California proposal for pension reform

[Chuckanut]

Because taxpayers use those services and facilities. Not so sure about SS benefits and entitlement programs.

Oh, and taxpayers did not use the services provided by the public employees when they earned their pension?

Pensions are part of the total compensation package and are earned. The fact that the employee may not recieve that part of the package for many, many years does mean it was not earned and taxpayers did not get a use of it.

 

[utrecht]

When the employer decides there are enough assets in the plan so they don't have to make this year's contribution. This usually happens when some of the assets are invested in equities, they look right after a nice run up in stock prices and say "plan is overfunded so we don't have to make this year's contribution. Let's go spend it somewhere else".

Wow. We really do have some idiots running government, dont we?

 

[MichaelB]

Wow. We really do have some idiots running government, dont we?

They do that is the corporate world as well. But instead of spending the excess they call it higher profit produced by the outstanding executive team, and then modestly accept the bonuses and salary raises. It's not idiotic. These people act in their own self-interest and do these things because taxpayers and shareholders are often disinterested or naive. It is not rule breaking but rule inadequacy and lack of oversight that leads to pension shortfalls.

 

[Texas Proud]

I interpret the document to mean there is no change to current policy here. For new employees, final salary for the pension calculation was already determined from the last 3 years, and that's what will be done, henceforth. Then why say anything about it at all if there is to be no change? The new policy would be criticized if it did nothing about spiking, so that has to be covered. (It's probably not legal to change it for those already employed or retired.)

I would think it is legal.... Texas teachers changed from 3 year to 5 year avg awhile back... one of my sisters just made it under the grandfather clause and was able to use 3 years...

 

[Texas Proud]

This might sound strange coming from a cop, but I think forfeiting your pension due to being convicted of a felony is not a good idea. Why should someone be penalized what could amount to $100,000's or even a million or more over a lifetime due to a felony conviction. That seems like an extreme punishment that relatively few people would be subject to. Bill Gates pays $5000 fine for a felony DWI but Joe Blow Civil Servant pays a million in lost pension?

I was concerned about this too, but the document provided by Michael in the OP clarifies the situation. It's only for those who have committed a felony while performing their official duties. They lose the retirement pay credited for that period of their service when they were committing crimes. Seems entirely fair to me.

The military can do the same thing. When someone is found to have broken the (significant) regulations, a board can be convened to determine the rank at which they last served honorably. That's the rank upon which their retired pay is based. It doesn't happen often, but it's a useful tool to have available.

Good comments... I think this is to cover the Bell city issue... to me, paying these people pensions for life after ripping off the citizens is just crazy...

 

[Texas Proud]

The worst that I heard (and do not know how it works) was a Chief of Police got a big pension increase when the mayor gave him a salary increase just before he retired... it cost the pension plan millions of dollars.. he only got ONE paycheck at that higher rate but it was enough for the much higher pension... I think they have fixed that... but am not sure...

 

[samclem]

Why not just base the pension on the final 3 years BASE salary, with no overtime or other add-ons allowed?

Many/most of these employees aren't salaried. They get paid by the hour. So, in those cases you'd have to come up with a figure that was similar to a salary, which I think would be their standard hourly rate x 2080 (work hours in a year at 40/week).

 

[youbet]

It does seem strange that they wouldn't extend the changes on spiking (and overtime) to all employees -- or, if there is concern that would be unfair to employees near retirement, then phase it in for current employees.

It is indeed strange that if your interpretation is correct current employees will not see their ability to spike pensions reduced. I hope you're wrong......

But, I can see where the concern is. Here in Illinois, when anti-spiking provisions were enacted a couple of years ago, there were protests in Springfield. Although spiking was never spelled out as a provision in the state pension plans, it was so prevalent that employees considered extreme spiking a "right" or "promise" that the state needed to keep. Protesters characterized the changes to limit spiking as a "cut" to their pensions.

 

[Surewhitey]

I just left Cali and this state is a mess. I loved living there & my friends, but the political / pension junk is ridiculous.

