Board of Supervisors — 2026-04-17

Good morning, everybody. I'll call to order the April 17, 2026 meeting of the Santa Barbara County Board of Supervisors and the third and final day of our county budget workshops for the fiscal year 2026-2027. Madam Clerk, can you please call the roll?

No report this morning, Chair.

All right. Madam Clerk, do we have any announcements or changes to our agenda today?

Chair Nelson and members of the board, I just have a few quick announcements this morning regarding public participation. Members of the public wishing to address the board will have an opportunity to provide comments at the conclusion of each functional group presentation, or excuse me, at the end of the special issue presentation this morning. If you would like to speak more broadly on the county budget, there will be an opportunity to do so during the budget workshop summary public comment period at the end of the meeting today. For those joining via Zoom, please indicate the specific special issue you would like to comment on when registering to speak. Lastly, for more information on the Board of Supervisors' methods of public participation and instructions on how to provide public comment on items listed on today's agenda or during the general public comment period, please refer to page 2 of the agenda.

Individuals that would like to provide verbal public comment may do so via Zoom by registering in advance via the link available on page 2. If you have any questions, please contact the Clerk of the Board's Office. At area code 805-568-2240. Again, that number is 805-568-2240. That concludes my announcements for this morning.

All right. Thank you very much. Now is the time

Chair Nelson and members of the board, we did have one request to speak from the public on general public comment, Julia Barbosa, but I do not see her currently on Zoom. So we have no further requests to speak on general public comment.

All right. Thank you. We'll go ahead and proceed. We'll start the budget workshop. This brings us to the third and final day of our budget workshop for fiscal year 26-27. I will now, actually before I do this, we're going to have some final Presentation by our CEO and Budget Director and then we're going to get into our special issues items. Just when we complete those special issue items and note for the record that's the AI update that we're trailing from. Wednesday's meeting will hold that first, and then we will have a pension fund outlook. We have Mr. Greg Levin from SB CSRS here, and then we'll be doing our jail systems housing options, which I know a lot of people are here, they're very interested in. Right now we're well over 30 speakers, and that's growing, so typically it's three minutes of public comment.

If it continues to grow much further, we may potentially reduce that down to two minutes, so I just want to let public commenters know that in advance so they can just look over their notes. I'll try to be graceful on the time as we do that, but if it gets too large, we need to, you know, keep this meeting moving along. So I may go down to two minutes if there's too many public speakers. I just want to make sure those who are wishing to speak on these items know that in advance so you can prepare your comments accordingly.

So with that, let's come back to RCO and budget director. on any updates.

Chair Nelson, members of the board, we did release a handful of board inquiry responses yesterday afternoon. They were related to balancing measures, just kind of proportionality between departments and sizes of budgets, deferred maintenance backlog, the Sheriff's Office calls for service, a little more detail on cannabis education funding, where that goes.

Community Services Department discretionary programs funded by GFC and social services priority contracts recommended by the CEO to be funded.

All right, thank you Mr. McLinty. So at this time we'll be turning over to our special issues items and the first one is our AI update artificial intelligence and I believe that we have Chris Sherwin our Good morning, chair Nelson and members of the board.

I'm Chris Cherguin, the county's Chief Information Officer, and I will be presenting on our AI journey so far here with the county. So the county began this journey a couple of years ago, and our focus really for the first year or so was all around AI governance. This morning, I'm going to talk about what we've done from a governance standpoint. I'll talk about the education and training that we've been offering and will be offering. And then I will cover the implementation. So what have we done so far and where are we going with AI tools and solutions?

So to start with, on the governance side of things, about a year and a half ago, we formed a countywide AI Steering Committee. This committee is currently made up of 12 different county departments with 15 members to provide the oversight of our AI decisions at the county. The first thing we did was we published the countywide AI guidelines. That was about a year and a half ago that we published that. And that document was mostly around education and awareness of AI.

And then, as you know, the AI policy was approved by the board in January of this year. We are working very closely with the EITC as well, and we have created a centralized intake system using our ServiceNow solution that allows departments to go in and submit requests for AI tools that they might be interested in. And that intake process includes about two dozen different questions where The AI Steering Committee will review those questions. We look at things like cybersecurity. We look at things, you know, around AI ethics. And we have a whole list of different focal areas on each proposal that's coming in to us. And so we really are comprehensive in regards to how we look, how we review any AI solution that departments are bringing.

