For some reason, trustees of the Contra Costa County Employees' Retirement Association never seem to get it quite right.
On Wednesday, they narrowly approved lowering their investment earnings expectations, from 7.75 percent annually to 7.25 percent, a long-overdue move that will require employers and employees to contribute more upfront to the badly underfunded pension program.
The new earnings-assumption rate places the plan at the low end of California public employee pension systems. Unfortunately, it's not low enough, as data from the board's own actuary indicated.
Then, after most observers left the meeting, trustees agreed to consider in March delaying full implementation of the contribution increases -- a move that would undermine the goal of properly funding the pension plan.
The retirement association administers pensions for county workers and employees of 16 other public agencies. Labor groups generally oppose moves to lower the investment assumption because it means their members must make larger contributions. They know that if the system later falls short because of inadequate contributions, it's not their problem.
Rather, public agencies (the taxpayers) are on the hook for any unfunded liabilities, which they must make up through higher future contributions. That's exactly what's been happening. Because of inadequate past funding, the system has a shortfall of nearly $1.9 billion, driving up county costs and draining money that would otherwise go for public services.
Which brings us back to the pension board, composed of four appointments by the county Board of Supervisors, four labor representatives and county Treasurer Rusty Watts.
The political math last week was simple. The four labor representatives did not support the drop to 7.25 percent. Watts and three of the four county representatives did. The swing vote was former Richmond Councilwoman Maria Viramontes, who often sides with labor.
What brought her around to provide the crucial fifth vote? We suspect she realized that since she's up for reappointment in three months, she needs to start looking out for taxpayers and the fiscal integrity of the pension system as much as labor unions.
The pension system's actuary, Paul Angelo, who works under contract, didn't help matters. He recommended lowering the rate to 7.25, but repeatedly said that 7.50 percent would be acceptable -- even though his calculations showed the rate should be lowered to 7.09 percent.
As he explained his methodology, it became clear that the rate should be even lower. But if his firm recommended even 7.09 percent "that would be our last day here because that is a big drop." The supposedly independent actuary was making his own political calculation.
So, he explained, he rounded his recommendation to 7.25 percent, leaving some board members scratching their heads. As Trustee Debora Allen correctly pointed out, if Angelo wanted to round to an even quarter point, the recommendation should have been 7 percent.
Allen voted for the 7.25 percent rate, but wanted it lower. As she said, "We should start living in the real world and facing the reality we have before us."