County employees say lackluster retirement plan disrupts long-serving staff, discourages new ones • Georgia Virtue

Employees say the county’s lackluster retirement plan is costing valuable members of Bulloch County’s workforce, driving up health care costs and subjecting the county to avoidable liabilities.

That’s what commissioners heard during a report on the pension plan proposals at Tuesday’s meeting.

“I have been here for 20 years. I’ve been in the sheriff’s department since I was 20. In 20 years, I have never seen an employee leave the sheriff’s office and return to the police department. Never… When the city changed their pension to a 60% pension, for the first time, I saw people leaving the sheriff’s office and going back to the police department. Why did they leave? Retirement. What we have is far from what the city has. What we have is a far cry from what Chatham County has. We cannot compete with them.

For recruitment, people come in, their question is ‘What is the departmental pension?’ and the answer is ‘Let me explain it to you very quickly.’ then you explain to them and you never see them again.

– Capt. Marcus Nesmith, Bulloch County Sheriff’s Office.

Background

In September 2021, Sheriff Noel Brown approached the commissioners to reinstate a pension committee formed in 2007. Then the committee was created with the goal of evaluating different types of pension plans for county employees and pension benefits. health insurance after employment, although no action was ever taken. While Brown was there on behalf of his own employees at the sheriff’s office, any revisions to the plan, he told them, would positively impact all county employees. Following Brown’s presentation, Commissioner Timmy Rushing moved to reinstate the committee, and the measure passed unanimously.

The committee was made up of employees from all county departments and met several times last fall to assess and consult with a representative from the Association of County Commissioners of Georgia (ACCG) to assess initial costs. and long-term for employees and taxpayers.

Bulloch County currently offers a defined contribution plan, which invests contributions made by both employer and employee in an account, which is in turn invested in stocks. Thereafter, the value depends on market conditions. Budget documents for fiscal year 2022 show the county is proposing a 401a/457b employee retirement plan. The county pays 6.5% of participating employees’ gross earnings into a 401a defined contribution plan. It also adds a 50% match of up to 2% of gross earnings to the 457b account.

However, employees have long advocated a defined benefit plan or a hybrid combination of defined benefits and defined contributions. Both solutions provide eligible employees with a guaranteed income when they retire using a formula based on factors such as the employee’s salary and years of service. Proponents of the reform say the latter options allow employees to better plan for retirement instead of retiring and then knowing what benefits they will receive, subject to fluctuating market conditions.

Committee members worked with their respective colleagues in their agencies and departments to share their feedback with CACG. The organization conducted an analysis at no cost to the county and presented four different options. Those options were then provided to the committee for consideration as well as commissioners and county staff ahead of Tuesday’s meeting.

(Note: Retirement benefits for sheriffs and other constitutional officers are administered by the state, so Brown would not be affected by a benefit change.)

Reasons for desired changes

Capt. Marcus Nesmith of the Bulloch County Sheriff’s Office presented the multi-page report along with the committee’s recommendations at Tuesday’s commission meeting. A number of committee members from other departments were also present, as were Sheriff Brown and a few members of his administrative staff.

Nesmith told commissioners that in addition to competitiveness, revisions to employee retirement would eliminate some liability, particularly for older employees in their 60s driving trucks and county vehicles. Nesmith said some want to work, but many haven’t retired simply because they don’t know what to expect. “I think if we can give them the opportunity to retire, we owe it to the employees,” Nesmith said.

He also said the plans just aren’t enough to live on after offering half their lives – so far – to the county. “We have 30 or 35 employees who have about $300,000 when they retire. That’s it. Can you retire with $300,000 at age 65? The answer is probably no. Just basic math and without considering interest or anything – if you took $30,000 a year, you’d be broke by the time you turned 75.

Alternative Proposals to the commissioners

Ultimately, Nesmith said two of the four plans appealed to county employees, and staff understood the other two options weren’t viable. (See page 2 of the document below)

Scenario 2 – Hybrid plan with a 45% defined benefit pension and a 457(b) plan in which employees would contribute 4% and the county would contribute 2%. Employees would vest after five years.

The multiplier would be 1.5% of the final annualized average monthly earnings.

Scenario 3 – Defined benefit plan of 52% of an employee’s salary, with the employee vesting after seven years. An employee could retire at age 55.

The multiplier would be 1.75% of the final annualized average monthly earnings.