Go ahead and move to the next slide. Thank you. I'm remiss because I did not introduce Matt Murray and Chris Bowser, who are sitting at the table there. Matt Murray is our Director of Service Delivery, and Chris Bowser is the county's AI Transformation Coordinator. They've both been instrumental in AI efforts around the county, so I want to thank them for their work. And they're also available at the end to answer any questions.

So in regards to the AI training, the first thing we did was we formed an AI working group. That was back in 2024. And that group was designed to really promote AI learning education. We brought in several guest speakers. We brought in several AI vendors. And it's all around just education and awareness. We also have led several in-person and virtual AI courses.

HR and ITD work together on those. We have virtual training now available as well that we will be offering all county staff, and that's training around our countywide AI policy, that's training around Microsoft Copilot Chat, and then just, you know, how to do prompt engineering, and AI in general, and so a variety of different virtual training, self-paced training that is and will be offered to all county staff.

So working very closely with HR, and I do want to recognize Lillis Smith, who was not able to be there in person, but Lillis Smith is the Talent Development Manager for County HR. And she is co-chair of the county's AI Steering Committee and has also been very instrumental in working with us on the AI training. So where are we at today? We currently have seven different AI applications that have been approved by the Countywide AI Steering Committee.

And these solutions are in various stages of being implemented today. So we've got solutions from behavioral wellness, from sheriff, from public defender, A couple countywide applications, clerk-recorder-assessor, that have gone through the process and are, like I said, in various stages of being deployed today. And then we have two other use cases that we are currently reviewing and looking likely that those will be approved as well. And then there's some other solutions that are just at the beginning stages of the vetting process, and they're not on this slide today. So we are making real progress in carefully and methodically beginning to implement AI tools throughout different departments at the county.

One of the larger initiatives that we have been working on now for quite some time is a county-wide launch of Microsoft Copilot Chat. And so if you're not familiar with Microsoft Copilot Chat, it's similar to Chat GPT. It's similar to Gemini. It's a tool that will allow staff to be able to leverage Gen AI and to help them just in their day-to-day tasks. And so we are actually planning to launch this countywide in about two weeks. Late April is when we plan to roll this out. There is no budget impact on the county for this tool. This tool is included in the current Microsoft licensing that we already have. And so we're really excited about this. We've been doing a lot of change management. We've been doing a lot of training and education.

on what this tool is, how to use this tool, and I do believe it will definitely be helpful for many of the staff of the county to be able to have a tool like this to help them in their day-to-day tasks. So where are we going in the future? We've spent a lot of time looking at other AI solutions that we really feel will not only benefit county staff, but will also benefit Santa Barbara residents.

So we've looked at various solutions for permitting. We've looked at constituent engagement tools. 311 service type tools, along with many others. And so we're really doing our due diligence to see what platforms are out there and what might be able to benefit our county. And so looking towards the future, I think we will continue to be reviewing and ultimately implementing many new tools.

The full version of Microsoft Copilot, which does cost additional money, is another tool that we have been doing a lot of research with and is a tool that we are hoping to roll out towards the end of this calendar year. That would be more of an opt-in. Departments can choose how many licenses they want and who, you know, within their departments would receive those licenses. And that's just a much more integrated tool. It integrates with Word, Excel, Outlook, Teams, that type of thing. And so it's a bit more robust than the version that we'll be releasing here at the end of April.

We've been looking at agentic AI, which is, in a nutshell, is artificial intelligence that helps us automate workflows. And so that's something that we've begun to do some research and doing some pilots with that as well. At the end of the day, we really see that AI is going to allow us to really leverage it to make county staff more efficient, higher productivity, that type of thing. It really is a force multiplier. And it also can definitely elevate the residents' experience.

through, you know, more transparency, through improved service delivery, quality of services, that type of thing. So very bullish on what it can do. But as with any new technology, we need to be very methodical and very careful about how we implement this type of technology. I want to close by just saying that just recently, our county was recognized by an organization called Public Sector AI Summit, and we were recognized in the top 50 most forward AI counties in the nation. for the work we've done with our AI governance. And so that was a very nice recognition.

We have put a lot of work into governance, which is the foundation of, I believe, of, you know, a successful launch of AI solutions. And so I wanted to share that. So that's the end of my presentation. I am happy to answer any questions that you may have. Questions from

the board? Supervisor Hartmann.

