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Wednesday, January 16 , 2019, 2:21 am | Overcast 54º


Facing Rising Pension Costs, Santa Barbara County Pledges a More Meticulous Budget Process

For their final meeting on the dais, Santa Barbara County Supervisors Salud Carbajal and Doreen Farr received a warm welcome from their colleagues.

Farr, who had represented the Third District for eight years, is retiring, while Carbajal, who has represented the First District for 12 years, is heading off to Washington, D.C. as a freshman congressman.

Despite the good wishes and appreciation, however, the two still had to join the three other members of the Board of Supervisors in confronting a tall and unexpected fiscal hurdle.

The county is adding extra steps to its budget-development process as it prepares to tackle some rather significant fiscal issues looming over the next several years.

The chief issue is mounting pension obligations, costs for which are projected to continue rising over the next five years, county budget director Tom Alvarez told the supervisors at their final 2016 meeting on Tuesday.

Next year, a number of “fiscal issues” will require more funding than is available from discretionary general funds, he said.

County departments must find ways to cut levels of service if no new revenue makes up for the impending budget gaps, Alvarez added.

Behind the pension increases was the October decision by the county Employees’ Retirement System to lower the assumed rate of return by half a percent, which increased the county’s pension contributions. Those contributions now exceed the funds the county had set aside for any anticipated increases.

Paired with the county’s need to make up for shortfalls in the pension fund’s investment earnings, the increase in pension costs is projected to be $10.8 million for the next year and balloon to more than $40 million in five years.

On top of that, in-patient system of care costs for the Department of Behavioral Wellness are projected to be $4.5 million higher and are expected to stay that way for the short term, Alvarez said.

The extra expense, he explained, is due to increases in demand for services, lengths of stays and court-ordered patient placements.

The county is also facing increases in health insurance costs and decreases in gas-tax revenue, an important funding component of the county’s backlog of deferred infrastructure maintenance. Part of that maintenance includes capital improvements needed for the main jail in Santa Barbara.

The largest public works project in county history, the $111 million Northern Branch Jail near Santa Maria, is also on the table.

The recent pension increases could affect the jail’s funding and hiring plans, Alvarez said. The 376-bed facility, which broke ground in October, is expected to open in 2019.

All those issues total about $31 million for next fiscal year, he said.

“We’re not recommending any significant or substantive changes to our (budget-development) policies at this point,” Alvarez added, although a few extra steps are being incorporated into the budget-development process in the coming months.

In January, the county will implement a hiring-review process in which departments must justify filling positions by demonstrating those positions’ operational necessity and how the department can still balance its next budget.

It’s not a hiring freeze, Alvarez said, but a way to ensure that new employees aren’t cut soon after they’re hired.

Right now, he said, departments are going through their budgets for the next fiscal year to determine their own funding gaps, with early indications of service-level reductions expected in March.

“At some point, I think we’re in a new world of having to do some things that we probably are not too comfortable with,” Fifth District Supervisor Steve Lavagnino said. “One of them for me is I think we really need to, when we go through our budget process, really lay out what (funding) is mandated and what isn’t.”

Employee salaries and benefits make up a considerable chunk of the county budget, and the Board or Supervisors approved another handful of new memoranda of understanding with employees’ unions, both on Tuesday and at its previous meeting.

The board also approved a 2 percent raise for County Executive Officer Mona Miyasato, bringing her annual pay up to $249,492.

Miyasato was hired in 2013 at a salary below that of her predecessor, Chandra Wallar.

The new MOUs agreed to this month were with:

Engineers and Technicians Association

The new MOU went into effect Dec. 5 and lasts until June 30, 2019. The previous MOU expired back in July.

Under the new agreement, roughly 120 employees working in various county departments received a 2-percent pay increase on Dec. 5, and will get 3-percent increases in July 2017 and again in 2018.

Service Employees International Union, Local 721

More than 550 county employees, mostly in the Department of Social Services, belong to this union.

The new MOU went into effect Dec. 5 and expires on June 30, 2019. The previous MOU expired back in July.

Members saw a 1.8-percent pay increase on Dec. 5, and will see 3-percent increases in July of 2017 and 2018.

Deputy District Attorneys Association

More than 40 employees of the District Attorney’s Office belong to the association, whose MOU expired Dec. 18.

The new MOU lasts from Dec. 19 to June 30, 2019. After a 2-percent pay increase this month, members will receive jumps of 2.5 percent each of the next two Julys.

Fire Fighters, Local 2046

Over 200 county personnel are represented by Local 2046.

The old MOU expired in March, and the new one is effective from Dec. 19 to Feb. 24, 2019.

Pay raises include 2 percent this month, 2 percent in February, 1 percent next July and 3 percent the following July.

The MOU eliminates retiree medical coverage for new employees, but has a contract reopener not to be triggered before next September regarding issues including a mechanism for employees to prefund post-retirement medical benefits.

Noozhawk staff writer Sam Goldman 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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