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Group Urges Pension, Fiscal Reform

New Sonoma urges county to reduce pensions for current employees, privatize some government functions and not invest in risky ventures such as creating its own power authority.

A group made up of economists, financial experts and other concerned residents is calling on Sonoma County to revamp its pension system, privatize some government functions and not enter into new and potentially financially ruinous agreements such as a new power authority in hopes of generating more clean energy.

Over the past two years, members of New Sonoma, as the group is known, have been meeting to discuss what could be done to reverse the county’s financial crisis caused largely by an increase in pensionable salaries that have left the county with $500 million in unfunded pension liabilities, according to the group’s statistics.

New Sonoma has held meetings with several county supervisors, researched pension data and even authored detailed reports and white papers. Taken together, the group’s message is that business as usual is no longer an option and that decisive action in needed—right now.

“When you have a financial crisis like we do here, you have to come up with creative solutions,” says Ken Churchill, the founder of New Sonoma and a retired CEO of a Day Star Energy Systems, a solar energy company.

“What I see now is a group of managers who are afraid to make the tough decisions and who have allowed unions to become so powerful. We want to restore power to the people. Without pension reform, people will just continue to see more services cut.”

All Sonoma County Supervisors have acknowledged that growing pension costs need to be dealt with, but say they are stymied by existing contracts with labor groups.

In May, Supervisor Efren Carrillo told the Press Democrat that the board has been “aggressively demanding answers from county staff about what the law will allow us to do” in terms of reducing pension costs and that the county leadership should set an example through their own concessions.

One of New Sonoma’s central arguments is that county employees have not contributed their fair share toward pensions, despite receiving a pension increase in 2002. That has resulted in the county spending 40 percent of payroll costs on pensions alone and led to a growing budget deficit.

“People in Sonoma County government retire with 90 percent of their salary," Churchill says. "We are number one in the country in terms of pensionable benefits. And that’s not something we can continue.”

A Grand Jury report released last month concluded that California Employees Retirement Law requirements may not have been followed when the county approved pension increases in 2002. But the all volunteer group was not able to complete its investigation “due to time constraints and a difficulty in locating the necessary documents,” meaning that a lawsuit against the county may be the only way the dispute over pension increases will be reversed.

If the supervisors are not able to lower pension formulas, New Sonoma wants to create a ballot initiative that will allow voters to decide what public employee salaries and benefits should be.

Beyond pension reform, the group also wants to find efficiencies in the day-to-day operations of the county, that could include using staffing agencies to fulfill administrative tasks. Another is a recommendation that the county not spend any more money pursing , a program that would set up a separate utility company in order to generate clean energy locally.

“We are very concerned about the county taking on any new debt and selling bonds in order finance renewable projects,” Churchill says, adding that state mandates requiring PG&E to obtain at least a third of its energy from renewable sources negate the need for the authority and that it will be hard to gauge how much energy to buy, resulting in rate increases.

“People are cheerleading this effort, but studies show that people don’t want to pay more for clean energy,” Churchill says.

The county says there are many advantages to creating its own power including reducing the need to purchase clean energy from out of state, creating new jobs and spurring the renewable energy sector which often depends of government incentives before private investors are willing to commit.

Other founding members of New Sonoma include Madeline Schnapp, an economist specializing in identifying emerging trends and former Director of Market Research for O’Reilly Media, Robert Williamson, a former corporate comptroller and fiduciary, Andrew Simpson, an investment banker who has done work for the European Union and Bob Andrews, who served on the City of Santa Rosa's task force on pension reform and writes a column for North Bay Business Journal.

Many are also members of the Sonoma County Taxpayers' Association, a group that urges fiscally conservative policies and opposes tax increases.

To see members' full profiles, visit newsonoma.org

At the end of the day, New Sonoma is hoping to generate interest among residents and create a vocal group that will pressure county officials to enact change.

