Treasurer balks at county pension decision

Deirdre Newman

The Board of Supervisors on Tuesday agreed to raise retirement

benefits for county workers, a decision the county treasurer said

could lead city employees to clamor for the same boost in their

pensions.

In voting 3 to 2, the board agreed to significantly raise

retirement benefits for most of the county’s 17,000 workers. The

decision is retroactive, so these employees will get their retirement

benefits increased using the new formula for the entire time having

served the county, County Treasurer John Moorlach said.

The increase varies depending upon how long employees have worked

for the county and their age at retirement. Workers retiring at 55

who have worked for the county for 30 years will receive 2.7% of

their salary for each year of employment. In the old formula, the

percentage was 1.67%.

The change means workers with a salary of $100,000 will get $81,000 a year starting in July 2005, Moorlach said. Under the old

plan, they would have gotten $50,100, Moorlach added.

“That’s an increase overnight of [about 62%],” said Moorlach, a

Costa Mesa resident.

Union employees also will share a larger portion of healthcare

costs, contribute larger payments into the pension plan and work for

multiple years without salary increases under the three-year deal.

Now that it has passed, Moorlach said he is concerned employees

throughout the county will want to follow suit.

“[Employees] in the local cities are going to say, ‘We work for

the planning department; why don’t we work for the county instead?’”

Moorlach said. “You’re not being competitive, so everyone has to

increase their pension benefits, and that could be really

detrimental, especially if the market doesn’t give the returns that

CalPERS is trying to achieve.”

Moorlach’s premonitions have been correct before. He tried to warn

the county about risky investment strategies before those strategies

caused the county to go belly-up in 1994.

Costa Mesa City Manager Allan Roeder said it’s too early to

project what the effects of this decision might be, but it will

probably have a ripple effect on other public agencies.

“I think it’s very much premature to draw conclusions of what the

effect might be, but I would not be surprised at all, at least in

future negotiations with the representatives for employees with the

city, to point to the county’s system and say, ‘We want that,’”

Roeder said.

Roeder said the decision might force the county to raise salaries

across the board at the end of the contract just to attract new

employees.

“My concern is at the end of the terms of the agreement ...

there’s going to be a great deal of pressure on the board to hike

salaries back up to be competitive with the market,” Roeder said. “I

think that will happen before the three years is up but on an

isolated, position-by-position basis. [The county] may find out that

maybe having this retirement benefit is not a good recruiting tool,

because it will be a very long time before those employees coming in

at entry level will benefit.”

Newport Beach Human Resources Director Diana Axley said public

employees traditionally hope to get their benefits increased, so she

wasn’t sure the board’s decision would have a direct effect on

Newport Beach employees.

* DEIRDRE NEWMAN covers government. She may be reached at (949)

574-4221 or by e-mail at [email protected].