Government Spending

The $499,000 Pension and Other Tales of California Governance

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How hosed is California based on state-sector pension obligations alone? Alert reader Robert Kelley sends along this gruesome little database of the 5,115 people currently drawing pensions in excess of $100,000 from the Golden State. (If you want to go down a fascinating rabbit hole of Internet searching, I highly recommend looking up the half-mil-pension-receiving Bruce Malkenhorst.) Kelley comments:

I used to work at a library and for a city government in the Bay Area.  I took a look at some people who I knew worked there and retired recently.  One librarian had retired with a $110k a year pension.  A former police chief who retired recently (in his early 50s) from my tiny city now has a pension of $185k a year.  These government workers are retiring with full health care benefits for them and their families at no additional cost, and they can retire at age 50 or 55 depending on where they work.

It's an amazing gravy train.  Given that a person at age 55 can reasonably expect to live 30 years now, that means the effective yearly salary paid to those people during their working years is about double what is stated.

The next time you hear about a schmuck Coastal Commission Analyst only making $80k a year, think about that.  The real cost is more like $160k a year.  Beats working.

While public employees continue enjoying gold-plated retirements, the ongoing media scare campaign over Gov. Schwarzenegger's "annihilating" cuts continues apace. The latest, care of also-alert reader Ray Eckhart, comes from the New York Times, under the headline "Deep Cuts Threaten to Reshape California." The word "pension" was not harmed in the production of this article.

The cuts Mr. Schwarzenegger has proposed […] would turn California into a place that in some ways would be unrecognizable in modern America: poor children would have no health insurance, prisoners would be released by the thousands and state parks would be closed.

Nearly all of the billions of dollars in cuts the administration has proposed would affect programs for poor Californians, although prisons and schools would take hits, as well.

My take on big-California-government apologists who don't ever come out and say big California government is kewl, here.

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  1. Maybe they could randomly select one hundred taxpayers and walk them through the budget, line by line; any item getting seventy-five or more “WTF?s” should be pulled out for further review.

  2. The latest, care of also-alert reader Ray Eckhart, comes from the New York Times, under the headline “Deep Cuts Threaten to Reshape California.”

    They say that like its a bad thing.

  3. “poor children would have no health insurance, prisoners would be released by the thousands and state parks would be closed”

    Your point?

  4. This doesn’t explain the 185K pension, but in general, law enforement is looking at a different employment situation than most bureaucrats.

    Mandatory retirement for law enforcement at age 50 is pretty standard. Some cops have tried to challenge it becuase they want to keep whippersnappers off the public’s lawns after age 50, but courts have upheld it. Hence, law enforcemnt often get nice retriement packages to compensate.

  5. To compensate? For the fact that they can get another job for 15 years while they collect pension? I understand it hinders their ability to build up a 40-year 401k, but this is severely excessive.

    Not that you were saying it isn’t, etc.

  6. If the state goes bankrupt, I wonder if they’ll still be obligated to dole out the pensions.

  7. Colin, what “they?” You mean “we.” And I think you know the answer.

  8. I like this story about the “devastating” budget cuts.
    All told, the county could be subjected to spending cuts approaching 20% of its discretionary money.

    “It’s beyond my wildest imagination. It’s like nothing I’ve ever seen before,” L.A. County Supervisor Don Knabe said in an interview. “Do I want a deputy sheriff pulled off the street? Do we close City Hall for a day? Do we close a library for a day?”

    Close the library for a day? It’s just beyond imagination.

  9. Close the library for a day? It’s just beyond imagination.

    That’s exactly what they imagined in Seminole County, Florida. Along with about 200 layoffs from all County Government Departmments. Including the Sherriff’s Office, though precedence was given to keeping patrol deputies.

    The County Commission took on the budget about a year and a half ago right as the housing boom started to burst.

    Somehow not having the library on Friday is not nearly as upsetting as some folks though it would be.

    The recession’s felt as badly here as elsewhere, but at least we aren’t being threatened with tax increases.

  10. Close the library for a day? It’s just beyond imagination.

    The high schools could play football during daylight hours.

    Ha ha. Just kidding.

  11. precedence was given to keeping patrol deputies.

    This surprises me; I would have expected them to lay off ten or fifteen deputies, and then hire four PR consultants to publicize the increased danger to the… ummm, you know….

    children.

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  13. The solution to the crisis in California is obviously to make everyone a state worker. Everyone retires at 55!

