REPORT/RECOMMENDATION TO THE BOARD OF SUPERVISORS
OF SAN BERNARDINO COUNTY
AND RECORD OF ACTION
June 27, 2023
FROM
DEBBY CHERNEY, Chief Executive Officer, San Bernardino County Employees’ Retirement Association
SUBJECT
Title
Retirement Contribution Rates 2023-24
End
RECOMMENDATION(S)
Recommendation
Approve adjustments to the Retirement Contribution Rates effective July 1, 2023 for Pay Period 15/23, as follows:
1. Decrease County retirement contribution rate for Tier 1 General Members from 27.17% to 25.54% of compensation earnable.
2. Decrease County retirement contribution rate for Tier 2 General Members from 24.03% to 22.53% of pensionable compensation.
3. Increase County retirement contribution rate for Tier 1 Safety Members from 59.75% to 61.93% of compensation earnable.
4. Increase County retirement contribution rate for Tier 2 Safety Members from 51.21% to 53.58% of pensionable compensation.
5. Decrease Superior Court retirement contribution rate for Tier 1 General Members from 29.67% to 27.72% of compensation earnable.
6. Decrease Superior Court retirement contribution rate for Tier 2 General Members from 26.53% to 24.71% of pensionable compensation.
7. Decrease South Coast Air Quality Management District retirement contribution rate for Tier 1 General Members from 47.44% to 44.18% of compensation earnable.
8. Decrease South Coast Air Quality Management District retirement contribution rate for Tier 2 General Members from 41.36% to 38.81% of pensionable compensation.
9. Decrease Other General (Non-County/Special Districts) retirement contribution rate for Tier 1 General Members from 40.48% to 35.90% of compensation earnable.
10. Decrease Other General (Non-County/Special Districts) retirement contribution rate for Tier 2 General Members from 35.48% to 31.03% of pensionable compensation.
11. Decrease Other General Local Agency Formation Commission retirement contribution rate for Tier 1 General Members from 35.30% to 30.19%.
12. Decrease Other General Local Agency Formation Commission retirement contribution rate for Tier 2 General Members from 30.30% to 25.32%.
13. Revise the employee retirement contribution rates for General Members and Safety Members as set forth in Exhibit III.
14. Increase the General Member employee survivor benefit contribution rate for employer and employee from $0.91 to $0.92 each per bi-weekly pay period.
(Presenter: Debby Cherney, Chief Executive Officer, 885-7980)
Body
COUNTY AND CHIEF EXECUTIVE OFFICER GOALS & OBJECTIVES
Operate in a Fiscally-Responsible and Business-Like Manner.
FINANCIAL IMPACT
Approval of these adjustments will ensure the retirement fund remains on a sound actuarial basis as required by law. The adjustments to the retirement contribution rates detailed in the Recommendation have been incorporated into the 2023-24 budget process. According to information provided by County Finance and Administration, it is projected that total County retirement contributions will see a decrease by an estimated $16.2 million from 2022-23 to 2023-24, which includes a $16.8 million decrease to the County, and a $633,000 increase to San Bernardino County Fire Protection District and Special Districts. Of this amount, it is estimated that County General Fund departments will see decreases of approximately $3.1 million in the use of Discretionary General Funding (Net County Cost) in 2023-24. The reduction in total County retirement costs excludes reductions associated with changes to County Pension Obligation bonds payments, as those payments are not included as part of the retirement contribution rates detailed in the recommendation.
BACKGROUND INFORMATION
The provision of California Government Code (GC) section 31453 requires that the San Bernardino County Employees’ Retirement Association (SBCERA) Board of Retirement shall, recommend to the San Bernardino County Board of Supervisors (Board) changes in the rates of member retirement contributions.
Contribution rates are established for two tiers of members:
• Tier 1 - Members with SBCERA membership dates prior to January 1, 2013.
• Tier 2 - Members who are new to SBCERA on or after January 1, 2013, or had more than a six-month break in service from a prior public retirement system and were ineligible for or did not establish reciprocity.
The contribution rates in the Recommendation were determined based on a report on the actuarial valuation of the County Retirement Plan, which was completed as of June 30, 2022. The SBCERA Board of Retirement adopted the actuary’s recommendations on November 3, 2022. Copies of the actuarial valuation were provided to the County Administrative Office and the Board in November of 2022.
While the Board is not the governing body for SBCERA, SBCERA presents certain matters directly to the Board since the interests of the County and SBCERA are intertwined in the County Employees Retirement Law of 1937. These matters have included the calling of elections and the setting of retirement contribution rates.
The contribution rates in the Recommendation do not include any amounts due to the County for Pension Obligation Bonds. Please note the effective date may be different from July 1, 2023, for other SBCERA participating employers depending on when their pay periods begin.
PROCUREMENT
Not applicable.
REVIEW BY OTHERS
This item has been reviewed by San Bernardino County Employees’ Retirement Association (Debby Cherney, Chief Executive Officer, Barbara M.A. Hannah, Chief Counsel, and Amy McInerny, Chief Financial Officer, 885-7980) on June 13, 2023; County Counsel (Julie Surber, Principal Assistant County Counsel, 387-5455) on June 14, 2023; Finance (Abigail Grant, Administrative Analyst, 387-4603) on June 14, 2023; and County Finance and Administration (Matthew Erickson, County Chief Financial Officer, 387-5423) on June 14, 2023.