How Crazy Is The Public Pension Cash Cow?
LA's new police chief, Michel Moore, got a $1.27 million payout for retiring from the LAPD -- shortly before he was rehired in his new job as head cop.
Jack Dolan writes about Moore at the LA Times:
He left as chief of operations for only a few weeks before rejoining the force in the same job at the same pay. But the move provided him with a financial windfall: a lump sum retirement payment of $1.27 million from the city.Moore, 58, received the money thanks to his enrollment in the city's Deferred Retirement Option Plan, or DROP, which pays veteran cops and firefighters their pensions, in addition to their salaries, for the last five years of their careers.
The extra pension payments go into a special account that the employee receives at the end of the five years -- so long as they formally retire.
Moore said in an interview that the plan to have him retire and then return almost immediately to work was proposed by former Chief Charlie Beck and approved by Mayor Eric Garcetti.
A few months after he returned to work, Garcetti appointed the well-respected, 36-year veteran as the department's next chief.
Because chiefs are excluded from DROP, if Moore had won the promotion before he retired he would have been forced to forfeit the $1.27 million in order to take the job. Several other L.A. police and fire chiefs -- including Beck -- have lost their DROP payments that way.
Moore said he did not know that he would soon become chief when he agreed to retire and come back to work as operations chief. At that time, Beck had not announced his plans to depart. And when he did, Moore was one of several finalists for the job.
"You may call it suspicious timing, but I didn't program it that way," Moore said.
Meanwhile, there are potholes on the roads so big you could lose a goat in them and enough homeless people all over Venice that you could easily re-enact the scene with the Israelites crossing the Red Sea...just for starters.
Though Moore appears to be legally entitled to this money, he's just one guy getting the $1.27 million. There are countless others who are set to retire, and retire, and retire. So when California Governor Jerry Brown talks about a budget "surplus," he's conveniently leaving out the looming pension crisis that will, before long, have much of the money coming in to the state going out to retirees -- rather than road-fixing, policing, and those other things that make life in California (and everywhere) work.
Marching down the road to Venezuela, double time.
Isab at August 13, 2018 7:09 AM
Police and Fire Department pensions are hard ones to cut. You're asking people to put their lives on the line for you, but then telling them you're unwilling to pay them for doing so.
On the other hand, we cannot afford to keep forking out millions to administrators who gamed the system, collecting a hazard pension when the biggest danger they faced on the job was a paper cut.
Stories like Moore's don't help sway the public to the argument that police and fire retirees earned their generous pensions.
When Jerry Brown talks about a "budget surplus," he's talking about a budgetary surplus, not an actual monetary surplus; it's political double-talk. The state's going hell on a bus and Jerry's behind the wheel. Sadly, he's the most fiscally responsible person currently in the California government.
Conan the Grammarian at August 13, 2018 8:46 AM
A lot of those public pension systems are designed to be gamed. For example, it's typical that the pension amount is based on the employee's total pay for the past year, or two years, before retirement. By working a bunch of overtime over that period, the employee can greatly inflate the pension amount. The elected officials and bureaucrats who run the systems, and the employees who abuse it, have a nudge-nudge-wink-wink relationship about the whole thing. The taxpayers' interests are not represented anywhere in the process.
I suspect that these officials and bureaucrats are perfectly willing to let pay, pensions and entitlements swallow the entire budget. They figure that eventually the taxpayers will get so desperate that the private sector will start picking up the tab for basic public services, just to keep their cities and towns functioning. A la what Domino's has started to do with road repairs.
Cousin Dave at August 13, 2018 10:23 AM
DROP = we're going to pay you money to go ahead and retire when it is very likely you would have retired anyway.
I'm surprised there isn't a time limit on how soon he can be rehired back into the same position. I'm sure he didn't *wink*wink* game *nudge*nudge* the system *laugh*laugh*.
I R A Darth Aggie at August 13, 2018 10:26 AM
"You're asking people to put their lives on the line for you, but then telling them you're unwilling to pay them for doing so."
No, you're telling them you won't write blank checks you can't cover.
Defined benefit pensions are doomed to bankruptcy because you can't reasonably make promises for the future without regard to the risk of changing circumstances. That's why pension funds are going bankrupt everywhere, and why the private sector is shifting to defined contribution programs, which say we will put a certain amount into your pension each pay period NOW, and offer assistance with investing and managing it.
bw1 at August 13, 2018 6:09 PM
Read the next paragraph, bw, it begins with, "On the other hand, we cannot afford to keep forking out millions...."
The non-unionized private sector has switched to defined contribution plans because they do not carry the same liabilities, the company is not responsible for funding the pension plan if the investments go awry and lose money.
Defined contribution funds are managed as investment funds, usually by outside parties. Defined benefit plans are underfunded and managed by corrupt insiders who too often treat the pension fund as a company, or personal, slush fund. The rationale is always some variation of, "besides the pension fund was just sitting there!"
Conan the Grammarian at August 13, 2018 6:40 PM
To echo Conan, while there are pensions in the private sector they are only in large legacy companies. Boeing has one. So does Exxon-Mobil. But anything smaller than that does not. Companies like Baker-Huges and Halliburton offer something they call a pension but it isn't the traditional one. Instead they have a defined contribution account and when you retire they buy you an annuity with that money. Quite inferior to a 401k since there is no growth over time from investing and it still has the clawback issues pensions suffer from.
As for the public sector, Texas is working on converting all of it's employees over to 401k style defined contribution plans. Some cities around here have already made the change.
Ben at August 14, 2018 6:28 AM
Boeing eliminated pension eligibility for new hires starting in, IIRC, 2002. I started there in 1999 and I got in under the wire. I'm taking my pension payments from Boeing now, even though I'm still working, because I'm dubious about how long the pension fund will survive, so I'm getting it while the getting's good.
Cousin Dave at August 14, 2018 6:58 AM
There are DROP programs for municipal employees all over the country. Details vary, from when you are eligible to sign up and how long you can be in the program before you MUST retire from municipal service. I just DROPPED, as we say, a few months ago. I was an assistant district attorney for a large city for 26 years. In our DROP, you must leave city service within 4 years, not 5 as in the OP. People originally gamed the system when it was put into place about 20 years ago, by "retiring" and then being re-hired by the city for the same or a different job. Much bad publicity later, this practice was abolished--you can't be hired for any kind of city job, period, once you've DROPPED. I am really at loose ends now because I am discovering that I would still like to work/earn and I'm relatively young and healthy.
RigelDog at August 14, 2018 10:10 AM
Funny Cousin Dave. My sister works at Boeing and she was telling me how everyone everywhere has a pension. She got quite mad when I mentioned most people don't work at Boeing. And just in case you are wondering I consider you a more reliable source than I do her, which is why I find this so humorous.
Ben at August 14, 2018 1:25 PM
"Read the next paragraph, bw, it begins with, "On the other hand, we cannot afford to keep forking out millions....""
and goes on to say something about fire chiefs not facing the risks of firefighting, but I've never heard of a fire chief who didn't start out dragging hoses into burning buildings. You can add a risk increment to the defined contribution, but no matter how you spin it, you can't sanely guarantee a benefit 40 years down the road.
"The non-unionized private sector has switched to defined contribution plans because they do not carry the same liabilities"
Yeah, they don't carry the POLITICAL liabilities of not getting campaign contributions unless they roll over for public sector unions.
bw1 at August 16, 2018 11:00 PM
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