California public pensions are not bullet proof

July 7, 2017

Mike F. Brown

By MIKE BROWN

One of the paradoxes of current California state and local politics is the continuing support by public employee unions of left progressive candidates and their policies. This emerging and expansive Democratic Party faction has recently been restyled and consolidated nationally as the Alternative Left Progressives (in honor of Bernie Sanders) and locally as the SLO County Progressives.

Historic support of the progressive left by unions through campaign contributions, candidate endorsements and boots on the ground campaigning is certainly understandable. After all, the progressives have delivered decades of exponentially compounding “cost of living” raises and guaranteed retirement formulae, which often grace career employees with pensions that are equal to their highest lifetime salaries.

Until recently, the current employees working towards retirement and the current retirees, and their survivors, have believed that it is legally impossible for either the various pension systems (CALPERS, UC Retirement System, County 1937 Act, And CALSTRS for teachers) or the funding jurisdictions (the state, public university systems, counties, cities, public school systems, and thousands of special districts) to abridge or otherwise modify benefit levels once promised.

Recent efforts by the City of San Jose and Orange County to change promised benefit levels for currently working and as yet unretired employees survived legal challenges. However, both the city and the county then had to partially abandon the efforts because critically needed employees such as police officers simply quit and moved to other jurisdictions that have not imposed benefit reductions.

This is possible because the various pension systems and jurisdictions within California have adopted reciprocity provisions that transfer the accumulated years of service and blend the benefit levels, if in fact they are different, from the sending to the receiving jurisdiction.

For example, an acquaintance of ours, who is an outstanding executive manager, has worked for a city, two counties, and several public universities over his career. He has been actively recruited by the various entities and now serves in a very high level position with direct compensation approaching $300,000 per year. He could end up with 35 years of continuous public service (not counting the military, in which he served in a combat branch and which is not counted in his years). In any case, 35 years times 2.5 percent of final average salary of $290,000 equals $253,000. Since he has accumulated sufficient quarters, he will also be eligible for Social Security.

In this environment, public employees have had little reason to support reform and have only recently acquiesced, in some cases, to adoption of two-tier systems under which future hires will receive lower benefits and will contribute more to the cost than their currently serving colleagues.

Not so fast

Recently and with increasing frequency, retirees and current employees ask me about the risks to their pensions. They prudently sense danger. These informal inquiries are usually framed in terms of the fear that their former or current employer will become so hard pressed that it will discover or engineer a legal way to renege on retirement payments or previously promised benefits. Barring a significant and protracted public emergency, the chance of wide spread retroactive legal changes still appear somewhat remote, but not impossible.

The more likely scenario is the potential collapse of the pension funds and/or collapse (bankruptcy) of the funding jurisdictions. Unfunded pension debt; unfunded deferred maintenance on roads, bridges, prisons, university buildings, park facilities, aqueducts, dams, water and sewer systems and existing debt that has been already issued by all the government jurisdictions is approaching $1 trillion dollars.

On top of this, the Alternative Left Progressives, including the SLO County Progressives, are officially calling for single payer medical care, which will require hundreds of billions of dollars in new taxes. Similarly, they are calling for free public university education, which would require further tens of billions. Moreover, they are advocating that these benefits be provided to any resident of California regardless of citizenship.

In other words, the current retirees are not safe. The current working employees are certainly not safe. If the state, local governments, school districts, and universities flounder, the public could simply contract with private sector alternatives. For example, Cal Poly receives only about 33 percent of its revenue from the state. Most consists of tuition. In a pinch, it could evolve into a private university.

As things begin to collapse, voters will reject tax increase bailouts. You would think that these retirees and future retirees would wake up and endorse candidates and officials who support growing the economy, more private sector jobs, and vigorous private investment, all of which would make it easier to meet the existing pension obligations.

You would also think they would question the SLO Progressive platform and ask its officers and committee chairs how they will protect their pensions, deal with the existing debt structure, add a half billion in new programs, and not annihilate the private sector and drive it out of state. They might also inquire as to how they plan to work these policies while at the same time banning oil and gas production and development; socializing the stockholder owned utilities; banning nuclear energy; and imposing project killing fees, taxes, and regulatory hurdles on new home and commercial development.

What current retirees and current vested working public employees need to understand is that all boats rise with a vigorous and growing economy. The historically accumulated and continually growing avalanche of state and local regulations, fees, and taxes undermine investment, job creation, and the generation of state income tax, corporate income tax, sales taxes, and property taxes.

This reduction in resources will in turn increase the pressure for the state, cities, counties, school districts, and special districts to find ways around the pension cost dilemma. Voter initiatives and legal remedies will be attempted. In the face of this growing and necessary pressure, if public services and education are to be preserved, it would be prudent for public employees and public retirees to reject the neo-progressive status quo and to elect officials who will ease the problem by enabling a better economy and a naturally growing revenue base.

Mike Brown is the Government Affairs Director of the Coalition of Labor Agriculture and Business (COLAB) of San Luis Obispo County. He had a 42-year career as a city manager and county executive officer in four states including California. He can be reached at mike@colabslo.org.