  14. I personally know a retired Ca school teacher whose pension is almost 100 grand a year. Better yet, she lives in Hawaii, a state that doesn’t tax retired teacher’s pensions.

  15. How much could be saved by pardoning all the non-violent drug offenders in state prisons, Mr. Governator? And, add that to how many fewer patrol officers you’d need if your state stopped making drug arrests or investigating non-violent crimes? In a state with that many people, I would think the numbers would approach significant. Less prosecutors, bailiffs, and judges would be required, too.

  16. It’s political blackmail. If you don’t pay the politicians the money, they’ll get rid of firemen and police instead of bureaucrats, lay off teachers instead of administrators, close prisons instead of parks, etc.

    Solving the budget crisis is easy, but it does take some cojones. Fire 50% of administrators from every program; 5% pay cuts for everyone; 50% pay cuts for every legislator and executive; move non-violent offenders into house arrest; cut spending 5% across the board on everything; sell off Arnold’s Hummers; etc.

  17. Pretty soon everyone will work for the government. Yeah, communism!

    I look forward to the skull of the sheep being caved in.

  18. Brandybuck

    AFAIK, Arnold’s Hummers are his own personal property.

    I don’t believe any state funds were used to aquire them.

  19. But the rest of the post made a lot of sense.

  20. The cuts Mr. Schwarzenegger has proposed […] would turn California into a place that in some ways would be unrecognizable in modern America: poor children would have no health insurance, prisoners would be released by the thousands and state parks would be closed.

    Ha ha, that’s really funny. Someone took a California state propaganda page and dressed it up to look like the real page from the New York Times. Those darned kids!

  21. My great aunt just retired as a secretary for the State of Wisconsin. She was 89 years young, and since her monthly pension is doled out according to her life-expectancy she gets about $11K each month. She earned it, though it still looks obscene.

    Not as obscene as me being able to retire from my Arizona job somewhere around 54, but still unseemly.

  22. Quit your whinning. If this is what they are entitled to receive, so be it. Your jealousy shows!!

  23. IF (and thats a big IF) the promised pension and retiree healthcare benefits in Calif cannot be reduced for current employees, eventually, the following will happen …….

    The ONLY residents in Calif. will be Civil Servants and welfare recipiants …… and the taxes PAID by the Civil Servants will EXCEED their ENTIRE benefit packages.

    There’s no free lunch ……. even for our GREEDY Civil Servants

  24. here’s a doozy for you:

    Contra Costa County’s First 5 Commission has blown nearly $2 MILLION of its pension contributions!

    From their 06/01/09 Agenda (on their website):

    http://www.firstfivecc.org/index.php?page=commission-info

    “Update on the pension UAAL

    ? staff have met with First 5’s actuarial consultant to review the results of a recent study estimating First 5’s assets within the CCCERA retirement fund. The study was commissioned in anticipation of considering whether First should move its retirement to CALPERS. The study found that, based on CCCERA’s standard calculations, First 5’s assets are calculated in the negative range. ”

    Yes folks – they said Contra Costa’s PENSION ASSETS ARE NEGATIVE NUMBERS!

    So, people, looking at Contra Costa’s latest audit report (07/08 from their website) to get a point of comparison, it shows that this First 5 Commission contributed, for the past three fiscal years, a total of $949,920 to its employee pension plan, with an annual growth rate of 18%.

    If you go back for another 4 years to probably when this First 5 started to have some number of staff, and assume just a 15% growth in the contribution over the 4 years, the expected total of contributions for FY 00/01 through FY 07/08 would be about $1,775,000 in total pension contributions.

    So, here are my questions:

    1. WHERE exactly did nearly $2 MILLION dollars go?

    IMO, even if the stock market was down 50%, then you could expect that pension value to maybe be about $1 million, which is still ridiculous, but it being in negative territory reflects a level of investing ineptitude. Who should be held responsible for that? Well, it should be the Board’s Finance Committee.

    Note that the agency will have to make up the $1.7 million first just to get back to ZERO, and then come up with a lot more to cover its legal obligation. So the real need to cover their future obligations is probably more like $3 – 4 million just to get to a point of stability.

