Local Budgets Update: Pension Costs Wallop Kern County as reported in Caltaxletter, June 10, 2005.

Marin Pension Costs Escalate. Marin taxpayers are paying $25 million this year for county employee pensions, up 35.8 percent over last year. Last week the county retirement board awarded a tax-free disability pension for the former county director of parks, Fran Brigmann, who is 55. The Marin Independent Journal (June 14, 2005) said the tax-free pension is for more than $60,000 a year.

Discussions on disability pensions in the past have been held in public, but the retirement board has now decided to consider all disability pension requests in private. A recent opinion by Attorney General Bill Lockyer validates the practice of holding disability pension reviews in private. In March, former county retirement administrator Norman Klein applied for a disability pension. His application was on the agenda of last week’s retirement board meeting but was not acted upon.

In the city of San Rafael, the cost to taxpayers of city pensions is $10.1 million, up 31.2 percent over last year.

PUBLIC PENSIONS: BEYOND OUTRAGEOUS. The Sacramento Bee (May 31, 2005) editorialized against public employee-union backed legislation that would add “even more generous benefits to already lavish pensions.” The paper said the unions have returned to the pension trough, flexing their muscles in the Democrat-controlled Assembly Public Sector Committee to gain passage of a series of bills “to fatten already bloated police and fire pensions.” These are “fiscal time bombs” that “fleece taxpayers, while pushing state and local governments ever closer to insolvency.” The worst of the measures, the editorial said, is ABX1 6 by Assembly Member Noreen Evans, a Santa Rosa Democrat first elected last November. It would raise the cap on retirement benefits from 90 percent to 100 percent of pay for firefighters and police officers. The bill also would increase the tax-free status of public safety disability pensions from 50 percent to 85 percent, which the paper said would merely encourage more disability retirements. This measure is “irresponsible, unconscionable, shameless, craven,” wrote The Bee. Cal-Tax concurs.

COLLEGE TRUSTEE WON’T RESIGN OVER PENSION FLAP. The Orange County Register (June 3, 2005) reported that Coast Community College District Trustee Armando Ruiz won’t resign despite complaints about increasing his pension ten-fold by retiring, then immediately running for re-election. He said, “I earned my pension. I think the real issue should be the excellent quality education students have received in this district during the 21 years I’ve been here.” On October 31, he retired and won re-election as an incumbent two days later. The newspaper reported that he took advantage of a legal loophole in state law, since closed, that let him inflate his pension from his part-time district job. It went from $5,000 per year to an estimated $54,000 annually.

SR Legislator Proposes 100% Pensions for Police, Firefighters by Kerry Benefield as reported in the Santa Rosa Press Democrat, June 4, 2005.

Beyond Outrageous an editorial from the Sacramento Bee, May 31, 2005

PERKING UP PENSIONS. The Los Angeles Daily News (May 24, 2005) reported how city and county employees augment their salaries with hundreds of bonuses that the courts have held can beef up pensions. For example, a Fire Department arson investigator gets a “shooting bonus” of up to $32 a month, as approved by Los Angeles County supervisors earlier this month. However, the paper said none can recall ever having to fire a weapon at someone. Another bonus: $120 a month for county janitors who wax floor, and if a custodian agrees to act as a watchman to guard against fire, weekly pay jumps 5.5 percent. Jon Coupal, president of the Howard Jarvis Taxpayers Association, called it “a nefarious yet successful means to disguise both pay and pension-spiking. It’s clearly a way to hide from taxpayers the true cost of public employment.”

Six Charged in San Diego Pension Scam as reported in Caltaxletter, May 20, 2005.

Schwarzenegger Drops Pension Reform, But the Crisis Continues by Dan Walters in the Sacramento Bee, May 16, 2005.

Sacramento County Budget in the Black. For the first time in four years, following millions in spending reductions, Sacramento County’s budget is free of red ink. The proposed budget for next year even has a $7 million surplus. However, county supervisors face a challenge of holding down spending because large debts are coming due in the next few years, reported The Sacramento Bee (May 11, 2005). The $484 million budget plan was unveiled as officials warned of stormy seas ahead because payments on pension bonds are expected to grow from $22 million in the fiscal year starting July 1 to more than $88 million in 2009-2010. This means steep budget shortfalls in each of the next five years, the paper said, as financial officials suggest county residents should lower expectations of enhanced services in years ahead.

