Strategic Goal #15

CalPERS Retirement Plan

Issue

The District participates in the California Public Employees Retirement System (CalPERS) but does not participate in social security.  District employees are in the CalPERS Local Miscellaneous group for which five different retirement formulas are available.  The District currently contracts for the 2% @ 55 benefit formula (the second lowest).  Typically, public agencies that do not participate in social security offer one of the better benefit formulas.  Neighbor cities recently upgraded to the second highest, 2.7% @ 55, benefit formula: Santa Maria in 2002, and Lompoc in 2005.

A better retirement plan would make the District competitive within the northern Santa Barbara County job market.  It will help the District recruit and retain quality employees.

The Governor is trying to fundamentally change the retirement system for public employees hired after January 1, 2007.  The District needs to prepare for the possibility of funding and managing two separate retirement programs.

Goal

Provide a CalPERS retirement plan that attracts and retains quality employees.

Strategy

1.      Continue participation in CalPERS.  Do not participate in Social Security.

2.      Evaluate costs associated with changing to the 2.7% @ 55 or other benefit formulas.

3.      Consider the District’s retirement benefit within the context of total compensation

(Salary + Benefits = Total Compensation).

4.      Legal/Personnel Committee to review this issue.

Cost   (Operating Budget)

Retirement costs fluctuate annually depending on the performance of CalPERS investments.

Contracting for the 2.7% @ 55 would increase the annual cost for FY 2005-06 from 17% to 23% of salary, an increase of about $35,000.

Maximum impact to monthly water rates is 2%.

Maximum impact to monthly sewer rates is 1%.

Development impact is 0%.