Growing deficits threaten pensions

[Wags]

CNN Money - Fat pensions spell doom for many cities
Vallejo, Calif., took the extreme step of filing for bankruptcy to get out of generous obligations to public employees. Other cities and states are watching.

Fat paychecks and pensions spell trouble - Jun. 3, 2008

Excerpts from the article

Here's the skinny: In late May, Vallejo, Calif., became the largest city in California history to declare bankruptcy. Its financial demise was brought about partly by the real estate crash, which decimated home prices in the area and put a major dent in the city's tax revenues.

But the real nail in Vallejo's coffin was the city's labor costs. Under the current labor agreement, the average police officer walking the beat in Vallejo will be paid $122,000 this year before overtime, according to city documents. An average sergeant will make $151,000; a captain, $231,000. The average firefighter, meanwhile, will bring in $130,000 before overtime.

That's just the salaries, though. The final budget-crusher was the city's pension plan. Thanks to retroactive benefit enhancements approved by the city council in 2000, police officers and firefighters can now retire at age 50 and receive an annual pension equal to 90% of their final pay (assuming 30 years on the job), an amount that gets increased every year to help keep pace with inflation. The old plan had given the workers a pension equal to 60% of their final pay at age 50.

So a Vallejo police sergeant making $150,000 a year can now retire at age 50 and receive an annual pension of $135,000, increased each year for inflation. To put that amount in context, you would need to amass a retirement nest egg equal to about $3.5 million to produce a similar retirement income on your own.

It wasn't just police and firefighters who benefited from the city's largess. The annual pensions for rank-and-file city employees were jacked up from 60% of final pay at age 55 (after a 30-year career) to a whopping 80% of pay, increased each year for inflation.

End of excerpts.

Folks, it seems as though the Grim Reap·er just might be coming after all the poor devils who have local government pensions and fat cat jobs.

After that who knows the Grim Reap·er may be coming after the rest of our state and federal pensions.

IMO, the ones who are to blame are our politicians who made promises and deals that they could not fullfill and we the voters who voted the varmints into office (for repeated performances).

God Bless Us All

[Notmuchlonger]

Here you go Wags.

YouTube - (Don't Fear) The Reaper-Blue Oyster Cult-Lyrics Included

[Wags]

Quote:

Originally Posted by Notmuchlonger Here you go Wags. YouTube - (Don't Fear) The Reaper-Blue Oyster Cult-Lyrics Included

Thank you, Great Song.

As a so-called alleged rabble rouser I enjoy letting my hair down every now and then and this song hit the spot.


God Bless Us All

[Basenji]

Quote:

Originally Posted by Wags CNN Money - Fat pensions spell doom for many cities Vallejo, Calif., [snip] Under the current labor agreement, the average police officer walking the beat in Vallejo will be paid $122,000 this year before overtime, according to city documents. An average sergeant will make $151,000; a captain, $231,000. The average firefighter, meanwhile, will bring in $130,000 before overtime. That's just the salaries, though. The final budget-crusher was the city's pension plan. Thanks to retroactive benefit enhancements approved by the city council in 2000, police officers and firefighters can now retire at age 50 and receive an annual pension equal to 90% of their final pay (assuming 30 years on the job), an amount that gets increased every year to help keep pace with inflation. The old plan had given the workers a pension equal to 60% of their final pay at age 50. So a Vallejo police sergeant making $150,000 a year can now retire at age 50 and receive an annual pension of $135,000, increased each year for inflation. To put that amount in context, you would need to amass a retirement nest egg equal to about $3.5 million to produce a similar retirement income on your own. It wasn't just police and firefighters who benefited from the city's largess. The annual pensions for rank-and-file city employees were jacked up from 60% of final pay at age 55 (after a 30-year career) to a whopping 80% of pay, increased each year for inflation. [snip] IMO, the ones who are to blame are our politicians who made promises and deals that they could not fullfill and we the voters who voted the varmints into office (for repeated performances). God Bless Us All

Wow! I apparently made a big mistake in working for the State of Texas (rather than California). Those salaries and pensions mentioned above are almost triple the typical Texas levels (maybe double for firefighters).

