While the pension debt racked up by the city of San Diego has received broad attention in recent years, the amount of money the county’s retirement system owes to its has ballooned to nearly $5 billion.
The San Diego County Employees’ Retirement Association’s unfunded liability now stands at $4.8 billion, roughly 10 times what it was just before the Great Recession.
In 2008, the county pension debt was $485 million.
The current debt also amounts to nearly one-third of the portfolio’s $15.8 billion in assets.
Pension officials say they are aware of the rising debt, which is formally called the unfunded actuarial accrued liability, or UAAL.
They say they have taken a series of steps to manage and reduce the obligation, including lowering assumed rates of return from 8.25 percent to 6.5 percent.
The top pension official also noted that investment earnings over the past 10 years matched the lower 6.5 percent assumed return rate, meaning they are issuing accurate projections.
“SDCERA has a strong funding policy and a prudent investment strategy designed to ensure current and future benefit payments to our ,” Tracy Sandoval, the association’s chief executive officer, said in a statement.
The association “has a systematic actuarial program that determines contribution rates intended to pay down the unfunded liability with a long-term goal of reaching fully funded status,” Sandoval added.
Pension debts climb when fund managers lower their assumed return rates or extend mortality expectations. The projected value of the portfolio is reduced even though the amount of benefits stays consistent.
Like the city of San Diego, the county operates its own pension system rather than participating in statewide programs like California Public Employees’ Retirement System or the California State Teachers’ Retirement System.
The county fund serves just over 47,000 people, including about 21,000 retirees, 18,000 workers and about 8,000 whose benefits have been deferred.
The association is governed by a nine-member board of elected officials, volunteers and current and former employees.
In addition to county workers, it serves employees of San Diego Superior Court, the county schools office and two tiny municipal entities.
The escalating debt has important consequences for San Diego County taxpayers.
The higher the unfunded pension obligation, the more the county Board of Supervisors has to pay into the retirement fund each year — money that could otherwise be spent on public safety, libraries, road improvements or other projects.
Public pension systems provide a defined benefit to retired each month. They generally rely on contributions from taxpayers and current government employees and the money generated by their investment.
Unfunded liabilities grow when contributions and investment returns fail to meet the payments to beneficiaries.
In recognizing the growing deficit between assets and obligations, the county Board of Supervisors is working to reduce the pension debt.
Earlier this month, supervisors voted to add a voluntary $31 million payment to the retirement system on top of the hundreds of millions of dollars the county steers into its pension fund every year.
Separately, the board expected to contribute $773 million to the fund, the staff report said. By 2025, the annual contribution could reach $864 million based on current projections.
“These actions are a part of a long-term plan to manage ongoing pension costs to help ensure the county’s commitment to providing for employees’ retirement while maintaining service delivery to the public in the long term,” the report to supervisors said.
Monthly benefits are calculated under a formula based on employees’ length of service and annual pay. The amounts paid to San Diego County Employees’ Retirement Association vary greatly.
Almost 3,500 beneficiaries collect less than $1,000 a month, according to the association’s latest annual financial report. About 8,000 others receive between $1,000 and $3,000 per month.
Just over 6,000 people collect between $3,000 and $6,000 each month — nearly one in every four .
Nearly 1,000 people receive $10,000 per month or more. Most of those are retired s, elected officials or senior executives.
According to Transparent California, which maintains public databases of public salaries and pensions, recently retired attorney Thomas Montgomery received the highest county pension last year: just over $375,000.
