Ventura spat sparked pension shift

Backers of an initiative that would give new Ventura County employees a 401(k)-style plan, rather than a pension, sometimes mention a lawsuit filed last fall by a former sheriff.

Bob Brooks, whose salary as Ventura County sheriff was $227,600 a year when he retired in January 2011, received an annual pension of $283,000. He filed a suit last September seeking an additional pension of $75,000 under a supplemental plan.

If Brooks were in the California Public Employees Retirement System, his combined pension of $358,00 would be No. 2 on the current list of largest CalPERSpensions posted by a pension reform group.

A longevity bonus for more than 30 years of service helped boost the base salary of Brooks, $227,600, to a much higher final pay total resulting in the pension of $283,000 a year, the Pacific Coast Business Times reported.

His total pension would top the largest California State Teachers Retirement System pension, $302,064 for a Modesto elementary school official, and the largest University of California pension, $337,346 for a UCLA retiree.

In 1997 a state Supreme Court ruling in a Ventura County deputy sheriffs suit expanded the final pay used to determine pension amounts for 20 independent county systems operating under a 1937 act, ranging in size from Los Angeles to Mendocino.

Bob Brooks

What became known as the “Ventura decision” said in addition to the salary, county pensions should be based on special pay received for other things, such as unused vacation time, bonuses, health care, education and car and uniform allowances.

A longevity bonus for more than 30 years of service helped boost the base salary of Brooks, $227,600, to a much higher final pay total resulting in the pension of $283,000 a year, the Pacific Coast Business Times reported.

His suit seeks a $75,000 supplement under a county plan, offered between 2000 and 2004, that was aimed at keeping the pensions of elected officials (ineligible for some “Ventura decision” add-ons) in line with the pensions of top appointed officials.

The lead example in the Times story was a former Ventura County chief executive, Marty Robinson, who was earning $228,000 a year and retired in 2011 with an annual pension of $272,000.

“The fact that he spiked his pension beyond his base salary was a slap in the face to taxpayers,” James McDermott, an initiative sponsor, told the Business Times last fall. “This is stabbing them in the back. What chutzpah.”

An attorney for Brooks, Anthony Strauss, said the former sheriff was told many times before he retired that he would receive the extra benefit, and he based his retirement plans on the combined standard pension and supplement.

“He (Brooks) is an extremely generous man and travels on humanitarian missions all the time, to Haiti and other places,” Strauss told the Business Times. “That’s the way he uses his funds.”

An analysis done by the Los Angeles Times two years ago found that 84 percent of the Ventura County retirees with pensions greater than $100,000 had pensions that paid them more each year than their salary while working.

The lead example in the Times story was a former Ventura County chief executive, Marty Robinson, who was earning $228,000 a year and retired in 2011 with an annual pension of $272,000.

“Robinson cashed out nearly $34,000 in unused vacation pay, an $11,000 bonus for having earned a graduate degree and more than $24,000 in extra pension benefits the county owed her,” said the Times.

The San Diego initiative exempted police from the switch to a 401(k)-style plan, allowing them to continue receiving pensions. The Ventura County initiative would switch all new hires to 401(k)-style plans, including the sheriff and the deputies.

Backers of the initiative filed this month say the growing cost of pensions is taking 17 percent of the Ventura County budget and eating up money needed for parks, libraries and hiring more deputy sheriffs.

The initiative website says county spending on pensions is soaring — $45 million in 2004, $162 million in 2013, and the county finance officer projects the cost “may exceed $220 million by 2018.”

McDermott said the initiative drive was launched after eight years of failed attempts to get unions and elected officials to cut pension costs. He signed the initiative petition filed Jan. 16 along with Richard Thompson and David Grau.

All three are members of the Ventura County Taxpayers Association. A separate group was formed for the initiative campaign. The signatures of 26,000 registered voters are needed by May 16 to place the initiative on the November ballot.

The initiative is similar to an initiative approved by 66 percent of San Diego voters in June 2012 that switched new hires to 401(k)-style individual investment plans and called for a five-year freeze on pay used to calculate pensions.

But there is an important difference.

The San Diego initiative exempted police from the switch to a 401(k)-style plan, allowing them to continue receiving pensions. The Ventura County initiative would switch all new hires to 401(k)-style plans, including the sheriff and the deputies.

“If you want to make a material change you have to include safety, because there is a significant amount of the cost included in their pensions,” McDermott said last week.

The “Ventura decision” may have been enabled two decades ago. CalPERS sponsored anti-spiking legislation for its members, SB 53 in 1993, that created a screening unit and made it more difficult to manipulate final pay to boost pensions.

Ventura County Sheriff Geoff Dean told the Thousand Oaks Acorn the claim that pensions are cutting services and the hiring of new deputies is “completely untrue.” He said the initiative will be “detrimental to my ability to recruit and retain qualified people.”

McDermott said the initiative backers “respect the service” of deputies and do not want a “B team” of the less qualified. If a county contribution of 11 percent of pay to the 401(k)-style plan is not attractive enough, he said, salaries can be raised.

The initiative limits the county contribution to 11 percent of pay for safety employees not in Social Security, 5 percent of pay for safety employees enrolled in Social Security and 4 percent for other employees with Social Security.

Most private-sector employers have switched to tax-deferred 401(k) individual investment plans that avoid long-term debt, have no hidden or ballooning costs and can be moved by employees if they leave the job.

Critics say 401(k) plans shift risk from employers to employees, tend to have investments poorly managed by employees, were intended to supplement not replace pensions and often do not provide adequate funds for retirement.

The “Ventura decision” may have been enabled two decades ago. CalPERS sponsored anti-spiking legislation for its members, SB 53 in 1993, that created a screening unit and made it more difficult to manipulate final pay to boost pensions.

A similar bill for the 1937 act counties, SB 2003 in 1994, cleared the Senate but died in the Assembly. The state Supreme Court “Ventura decision” in 1997 was unanimous, even though labor agreements reportedly had said additional pay would not count toward pensions.

The courts later ruled the “Ventura decision” was retroactive, boosting pensions of those already retired. Unlike CalPERS and CalSTRS, seven county systems refused to release the names and pension amounts of retirees until ordered by the courts.

An anti-spiking provision in Gov. Brown’s pension reform legislation limited special pay that can be counted toward county pensions. Union lawsuits challenging the reform were filed in Alameda, Contra Costa, Marin and Merced counties.

Contra Costa Superior Court Judge David Flinn issued a preliminary ruling last month in the consolidated Alameda, Contra Costa and Merced suits. He set a hearing Feb. 11 on arguments and modifications submitted by the parties.
—
Ed’s Note: Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Calpensions.com.