The recession may be over, but SLO County’s finances are still in the toilet. In the county’s annual attempts to turn its financial fortunes, the latest proposals may be the most drastic, with county officials preparing to futz with the two golden calves of union negotiations.
County administrative officials—at the advice of a financial consultant brought in to brainstorm new ways to save money—are expected to implement a two-tiered pension system around January 2011. Such a system would provide new employees with lesser benefits than those already in the pension system. New employees, for example, might get a benefit level of 2 percent of highest salary at 60 years old, compared to the existing system of 2 percent at 55, according to a staff report.
The change is expected to save $15 to $20 million, but any savings probably won’t be realized for about a decade, according to the staff report.
County supervisors approved the staff recommendation on Oct. 12, with an additional nod that will allow staffers to tweak the county’s prevailing wage ordinance. Prevailing wage has essentially guaranteed a 2 to 7 percent increase in salaries for county employees regardless of whether the budget is hemorrhaging, which it has been since at least the 2008-09 fiscal year when there was an $18 million deficit.
Under the new methodology, county officials would compare local government salaries to those in nearby counties; they currently look to places like Marin as comparable. A revised ordinance would also stop the current “automatic pay increases,” and give the county greater bargaining power during times of financial duress.
A best guess for the coming fiscal year puts the county’s budget at least $9 million in the hole, with the possibility of the deficit being as high as $15 million. It’s not as bad as last year or the year before—$17 million and $30 million, respectively—but the economy is still dragging, forcing local financial experts to expand their five-year recovery plan to a seven-year plan. In other words, don’t count on a solvent budget until the 2014-15 fiscal year.
And the state’s own patchwork budget continues to hold a proverbial gun to the county’s temple. Assistant County Administrator Dan Buckshi called the state budget a “patch” and a “gimmick,” with about $7 billion in cuts to eliminate a $19 billion deficit and the rest coming from financial shuffling and other bandages.
The county pension fund is doing better this year than last, but is still unfunded by about $279 million, according to the latest actuarial. County officials increased the contribution by about 1 percent last year and are about to begin negotiations with the San Luis Obispo County Employees’ Association (SLOCEA).
SLOCEA General Manager Kimm Daniels wasn’t happy with the county’s proposals. She openly criticized county officials on Oct. 12 and later told New Times the county is allowing management and other highly paid employees to draw higher pensions than the average SLOCEA employee.
“When you’re talking about reducing the formula, changing the formula, changing how you calculate prevailing wage … why aren’t we talking about doing away with some of these perks for managers?” she told New Times. “That’s my bitch.”
SLOCEA is still in negotiations, and should have a potential compensation agreement outlined by the end of the month, but Daniels said this year is the worst yet despite county hints that things are getting better.
“Oh my god, they’re night and day different,” she said. “There’s no comparison with this year and prior years.”