In it’s final meeting of 2013 the Orange County Board of Supervisor’s approved a new Memorandum of Understanding with it’s managers. County managers have been without a contract for two years. Under the agreement the managers will have to start paying their employee share of pension contributions. Those contributions, which will range from 3.5 to 10.5 percent of their paychecks, will be phased in with half starting in January and the remainder in June.
The county will provide a performance incentive pool for managers (P4P) of 2.5% to be awarded to managers whose performance exceeds expectations. The incentives will be paid half as onetime bonus pay and the other half as base salary building compensation. The incentives will be awarded based upon performance in 2011. There will be no P4P for 2012.
The vote by Supervisors was not unanimous. Supervisor Shawn Nelson was not happy with the phase in of retirement contributions over the next six months.
“The managers don’t pay the employee full share, and to drag it on meant they didn’t pay the employee end for up to two years. That’s the best deal in the world,” Nelson said.
According to estimates in the staff report “when all elements of the contract are fully implemented (e.g., full twelve months of retirement and medical insurance savings) the annual total gross savings and Net County Cost savings will be approximately $4.7 million and $813,000 respectively. The new contract runs through January 9, 2014, a little over 12 months.
The Board also adopted a new retirement formula for new hires in all bargaining units, except for attorneys and eligibility technicians, of 1.62 percent at 65, with a 2% match to employee contributions to a defined contribution plan. This is the hybrid plan option negotiated with most bargaining units in their most recent contracts. Since the Pension Reform Act of 2012 does not allow the option of plan choice to new hires, the Board got to chose the lowest benefit (and cost) plan. While the decision will result in nominal savings, it may also have a dramatic effect on the county’s ability to recruit experienced workers from other government entities, since most will be offering the maximum 2% @ 62 benefit allowed by the act.