At its regularly scheduled meeting on Jan. 25, 2011, the Placer County Board of Supervisors will receive a report on the County’s pension plan performance as of June 2009 and related increased County costs for CalPERS retirement contributions. The report, provided by the County Executive Office, covers all county employees enrolled in two separate plans: Miscellaneous and Safety.
The majority of employees and retirees are covered by the Miscellaneous Plan, which covers 5,286 people. The Safety Plan represents 842 participants.
“Placer County, like many other jurisdictions, continues to deal with rising retirement benefit costs,” said County Executive Officer Thomas M. Miller. “However, the Board of Supervisors continues to show fiscal responsibility by making informed decisions on difficult issues, ensuring our economic viability. Hearing regular reports on expenditures, such as CalPERS costs, enable the Board to act proactively.”
One recent action was taken by the Board, effective March 12, 2011. All new county hires will be placed in a new pension tier and receive less generous benefits at retirement. Miscellaneous employees currently receive a benefit of 2.5 percent at age 55. For those hired on or after March 12, 2011, that benefit will be reduced to 2 percent at age 55. Safety Plan employees and retirees currently receive a benefit of 3 percent at age 50. For newly hired Safety Plan employees, the benefit changes to 3 percent at age 55. In addition, for new hires, the retirement benefit will be calculated on a three-year average, rather than the current one year of compensation.
Through other related Board actions since September 2009, that were either imposed or adjusted by labor agreement, 87 percent of the workforce now pays a greater share of their pension obligation. These relatively recent actions require employees represented by either the Placer Public Employees Organization or the Deputy Sheriffs Association (DSA) to contribute more towards their pension costs. Previously, employees represented by the DSA did not contribute to their retirement obligations. Employees represented by the Placer Public Employees Organization paid between 1 percent and 2 percent of their retirement costs. Now, all employees pay between 2 percent and 4 percent.
After March 12, 2011, all new DSA and Management and Confidential hires will pay between 7 percent and 9 percent of their retirement obligation.
The CalPERS investment portfolio saw a 24 percent decline in value in fiscal year (FY) 2008-2009. That loss has been spread over several years and this report reflects the first year where that decline affects retirement costs. In addition, the CalPERS Board adopted the results of an Experience Study which reset the actuarial assumptions used in this report and moving forward. Employers can expect additional increases to pension costs in the next few years in order to recoup investment losses. However, in FY 2009-2010, the CalPERS investment portfolio saw an increase of 13.3 percent.
In FY 2009-2010, the County paid $37.8 million toward pension obligations to CalPERS. For FY 2010-2011, $41.8 million has been budgeted. Next year, the rate for the Safety Plan is 28.139 percent of compensation, up 3.15 percent and the Miscellaneous Plan rate is17.972 percent, an increase is 2.815 percent. In addition, the County pays a portion of the employee contribution between 6 percent and 9 percent depending on the unit designation. As of June 30, 2009 the Safety Plan had an actuarial unfunded liability of $67.8 million (72 percent funded); the Miscellaneous Plan had an unfunded liability of $187.7 million (75 percent funded).