A message from the SCERA Retirement Board Chair

Published:  March 11, 2021

There has been some confusion regarding the role of SCERA in the administration of the pension plan and specifically the recommendation for or granting of new benefits, and the characterization of the benefit formulas negotiated by collective bargaining.

WHAT IS SCERA’s ROLE   

SCERA’s purpose is to invest trust assets and administer retirement and survivor benefits to its members and beneficiaries.  The benefits are set by statute, and the benefit formulas are adopted by the participating plan sponsors (employers) through collective bargaining.  SCERA is not a party to collective bargaining and we do not represent employees.   When asked, SCERA provides cost information on benefit formulas and other elements of compensation that could impact a retirement benefit.

SCERA is governed by the California Constitution, state law and regulations adopted by the SCERA Board and approved by the Sonoma County Board of Supervisors.  Under Article XVI, Section 17 of the California Constitution, the retirement board has a fiduciary duty to the members and beneficiaries of the plan and is required to act solely in the interest of, and for the exclusive purpose of:

           Providing benefits to participants and their beneficiaries (this is the highest duty);

           Minimizing employer contributions; and

           Defraying reasonable expenses of administering the system.

These constitutionally mandated fiduciary duties are woven throughout SCERA’s governance policies. 

SCERA’s COLA POLICY

Mandated fiduciary duties are found in the COLA policy which contains three policy goals:

Maintain reserves sufficient to permit the payment of all COLAs that have been granted to SCERA retired members and beneficiaries;

Maintain the purchasing power of retirement benefits to the extent allowable under the ‘37 Act by annually analyzing SCERA reserves to determine whether the COLA can be fully funded and the funding status communicated  to the Sonoma County Board of Supervisors; and

Minimize Employer contribution rate increases.

These policy goals align with the Retirement Board’s constitutional fiduciary duty to administer the plan in the best interests of the members and beneficiaries by ensuring that any cost of living increase to benefits has a dedicated funding source before being authorized by the Board of Supervisors.

The COLA statute that SCERA operates under was added to state law in 2004 through a bill sponsored by the Sonoma County Board of Supervisors.  The purchasing power COLA, by statute, requires a certain amount of reserves plus the cost of the COLA to be available before a COLA can be granted by the Board of Supervisors. 

SCERA does not have the authority to implement a COLA without approval from the Board of Supervisors, and SCERA does not make recommendations regarding a COLA.  That’s because retirement benefits are considered deferred compensation and SCERA is not representing employees in their employment capacity.  SCERA’s role is to administer the plan that it receives from the employer, not to advocate for increased or different benefits under the plan.

BENEFIT FORMULAS

The benefit formulas in place are:

           General Member Plan A – Legacy Plan        3% at 60

           General Member Plan B – PEPRA Plan        2.5% at 67

           Safety Member Plan A – Legacy Plan            3% at 50

           Safety Member Plan B – PEPRA Plan           2.7% at 57

The Legacy plans are on par with other California plans, and are the most generous formulas offered under the governing law for county retirement systems operating under the County Employees Retirement Law, like SCERA.  Every public pension plan in California, except for transit plans, the University plans and other plans specifically excluded from the Public Employees’ Pension Reform Act (PEPRA) are required to administer the PEPRA plan for new employees hired on or after January 1, 2013, with certain very limited exceptions. 

SCERA encourages all plan participants to access this website for information about how the plan operates.