May 12, 2010 in City
State error could cost Spokane County $325,000
Nonunion employees could see pensions cut amid rule confusion
A mistake by the state Department of Retirement Systems could cost Spokane County nearly $325,000 – if commissioners don’t pass the burden to employees.
The mistake could shave hundreds of dollars a year from the pensions of employees who are within five years of retirement and aren’t represented by unions.
For example, a 30-year employee who earns $61,700 — the average for 243 nonunion employees — would lose $77 a month, or $925 a year, on a pension that otherwise would have paid $3,162 a month, according to the county budget office.
The example assumes the employee is in the most common of three Public Employees Retirement System pensions covering county workers.
The problem occurred last year when commissioners tried to use a new state law that allowed them to cut employees’ pay or hours without also cutting their pensions – which are based on earnings.
While union employees received furloughs and other cuts, nonunion employees were denied a 2.5 percent cost-of-living raise that had been planned this year.
Before taking that action, county commissioners received assurances from the state Department of Retirement Systems that eliminating the raise would qualify under the pension-preservation law.
County Human Relations Director Cathy Malzahn said in December that Larry Bona, a Retirement Systems employer relations representative who served on a committee that drafted the law, told her commissioners were on solid ground.
Chief Civil Deputy Prosecutor Jim Emacio, who thought Bona was wrong, insisted on getting Bona’s opinion in writing.
Later in December, Malzahn sent Bona a copy of the commissioners’ proposed resolution to eliminate the cost-of-living increase to make sure it would comply with the new pension law.
Bona said he thought it would, but asked a supervisor, Vickie Worgum, for a “second, surgical opinion.”
“This resolution sounds just fine,” Worgum replied in an e-mail.
In March, three months after the resolution took effect, another employer relations representative raised questions about his co-workers’ advice.
The department’s legal and legislative services manager, David Nelsen said orally last month and in writing this month that commissioners were given bad advice. To have their pensions protected, employees must experience actual cuts in their pay or hours, Nelsen said.
Department spokeswoman Dawn Gothro said Wednesday that the department stands by Nelsen’s opinion.
“We’re looking into the facts of the situation,” Gothro said, declining to comment further.
County commissioners considered several possibilities Tuesday, including restoring the cost-of-living raise — which would cost the county $325,000 — or splitting the difference with affected employees.
The board took no action, but Commissioner Todd Mielke grumbled that the state had cost the county money.
“I think we did our due diligence,” he said.