Supplemental Benefits Strain Pension Fund

Ventura County’s 6,000 present employees may have to pay higher contributions to their retirement funds in future years if the county’s 2,200 retirees are to continue receiving supplemental benefits, the county tax collector said Tuesday.

The $5-million annual bill for supplemental benefits--which are paid in addition to those due retirees by contract--could also come from the county’s general fund, Tax Collector Harold S. Pittman said.

But given the county’s budget problems, it is unlikely that the Board of Supervisors would approve such a move, he said.

Pittman told county supervisors Tuesday that he opposes a proposal to be considered by the county Board of Retirement on Monday to continue paying the supplemental benefits by tapping the retirement fund’s $42-million reserve account.

Pittman said that taking money from the reserve account would only deplete the retirement fund for present employees.

If the reserve is tapped, employees would have to make higher pension contributions to make up for income lost from the money taken from reserves, Pittman said.

Since 1977, the county has been able to give supplemental benefits--now amounting to as much as $280 per month for some retirees--because the retirement fund was earning large profits on its stock, bond and real estate investments. The supplemental benefits were sort of a bonus in addition to the benefits provided by the employees’ contributions to the pension fund.

But with the recent downturn in the markets, the Board of Retirement has no extra funds to pay the supplemental benefits, Pittman said. The Board of Retirement would have to take capital from reserves to pay the benefits this year.

But Pittman acknowledged that it would be difficult for retirees to accept smaller pensions.

“It’s a very emotional issue for these people,” he said. “People out there have grown to depend on the supplemental benefits. But I don’t think it’s my responsibility to approve benefits to the detriment of current employees and the county general fund.”

Pittman told supervisors Tuesday that they should decide the matter and not leave it to a nine-member board of appointed and employee-elected representatives who govern the retirement fund. The supervisors decided to put the matter on the agenda in two weeks to discuss a possible policy change.

Supervisors Chairwoman Vicky Howard said the downturn in the markets was bound to happen.

“We’ve been riding the upsurge for a number of years and this is the inevitable shakeout,” she said. “But part of our fiscally conservative approach is to keep that 5% (reserve) to protect present employees and retirees.”

Supervisor Maria VanderKolk, who sits on the Board of Retirement as the supervisors’ representative, said she also objects to paying the supplemental benefits this year.

“We expect a large number of retirees coming to complain on Monday about how difficult it is to deal with what could amount to a couple hundred dollars a month less,” she said. “But we just don’t have the money.”

Retirement board member John Crossan, president of National Benefit Services, a pension administration and asset management company in Westlake, said he plans to take both viewpoints into account when he votes on the matter Monday.

“We understand the retirees’ position and we would certainly like to help them in any way we can,” he said. “We’d love to do it. But we have to look at our fiduciary responsibilities to the whole fund.”

Pittman added that despite the possible loss of some reserve funds, the retirement fund overall is financially healthy, with holdings worth $896 million, including the reserve. He said that by law, the retirement fund is required to keep only a 1% reserve. But the reserves were bumped up seven years ago when investment returns were extremely good.

“If it was a good idea to have 5% in times of plenty, why would we want to reduce it during a time when we’re losing money?” he asked.