Stanislaus County's retirement board today will consider a far more restrictive policy regarding extra benefits for local government retirees.
The excess earnings policy has been near the center of debate over the Stanislaus County Employees' Retirement Association, which administers pension benefits for thousands of employees and retirees of the county, Ceres, the courts and five special districts.
Under a change in policy, StanCERA would need to be at least 90 percent funded before it could consider dedicating excess earnings to benefits such as a medical stipend.
The association has been criticized for being too generous with excess earnings in previous years. When StanCERA's investments earned higher than an 8.16 percent annual return, the earnings above that target were put in a fund for paying a medical stipend of up to $370 a month to retirees, a supplemental cost-of-living increase and other benefits that were not part of labor agreements.
County Supervisor Jim DeMartini, who serves on the StanCERA board, says those earnings should have been used to bolster the pension fund. He has wanted to eliminate the extra benefits, but other board members are willing to consider them.
"The new policy is a compromise," DeMartini said. "It is really restrictive. I don't see any excess earnings for quite some time."
As of July 2009, the pension system could cover 71 percent of promised benefits to its 8,200 members, but its investments are up about 20 percent this year.
With the proposed policy, the retirement board could dedicate 25 percent of excess earnings to supplemental benefits if StanCERA is 90 percent to 100 percent funded. The other 75 percent would be used to fund the pension liability.
If the system is 100 percent funded or more, 50 percent of extra earnings could be used for supplemental benefits, with the rest saved for the next market slump.
The benefits could include annual payments up to $3,600 to help retirees buy health insurance and a supplemental cost-of-living allowance for retired members who have lost 20 percent of their purchasing power.
Retired Employees of Stanislaus County charged the policy would all but eliminate the benefits. The retiree group wants StanCERA to change some of the wording and increase the medical stipend to $4,400 a year, with annual increases based on health care costs.
"Once again, the proposed policy is all beneficial to the county," said Michael O'Neal, past president of the retired employees group. He said the retirement board is supposed to represent the interests of members.
O'Neal said the old policy gave the county a piece of the excess earnings to lower its contribution to the pension system.
"It is supposed to be the retirees' fund," he said. "We think if there are any excess earnings, the retirees ought to be able to share in that."
To help offset sharp increases in the county's annual contribution to the pension system, StanCERA in the past two years shifted $80 million from supplemental benefit reserves to the main pension fund. The retired employees group is challenging the transfers in court.
The StanCERA board meets at 2 p.m. today, in the boardroom at 832 12th St., Suite 600, downtown Modesto.
Bee staff writer Ken Carlson can be reached at firstname.lastname@example.org or 578-2321.