In May, the county administrator’s salary was renegotiated, resulting in three salary increases, bringing her income to $247,500 with the final increment in December 2008. Based on this payment level, she will receive annual retirement pay of $248,598 for life with a 2 percent automatic increase built in. This figure does not include Social Security benefits that she will also receive at age 65.
Now, interestingly enough, in September, once again her salary will be renegotiated, along with the county’s 1,800 union workers. This will result in further enhancements of both her salary and her retirement benefit.
There is one cautionary note the supervisors should weigh as they project these increases, and that is the escalating cost of the county retirees’ health care.
The cost of the retirees’ health care in fiscal year 2001 was $399,638 for 318 retirees. The projection for the current fiscal year is $2,962,128 with approximately 700 retirees. That is exponential growth — sevenfold in seven years with the current cost going from $1,256 to $4,232 per individual.
This expenditure will continue to grow, with health expenses ever escalating and retirees living longer, plus retiring earlier. Merely projecting the increases to date would bring us to $20,000,000 in another seven years, fiscal year 2014.
What do you do about it? You either raise taxes or modify the existing program by changing the eligibility requirement, the deductibles, co-payments or the amount the county pays. Most importantly, begin amortizing the unfunded liability on an annual basis as with the pension program.
According to the PERS actuary, the prefunding with a trust will save about $3 out of every $4 of benefits as they are paid from investment earnings.
To do nothing will find the county with a huge debt resulting from skyrocketing health care costs coupled with the baby boomers currently working for the county growing older and retiring in masses.
— Robert Suhr, Scotts Valley