We all agree that current public employee retirement costs are unsustainable without continued reform. Given the economic downturn and changing demographics, the increased costs of post-employment benefits compete with limited public resources for vital services to our residents including health and human services, public safety, parks, roads and transportation. I continue to work on pension reform that is fair to our employees and fiscally responsible to our residents.
Successful Efforts for Reform
The County has taken several steps to control our pension costs, and I am proud of these efforts to reduce costs through meaningful reform, including:
- Enacted reform to base the calculation of pension benefits on a three year average
- Capped annual cost of living adjustments at two percent
- Created a new, lower cost retiree health plan for employees hired in 2008 or later
- Limited growth in existing retiree health plans, reducing the long-term liability for retiree health by $18 million over the past 4 years
- Raised the retirement age with a new Miscellaneous retirement tier of 2% at 61 ¼ (previously 55) negotiated with all Miscellaneous bargaining groups
- Set aside and budgeted for unfunded retiree health liabilities above ‘pay as you go’
- Require employees to pay 50% of the cost for any COLAs and 50% of the cost for enhanced formulas
- Supported the Governor’s 12-Point Pension Reform Plan, as it contained many of the policy options for which we had been advocating to make pensions more sustainable
Closing the Budget Gap
The County is committed to reducing our budget gap, specifically as it relates to employer pension and retiree health costs.
- The Board of Supervisors approved paying down approximately $32 million of our unfunded pension liability in fiscal year 2012-13 to reduce the County’s required pension contribution by an additional $2.4 million - effective FY 2014-15.
- The Board of Supervisors approved paying down retiree health unfunded liability by approximately $14 million in fiscal year 2012-13 to reduce the County’s annual required contribution by an estimated $0.6 million - effective FY 2013-14.
- The County worked with an actuary to reduce our required contribution for retiree health benefits with the recommended establishment of an OPEB (a retiree health trust). In April 2012, the Board of Supervisors approved the creation of a retiree health trust. This action closed the FY 2012-13 projected shortfall, significantly reducing future expenses, and allowed the County to pay for our unfunded retiree health liabilities over a 30 year period.
Providing Financial Transparency
Since the fall of 2013 property tax bills in Marin County include an insert with details about the County's unfunded pension liability and post-employment healthcare liability. At my direction, Finance Director Roy Given worked with Citizens for Sustainable Pension Plans on the details. You can also view this information at the Department of Finance's Debt and Pensions Page.
For more information about County pensions, visit the County Pension Information Page.