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Rising Cost of Retirement Benefits at Center of County Budget Talks
The Santa Barbara County Board of Supervisors got a peek Tuesday at the ugly fiscal year that lies ahead for the county in 2010-11.
Tuesday’s meeting was the first in a series of budget workshops. The meeting focused on defining the problem, which seems to stem from the fact that salaries and benefits are the county’s largest expenditures — more than half of its operating budget.
Even though staffing has been reduced, the cost of salaries and benefits is still growing.
In fact, that cost amounts to about $119,000 per county employee per year — after salary and benefit increases. That number is up from $109,000 last year, according to Theo Fallati, the county’s assistant auditor-controller.
To maintain current staffing levels, the county would need to shell out nearly $39 million in additional costs in 2010-11. Staff salaries would increase $14 million, and employee benefits would increase $25 million.
The most significant component of the benefits increase would come from maintaining the current level of retirement benefits — about $20 million. Decreasing revenues also are expected in the next year.
Most of the county’s discretionary revenue comes from property taxes, but those monies, along with county sales and bed taxes, are expected to decrease about $3 million in the next fiscal year.
Based on historical trends, sales-tax revenue should be the first to improve, Fallati said, and could begin to go up by April.
Most of the county’s unions have contracts that provide for the salary increases. In addition, there are “step increases” that take effect as employees take on roles with more seniority.
SEIU Local 620 has allowed for step increases of $7.1 million, the Deputy Sheriffs’ Association $2 million and all others $4.4 million.
Only four people, including two representatives of county unions, spoke during Tuesday’s public comment period.
One recommendation came from Bruce Corsaw, the interim executive director of SEIU Local 620. That group represents more than half of the county’s employees — “the lowest-paid half,” he said.
Corsaw said the county should consider changing its amortization schedule to 30 years instead of 17 years — as it is currently — and that doing so could shave $15 million off total retirement costs.
The retirement board offered the county the option of spreading out the debt over a 30-year period to address “this perfect financial storm our county is facing,” Corsaw said. “But the county CEO insisted on a 17-year schedule and refused to tell the retirement board that the schedule would cause a hardship on the county,” adding that the schedule could be changed once a year.
A representative of SEIU Local 721 also encouraged the board to adopt the 30-year plan, and said it could switch back when the economy improves.
County CEO Mike Brown said the board considered the amortization very carefully, and that the supervisors and retirement board both adopted it.
“The bigger the mortgage and the longer the mortgage, the higher the interest ultimately over time,” Brown said. A 30-year plan would have added $1 billion in debt, and “we felt that your board took a prudent, middle-ground step” in approving the 17-year term, he said.
Supervisor Janet Wolf expressed concern when a yearly increase for managers and executives was mentioned.
A total of $700,000 in pay increases were detailed, of which about $50,000 is allotted for bonuses.
Wolf was adamant that those increases be eliminated. “There’s no place for executive bonuses ever, and particularly in this climate,” she said.
Though Supervisor Salud Carbajal said he agreed that bonuses would “send a terrible message,” but that the contracts negotiated with the county’s employee unions needed to be honored.
“Not only did management take the furlough, but they didn’t receive any pay increases,” he said of the past two years. “Obviously this climate is tough. I just want us to be fair.”
The county must close the budget gap by July 1, and the budget session on Feb. 22 will look at potential service effects.
— Noozhawk staff writer Lara Cooper can be reached at .(JavaScript must be enabled to view this email address).
Comments
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» on 02.10.10 @ 12:37 AM
The government is more like royalty, and the unions have paid off our weak leaders—bust the unions in Government, its wrong…
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» on 02.10.10 @ 07:51 AM
Our firemen and cops are retiring at 52 years old with almost full pay and med care for life spouses included. Granted these are great guys/gals who are always there when everything is coming unglued, but aren’t they just plundering their friends and neighbors at this point? How long can they expect this gig to last? Is it worth bankrupting good old SB?
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» on 02.10.10 @ 07:59 AM
The entire government is more like royalty, and we the taxpayers have had to suffer with it too long. Start by eliminating bonuses and going back to govenment without unions. There was a high level of job security before the unions came along and should continue to be.
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» on 02.10.10 @ 08:23 AM
The Pension plan is more like a Pyramid Marketing Scheme that can’t be maintained. Really….are we the taxpayer expected to pay 95% of these peoples salaries from retirement to death? This can’t be sustained! It’s ridiculous. Maybe we should get rid of Unions and re-instate 401K plans for these people so they will be taken care of. It’s a false sense of hope to believe that a pension plan will take care of you. Anything can and will be cut if the budget is not met.
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» on 02.10.10 @ 08:29 AM
Are any of the readers surprised? This has been the ongoing game for decades. It used to be government employees earned 10% less then private sector. It was the trade-off for having pay and job security based on government vs. the private sector.
