VID: Ventura County Residents Blocked From Voting on Pension Reform

“Why Were Ventura County Residents Blocked From Voting on
Pension Reform in the Midterm Elections?,” produced by Alexis
Garcia. About 11 minutes. Original release date was
November 4, 2014 and original writeup is below.

“The taxpayers bear a large burden…for the government employees’
pension and these pensions are much more generous than is available
to them,” says Richard Thomson, president of the Ventura County Taxpayers Association
(VCTA). “The question you have to ask is what’s so special about
government employees that they shouldn’t have to assume some of
their own risk—like the taxpayer—for their retirement.”

On Tuesday, voters across the county will venture to polling
stations for the midterm elections. In Ventura County, California,
residents will be able to have their say on a variety of local
issues, but there is one initiative they won’t be able to cast
their ballot for—that measure is pension reform. 

Like so many retirement systems across the country, Ventura has
seen it’s pension fund go from having a healthy surplus to being
over a billion dollars in debt. To avoid having their county become
the next Stockton or Detroit, the Ventura County Taxpayers
Association crafted a reform measure that would move the county
from a defined benefit to a defined contribution system. 

But shortly after it was approved to appear on the ballot, a
local judge
preemptively ruled the measure illegal
and ordered it stricken
from the 2014 election—thus ending Ventura’s hopes to change their
costly pension system. 

The roots of Ventura’s failed attempt at pension reform were
planted in 1947 when residents elected to create the Venture County
Employees Retirement Association (VCERA). After the Great
Depression, states thought it beneficial to establish retirement
systems that could provide aging workers with modest benefits when
they could no longer work.

In California, a 1937 law gave counties a choice—they could
become part of the statewide retirement system or create their own.
Twenty counties, including Ventura, chose the latter and became
known as ’37 Act counties. This designation is important
because if Ventura could elect change, it could provide a blueprint
for other counties to enact reform without having to go through the
arduous legislative process in Sacramento which often stalls
because of union pressure to squash any form of pension

to the judge’s ruling
, even though voters elected to create a
pension fund decades ago, the law provides them no way to exit the
system through a vote. Reformers would have to either repeal or
amend the law through state legislation to change their costly
pension programs. 

The decision was a setback for the VCTA, who had hoped a midterm
victory could expedite change to VCERA’s growing mountain of debt.
In 1999, pension payments accounted for just
one percent
of the total budget—today that number is
17 percent
. As retirements eat up a bigger portion of the
budget, the amount residents have had to kick in to cover pension
obligations has also increased. 

Taxpayers pay
$153 million per year
to the pension system—that’s triple the
number they paid out over a decade ago. In the next five years,
that number is expected to climb to$226

Some of the rise in costs can be attributed to demographics.
Retirees are living longer and drawing more in pension payments.
Unrealistic investment targets have also hampered growth in the
retirement system. While Ventura assumes the standard
7.75 percent return
on retirement investments, the county has
seen just a
5.82 percent return
in the last five years. 

In addition to these factors, the county also has the
distinction of having some of the highest retirement benefits in
the state—thanks to a practice known as spiking—in which retirees
can manipulate their final pay with supplemental benefits to boost
their pensions. 

1997 state supreme court ruling
known as “The Ventura Decision”
upheld this practice which legitimized pension spiking throughout
the state. A recent
Los Angeles Times study
found that 84% of Ventura
retirees receiving more than $100,000 a year in pension benefits
are getting more than they did on the job.

“When you look at compensation and pensions…we’re right up there
if not higher than anybody else,” states Bill Wilson, a member of
the VCTA who has also served on the county retirement board for
over 16 years. 

Under the defined benefit model, the government worker
contributes just a small fraction of their payroll toward the
retirement fund. According to a 2014 actuarial report done by Segal
Counsulting, Ventura county workers contribute 7.20% percent
of their paycheck, while public safety employees contribute 15.93
percent. The taxpayers match those contributions and pick up the
payments for any debt that has accrued. 

The same Segal actuarial report spells out average county worker
benefits. After 35 years of service, the average county employee in
Ventura with an $85,000 salary could expect to retire with $74,375
in annual benefits on top of their social security and 401(k) pay.
The average public safety employee making $125,000 salary can
expect to walk away with an annual pension of a $101,250 after 30
years of service. 

The reform
would have changed this structure by enacting a
defined contribution plan whereby the county would contribute four
percent for general county employees and 11 percent for public
safety workers. The measure would have only applied to new
employees hired after July 2015. The Reason Foundation—which
publishes Reason TV—provided analysis of the reform for the VCTA

and estimated
that the measure would save the county $460
million over the next 15 years and would reduce pension liabilities
by $1.8 billion. 

While the measure was wildly popular with local residents, labor
groups vehemently opposed reform. They turned out in large numbers
to county board meetings to voice their opposition and even showed
up at signature drives to intimidate people from signing the
petition to place reform on the ballot. 

Though the measure won’t appear on this year’s ballot, the VCTA
will continue to push for statewide reform. Growing public support
for reform and
recent court rulings
that may allow cities like Stockton and
Detroit to restructure their pension debt could be the tipping
point necessary to bring about change. 

“Once people realize what is at stake here, they’re going to
support it,” says Wilson. 

Approximately 11 minutes.

Produced by Alexis Garcia. Camera by Garcia, Paul Detrick, and
Alex Manning. Music byMobyGratis, Incompetech, and

Scroll down for downloadable versions and subscribe to Reason TV’s YouTube channel
to get automatic notifications when new material goes live.

from Hit & Run

Leave a Reply

Your email address will not be published. Required fields are marked *