(Published January 3)  San Bernardino County’s contribution to its employee pension system, which has seen steady and significant increases over the last several years, will escalate to beyond the $200 million mark in 2014-15.
While previous increases in the county’s contribution reflected the growing number of surviving retirees, next year’s increases will include an escalation of the percentage rate now being employed in the contribution formula as a consequence of a new state mandate under the Public Employee Pension Reform Act. That law requires that a governmental entity’s pension contributions be consistent with actuarial projections.
Accordingly, the county board of supervisors authorized increasing, effective June 28, 2014, the county’s contribution rates for its two tiers of employees.
In response to concern that escalating pension costs would threaten the county’s solvency, retirement benefits were reduced for county employees who began participating in the San Bernardino County Employees Retirement System on or after January 1, 2013.
San Bernardino County’s scheduled contribution to the county employee retirement fund in the current fiscal year was $179,068,000. By taking advantage of a provision of state law contained in Government Code Section 31582, which allows the county to advance pay part or all of the county’s estimated annual retirement contribution within 30 days after the commencement of the county’s fiscal year, the county was provided with a discounted simple interest rate of 3.68 percent, translating into a savings of $6,589,943. Thus San Bernardino County actually paid $172,478,057 into the retirement fund for this year.
In the fiscal year commencing on July 1. 2014, the county is due to see its pension liability zoom up by $23.37 million to $202,438,000.
The county’s pension contribution costs have been escalating by an average of $20,107,480 per year over the last two years.
In 2011, the county made a $132,263,097 prepayment to the board of retirement to cover the cost of pensions for retired employees during the 2011-12 fiscal year, reflecting a prepayment discount of $5,299,603 from the $137,562,700 owed by the county as its annual contribution to the retirement fund that year. In 2012, the county made a $154,626,037 prepayment to the board of retirement to cover the cost of pensions for retired employees during the 2012-13 fiscal year, reflecting a prepayment discount of $5,907,863 from the $160,533,900 owed by the county as its annual contribution to the retirement fund through June 30, 2013.
Pursuant to the board of supervisors’ action on December 17, the retirement contribution rates for the county’s first tier (i.e., long term) general employees will increase from 18.96% to 20.24% of compensation earnable. The retirement contribution rate for second tier [i.e., hired since December 2012] general employees will escalate from 16.53% to 18.02% of pensionable compensation. The county’s contribution rate for first tier safety employees will increase from 39.99% to 43.15% of compensation earnable. The county contribution rate for second tier safety employees will go from 32.9% to 37.02% of pensionable compensation.  The Superior Court retirement contribution rate for first tier general members will jump from 19.87% to 21.75% of compensation earnable. The Superior Court retirement contribution rate for second tier general members will rise from 17.44% to 19.53% of pensionable compensation. The non-county/special districts retirement contribution rate for first tier general members will increase from 27.69% to 29.91% of compensation earnable. The increase in the retirement contribution rate for non-county/special districts general second tier members will entail a change from 23.83% to 25.44% of pensionable compensation. The non-county/special districts retirement contribution rate for first tier safety employees will shoot from 57.82% to 59.65% of compensation earnable. The non-county/special districts retirement contribution rate for second tier safety members will decrease from 50.87% to 50.73% of pensionable compensation.  The South Coast Air Quality Management District retirement contribution rate for first tier general members will rise from 25.22% to 27.76% of compensation earnable. The South Coast Air Quality Management District retirement contribution rate for second tier general employees will increase from 22.86% to 25.36% of pensionable compensation.
In addition the general member employee survivor benefit contribution rate for employer and employee will go from $1.34 to $1.85 per pay period.
Despite the overall escalation of the cost of pensioning its employees, the county is beginning to see a decrease in the rate of its escalating costs in that the contribution for second tier general members is a reduction of 4.22 percent the county would have paid under the previous rate and 6.13 percent for second tier safety employees compared to what is being paid to their first tier counterparts.