Not really a question but just I hadn't fully appreciated how much you have to build a foundation go slow to go fast ultimately and so I'm really excited about your award that that not only have you persuaded this board but you've made it clear even nationally how significant that is. Organizations can invest a whole lot in these systems, and then if you don't build that foundation, it can be money for naught. So, just wanted to appreciate you.

Thank you. Thank you, Supervisor Hartmann. Supervisor Capps.

Yeah, thank you, and I appreciate the Chair and others that put this item with our budget conversation and building on what Supervisor Hartmann said. I'm just excited to get to the phase where we do start to see some real monetary benefits from AI. I know I've started to see that in the economy of my personal time, and I just, you know, I'm not going to lead you and make you give predictions that you can't do at this point, but I would like to get us there sooner than later of when we can start to see departments, you know, sort of predicting what it will mean for us, you know, to reduce costs, et cetera, et cetera, because I do see that in other industries where they're really reducing costs, and so Again just appreciate the juxtaposition of this conversation as we look at having to make some real tough budget decisions.

Yes thank you Supervisor Capps. I was sitting here getting your presentation of course I used AI to find out how many counties there are in the U.S. which is 3,143 which also makes us in the top 50 in the top 1.59% according to AI. So I think that's something to be proud of and I you know I'm one of those people that have been fairly impatient but I do see the value in all the hard work that went into kind of building that foundation the team together you know I'm somebody that wants to jump sometimes before I look and that's can be scary especially you know I think we had a public commenter on the first day talk about you know Their personal information and the government you know especially with health records and other information that we have there's a lot that we are responsible for and you know what that public commenter probably doesn't know or didn't understand is that you know all this work that we've done in advance that none of these things are going to be done without proper vetting without going through these types of committees going through all the channels that I think everybody expects from the public when we're going to go through that and I and that might lead to maybe less innovation, but I think ultimately I think that protects the general public and their privacy and their information, which is hugely valuable.

But also I think you guys are still forward leaning and I think we're obviously identifying areas of improvement. And I think this is something that the message is to county employees, to county departments, is this is somewhere that this is not a fad. This is the future to the unions, too, that also are struggling on finding what this means for their employees.

And, you know, what does that mean for retraining to make them more effective, to get more work done? And so it's an area that I think we're all cautiously moving forward. And and it's you know I think there's gonna be some big changes in the future and hopefully at the end of the day how do we deliver services to our constituents, to taxpayers, to members of our community. Hopefully we're gonna be able to do that in a better way, a more efficient way.

Those that are afraid that somehow it's gonna take away jobs you know I really focus them on looking at is there ever Not enough work to do right, there's always more work to do and so we're gonna be able to get more done. I don't think it's you know there's always another task to be completed and so I'm really looking forward to delivering higher level service for the value of our tax dollars through the use of AI into the future so.

Thank you. Supervisor Hartmann.

I did have a question and that is the use of AI within the county organization. Will that largely be a decision department by department working with ITD or will there be a priority of things that might come back to the board? How do you anticipate the kinds of things we'll be using and how decisions will be made about that?

Yes, great question. So the process as it stands today is departments could submit through the vetting portal that we've created. They can submit their AI solution that they're interested in. So the countywide AI Steering Committee reviews that very, very carefully. We look at it from all different perspectives, including, as I mentioned earlier, cybersecurity and things like that.

If the Countywide AI Steering Committee approves it, and that solution is under a certain dollar threshold, which is if it's under $50,000 for the contractor for the year, That department does get the green light if it gets approved by the Countywide A.I. Steering Committee. However, if it's over $50,000, it also gets reviewed by the EITC Committee, which has been an existing committee at the county for many years.

And that committee is made up of many department heads, including members of the county executive office. And so that group also then reviews and vets those AI solutions. So I believe that there are You know, I believe we have a solid process in place to ensure that we're carefully reviewing any AI solution before it gets approved. Today, it wouldn't come to the board for approval, but if that is something that you feel is important, we can certainly look into that.

