Quantcast
 
Loading
WatchSonoma
WatchSonoma Watch

GULLIXSON: When worlds collide – over pensions

 

 “At this rate, I will have to work until I’m 62.”
 - Greek protester, on National Public Radio.

 

Has the world gone crazy? Work until you’re 62? Most of us would be  ecstatic to retire by then.

Many have seen their hopes of retiring at all disappear in recent years — along with the equity in their homes, their 401(k) accounts and, in some cases, their jobs.

Retire at 62? You’ve got to be kidding. How about just making it through the week?

It’s quotes like the one I heard on NPR one day that underscore how there are two different worlds out there regarding retirement. There’s the real world. And there’s another one where despite the biggest economic collapse in 80 years, people retire by 60, sometimes as early as 50, with pensions near or equal to 100 percent of their final salary, or more. And people in the other world — taxpayers — are on the hook to pay for the majority of it.

The general public has been given a peek inside that other world with the court-ordered release of Sonoma County pension information. And as we’ve noted in recent days, it’s not pretty. Ninety-eight county retirees are receiving pensions in excess of $100,000 including 29 who are bringing in more than $140,000 a year. Three are making more than $200,000.

But this only tells part of the story. The real story is the overall growth in salaries and benefits. As Staff Writer Brett Wilkison has reported, the average pension doled out to someone who retired in 2001 was $22,863. The average this year is $48,814 — an increase of 114 percent. Yes, the recent figure includes the income of retired Auditor-Controller-Treasurer Rod Dole, 59, who in 2009 was making $186,000 a year and somehow managed to step away with a pension of nearly $255,000 a year. (That is what you call one helluva “bump.”) But these averages also include those who retired after only five to 10 years of service and will be taking home 15 percent to 30 percent of their final salary — for life. Someone making $67,000, for example, would be entitled, under the county’s 3-percent-at-60 plan, to a pension of between $10,000 and $20,000. No, it’s probably not enough to live on. But these are people who likely have retirement income from past public and private employment, income that is not included in these averages. In addition, county employees also qualify for Social Security, which they have been paying into during their work years.

But this is just the story of the past 10 years. If you go back farther, total retirement payouts for the county, since 1993, have increased 534 percent.

If pensions continue to rise over the next decade at the same rate as the last one, the average payout for those who retire in 2021 will be $104,000 a year. Astounding.

Then there’s the other world, the one where unemployment has been hovering at or above 9 percent for two and a half years. Where one out of eight families in Sonoma County live in poverty — meaning less than $22,113 for a family of four. And where even for those who have a job, the situation is not good. Figures put out last week show wages are growing slower in Sonoma County than the rest of the nation as a whole and slower than all but one of the Bay Area counties. The average weekly wage was $846 in Sonoma County during the first quarter, up just 3.4 percent from a year earlier.

These two worlds are about to collide.

On Friday, the county Ad Hoc Committee on Pension Reform will issue its analysis of the issue. I expect the document will be informative, and there will be liberal use of words such as “alarming” when it’s reviewed by the Board of Supervisors. But, in the end, I doubt anything substantial will come of it. The same is true at the state level, where Gov. Jerry Brown said last week that he will be coming out with his plan for pension reform. Don’t expect much.

The real point of contact between these worlds will occur at the ballot box and, later, after the results are challenged, in the courts.

Last November, there were 11 different measures related to pension reform on ballots from Los Angeles to Redding. All but one passed.

Currently, there are six different state ballot initiatives in circulation concerning pension reform. One increases the minimum retirement age for public employees to 65. One limits pensions to 60 percent of an employee’s highest salary. Another eliminates collective bargaining rights for public employees altogether. Funding for these initiatives is in short supply, so it’s not clear which if any will qualify. But it’s a telling sign.

Similar signs are cropping up all over. On Aug. 30, voters in San Luis Obispo overwhelmingly approved two pension measures, including one that eliminated binding arbitration for police and firefighters, something Santa Rosa will be considering as part of its charter review. San Jose and Vallejo have also voted to eliminate or restrict binding arbitration.

Voters in Santa Rosa and possibly Sonoma County may be voting on their own pension measure a year from now.

This is why there’s a full-court press out there to have the public believe there’s no problem, that we can afford to continue funding these pensions. But to be successful, these pension-crisis-deniers will have to persuade the average Joe that there’s no connection between these generous benefits and the fact that the pothole out in front of his house is not getting fixed and half the streetlights on the block have been turned off.

