HomeMy WebLinkAboutMINUTES - 05261987 - 1.15 .0 ��IS
TO BOARD OF SUPERVISORS
FROM: Phil Batchelor Contra
County Administrator
@ - Costa
DATE: May 20, 1987 County
SUBJECT: Legislation: Senate Constitutional Amendment 32
(Russell)
SPECIFIC REQUEST(S) OR RECOMMENDATION(S) & BACKGROUND AND JUSTIFICATION
RECOMMENDATION•
Adopt a position in opposition to SCA 32 by Senator Newton
Russell which would prohibit the use of the reserves of a
retirement system to reduce the employerscontributions which
would otherwise have been payable.
BACKGROUND:
For the last several years, the Contra Costa County Employees'
Retirement Association has used a portion of its reserves which
result from achieving earnings higher than had been assumed by
the Retirement Association to offset increases in contributions
from the employer or employee due to cost-of-living adjustments.
During the current fiscal year this contribution from the
Retirement Association has been worth approximately $6,000,000 to
the employer. For the 1987-88 fiscal year, this amount will mean
approximately $9,000,000 to the employer.
Senator Russell has introduced SCA 32 which would prohibit this
practice, thereby substantially increasing costs for the employer
and, in the case of this County, undoubtedly causing layoffs,
program reductions and major disruptions to public service.
The fiscal integrity of the Retirement System is determined by
actuarial analysis which intentionally makes use of fairly
conservative assumptions regarding the earnings of the System' s
investments. When actual earnings exceed the assumptions, the
difference builds up in the reserves. As long as the Retirement
System maintains prudent reserves and appropriately cautious
assumptions regarding earnings, there is no reason their reserve
should not be used to benefit the employee members of the
Retirement System as well as the employer.
It is interesting to note that SCA 32 appears to limit the use of
the reserves to reduce the employer contributions. There is no
such limitation proposed on the use of the reserves to reduce the
contributions of the employee members of the Retirement System.
CONTINUED ON ATTACHMENT: YES SIGNATURE:
X RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD,COMMITTEE
X APPROVE OTHER
SIGNATURE(S)' n .� Q A& 5ye�
ACTION OF BOARD ON May 26 . 1987 APPROVED AS RECOMMENDED X, OTHER
I
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS ISA TRUE
UNANIMOUS (ABSENT '�—� AND CORRECT COPY OF AN ACTION TARN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
County Administrator MAY 2 6 1987
cc: Retirement Administrator ATTESTED _
Treasurer-Tax Collector PHIL BATCHELOR, CLERK OF THE BOARD OF
Jackson/Barish & Associates SUPERVISORS AND COUNTY ADMINISTRATOR
Senator Newton Russell n i�
CSAC Director BY LJ DEPUTY
M382/7-83
J
Page 2
Passage of SCA 32 and its approval by the voters would work a
substantial hardship on the County and would, in the long run,
hurt the public and the services provided to the public. This is
unnecessary and an inappropriate intrusion on local control and
management of the Retirement System.
It is, therefore, recommended that the Board oppose SCA 32.