Editor’s Note: This is the third in The county Sheriff’s Department and Orange County Fire Authority are hired by many cities to provide police and fire services. Their contracts are consistently some of the costliest items in local budgets, which are being voted on this month by city officials.
As debate swirls over wages and overtime for police and firefighters, a much bigger nightmare looms: pensions.
In the not-too-distant future, public employee pension costs threaten the solvency of government agencies in California and throughout the nation.
And there's no easy solution. Orange County and other agencies are contractually and legally bound to honor the pension agreements signed long ago with public safety employees. The California Supreme Court this spring shot down an attempt led by O.C. Supervisor John Moorlach to get rid of some generous retirement benefits. The failure has left the county on the hook for what could amount to $5 million in legal bills.
SHERIFF'S DEPARTMENT PENSIONS
Four years ago, the county–led by Moorlach and his former chief of staff, Mario Mainero—tried to pull back the Orange County Sheriff’s Department’s “3 percent at 50” pension plan for sheriff’s deputies.
This is a common formula offered in 37 counties throughout the state by the California Public Employee Retirement System, according to the Peace Officers Research Association of California.
That's a total of 251 agencies.
Under the plan, at age 50, a sheriff’s deputy can retire and receive 3 percent of his yearly wages for each year he served, according to the Peace Officers Research Association. The 3 percent figure is usually calculated using the highest-paid year's base pay, or using an average of the three highest-paid years' base pay, depending on the contract.
So, according to the Peace Officers Research Association of California’s site, a deputy who retires at 50 after 20 years of service would receive 60 percent of his salary from the Public Employee Retirement System every year until he died.
Under some plans, a spouse or other dependent survivor can continue to receive half the payout after the retiree's death, according to CalPERS literature.
Multiply that by the tens of thousands of California employees with 3-percent-at-50 contracts, and it's easy to see the cost ballooning out of control.
After Orange County lost its court battle to overturn the formula, Moorlach took to his blog, predicting pension costs would undermine other vital services.
“I’m just back from a tour of the Dayle McIntosh Center for the disabled,” Moorlach wrote. “It is programs like these that will suffer in order for the taxpayers to pay for a 50 percent increase in pension benefits for government employees who paid nothing for them and for which no funds were set aside during their careers...
“Wayne Quint [then-president of the Orange County Deputy Sheriff's Association] owes the taxpayers of Orange County a big thank you for this incredible awarding of a life-time guaranteed income,” he continued.
Many taxpayer groups are also unhappy with the pensions that public safety workers receive.
“We think they do deserve a good rate of pay, but when they retire at 50 at full pay, that’s not right,” said Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Association.
“That they can get paid $100,000 every year forever is insane,” said O.C. Supervisor Shawn Nelson.
The top tier of deputies in the OCSD receive 3 percent of their highest-paid year in the calculation of their retirement, whereas a lower-tiered employee gets 3 percent of the average of his or her three highest-paid years, which works out to a lower figure.
FIREFIGHTER PENSIONS
The Orange County Fire Authority renegotiated some of its contracts late last year and this year to increase the employee pay-in for its retirement system, but pensions still pose a looming burden.
OCFA Spokesman Kris Concepcion said he and his colleagues also have a 3-percent-at-50 pension plan. Contrary to popular assumption, overtime is not included in the salary calculation, he said.
In other words, a hypothetical firefighter’s 3 percent would be calculated using his or her $80,000 base salary, not the $120,000 total salary that includes overtime.
Concepcion countered characterizations that most employees retire with 90 percent of their salaries at 50. Though it’s mathematically possible for rank-and-file firefighters to retire at 50 with most of their salary in pension payouts, it seldom happens that way.
Employees don’t tend to start at 20 and work at the same place for 30 years anymore, he said.
Concepcion said the several unions who organize OCFA employees have agreed to concessions over the last seven months—addressed in Part 4 of this series—that will save the authority tens of millions in pension costs. In part, firefighters will be stepping up retirement contributions to 9 percent.
County Supervisor Nelson said all employees should pay in half the cost of their pensions and there should be a cap on how big a pension could be, although he doesn’t know the “right number.”
Nelson said at OCFA, the cost of a typical pension is 60 percent of an employee's base salary.
So, if someone makes $100,000, that's a $60,000-per-year pension, independent of how much overtime that employee took during his or her career.
-- San Clemente Patch Editor Adam Townsend contributed to this article
Or do you have a beter solution? I'm not paying more taxes thats for sure!
I understand people's concerns, but, like Rich said, these agreements were already made - when you tear apart the union you are attacking people's lives - the very same people you hope are going to show up when you have a fire or other emergency. The city of Brea just quietly re-negotiated all their contracts and were successful in reducing their pension liability. Maybe we could all take a page from this?
Wash-rinse-repeat. Raising taxes in California(one of the highest taxed States in the country) would kill the state, by chasing even more businesses and wealthy people out of the state.
Politicians Underfunded Agreements Threatens Government Solvency
Robert Citron was the treasurer, and he was a Democrat. http://en.wikipedia.org/wiki/Robert_Citron Granted that he was not your run-of-the-mill Democrat, but he was one. A very rare one in the county. Your point would be better served if you would continue to extol the pitfalls of underfunding pensions, because the 1994 bankruptcy had similar underpinnings. Short of money->huge bets on the stock market->lost everything. But no tax increases.
