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Public Pensions & Retirement
- 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.
- 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.
- 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.
- 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.
- 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.
- 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.
- 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."
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Runaway Pension by Troy Anderson, from the Los Angeles
Daily News, April 3, 2004.
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