I think it would be nice not, we don't have the expertise and you've put the systems in place, but I think getting reports back and just speaking for myself, I know you've talked about making our website more user-friendly, easier for people wanting to use it to have AI find things, because it's very difficult, especially historically. So I think that's a really important use. And I think the extent we can use it for report writing and get people actually, you know, social workers with clients, doctors with patients, law enforcement, you know, actually preventing crime rather than having to sit and write reports. So those are, you know, things I hope we'll see in the future.

Agreed. And some of those solutions are already either in place or are going through the process right now. And so I think, you know, if we look over the next year or two, we're going to see many of those solutions that will benefit both residents and our staff be implemented. So I'm confident that we're well on our way and we'll see a lot of just overall improvements and services

through these tools. Thank you. Thank you, Supervisor Hartmann. And just to speak to, you know, board approval, I think that we would probably be an impediment to progress in this, you know, and so, you know, I want to continue to lean on our department heads and our executives that are know their departments the best and then an ITD department that is you know second to none in county government on this type of stuff. I do think reporting back with some semi-annual reports might be nice just so that we know what's going on. I think also department heads I think this is something that when we do evaluations I think this is something we should be also looking at on You know, how are you using AI in your department to, you know, improve workflow or our delivery of services is something that we as a board should be looking at when we do our annual look at county departments.

So those are just, you know, again, I think the message on these budget workshops is we're often sending signals to departments on the values of this board. And I think this is something that we want to continue to lean into. So Supervisor Capps.

My caffeine is kicking in. So I'm going to ask one more question. Director Sherwin. So just to be pedantic, so if a manager is listening to this and has an area of their work that they think, oh, it's very cumbersome, what do you suggest? How do they explore with your department? You know, this area of our work really takes a long time. I bet AI might be able to help reduce our workload. What, what's the steps? Because I still, I just, I just, I'm still always curious how your team, you know, really does affect such a massive county of 4,700 employees.

Yes, another great question. So our department has a division within it called the Business Relationship Management Division. And Matt Murray, who's sitting at the table, leads that division. They meet with every department on a monthly basis. And the purpose of those meetings are to help departments, you know, answer, we're there to answer their questions, we're help there to provide strategic guidance, If a department has, let's say, an AI solution that they want to discuss with us, we're there to discuss that with them. And so, yes, we meet monthly with each department and that's been very Thank you so much.

I would say departments, as we meet with each one, with the BRM team, we talk about a lot of different topics. AI is something that comes up, mostly the conversations lately have been around co-pilot chat. Microsoft's rebranded it to co-pilot chat basic, so we can always count on Microsoft to throw us curveballs. But as we ease in, I think, to AI, I think more use cases will become apparent.

What can we use with the tools we already have that don't require further investment? And then what would require further investment? And those are the use cases that Chris presented earlier. As departments see niche needs and areas of expansion, we're happy to work with departments on all levels of AI use.

And are we using them for contracts yet? Are we using AI for contracts yet? I mean, I know that's a very big question, but I mean, I know how much, how many contracts we approve every board meeting and I, I know from, from friends that that's a area that's been taken over by AI by and large.

I'm looking at Kirk Lagerquist who's over purchasing and he's shaking his head no, but that's a ripe area to be evaluated.

Great.

Just prompted by Supervisor Capps' question, you know, sometimes when you're in the organization, it's hard to get your ideas surfaced. I visited FLIR, which is a highly innovative company, and they just have suggestion boxes around for people, and if the suggestion is actually implemented, people get rewards, or their whole department get rewards. It's a way that they try to cultivate a culture of innovation. So, maybe something worth trying.

Excellent. All right. Well, thank you, ITD. Thank you, Mr. Sherwin. I apologize for having to move it so you couldn't be here in person, but you did an excellent job remotely. Thank you. And now we will shift to our second of three special issues today, which will be the Pension Fund Outlook. And we have Mr. Greg Levin here to present.

Oh, you're, there you go. Thank you, Chair. I'm ready to proceed if you're okay. Thank you for having me. My name is Greg Levin. Through members of the public, I'm the Chief Executive Officer of the Santa Barbara County Employees Retirement System. It's been several years since we've been before the Board of Supervisors, and we're pleased to come here and talk to you today about the financial results of the system. And because this discussion today is focused on budget, we've tailored this presentation to really focus on those issues for you. I would be remiss if I didn't say there's a whole wealth of information about the Santa Barbara County Employees Retirement System that I would love to share.

