San Mateo County Grand Jury • 2011-2012

Controlling the County’s Escalating Retirement Costs Issue | Background | Findings | Conclusions | Recommendations |

Published: May 22, 2012 18 pages
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Note: Missing finding numbers detected: F18, F19, F20, F21, F22, F23, F24, F25, F26, F27, F28, F29, F30, F31, F32, F33, F34, F35, F36, F37, F38, F39, F40, F41, F42, F43, F44, F45, F46, F47, F48, F49, F50, F51, F52, F53, F54, F55, F56, F57, F58, F59, F60, F61, F62, F63, F64, F65, F66, F67, F68, F69, F70, F71, F72, F73, F74, F75, F76, F77, F78, F79, F80, F81, F82, F83, F84, F85, F86, F87, F88, F89, F90, F91, F92, F93, F94, F95, F96, F97, F98, F99, F100, F101, F102, F103, F104, F105, F106, F107, F108, F109, F110, F111, F112, F113, F114, F115, F116, F117, F118, F119, F120, F121, F122, F123, F124, F125, F126, F127, F128, F129, F130, F131, F132, F133, F134, F135, F136, F137, F138, F139, F140, F141, F142, F143, F144, F145, F146, F147, F148, F149, F150, F151, F152, F153, F154, F155, F156, F157, F158, F159, F160, F161, F162, F163, F164, F165, F166, F167, F168, F169, F170, F171, F172, F173, F174, F175, F176, F177, F178, F179, F180, F181, F182, F183, F184, F185, F186, F187, F188, F189, F190, 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Findings and Recommendations 18 findings

