State

Stanislaus County weighs buyout, pension

Stanislaus County supervisors Tuesday will consider nudging seasoned employees out the door with a buyout offer while slashing pension benefits for newly hired workers.

The effort to reduce labor costs includes a 5 percent pay cut for employees, managers and elected officials.

The steps are aimed at cutting payroll to balance the county's budget and to put its long-term pension costs on a more sustainable level.

According to a staff report released Friday, 11 of the 12 employee bargaining groups have ratified the 5 percent salary cut. The County Attorneys Association is scheduled to complete its voting today.

The pay cuts could save the county $13.8 million in the fiscal year that starts July 1, potentially erasing $5.5 million of a $23.5 million general fund budget deficit.

"It is a positive step to address some of our budget challenges," said Rick Robinson, county chief executive officer. "The bargaining units have been very receptive and responsive to our requests."

Two groups are exempt from the pay cut: employees with retirement dates in the next two years and the physicians-in-training in the county residency program.

The staff report said the employee concessions should prevent a "significant number" of layoffs, although payroll cuts still are looming for law enforcement and other departments. Officials estimated last month that, without concessions, 239 employees across county departments could lose their paychecks.

Pension review

Supervisors will consider a cost-cutting package that includes incentives for some employees to retire, as well as proposals for changing a costly pension system.

Robinson wants to create a new retirement benefit structure for employees hired after Dec. 31, 2010.

No benefit changes are proposed for current employees, but for new staff members, the county would revert to what was offered before 2002, the year employees were given a major boost in pension benefits.

The CEO's office still is negotiating the terms with labor groups, but supervisors could approve benefits for new staff not represented by unions.

For new public safety employees, the county no longer would offer the "3-percent-at-50" benefit, which has caused public service pension costs to skyrocket in California. Instead of allowing employees to retire at age 50 with up to 90 percent of salary, the new benefit would allow retirement at 50 with 2 percent of salary times years of service.

Under the proposals, general employees could retire at age 61 with 2 percent of salary multiplied by years of serv-ice. The current formula allows people to retire at 55 with up to 75 percent of their salary.

To prevent pension spiking, monthly pensions would be based on a three-year average salary. With the current system, the pension calculation includes the final year or top salary, which allows employees to boost retirement payments by claiming vacation cash-outs and other compensation.

If supervisors give approval, actuarial studies and other work is required to implement the changes by Jan. 1.

Supervisor Jim DeMartini said the proposed retirement benefits are reasonable.

"We could fund the system we have now, but we would have to put $50 million a year into it and then hope the pension fund makes 8 percent returns every year," he said.

Early retirement offer

To trim the work force, the county will offer "golden handshakes" for employees who are willing to retire in July. Employees with at least 20 years of service or those eligible for retirement next fiscal year will be offered $1,000 per year of full-time service, up to $25,000.

The payments cannot be used to boost pension benefits for people choosing to retire, officials said.

The county is aiming to reduce positions subject to layoffs in the next two years and reduce unemployment insurance costs, the staff report says. The voluntary buyouts could be offered again in 2011-12.

County officials did much to shore up the general fund deficit by reducing retirement system costs for 2010-11.

Because of a growing unfunded liability in the Stanislaus County Employees' Retirement Association, the county was looking at pension costs well exceeding $50 million next fiscal year, an expense that could have led to 121 employees losing their jobs.

The retirement board, however, agreed last month to shift $20 million in supplemental benefit reserves to help offset the county's retirement contribution.

The Board of Supervisors meets at 9 a.m. Tuesday in the basement chambers at 1010 10th St. in downtown Modesto.

Bee staff writer Ken Carlson can be reached at kcarlson@modbee.com or 578-2321.

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