The Santa Barbara County Board of Supervisors received a budget report on the first quarter financial statement that showed departments tracking pretty closely with projections. Staff recommended no reductions in staffing levels, but anticipate a $37.6-million budget gap in the General Fund and a total gap of $59.3 million.
That alone is bad news, but looming in the near future is a drastic proposal from the County Board of Retirement that would add an additional $30 million or so for the county to deal with the next fiscal year. The Board of Retirement voted on 10/27 to give a policy direction to drop the actuarial assumption on investment return from 8.16 percent to 7.75 percent. This vote in turn, increases the contribution rate required from the county. Currently, the actuarial valuation is at 28.88 percent, which means that for every dollar of payroll, the county pays nearly 29 cents into the retirement fund. When the valuation jumps, the county will be paying in 37.37 percent of the payroll. “It’s an almost $30-million scenario,” Auditor-Controller Bob Geis explained.
The recommendation from Milliman, the system’s actuary which just completed a study of the demographics of the retirement system’s population, was to drop the investment return assumption even lower, which would have meant an even bigger contribution by the county. But the Board of Retirement decided against that. The experience study takes a look at changes in demographics — for instance, the study found that people are living longer in retirement and that the rate of retirement has gone up, two reasons the system does not have enough money. The $30-million figure the county will have to pay into the system is in addition to the roughly $80 million it paid this fiscal year.