And so just letting everybody know in the public that you can find a lot more information on our website and we do meet in public work meetings once a month on the fourth Wednesday of every month. If you're interested in learning more about the system, I would encourage you to check in to those meetings and also look at our website.

Greg, can you move it a little closer? It's

having a hard time picking you up a little

bit.

Is that better? It is. Thank you. Thank you. So just a couple of things about this. We go through an annual process of creating an actuarial valuation report and going through annual audits to develop this information. I'm going to jump around a little bit because I'm trying to give you the latest information. A lot of the information I'm presenting today is dated as of June 30, 2025, and then I'll give you an update about where we are in the markets today as well.

And then just wanted to mention that SB Services is a legally separate agency from the county that's governed by an 11-member Board of Retirement. So we'll head into it and we'll get to it and head into it our fiscal year 2025 results. We closed the fiscal year of 2025 with a 5.4 billion dollar actuarial liability that was offset by about 4.8 billion dollars in assets. That remainder left a almost 600 million dollar unfunded liability.

That unfunded liability represents past service costs, not future service costs, but past service costs. Benefits that have already been accrued but not yet funded. That resulted in an 89% funding ratio. Moving over to the other side, we have 4,700, approximately 4,700 active members, 2,000 deferred members. Those are members that once worked for the county or another participating agency and have left to go on to other employment opportunities around the state and other parts of the country that have left their time and their service, their money in the system and are entitled to take a benefit in the future.

And then finally, we have 5,400 retired members, many of whom live in the Tri-County area, the vast majority of who live in Santa Barbara County proper. And so we're sending this money back into our community. It's something that we're proud of. At the bottom of that table, I wanted to draw your attention to the retired to active ratio. That's an important metric in KPI in the pension world. It is what we're looking at there is the ratio of active members, so those who contribute to those who receive benefits from the system.

And what you should take from that as that number grows is that that increases the sensitivity of the plan to investment losses and in turn the sensitivity of the county to contribution rate changes that result from investment losses. SB service is considered a mature retirement plan with a ratio of 1.15 retirees to every active member. And so that means that we need to act accordingly and I'll talk to you a lot about the strategies that we're using to mitigate some of that risk as we look forward into the future.

Before we get there, I thought we'd spend a little bit of time talking about our plan demographics and membership data. I'm not going to go through all the numbers on this chart, but what I wanted to point out to you is that in 2013, Governor Brown passed a landmark pension reform. It's called the Public Employees Pension Reform Act. This reduced benefits for new employees at the county.

It also delayed the time at which you can retire, so employees are retiring later. That actually contributed greatly to savings for the county over time, because these benefit plans are much less expensive than the legacy benefit plans. And over the past 13 years, you've gone from having no employees in these pepper plants to having almost 70% of your general membership in these pepper plants and almost 60% of your safety membership in these pepper plants.

It is worth noting that in Sacramento right now there's legislation that's being considered by the State Senate that would repeal some of these pension reforms and put in place pension benefit formulas that are similar to what existed prior to the Great Financial Crisis. I share that with you as that's one of a future factor that can affect pension funding down the road and I think you should just be aware of that.

On the retired side, about 75% of our retirees are general members, 25% of our retirees are safety members. The other thing that you should draw from this slide is that the average annual pay of a general member is now close to $100,000, but a safety member is about 30% more than that, or almost $130,000 on average now. And if you look at how that translates into retirement benefits, safety members generally get a richer retirement formula. So their benefits levels are substantially higher than general member benefit levels.

But when you're evaluating that in the context of your overall plan, understand that your general membership is much larger than your safety membership. So presented this information for people who'd like to do their own analysis. But that is the demographic data of our plan. Now I'm going to flash forward to February 28th, 2026. This is a large investment portfolio that takes time to price, and so we typically receive performance results about a month after the markets close is when we're getting up-to-date information on what's happening within the portfolio performance.

So as I was writing this, we turned these reports in about two weeks in advance. So I was writing this, we were just at the end of March, and the best data I had at that time was on February 28th, 2026. So we'll start there, and then I'll talk to you a little bit about what's happened since then. The first chart on the left shows diversification, and what I'm trying to show you here is that the investment portfolio for this plan is well diversified. It's designed with intention to avoid catastrophic results from the failure of any one specific area of the market. It's allocated across several different types of investments that have different macroeconomic factors that drive their return.

