Is Pension Reform Dead?

Sacramento is currently consumed with taxes.  There are between four and seven separate tax proposals being kicked around in the state capitol these days.  The three primary proposals are Governor Jerry Brown’s sales and income tax increase, the Molly Munger/PTA proposal and the California Federation of Teachers’ “millionaire’s tax.”  All three are heading for the November ballot where many project voter confusion and irritation will doom them all.  (more…)

Churchill on Pensions

Association member Ken Churchill has produced another examination of the Sonoma County pension crises.  To read his report, click here.


Dear Governor, Straight Talk Please

Anyone not living under a rock these days is well aware of the financial straits facing state and local governments.  Teachers and public employees laid off or furloughed, fundamental government services such as health care, child care, senior services, veterans services, services for the poor and disabled, primary, secondary and higher education, parks, recreation, roads, you name it.  All have been eliminated or reduced to skeletal remains of their former selves.  And while blame for the current malaise may be laid at many a doorstep from (more…)

The Ugly Truth about Pension Reform

Any pension reform proposal that hopes to make a meaningful positive impact on a public employer’s budget must address the cost of pensions for current employees. Since the main reason for the current problem is the excessive benefits, the most logical solution is to modify and reduce those benefits. (more…)

The Myth of Salary Concessions

The working public and taxpayers are finally becoming aware of the unsustainability of public employee pay and benefit obligations. Possibility of looming bankruptcy for the State of California and many cities and counties has at least had the beneficial effect of developing an informed public about a major problem that is fast getting worse. (more…)

Cities can’t afford public safety “super-pensions’

Brad Conners, the vice president of the Santa Rosa Police Officers’ Association, defends the high level of benefits for public safety officers (“In defense of public safety pensions,” Close to Home, March 31). But his defense is misleading and glosses over the deadly fiscal crisis represented by super-pensions for public safety employees.
The Santa Rosa Police Officers’ Association is a union, with its top goal being more pay and benefits for its members. Same for the Firefighters Association. For them, the 1999 law change that led to public safety officers being able to retire at age 50 with up to 90 percent of pay for life was literally worth a fortune. That law change was not something they negotiated locally, and it was not a sudden recognition that law enforcement and fire protection are “professions,” as Conners wrote. Instead, the law change was an immense reward from Sacramento politicians for support by public employee unions. Money in, money out.
Meanwhile, back in Santa Rosa, the police and fire unions had gotten voters to approve a very mild-sounding ballot measure that granted police and fire workers mandatory “comparable pay and benefits” (based on a group of comparison cities) and binding arbitration. Did voters understand that this measure gave virtually all power in “negotiations” to the unions?
Conners makes it seem as if the city of Santa Rosa had an option whether to grant the super-pension at age 50. The city did not have an option. The super-pension was a foregone conclusion once other cities in the comparison group adopted it.
Yes, public safety workers pay a portion of the cost for pension funding. But the part paid by the city is huge, perhaps as much as an amount equal to 40 percent of pay.
In 2003, the city of Santa Rosa quietly borrowed $50 million just to catch up with the unfunded liability of enhanced pensions, and the annual pension cost went up over 500 percent. Sonoma County borrowed more than $200 million to catch up with its unfunded pension liability. This scenario was repeated across California cities and counties, costing taxpayers billions of dollars to catch up and then billions more in future funding. And these pensions are guaranteed by the state constitution.
In Santa Rosa, police and firefighter salaries also soared in the past 10 years, adding to the pension funding cost.
Conners states that the life expectancy of a police officer or firefighter is about 10 years less than the average person in other professions. I have not seen any independent study verifying this statement, and I strongly doubt that the life expectancies of police as a group, versus firefighters as a group, are the same.
As one retired New York police officer told me, in explaining why up to 15 percent of the applicants for New York City firefighter jobs are current New York City police officers, “Everyone wants to be a firefighter, and no one wants to be a cop.”
There are quantifiable reasons why most cities have no trouble hiring firefighters — with applicants sometimes in the hundreds or even thousands — while at the same time having trouble hiring enough qualified police officers. And yet firefighters have also enjoyed the huge surge in pay and benefits.
Equally important to the topic of life expectancies: pension benefits often continue to be paid to a worker’s surviving spouse, who was not a police officer or firefighter. Are the combined life expectancies any different than those for people in other professions?
Police officers and firefighters know that the super-pensions at age 50 were a gift from grateful politicians. They know that the pensions are so costly that cities and counties are being forced to reduce or eliminate other services and that next they will be forced to eliminate police and fire jobs.
It would help if legislators agreed to a two-tier benefit system, under which new employees would be entitled to the previous pension which allowed retirements at age 55 with 75 percent of pay. Police and fire unions have opposed the two-tier system.
Police officers and firefighters are not the bad guys. But the cost of their benefits is a fiscal disaster. How much of a disaster? According to Monday’s Press Democrat, a Stanford University study commissioned by Gov. Arnold Schwarzenegger says California’s public pension funds are underfunded by as much as $500 billion.

Bob Andrews, a Santa Rosa resident, is the former president of a Santa Rosa pension and actuarial firm. This was a “Close to Home” opinion that was authored by Mr. Andrews and appeared in the Thursday, April 8, 2010 edition of The Press Democrat. Mr. Andrews provided the Association with permission to reprint his submission.