Pension Crisis

Stockton Police Chief's $204,000 Pension Contributes to Bankrupt City's Woes

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Just don't point fingers

Here is a depressingly familiar story about public sector pensions, with perhaps the added attention-grabber of honest-to-God bankruptcy thrown in. From Bloomberg:

Stockton, California, Police Chief Tom Morris was supposed to bring stability to law enforcement when he was appointed to the job four years ago.

He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000—the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries.

Stockton, which filed for bankruptcy protection on June 28, is among California cities from the Mexican border to the San Francisco Bay confronting rising pension costs as they contend with growing unemployment and declining property- and sales-tax revenue. The pensions are the consequence of decisions made when stock markets were soaring, technology money flooded the state, and retirement funds were running surpluses.

All of which calls to mind one of my favorite bad editorials in the Los Angeles Times: "Stockton bankruptcy: No need for finger-pointing."

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  1. So clearly everyone in California is so incredibly delusional that they are ok with the fact that they are going bankrupt, right? I mean, if it’s this obvious as to why they are broke than they have no room to complain until this problem is fixed first, right?

    Almost a quarter mill a year in pension for 8 months of service? Nice gig if you can get it I suppose, but good lord I’m surprised they are able to operate basic services to begin with.

    Tennessee had a half billion dollar surplus this year. And we have no income tax.

    FUCKING ECONOMICS, HOW DOES IT WORK?

    1. I don’t spend time worrying about what anyone else earns except for when my tax dollars are paying for it. Then I am very concerned about it. Some public employees don’t seem to get this. And with our current POTUS spewing the type of bullshit that he is, it’s no wonder that they are so clueless.

      1. And also, when CA knows that they are ‘too big to fail’, and that dear leader has a tax payer funded bailout all ready for them, why should they worry? Spend onwards, dear comrades!

    2. So clearly everyone in California is so incredibly delusional that they are ok with the fact that they are going bankrupt, right?

      Formal bankruptcy is the only way to undue these kinds of corrupt contracts.

      I mean, if it’s this obvious as to why they are broke than they have no room to complain until this problem is fixed first, right?

      The problem is that almost no one was aware of the sweet heart deals be arranged between public employee parasites and the politicians they fund.

      Fixing that dynamic will take several reforms that no one seems interested in pursuing.

      1. Fixing that dynamic will take several reforms that no one seems interested in pursuing.

        Don’t you worry. Those voters will get up out of their chairs and vote those responsible right back in.

    3. “Tennessee had a half billion dollar surplus this year”

      That may be true, but you probably lack the horrible public schools (despite spending the most), rampant crime, gigantic government bureaucracy, and millions of citizens fleeing the state every year.

      At least we’ll have that high speed rail sometime next century.

      [runs crying from the room]

      1. Now, if all the HSR lines ran out of the state, they might get enough riders to pay operating costs for a year or two…

      2. What’s funny is that they’ve tried to “connect” East Nashville with West Nashville through a smaller less sophisticated version of “high speed rail”, meaning something “other than the bus”.

        And Nashvillians have asked-“Well, how much does it cost and who’s paying for it”?

        And then we all have a nice laugh and go back to enjoying the fact that our city and state aren’t financially destitute.

        Good times.

        1. See? That’s why Nashville will never be a progressive utopia like California.

    4. Tennessee had a half billion dollar surplus this year. And we have no income tax.

      That’s funny. Last time I drove through Tennessee I didn’t see anyone starving in the street, gangrenous limbs rotting as they breath noxious fumes, sip toilet water from the gutter and try vainly to shield their naked infants from hordes of rabid dogs. Are you sure you have no income tax or deficit spending?

  2. I hope that poor man gets what he deserves.

    1. One of the things I don’t quite understand is why so many people buy into the idea that police and firefighters should be able to retire so early because we don’t want 60 year old firefighters carrying unconscious people out of burning buildings or chasing robbers over fences.

      Aren’t there plenty of administrative jobs or training jobs or detective jobs (including arson investigation) which don’t require the prime of life? Why can’t they do like the military and hold off on the pension until they hit retirement age, and get an honest job in the meantime instead of getting a free disability ticket to the golf course?

      I understand how the politics work; you scratch my back and I’ll scratch yours. But why do so many people buy into this nonsense?

