Retirement Benefit Boost May Only Be the Beginning
Wait for the lawsuits to pour in and roll the dice on the results. Or strike a deal now and ante up millions of dollars to stave them off.
That is the unpleasant choice facing Ventura County’s retirement board today after a state Supreme Court ruling last year dramatically boosted the benefits owed to former county employees.
Due to a landmark suit brought by the Ventura County Deputy Sheriffs Assn., 20 California counties must add certain employee benefits, such as cashed-out vacation time, to base pay when calculating retirement benefits.
In other words, Ventura County and some of its counterparts around the state now have to pay more retirement benefits than they had anticipated when collecting contributions to their retirement systems.
Ventura County alone is on the hook for an estimated $66 million in retirement pay to all active employees and those who retired within the past year, according to a consultant’s report.
And if the court decision is deemed applicable to all 2,861 former county employees now collecting retirement benefits--as some insist it should be--the county could be liable for another $27.6 million.
Moreover, if the county’s Board of Retirement opts to make the court decision retroactive for those who have been collecting benefits during the last three years--as some attorneys are urging--the county would have to pay an extra $5.9 million in lump sum checks, according to the report by actuary Rick Roeder.
The bottom line: All those unfunded costs, when spread out on an annual basis, would cost the county more than $14 million a year--money that would have to come from the county’s budget for other programs, officials said.
But following the tremendous stock market success the county’s retirement fund has enjoyed in recent years--jumping from a little more than $1 billion in 1995 to nearly $1.9 billion today--county Retirement Manager Van Perris thinks the county is more than able to handle the increase.
Because the retirement fund has a surplus, the county this coming fiscal year will need to pay only $300,000 to cover its share of retirement expenses, which typically average more than $18 million annually.
So adding the costs resulting from the court ruling should not hurt too much--until the stock market slows down, Perris said.
“The county is very fortunate that we are in the financial status we are in,” Perris said. “The retirement fund is making money hand over fist right now.”
If a certain lawyer has his way, however, the county could soon experience a reversal of fortune.
Stephen H. Silver, the Santa Monica attorney who won the case for the Deputy Sheriffs Assn., said he is gearing up to file another suit seeking a similar judgment for several other county labor groups. He is also working on similar cases for current and former employees in Los Angeles, Santa Barbara, Orange, San Bernardino and Stanislaus counties.
Silver has already won a Ventura County Superior Court ruling declaring retired Deputy Sheriffs Assn. members eligible for the extra benefits dating back to 1995. But for everyone else, the nine-member Board of Retirement opted to apply the ruling starting at the beginning of this year.
Silver believes that policy makes no sense. He says the county is courting lawsuits from groups looking to get the same deal as the deputies. He would like to negotiate a settlement making the ruling retroactive to 1994 for all retirees.
“If somebody retired 30 years ago, and is still collecting pensions, it is my contention that they should be receiving the increase in the future--and going back three years before the decision,” Silver said.
Hoping to avoid what could be a costly legal battle, Supervisor Frank Schillo, a member of the retirement board, is advocating a “global solution” involving all the affected counties and the lawyers representing the labor groups. He thinks it would be pointless for Ventura County, or any county, to strike a deal with its retirees, only to have it rendered moot by a court ruling.
Schillo pointed out that two decisions by supervisors three years ago--ending the practice of paying retirees bonuses when the fund made a surplus, and issuing pension obligation bonds to cover a $150-million liability in the retirement system and get it back in order--proved wise.
He thinks closing a deal and staying out of court could prove wise as well.
“Instead of waiting for the lawsuits, which are expensive, we need to take the initiative and reach a compromise that everyone can agree with, not just Ventura County, but all the counties,” Schillo said. “There’s probably two attorneys working on this whole thing, so it’s not like we would have to deal with a lot of different people.”