Retirement Boondoggle: Bakersfield Council Gives City Manager Special Retirement Perk. The Bakersfield City Council on May 11 voted to give its $191,000-a-year city manager a special retirement perk. According to the Bakersfield Californian (May 11 and 12, 2005), Alan Tandy will be allowed to convert extra money the city pays into an investment for the manager into salary for one year. This will allow him to spike his salary for the fiscal year, enhancing his retirement benefits because California, unlike most other public employers, allows retirement to be on the highest one year of pay. The paper said the agreement could add $6,000 to Mr. Tandy’s retirement pay.

Ventura County Retirement Costs Soar. Contributions by Ventura County to its employee retirement system will increase by 38 percent this year, to $101 million, the Ventura County Star reported May 11, 2005. County supervisors voted 4-0 on May 10 to approve the new contribution rates. An actuarial report said the system was underfunded by $323 million.

Reform Public Employee Pension Plans, an editorial from the Contra Costa Times, May 3, 2005.

L.A. County Retirement Costs Soar. Increasing retirement costs amounting to $115 million have created a budget headache for Los Angeles County. The Los Angeles Times (April 18, 2005) reported that the latest in a series of increases has pumped up the county’s annual pension costs to nearly $1.2 billion. The culprit is stock market losses when the dot-com bubble burst in 2000, according to the county chief administrative officer, David Janssen, along with a decision to borrow nearly $2 billion in bonds to deal with budget shortfalls with debt payments peaking in the next three years. Things would have been worse, The Times reported, if county supervisors had not offered much less generous pension benefits in the late 1990s, when pension fund investments had soared and many cities and counties adopted generous retirement plans, especially for public safety officers. Mr. Janssen said pension costs paid by taxpayers are expected to level off after next year.

Pension Costs Soar 33% in Marin County. Pension costs for Marin County employees will increase by more than $6 million this year, twice what was expected, the Marin Independent-Journal reported April 14, 2005. Last year, the cost for pensions was $18.4 million; this year’s cost is projected to be about $25 million, roughly a 33 percent increase. The Marin retirement system has 4,000 members and retirees.

Did Pension Gambit Set Stage for Solid Reforms? by Daniel Weintraub as reported in the Sacramento Bee, April 12, 2005.

Criminal Pension Funding Probe Under Way in San Diego. San Diego County District Attorney Bonnie Dumanis has informed top San Diego City Hall officials that a criminal investigation has been launched into the city’s pension system and its 13-member board of trustees. The San Diego Union-Tribune (March 24) reported the confidential letter from the DA to the city attorney. The paper also said the DA was “marching down a well-worn path, one trekked for more than a year now by federal investigators.” The DA is looking at conflict-of-interest law and pension board votes in 2002 when a majority of trustees, including several city employees, endorsed letting the city underfund the retirement system. The $3.6 billion system has a deficit of at least $1.37 billion, largely from underfunding, benefit increases and investment losses.

A Billion in Debt and Big Payments Define 'Success' by Daniel Weintraub as reported in the Sacramento Bee, March 24, 2005.

Public Pensions: CALPERS Plan Would Prevent Wild Swings in Employer Costs as reported in Caltaxletter, March 18, 2005

Public Pensions: Governor wIll Listen to Counter-Proposals that Benefit Taxpayers, Says Finance Director as reported in Caltaxletter, March 4, 2005.

Fraud is Accused on One Hand; Pension Awarded on Another as reported in Caltaxletter, February 25, 2005.

Pension Changes Would Create Long-Term Savings by Daniel Weintraub as reported in the Sacramento Bee, March 1, 2005.

Public Pensions: CalPERS Rejects Schwarzenegger Reform Plan as reported in Caltaxletter, February 18, 2005.

$1 Billion in Pension Savings by David Drucker as reported in the Los Angeles Daily News, February 17, 2005.

Pensions Contribute to County's Budget Woes by Cameron Jahn as reported in the Sacramento Bee, February 14, 2005.

Public Pensions: Governor Kicks Off Campaign for Reforms in San Diego; Fires Retirement Board Appointees as reported in Caltaxletter , February 11, 2005

Public Pensions: Angelides Leads Opposition to Reform as reported in Caltaxletter, February 4, 2005.

Public Pensions: Senate Hearing Delayed as Chair Rips Schwarzenegger-Richman Reform Proposal as reported in Caltaxletter, January 28, 2005.

Lessons for California from Oregon's Debacle by Daniel Weintraub as reported in the Sacramento Bee, January 27, 2005.

California's Pension Benefits Among the Richest by Daniel Weintraub as reported in the Sacramento Bee, January 25, 2005.

Comp Abuses Tied to Policy by Troy Anderson as reported in the Los Angeles Daily News, January 24, 2005.

