Recent fundraising financial reports show that the Concerned Citizens of Pinole, organizers of the Pinole Recall campaign, raised about $17,675 in 2007, $15,769 between July 1 and December 31. Meanwhile, recall target, Maria Alegria’s financials show her raising $30,865 in 2007, $30,447 collected between July and December. Alegria paid political consultant, Kevin Raikes, over $31,000 to advise her to pursue ultra-negative, slash-and-burn tactics where Alegria in public comments, print ads and video, has called Pinole citizens supporting the recall thugs and hooligans.

Prominent Alegria contributors include:
- $3,500: Plumbing Industry Consumer Fund
- $2,000: Northern California Carpenters Regional Council
- $1,500: Operating Engineers Local 3, International Association of Firefighters Local 1230
- $1,000: Stephen Tilton, CCC Labor Council, International Brotherhood of Boilermakers
- $ 500: The Kivelstadt Group, PG&E, CCC Labor COPE AFL-CIO, Comcast, Richmond Sanitary Service, Northern California Carpenters Regional Council, UFCW Local 1179

Below see analysis that shows why I believe the County has barely taken “baby steps” to solve the problem, and I have also attached a list of critical financial events to help put in perspective just how long some of these problems have existed in the County. Please take a look at that timeline list as well as the Economic Partnership’s report.

The Problem
Contra Costa County has been promising its employees lifetime health care without setting aside money to pay for this cost. The County has known about this problem since 2001 and has been through two labor contract cycles (the latest in the fall of 2006) without dealing with a level of benefits that has been deemed “unsustainable” by the County’s financial experts. A new accounting requirement (GASB 45) is forcing the County along with all other government entities to disclose the cost of the total retiree health care obligation and to begin to deal with it. The bad news: Contra Costa County’s obligation is $2.6 billion.

For Fiscal Year 2007-08, the County will pay about $36 million annually for retiree health which is the amount they are actually being billed. This continues the practice called Pay-As-You-Go. Under the GASB 45 reporting requirement, the County’s annual obligation is actually around $227 million. The shortfall will have to be reported as a liability.

The County’s Solution
On June 26, 2007 the Board of Supervisors passed a Board Order that at least some of the Board members contend has addressed the $2.6 billion retiree health problem. Unfortunately, up to this point they only established targets, but have not taken any binding action that will actually solve the problem. What the Board did and did not do:

1. The Board did not find a single penny in the current Fiscal Year budget to devote to this problem despite publicly declaring it to be “County Priority #1, #2, and #3.”

2. The Board proposed setting up a Health Trust Fund with a targeted funding level of only 40% (Pensions target 85% - 110% as a funding level.) At the Governor’s recent Public Employees Post Employment Benefits Commission hearing where I testified on this issue, nobody in a financial capacity suggested that the funding levels for retiree health be any different than that of pensions.

3. The “Trust Fund” is not currently funded and as a prominent local attorney stated “If it isn’t funded, it isn’t a trust fund.”

4. The proposed future funding of the “Health Trust Fund” relies on funding sources that may or may not materialize. Some of the funds are not even available until Fiscal Year 2022-23 when the current Board members will likely be long gone.

5. The $2.6 billion liability is likely to increase because the actuaries used an older Mortality Table. When they do their new calculations as of 12/31/07, they should use the updated table that reflects the fact that people are living longer. In addition, until the County takes real action to reduce the debt it continues to grow daily.

6. Given the proposed funding level, it appears the Board will either have to cut services and/or change the benefit structure for union members. No changes have publicly been agreed to by the unions.

If retiree health were the only financial issue, the County would still be in trouble. Unfortunately, there are others. The cost of health care benefits in general has doubled in six years. The pension issue continues to loom. The County is not funding building maintenance or vehicle replacement adequately. It can only be hoped that increased focus on the County’s growing retiree health problem will also mean that these other issues will finally be dealt with as well.

If you have any questions, comments, or solutions please feel free to call or email me.

Sincerely,

Kris Hunt
Executive Director
Contra Costa Taxpayers Association
925-228-5610