The game changer came when the left demanded (not suggested) pay equality even though the retirement and health benefits far outstripped the private sector. It started in the late 1960’s, accelerated in the 1970’s and continued even through the tough times of the ‘70’s ‘80’s recessions. Tax and spend politicians from both side broke the bank in California.
It is time to cut the cord, out source most jobs to private industry to stop benefit hell. (it will take decades to get out from under the avalanche of current benefits)
Look in the mirror, yes you the taxpayer, how much longer can you demand perks and services never conceived 50 years ago? Compassion will not generate money and government cannot continue tax increases. Space does not allow the listing, but you get it. Or do you?
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» on 02.10.10 @ 08:30 AM
Outrageous! Why are salaries and benefits increasing while they are decreasing in the private sector? Answer: Union supported candidates like Das Williams, Susan Jordan, Helene Schneider. We hear so much about big greedy corporations and executive bonuses, but not so much about big greedy government executives and their fat benefit packages and bonuses.
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» on 02.10.10 @ 08:51 AM
Supervisor Janet Wolf gets it. She clearly understands how balance is critical, and I appreciated her comments
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» on 02.10.10 @ 10:40 AM
The days of no phones is over—no more paid to sleep and shop????? Bust the unions in government..They are already civil servants of the PEOPLE..
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» on 02.10.10 @ 11:20 AM
Unions have gone beyond what is right. They were needed years ago to protect employees, but now they have become too powerful and as a result have placed the County in a position where they are forced to cut services for the very people that are paying County salaries.
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» on 02.10.10 @ 11:42 AM
Just another way to kick the can down to road. Changing the amortization schedule to 30 years from 17 years will just give us a few more years until the cost of pensions run us over. Then it will cost us even more because amortization is just an a nice way of saying borrowing money and paying interest.
Pension cost are operational cost and should not be ‘amortized’ over 17 years let alone 30 years. There should have been money put in reserve in the years that the market was doing well—instead it was spent on bonuses.
Now it is time to face the music.
Shameful!
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» on 02.10.10 @ 12:22 PM
A 9% increase in per-employee cost? In a year when the Consumer Price Index declined for the first time in decades? In a year when CA property taxes will FALL due to the decrease in CPI?
The villains here are the SEIU and the cowardly politicians who suck up to them, with Salud Carbajal in the lead.
This is not all that hard. Tell the unions that, barring agreement to reduce salaries, benefits, and pensions, the county will embark on massive layoffs. We’ll just have to do without services. Be glad we don’t have snow here.
OR, declare bankruptcy under Chapter 9 of the federal bankruptcy act, abrogate all union contracts, and renegotiate something we can afford, something more like the non-government worker gets. Who declared the government employee to be some special, coddled, group anyway? ANSWER: the politicians whose votes were bought by the unions.
AND folks, the argument about comparable pay (including benefits) wasn’t valid 40 years ago, and it’s not valid now. The oldest trick in the book is to overclassify a government job and then compare it to the private sector. Like calling a secretary an executive secretary, or an HR clerk an HR counselor.
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» on 02.11.10 @ 12:18 AM
Is it worth bankrupting good old SB? YES!! Let’s reset this beast. Renegotiate the pensions and salaries. Did you notice that it is SEIU this and SEIU that? Amazing how these blood suckers work.
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» on 02.11.10 @ 10:05 AM
“Your agenda has been my agenda”
http://www.youtube.com/watch?v=aQ1NJaCtIkM
time 3:16
This is what you fools voted for, don’t complain.
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» on 02.12.10 @ 10:21 AM
Firefighters 8 hours:
When they are in remote areas and in another town helping out (so we get help when we need it), do they not pay them for sleeping and expect them to donate time? Perhaps when you see them shopping they are on their lunch hour or break…. It would also increase the number of firefighters we would need to hire to cover citizens 24 hours a day which, might include more benefits. Common Sense…..
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» on 02.12.10 @ 09:40 PM
I could cut the firefighter budget in half, and be more efficiant—The gig is up soon—I promise—cut wages and staff—voluteers would step up if needed—oh NO competion also cross train cops—
I know you dont like the truth
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» on 02.13.10 @ 08:36 AM
while those might be the folks the GOP/Andy wants cut, others look to the inflated county execs and asst. execs salary and benefits and fluff
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» on 02.13.10 @ 09:53 PM
The exorbitant salaries and pension plans paid to county employees is totally unsustainable. I propose that wages, pensions and benefits be slashed by 25% for one year, then 15% for the next year, and then by 5% for the following three years. Plus, eliminate all unions from the public sector totally.
We would then have some fiscal sanity in our budget processes and government management and labor costs would be more in line with the private sector costs.
Sincerely,
Clair Beck
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» on 02.14.10 @ 02:37 PM
Get the unions out of Government—The sock puppet leaders take comands from them?
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» on 02.16.10 @ 09:41 PM
how about reducing pension benefits and staff if the county doesn’t have the funds then cut benefits and pensions!
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