No immediate relief for San Bernardino County pension costs

San Bernardino County’s contribution to its employee pensions will increase by $35.6 million in the next year, attributed to reduced rates on investment returns and increased life expectancies for pensioners, according to the county’s chief financial officer.

And those increased costs will shadow the county for at least the next 15 years.

“While I think we’ve swallowed most of the real difficult increases, we’re going to have to stay at this level for quite a while. It’s going to put continued pressure on the budget,” Chief Financial Officer Gary McBride told the Board of Supervisors at its first meeting of 2015 on Tuesday.

Supervisor Janice Rutherford called the increases “staggering,” and that in some cases more than 50 percent of what is paid in salary the county has to pay into pensions.

She commended employees who have already agreed at the bargaining table to pay more into their retirement that the county had previously picked up.

“That has helped us a great deal with this and will ultimately help them in their retirements as well,” Rutherford said.

Pension costs for the next year include a $32.8 million increase to the county and a $2.8 million increase to county fire and special districts. It is also estimated that the county’s general fund departments will see increases of roughly $12.6 million in discretionary general funding in the next fiscal year, which include a projected increase in pension obligation bond retirement payments, according to a board staff report.

The rate of expected return on investments this year decreased from 7.75 percent to 7.5 percent. Coupled with increased life expectancies for pensioners, it substantially drove the county’s costs up, McBride said.

Over the last five years, the county’s pension costs rose from 18 percent for general employees to 30 percent, and the county absorbed heavy market losses in 2008 and 2009, when the stock market sold off 25 percent, McBride said.

As a result, the San Bernardino County Employee’s Retirement Association is now funded at about 80 percent, with $2 billion in unfunded liabilities, McBride said.

“So we’re going to be paying an elevated cost for the next 15 years before we start to see it dip off a little bit,” McBride said.

County Chief Executive Officer Greg Devereaux said money that has historically been used for employee raises is now being used to keep their retirements whole.

“And so even though they’re not seeing more money, we’re having significantly bigger costs for every single position and every single employee,” Devereaux said. “It’s certainly costing the county a great deal more.”

McBride said the county will have persistently higher pension costs for the foreseeable future, which will affect county services and its ability to compensate employees.

“It’s a difficult situation because with the employees, even though we haven’t been able to give them raises, our costs associated with those employees has gone up tremendously due to the pension costs,” McBride said. “The cost to compensate those employees continues to rise. So it’s a very difficult situation.”


Joe Nelson covers San Bernardino County for The Sun, Daily Bulletin and Redlands Daily Facts. Reach the author at or follow Joe on Twitter: @sbcountynow.