Contra Costa County Grand Jury
• 2014-2015
A Report by the 2014-2015 Contra Costa County Grand Jury*
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings and Recommendations 7 findings
F1
The County and CCCFPD currently have unfunded accrued pension and OPEB liabilities that exceed $2.6 Billion. The cost to the County and CCCFPD to cover these and additional annual pension and OPEB liabilities require payments in excess of $375 Million each year.
Related Recommendations (1)
R3
Establish a special web page on the County web site where citizens can easily track by means of a pension "dashboard" the costs and size of the County's and CCCFPD's pension obligations and the progress on its plans to reduce their costs.
F2
Pension costs alone now consume over 11% of the combined budgets of the County and CCFPD. These costs have risen from a percentage slightly under 5% in 2000 and now constitute the largest financial challenge facing the County.
Related Recommendations (1)
R3
Establish a special web page on the County web site where citizens can easily track by means of a pension "dashboard" the costs and size of the County's and CCCFPD's pension obligations and the progress on its plans to reduce their costs.
F3
The cost of pension and OPEB obligations are debts that must be paid before the County can allocate available resources to other needs and services. This has contributed to the "crowding out" of other County services, the deferral of needed building maintenance projects, and the postponement of needed system improvements for the County.
Related Recommendations (1)
R3
Establish a special web page on the County web site where citizens can easily track by means of a pension "dashboard" the costs and size of the County's and CCCFPD's pension obligations and the progress on its plans to reduce their costs.
F4
Pension costs are difficult to manage because they vary directly with the investment results obtained by CCCERA on its pension funds. The County and CCCFPD are at risk each year of having to increase pension payments in the event CCCERA does not achieve its 7.25% assumed rate of investment return on the pension fund.
Related Recommendations (1)
R3
Establish a special web page on the County web site where citizens can easily track by means of a pension "dashboard" the costs and size of the County's and CCCFPD's pension obligations and the progress on its plans to reduce their costs.
F5
The County faces competitive pressures in retaining and recruiting a skilled and professional workforce. This limits its ability to seek greater contributions from its employees to the costs of the pension and OPEB obligations because other counties and cities may not seek the same contributions from their employees.
No recommendations for this finding
F6
The County and CCCFPD have a severe handicap in reducing their pension obligations because of a highly inflexible rule under a long-standing California court precedent that the County believes severely limits their ability to negotiate reductions in future, unearned pension benefit rates with their current employees.
Related Recommendations (2)
R1
The County Board of Supervisors and the Board of Directors of CCCFPD should establish a task force to review all options available to reduce the burden of the Contra Costa County 2014-2015 Grand Jury Report 1503 County and CCCFPD's pension obligations, including efforts to bring about a reform in California public pension law. The task force should: Confirm with the County's or CCCERA's actuaries what level of potential
R2
The task force should be formed and be required to report back to the Boards with its recommendations within 90 - 120 days.
F7
The County has not taken steps to challenge or change the California legal rule on changes to future pension benefits for existing employees, whether through the initiative process, clarifying legislation, or friend of the court legal briefs.
Related Recommendations (2)
R1
The County Board of Supervisors and the Board of Directors of CCCFPD should establish a task force to review all options available to reduce the burden of the Contra Costa County 2014-2015 Grand Jury Report 1503 County and CCCFPD's pension obligations, including efforts to bring about a reform in California public pension law. The task force should: Confirm with the County's or CCCERA's actuaries what level of potential
R2
The task force should be formed and be required to report back to the Boards with its recommendations within 90 - 120 days.
Conclusions 3
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CL1The percentage of their combined budget taken up by pension costs alone now exceeds 11%; double what it was in 1999.
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CL2Their outstanding debts for pension and OPEB benefits have reached $2.6 Billion.
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CL3Part of this debt is in the form of pension obligation bonds, which must be repaid according to their terms. The remaining debt must be paid through increased contributions to the pension and OPEB funds or from increased investment earnings on those funds. Increased contributions to the pension and OPEB funds must come either from budget cuts, increased revenues, tax increases or some combination of the three. Budget cuts mean service or salary cutbacks, deferred maintenance and postponed capital improvements, and in extreme cases, hiring freezes or job layoffs. The County has taken important steps to reduce its pension and other retirement expenses, but has not taken an active role in seeking to change the California legal rule that blocks reductions in future, unearned public pension benefits for existing employees. Such a change tied to collective bargaining rights for its employees would be both fair and effective. The change could free up as much as $100 Million a year for the County and CCCFPD through successful negotiations with their employees. A more flexible California law on future pension benefits offers a way forward for the County to bring its pension and other retirement obligations down to manageable size. Without added flexibility under California pension law the County will remain shackled to an enormous cost burden but with only limited tools to relieve the pension stress on its financial resources. The remaining tools available to it, wage freezes or reductions, layoffs or higher taxes, lead to what are heavy burdens on the County, its citizens, and its employees. The County has already seen service and staffing cuts, deferred maintenance and delayed system upgrades that have hurt its citizens, imposed hardships on its employees and impacted the quality of life in the County. While we have seen improved economic conditions since 2009, the challenge of pension costs is simply too large a financial problem to expect a solution through improved economic conditions and higher tax revenues. Delaying a direct attack on the California pension law problem risks further years of service cuts, postponements of needed improvement projects for disaster preparedness and other County needs, burdens on employees Contra Costa County 2014-2015 Grand Jury Report 1503 arising from understaffing and less than competitive wage rates, and uncertainties for employee retirement security arising from funding gaps in the pension and OPEB funds.
* This report's PDF did not contain easily extractable text and required Optical Character Recognition (OCR) for analysis. There may be minor errors in the extracted findings and recommendations due to OCR limitations with scanned documents.