Two years after California leaders approved widespread pension changes, Sacramento County is struggling to persuade its workers to pay higher retirement contributions, one of the signature elements of the state overhaul.
The California Public Employees’ Pension Reform Act gave local governments five years to negotiate higher pension payments before they can impose an increase, within limits.
Almost 6,500 Sacramento County employees – or 62 percent of county staff – have been working without a contract for more than eight months, and the biggest reason is that they don’t want to pay higher contribution rates, according to county labor negotiator Robert Bonner and union leaders.
“In the spirit of the act,” the county is asking employees to pay as much into the pension fund as the county, Bonner said. Pension benefits are paid through investment earnings and contributions by employees and the county.
“We have significant budget issues and debt that we are working through to get us to a solid financial status. While we’re making progress, it is important to manage pension costs while offering employees fair wages,” said Bonner.
The amount county employees now pay depends on their job and experience. In the most common situation, employees contribute 26 percent compared to the county’s 74 percent of the total contribution to the fund. The county wants the contributions to be made 50-50.
For an employee making $50,000 a year, his or her contribution would roughly double from about $2,500 to $5,000 a year.
Marcia Fritz, an advocate for pension changes, has said the higher contribution rate for employees is “without question, the most significant of the governor’s reforms” because of the money it will save governments.
H.D. Palmer, a spokesman for the state Department of Finance, said the higher contribution rate “was a huge priority.” The five-year implementation period was approved because “the governor and the Legislature recognized that the new level could represent a big jump for some employees.”
The state’s Pension Reform Act was approved in response to concerns about growing pension costs at the state and local level. In Sacramento County, pension costs have been growing by tens of millions of dollars annually, up to an estimated $372 million this year.
The county has offered contracts with phased-in cost-of-living and salary increases in exchange for increased pension contributions, Bonner said. Some unions don’t feel pressure to reach an agreement this year because there’s no money for salary increases this year, and existing contracts remain in force until they’re replaced, Bonner said.
For agreements that have been reached, the increased pension payments are phased in, reaching 50 percent by 2018 – the same year the pension reform law gives the county authority to implement higher payments.
The law, however, does not give the county authority to automatically increase employee contributions to match the county’s rate. It allows county governments to impose a 14 percent contribution increase for general members and a 33 percent increase for public safety members.
Ted Somera, executive director of the county’s biggest union, United Public Employees Local No. 1, said the math doesn’t pencil out for his members.
“We’re not objecting to paying more,” he said. “But it’s too much, too soon.”
He said any salary increases would be lost to higher pension payments, which will be particularly hard after employees suffered through the recession without salary increases and more work due to layoffs.
UPE employees recently walked off the job and crowded the Board of Supervisors chambers, and the lobby outside, to protest the county’s contract position. While the employees returned to work the next day, Somera said they have voted to authorize a strike if negotiations fail.
Ten county unions are working without contracts, including the American Federation of State, County and Municipal Employees, Service Employees International Union and the Sacramento County Management Association.
Eight county unions have agreed to contracts that call for employees to match employer contributions by 2018, Bonner said. Three of the unions represent public safety employees, including sheriff’s deputies, who have the county’s most generous pension benefits. County contributions are higher for public safety employees, who can retire earlier and with a higher percentage of their salary than other employees.