Santa Barbara County supervisors on Tuesday unanimously approved changes to how county employee pensions and retiree health benefits are funded, cutting the Other Post-Employment Benefits (OPEB) contribution rate from 4 percent to 1.5 percent of payroll.
The recommended update comes from county CEO Mona Miyasato and Budget Director Paul Clementi, who say the changes are needed to keep the county on a stable, predictable financial track.
“I think this is an opportunity for a little bit of a celebration,” said Supervisor Bob Nelson, explaining that past boards had not been as fiscally responsible and that he was proud this decision does not pass liabilities on to the next generation of elected board members. “I spend a lot of my time trying to educate people on how fiscally responsible this board is.”
The OPEB plan, administered through a 401(h) trust managed by the county’s retirement system (SBCERS), provides monthly healthcare subsidies to retired county employees and their dependents.
Under the existing policy — adopted in 2016 — the county has been contributing 4 percent of payroll each year to cover ongoing benefits and pay down long-term costs, with a goal of hitting full funding by 2034. But the trust has grown much faster than expected because it’s been closed to new employees since 2018, investment returns have been strong, and the county has steadily added extra money to it.
As a result, the OPEB trust is now running seven years ahead of schedule, and county actuaries expect it to reach full funding by 2027. That accelerated progress is what allows the contribution rate to be reduced.
Staff said the lower rate is appropriate, with the change taking effect January 1, 2026.
Lowering the annual contribution from 4 percent to 1.5 percent frees up millions of dollars each year in the county’s general fund. Those savings can be redirected to ongoing services, capital projects, social services and public health, or other long-term needs without reducing retiree benefits.
The adjustments are described as both fiscally responsible and timely. Officials emphasized that the savings will provide relief to departments facing budget pressures
All in all, staying disciplined during stronger economic years makes it easier for the county to protect core services when revenues tighten.
