Solana Beach: Residents ask Santa Fe Irrigation District for more cost cuts

By Joe Tash/Contributor

Santa Fe Irrigation District residents are demanding more cost-cutting by the district’s board of directors in the wake of the panel’s decision last month to raise water rates by 12 percent on Jan. 1, and by up to 12 percent in 2012 and 2013.

At a board meeting on Thursday, Dec. 16, speakers asked directors to reconsider their vote to raise rates over the next three years. They also urged the board to cut expenses such as employee retirement benefits and compensation for board members, and to consider consolidation with neighboring water districts to save on administrative overhead.

“I see this really as a moment of truth,” Rancho Santa Fe resident Greg Gruzdowich told the board. “You can either grasp the magnitude of what’s happening and change your ways, or continue to hide under these rocks.”

Thursday’s board agenda included a letter from Gruzdowich calling on the district to take three specific actions: eliminate all compensation and benefits for board members, convert the current employee pension program to a 401(k)-type retirement plan, and form a task force to work toward consolidation with neighboring water districts by the end of next year.

Board members responded that Gruzdowich’s suggestions deserve consideration, but they did not act on any of his proposals.

The board Thursday did approve a new two-year labor agreement with its 48 employees and managers that includes no pay increase, but raises employee contributions toward their retirement benefits over the next two years from the current 1.5 percent of their salary to 3 percent. The district saves about $40,000 for each additional 1 percent retirement contribution by employees, said administrative manager Jeanne Deaver.

The district provides water to some 22,500 residents of Rancho Santa Fe, Solana Beach and Fairbanks Ranch, and is governed by an elected five-member board of directors. Under the rate plan approved on a 3-2 vote last month, the bimonthly bill for the average residential customer will rise from the current $216 to a maximum of $303 in 2013.

Brad Burnett told the board Thursday that he has been examining the district’s finances, and found that the district is paying some $700,000 per year for employee retirement benefits, which he said is more than the district can afford.

“You need to find a better system,” he said.

Board president Michael Hogan said, “As much as I’d like to make the change right now, we can’t do it.”

In an interview after the meeting, Hogan said the district has contractual obligations both to current retirees and current employees, which cannot legally be broken or changed. The district — which belongs to the California Public Employees’ Retirement System, or CalPERS — also cannot opt to keep new employees out of the CalPERS system.

Its only option, he said, would be to create a new “tier” of lower benefits for new hires under the CalPERS system. For example, current district employees can retire at age 55 and receive an annual pension of 2.7 percent of their final year’s wages for each year of service. A new tier could increase the retirement age to 60 and decrease the benefit to 2 percent for each year of service.

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