Who elects these politicians, and therefore bears the ultimate responsibility of their decisions? "As a result, pensions need to be phased out for all new employees, and for existing employees, a requirement that they contribute a lot more towards their pensions. MetOO will likely squawk at this and claim it is unfair, but that's life." In other words negotiate with the unions? Or spend millions in lawsuits trying to renege on legally binding agreements that has already made the hole larger with a vociferous cheer-leading squadron in tow, encouraging these very officials to fight the unions?
Between the legislators and the public employees (unions, where applicable). Not disingenuous rhetoric of "taxed to death", "union thugs", "illegal aliens" and other assorted, disconnected slogans. A good example of such negotiations can be seen in the city of Mission Viejo. They too felt the burden of the pension plans negotiated a decade ago by their predecessors, but they chose to take a rational approach. Sat down and discussed it. The deal? A nominal pay raise, and an increased contribution on the part of the employees. Peter "The Editor" Schelden did a good job of reporting that, read it here: http://missionviejo.patch.com/articles/pay-raise-pension-cut-request-from-mission-viejo-city-staff People will negotiate when they have a lot to lose, and much to salvage. The county going bankrupt is not in anyone's best interests. It does not help though when you insist reneging on agreements made in good faith, especially when it was you that exercised poor judgment in the first place. That leaves the other side with no choice. You always negotiate as long as you have that option.
Despite the uproar over expensive pensions, 98% of state and local retirees have modest retirement benefits, far smaller than the $100,000 a year pensions that have become the boogeyman for public pension opponents. The average is $26,000 a year. Pensions for police and firefighters are larger than those for other public workers but for a sound reason: their work requires great physical stamina. Thus their pensions are structured to encourage them to retire before age lessens their abilities, leaving the work to younger public safety personnel. Finally, as to bankrupting government: here in California at the state level, pensions account for just 3% of the budget. At the local level 180 city, county and special districts have negotiated significant changes that keep public pensions fair while reducing taxpayer costs.
And the public has failed to proactively "police" their government.......There is plenty of blame to spread around.
I have no problem with reasonable pensions. However, when you have pensions over $70,000 a year (and many would say that's too high) that's a problem, when you get over $100,000, that is outrageous.
I get it that you think 70K is a problem, 100K is loony-tunes, but what's the number you have in mind, and if you can, please explain the rationale by which you arrived at it?
You're quite right that dialog is the key. @metoo, I think 'hate' is too strong a word for 1, and 2. I suggest 'dislike'.
Soon, the world will be ours in another triumph of democracy [then he wakes up] PS Nice job metoo, in at least proposing a scheme.
The $26k figure is very misleading. Just like the national average income. I find it hard to believe that number is for Orange county. Every single person I know that is retired on a government pension is making at least double that number. Add to that guaranteed "cost of living" increases, and you have a completely unsustainable financial drain on tax revenue. "...far smaller than the $100,000 a year pensions that have become the boogeyman for public pension opponents." -They are called-out for a reason. Believe it or not, a large number of OCFD are in the $100k club. Quite a few are in the multi-six figure club. I know a Captain that is retired with more pension compensation than a friend who is a surgeon. "Pensions for police and firefighters are larger than those for other public workers but for a sound reason: their work requires great physical stamina." -So dry wallers and framers should receive large pensions as well? Ridiculous. Are you aware that the average time a firefighter spends actually responding to or fighting a fire is 5%? Most of their time is spent on medical transport and EMT calls. This is why over 3400 applicants turned-out for the last call for 320 firefighter positions.
-Proof? So the investments for public pensions are experiencing a special "magical" robust recovery, but everyone else's 401k's are tanking in the markets. Absurd. You would have to be a fool to believe this. "...funding levels on track to meet obligations." -Complete fluff. This outrage is a result of more awareness by the public. Government worker salary and benefit data is available online, so there isn't really any "boogeyman." All of this is occurring during a historic economic downturn, with many if not most private sector workers experiencing double-digit salary cuts.
Good example of current private sector vs. public sector compensation. Your experience is similar to many of mine. What a wpnderful fantasy of entitlement to expect to maintain such ridiculous pension obligations.
Was it a good deal? A smart deal? I personally don't think so, but then I wasn't the elected representative that wanted to pay them more then and didn't have the money to do so. I didn't negotiate to pay them a smaller salary NOW and promised to pay them when they were not working later to make up for it. But they honestly provided the service we paid them for at the time we made the deal, and they agreed to accept their additional payment from us as a part of their overall compensation package. They kept their end of the bargain, now we have to keep ours. You seem to forget that we aren't "paying for them now", we are paying them for services provided years ago, that we cut a deal to pay for later rather than pay for at the time the service was rendered. You don't like the deal? Too friggin bad. Go find the elected officials that cut the deals and go hang them, not the guys that agreed to work for those conditions. I don't like the fact that some of these guys are "double dipping" the system, but I don't blame them for the deal, I blame the elected officials that cut the deal and then UNDERFUNDED to pension plans so we get stuck with the bills today.