From a liquidity perspective, that's the middle chart, we are invested in 37% of the funds are invested in what we would call a liquid assets, and then 63% of the fund is invested in what we would call liquid, publicly traded, daily priced assets. Why that's important for consumers of this information to know is that One of the initial trends that occurred over the last couple of decades was to increase allocations into private markets. Private markets tend to generate a higher return.

The downside of that is that they are less liquid, and they can't be sold readily on open markets. Once you invest, you tend to have to ride those investments out. So that's a risk that we monitor quite closely at the system, and it's something that we keep an eye on. And as we achieve full funding, one of our goals is to reduce that risk of illiquidity in the portfolio and transition into other types of asset classes that might generate more yield and more liquidity through the system over time. I just wanted to point that out to you because that speaks to what's going to happen in the retirement system over the next 20 years. And I think it'll connect with it a little bit more when we talk about some of the later slides in the presentation.

But as of the end of February, we had about $5.2 billion in the portfolio, and we were trending towards a 9.41% fiscal year to date. That was what it was at the end of February, so we were looking to have a nice premium over our assumed rate of return for the end of the fiscal year. Since then, I'm sure you all watch the news, there's been a conflict in the Middle East and the event was started. There's been a lot of volatility in the investment markets.

I do have some preliminary data for the end of March now. At the end of March, the portfolio, the annual return, fiscal year-to-date return on the portfolio had dropped to 5.8%. So, you can see we lost about 4% in response to the Iran war. However, since then, the last two weeks, we've seen a tremendous recovery in financial markets. Broad U.S. equity indexes are actually above where they were at the end of February.

The same cannot be said of fixed income markets. Yields are still about 40 basis points above where they were when the war started. However, they've been stable, so that relates to about a 2% decline in the Barclays Ag, which is a broad investable index of corporate and government bonds. So it's been mixed, but we expect that come to the end of April, if the trend continues, that the portfolio will balance out and there will be some recovery from those March numbers.

So that's where we are today and where we stand today. Looking back over the last 20 years, this slide shows our historical investment performance, and you can see that over the 1, 5, and 10-year periods, the system has exceeded its assumed rate of return of 7%. Over the 20-year period, it's below the assumed rate of return for 6.46%, but it's important to remember that, you know, it all depends on the period of time that you're looking at. In 2008-2009, which is the great financial crisis, those numbers are still in that 20-year number. So when I come back to you on four or five years and I show you the 20-year number, it's going to go up a lot because those losses will not be in that time period anymore.

But what I'm really hoping that you'll take away from this slide is the orange bar that cuts across all of those blue columns. That orange bar is the system's assumed rate of return. So when you're looking at the system's investment performance, what you want to look at is how we do relative to that orange bar. So we can, for example, on a year like 2016, we gained 1.3%.

So we had a positive return in the portfolio, but from an actuarial perspective, that's actually a loss of 5.7% because it's below the 7% assumed rate of return. So that's what we're trying to communicate with this chart. Moving on, talking about your historical contribution rates, you can see that in 2008, contribution rates were in the low 20s for the employer because of the market losses. Those contribution rates increased significantly over the next three years after that.

What also came out of the great financial crisis was the need to reconcile the actuarial, the assumption risk of these plans. And the assumption risk of these plans is the risk that the things we assume may not happen. So we may not earn that 7% that we're assuming. People may live longer than we're assuming. The workforce, the county workforce may shrink or grow more than we assume it will. Those are all factors that affect contribution rates.

The other thing that affects contribution rates is amortization of losses. And so over the last 17 years with those elevated contribution rates, what you've seen is the county has actually been repaying its investment losses from the 2007, 2008, 2009 time period. And that's really important to take in because that's going to be a key factor in some of the information that I'm about to show you.

Before I go there, though, I just wanted to show you that in addition to right-sizing our actuarial assumptions and removing plan risk and making this a more safe, sustainable pension plan, the county's also done a lot of hard work at the negotiating table, and it increased the share of the contributions that the employees pay, and that's shown by that orange line in this chart. So our legacy members, members that are not in PEPRA plans, have been paying a greater share of contributions towards their pension benefits since 2016.

What you should see over time, if I were to stretch this chart out into the future, is you'll see those gray and those orange lines converge. But bottom line, you can see from 2008, employees went to contributing less than 5% of pay to the pension plan. And now when we get to about 2031 and today, they're contributing close to 10% of the plan. So that's a big achievement for plan sponsors and shows your part in helping sustainably fund the pension system and the employees' contributions to their own retirement benefits, which should not go unrecognized.

