By David P. Grau and Dick Thomson on February 17, 2012
On Feb. 7 we wrote to the Ventura County Board of Supervisors about the effort that is underway on pension reform. We are pleased that elected officials are finally addressing the issue. At the same time, Ventura County Taxpayers Association is concerned we have heard nothing since the board announced it would take a look at reforms nearly a year ago.
Reform is needed to curtail and prevent future abuse in the system. On March 15, 2011 the taxpayers association recommended to the board that it take various steps to ensure the county provides transparent, fair and sustainable retirement benefits for employees. Among those recommendations were four that could be addressed immediately by resolution:
• Exclude employer “pick-up” of the employee’s retirement contribution from compensation earnable, as other ’37 Act counties have already done. (Twenty California counties, including Ventura, operate retirement systems under the provisions of the 1937 Act, which allows them to create their own retirement systems independent of CALPERS).
• Restrict elected officials to the standard 401(k) with a county match not to exceed 3 percent.
• Restrict annual leave redemption for all management, confidential clerical and other unrepresented employees.
• Delete Section 612, entitled “Education Incentive Pay” of the Management Resolution for management, confidential clerical and other unrepresented employees.
The board responded to one of our recommendations: The restriction of the annual leave redemption. Rather than attempting to deal with the problem of top managers using the vacation benefit system to spike compensation and pensions, the board suggested a policy change that “suspended vacation buy-backs for new managers, pending modifications” — saving taxpayers nothing.
In January 2012, as part of our continuing inquiry into the pension system, the taxpayers association discovered Ventura County is the only ’37 Act county that continues to include the employer “pick-up” in pension calculations.
The county also applies a 133 percent “gross-up” to the amount picked-up, further inflating employee pensions. San Bernardino has a partial inclusion for some employees, but Los Angeles, San Diego, Orange, Santa Barbara, Sacramento and the other 13 counties operating under the ’37 Act elected not to include these payments.
Also in January, in an apparent confirmation of our findings, County Executive Officer Mike Powers said that county retirement benefits, when compared to peer jurisdictions, are “high on compensation earnable” due to factors such as “leave redemption and gross-up” calculations.
Both Ventura County and our organization recognize fundamental pension reform is impossible without taking steps to correct the issue of high compensation earnable. The initial step should be the implementation of our four recommendations, starting with management, confidential clerical, other unrepresented employees and elected officials.
We understand most changes for the represented employees need to come through the bargaining process, but if the county does not lead with management it will have no credibility when bargaining with other labor groups.
The time for change is overdue. Ventura County is clearly an outlier in its pension system and taxpayers are bearing the burden. It is not enough to merely create a new level of “reasonable” pensions — which would only apply to new employees — and leave the existing system basically untouched for current employees and elected officials.
The county workforce is made up of dedicated, hard working, productive people and we appreciate their efforts. But we all must realize that the pension system as we now know it has brought unexpected and undeserved benefits and has turned county management into a new privileged class. The only people who can bring sanity back to compensation and pensions are the five elected supervisors.
We sent our letter in expectation of hearing what our elected officials are doing in response to our almost two-year call for pension reform. We have asked for a detailed reply within the next 30 days. Until then, we’ll continue to advocate for sound practices in financing Ventura County’s pension obligations, past, present and future.
• David P. Grau and Dick Thomson are the chairman and president , respectively, of the Ventura County Taxpayers Association.