Ventura County officials agreed Friday to cut as much as $280 a month from retirees’ pay next year, rather than dip into reserve funds or county coffers for the needed funds.
Faced with tight financial markets and real estate losses in the pension fund, the county Board of Retirement voted 7 to 2 to eliminate the extra pay in the budget year beginning this July.
“We don’t have the money, that’s what it comes down to,” said Harold S. Pittman, the county tax collector and a member of the board.
County officials argued that granting the $5 million in supplemental benefits could force current employees to contribute more toward their retirement or prompt the county to cut jobs and salaries.
Retirees rejected that argument, saying the pension fund has more than $42 million--or 5% of its resources--in reserves that could be tapped. State law only requires that 1% be set aside.
Retirees and current workers both supported a plan to reduce the reserve fund to 4%, providing as much as $8 million to pay the supplement benefits.
“The fund is extremely healthy, there is no reason this could not be approved by your board,” said Catherine Johnston of the Ventura County Retired Employers Assn.
Johnston argued that the pension plan can afford the reduction better than the retirees. “To eliminate those benefits is going to create a tremendous hardship on those retirees,” she said. “They have come to depend on these benefits for living expenses.”
Board member Chuck Moore, who favored continuing the benefits, presented an actuary’s analysis indicating that one year’s payment would not affect the interest rates or require higher employee contribution rates.
Current county employees said the board should be able to find a way to provide the benefits without raising costs for workers or cutting into retirees’ pay.
“I don’t care how we do it, whether we lower the reserves or whether the county steps up to the plate,” said Barry Hammitt, executive director of the Service Employees International Union, Local 998.
But taxpayer advocates argued that reducing reserves for a onetime payment represents bad financial planning.
The benefits at issue come as supplement pay, funds beyond the pension that county retirees are already due. The retirement board granted one supplement benefit in 1977, giving up to $70 a month to pensioners.
The second benefit, approved in 1990, applies only to employees who retired before that year. That payment, which can climb as high as $210 a month, was intended to make up partly for policy changes that gave the newest retirees significantly higher pension payments.
But the benefits were intended to use up excess funds in the profitable years, argued Supervisor Maria VanderKolk, who is also a member of the retirement board.
“In this past year, we don’t have excess earning, and that’s the crux of this,” she said. Drops in the stock market have reduced the value of the county’s fund, and real estate losses have also affected the value.
“A public retirement plan is not a social program intended to provide supplemental benefit as time and circumstances change,” VanderKolk wrote in a letter to the other supervisors.
Retirees say there is little solace to the pensioners, some of whom rely on the supplemental benefits for 38% of their pay.
“We still come to the bottom-line problem. We’re taking money out of people’s pockets who have come to rely on it,” said Hammitt from the employees union. He urged the board to find a permanent way to fund the supplemental benefits. Board members and retiree representatives agreed to work toward that aim in the year ahead.
Retirees will receive a letter within a few weeks telling them not to expect the supplemental pay.