Supervisors to Look at Modified Pension Plan

The Riverside County Board of Supervisors today is considering a resolution that represents more than two years' work toward modifying the retirement plans of new county employees to save the county tens of millions of dollars.

The supervisors are expected to authorize formal notification to 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, the California Public Employees' Retirement system.

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.

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

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, while 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.

During last week's board hearing on the proposed 2012-13 fiscal year budget, Sheriff Stan Sniff warned that lowering pension benefits could "hobble'' his department's efforts toward recruitment and retention.

"Agencies outside the county are picking up men and women who have
remarkable skill,'' Sniff said. "My request: Be careful ... Make sure you're
absolutely right on 2 percent at 50.''

Meantime, county Chief Financial Officer Ed Corser last week raised concerns about the costs associated with concessions in union contracts. The shift of EPMC to employees will be phased in over the next three to four years.
But at the same time, the county will be implementing cost-of-living adjustments and merit pay increases.

For instance, the COLAs, wage hikes and boosts in vacation and medical
allowances in the Riverside Sheriffs' Association contract will cost $106
million over the next four years, according to county officials.

The county budget is expected to reach structural balance in 2012-13,
largely through spending cuts, with more than 200 positions being phased out or eliminated.

Pension reform efforts began in March 2010 with the convening of a Pension Reform Advisory Committee, which concluded that the county's current
defined-benefit retirement system was unsustainable.  In the spring of that year, the RSA and county went head-to-head on the issue of pension reform, leading each side to draft and place competing measures on the June 8, 2010 ballot.

The deputies' union sought voter approval of a plan to bar county supervisors from changing public safety workers' retirement plans without first receiving voters' OK. The supervisors' measure, which prevailed, left the board as the final authority.

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 formally ratified after a second public hearing, which is set for July 17.