F1
The San Mateo County Civil Grand Jury finds that: All permanent San Mateo County employees are members of the San Mateo County Employees’ Retirement Association (SamCERA).
No recommendations for this finding
F2
The San Mateo County Civil Grand Jury finds that: SamCERA was created in 1944 and is governed by the provisions of the County Employees’ Retirement Law of 1937 as amended over the years.
No recommendations for this finding
F3
The San Mateo County Civil Grand Jury finds that: SamCERA operates 10 different retirement plans. Within each plan there are multiple tiers based on a member’s bargaining unit and date of hire. Each tier has different employee contribution and cost sharing requirements. These have been negotiated with the County’s nine employee unions.
No recommendations for this finding
F4
The San Mateo County Civil Grand Jury finds that: As of June 30, 2011, SamCERA had an unfunded liability of approximately $842 million. As of that same date, SamCERA was estimated to be 74.1% funded.
No recommendations for this finding
F5
The San Mateo County Civil Grand Jury finds that: On May 22, 2012, SamCERA lowered the assumed annual rate of return for its invested assets from 7.75% to 7.5%, effective July 1, 2013.
No recommendations for this finding
F6
The San Mateo County Civil Grand Jury finds that: County contributions to SamCERA have been increasing per Table 2. In fiscal year 2005-06, the County contributed a total of $78 million to SamCERA. In fiscal year 2006- 07 there was a $22 million increase in the County contributions. In fiscal year 2010-11, County employer contributions jumped by $45 million to $150 million.
No recommendations for this finding
F7
The San Mateo County Civil Grand Jury finds that: For fiscal year 2013-14, the Grand Jury estimates that the required County contribution will increase again by approximately $13 million (assuming $435 million in salaries) unless salaries and/or number of employees are reduced, or other solutions are found.
Related Recommendations (1)
R1
Develop and adhere to a specific budget strategy to lower County retirement contributions to SamCERA and restructure benefits by: a. significantly decreasing the number of County employees through outsourcing and/or reducing services, and by attrition; b. negotiating the elimination of the employer pickup and “right-sizing” future benefits with the unions without increasing salaries; and c. studying the possibility of withdrawing from Social Security.
F8
The San Mateo County Civil Grand Jury finds that: Factors determining County contribution levels include past and future investment returns and losses on SamCERA’s investment assets, salary levels, employer pickups, the total number of County employees, union agreements, and limits imposed by State statutes.
No recommendations for this finding
F9
The San Mateo County Civil Grand Jury finds that: For 2010, per Table 3, the County paid 78% of the combined employer-employee share of contributions to SamCERA.
No recommendations for this finding
F10
The San Mateo County Civil Grand Jury finds that: Pensions are partly based on salaries. However, salary increases do not account for the near doubling in pension costs since 2006. In fiscal year 2010-11, the average annual salary for non-safety employees in San Mateo County was $79,189 (not including public 9 safety or probation officers salaries). If public safety and probation officers are included, the average annual salary was $82,464. 26
No recommendations for this finding
F11
The San Mateo County Civil Grand Jury finds that: In addition to pension benefits, all pensioners except retired safety members receive Social Security. The County pays the employer portion of Social Security, which adds 6% of payroll expense to the budget.
Related Recommendations (1)
R1
Develop and adhere to a specific budget strategy to lower County retirement contributions to SamCERA and restructure benefits by: a. significantly decreasing the number of County employees through outsourcing and/or reducing services, and by attrition; b. negotiating the elimination of the employer pickup and “right-sizing” future benefits with the unions without increasing salaries; and c. studying the possibility of withdrawing from Social Security.
F12
The San Mateo County Civil Grand Jury finds that: The County currently pays 61 cents on every dollar of salary (or 61% of salary) earned by current employees for fringe benefits including retirement benefits, per Table 5. These benefits are projected to gradually increase starting in July 2013, and for nine years thereafter, to 68 cents per dollar of payroll for County employees.
Related Recommendations (1)
R1
Develop and adhere to a specific budget strategy to lower County retirement contributions to SamCERA and restructure benefits by: a. significantly decreasing the number of County employees through outsourcing and/or reducing services, and by attrition; b. negotiating the elimination of the employer pickup and “right-sizing” future benefits with the unions without increasing salaries; and c. studying the possibility of withdrawing from Social Security.
F13
The San Mateo County Civil Grand Jury finds that: The number of active members of SamCERA (i.e., active County employees) has been decreasing since 2009, per Table 6. In 2011, the County Manager told the Board of Supervisors that a $5.3 million reduction in retirement contributions could be achieved if 208 positions were eliminated. (The full reduction was not realized because some jobs were restored.)
No recommendations for this finding
F14
The San Mateo County Civil Grand Jury finds that: A reduction in pension costs to the County has been achieved by obtaining union concessions, by reducing the employer pickup for management and other unrepresented groups, by continuing to introduce new less-costly plans for new employees (which will be realized in future years), and most significantly by reducing the number of County employees.
No recommendations for this finding
F15
The San Mateo County Civil Grand Jury finds that: Many counties that have pension systems governed by the 1937 Act do not participate in Social Security.
No recommendations for this finding
F16
The San Mateo County Civil Grand Jury finds that: Information on Social Security payments and employer pickups is not readily available from the County or on the County website, nor are recent meeting minutes available on the SamCERA website.
Related Recommendations (1)
R3
Make County and SamCERA information more easily accessible to the public, including the amount of employer pickups, the payments to Social Security, and the past and projected County (employer) and employee annual contributions to SamCERA. 11
F17
The San Mateo County Civil Grand Jury finds that: The State Legislature would likely have to amend state statutes in order to allow the County to make changes to current employee pension contracts going forward (without affecting pensions already earned). Conclusions The San Mateo Civil Grand Jury concludes that:
Related Recommendations (1)
R2
Actively support State pension reform that would allow for changes to future retirement benefits for current employees (without effecting pensions already earned).
F2009 Page 7
Table 6 Number of Active County Employees Year 2007 2008 2009 2010 2011 Total 5,514 5,475 5,524 5,327 5,227* members *Projected. Referring to Table 2 above, one can see that the recent decrease in the number of employees has resulted in an approximate $4 million dollar decrease in the County’s required retirement contribution in 2012. Additional employee reductions will come from ending the County’s operation of the Burlingame Long-Term Care Facility. See Footnote 7, Appendix, throughout 21 SamCERA valuation preview, May 22, 2012, p. 12. 22 http://www.co.sanmateo.ca.us/bos.dir/BosAgendas/agendas2011/Agenda20110621/20110621_m_10.html 23 http://www.co.sanmateo.ca.us/Attachments/cmo/pdfs/Budget%20&%20Performance/SeptemberRevisions_ 2011.pdf, 24 http://www.samcera.org/pdf/2011CAFR.pdf, p.111 7 Toward Pension-Cost Reductions The Grand Jury learned during its investigation that the County has done the following to reduce pension costs: 1. Obtained concessions from some unions during contract negotiations for their members to pay a larger portion of the employee contribution to SamCERA. For example, the California Nurses Association agreed that their members would forego 25% of the cost- of-living-adjustment increases, post retirement.
No recommendations for this finding

Conclusions 5

No Responses Found 3

Government entities assigned to respond to this report. No response documents have been linked in our database.

County of San Mateo Agency
San Mateo County Board of Supervisors Elected County Office
San Mateo County Office of Education Agency