Board braces pension fund

Ken Carlson

Apr. 29, 2009 (McClatchy-Tribune Regional News delivered by Newstex) -- Stanislaus County no longer is facing a huge increase in payments to an employee retirement system next fiscal year and that should help in weathering a $34 million budget deficit.

For the fiscal year starting July 1, the county was bracing for a $22.7 million increase in its contribution to the Stanislaus County Employee's Retirement Association, which provides pension benefits for retired employees of the county, the courts, the city of Ceres and five special districts.

But the StanCERA board decided Tuesday to transfer $60 million from a "nonvested" benefits reserve to substantially lower the county's obligation.

The county will pay less than the $36.3 million it paid into the system for 2008-09. Retired county employees who attended the contentious meeting at the Gallo Center for the Arts said the solution came at their expense.

Rick Robinson, county chief executive officer, had warned that a major increase in its contribution rate would lead to additional layoffs and furloughs for county employees, as well as cuts in public services.

"We are very satisfied with what they have done," Robinson said after leaving the meeting. He estimated the contribution will be 7 percent less than the previous year.

Because of faulty assumptions about retirement patterns and other factors in previous years, the county didn't pay enough into the system and is now expected to pay more to keep the fund solvent.

The StanCERA board, in a 7-2 vote, decided to move $50 million from the nonvested benefits reserve into the nest egg that funds pensions and other benefits stipulated in labor contracts. That will lower the county's contribution rate; an additional $10 million taken from the reserves will help offset the county's cost.

Supporting the action were board members Darin Gharat, Mike Lynch, Mike Fisher, Gordon Ford, Maria De Anda, Ron Martin and Jim DeMartini. Clarence Willmon and Wes Hall were opposed.

StanCERA also will suspend or reduce certain "ad hoc" benefits for retirees (or benefits that were never part of labor agreements). A health care stipend could be suspended as of Jan. 1. In addition, a special cost-of-living increase for the oldest retirees will be suspended this year.

The retirement association may consider alternatives for the health care stipend, which currently gives retirees with 30 years' service $370 a month to buy insurance.

"It is not our intent that this goes away permanently," Gharat said.

Retired employees said they realized some give-and-take was needed to provide relief for the county, but many thought they were doing all the giving.

"I hope the (health stipend) number will be better than zero," said Lyn Bettencourt, a retiree who also urged the board to retain the COLA for people who retired before 1981. "Leave the old folks alone."

Lynch, a county appointee to the board, said the nonvested benefits, which never were guaranteed to employees, needed to be suspended to safeguard the vested pension benefits for years to come.

Dennis Nasrawi was among retirees who charged the association with shirking a responsibility to represent its membership. StanCERA's board consists of four county appointees, two employees elected by miscellaneous members, one elected by public safety members, one chosen by retirees and an ex-officio member.

The county is bracing for another financial blow when experts calculate the damage from huge investment losses in 2008-09. StanCERA's investments lost more than $500 million after the end of 2007. In a report for March, the total value of investments rose $40.2 million but was still almost $400 million less than the previous year.

Robinson said the county will create a reserve to help offset a contribution increase for the 2010-11 fiscal year.

Bee staff writer Ken Carlson can be reached at kcarlson@modbee.com or 578-2321.

Newstex ID: KRTB-0125-34517364