Posted on Tue, Jul. 07, 2009

In April, directors of the Stanislaus County Employees Retirement Association made some bold but necessary changes in accounting practices to avoid putting a $22 million additional burden on the county for pension costs in 2009-10.

The retirement board also suspended the extra cost-of-living adjustment for the oldest retirees. That decision affected about 260 people and saved the fund about half a million dollars for 2009.

At that time, the board also alerted all of the 2,500-plus retirees and surviving beneficiaries that they could lose all or part of their nonpromised health benefit for 2010.

Wednesday, this issue comes to a head. The retirement board will decide whether to reduce or suspend the health benefit for next year. Retirees are expected to turn out en masse to object.

We understand their concern. No one wants to see their income reduced. But the retirement fund has paid out more than $80 million in these extras since 1981, using an "excess earnings" formula that due to an accounting gimmick grew even in the years when there were no excess earnings.

The health benefit amounts to up to $370 a month per person, with no requirement it be spent on health care.

Retirement administrator Tom Watson offers an alternative of reducing benefits for 2010, but recommends suspending them because the fund's investments have taken such a hit.

The Retired Employees of Stanislaus County has retained an attorney to fight the loss in benefits, suggesting the retirement board is favoring current employees over retirees.

The retirement board has a responsibility to consider all its constituents -- active county employees and retirees. It should not pay out unpromised benefits when it is not fully funded to meet its promised benefits.

The board meets at 1 p.m. Wednesday in the basement of Tenth Street Place.