10:00 PM PDT on Sunday, July 17, 2011

The Press-Enterprise

San Bernardino County supervisors wanting to reduce future retirement costs may have difficulty changing the system on their own, county officials and a leading pension reform advocate said.

State law, a California Supreme Court decision and the need to negotiate with employee labor unions add to the complexity, they said.

The county’s retirement costs are expected to increase from $105.2 million this year to $163.9 million by 2015-2016.

County officials are researching ways to curb those increases, and Supervisor Janice Rutherford last week introduced a series of measures aimed at capping benefits.

She cited a recent report in The Press-Enterprise showing that the San Bernardino County Employees’ Retirement Association has 445 retirees who receive annual pensions of $100,000 or more.

Many of the top 20 earners receive more in retirement than they did when working for the county.

San Bernardino County is one of 20 in California that has its own retirement system operating under legislation first approved in 1937. The San Bernardino County Employees’ Retirement Association administers the county’s retirement fund and has its own board of directors.

To make significant changes, supervisors would have to persuade lawmakers in Sacramento to amend the 1937 legislation and then persuade employee groups to agree to new plans during contract talks.

An employee’s retirement is based on age, length of service and final pay. In San Bernardino County, general employees receive 2 percent of their pay for each year of service at age 55. Public-safety employees receive 3 percent at age 50.

Changing those formulas, even for new employees, is difficult, said Marcia Fritz, president of the California Foundation for Fiscal Responsibility, which advocates pension reform.

“All agencies have to work within the formulas and optional benefits established by their respective pension systems,” Fritz said.

The San Bernardino County retirement system offers just the two formulas.

By contrast, the California Public Employees Retirement System offers at least a half-dozen different formulas, including one with 65 as a retirement age. Riverside County and many Inland cities are CalPERS members.

The 1937 legislation does include other formulas besides the two the San Bernardino County retirement association offers, said Christie Porter, the agency’s chief of member services.

If the county wanted to use one, the Board of Supervisors would have to adopt the appropriate section of the law, she said.

But if supervisors wanted to create a pension formula not already specified in the 1937 legislation, they would have to persuade state lawmakers to pass a bill, Porter said.

Pensionable Pay

Total pay also is a significant factor in how much an employee receives in retirement and how much a public agency must pay to fund those pension obligations.

A 1998 state Supreme Court decision involving Ventura County sheriff’s deputies determined that cash benefits paid to employees must count toward their retirement.

San Bernardino County has a seven-page list of pay codes on its employee timecards listing what can be considered earnable compensation.

They vary according to positions — for example, special pay for nurses and public safety officials — and include allowances for cellphones, cars, tools and uniforms.

San Bernardino County employees also can count cashed-out vacation and sick time toward their retirement.

“When it comes to what’s considered to be pensionable, the county’s hands are completely tied by state law, by court decisions such as Ventura and ultimately SBCERA’s determination of what’s considered earnable compensation,” said county spokesman David Wert.

Officials with the retirement association disagree.

“We are not the ones that set the benefit levels,” Porter said.

She said the association only administers the fund. Deciding what benefits to offer is a matter between the county and its employees and is negotiated through labor contracts, she said. It’s a reason, she said, that the 1937 legislation isn’t as clear on what constitutes earnable compensation.

Given the difficulty in making changes, Fritz, the pension reform advocate, said San Bernardino County should require employees to use their vacation time before retiring.

Until last year, non-union employees — often members of management — could accrue an unlimited number of hours. A person saving 1,000 hours of vacation could boost their final year’s pay by 50 percent.

They now have a 480-hour cap on vacation accrual.

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