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Wednesday, August 17, 2005 | San Diego County operates a pension system known as the San Diego County Employees’ Retirement Association (SDCERA). It is similar to that of the city’s, though it is much larger due to the higher number of employees working for the county.
The county’s pension fund is facing a shortfall of more than $1.2 billion, which means it currently owes its retirees and future retirees that much more than it actually possesses in assets. In fact, it has 81.12 percent of the assets it needs to cover all its future debt. That ratio is much higher than the city’s, however, which conservative estimates put at a ratio of 65.8 percent.
For several years, the county ran surpluses in its pension fund. In June 2001, the county had a $238 million surplus in its pension fund – it had 106.8 percent of the assets it would need to cover its future pension obligations. But in March of 2002, the county enacted benefit increases for its employees that immediately sent the fund into a deficit of $1.2 billion. After that decision, the county had 75.45 percent of the funds it would need to pay its retirees.
The average general county employee earned a salary of roughly $44,000 in 2002. Before March of 2002, the average county worker with 30 years of experience could have retired with a basic guaranteed annual pension of $26,400. After March 7, 2002, that same employee could have retired with a basic annual pension of $39,600.
Members of the county Board of Supervisors earn $115,000 per year. If one of them were to retire now with 16 years of service (four terms in office), he or she would have a guaranteed basic annual pension of $55,200. At the pre-2002 formula, that annual pension would have been $36,800.
Leading up to the 2002 benefit enhancement, an average of 30 employees retired every month – or 360 per year. But between March 8 and June 21 of 2002, 813 employees retired from the county.
At the time of the benefit enhancement, county staff reported how much they would cost. “The ongoing annual impact of that cost is expected to be approximately $32 million beginning in fiscal year 2003-04.”
Since then, the county has borrowed $1.27 billion from investors to fill the deficit the benefit enhancements created. Along with far more taxpayer funds than had gone to the fund in the previous decade, the loans have kept the fund’s ratio just above what its advisors call the “red zone.”
Even with the massive investment, because of SDCERA’s “20-year layered” financing strategy, the county will not start paying down the $1.2 billion deficit for five more years.
The pension bonds will not be paid off until 2032.
– SCOTT LEWIS, Voice Contributing Writer