For the public agencies in the Stanislaus Employees' Retirement Association, the bill has come due for the huge pension fund losses that occurred in the past two years.
But some agencies in the public service retirement system want to defer the pain as they deal with budget deficits. So the retirement board decided Tuesday to give time for Stanislaus County, Ceres and other agencies to submit their suggestions.
The proposals will be discussed at StanCERA's meeting Feb. 10.
"Any increase is going to be very challenging for us," Ceres City Manager Brad Kilger said. "I agree that putting it off indefinitely is not what we want to do."
StanCERA waited until this month to account for more than $400 million in investment losses from early 2008 to June 2009. The system relies heavily on investment returns to fund pension benefits and when they fail, the member agencies are expected to put more taxpayer money into the fund.
In a preliminary report released Friday, actuaries recommended that Stanislaus County increase its contribution to $42 million — a $17.3 million jump — in the fiscal year that starts July 1. The report said Ceres needs to pay an additional $1.2 million, not a cost the small city can easily absorb.
A revenue decline led to Ceres laying off 20 percent of its general service staff last year and another general fund deficit looms in 2010-11.
Ceres and five special districts have been shielded from the pension fund's investment losses and gains by a policy dating to the mid-1990s. But a move is afoot to change the policy, because the big investment losses are causing the county to subsidize the smaller agencies.
The StanCERA board could lessen the impact on Ceres by spreading the contribution increase over a few more years. Kilger said the city needs to quickly hire outside help to analyze the report from EFI Actuaries.
Instead of writing a big check to StanCERA, county officials for the second consecutive year could ask the retirement board to move supplemental benefit reserves into the main fund for making pension payments to retirees.
A retiree group filed a lawsuit over StanCERA's decision last year to transfer $60 million from supplemental benefit reserves to shore up the system.
Lyn Bettencourt, a retired county employee, warned county officials at the meeting not to touch the reserves. "Pay it now; otherwise it will cost you more in the long run," he said. "What are you going to do the following year when you are hit again?"
The agencies would be facing a bigger financial hit in 2010-11, but StanCERA can spread the impact over 20 to 30 years, said Graham Schmidt of EFI Actuaries.
With the smoothing technique, the retirement system will have the ability to meet 71 percent of its pension liabilities, down from 85 percent in 2008.
Schmidt said half of the StanCERA fund is meeting the pension obligations for 2,800 current retirees, with the other half devoted to fulfilling promises for 5,400 employees who will draw pensions when they retire.
It is not an ideal situation, but StanCERA is in better shape than other public serv- ice pension funds, he said.
Some pension systems don't have the assets to cover current retirees, he said.
Bee staff writer Ken Carlson can be reached at email@example.com or 578-2321.