The economic downturn has created challenges for the 58 counties in California in dealing with declines in property values and stock market losses which affect their pension funds. Complicating this is a continuing push by the state legislature to use local government as a piggy bank and shift the costs of state-mandated programs to the counties and their local taxpayers.
While the structural deficit must be addressed, Marin County is in the best condition of any of the 58 counties for the following reasons:
- The county saved for the rainy day with a healthy capital reserve and a back-up reserve, which means that the county prudently set aside money over the years for one-time capital projects and to create a buffer for fiscally challenging times. The reserve has provided the county with a little breathing room as we restructure the budget to work leaner and more efficiently.
- The county enjoys an AAA+ bond rating. This means that very low interest loans could be made available if needed at the same time the state has experienced near junk bond status.
- The county has very low debt.
- The county has more conservative salaries and pensions than similar counties in the state.
- The county has among the lowest costs per capita compared to similar counties in the state.
- The county has consolidated services. The Health and Wellness campus is a good example of how one-time funds and tobacco settlement monies were used to create a consolidated facility which is now saving 1.3 million dollars/year in lease savings and $500,000 a year in administration and staffing costs.
- The county has a vibrant volunteer program which in fiscal year 2009-10 saved the taxpayers almost 11 million dollars in “in-kind” support for county programs.
- The county began with a $20 million structural deficit and has reduced this to $8 million. This has been done through elimination or restructuring of 170 positions with very few active employees being put at risk of losing jobs, increasing the use of technology and raising some revenues. By the end of this fiscal year, the budget will be balanced.
- Pension reform will continue to be a large factor in bringing the county’s financial condition into structural balance:
The pension obligation is an important element in the future fiscal health for the county. I am committed to pension reform. The county has already taken several steps to improve the situation. The county will continue to work with the employee unions to align costs with available resources. There are now three tiers for salaries and four tiers for retiree medical benefits. Newer tiers are less generous. For employees hired after 1980, pension benefits are calculated using a three-year average salary rather than taking the highest year in order to prevent “pension spiking”. Annual COLAs are limited. Newer employees contribute more to their retirement and since 2008 receive less costly retiree health plans that will save taxpayers tens of millions of dollars in the long-term. Tier 4 does not provide spousal retiree health benefits. The average county retirement benefit is $32,000/year and is in-lieu of Social Security. I don’t participate in the pension program nor do I take the car allowance.
The challenge for the county is when talented employees can get better compensation and a lower cost of living elsewhere. Some departments cannot fill key positions, e.g. traffic engineers. Ultimately, the state must help address this issue. I am working with the California State Association of Counties on a set of guiding principles for reform, but the state has its own very serious pension obligations, far worse than those of the county. The legislature and our state representatives have not been able to effectively address this issue in any serious way, but that will not keep the county from looking at all options to bring pension costs more into alignment with the funding resources available. I will continue to work on this very important issue while serving on the board.