“If we can become thousands of voices and let people know what’s happening, then we have succeeded,” Churchill says. “We can’t expect our government officials to not serve themselves instead of us.”

Bill Fishman July 09, 2012 at 07:45 PM
. . . incidentally, it is a bit of a canard to state that 401(k)s are more risky than a pension plan because the investments might go south. Remember what happened in Orange County 25 or 30 years ago -- the pensions invested in "derivatives" that didn't do so well. Remember also Enron, which invested all of the retirement plans AND 401(k)s in Enron stock -- which went belly-up. Retirement fund investment people should exercise the same prudence that a trustee is held to in investing someone else's money. If you are interested in that and have trouble getting to sleep some night, Google the "California Uniform Prudent Investors Act". . . . a sure cure for insomnia; but investment experts know all about it.
David Keller July 09, 2012 at 09:52 PM
I am troubled by a national line of thinking, advanced here by small government, anti-union, anti-tax political forces, that magically believes that cutting public employees' pensions will solve government funding shortfalls. There isn't enough in the system to do that! Then what? Where is this group's proposals to solve other parts of funding government, such as the gross inequities built into Prop 13, where newer property buyers significantly subsidize the costs of local services enjoyed by pre-1976 buyers? Prop 13 subsidizes many corporate property ownerships, where the corporate name stays the same when owners change, thus not triggering reassessments? What about the subsidies that are given to 2nd homeowners who can take the homeowner's tax deduction for multiple 'residences'? What about taking action against the many California corporations paying little or no taxes to the State through carefully crafted loopholes in tax law? What about online sales, where most companies outside California collect and pay no sales taxes to our state for goods delivered here? How about oil and gas severance fees in California? Gas taxes that actually pay for road maintenance? Until this group of so-called economists and experts (apparently associated with the Sonoma County Taxpayers Association) are willing to address these other considerable inequities in government financing, their attacks on employee pension plans ring hollow and crass.
Paul Andersen July 10, 2012 at 06:45 PM
What many folks don't realize is that local government employees in California do not receive their full Social Security benefits. This includes teachers, law enforcement and county/municipal workers. This applies even if someone paid into Social Security for 20 years employed in the private sector and then spent the last 10 years of their career as a public sector employee. Their used to be a social contract in this country that if one worked in public sector they could expect to be paid less than the private sector but would be guaranteed a pension (which they paid into, by the way) when they retired. What's disheartening is the view that somehow government employees are leaches and parasites when, in fact, they are providing all of us a vital service keeping us safe, maintaining our roads and infrastructure and generally doing the work that the private sector won't or can't do. Yes, there are outrageous examples of pension abuse. Usually this are by the high-level management. Those should be curtailed especially since tgrt usually have other added perks. I can guarantee you that a retired road maintenance worker is not receiving a $200,000 pension! More like $30,000 if that. Maybe another $10,000 from Social Security if they're lucky! Barely enough to live on in this area.
Active Thinker July 10, 2012 at 07:05 PM
David is right here...we have many more things we should "worry" about...or as well. Companies get big tax breaks...schools get left behaving...and we are still at war and have a way to large military...we spend more then the next 25 or so countries combined on our defense...stop that stuff first... Funny, now we are talking about people who work in government and their retirements...not all or even most make good money...just the highest ones...but after the economy goes south and our house prices are nothing again...then we start talking about it? We as a people let this happen long ago...
mikeg55 July 10, 2012 at 08:08 PM
Wow, my tax dollars are paying a retired road maintenance worker a $30,000 a year pension???!!! Outrageous!!! My mother retired with a $200,000 401k after working as an officer manager for a bank for 30 years. At $30,000 a year, her 401k will be gone in 7 years. Yet the retired road maintence worker will be taken care of, at tax payers expense, for the rest of his life????!!!! Common folk in the private sector DO NOT get the same benefits as the common folk in the public sector. the public service pension system is outdated and needs to be changed. it is no longer economical for municipalities and unfair to the tax payer.

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