 It’s a tough sell, because there is a connection. And my guess is that when voters figure that out, everyone’s world is in for a change.

Paul Gullixson is editorial director for The Press Democrat. Email him at paul.gullixson@pressdemocrat.com. Or call him at 521-5282.

 





23 Responses to “GULLIXSON: When worlds collide – over pensions”

  1. Lets be Reasonable says:

    @Juvenal – not sure why you say this is “no longer a live commentary,” since it is still on WSC, though no one has commented on it for a while… I would still like to see Paul, or someone from the County, come up with what the actual COLA amounts were for the last decade for the different County employee groups.

    Thumb up 1 Thumb down 0

  2. Juvenal says:

    This is no longer a live commentary, but it occurs to me the only explanation for the discrepancy between increases actually received by employees and the figures the PD got from SCERA has two parts: 1) management wages and numbers increased dramatically beginning with the Deis regime; and 2) layoffs have been at the working, not the management level.

    Thumb up 4 Thumb down 0

  3. County worker says:

    Two of the unions tried in 2008 and 2009 to work with the county to set up HSA’s and get the county out of the retiree medical business. They would not even talk with the experts brought in. The county has historically rejected anything they didn’t think of first.

    Thumb up 1 Thumb down 1

  4. GAJ says:

    HSA’s work very very well; you are completely wrong on this. If you don’t fund it, yeah, then you could have a problem, but you’d be an idiot not to take the tax deduction, (this article says you can save about $1,200/year which is my experience) and fund the thing…especially as you will be paying hundreds less per month for your high deductible plan, (Kaiser offers one with a $1,500 deductible and maximum out of pocket of $3,000/year).

    But perhaps putting away several thousand dollars a year, (mostly from tax savings and savings on the Medical Plan), is only for the “rich” in your view.

    Are you telling me the broken femur cost your friend less than $3,000? If so they got one heck of a deal if you ask me!

    You do people a disservice by not having them consider the significant advantages.

    And no, I don’t work for Kaiser or any other Medical provider or an Insurance provider.

    Thumb up 3 Thumb down 1

  5. MOCKINGBIRD says:

    GAJ-HSAs are a joke. It’s a road to bankruptcy for anyone who truly gets really sick or injured. Unless you’re rich that is. Then is makes a great tax deduction for now.

    I know a family who is “stuck” with one. Child broke her femur, family had to pay for the whole thing because of the high deductibles. They though they were covered. The insurance involved PAID NOTHING.

    And that’s how the cheap insurance policies work. You pay, and pay, and pay those premiums and you pay for you healthcare too. When you need it you pay even more. The insurance companies profits soar at your expense.

    Thumb up 2 Thumb down 1

  6. karma says:

    Interesting bias in reporting. Way to further inflame the masses. Remember that the majority of county workers are clerks of some form or another. They really don’t make that much money; and very truthfully, they are the ONLY ones let go when attrition and layoffs occur.

    My department head didn’t get laid off, 3 clerks did. An attorney at the DA’s office didn’t get laid off, 5 clerks did. Can you guess how much one of those attorney’s earns every year? Do you care? Is that where your anger is directed? Because those are the FEW with the big bucks that are killing taxpayers.

    And remember, we need to take everyone and their mother to court and to jail so that we can keep justifying those big salaries.

    Stop blaming ‘county workers’. Go apply for a job if you can do better. Or, better yet, get a legal degree and become a DA or Public Defender, or some other high-paid government official. Good luck.

    Thumb up 8 Thumb down 5

  7. GAJ says:

    @County Worker:

    Tell your friend to get an HSA eligible Medical Plan and he can set aside money, (I believe up to $6,250/year for a Family Plan), pre tax, in an HSA account.

    “Health Savings Accounts are tax-favored accounts set up with banks and certain other qualified financial institutions. These accounts are designed to pay current medical expenses and to build savings to pay for future medical expenses.

    Annual HSA Contributions, which can be made either by an individual or by that individual’s employer, are tax deductible. Distributions for qualified medical expenses are not included in individual taxable income, and the earnings of HSA assets are not taxed.”

    http://401k-employee-benefits.com/1523-hsa-limit-2012-contributions

    Thumb up 4 Thumb down 3

  8. John T says:

    @Paul
    “Last November, there were 11 different measures related to pension reform on ballots from Los Angeles to Redding. All but one passed.”

    How about an article on those 11 measures?

