Employees of the Orange County Transportation Authority will pay their full share of pension costs under a proactive plan approved April 22 by the agency’s board of directors.
OCTA has been paying an average of 8 percent for each administrative employee’s share of their pension costs. OCTA’s 1,100 union-represented coach operators, maintenance workers, facilities technicians and parts clerks already contributed 100 percent of the employee share.
OCTA’s administrative employees serve at-will and are not members of a union. There are no automatic step increases, promotions or cost of living adjustments and OCTA does not pay for employee medical care after retirement.
Beginning Jan. 1, 2014, administrative employees will contribute an average of 2 percent of their salaries to their pensions. That contribution will increase each year until employees are paying 100 percent of their employee share by Jan. 1, 2017.
“From innovative transportation solutions to administrative efficiencies, OCTA has long been a pioneering public agency that runs like a private-sector corporation,” said OCTA Chairman Greg Winterbottom. “This is one more example of ensuring the taxpayers’ dollars are spent most effectively.”
This progressive implementation plan will result in an $8.2 million savings to taxpayers over the three-year period. During the next 20 years, employees paying their own pension share is expected to result in a savings of $85 million.
OCTA employees belong to the Orange County Employees Retirement System and the overwhelming majority — 96 percent — have a retirement formula of 1.67 percent at the age of 57.5. This is one of the lowest pension formulas in the state.
“This agency operates entirely with a business mindset,” said CEO Darrell Johnson. “Each one of our decisions is guided by public policy that continuously asks the basic question, ‘Does this make financial sense for our future?’”
OCTA has a merit-based pay-for-performance model much like the private sector where employees only receive raises if they achieve clearly defined goals and objectives. In response to the Great Recession, from mid 2009 through 2012 OCTA administrative employees received no merit-based pay raises.
“Government agencies are grappling with controlling pension costs throughout the state and I’m proud that our board has the vision to address this matter head on,” said OCTA Director Todd Spitzer, who chairs the agency’s finance and administration committee and is the county’s third district supervisor. “This is the right action to take at the right time and phasing in its implementation is the best thing for our talented and dedicated employees.”