Ventura County Supervisor John Flynn has proposed that the county use $20 million in surplus funds from its burgeoning employee pension plan to offset anticipated shortfalls in its employee medical plan.
“It’s a responsible financial move,” Flynn said this week. “There’s such a large surplus . . . and if we don’t use this money, the money simply sits there.”
Flynn, a board member of the Ventura County Employees Retirement Assn., says that over the years, prudent investments have swelled the county’s pension fund to $470 million. After paying $18 million in annual benefits and setting aside 5% of the total amount as a hedge, the pension fund still generates a $42-million surplus annually, according to Hall Pittman, county treasurer/tax collector.
Pensions Raised in 1986
The surplus is so large that in 1986, the county took $53 million from it and raised pension pay-outs for each retiree by $110 per month, Flynn said.
Now, Flynn says it’s time to look at other uses for the surplus. In a letter to the retirement association, the supervisor suggested transferring $5 million to the county’s medical plan to pay off its deficit this year. He also proposed that $15 million go toward establishing a reserve fund for future medical plan shortfalls.
If the county doesn’t step in to pay off the medical plan deficit, Flynn said county employees will face a hike in their insurance premiums next year. Jack Anderson, a senior administrative analyst with the county administrative office, says the county is analyzing the rate of increase that would be necessary to balance the fund.
Flynn said his proposal has the support of Public Employees Assn. of Ventura County, the union that represents county employees. No one from the union could be reached for comment Wednesday morning.
Huge Insurance Claims
County officials say medical insurance payments have skyrocketed because of several expensive claims filed by employees this year. One employee’s claim for catastrophic illness approaches $1 million, and several other claims approach $200,000 to $300,000 each, Anderson said.
Flynn’s proposal was received cautiously by Al Harris, chairman of the Ventura County Employees Retirement Assn.
“Right now, I’m reserving opinion until we get independent legal counsel and an actuarial study,” he said.
But Allan Burdick, a Sacramento lobbyist for the County Supervisors Assn. of California, says Flynn’s proposal is not unique.
“As long as they’re using surplus funds, it could be a prudent financial decision to make,” he said.
Harris and Flynn stressed that the proposal is still a tentative one until expert legal and financial advice can be sought.
“There are still a lot of questions about it,” Flynn said.