    Very few will dispute that pension reform is necessary. What are the solutions implemented elsewhere?

    I wish the County would release the info on Public Safety and Management. The insane 3%@50 (or 52?) safety retirement formula that Gray Davis foisted on California is the root cause of a large percentage of the pension debt being incurred.

    Thumb up 9 Thumb down 2

  9. Sandy M says:

    @Bear,
    I find your defense of “public jobs” interesting. Do you think there aren’t private jobs that don’t qualify as nasty jobs? Think again, there are, the public sector doesn’t have a corner market on those jobs.

    Those jobs can take 10+ years off someone’s life too in the private sector. But no taxpayer is footing their pensions, no taxpayer is footing their salaries. But unlike the public sector that seems to expect the taxpayer to put more money in the coffer for these grandiose pension plans, the private sector that has had it’s retirements hammered too doesn’t have the taxpayers “to fix it”. These private sectors with nasty jobs just have to work longer and harder and put more of their OWN hard earned money back into retirement accounts.

    We taxpayers have been hit by the worst economy too. Our retirements have been hit by the worst economy too. We don’t have any one to put money back into our retirement accounts except members of our own household. Yet the public sector seems to think they are exempt from the same issues the rest of us are. You want pity, then get it from your spouse. We all are struggling in this economy.

    I want to build my retirement back up too and have a fancy pension plan. Mr. Public Sector, will you put money in my account? You ask the same of me!

    Thumb up 9 Thumb down 7

  10. County Worker says:

    I have a friend in the private industry. He is an electrician. His company announced everyone was getting an $8 an hour raise. They thought that was great. Then the other shoe dropped, the company was turning over 100% of the medical they had to the employees. The $8 was the exact cost of the benefit. Sounds fair. Oops, the benefit is now taxable, which means you don’t get all the money in your check after taxes, but your income went up on paper. Now he has to make up the difference in the cost out of his check. End result? Take home pay cut, but his income looks better on paper.

    The county did a similar thing. The county was paying $500 to $1400 a month for medical insurance and the employees were paying $0 to $500 a month. They cut the county’s payment to a flat $500 and the employees were given the $600 a month to use how they wanted, taxable. Now the employees are paying $0 to $1400 a month. It cost most employees about a $400 a month cut in their take home pay. But it looks great on paper!!! Things aren’t always greener on the other side of the fence. I not complaining about having health care, I know not everyone has it. But in the end, through creative accounting, the employees are taking home less… Sonoma county has no COLA in retirement. I know a retired employee who who has had a single, 1% raise in the last 8 years and his medical went up $700 additional a month.

    Thumb up 5 Thumb down 3

  11. GAJ says:

    Read this article if you want to know our future as it is completely inevitable…just came out in Vanity Fair and summarizes the last 10 years of self destructive behavior on our parts. It’s called “California and Bust.”

    Here’s a tiny taste of what’s in it…the quotes are from the Mayor of San Jose…the City with second highest average household income after NYC:

    “At that point, if not before, the city would be nothing more than a vehicle to pay the retirement costs of its former workers. The only clear solution was if former city workers up and died, soon. But former city workers were, blessedly, living longer than ever.

    This wasn’t a hypothetical scary situation, said Reed. “It’s a mathematical inevitability.”

    http://www.vanityfair.com/business/features/2011/11/michael-lewis-201111

    Thumb up 8 Thumb down 4

  12. Lets be Reasonable says:

    @Brett – when you say that employee salaries have gone up 60% when inflation has only been 23%, you make it sound like employees are getting an extra 37% take home pay above inflation, which just isn’t true. This $600 “cash allowance” was taken from what the County had been paying for health care premiums, and if employees want to maintain their existing health coverage, they must use it towards the premiums. Right now, it is a break-even deal for employees, but as health costs go up, it will be paid for by the employees. It does raise pensions though, and both employees and the County had to raise their contributions because of it. This was forced on employees by the County.
    .
    COLAs are included in the table you mentioned, but you make it sound like it was all due to COLAs, which is not the case. This is why I want you guys to find out what the actual COLAs were, which should be easy to get from the County.
    .
    The COLAs and the 15.6% “cash allowance” will not add up to your 60%. Again, as I mentioned earlier, one reason the “average salary” has gone up is because the County has been laying off workers. As the table shows, the number of County employees has dropped by 484 (11.3%) over the last 10 years. Part of this was through lay-offs, which tend to be the newer, less well paid employees. Also, if you look at Safety, their numbers only went down 41 (5.3%) while General went down 443 (12.7%). So, again, the lower paid General workers have been reduced much more than the higher paid safety workers. Thus, while you have a smaller work force, the average pay is higher, and it was not through salary increases.
    .
    So, instead of inflaming your readers by saying that salaries increased 60%, why don’t you find out what the actual increases were – I’m sure the County will give that to you quickly. I’m guessing it was closer to 25 or 30% than 60% when you remove the “cash allowance.”