Public Pensions: CalPERS Web Site Unlawful, Says Richman as reported in Caltaxletter, January 21, 2005.

A Billion, Borrowed, an editorial from the Sacramento Bee, January 20, 2005.

Public Pensions: More Horror Stories as reported in Caltaxletter, January 14, 2005.

Public Pensions: Outrages Continue to Surface as reported in Caltaxletter, January 7, 2005.

State's Retirees Prosper by Kathleen Pender as reported in the San Francisco Chronicle, January 7, 2005.

Pensions Under Probe by Troy Anderson as reported in the Los Angeles Daily News, January 3, 2005.

County Works on Pension Burden by Peter Felsenfeld as reported in the Contra Costa Times, December 21, 2004.

How Law Fattens State Pensions by John Hill and Dorothy Korber as reported in the Sacramento Bee, December 19, 2004.

Public Pension Crisis: Ticking Time Bomb as reported in Caltaxletter, December 17, 2004.

Padding For Pensions by Troy Anderson as reported in the Los Angeles Daily News, December 11, 2004.

Public Pensions: CHP Report says Abuse or Fraud May Be Involved in Disability Retirements as reported in Caltaxletter, December 3, 2004.

S.J. Costs Soar for Pensions by David Siders as reported in the Stockton Record, December 1, 2004.

CHP Urges Pension Probe by John Hill and Dorothy Korber as reported in the Sacramento Bee, December 1, 2004.

A New Idea for California's Reform-Minded Governor by Daniel Weintraub as reported in the Sacramento Bee, November 28, 2004.

City's Pension Costs Continue to Soar by James Burger as reported in the Bakersfield Californian November 23, 2004.

Public Pensions: Riverside to Issue Bonds; O.C. Excesses as reported in Caltaxletter, November 19, 2004.

San Diego has Borrowing Plan for Pension Mess. The San Diego City Council approved Mayor Dick Murphy’s plan to reduce the city’s $1 billion pension debt by borrowing $600 million over three years. The San Diego Union-Tribune (October 6, 2004) reported the council’s 7-1 vote represented what the mayor called forward movement on all 17 recommendations of his Pension Reform Commission. The mayor acknowledged, however, that the city cannot issue bonds until a federal investigation is resolved. The probe involves the city’s financial statements related to bond sales that did not reflect the worsening deficit as a result of decisions to fatten pension benefits for city employees.

Pensions Raise Concern in Riverside. Riverside County has joined the ranks of local jurisdictions worried about rising pension costs. The Board of Supervisors ordered a study of the county retirement system’s financial soundness, reported the Los Angeles Times (September 29, 2004). Supervisor Bob Buster said Riverside County had made the same error that the City of San Diego committed, leading to fiscal crises. The county increased pension benefits that could not be sustained when the economy soured. The pension fund faces a $300 million shortfall, which Treasurer Paul McDonnell says makes the Riverside County system 92 percent funded, which is far better than San Diego’s 76 percent or Orange County’s 79 percent. Mr. Buster’s proposal called for budget officers to attend labor negotiations and to study such alternatives as reduced benefits for newly hired employees. A 5-0 vote ordered county staff to produce a report later this year.

Disability Status Boosts Pensions for Top CHP Officers as reported in Caltaxletter, September 17, 2004.

Pension Concerns Raised in Orange County as reported in Caltaxletter, August 20, 2004.

State Employee Pensions. AB 2119 (Assembly Budget Committee) was amended on July 27, 2004 to provide that new state employees do not make contributions to PERS, nor receive service credit for 24 months and the state doesn’t contribute during that period; the new employee will contribute 5 percent to an alternative retirement program, and may transfer the amount and get credit from PERS after the 24-month period. This measure went to the governor as SB 1105 (Senate Budget Committee).

Pension Bond. AB 2120 (Assembly Budget Committee) authorizes a $2 billion pension restructuring bond. This measure also is SB 1106 (Senate Budget Committee), which was sent to the governor.

State Agency Limits Pension Boost. The Schwarzenegger Administration’s Department of Personnel Administration has ruled that 600 supervisors and managers do not qualify for a lucrative pension deal. The 25 percent increase for members of CAUSE, the California Union of Safety Employees, took effect July 1, 2004 allowing more than 2,000 employees who do such work as inspect billboards and meat, and test driver’s license applicants, to retire at age 55 with 2.5 percent of pay times years worked. The union won approval of SB 183 (Burton), along with then-Governor Gray Davis’ signature, after showering legislators and the governor with campaign contributions. The Legislature’s Democrat majority blocked efforts to repeal the pension boost before it could take effect. The state agency also has ruled that the safety benefit will not apply to past service, prompting dozens of calls from angry workers who had been led to believe they would qualify for the fatter pensions.

