Kern County will dump a plan to alter an important part of Kern County's pension system after talks with county retirees and unions failed to produce an agreement on how to implement it because retirees wanted more benefits while unions wanted pay increases.

Last month Kern County supervisors called for a state law limiting how often the Supplemental Retiree Benefit Reserve would receive money. The law would freeze the flow of cash into the SRBR when it has more than 120 percent of the money it's expected to need to fund current and future retirement benefits.

Kern County supervisors say the move would help the county deal with more than $200 million a year in pension contributions required to prop up faltering investment funds of the Kern County Employees' Retirement Association.

But the effort has flopped so far.

Senior Administrative Analyst Allan Krauter told county supervisors Tuesday he would ask Sen. Jean Fuller, R-Bakersfield, to immediately pull the placeholder bill she had promised to carry for Kern County.

The KCERA manages retirement investments for Kern County employees as well as workers for a number of special government districts. When KCERA's "actuarially-adjusted" earnings top 7.75 percent -- the system's assumed annual rate of return -- a switch is flipped and the majority of the extra money is split in half.

Half goes back into the main fund. The other half goes into the SRBR.

The SRBR exists to fund extra benefits for retired employees to ensure their pensions keep up with inflation as they age. But it has the effect of siphoning money the main investment fund needs to reach that 7.75 percent rate of return.

Currently the SRBR has 176 percent of the money it will ever need to fund the benefits it currently provides.

At the same time, KCERA's main pension fund is dangerously underfunded with only 61 percent of the cash it needs.

Fuller's SB 1056 would have prevented the SRBR from funneling funds from investment earnings in any year the fund had more than 120 percent of the money it needed.

"It's better to get the main pension fund healthy before the county pours money into a supplemental account that is already nearly 200 percent funded," Krauter said.

But Krauter said the county couldn't convince some of its unions and retiree groups to agree.

The past three presidents of the Retired Employees of Kern County group wanted the county, in exchange for the 120 percent investment cap, to add a new retirement benefit boosting the pensions of retired workers.

They initially opposed the idea of the cap saying that limiting the ability of the SRBR to capture funding would eventually drain the fund and cut off benefits to retirees.

Some unions, Krauter said, wanted to see changes in the way the cap would work.

But the biggest problem lies with the county's biggest union.

"I have been unable to engage SEIU Local 521 representatives in any type of dialogue regarding the County's proposed SRBR legislation," Krauter wrote in his note to supervisors.

Representatives of the Service Employees International Union, which represents the vast majority of county workers, have refused to attend group meetings on the topic, Krauter said.

And when he did talk to them, he said, they made it clear the county needed to enter formal negotiations on the issue and offer up some raises.

"We're happy that the County is going to stop trying to do an end run around the people and get serious about discussion instead of dictating terms," SEIU Local 521 Regional Director Ernest Harris wrote Tuesday in a statement. "We hope they're willing to join in talks with us on a level playing field where we're treated as an equal partner. The committee we're forming this week is designed to make sure that these funds are used in a responsible way with transparency and accountability."

Supervisor Zack Scrivner said making the change in SRBR funding is "crucial for the health of the retirement fund."

The county does have other options, though, including pursuing a trailer bill.

But supervisors said the union's support is critical, with David Couch calling SEIU the "gatekeeper" at the state Senate committee level. If the union doesn't bless a bill, it probably won't move forward, he said.

"That's just the politics of the state," Couch said.