Top Finance Official: County Pension System on ‘Very Good Track’

Nick Gerda/Voice of OC

Frank Kim, Orange County's chief financial officer.

Following years of dire warnings from political leaders and concessions by employees, the Orange County government’s retirement system is now well on its way to becoming stable, according to the county’s top finance official.

The county pension system “is on a very good road, and a very good track to maintaining and gaining that financial stability that we’re looking for,” said Frank Kim, the county’s chief financial officer, at a recent county supervisors workshop.

In five years the system is expected to be 80-percent funded – a level Kim said finance officials like to see. He made sure to credit both the county leadership and employees for the system’s improved outlook.

“While in the short term it’s been painful, in the long run we have a very healthy system,” Kim said.

Such comments stand in stark contrast to the picture that’s often painted about public sector pensions in Orange County. Public officials, especially members of the Republican establishment, routinely sound warning bells about pension costs — saying they threaten the delivery of basic governmental services.

They often, for example, point to the rising unfunded liability of the Orange County Employees Retirement System, which grew from just over $1 billion in 2004 to more than $5 billion last year.

The issue was given renewed attention Monday, with an Orange County Register editorial that described public pension liabilities as “a new threat” to county and city budgets.

Labor leaders, meanwhile, have emphasized that county workers have taken major steps to address the pension issue. Employees represented by the Orange County Employees Association (OCEA) pay the full employee share of their pension, plus part of the employer share, with some paying more than 20 percent out of every paycheck, according to the union.

OCEA also worked closely with county supervisors to develop a process for current employees to opt in to a lower benefit tier. But the so-called “hybrid plan” has so far been stalled at the federal level.

Notable at last week’s workshop was the conciliatory tone struck by supervisors’ Chairman Todd Spitzer toward the county’s public employee unions.

Spitzer said the county won’t be able to solve key problems – ranging from unfunded pension liabilities to getting a fairer share of property tax revenue from Sacramento – without having unions on board.

“I wish we could take this on our own and get that $800 million. It’s not going to happen,” said Spitzer, referring to the property tax equity issue. “I think we have to look at labor as…a partner with us in every regard.”

But at the same time, Spitzer made it a point to say that collaboration is a two-way street, and asked OCEA leaders to tone down their often-confrontational approach toward supervisors.

“I need you guys to dialogue with this board in a little different way than you have in the past,” Spitzer told Jennifer Muir, OCEA’s assistant general manager.

Muir, meanwhile, acknowledged that cooperation between OCEA and supervisors would make the county “a better place.”

“We as well are committed this year to really [working on] a collaborative relationship,” said Muir, who is slated to become the union’s general manager in August when its longtime leader, Nick Berardino, retires.

Addressing pension issues has led to increased costs for county employees, she added, making it difficult for some workers to not only put their kids through college but even put food on their tables.

“The employees care about this county just as much” as all of you, Muir told supervisors.

Correction: A previous version of this story misstated the top percentage that county employees represented by the Orange County Employees Association pay toward their pension.  We regret the error.

You can contact Nick Gerda at ngerda@gmail.com, and follow him on Twitter: @nicholasgerda.

  • LPA Gov

    It’s a myth that 80% funding is adequate and safe. According to the American Academy of Actuaries, “Left unchallenged, this (80% funding) misinformation can gain undue
    credibility with the observer, who may accept and in turn rely on it
    as fact, thereby establishing a mythic standard.” Further, the Academy states, “Pension
    plans should have a strategy in place to attain or maintain a funded
    status of 100% or greater over a reasonable period of time.”

  • the714

    Correct this article … I’m paying 20.5% to OCERS every two weeks, so 17% is certainly not the “maximum allowed by law” – I sure wish it was! And despite its public posturing, the County continues to press hard for further employee concessions while pleading poverty and offering next to nothing in return. These are the same employees who haven’t had a COLA in years and gave up contracted raises when the County was truly in hard times. How soon the County forgets.

  • Diego Vega

    “Most county employees, led by those represented by the Orange County Employees Association (OCEA), now pay as much as 17 percent of their pay into their pensions, the maximum amount allowed by law.”

    What? Most County employees pay 20% to 22% out of every paycheck, except cops and fire fighters who still pay a net ZERO toward their pensions.