Nesmith said Scenario 2 was good, but employees really liked Scenario 3 and would allow the county to be competitive.

Both plans have an initial “unfunded liability” for the county, however, if the county elected to go through the ACCG pool to convert the pension plans, the initial liability could be amortized over 20 years.

For scenario 2, the estimated initial unfunded liability to the county would be $4,055,500. Amortized over 20 years, the estimated annual payment would be $269,100.

For scenario 3, the estimated initial unfunded liability to the county would be $9,809,900. Amortized over 20 years, the estimated annual payment would be $650,900.

“We know and understand that it won’t just be free. We’re going to have to put something in there and I think we’re all ready to do that to come up with a better retirement plan,” Nesmith told the commissioners.

“It’s a big ask. But we’re asking you to take your time, do your due diligence and decide. Which is more viable and you come back to this room and you vote. I think that’s a fair request for all employees,” Nesmith said.

Here is the full PDF provided by CAGC (story continues below)

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Commissioner’s comments

The commissioners were not ready to make a decision on the matter at Tuesday’s meeting. President Roy Thompson expressed concern that such a move would require higher taxes.

“There are 425 employees in the county, but we have to cater for 83,000. Maybe we can get that for the same amount of money. I don’t know,” Thompson said. “I want you to have everything taxpayers can afford. I really do not know. Someone has to pay for this. We have to be well informed because of the number of people we represent. We need to have a workshop with the board, committee, CAGC and any other staff that wants to come… let’s discuss it.

Thompson also asked if the employees knew they were “giving up money.” “Do the employees know they’re going to write a check to the county for what they have so far?” Thompson asked Nesmith.

“Those I spoke to, yes. They understand that,” Nesmith said. “They know they’re going to give it back and get a better return at the end. He doesn’t just go away and never come back. Nesmith also told commissioners that most employees already contribute above the minimum contribution and are willing to do so to fund the scheme.

“I’m a small business owner, and there are a lot of small business owners who don’t offer any retirement benefits,” Thompson said.

Commissioner Curt Deal echoed the wish for a workshop. “There are a lot of variables. A lot of good can come from this, but I want to make sure we’re all on the same page and can all live with what’s to come.

Commissioner Walter Gibson said he was interested in a workshop so they could assess how to “help honest, good people who serve our county day and night.”

County Manager Tom Couch also asked Nesmith if, when evaluating the plans, employees had taken into account the reduction in the retirement age from 65 to 62 and the impact of retirement before being eligible for Medicare. Nesmith said this was not considered as the committee’s priority was retirement.

“I think these plans are attractive enough to generate retirements in this county. People who won’t stay until they’re 65 or 70,” Nesmith said.

Commissioner Timmy Rushing was not present at Tuesday’s meeting.

What other counties are doing

For comparison, other counties offer retirement benefits as follows:

COUNTY PLAN TYPE MATCH NUMBER OF YEARS PRIOR TO ACQUISITION MULTIPLIER(For defined benefit plans)
City of Statesboro
(31,495 inhabitants)
Defined benefit
Option 457(b)
60% of salary upon retirement 5 years
(65 years)
(55-year retirement for public safety after 25 years of service)
Wheelbarrow
(83,240 inhabitants)
Defined benefit
+ 401(a)
?
401(a) match is 3%
5 years Depends on years of service
Cobb
(760,141 inhabitants)
Defined benefit
with a defined contribution top-up option
In fiscal year 2021, the county paid 24.15% of employees’ base pay
County will match up to 4% of 401(a)
100% acquired after 10 years 1.0%
Effingham(64,296 inhabitants) Defined Contributions457(b) + 401(a) County pays:–3% on 401(a)–up to 3% on 457(b) after 1 year 5 years
fayette
(114,421 inhabitants)
Defined benefit The employee is required to contribute 5% 10 years 2.0%
Glynn
(85,292 inhabitants)
Defined benefit
(discontinued for new hires from mid-2021 due to lack of funding)
10 years (65 years)
Freedom
(61,435 inhabitants)
Defined Contributions457(b) + 401(a) County matches 401(a) contribution, %uncertain
Rockdale
(90,896 inhabitants)
Defined benefit
With defined contribution top-up option
90% of salary upon retirement 5 years

Pension benefits remain a controversial topic for local governments and employees. Just this week in Hall County, a judge again ruled in favor of a county in its decision to switch from a defined benefit plan to a defined contribution plan in 1998.

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