County's Pension Reform Plans Move to Final Phase

Riverside County supervisors moved ahead today to enact pension reforms expected to save the county millions of dollars annually, despite warnings from the sheriff that his recruitment efforts might be undercut because of the changes.

"We have been talking about pension reform for more than a year and a
half,'' said Supervisor Jeff Stone. "We need to codify this and start saving
taxpayers money.''

The board voted 4-0 -- with Supervisor John Benoit away on vacation -- to approve a resolution formally notifying the Board of Administration of the
California Public Employees' Retirement System that the county will be
implementing a ``second-tier'' pension plan effective Aug. 16.

Since 2010, the county Executive Office has successfully negotiated collective bargaining agreements with unions representing more than 16,000 workers to establish new retirement formulas for new hires and have all employees cover their own monthly pension contributions to CalPERS.

Under the second-tier plan, public safety workers hired after August 2012 will be covered under a defined-benefit plan with a pension formula of 2 percent at 50 -- meaning compensation will be determined based on 2 percent of the average of the three highest-paid years of an employee's career with the
county, multiplied by the number of years on the job.

Safety workers have to be employed for at least five years and must be 50 years old to start collecting benefits. Those who remain on the job beyond age 50 become eligible for a 2.7 percent at 55 pension and can receive up to 90
percent of their final year's full-time compensation.

Sheriff Stan Sniff, who had expressed reservations earlier about the 2
percent at 50 formula, reasserted today that the change would attenuate his
department's ability to recruit and retain career employees.

"This puts us at a disadvantage,'' Sniff told the board.  "You risk turning this agency into a training ground. People will come to work for us and then fly off to other agencies for better benefits.''

He said 48 deputies had left the sheriff's department this year, making
"lateral'' transfers to surrounding agencies "because they sensed instability
in the county.''

"It's the boots on the ground -- the young men and women -- we need to
keep here,'' Sniff said. "I'd ask you to make haste slowly on this.''

Department of Human Resources chief Barbara Olivier countered the sheriff's argument that pension modifications would make the county less attractive to potential recruits, noting that both the Los Angeles County and Ventura County sheriff's departments have 2 percent at 50 retirement plans.

Olivier reminded the board that the sheriff had objected to a "more
severe pension plan'' that would have mandated a 2 percent at 55 formula for
safety personnel, and the Executive Office backed off the concept.

The board resolution calls for establishing a 2 percent at 60 formula for non-public-safety, or "miscellaneous,'' employees hired on or after Aug.
16.

Sniff requested that the safety half of the reform plan be set aside to give the sheriff's office time to come up with possible alternatives for the board to consider. However, Olivier pointed out that such a move would force her office to "start over'' on a new resolution to CalPERS, delaying enactment of reforms to October.

She said the county stood to lose between $400,000 to $2.8 million in
the next fiscal year because of the deferral.

"We don't want to snatch defeat from the jaws of victory here,'' said Supervisor Marion Ashley.  "We can look at other incentives (for the sheriff's department), like signing bonuses and lateral bonuses. There are other ways to accomplish the (recruitment) goal.''

Supervisor Bob Buster recommended -- and his colleagues agreed -- that
the Department of Human Resources work closely with the sheriff to monitor
potential recruiting problems and come up with incentives packages that the
board can consider down the road.

"There are a lot of people in the private sector living with harsh realities, a lot of people looking for jobs,'' Stone said.  "Something tells me we'll be able to get along, and the sheriff's department will continue to grow.''

The reduced retirement benefits will net the county around $206 million in savings over a decade, according to the Executive Office. Existing employees' tier one benefits will remain unchanged: 3 percent at 50 for public safety, and 3 percent at 60 for miscellaneous employees, who include clerks, technicians, accountants and nurses.

The largest savings will be realized after all county employees begin paying their full share of member contributions into CalPERS. So-called  "employer-paid member contributions'' have been a taxpayer expense since the early 2000s. For miscellaneous workers, the contribution amount equals 8 percent of gross earnings, and for safety workers, it's 9 percent. That's on top of the county's matching contributions.

According to the Executive Office, by shifting the EPMC to workers, the county will save up to $650 million over 10 years.

The resolution advising CalPERS of the county's intent to amend the pension plans includes an ordinance that will spell out the changes. However, all of the documents must be ratified after a second public hearing, which is set for July 17.