    Thumb up 6 Thumb down 8

  13. MOCKINGBIRD says:

    Paul G-I don’t think the county wants to give that breakdown because they don’t want people to know how small the ratio of management to frontline workers is. That’s the reason the “AVERAGE” income went up overall because the newer, lower paid workers got laid off or had their hours cut. The BOA knows this and is still approving hiring managers. Check out the county’s online jobs list for the last 4 years. There is no hiring freeze on management positions and positions have actually been added.

    As for COLAs-not happening. The managers got the last COLA and the rank and file workers got none.

    Thumb up 9 Thumb down 1

  14. James M says:

    As a taxpayer, I don’t care why salaries have gone up dramatically, I do care that the PD is exposing this travesty, as with the massive pensions obligations it spawns, and I care that the elected officials agreed to this. I can’t change now what those conflicted polititians did, but what can change is the ridiculous pay and benefits going to the top ranks of government. The lower paid workers will suffer along with the abusers, but then, they never spoke up when this travesty was being perpetrated – its too late to say “don’t pick on poor little old me” now.
    As for blaming CEO’s, I agree that their pay is ruining the country. We all took the loans that created hte housing collapse, so blame ourselves for that. None of that matters because it is the middle class that pays the taxes that fund government pay, and we are hurting to the point we can’t afford this largesse any more. It is a sad reflection on the excess pay in government why the Wall Strret Journal says you are better off financially with a policeman job in California than getting a degree from Harvard. That shows how out of balance things have got, and they have to revert to a sustainable level.
    Thank you PD for drawing attention to this issue and for providing the facts that have been hidden for so long.

    Thumb up 6 Thumb down 8

  15. Brett Wilkison says:

    @Lets be reasonable

    The average pay chart does include the cash allowance granted by the county starting in 2008. You’ll see it accounted for a 15.7 percent increase in average pay between 2007 and 2008 alone.

    Not sure I understand your point about cost of living adjustments. I believe pay COLAs are factored into this set of numbers on average employee pay as the pension system uses this info to help set the county’s annual contribution to the system. If COLAs are not accounted for, as you suggest, then the average salary rise over the last decade may actually be higher.

    Thumb up 4 Thumb down 2

  16. Lets be Reasonable says:

    @Brett – that table does not show COLAs. It shows the average salary for the year. Not the same. With layoffs, lower paid employees are the first to go, so average salary goes up. It also includes merit increases and promotions. Also, in 2008, the County tried to control health care costs by reducing what they would pay for health to $500 per month. To placate workers, they gave each an extra $600 in pay, which workers could use to pay for health, or hopefully, they would drop their health if they could be covered by a spouse. These amounts would not change over time, so workers will have to pay any additional cost. What the County did not think through was that this $600 was then included in retirement calculations. This extra $600 (which is not an increase in salary since workers now must pay more for health) accounts for 1/4 of your 60%. Please get actual COLA info from the County.

    Thumb up 6 Thumb down 4

  17. Mike says:

    @ Editor

    Where was the outrage when the Supervisors were approving all of these pensions? Did you have an investigation or a reporter assigned to look into the ramifications?

    Now its a little late in the day to suddenly stumble upon the truth.

    These pensions were known to be out of whack when they were approved by the Board. No one spoke up that I remember. Your outrage is a little late and seems to be playing to the crowd.

