Good news on pensions; StanCERA will see lower contribution rate

Stanislaus County officials thought they were facing a sharper increase in the yearly payments to help fund employee pensions.

But the picture changed Wednesday with a better-than-expected report on the condition of the pension fund managed by the Stanislaus County Employees' Retirement Association.

Instead of a 20 percent jump in the contribution rate, which could have increased the county's obligation by more than $8 million, local agencies in StanCERA will see a slight decrease in the rate, according to a report from EFI Actuaries.

It was welcome news for a county government that's faced a constant budget crisis in recent years. The county can't rely on assistance from StanCERA to defray its pension costs in the fiscal year starting July 1 because reserves shifted in previous years to offset the county's costs were exhausted.

With the report delivered Wednesday, the county's total pension-

related payments could come to $49.5 million next year. The county kept those costs at $38.1 million this year, but it would have been $50.7 million if StanCERA had not agreed in March to use $12.6 million in reserves to assist the county.

Graham Schmidt of EFI said a 22 percent return on the value of StanCERA's investments and salary cuts for local government employees were major factors in easing the burden on its member agencies.

StanCERA administers pension benefits for employees of the county, Ceres, the Superior Court and five special districts.

As of June 30, the value of its assets was $1.372 billion and the pension system was 78 percent funded.

Another reason for the lower-than-expected contribution rate was that consultants had assumed payroll costs of the member agencies would grow 3.75 percent per year, Schmidt said, but the local agencies have been slashing payrolls.

On Wednesday, StanCERA board members started the process of shortening the period for amortizing the system's unfunded liabilities. Next year, StanCERA will start shaving a year off the 25-year amortization with a goal of reducing it to 10 to 15 years.

County Chief Executive Officer Monica Nino said that will serve to increase the county's contribution for 2013-14.

"It tells us that our departments will need to start setting aside funds for 2013-14 in anticipation of those additional charges," Nino said.

Wednesday's report was in sharp contrast to the recession years when the pension fund lost hundreds of millions of dollars in value.

Bee staff writer Ken Carlson can be reached at kcarlson@modbee.com or (209) 578-2321.