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Friday, January 18 , 2019, 12:00 am | Fair 51º


Payouts to Outpace Contributions to County Pension System, Supervisors Told

Santa Barbara County's Employee Retirement System has almost as many retired people in the system as it does contributing members, according to a presentation given by a SBCERS official on Tuesday.

The Santa Barbara County Board of Supervisors heard the presentation and voted unanimously to receive the info, which updated supervisors about where the fund currently stands.

The system, which has a total fund value of $2.5 billion, has about 9,271 participants, and Gregory Levin, CEO of SBCERS and a CPA, said the system "has become mature."

In 1994, the system had 2.2 active members paying into the system for each retired person. In 2014, that number was 1.1 active members for every retired person.

"The payout of benefits is going to be larger than the contributions," he said.

Levin said that when he's out in the community, one of the most common misconceptions is that the board of retirement makes decisions about what to pay out to the employees.

The county sets the level of benefits afforded to employees, not the board of retirement, Levin said.

The board has 11 members, nine who vote and two alternates. Four are regularly elected, and the two alternates are elected by the members. Four members are appointed by the supervisors, and the county treasurer also serves on the board.

Benefits to safety members have grown and the average benefit is about $56,232 annually, and the average general member is about half that, Levin said.

However, many safety members are excluded from Social Security and general members are not, he said.

Over the past 20 years, about 60 percent of the funding has come from investment earnings, 34 percent from employer contributions from and 6.5 percent from member contributions.

In 2008, the 3 percent at 50 provision came in, which allows safety employees to start receiving retirement at age 50, which they will collect for the remainder of their lives, with a maximum of 90 percent of their annual income at retirement.

With the inception of that provision, "this is the first time that the county starts to realize a significant liability," Levin said, and the peak of unfunded liabilities at the height of the financial crisis was at $1 billion.

Since that time, there have been "substantial reform efforts on behalf of the county."

Benefit levels have been reduced to 1990 levels, PEPRA increased the retirement age, and required that final salaries be averaged over the last three years of an employees tenure. Contributions and benefits are also capped.

"We expect over the next 10 years, over half of your actives will be in these PEPRA plans," Levin said, adding that over time, as employees begin paying more of their benefits, it could present significant savings to the county.

Supervisor Steve Lavagnino said he gets asked about the county's pension system "all the time" and would like to have more frequent updates.

Supervisor Salud Carbajal also weighed in, and responded to an earlier comment from public speaker Andy Caldwell, who asked the supervisors to consider of privatization.

Carbajal said privatization comes with its own liabilities, adding that the county has privatized some contracts with private companies before that "yielded bankruptcies and lost our taxpayers significant money."

Noozhawk staff writer Lara Cooper can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.

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