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Forbes is just now reporting on the obvious: $2 million in pension benefits per retiree is becoming increasingly unaffordable for many cities. (Also because mun

by declan 12y ago

Forbes is just now reporting on the obvious: $2 million in pension benefits per retiree is becoming increasingly unaffordable for many cities. (Also because municipal workers in some states can switch jobs to a nearby city and get a second pension, that can jump to $4 million per person.) In the San Francisco bay area we have this nearby example: http://online.wsj.com/news/articles/SB10001424052748703625304575115551578762006 http://online.wsj.com/news/articles/SB1000142405274870362530... "The study also found that lavish pay and benefit packages were a root cause of the city's problems. In Vallejo compensation packages for police captains top $300,000 a year and average $171,000 a year for firefighters. Regular public employees in the city can retire at age 55 with 81% of their final year's pay guaranteed. Police and fire officials can retire at age 50 with a pension that pays them 90% of their final year's salary every year for life and the lives of their spouses." And another example in California, where residents may be required to pay more in taxes (it's already the highest-taxed state) because of political mismanagement and ballooning pension benefits: http://online.wsj.com/news/articles/SB10001424052702304815004579419371878171830 http://online.wsj.com/news/articles/SB1000142405270230481500... "Yet government pension costs are soaring as the bills that politicians postponed during the hard economic times come due. No less than Warren Buffett warned this week that "local and state financial problems are accelerating, in large part because public entities promised pensions they couldn't afford." .. Calpers also voted last month to dun state taxpayers for an additional $1.2 billion a year. And lo, the state Legislative Analyst's Office says that California State Teachers' Retirement System (Calstrs) says it needs $5.3 billion to $5.7 billion more annually by 2020 to pay down its $71 billion shortfall. That's more than California spends on the University of California and Cal State colleges."

patio11 12y ago
There also exists a culture in California of systematically looting the pension system via "spiking", where everyone knows the formula of the pension weights the last year's pay most heavily, and engages in a game of "I'll scratch your back and someone will scratch mine in N years" whereby people are allowed sudden bumps in seniority / job title / overtime hours months before retirement, to no legitimate governmental purpose, with the sole objective of increasing their pension's value. There are a variety of reforms designed to address this, from speedbumps like "OK, we'll use the average of the last 3 years" to making spiking outright illegal. The common argument against illegalizing spiking is, I kid you not, that spiking is so ingrained in the cultural mores and expectations of California public servants that to deny spiking for new retirees would be grievously unfair to them when compared to Of-Course-I-Spiked-Everyone-Does retirees.
- dragonwriter 12y ago
  Spiking as you describe it is always outright illegal (if its done "to no legitimate government purpose", its an outright illegal gift of public funds -- but if the personnel decisions are made under existing laws and procedures which exist to assure that personnel actions, positive or negative, have a legitimate government purpose, which is almost always the case with what is usually described as "spiking", its not what you describe as "spiking".) What isn't illegal, and what is what is usually called "spiking", is people changing their preferences in terms of what they will apply for that they are qualified for, or what they will accept in terms of overtime requirements in a position, based on proximity to retirement. With retirement programs that are based on last-years salary, this can produce an outsize reward, which is what reforms are intended to address. And the closest argument to the one you present I've seen -- and I've spent a lot of time in and around state government and public worker issues -- isn't that its "ingrained in cultural mores and expectations", but that changing the terms for current workers (not future workers) is not acceptable because the terms of the retirement program are part of the deal they accepted when they started working, and in which they have a -- legally enforceable under federal law -- property interest, so that it would be outright illegal to change the terms (which is exactly the reason that the change to the three-year rule only worked for new hires.)
adventured 12y ago
Forbes has been reporting on looming pension problems for munis for the last 15 years at least, and that's just what I can remember back to.

by declan 12y ago

patio11 12y ago

There also exists a culture in California of systematically looting the pension system via "spiking", where everyone knows the formula of the pension weights the last year's pay most heavily, and engages in a game of "I'll scratch your back and someone will scratch mine in N years" whereby people are allowed sudden bumps in seniority / job title / overtime hours months before retirement, to no legitimate governmental purpose, with the sole objective of increasing their pension's value. There are a variety of reforms designed to address this, from speedbumps like "OK, we'll use the average of the last 3 years" to making spiking outright illegal. The common argument against illegalizing spiking is, I kid you not, that spiking is so ingrained in the cultural mores and expectations of California public servants that to deny spiking for new retirees would be grievously unfair to them when compared to Of-Course-I-Spiked-Everyone-Does retirees.

dragonwriter 12y ago
Spiking as you describe it is always outright illegal (if its done "to no legitimate government purpose", its an outright illegal gift of public funds -- but if the personnel decisions are made under existing laws and procedures which exist to assure that personnel actions, positive or negative, have a legitimate government purpose, which is almost always the case with what is usually described as "spiking", its not what you describe as "spiking".) What isn't illegal, and what is what is usually called "spiking", is people changing their preferences in terms of what they will apply for that they are qualified for, or what they will accept in terms of overtime requirements in a position, based on proximity to retirement. With retirement programs that are based on last-years salary, this can produce an outsize reward, which is what reforms are intended to address. And the closest argument to the one you present I've seen -- and I've spent a lot of time in and around state government and public worker issues -- isn't that its "ingrained in cultural mores and expectations", but that changing the terms for current workers (not future workers) is not acceptable because the terms of the retirement program are part of the deal they accepted when they started working, and in which they have a -- legally enforceable under federal law -- property interest, so that it would be outright illegal to change the terms (which is exactly the reason that the change to the three-year rule only worked for new hires.)

adventured 12y ago

Forbes has been reporting on looming pension problems for munis for the last 15 years at least, and that's just what I can remember back to.