How Salary Spiking Drains Publicly Paid Pension Funds
Catherine Saillant, Maloy Moore and Doug Smith write in the LA Times of legally allowed thievery from taxpayers:
Approaching retirement, Ventura County Chief Executive Marty Robinson was earning $228,000 a year.To boost her pension, which would be based on her final salary, Robinson cashed out nearly $34,000 in unused vacation pay, an $11,000 bonus for having earned a graduate degree and more than $24,000 in extra pension benefits the county owed her.
By the time she walked out the door last year, her pension was calculated at $272,000 a year -- for life.
Robinson, 62, is among a group of public employees who have increased their retirement paychecks by adding such things as vacation time, educational incentives, car allowances and bonuses to their final salaries.
Such "salary spiking" was banned in 1993 by CalPERS, the state's largest public employee retirement system, to help control spiraling costs. But 20 of California's 58 counties -- including Los Angeles, Ventura, Orange and San Diego -- do not participate in CalPERS and their employees may legally continue to spike their salaries.
The scope of the practice is unclear because counties have resisted releasing complete pension data, citing the difficulty and cost of assembling the information.
But an analysis by The Times of partial data from Ventura and Kern counties -- two small windows into the problem -- shows that spiking is affecting pension systems already staggered by massive obligations.
In Ventura County, where the pension system is underfunded by $761 million, 84% of the retirees receiving more than $100,000 a year are receiving more than they did on the job. In Kern County, 77% of retirees with pensions greater than $100,000 a year are getting more now than they did before.
Ventura County officials have defended the practice, arguing that some pension boosts were meant to make up for pay freezes during lean years. It would be unfair to take them away now, Robinson said during a board hearing last year.
And the vast majority of county employees, officials pointed out, retire with modest pensions: an average non-management worker with 30 years of service gets $32,580 a year.
Why?
It is totally untenable for us to be paying this.
My current and prior companies have had years with pay freezes. They sort of made up for it with a 4-5% max raise in the following years instead of the 3% cap that is normal. If I didn't like the freeze -- I had a choice accept it or find a new job.
Jim P. at March 4, 2012 7:01 AM
Again: the public didn't pay any attention when this was being set up, so the agents which put the rules into place had no checks against this kind of thing.
Now, what remains is to publish the identities of the counties and persons in charge of pension administration and ask them pointed questions about how they intend to provide public service as a priority, rather than funding persons who now do no work.
I understand there are contracts. That does not mean these questions must not be asked. They must!
Flint, MI, for instance, cannot put cops on te street because that money goes to retirees instead. That is a failure of public servants to serve the public, and is no less a failure than not buying gas for a patrol car.
Radwaste at March 4, 2012 8:21 AM
It sounds like a fraud investigation would be appropriate. I am sure the salary spiking police and DAs would be totally unbiased in their work.
Curtis at March 5, 2012 9:24 AM
I was out of work for four months last year, and I had to take a new job at a 25% pay cut. So excuse me if I don't boo-hoo for them.
Cousin Dave at March 5, 2012 6:23 PM
Leave a comment