L.A. Media Exposes Excessive Public Pensions as reported in Caltaxletter, July 16, 2004.

County's OT Shocker by Troy Anderson from the Los Angeles Daily News, July 4, 2004.

Local Budgets: Pension and Pay Hikes Drive Contra Costa Budget Woes as reported in Caltaxletter, July 2, 2004.

GRAND JURY HITS PENSION PLAN. The Sacramento County Grand Jury on June 23, 2004 reported that the Sacramento City Unified School District Board of Trustees was negligent in allowing an alternative pension plan for district administrators. The report, according to The Sacramento Bee, criticized the board for not seeking details on the CASA pension plan and for ignoring concerns raised by others. It found former Superintendent Jim Sweeney allowed his former chief financial officer, Laura Bruno, to exert too much influence and control. She created and oversaw the CASA plan. The California Administrative Services Authority was created four years ago for about 100 non-union employees of the Sacramento district, plus about a dozen employees of the Yolo County Office of Education. CASA enabled them to stop payments to both the California Public Employees Retirement System and Social Security by joining the new retirement system. There now is litigation over CASA’s $3.2 million in assets. School Board President Jay Schenirer said the board will act on the jury reports recommendations to run a tighter ship. Ms. Bruno, who has moved to Nevada, refused comment. Mr. Sweeney said the report amounted to political “piling on” and was not going to bother reading it.

Public Employee Pension Costs Continue to Plague Local Governments as reported in Caltaxletter, June 18, 2004.

Assembly Democrats' Attempt to "Punt" Pension Rollback Bill is Blocked; Hearings to be Held as reported in Caltaxletter, June 18,2004.

Pension Suit to be Dropped. As long as the Legislature approves state employee pension reforms, the Howard Jarvis Taxpayers Association will drop its lawsuit against Governor Schwarzenegger’s plan to sell nearly $1 billion in pension obligation bonds. “It is an excellent deal for taxpayers,” said Jon Coupal, president of the HJTA, when the pledge was made in a written agreement with the governor’s Department of Finance, according to The Sacramento Bee (June 5, 2004). The governor is calling for state employees to pay an additional 1 percent of their pay into the pension program. He also wants new hires to be covered by a less-generous pension. The administration dropped its appeal of an earlier court ruling in favor of the HJTA lawsuit that blocked the Davis administration from issuing $2 billion in pension bonds. The HJTA also gets reimbursed $120,000 in legal costs, reported Bee columnist Daniel Weintraub. The deal drew criticism from the Assembly Democrats’ top budget-writer, Mr. Steinberg, who said employee unions should be included in the pension talks and the taxpayer group’s pledge not to sue is “a bit shallow.” He said the HJTA is “ready to march right back to the courthouse if they don’t get their way on reducing the pensions of state workers.” Jim Hard, leader of the California State Employees Association, called the deal “disgusting” and “certainly a tax on state employees, and it’s unfair.”

Repeal of Law Giving Management Positions Lucrative Safety-Member Pensions. SB 9 (McClintock) was amended June 7, 2004 to delete prior contents and add provisions repealing a law signed by former Governor Gray Davis giving, as of July 1, 2004, specified management employees the benefits of the very generous public safety retirement pensions. The Sacramento Bee has been running editorials almost daily calling for the law’s repeal, saying milk testers aren’t cops and billboard inspectors don’t fight fires.

Pension Reform is Sought. Senator Tom McClintock on June 7 intends to seek Assembly floor permission to amend an unrelated bill (SB 9) so it would repeal a controversial contract giving special public safety pensions to 3,200 state employees. They include driver’s license examiners and inspectors of milk and billboards. The pension bill was passed in 2002 to take effect this July 1.

According to The Sacramento Bee, Senator McClintock said, “This is the most outrageous of all the pension giveaways that have been passed over the last several years. If we can’t pass this (repeal bill), we’re not going to see any serious pension reform in the foreseeable future.” The repeal would save taxpayers about $11 million a year. The Bee in May reported in a two-part series that the 2002 legislation (SB 183, Burton) departed from prior criteria for qualifying for enhanced retirement benefits. The bill was pushed by members of the California Union of Safety Employees after the Department of Personnel Administration refused to grant the higher pension in collective bargaining. The Bee has been running daily editorials calling for the repeal of the benefit before it takes effect. (Caltaxletter, June 4, 2004.)