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Supervisors Formalize New Employee Retirement Benefits

January 11, 2011

The Placer County Board of Supervisors, at its regularly scheduled day approved changes to retirement benefit formulas for employees. The Board OK'd two items: a resolution and an ordinance that amend contracts with the California Public Employees Retirement System (CalPERS). The actions by the Board are part of a specifically proscribed process to implement changes to contracts between the County and two employee organizations.

The changes will apply only to new hires and will include establishment of new formulas for retirement benefits and implementation of a new way to determine retirement compensation.

The changes to the contracts specifically would:

  • Change the retirement benefits for most future employees from 2.5 percent at age 55 to 2 percent at age 55;
  • Change the retirement formula for future public safety hires from 3 percent at age 50 to 3 percent at age 55;
  • Require that future retirement allowances for all new hires be based on a three-year average, rather than the current one-year standard; and
  • Require all new safety, management and confidential employees pay 100 percent of the employee share of the retirement contribution.

The new formulas would cover employees hired after March 12, 2011, or employees who change their retirement classification after that date. The Board took action in September and November of last year to approve the new formulas. Today’s actions are part of the process to codify those changes.

“This is one example of several necessary actions that need to be taken to achieve fiscal sustainability,” said Supervisor Robert Weygandt, who will be the new Board Chairman in 2011. “These are the kind of structural changes that will allow the county budget to work now and to work 20 years from now.”

In the past, the county agreed to pick up increasing percentages of employee pension contributions to CalPERS for current employees. However, in changing financial times with increasing CalPERS payments, the County can no longer continue that level of contribution.

“These are some of the difficult changes that the Board of Supervisors has had to make over the past few years to ensure the financial stability of Placer County,” said outgoing Board Chairman Kirk Uhler. “While neighboring jurisdictions have had to make wholesale cuts in staff and services, we have largely avoided these measures.”

CalPERS rules require that local agencies adopt a Resolution of Intention a minimum of 20 days before adopting an ordinance that changes a CalPERS contract. The anticipated action at Tuesday’s meeting will constitute the first reading of the ordinance. The second reading is tentatively scheduled for the Supervisors’ Feb. 8, 2011 meeting, with the ordinance taking effect on March 12, 2011.

Adopting the two-tier system is a financial measure that will reduce long-term pension liabilities and costs. Placer County instituted a hiring freeze in 2007, and as a result, has hired very few new employees into county service. The hiring freeze, combined with normal attrition, has resulted in a reduction in the County-wide work force of almost 300 full time employees. This, and other actions such as the judicious use of reserves by the Board of Supervisors, have sustained basic County Services with total layoffs over a three-year period of less than 15 individuals.

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