The Stanislaus County Employees' Retirement Association will shift $21.4 million from supplemental benefit reserves to help offset a retirement cost increase for the county and other public agencies, sparing them harsh cuts that likely would include layoffs.
The retirement board, in a 6-2 vote Monday, committed $20 million to help the county, the Superior Court and Stanislaus Council of Governments pay a pension-fund liability created by severe investment losses in 2008 and the first half of 2009.
The remaining $1.4 million will help ease the burden for Ceres, the East Side Mosquito Abatement District, Hills Ferry Cemetery District, Keyes Community Services District and Salida Sanitary District.
Supporting the decision were retirement board members Darin Gharat, Mike Lynch, Mike Fisher, Clarence Willmon, Ron Martin and Jim DeMartini, a county supervisor; board Chairwoman Maria De Anda and Gordon Ford were opposed. Retiree representative Linda Stotts-Burnett was absent.
StanCERA, which administers pensions for 8,200 employees and retirees, will take the funds from a reserve used to pay extra benefits to retirees and will reinforce the main fund for paying monthly pensions.
Supporters of the motion said the intent was to preserve jobs in the public agencies and safeguard pensions for StanCERA's membership.
Gharat, who made the motion, said the county and other member employers should not expect to touch the reserves in the future. The decision was opposed by a retiree group, which is suing StanCERA over a similar $60 million transfer last year.
"This will be the last time that we will do this, from my perspective," said Gharat, a board member elected by public safety members.
Rick Robinson, chief executive officer for the county, said the decision will help the county meet its retirement obligation in the fiscal year that starts July 1, but the county still expects to see rising pension costs in the next few years.
The county had asked StanCERA to commit $12 million in nonvested benefit reserves in 2010-11 and $12 million in each of the following three years. Monday's board decision also shortened the schedule for making payments on the unfunded liability to 25 years, instead of spreading the impact over 29 years.
DeMartini noted that about $36 million remains in the reserve fund. The county could make another request for the funds next year.
StanCERA relies on its $1.25 billion investment portfolio for more than 60 percent of its funding, and when it drops in value, the county and other employers are expected to kick in more funding.
An evaluation in January showed the investments were so badly depleted, as of June 30, 2009, that the system could cover only 71 percent of the pension benefits promised to members. It meant the public agencies needed to increase funding from $32.1 million in 2009-10 to $48 million in 2010-11.
Even though StanCERA's portfolio rebounded by 19 percent in the final six months of last year, it is still $200 million below a $1.46 billion peak in 2007.
County officials said the $22 million retirement increase for the county would result in 121 job cuts and reduced public services. With the fund transfer approved Monday, the county will have a $4 million retirement cost increase and should be able to save most of those jobs, Robinson said.
The transfer is also a big help for Ceres. The city, which lost 20 percent of its general service staff to budget cuts last year, faced a $1.2 million retirement cost increase before the transfer was approved.
Members of Retired Employees of Stanislaus County charged, however, that the decision benefits the public agencies at the expense of employees and retirees. Retirees have lost a health insurance stipend of up to $370 a month and a supplemental cost-of-living increase that went to older retirees.
The group's members also produced records showing that, from 1998 to 2004, the funding from employee paycheck deductions outstripped the contributions from the public agencies.
"Every time the county has financial problems, this body bails them out," retiree Lyn Bettencourt said.
Robinson countered that in addition to its contributions, the county issued a $108 million pension bond in 1995 to fund the retirement system.
Bee staff writer Ken Carlson can be reached at firstname.lastname@example.org or 578-2321.