    Thumb up 9 Thumb down 6

  18. Brett Wilkison says:

    @Lets be Reasonable

    This is PD staff writer Brett Wilkison. The figures showing that the average county employee’s pay has increased 60 percent between 2001 and 2010 come from the county retirement system’s 2010 Comprehensive Annual Financial Report, page 62, http://www.scretire.com/forms_documents.htm
    2001 average pay: $53,374
    2010 average pay: $85,609

    Thumb up 7 Thumb down 6

  19. Lets be Reasonable says:

    Paul, of course it is not just inflation, but it is impossible to tell what it is from. And 10 years ago, employees who could, were probably putting off retirement since they knew that a better retirement was just around the corner – how did that throw off the numbers. But do a calculation. What was the old plan? If it was 2.5 at 55, and someone worked until 60 with 30 years, they would get 30 x 2.5 = 75% of salary. Compare that to the current plan of 3 at 60 and you get 90% of salary. So, under this scenario, adjusted for inflation, pensions would only have gone up 90 / 75 = 20%. If they only got 2%, then they would still get 60% of their salary, leading to 50% increase – still not close to your 114%. You can get the County to give you that info. In Santa Rosa, miscellaneous employees have received 23% in COLAs over the last 10 years – the same as inflation. I’m assuming that the County has to have been similar. You can get the actual amount from the County – it is certainly not the 60% that was mentioned in an earlier article. How much did Public Safety get over that same period? How much did department head salaries go up? This kind of generic info should be easy to get from the County. A lot can be deduced from this, and you can then start looking at what else could be causing that jump.

    Thumb up 7 Thumb down 4

  20. Paul Gullixson says:

    @Lets be Reasonable,
    We’re trying to break down these numbers exactly as you suggest, but so far the county has refused to give us the kind of detail we need to do that level of analysis. They’ve refused to give us retirement dates, years of service, positions, etc. Pretty much all they’ve given us are names and pension numbers, which is contrary to what has been disclosed in other areas and contrary, in my view, to the court directive. We will see how this shakes down. I agree that the 114 percent figure is just a snapshot, but I don’t agree that it is meaningless.
    As Brett pointed out in his Sept. 25 story, the average pension among those who retired in 2001 was $22,863. If pensions had merely kept up with inflation, the average pension among 2011 retirees would be around $28,000. In fact, it was $20,000 more than that. You can’t attribute this kind of growth to cost of living adjustments.

    Thumb up 14 Thumb down 7

  21. Lets be Reasonable says:

    @Paul – First, let me say that I agree that current retirement plans were a mistake, and should be changed, along with curbing the abuses.
    .
    But Paul, this article is a travesty. Your numbers are meaningless. You dump a number out there of 114% increase, but don’t explain what is behind it. Part of it is simple inflation (23%). You guys incorrectly stated that County salaries have gone up 60% – what else do you have wrong? You compare us to Greece, where public salaries have increased 100% in REAL dollars over the last 10 years, while most Sonoma County employees have seen little if any increase in wages over the last 10 years after adjusting for inflation. Instead of trying to inflame us, why don’t you put some real work into your story and give us some real information. Tell me what was the average years of service 10 years ago compared to today? If folks are working at the County longer, then their retirement will be higher. What about breaking out the numbers by job class – how much of this is caused by Public Safety? How much by management spiking? Why don’t you try looking at a non-management miscellaneous employees and compare the old retirement formula to the new one, and calculate in real dollars what the difference is between the two plans? You are lumping all public employees into the same boat – and we’re not equal at all. We have different plans, we pay different amounts towards our own retirement and we’ve received different salary increases. Sure, we should debate this issue, but we need to be informed, not inflamed.

    Thumb up 8 Thumb down 10

  22. Roger Carrillo says:

    What is sad is that so much anger is directed towards public employees because of the large pensions given to a very few highly paid administrators. The average pension earned by a public employee in California is barely a living wage.

    I agree that we need some reform. No one should make more in retirement than they made while they were working. No one is worth more after they leave employment than when they are there working.

    We need a percentage and dollar cap on what can be earned in retirement but it does not have to be draconian just eliminate the excess at the top.

    Finally our anger should be against those that created the revenue mess we are now in and that is not our public employees! We need to be angry at the selfish and corrupt CEO’s that are draining the countries resources for their excessive salaries and bonuses. And against those that created the mortgage crisis, bankers etc. and continue to pay taxes at a lower rate than the average taxpayer. Finally the corporations such as Exxon and GE need to pay their fair share of taxes then we would not have this huge revenue shortage.

    Thumb up 12 Thumb down 7

  23. bear says:

    There are numerous TV ads that will help you get out of tax and credit card debt.

    Guess that City Hall and the County can consult these sources on how to escape their promises to past and future employees.

    What, you don’t approve of keeping promises? You voted for this.
    The vast majority of underpaid County employees planned for this retirement income and health insurance coverage.

    Want to be a public employee? Even if it would take 10 or more years off your life?

    We do the nasty jobs. What do you do?

    Thumb up 7 Thumb down 20

Leave a Reply