Napa County Grand Jury • 2007-2008

Retirement Benefits for County of Napa/Alcohol-Drug Prevention Programs for Napa Youth

Published: June 10, 2008 55 pages
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Findings and Recommendations 15 findings

F1
The County of Napa: a. pension benefit for employees is a defined-benefit plan. b. plan for its non-safety employees and the Board of Supervisors is a “2.5% at 55” plan. c. plan for safety employees is a “3% at 50” plan. d. vesting period for County employees is 5 years and for the Board of Supervisors 8 years. e. total cost to Napa County taxpayers to fund employee retirement benefits over the next two years will be $39,377,900. f. BOS monthly salary is currently $7,017, with full medical and dental coverage for themselves and their family. They also enjoy a defined- benefit pension that includes a monthly annuity.
No recommendations for this finding
F2
The City of Napa: a. retirement benefit for its employees (with limited exceptions) is a defined-benefit plan. b. plan for its non-safety employees and the Mayor and Council members is a “2.7% at 55” plan. c. plan for its safety employees is a “3% at 55” plan. d. vesting period for the City of Napa employees is 5 years and for the Mayor and City Council members 8 years. e. current annual cost to provide medical benefits to retired employees is $1,400,000, a more than six-fold increase from $227,240 in 2002. f. estimates it will spend approximately $44,000,000 over the next six years to fund pension benefits, assuming a flat salary increase of 5%.
No recommendations for this finding
F3
OPEB: a. The County of Napa also provides OPEB for its retired employees and elected officials, some for their lifetime. b. The City of Napa also provides OPEB to its retired employees and elected officials, some for their lifetime. 10 c. The costs of OPEB, particularly health insurance have experienced double-digit percentage increases in the past 5 years. d. Early retirement of City and County employees, allowed by the pension plans, obligates the City and County to provide OPEB for a longer period of time until a retiree becomes eligible for Medicare at age 65. e. The unfunded OPEB for the County of Napa is between $37 and $51 million and the City $2.8 million. f. The County has started reducing its unfunded OPEB liability and intends to be fully funded in 14 years.
Related Recommendations (2)
R2
The City of Napa and County of Napa each adopt a resolution stating that it will participate in talks regarding health care reform. 11
R4
Both the City of Napa and Napa County review the time period of the OPEB coverage to determine if it could be reduced, e.g. by adjusting the retirement age percent formulas to reflect a 2.5% at 62 instead of age 55 for miscellaneous employees, or to reflect 3% at 55 instead of age 50 for safety employees, the OPEB liability could be significantly reduced. REQUEST FOR RESPONSES 2007-2008 Napa County Grand jury requests responses from: • County Executive Officer • Napa County Auditor-Controller • Napa County Board of Supervisors • City Council of Napa • Mayor of the City of Napa • City of Napa Finance Director
F4
Pensions: a. The costs to both the City and County for pension benefits are rising so rapidly that they can adversely impact the provision of other governmental services. b. The unfunded liability by the County of Napa for pension benefits is $52.5 million. c. The unfunded liability by the City of Napa for pension benefits is $49.3 million.
Related Recommendations (1)
R4
Both the City of Napa and Napa County review the time period of the OPEB coverage to determine if it could be reduced, e.g. by adjusting the retirement age percent formulas to reflect a 2.5% at 62 instead of age 55 for miscellaneous employees, or to reflect 3% at 55 instead of age 50 for safety employees, the OPEB liability could be significantly reduced. REQUEST FOR RESPONSES 2007-2008 Napa County Grand jury requests responses from: • County Executive Officer • Napa County Auditor-Controller • Napa County Board of Supervisors • City Council of Napa • Mayor of the City of Napa • City of Napa Finance Director
F5
The City needs to budget more funds to more rapidly reduce its unfunded pension liability.
No recommendations for this finding
F6
The consequences of the failure to manage these unfunded liabilities can result in tax increases, reduced services and impaired borrowing ability.
No recommendations for this finding
F7
GASB 45 government agencies providing retiree health care and other non-pension retirement benefits must disclose the future and accrued cost of those benefits to the public within the next four years.
No recommendations for this finding
F8
Government agencies pay more of their compensation in the form of benefits than in the private business sector.
No recommendations for this finding
F9
Government entities do not need to provide these high levels of pension benefits to attract and retain employees.
Related Recommendations (1)
R1
A shift to defined-contribution plans for all new employees of the City and the County be considered as a priority.
F10
Having the Board of Supervisors and the City Council negotiate or approve wages and benefits on behalf of themselves, although legally permissible, is a classic conflict of interest.
Related Recommendations (1)
R3
A commission or task force be established to recommend and/or to vote on any wage, pension or OPEB for the BOS or City Council.
F11
Private sector defined-benefit pensions are a thing of the past, retiree health care is virtually non-existent and wages, on average, are no greater than their public sector counter-parts.
No recommendations for this finding
F12
The average age at which current City of Napa employees retire is 57 years for miscellaneous employees and 52 for safety employees.
No recommendations for this finding
F13
The average age at which current Napa County employees retire is 62 for miscellaneous employees and 57 for safety employees.
No recommendations for this finding
F14
A defined-contribution plan allows the plan to define the level of contribution the employer and the employee will make.
No recommendations for this finding
F15
A defined-contribution plan provides advantages to the employees and reduces the cost of retirement benefits over time.
Related Recommendations (1)
R1
A shift to defined-contribution plans for all new employees of the City and the County be considered as a priority.

Commendations 1

No Responses Found 4

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

Napa City
Napa County County
Napa County Auditor-Controller Elected County Office
Napa County Board of Supervisors Elected County Office