So we're going to get a little technical here with this chart and it's important for you to understand the components of the county's contribution rate so you understand the next chart that I'm about to show you. This chart shows the two major components of the county's contributions. The first component is that blue column at the bottom of the chart on the left. That's the normal cost. That is the cost of the pension benefits that are being earned today. So the pension benefits that are being earned by the people sitting in this room today for the work that they're doing today.

The orange bar on top of that is the amortization cost. That is the cost of past pension benefits that have not been paid for for a variety of reasons. One, perhaps because our assumptions were bad, perhaps because we've had investment losses and we didn't earn the return that we thought we were going to earn. Those generate costs, and that's the two-thirds of your current contribution rate.

Now the chart on the right decomposes that orange bar on the left. So this is your various components of your amortization cost. Last year, this year, you were paying about $111 million in amortization costs. And of that $111 million, $96 million relates to one single amortization level. So coming out of the general financial crisis, the Board of Retirement determined to put the county on a plan to repay these investment losses and pay for all of the changes that were happening coming out of pension reform. That, that charge is 96 million dollars a year and it is, we are in year 12 of 17 years of amortization of that, so we have five years left of that payment. That 96 million dollars, I can tell you with a certainty, is going to go away in five years.

The thing we don't know is what will replace it and I'll talk to you a little bit more about that, but before I get there I just want to point out That if you look at that investment, that orange bar on the chart at the right, you will see that that actually lowered your amortization cost. And the reason for that is it should surprise no one that when you lower the assumed rate of return, you are more likely to exceed assumed rate of return. And so what we're showing you there is that these decisions, while painful when they were first made, they pay benefits over time. They reduce the aggressiveness of the pension plan, and they make it more likely that you're going to achieve your goals. And then finally, offsetting that, that $31 million on the right, that's the cost of all of the assumption changes that have been put in place over 10 years.

So that includes the change in mortality of recognizing that people live longer, the lower assumed rate of return, the past cost of the lower assumed rate of return, and so forth. So where does this bring us? This brings us to a 20-year projection. I think this is the thing that excites everybody when you look at this data. What you can see is that $96 million amortization layers is going to persist until 2030, and then it'll be fully amortized, and then what we're left is the performance of the years since 2013 forward, and it shows that the county's composite contribution rate is projected, and I want to say projected, this is an estimate. We can't guarantee that this is going to happen, but it is projected to fall from the high 30% all the way down to the below 20%.

And if things go well and we achieve all of our assumptions, we project that the county's contribution rate will fall below 15% over time. What you're seeing in the out years with those borrowers at 10%, assumes that there is no amortization cost, that the county is fully funded at that point, and that the county is just paying the normal cost of these pension benefits every year. So when you're out in the public and people ask you what a pension benefits cost, the answer to that is today, the pension benefits being earned today in the room cost about 10% of payroll, but we're still paying for the excesses of our fathers, if you will, of the past.

This is another way of looking at this plan projection, and that brown bar shows the same trend that I showed on the prior slide. But what I want to draw your attention to on this slide is the colorful bars that overlay the brown line. This is a stochastic projection. We create this using thousands of simulations that I should say actually our consulting actuary produces this for us.

Using thousands of projections and using our actuarial assumptions and our assumptions of investment volatility, we look at what the range of probable outcomes is going to be. And what you can see is that that brown line is the mean projection. So that's the average of all of those thousands of scenarios that we've run. But what you should notice from this slide is that the farther out you go in time, and this is true of any projection, the less reliable that projection is going to be.

And so that's what those colorful bars in the background show. And so the yellow bars reflect what we think is going to happen between 40 and 60% of the outcomes. And then the orange bars is that 60th to 80th percentile of bad outcomes. And the red bar is that 20% of the worst possible outcomes that could happen. So what you should take from the slide in looking at this information is that you're, because of the recognition and the rolling off of that $96 million amortization layer, In 80% of our projected scenarios that we ran, you will have pension costs that are lower than they are today. However, there's a 20% chance that you're going to have pension costs that are higher than they are today. That's the risk of the investment portfolio, that's the risk of markets, and some of this is just, we can't control.