Sacramento Deputies Adopt Pension Plan Changes

As reported on SacBee.com, by R. Lewis, on August 10, 2010.

The Sacramento County Deputy Sheriff’s Association has approved a deal that would alter the pension system for new hires and require current deputies to pay more into the pension system annually. The deal is part of a package the Board of Supervisors will consider later today.

About 58 percent of the deputies voted for the pact, while 42 percent voted against it, according to the union. Voting ended at 11:59 p.m. Monday.

Under the plan, the deputies would increase their contribution to the retirement system. They currently pay about 6 percent of their salary. That would jump to 9 percent or 10 percent this year and top off at nearly 13 percent next year. In exchange they would get a 3.8 percent raise next year on top of the 2 percent to 5 percent cost of living adjustment they were already scheduled to receive.

The county would also raise the retirement age for new hires. Current deputies can retire at 50 and receive a pension based on the average of their three highest years of compensation multiplied by their years of service. New hires wouldn’t be eligible to receive 3 percent until they turn 55. Non-sworn personnel also covered by the union would go from 2 percent at 55.5 to 2 percent at age 60.

The plan includes an early retirement incentive for senior deputies. Up to 40 who agree to retire in the next month would be able to cash out half of their unused sick leave up to 1,000 hours. The cash-out would not add to their pension and could actually decrease the pension slightly. In the past, they had been able to convert those hours to service credit. Whatever the deputies cash-out and don’t use as service credit could conceivably lower the final pension.

That benefit is funded through a decrease in unemployment insurance costs — thanks to workers leaving willingly as opposed to through layoffs — and the savings the county will see from not paying into the Retirement Health Savings Account for a year.

If the board approves the plan, the county would essentially agree not to lay off any Sheriff’s Department personnel this year — saving as many as 85 jobs.

The deputies contract changes are the least controversial. A second part of the plan calls for changes to the agreement with the Law Enforcement Managers’ Association. The county is offering that union an early retirement incentive that promises to boost the pensions of some top level officials as much as 5.7 percent. Advocates have railed against paying anyone — let alone top officials — higher pensions.

The county’s own pension system has questioned if officials’ handling of the deal is legal.

State law requires local governments to prepare an actuarial report on retirement benefit changes and to present such a report publicly two weeks before making changes. The county didn’t release its actuary’s report until after 5:30 p.m. Monday. That report shows the pension boost could add as much as $9.3 million in unfunded liability to the pension system if 31 of the 61 eligible managers take the deal.

County Counsel Robert Ryan has argued the change isn’t governed by that section of the law. The change is to the employees’ underlying compensation and not their retirement benefit, he said.

Interim County Executive Steve Szalay said the plan is a package deal and that the county couldn’t consider the deputies’ portion separate from the managers’ deal. The county needs to move quickly if it wants to get the full 10 months of savings from the plan, he added.

County officials say the proposal would save $3.72 million this year, including $2.9 million for the general fund, and would save another $2 million next year, including $1.56 million for the general fund.

If you have any questions about retirement plans or any other estate planning matter, please contact the Law Offices of Mitchell S. Ostwald at 916.388.5100 or email us at info@molaw.com

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