I do not see a problem with the double dipping thing, personally. If you qualify for lowered benefits of say 60% of pay and you take it, what is wrong with filling a need (on a temp type way) while drawing your pension?

A friend does this in lieu of working another 10 years just to get an additional 10%. This way he fills a need on a part time basis and gets some time off to enjoy. He does not qualify for additional benefits and does not pay into the pension as a contract employee.

 

[youbet]

I do not see a problem with the double dipping thing, personally.

Here in Illinois (we envy Calif's financial situation BTW......... We really know how to get into deep, deep financial trouble!) double dipping almost always involves sweetheart deals intended to scam the system. Perhaps it's different in Calif.

One of my favorite parts of double dipping is when unions use the "burn out" excuse when negotiating early retirement ages. "Our members need full retirement benefits at 55 yo because they're "burned out" from serving the needs of citizens." Etc., etc. Then when they retire at 55 with full pensions, they keep right on working as contractors. At double pay, they don't feel quite so "burned out."

When ya retire and start your pension, it's really time to move on down the road. Double dipping, spiking and some other "wink-wink" provisions of pensions are all intended to pull the wool over the eyes of naive, uninformed constituents.

 

[eytonxav]

I just left Cali and this state is a mess. I loved living there & my friends, but the political / pension junk is ridiculous.

I am not sure about whether this applies outside of San Francisco, but any city that allows folks to walk around naked in public is messed up IMHO. Perhaps this is why its known as the land of fruits and nuts.

 

[haha]

I am not sure about whether this applies outside of San Francisco, but any city that allows folks to walk around naked in public is messed up IMHO. Perhaps this is why its known as the land of fruits and nuts.

Those naked walkers are ruining the state budget. If we can stop this outrage, all will be well. And OMG, those naked bicyclists must be stopped!

 

[MichaelB]

Those naked walkers are ruining the state budget. If we can stop this outrage, all will be well. And OMG, those naked bicyclists must be stopped!

So we want transparency, but not too much?

 

[MichaelB]

My problem with double dipping is that it rubs against the spirit of retirement pension. If a group of people can retire at a young age but continue working the pension start date is too early. This proposal addresses part of this by making the retirement age the same as for social security. Public safety still needs to be addressed.

 

[youbet]

My problem with double dipping is that it rubs against the spirit of retirement pension.

Yep. Fully agree. Double dipping is simply another version of having something both ways.

I noted, and was pleased, that Illinois' new pension plan for folks hired after 1-1-2011 includes tighter limits on double dipping. That is, the number of hours you can be paid doing your old job after retiring was reduced. For example, teachers can retire and still do some occasional substitute teaching. But they can't simply be rehired as "full time substitutes."

 

[MichaelB]

Yep. Fully agree. Double dipping is simply another version of having something both ways.

I noted, and was pleased, that Illinois' new pension plan for folks hired after 1-1-2011 includes tighter limits on double dipping. That is, the number of hours you can be paid doing your old job after retiring was reduced. For example, teachers can retire and still do some occasional substitute teaching. But they can't simply be rehired as "full time substitutes."

This is a fine line. We faced this in the corporate world when knowledgeable employees retired and we absolutely needed their expertise, yet rules made that almost impossible. I remember discussions with lawyers and HR because of labor law implications (not US). Most ended along the line of "he/she can work "n" hours over "x" weeks or months and no more, end of discussion". At the time, I would object. Later, when I presided over similar meetings, my take was more along the line of "if that's not good enough management is not doing it's job".

In real life there are very few people that are really that badly needed, and if they really are that valuable, someone will always find a way to get them back on board.

 

[GregLee]

Why not just base the pension on the final 3 years BASE salary, with no overtime or other add-ons allowed? That's the way my pension works, and again, one of the many reasons why its in good financial shape as opposed to these other scams they refer to as pension plans.

