The San Luis Obispo County Board of Supervisors voted unanimously Oct. 11 to begin to deflate ballooning county pension costs. Facing a $299 million unfunded pension fund liability, the supervisors instructed the county administrator to negotiate with county worker unions to raise employee contributions by nearly four percent and create a second, less favorable tier of benefits for new employees.
Citing ominous predictions by the pension trust’s actuary that the contribution rates will probably have to rise in the future to make the fund viable, the supervisors said the present levels of pension benefits aren’t sustainable. Supervisor Adam Hill said he was worried that the county might be headed down the same road General Motors traveled before going bankrupt.
“People said GM ended up as a pension provider with a car business on the side,” Hill said. “I don’t want our county ending up as a pension provider that does county services on the side.”
Supervisor Frank Mecham added, “If we don’t fix this now, we are going to suffer down the line.”
Saying that the county had been paying too high of a share of the county employees’ pension contributions, the supervisors said the status quo is unacceptable.
In 2003, the county floated a bond to stabilize finances. County government contributions to the fund, as well as contributions from most county employees, have been steadily rising. Pension funds throughout the United States have been decimated by the bad economy, and many states and cities have had to drastically rethink the way they offer retirement benefits for their employees.
Some county employees said they had heard the board say this all before. They said it was strange to hear the board speak this way now when only a few years ago it dramatically increased pension benefits, which some say contributed greatly to the present crisis.
Supervisor Bruce Gibson said he’s proud of the pension benefits the county has been able to provide for its employees, but said the times were changing.
“It’s just the nature of the current reality,” Gibson said. “We just can’t sustain the pension benefits we have now.”