Board of Supervisors

R01

The Board of Supervisors should commission an independent study on the merits of replacing the current defined benefit pension plan, for new hires, with a combination of reduced defined benefits and adjusted defined contributions similar to private industry. (C-07) RESPONSE: Do Not Concur There is no need to spend taxpayer resources for an independent study on an issue that the County is very familiar with. We recognize that a defined benefit pension is a very good benefit and the benefit and has worked very well for the County since 1947. The County Board of Supervisors resisted statewide pressure to increase benefits during the time of irrational exuberance in the financial markets that resulted in an overfunded retirement fund. Conversely, cutting pension benefits during a recessionary period not seen since the 1930's may not be the appropriate long term solution to a complex issue. For example, there are limited options to reduce public safety benefits under a new retirement plan and to do so would put the County at a definite disadvantage in recruiting and retaining public safety personnel. In the General Fund, since public safety comprises approximately 60% of the retirement cost there is much less ability to save by assigning a new retirement tier to non public safety employees.

R02

The Board of Supervisors should continue the moratorium on increases in pension benefits formula (C-04) RESPONSE: Concur The Board of Supervisors has not increased benefits when it was the statewide trend and will continue to be a leader this area.

R03

The Board of Supervisors should investigate and, if legal, place a proposition (similar to Orange County “Proposition J") on the next County-wide election ballot to require voter approval for increases in retirement benefits as a long term control of pension costs. (C-06) RESPONSE: Partially Concur The local agencies the Grand Jury refer to as exemplary in the recent voter approval processes have done so after already granting substantial benefit increases. The Ventura County Board of Supervisors has taken a strong position against enhancing retirement benefits and has not required the backstop of requiring voter approval to take this position. Long term, it may be advantageous to look into such a proposal.

R04

The Ventura County Employees’ Retirement Association should retain “Excess Earnings” in the Fund whenever the Fund is less than 90% funded. (C-04, C-05) RESPONSE: Partially Concur BOS and CEO Response to “Ventura County Pension: “An Uncontrollable Cost” We believe .that.all.excess earnings should-be retained in the retirement fund. As stated several times to the VCERA Retirement Board, it is the County’s position that the concept of excess earnings is a legal and accounting anomaly that has no direct correlation to actuarial principles. Although there may be legislative flexibility for the Retirement Board to approve certain non-vested retirement benefits, it is our opinion that the retirement sysiem is a long-term entity that should keep any available earings from good years to make up for deficiencies in bad years. Spending excess funds: in the good years on increased benefits requires additional county contributions to make up for the funds spent from the trust. The effect is to increase the cost to the County taxpayer above and beyond the promised pension benefits and vested rights. Furthermore, it is the County's position that any retirement benefit should be the sole responsibility of the Board of Supervisors.

R05

The Board of Supervisors and the Ventura County. Employees’ Retirement Association should propose state legislation to change the “Excess Earning” provision in the '37 Act, to require that returns from above-target investment performance years must be used to offset investment returns from below-target performance years before considering additional benefits or offsetting contributions. (C-04 C-05) RESPONSE: Partially Concur This does not take legislative action to correct. The Retirement Board is not required to grant additional benefits from excess earnings. The Retirement Board has the ability to eliminate all non-vested suppiemental benefits that they have granted without a change to the ’37 Act. We would support the elimination of those benefits and would support legislation eliminating Retirement Boards’ ability to grant retirement benefits beyond those benefits granted by the Board of Supervisors. THIS PAGE INTENTIONALLY LEFT BLANK VENTURA COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION 1190 South Victoria Avenue, Suite 200 Ventura, CA 93003-6572 (805) 339-4250 + Fax: (805) 339-4269 http://www.ventura.org/vcera August 5, 2009 S. Victoria Avenue, L#3751 Ventura, CA 93009 Re: RESPONSE TO GRAND JURY REPORT TITLED “VENTURA COUNTY PENSION: AN UNCONTROLLABLE COST” Members of the Grand Jury: Attached is the Ventura County Employees’ Retirement Association’s (VCERA’s) response to the Ventura County 2008-2009 Grand Jury’s report titled “Ventura County Pension: An Uncontrollable Cost”. The response states, as required by Penal Code section 933(c), whether the VCERA concurs, concurs in part, or disagrees with the Grand Jury’s findings and also includes the required responses to the Grand Jury’s recommendations R-04 and R-05. In summary, the VCERA’s response includes the following: e Pension costs rose over the decade from historically low levels due to the increase in the County of Ventura’s payroll, the increase in the number of employees earning pension benefits, the adoption of recommended actuarial assumption changes designed to achieve the retirement plan’s long-term funding goals and the swing in investment returns from very favorable levels to the recent negative markets. e Average pension benefits have not increased if measured as a percentage of member final compensation, but have increased over time on an absolute basis due to salary increases. e County of Ventura pension benefit formulas have not changed in thirty years. The Board of Supervisors lowered pension benefits and eliminated cost-of-living benefits for General members in 1979. e Fiscal year 2008/09 investment losses will increase future plan costs. RECEIVED AUG ~ 6 2003 VENTURA COUNTY GRAND JURY RESPONSE TO GRAND JURY REPORT August 5, 2009 e The Board of Retirement’s decisions involving “excess earnings” are held to a fiduciary standard and are determined in the context of the Board of Retirement’s duty of loyalty to all plan participants. e The Board of Retirement believes its fiduciary responsibilities to all plan participants precludes it from pursuing legislative changes to the “excess earnings” provisions of the law on its own or with the County of Ventura. On behalf of VCERA’s Board of Retirement, we thank the 2008-2009 Ventura County Grand Jury for its interest in VCERA’s operations and the opportunity to respond to its report. Sincerely, <= on, _” TRACY TOWNER Chairman — THONIS Retirement Administrator Attachments c. Honorable Kevin J. McGee, Presiding Judge VCERA RESPONSE TO GRAND JURY REPORT Findings: