Local Politics

Saturday, Mar 31 2012 09:00 PM

Union deals produce modest short-term savings for county

BY JAMES BURGER Californian staff writer jburger@bakersfield.com

The deals that Kern County supervisors inked with county employee unions this month have provided them a substantial rhetorical victory after two years of battle.

But they're not -- at this point -- big financial successes.

All county workers will now pay into their retirement accounts and health care premiums. In the past, the county paid those bills for a substantial number of employees.

The even bigger win, Supervisor Zack Scrivner said, is the concessions public safety unions made on retirement formulas.

Newly hired public safety workers -- firefighters and sheriff's deputies -- will receive a smaller pension benefit when they retire than current employees do and will need to work five more years to maximize their pension.

But the immediate dollar value of the union deals is small when compared to the size of Kern County's annual spending responsibilities.

MODEST VALUE

In three years, when all the provisions of the contracts are in place, the hard-fought concessions wrung from the unions will save Kern County 0.6 percent of its general fund annually -- $4.06 million of a $669 million spending plan.

The county maintains a "rainy-day" reserve fund that is more than 10 times as large.

Savings from the deal would have been $12.6 million but, to seal the deal, supervisors had to give out $8.59 million in annual pay raises.

And the county will actually lose money -- $843,250 a year -- on two of the deals because the raises offered to firefighters and deputy district attorneys were larger than the cash value of their retirement contributions and health care premium payments.

When contract battles began two years ago, supervisors were adamantly opposed to any pay changes.

"They went for two years unwilling to budge," said Chuck Waide, regional director of the Service Employees International Union, Local 521. "Everything we proposed was a flat no. We ran into a stone wall every time we went to the negotiating table."

Suddenly supervisors gave in, he said. He still doesn't understand it.

"The county is still strapped financially," Scrivner said. "However (things) are better than they were, so I felt that a small cost-of-living increase was justified."

But $4.06 million is, Supervisor Jon McQuiston said, still "a large amount of money."

Of course, McQuiston said, $12.6 million would be more but the pay raises were given out, "in order, at the end, to get an agreement with the bargaining unit(s) and avoid confrontation."

RETIREMENT FORMULA

Supervisors say the real plus for county taxpayers will come from the shift to a new, lower retirement formula for firefighters and sheriff's deputies hired in the future.

It will take nearly a decade for there to be enough of those workers for the county to notice any substantial financial benefit from the lower-retirement formula, county budget officials said.

But "I think we'll look back on it at some point and time and see it as a great positive," said retiring Supervisor Jon McQuiston.

New employees will be paid, in retirement, 2 percent of their final annual pay for every year that they work for the county. They will be able to retire at a minimum age of 50 years old.

But under the new deal, if they stay for five more years -- until age 55 -- they can increase the "2 percent" portion of that calculation to "2.7 percent" -- just a bit shy of the "3 percent" value in place for current employees.

New employees who spend 30 years with the county can boost their annual pension payment from 60 percent of annual salary to 81 percent.

Scrivner said what happens in those five years is where the cash value to the county comes in.

"That's an extra five years where the county is paying in and they are paying in," he said, adding the county will also benefit by retaining the expertise those workers build up during their careers.

PERSONAL PRICE

But while the value of the deal for the county is modest, everyone involved acknowledges that the impact of concessions on many senior county employees will be substantial.

Those who don't currently pay into the health care and pension systems will see pay cuts of 10 to 20 percent, according to a union analysis of state data.

Those workers who are old enough to retire have already taken action to do so. A total of 78 workers recently applied for retirement, a 16 percent jump from the same period in 2011.

The number of retirements scheduled to be effective in the first three months of 2012 -- 201 as of Thursday -- jumped 45.6 percent from the same period in 2010, when contract negotiations started.

Scrivner said that is a natural result of the baby-boomer generation reaching retirement age.

But Kern County Sheriff's Department Commander Bart Camps, who represents mid-management leaders in the Sheriff's Department, disagrees.

"Those older members who weren't paying, they're walking out the door. For the next three years they're walking out the door," Camps said.

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