Tuesday, July 12, 2011

Creeping Toward Pension Reform

With the budget mess (sort of) behind us, we've noticed some stirrings in the news suggesting that pension reform may be creeping into the political spotlight. Down in San Diego, a bold proposal to reform city employees' pensions is already stirring up tensions between advocates and organized labor. Former Assemblyman Roger Niello is working to put his own plan before voters this November, while Senate President and noted union shill Darrell Steinberg is continuing to deny that public pensions are a serious problem in need of dramatic reform. And reports in today's news show us a couple of minor reforms quietly moving forward.

Tsunami ahead.
First up, Political Blotter reports that Jerry Brown has signed Mark DeSaulnier's SB 373 into law. Under this bill, deputies in the Contra Costa County Sheriff's department hired after 2006 will end up with less costly pensions. Instead of a pension based on their highest annual salary and a 3% annual cost-of-living adjustment, these deputies will be limited to a 2% COLA and benefits based on the average of their three highest annual salary numbers. This pension "tier" was established in 2006, but the original agreement called for it to expire next year; the new bill removes the sunset clause.

Meanwhile, the Sacramento Bee reports that the state Senate has approved AB 340, which will (hopefully) curb abuses within county pension funds operating independently outside of CalPERS. If signed into law, this bill will prohibit county pensions from including bonuses and cash-outs of unused vacation and sick time in pension calculations, and will mandate a 180-day waiting period for employees who retire and subsequently try to return to their old jobs. Granted, this only scratches the surface of public pension abuse in the state. But it's a start.

And just to give you an idea of how serious the problem is, today's Bee reports that CalPERS may have solved the problem of how to bring an economic boom back to the Sacramento region: CalPERS retirement checks. That's right; never mind that the region's real estate market continues to fall off a cliff, and never mind that both the city and the county are slashing jobs on a massive scale: Sacramento is going to strike gold by reinventing itself as a haven for rich government retirees. We can't think of a single thing that could go wrong with this scenario.


  1. It seems to me that "three highest years" only means that the cops have to do pension spiking for three years instead of one. That's arguably worse for the taxpayer, as that triples the cost of pre-pension "planning".

    Stopping bonuses from counting in pensions is good, but not sufficient. It's common practice in Boston (and probably in California too) for department heads to take temporary leaves and have their subordinates made temporary department heads, with temporary salaries to match. That higher salary gets used to spike the subordinate's pension, and is not considered bonus pay. The more aggressive department heads are effectively on permanent "temporary" leave to spike as many pensions as possible but still show up for work every day. Another dodge is retiring "injured" because that exempts some of their pension from MA's taxes. It seems that nearly 100% of Boston FD retires with "on the job injuries", even the desk jockey bureaucrats.

  2. True, but it's harder to spike pensions that way than by a massive pay hike in the cop's last year on the job.

    I wholly agree that these reforms aren't sufficient. They're a start, and nothing more.