STATEMENTS ON PENSION REFORM
Marin County Board of Supervisors & California State Assembly
Steve Kinsey - Incumbent
Supervisor, District 4
Marin County Board of Supervisors
Pension reform is a critical issue facing all public agencies in California. Programs established in the 1970s are no longer sustainable without significant reform. That’s because retirees are living longer, today’s workforce is shrinking, leaving fewer people to contribute to pension funds, and statewide benefits added over time have not been fully funded. Also, just like many individual taxpayer’s retirement portfolios hit hard by the worst recession in our lifetime, the County’s liability grew by about $180M due to market losses.
The Marin County Board of Supervisors has been aware of our pension challenge for some time and has been working directly with our unions and State legislators to make changes to keep our public agencies financially sustainable over time without undermining important public services.
Since 2009, our Board has negotiated changes in our pension program that will save taxpayers hundreds of millions of dollars going forward. We increased the eligible retirement age for non-safety employees to 61-1/4, over 6 years later than any other agency in Marin. We reduced the salary percentage used in our retirement formulas by 20%. We capped annual Cost of Living adjustments at a maximum of 2% annually and changed employee contribution terms to require a 50-50 split of any future enhancements. These changes all benefit the taxpayer, but there is more to do, and under California law, we need legislation to complete our re-structuring.
That’s why Marin County has endorsed the Governor’s Pension Reform plan, drawing praise from Marin IJ commentator, Dick Spotswood,
“Kudos to Marin supervisors for supporting Gov. Jerry Brown's 12-point public employee pension reforms. Unfortunately, Marin is the only one of California's 58 counties to do so. Sonoma and the others need to stop making excuses and join Marin in being part of the solution.” Dick Spotswood, Marin IJ May 5, 2012,
The key change we are seeking is legislation allowing Marin County to create what is called a “Hybrid Plan”. A Hybrid plan would insure that all workers are guaranteed a minimum pension amount. (Marin’s workforce doesn’t contribute to or receive Social Security). Higher paid employees would be eligible to receive an annual contribution above the minimum, but it would only if adequate funds were available to pay for it. A cap on total pension would be in place to prevent the substantial amounts that the highest earners receive today.
We are not waiting for the State Legislature to enact the new laws we need to implement a Hybrid program. We have authorized an actuarial study that will inform both workers and management on how to structure fair, affordable pension reform. If the legislature fails to make the changes statewide, Marin will be in a position to immediately seek special legislation that lets us continue to lead the way. That’s why we were praised in IJ cartoonist George Russell’s Saturday, May 4th, contribution, shown here. While Marin County’s pension problem is real, and future liabilities remain large, the changes we have already made will add up to substantial savings over time.
To illustrate how meaningful Marin’s existing changes are, I will provide an example, using two persons starting work today at age 25. One starts work in Corte Madera, under its existing pension program, while the other begins working at the County under its existing program. They both begin their careers at a salary of $80,000. They each receive identical pay increases averaging 2% annually for the next thirty years. Then, at age 55, they each retire.
The annual pension for the Corte Madera worker will be $106,551.
The annual pension for the County worker’s will be $62,364.
If they both lived another 25 years, with normal cost of living adjustments, the difference in the required pension payout would be $1.41M.
Not only does this example illustrate the significant savings that Marin County’s existing changes will provide taxpayers, it also makes clear that Statewide adoption of pension changes are necessary to prevent agencies that do the right thing from being penalized because the best qualified workers go elsewhere to reap superior post-employment benefits.
I will continue to lead our Board’s efforts to finish the job on Pension Reform. I led efforts that resulted in a Labor-Management Council that is bringing all sides to the table on this issue. I supported the Governor’s Plan from its introduction and have encouraged our Board to be outspoken with our fellow counties and with state legislators.
Katie Rice - Incumbent
Supervisor, District 2
Marin County Board of Supervisors
Obviously, anyone concerned about the fiscal health of Marin County must focus on the issue of the County’s pension obligation and liabilities and actively attend to reform of what is clearly an unsustainable pension and retiree health system.
I understand the deep frustration many taxpayers feel regarding the current system, particularly when they confront their own diminished retirement hopes.
That said, California law, as upheld through State Supreme Court decision- protects vested rights, meaning that we cannot take back from employees/retirees what has been promised historically. Going forward, we need a future workforce that is economically viable and invested in the success of the County.
With our hands tied per the past, what we can do is move forward to create a system that is fair, sustainable and developed through the active participation of all stakeholder groups, -- the public, labor groups, and management.
The Board of Supervisors has taken significant steps already to tackle the problem head on:
- We have negotiated lower cost pension tiers with a number of our employee groups and continue to do so.
- We have reduced the risk of “spiking” by enacting a formula of three year averaging upon which pension benefits are based.
- We are creating an OPEB trust for fiscal year 2012-13 that will reduce the long-term liabilities for employee health costs. And I have personally been advocating for additional contributions to this trust with available one-time funds to accelerate this debt reduction.
- In parallel with supporting adoption of pension reform measures at the state level, The Board of Supervisors has directed staff to move forward with the development of a local hybrid option. This process must be collaborative and include labor groups as well as the public to best assure that the designed product will not only gain necessary legislative approval, but ultimately will be a viable tool at the bargaining table;
- Exploration of options to address “double dipping” that impose limits on post-retirement employment while at the same time accessing pension payments;
- Consideration of a cap on pension/retirement benefit to either a percentage or fixed dollar amount; and,
- Aligning retirement age with social security for non-safety employees.
Michael Allen - Incumbent
California State Assembly
Assemblymember Michael Allen (D-San Rafael), a member of the Conference Committee on Public Employee Pensions, applauded the efforts by Governor Brown to find solutions to the pension issue. During his remarks at the public hearing held in the State Capitol Assemblymember Allen compared the pension reform issue to the battle over water, suggesting that solutions should not be based on a pension funds best performing year.
Marc Levin - Candidate
California State Assembly
While the state legislature finds ways to kick the fiscal can down the road, I've worked with local government leaders to balance budgets and find solutions. I served on the Marin County Council of Mayors and Councilmembers Ad Hoc Pension Reform Committee. This committee brought together best practices to reform local government pensions, which had become a long-term threat to local finances. I took the lead and implemented many of these best practices in San Rafael, where the city enacted a pension reform plan that headed off a fiscal crisis and was fair to city workers. Many of these best practices, including the elimination of pension spiking, are incorporated into Governor Brown's 12 point plan which I support. I will take the same proactive approach to create sustainable pension reform for California in the Assembly.