Deputies Will Cover 100% of Employee Pension Contribution
By Orange County Supervisor Todd Spitzer
Residents and elected officials attended the Board of Supervisors meeting this week to speak in favor of the Memorandum of Understanding with the Association of Orange County Deputy Sheriffs (AOCDS) for Peace Officer and Supervising Peace Officer Units. When the Board of Supervisors entered into negotiations with the Orange County Sheriff’s Deputies, their goal was to reduce taxpayers’ pension burden by having employees pay 100 percent of their employee retirement contributions. This contract achieves 100 percent pickup by all deputies.
Orange County District Attorney Tony Rackauckas and Tom Dominguez, President of the Association of Orange County Deputy Sheriffs attended the board meeting and spoke in favor of the agreement on Tuesday.
“It’s been a long time coming with a lot of negotiations, but it arrives at a good balance,” Rackauckas said in urging the board to support the agreement. Rackauckas, however, warned county officials about asking too much of employees, making it harder to recruit.
In San Jose, city officials a decade ago boasted of having the safest large city in the country. But when police officers were required to cover the full cost of their retirement benefits, the tide turned, Rackauckas said.
“It was devastating to their police department since that’s gone into effect,” Rackauckas said. “They’re struggling to put that police department back together again, but they’re hemorrhaging police officers … They’ve had literally hundreds of transfers … and their crime rate has gone up. They’re now higher than the national average, higher than the state average, and they can no longer brag they’re the safest city. In fact, far from it.”
Response times for crimes in that Northern California city have gone from eight minutes to 20 minutes, Rackauckas said. Worse, he said, the city is “spending large amounts of money on training” recruits, only to lose them in a short time to other departments that can offer better pay and benefits.
“They have a very real concern they’re training people for other departments,” Rackauckas said. The deal was also supported by Sheriff Sandra Hutchens, who called the deal “fair.”
Also advocating for the passage of the deputies contract were business leaders and crime victim advocates including Gary and Colleen Campbell.
Orange County cities protected by the Sheriff’s Department consistently rank among the safest cities in America but that safety and security come at a cost. The County of Orange has invested millions of dollars recruiting and training experienced law enforcement officers and Supervisor Spitzer is committed to ensuring that the OC Sheriff’s Deputies are equipped with the tools and training they need to keep Orange County a great and safe place to live and work.
Under the new contract, Sheriff’s Deputies will be paying more than any other police officers in Orange County. While other municipal agencies pay 9-12 percent of salaries in retirement contributions, Orange County Deputies will pay between 14 and 20 percent. That is because our OC deputies are part of Orange County Employees Retirement System (OCERS) and not California Public Employees’ Retirement System. OCERS has recently reduced its rate of return in investments, thereby costing employees more in contributions.
With deputies stepping up to the plate to cover the full cost of their pensions, AOCDS started negotiations asking for across the board salary increases. The Board of Supervisors insisted on merit based increases. In addition, the new contract requires a 5.5 percent reduction in pay for new deputy sheriffs to create immediate and long-term savings for County taxpayers.
“As a fiscal conservative and public safety advocate, I will continue to work to balance our responsibility to provide for the safety of our communities while remaining fiscally prudent for the taxpayers,” said Supervisor Todd Spitzer.
Supervisor Spitzer said that he is thankful to both sides in this negotiation for being willing to “give up” some to protect the fiscal solvency of the County without jeopardizing public safety. “We achieved 100 percent retirement contributions by our deputy sheriffs, preserved our ability to recruit and retain quality law enforcement officers, and will continue to provide quality law enforcement to our residents all at a minimum cost to taxpayers.”
Here are Supervisor John Moorlach’s concerns with the AOCDS proposal:
1. It adds two new steps to the salary schedule, a thirteenth and a fourteenth. This creates two problems. The first is that it benefits all of those who are at the top of their pay scale (step 12), which represents some 77 percent of the workforce in this union. The second is that the pay increases to these impacted employees would be effective immediately, which is a pay raise, but not implemented until the following year. Initially, it made a mockery of the step system by moving up employees without a job review or proof that their work level even justified an adjustment up the pay scale. The second is that all of the newer members will not receive this pay increase. This is another blatant effort by the union to favor longer term employees and to take advantage of the negotiations at the cost of the newer employees (a common, but very inequitable, negotiating technique).
2. The retiree medical strategy for AOCDS is different than that of the other bargaining units. The County’s assumption of the employees’ portion, the Annual Required Contribution (ARC), assumes that this annual commitment of 3.6 percent will remain flat. That is not the case, as it will most likely continue to increase over time, based on actuarial studies. By the County assuming 2 percent of the cost (more than half), another pay raise, there is a blurring effect that, in future negotiations, could have the County picking up all of the costs. This may subject the taxpayers to an ever-increasing cost that this Board may probably initiate in perpetuity for subsequent Boards. This is not unlike the “3% @ 50” formula, where future Boards are straddled with ongoing and ever increasing costs. The positive side of this unique pay raise is that it is not compensation earnable for pension plan funding purposes.
3. Now the costs of the “3% @ 50” pension enhancement have come home to roost and it must be addressed. Consequently, all employees should at least pick up the employee portion that the employer had previously, and generously, subsidized. In 2001, AOCDS determined that a pension increase, retroactive to the date of hire, was more important than salaries. Therefore, dealing with this growing fiscal tumor will require an impact on wages. Every other bargaining unit has stepped up to the plate. This proposal provides an almost full offset for this maneuver, a point that may not settle well with the other bargaining units in future deliberations.
4. This is not an equitable proposal. One of the main reasons that I even ran for County Supervisor in the first place was because I could see the future impacts of “3% @ 50.” It was easy to see that every County general employee (non-safety) would have to subsidize the salaries and benefits of the deputy sheriffs. Someone has to sacrifice to pay the Sheriff Department’s employees, and it would be the employees of all the other County departments.
5. I’ll save comments about the lack of full disclosure and the current high fund balance level in the AOCDS Medical Trust for another time, as well as discussing the fact that pay raises exasperate the pension system’s unfunded liabilities.
6. The contract cities will have to budget for this proposal. I hope that they have an opportunity to weigh in and provide their counsel before the Board of Supervisors votes on this matter.
The bad news is that I’m not yet convinced that this is an equitable and fair deal. The good news is two-fold. This proposal is close to the Board’s intended goals. Fortunately, I will not have to live with the repercussions of this proposal as I am termed out. I just feel sorry for the rest of the County employees, including my former employees at the Treasurer-Tax Collector’s Department, that I could not do more to stop the potential hemorrhaging that they will suffer in the years ahead if this contract is approved.