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Who should pay? 

A fight is brewing over pension contributions by county employees

click to enlarge GROUND ZERO :  The county’s ailing pension trust is headquartered in an unprepossessing building on Mill Street. - PHOTO BY STEVE E. MILLER
  • PHOTO BY STEVE E. MILLER
  • GROUND ZERO : The county’s ailing pension trust is headquartered in an unprepossessing building on Mill Street.

Brutalized by a merciless stock market, the pension fund for SLO County employees has lost hundreds of millions of dollars: The question of who should make up for those losses is in dispute. On one side sits the Deputy County Counsels’ Association—a small union representing some of the county government’s lawyers, which is threatening to file a lawsuit—and on the other sits the pension’s administrators, the county government, and most of the county’s employee unions. The conflict centers on employee contribution rates, especially those of the deputy sheriffs, which haven’t increased to help cover the trust’s shortfall —while those of most other county employees have. The county board of supervisors imposed a rate increase on the deputy counsels, who have been operating without protection of a contract.

Last month, the pension actuary (the statistical expert who keeps track of how the fund is doing) recommended the county raise its contribution to the fund from around 20.5 percent to more than 22.5 percent to help pay for a $304 million unfunded liability. That’s the amount needed to bring the fund into the black. And the actuary warns there are signs more increases will be needed.

Ann Duggan, vice president of the Deputy County Counsels’ Association, submitted a letter to the Pension Trust Board on Aug. 24 outlining the union’s position. The union blames the county for most of the trust’s unfunded loss and asserts employees have been unfairly forced to pay for chronic pension under-funding by the county. The letter states they believe the actuary should guide increases in employee contribution rates, just as the actuary does for the county.

The deputy county counsels also maintain it’s unfair that, “for the first time in the history of the Plan, members with exactly the same benefits, same entry age. are now paying different rates into the Plan.” County employees in different professions have been paying widely disparate increases in contribution rates.

Perhaps most damning is the deputy counsels’ claim that the county costs are less and the employee’s costs are more than if the county were using CalPERS (California Public Employees’ Retirement System) to cover workers’ retirements. San Luis Obispo is among the very few counties in California that operate their own pension program.

County employees pay at many different rates into the fund depending upon their job category, as negotiated by some 29 separate bargaining units representing them. The county also contributes to the trust at rates depending on the job of each worker. Exactly how much for each job is determined during labor contract negotiations.

The county increased its contribution rates and even sponsored a bond to top off the fund in 2003. Moreover, two years ago it raised the contribution rates for most county employees as their individual union contracts expired, to try to fully fund the pension. And one union voluntarily raised its contribution rate though its contract hadn’t expired.

But the Deputy Sheriffs’ Association, which represents 283 County law enforcement agents, has refused to pay a higher rate. Their contract would have expired at the end of 2009 but a one-year extension was negotiated under the auspices of former Deputy County Administrator Gail Wilcox, which the board of supervisors approved 4 to 1 on Feb. 3. The extension insulated the deputies from paying hundreds of thousands of dollars in additional pension contributions. Wilcox was fired in the wake of a sexual relationship with the former Deputy Sheriffs’ Association leader Tony Perry, who resigned his union position after the affair was revealed.

Deputy sheriffs enjoy far better benefits than most other county employees. Sworn safety officers can retire at age 50 with up to 90 percent of their pay, but most other employees must wait until at least age 55 and then receive a much lower percentage. A safety officer gets half-pay if disabled in the line of duty; other employees get no more than a third. Almost one in four deputy sheriff beneficiaries are on disability, but only about five percent of other county workers receiving benefits are on disability.

Deputy Sheriffs say they earn those benefits and pay a higher rate into the fund than most other employees. Safety officers and county officials say the benefits are comparable to what other police officers are getting in other counties.

Though these issues have been brewing for several years and could significantly alter the pension payments of thousands of county employees, none of the parties involved would speak on the record. The Deputy County Counsels’ union would not comment, and no one at Pension Trust would comment, saying it would be unwise to speak on a subject that may soon be under litigation.

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