In the 1980s and 1990s, the State of Texas used to pay about 50-60% of the comparable private sector wage for a given position (at least in the legal and science/engineering fields). Many smart, highly dedicated, hardworking folks took that deal because of the relative job security and the promise of a pension that is reasonably good if you work at least 20-25 years for the State. I felt that at least 60% of the employees were in the good-great employee category, and turnover was low.

But, starting in the mid-late 1990s, Texas State employees went for many years without any pay increases. So ... in the 2000s, State employee pay has now become about 35-40% of the comparable private sector wage for a given position (at least in the legal and science/engineering fields). So, you won't be surprised to learn that turnover has skyrocketed (30+% in many years), and the percentage of good-great employees is down to about 25%. (Compensation is not the only reason; gross mismanagement by unqualified political appointees is another.) The disgruntlement level is very, very high.

I know many State employee secretaries and janitors being paid $15-20,000 / year. None of them can afford to live in Austin. They have to drive quite far. Given the increasing price of gas, their cost of living has got to be hurting them.

The State has never matched any 401(k) contributions (to my knowledge).

The "good news" is that the Employee Retirement System of Texas is in good shape (though the Teachers Retirement System of Texas is hurting). (Gotta wonder why TRS is hurting, and teacher pay is low, given that property taxes are obscenely high.)

In any event - I agree with the above: shame on the legislators, and shame on voters for not demanding integrity and honesty instead of pandering, flim-flam, shady accounting that violates GAAP and common sense.

[barbarus]

They're already bringing in engineers and programmers by the cargo-container load from India and China to w*rk for much less pay in industry.

No reason this can't be done for the various state and municipal workers being discussed here.

[kcowan]

Quote:

Originally Posted by Basenji Wow! I apparently made a big mistake in working for the State of Texas (rather than California). Those salaries and pensions mentioned above are almost triple the typical Texas levels (maybe double for firefighters).

Yabbut maybe you will actually get your more conservative pension.

[MGYog]

[quote=Basenji;
the percentage of good-great employees is down to about 25%. (Compensation is not the only reason; gross mismanagement by unqualified political appointees is another.) The disgruntlement level is very, very high.

Sounds like Cook County, Illinois, too.

[Wags]

Quote:

Originally Posted by Basenji Wow! I apparently made a big mistake in working for the State of Texas (rather than California). Those salaries and pensions mentioned above are almost triple the typical Texas levels (maybe double for firefighters). In the 1980s and 1990s, the State of Texas used to pay about 50-60% of the comparable private sector wage for a given position (at least in the legal and science/engineering fields). Many smart, highly dedicated, hardworking folks took that deal because of the relative job security and the promise of a pension that is reasonably good if you work at least 20-25 years for the State. I felt that at least 60% of the employees were in the good-great employee category, and turnover was low. But, starting in the mid-late 1990s, Texas State employees went for many years without any pay increases. So ... in the 2000s, State employee pay has now become about 35-40% of the comparable private sector wage for a given position (at least in the legal and science/engineering fields). So, you won't be surprised to learn that turnover has skyrocketed (30+% in many years), and the percentage of good-great employees is down to about 25%. (Compensation is not the only reason; gross mismanagement by unqualified political appointees is another.) The disgruntlement level is very, very high. I know many State employee secretaries and janitors being paid $15-20,000 / year. None of them can afford to live in Austin. They have to drive quite far. Given the increasing price of gas, their cost of living has got to be hurting them. The State has never matched any 401(k) contributions (to my knowledge). The "good news" is that the Employee Retirement System of Texas is in good shape (though the Teachers Retirement System of Texas is hurting). (Gotta wonder why TRS is hurting, and teacher pay is low, given that property taxes are obscenely high.) In any event - I agree with the above: shame on the legislators, and shame on voters for not demanding integrity and honesty instead of pandering, flim-flam, shady accounting that violates GAAP and common sense.

Do Texas state employees pay into social security?

I know that the teachers do not and some of my friends who had (already retired) or have (still working) 40 credits under Social Security are reallyabout the system because of the pension offset.

God Bless Us All

[Milton]

Quote:

Originally Posted by Basenji Those salaries and pensions mentioned above are almost triple the typical Texas levels (maybe double for firefighters).

Dunno why they would pay a police sergeant $150,000 a year. And pensions that pay 80-90% (indexed!) of final salary are simply unsustainable.

No wonder they're going bankrupt.