the San Bernardino County Safety Employees Benefit Association (SEBA) and the San Bernardino Public Employees Association (SBPEA), are up for renegotiation next year, and raises are merited.
“The only way we can pay for those raises is by laying people off or reducing service levels,” Devereaux said. “Ultimately, those are all decisions for the (Board of Supervisors). They are going to be faced with some very difficult decisions.”
Last week, the county Supervisors approved adjustments to the retirement contribution rates of county employees, part of an annual “ministerial process” in accordance with legislation established in 1937 relating to county retirement plans.
Retirement rates for general county employees will rise from 12.32-percent to 14.72-percent, and rates for safety employees will rise from 26.32-percent to 31.23-percent.
The county will see its retirement rates skyrocket over the next five years, and the dollars tied to how much the county pays per year are significant, Devereaux said.
“Over the next five years the amount we will be paying into the pension fund will rise by more than $100 million, and that’s just the general fund portion, and all of that is money that doesn’t go into providing services,” Devereaux said.
“At this point, it isn’t falling revenues, they’ve levelled off. It’s the increasing cost of retirement that is the problem.”
Supervisor Janice Rutherford remains concerned about the impact that rising rates will have on the county budget, and an actuarial report that bases the pension system’s soundness on an 8-percent return rate.
“I don’t know if that’s realistic in the current economy, and if you drop that number to something that might be realistic, these numbers go through the roof,” Rutherford said during last week’s board meeting.
She has proposed a workshop to discuss those concerns. The workshop has yet to be scheduled.
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