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modernwelding

Let us see … in 2011 from Transparent California

Name Job title

Regular pay Overtime pay Other pay Total pay Total benefits Total pay & benefits

WALLAR, CHANDRA COUNTY EXECUTIVE OFFICER

Santa Barbara County, 2011 $221,426.76 $0.00 $45,143.31 $266,570.07 $105,908.67 $372,478.74

So Mike, you held the same job back in 2009 I believe. What was your salary? What are your total public employment retirement benefits? Pot calling the kettle black.


modernwelding

Correction your retired October 31, 2010 as AO of Santa Barbara County.


modernwelding

Second correction, County Executive Officer of Santa Barbara County


modernwelding

Maybe the places you worked for did not have reciprocity so you have a series of small pensions. Maybe that is why you are so annoyed at the pensions of others.

BTW, I agree that public pensions and salaries are out of hand. But to my knowledge SLO Progressives are a new group and have not been involved in pension politics … yet.


modernwelding

I should say SOME public salaries and pensions are out of hand. School teachers, and some low grade public workers, don’t make beans.


SLOBIRD

Please, if teachers worked a full 8 hours a day, 50 weeks a year less 13 holidays they would be entitled to better pay. I truly believe for the hours worked and the benefits received in total they are as well paid as any other government sector.


I have two teachers living on my street and they do not get into their cars until 8 am or a little thereafter and one or both are usually home by 3 pm.


They have teacher “training’ days, early release days, “vacation” time, holidays, summer’s off, etc. I have the fullest respect for teachers, think they have a challenging job but I also that can be said about police, fire, emergency responders, grocery clerks, retail staff, legal clerks, etc. Life is difficult for everyone having to deal with the public and we should respect and try to understand their challenges big and small. Some are just better rewarded than others and they should stop whining and appreciate their chosen occupation.


Mitch C

I live with a teacher for over 36 years. You do not know what you are talking about. My wife easily put in a 50 hour week and when not trashing in the summer she would be in school preparing for the upcoming year. As a teacher she held a bachelor degree, masters degree and six teaching credentials. Some education classes did not lead to a degree or credential, she took them for self betterment to be a better teacher.


George Bailey

Mr. RU Kidding,


I checked ‘Transparent California’, and it reports that Mr. Michael Brown makes nearly $132,000 a year pension, for life, paid for by you and I as local taxpayers. Why the huge payout?


I say limit ALL pensions so that no retired government employee would ever take home more than $100,000 a year, and that would require greater pay in by that worker during their employment.


I DO NOT think this automatically makes Mr. Brown a hypocrite, but, in the very least, he should have divulged his conflict-of-interest in the topic of this article.


George


rukidding

Thank you since I was having trouble finding that information. I still wonder what he may be receiving from the 3 other states that he had worked in?


Ricky2

Right! The $132K is just his California pension, and it’s not reciprocal with other states. This guy is rich!


Mitch C

If you have a government pension your elected officials are stealing from you. Instead of funding what they promised (to get your vote) they are shifting the money that should be going to address the pension shortfall is going to fund numerous programs for illegals. The billions spent on sanctuary cities, medical care for illegals, etc could be directed toward your pension instead of attracting an illegal element that has no regard for our laws. The next time you hear about the unfunded pension liability,there is a solution.


billygatez
Rambunctious

The impending doom of the California public pension program is what keeps me in California….I don’t want to miss witnessing what I’ve been warning about for the last decade.

The next day I’ll move to Texas……


rukidding

Another interesting article especially the double dipping and other ways of getting multiple retirements by some.

But what is interesting was what was at the end of the commentary that Mr. Brown has served different government agencies for a 42 year career as a city manager and executive officer in 4 different states.

Mr. Brown what kind of different retirements are you collecting? This sounds to me like the NIMBY of retirement programs.


billygatez

Well said rukidding, NIMBY at its best. And to say that this is some “left based issue” is absolute b.s. Didn’t the moderator just post recently to a commentator to lay off political affiliation of left vs right in a segment as they were stirring the pot? To even say that Democrats want higher pay than republicans is ludicrous, look at political lobbyists all over the USA. Mike Brown is ignorant by definition. And Cal Poly gets 333million “State” and “Federal Budget”; fact, to pay both left and right managerial positions way too much money, not tuition my friend, does 10thousand times 18 thousand =333million, no, your a liar by fact. And COLAB is some shady stuff so i “feel”, very very shady. This county uses herbicides, pesticides and fertilizer and is experiencing bee colony collapse and no one speaks of it? Sheesh, i could go on. CCN, this is some insane commentary from a “liar” by fact, and is demeaning to your excellent journalism you have produced. This is some Al Fonzi crap. Another B.S. opinion piece like the crap on the Tribune everyone disliked, the same thing. No sources cited.


http://www.lao.ca.gov/Budget


billygatez

The ten thousand is roughly tuition costs annually for a student there, give or take a few thousand, with “roughly” 18k students, in regard to the math i posted. Vague, sorry!


billygatez

Shoot, i meant 33 million roughly, one too many 3’s…gosh, too upset over article, sorry everyone, including moderator!


The Identarian

What a mess the left has made of California. Now people with brains, who will come off as cruel, have to come in fix this disaster. Never vote for liberals people, never!


Rich in MB

SLO Progressives…so what do they want even higher Taxes, higher pensions for Government workers and more money for Adam Hill to spend…ha ha ha. Like bringing sand to the beach.