The Hawaii pension administrators seem to want anti-spiking legislation of some sort. A bill restricting the calculation to base pay for future hires failed this last year:

During the 2011 legislative session, a bill that aimed to redefine compensation for future public employees to include only base pay ultimately stalled. It could be revived next year.
Honolulu Civil Beat - Hawaii Retirement System Looks to Curb Pension Scams - Article

However, in my opinion, the anti-spiking proposals are just a sop to conservative and anti-union sentiment, and will make little difference to the financial positions of pension systems:

Kalbert Young, the state's budget director, had testified that the move to count only base pay for future hires would save the state about $13.2 million a year and save the counties $19 million collectively. It would also reduce the ERS's unfunded liability by $500 million, Young wrote.
Machida said the ERS can't clearly gauge whether there's rampant abuse, but said any efforts to cut down on the system's estimated $9 billion unfunded liability are crucial. The system has 111,000 members, with close to 37,000 retirees and beneficiaries.

 

[youbet]

This is a fine line. We faced this in the corporate world when knowledgeable employees retired and we absolutely needed their expertise, yet rules made that almost impossible. I remember discussions with lawyers and HR because of labor law implications (not US). Most ended along the line of "he/she can work "n" hours over "x" weeks or months and no more, end of discussion". At the time, I would object. Later, when I presided over similar meetings, my take was more along the line of "if that's not good enough management is not doing it's job".

In real life there are very few people that are really that badly needed, and if they really are that valuable, someone will always find a way to get them back on board.

If they are that valuable, find a way to compensate them enough so they choose to stay on and not retire. Offer them full time salary with part time hours. Or whatever...... But why complicate things by paying them a retirement pension and then bringing them back to work at their old job? It just seems silly. And it leaves the door open for "deals" where not-so-valuable employees get to double dip strictly as a means to game the system and achieve double pay for doing the same job.

For example, when CEO's or other highly compensated corporate executives retire with ultra-generous packages and then the BOD brings them back to consult for high fees........ Hey, if they really need the guy, pay him to stay. Otherwise, bye bye.

 

[youbet]

However, in my opinion, the anti-spiking proposals are just a sop to conservative and anti-union sentiment, and will make little difference to the financial positions of pension systems:

While curbing spiking may or may not make a significant difference to the financial positions of pension systems (depending on the system and the local circumstances), spiking should still be eliminated. I like systems where a five year (or more) final average salary is used and where only base pay is part of the calculation. The less "wink-wink" involved the better IMHO.

 

[Mulligan]

Some of these pensions are unbelievable. One is higher than the salary of the US president! You know pension reform is sweeping california when the LA Times has a whole page of linked articles to the issue.

http://www.latimes.com/news/local/la-me-pensions-sg,0,1564931.storygallery

I know this doesn't represent the typical pension, but CALPERS is coming after some of the excessive pensions. Some might be getting a pretty good haircut!

So far, the state retirement board has reviewed 2,250 retirement payments and found that 329 needed to be reduced, mostly because employers incorrectly reported employees' pay. They include a former general manager at the Serrano Water District in Orange County whose pension was reduced because the salary it was based on -- $206,668 -- was too high. A retired Vallejo city manager's pension was reduced when his salary was adjusted from $305,842 to $216,000.

CalPERS has also dramatically cut the pensions of top officials in Bell after an audit determined that they were improperly inflated, according to records obtained by The Times under the California Public Records Act.

Former City Administrator Robert Rizzo is now set to receive $50,000 per year. Before, he had been poised to get $650,000 a year from CalPERS and more than $1 million annually overall when a second pension from the city was included. The pension of his assistant, Angela Spaccia, was slashed from a projected $250,000 to $43,000.

The aggressive review comes amid criticism of high pensions paid to some officials, even those accused of wrongdoing.

Vernon's former city administrator receives the highest pension of any public official in California, $500,000, even though he was convicted of public corruption.

 

[BLS53]

Those naked walkers are ruining the state budget. If we can stop this outrage, all will be well. And OMG, those naked bicyclists must be stopped!

