New Sonoma, a volunteer organization of financial experts and citizens concerned about the finances and governance of Sonoma County, has just completed an extensive study of the county's pension crisis. The full text of the study is at www.newsonoma.org.
In addition to describing how the county has incurred over a billion dollars in unfunded pension and retiree healthcare liabilities, and how the county ignored requirements to notify citizens of the cost of the benefit increase and failed to follow the board of supervisors' resolution requiring that employees pay for the increase, the report also provides a first-of-its-kind comparison of Sonoma County's pension system with neighboring counties.
The following is a partial summary of the study's findings:
• Sonoma County is approaching balance sheet insolvency, which means its liabilities will exceed its net assets when the new accounting standards, which will require the county to list pension liabilities on its balance sheet, kick in and unfunded retiree medical liabilities are included.
• The key driver of the pension problem was the retroactive increases which took effect in 2003 and 2006 for safety and 2004 for general employees. The increases have led to higher pensions, accelerated retirement rates and reduced the average retirement age by five years.
• The retroactive increases combined with a new definition of pensionable compensation increased pensions by 66 percent for general employees and 69 percent for safety employees the year after the increases were enacted.
• Even though the board of supervisors' resolutions authorizing the new formula required general employees to pay the entire past and future cost of the increase and safety employees to pay the past cost, the resolutions were never enforced by the retirement association. In fact, in the 2008 contract negotiations, the county picked up all but 1 percent of the general employees contributions to the increase and all but 1 percent of the safety employees contributions.
• The county's pension costs have climbed from $24 million in 2001 to $122 million in 2012. Even with these increased costs, the system has $1.3 billion in unfunded pension, retiree healthcare and pension obligation bond liabilities.
• When comparing Sonoma County's pension costs with Tulare, Mendocino, Alameda, San Mateo, Marin and Contra Costa counties, we found that their average pension costs were 16 percent of the general fund, while Sonoma County's were more than double, at 36 percent. No other county or city we know of has pension costs as high as ours or as a percentage of the general fund.
• When adding payroll costs, the total climbs to 120 percent of the general fund. The average for the other counties is 60 percent.
• The county currently has a funding ratio of 60 percent for pension and retiree healthcare benefits when pension bond debt is added in. That means there is only 60 cents available for every dollar for benefits already earned. This percentage uses a 7.5 percent return on investments. If a more conservative 5.5 percent return is used, the funded ratio drops to 50 percent.
• Sonoma County employees receive on average $110,000 per year in salary and pension benefits, plus health insurance for life after 10 years of service. This is double the average salary and retirement benefits of Sonoma County residents.
We hope this report will be a call to action on the part of all stakeholders, and that they will work together to solve this deepening crisis.
Director of New Sonoma, Santa Rosa
Sodom meets Gomorrah through a dating service in Sonoma County. Love at first sight. Distilleries and pot dispensaries open tasting rooms. Five-star restaurants open e-cig/wifi sections to compete with fast food restaurants. Apple orchards replaced by vineyards surrounded by organic pot farms. Schools required to stay 50 feet away from taco trucks, with slot machines and ice-cream trucks selling pot-laced brownies. CHP and XYZ towing set up mobile units in casino parking lot. Smart Train adds casino stop. Eat, drink and make merry with the ladies of the night. When debauchery becomes the cornerstone of our tax base, let the good times roll. Stay drunk and stoned. Hopefully, there won't be a water shortage. Stay tuned for the end game.
Write to us at email@example.com.