Most retired members of the Stanislaus County Retirement Association get cost-of-living adjustments up to 3 percent a year, helping those with modest pensions to make ends meet.
But the annual COLA is making generous pensions even more lucrative for the top pensioners. Records released last week by StanCERA after a public records request by The Bee show that the adjustments are compounded annually, causing pensions to increase steadily over time.
For example, former Sheriff Les Weidman's pension has grown from $184,570 to $202,290 since he retired in 2005. The COLA has boosted the pension of former county Chief Executive Officer Reagan Wilson from $150,350 to $169,700, a 13 percent climb, since his departure in late 2003.
Jim Trevena, a former sheriff who retired with an annual pension of $70,000 in 1991, now gets $127,500.
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County retirement systems in California usually provide a COLA that compounds annually, while there are fewer and fewer private-sector employers who provide traditional pensions.
A 3 percent increase in a single year would cost the StanCERA system more than $2 million. The COLAs are granted almost every year and are tied to changes in the consumer price index. The majority of StanCERA members will receive the adjustments again this year, even though the inflation indicator is flat for 2009.
The agency oversees a $1 billion investment portfolio to pay pension benefits for employees of the county, Ceres, the courts and certain special districts.
"They are automatic, regardless of the CPI change," said Marcia Fritz, vice president of the Coalition For Fiscal Responsibility, a watchdog group that tracks the public pension system in California. "This year, Social Security and military retirements aren't going up — why should state and local pensions?"
County leaders started giving the COLAs to employees in 1969 to keep their retirement pay from being eroded by the steep inflation of that time. The adjustments for public service employees are allowed for in state law.
The annual adjustments are capped at 3 percent, but if the change in the CPI is more than 3 percent, StanCERA members can bank the extra percentage to supplement future COLA benefits. Thus, they can receive increases when there is no change to the CPI or when it goes down.
A StanCERA member said the COLA is important for retirees who have modest pensions and will lose a health care stipend next year. About two-thirds of StanCERA's 2,800 retirees get $2,500 or less per month.
"The rest of us are trying to survive," said Darlene Connelly, who worked 19 years as a courtroom clerk. "Most of the people I know are looking to see what expenses they can cut so they can make it."
Stanislaus County expects to pay $36.36 million into the retirement system this fiscal year. Its costs are expected to rise as more employees exercise retirement options and StanCERA deals with the past mistakes of actuaries.
The cost burden takes money away from public services, so county leaders are looking to contain the costs.
"For a long time, I have thought that the decisions made in the last 15 years are not sustainable in the long period," Supervisor Jeff Grover said Tuesday. "It is clear that the pensions being paid to local government workers are much larger than what the folks in private industry are getting. We need to bring it more in line with the private industry."
The cost-of-living increases are driving up pensions that were overly generous to begin with, said Jon Coupal, president of the Howard Jarvis Taxpayers Association.
"Certainly these automatic COLAs have been a problem," he said. "The people in the $100,000 club ... do not need these COLAs. Maybe there is a way to bifurcate who gets a COLA and who does not."
The Modesto Irrigation District also provides a COLA, compounded annually, in its basic retirement plan for employees, but the pension benefits cannot exceed the average monthly pay for retirees in their last three years of employment, said spokeswoman Melissa Williams. The increase is based on the CPI change, is capped at 4 percent and won't be given this year.
StanCERA Administrator Tom Watson said retirement benefits cannot be lowered for current employees. Typically, a county wishing to change benefits creates a tier with new benefit levels for newly hired employees.
Local governments have used generous pensions and other benefits as incentives for recruiting or promoting talented people to top managerial positions. But the tough economy has shifted the focus to the bottom line and whether organizations need so many managers, Grover said.
"I think what the boards and city councils need to look at going forward is, 'What can your organization afford?' " Grover said.
Bee staff writer Ken Carlson can be reached at firstname.lastname@example.org or 578-2321.