It gets better though. Some years back, I read of government giving incentives to some internet sex start-up, to rehab the old San Francisco National Guard Armory into a BDSM dungeon.

 

[Nords]

The worst that I heard (and do not know how it works) was a Chief of Police got a big pension increase when the mayor gave him a salary increase just before he retired... it cost the pension plan millions of dollars.. he only got ONE paycheck at that higher rate but it was enough for the much higher pension... I think they have fixed that... but am not sure...

While that may be a sterling example of abuse, that system also describes the old military "Final Pay" system.

As I started the final six months of my 20 years, the Navy decided that it needed to retain O-4s. It did so by giving all of us a "targeted raise" of 6.5% (including to those with more than 18 years of service) even though at least 10% of the Navy's O-4s would be required by law to retire that year.

DoD could have targeted that pay raise a little more precisely (as in "O-4s with 10-17 years of service") so we "senior" O-4s felt that DoD was finally attempting to recognize our true value. That extra $324/month has been getting the same COLA boost for the last decade as the rest of my pension... and it will for the rest of my life.

But now the pension is based on "High Three", so perhaps other states & municipalities are following some sort of federal example.

My problem with double dipping is that it rubs against the spirit of retirement pension. If a group of people can retire at a young age but continue working the pension start date is too early. This proposal addresses part of this by making the retirement age the same as for social security. Public safety still needs to be addressed.

Yep. Fully agree. Double dipping is simply another version of having something both ways.

I highlighted that last sentence in bold because presumably it's OK for police, firefighters, and military to be "double dipping". I don't think the pension start date is too early-- I think the occupational hazard is too high.

I don't know about the rest of the state/federal government services, but the military gets pretty prompt feedback when its pay & benefits package is judged to be too low. Next time we complain about govt services it might be worth reflecting on "getting what we pay for".

Most Americans "waste" billions of dollars every year on theft & fire insurance. Govt services have carrying costs, too, whether we actually need them that year or not.

 

[BLS53]

Yep. Fully agree. Double dipping is simply another version of having something both ways.

I noted, and was pleased, that Illinois' new pension plan for folks hired after 1-1-2011 includes tighter limits on double dipping. That is, the number of hours you can be paid doing your old job after retiring was reduced. For example, teachers can retire and still do some occasional substitute teaching. But they can't simply be rehired as "full time substitutes."

There's another loop hole, and that's the community college system. Which is a separate retirement plan. The faculties of these colleges are full of retired high school teachers.

 

[clifp]

My problem with double dipping is that it rubs against the spirit of retirement pension. If a group of people can retire at a young age but continue working the pension start date is too early. This proposal addresses part of this by making the retirement age the same as for social security. Public safety still needs to be addressed.

Exactly. I know both cops and firefighters in California who have put in their twenty years retired in their early 40s, then started working at different city in California. The cop continued the same career, the firefighter took a civil service job. I understand that jobs like cops and firefighters are dangerous and often are physically demanding. It seems to me that there is wide range of desk jobs or things like a Fire inspector. That don't have the same physical demands.

At the very least there should be an accurate actuarial reduction for people retiring before 55 on anything other than a job related disability.

 

[clifp]

The Hawaii pension administrators seem to want anti-spiking legislation of some sort. A bill restricting the calculation to base pay for future hires failed this last year:

"Kalbert Young, the state's budget director, had testified that the move to count only base pay for future hires would save the state about $13.2 million a year and save the counties $19 million collectively. It would also reduce the ERS's unfunded liability by $500 million


However, in my opinion, the anti-spiking proposals are just a sop to conservative and anti-union sentiment, and will make little difference to the financial positions of pension systems:

$500 million liability reduction, and $32 million/year isn't real money in your opinion? There only 400,000 households in the state so that $1250/household less debt obligation, and $80/year, and more than the state spends on library system. I am pretty sure given a choice between keeping pension spiking or making further library cuts I know how the public would vote.