    Do they intend to take this money from the funds directed to kids? It bothers me and shouldn’t that bother those who believe that First 5’s are doing such great work, like Marie Lakin at the Making Waves blog at the Ventura Star? Because this First 5 will have to take the money from somewhere and it does not grow on trees. So, IMO, it would not be the taxpayers taking money away from First 5’s, it would be inept management and/or investors; how is that more ok? To me it is not.

    2. Will Contra Costa’s next audit report for FY 08/09 actually print that they are in negative pension value land? Are they going to try to fudge the study’s assumptions so that it does not look so bad by the time the fiscal year ends?

    IMO, even if it were just $1 million (when it’s clear it’s more like $3 million minimum), that amount is easily material and significant from an accounting perspective. As the agenda also says, their 09/10 budget is to be about $17 million – so even just using the $1 million number shows the problem is greater than 5% of their budget – and in accounting circles – that means it is significant and/or material. It’s not probably very disputable, so I do not think it can be hidden by just showing the annual pension contribution expense – it’s really just too large and so I believe their auditor will make them disclose it and perhaps issue a finding.

    Again, folks, IMO something’s wrong here; public documents clearly show it.

    p.s. while I was digging, I happened to notice Note 9 of the audit, which stated that Contra Costa has a lease obligation of nearly $1 million. Okay, can someone please explain to me this size of lease? Maybe they should downsize and put some of that money in the pension. Should they have a pension? Well, I think that could be another post.

    for more on the First 5 agency problems including Board self dealing and spending $100 million+ on evaluators, see

    http://blogs.venturacountystar.com/mlakin/archives/2009/04/prop-1d-the-d-stands-for-decep.html

    http://www.thesweetmelissa.com/sweet_melissa/2009/04/proposition-carves-out-kids-cash.html?cid=6a00d83514497653ef01156f7a72f9970c

  25. Four years ago, I quit my sales job in corporate America and took a no-sweat job in county government. My corporate friends laughed at me for taking a 40% pay cut to work in government. After all, they were getting discounted company stock and, in some cases, stock options. Who in their right mind would want to take a pay cut and work for the government? Fast forward four years and a stock market crash later. Guess whose “friends” are calling to see how they can get on the “government gravy train?” The pendulum swings. When the economy recovers and business is good again, everyone will go back to thinking us government workers are losers with our “definded benefit plan” pensions. I, for one, will enjoy the steady income for as long as I live!

  26. Why did you make this into a “left verses right” thing? I know of no progressives who are in favor of these obscene pensions for government workers – they are disgusting.

  27. I’m getting a little tired of hearing how retired government employees are “given” pensions. Don’t you realize that government employees contribute a percentage of their salary over their years of service to pay for their pension?? A lot of them do not contribute to social security, which means they get nothing from the federal government when they retire. Or, if they did happen to contribute to social security for a portion of their careers, their benefits are reduced based on their getting a government pension. So even though they pay into social security, they are penalized for having a government pension.

  28. Anon, I can imagine why you are tired of hearing about the “given” pension. If you look at the CalPERS site:
    http://www.calpers.ca.gov/eip-docs/about/facts/retiremem.pdf

    You’ll notice that 71% of the payments made to employees are coming not from employee contributions, but from state contributions. That number has been growing every year, and that percentage is estimate to top 90% by 2015.

    Let’s see, that means for every dollar contributed by salary, the state pays out $2 currently, and will pay out $9 in a couple years.

    Talk about being penalized! Penalize me!!!

  29. What a bunch a cry babies. Thank God for public workers, such as Police, Fire, Caltrans & Prison Guards (just to name a few). Thank God we have people that will do this type of work. These retirement formulas were approved by the Calif. Legislature & the Governor in 1999. It’s only because of the recent economic downturn, that the spotlight is now turned on us. We have had lower pay for years in exchange for nice retirements, now its time to live up to our promises. The private sector is now jealous of us because their 401k’s are tanking. It was never an issue when the economy is good. We need to take care of our public servants that we rely on so much.

  30. DON’T SIGN ANY PETITION THAT PLACES AN ADDITIONAL EXCISE TAX ON SOCIAL SECURITY & PENSION INCOME. THIS WILL AFFECT YOUR PARENTS AND GRANDPARENTS. WE PAY OUR STATE & FEDERAL TAX LIKE EVERYBODY ELSE. THIS TAX UNFAIRLY SINGLES OUT PENSIONERS, AND WE BELIEVE IT WILL EVENTUALLY BE RULED “ILLEGAL” IF EVER PASSED. THANK YOU.

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