      Has Dunphy ever said anything? I wonder how many cops actually believe the kool-aid they’ve tricked everyone else into drinking.

      1. They shouldn’t be allowed to begin collecting the pension until they are eligible for social security (to pick an arbitrary age). Done putting in your 20 years at age 50? Congratulations! Now, find a desk job in the fire/police department, and if one isn’t available, go get another job.

        Work – how does it work?

      2. dunphy defends this practice because it’s “in the contract” and “the contract must be honored.” Which, interestingly, is the same cover MNG gives to bloated union contracts forced onto companies by federal mediators and bureaucrats and for the robbing of investors in the crooked allocation of GM bailouts funds.

        1. It is like saying Bernie Madoff should have been able to keep his money because people gave it to him voluntarily.

          1. Or saying corporate CEOs deserve their golden parachutes because it’s in the contract.

            1. Or saying corporate CEOs deserve their golden parachutes because it’s in the contract.

              Is that snark? If so, way to miss the point. The contracts are the problem, especially when they are taxpayer-funded and signed by one party with no vested interest in success or failure.

              1. Re-reading, I don’t think you were being snarky.

              2. I’m just saying if a progressive thinks unions deserve to get everything in their contract, then that progressive must also admit that CEOs deserve everything in their contracts. Otherwise, said progressive is a hypocrite.

        2. ALL HAIL THE MIGHTY GOD KONTRAKT!

          Please place your (public monies) offering in the box and move along.

        3. dunphy defends this practice because it’s “in the contract” and “the contract must be honored.”

          Realize that if he lived in Illinois the defense would be “It’s in the state Constitution and the Constituion must be honored.”

          Which is why the public employees campaigned hard against convening a Constitution Convention.

  3. these stories deserve all the highlighting they can get. How many people are even aware of a 200K annual pension for someone retired at 52? And let CA drown.

    1. Someone retired at 52 after eight months at this job.

      1. How many other pensions does this parasite have, I wonder?

        1. Work 30 years (22-52), get 1.5 pensions per year, that would make 45.

          Assuming this is the largest, lets say the average is 100K.

          He is thus getting 4.5M per year.

          Not bad if he was smart enough to pull that off.

      2. Would YOU want to be police chief of Stockton?

        If the job is so undesirable that this kind of deal has to be reached to hire someone, then bankruptcy should have taken place years ago.

  4. What stage are we at in the fall of the republic, when public officials don’t even bother hiding the rank corruption of the system?

    1. It’s about time for the Gracchi brothers?

      1. It’s Gracchi Brothers all the way down.

        1. Oh, oh, can I be Gaius Marius?! I always wanted to reform the army.

          1. Well, you gave it whack for 20+ years and failed, so give someone else a shot.

  5. All of which calls to mind one of my favorite bad editorials in the Los Angeles Times:

    Isn’t it though.

    “…Fail to build the economic infrastructure with publicly spurred development projects like hotels and promenades, and visitors will go elsewhere, taking their dollars with them.

    Oh so germane to Stockton – as we know, one of America’s top tourist attractions.

    1. Yeah that editorial is some A++ delusion right there.

      I love this line in particular-

      “But the promises made to public retirees ? especially to cover skyrocketing medical costs ? could no longer be supported by the tax base when the housing market tanked.”

      So when the housing market was A-OK you guys thought it was normal and reasonable to give a a 200K annual pension for someone who could retire at 52 after 8 months of service?

      But now that the money’s not there it’s suddenly a bad idea?

      How does these people brush their teeth without impaling themselves?

  6. 92% after a few years?

    That ain’t a golden parachute–that’s looting.

    If they did this in the private sector, there would almost certainly be a Congressional investigation. I remember when Obama was all on the warpath over executive compensation–where is he now?

    Who audits the city’s books? Maybe they can get some kind of claw-back by going after the auditor? And if the city approved all of that, then shame on them–that needs to come out,m too.

    Oh, and if the city screwed that up, you can bet they screwed up a lot of other things.

    Holy shit!

    P.S. Obama thinks government is the solution to our problems.

    LOL

  7. Ah well, at least he didn’t shoot a dog.

    1. To be fair, we don’t know he DIDN’T shoot a dog. It IS one of the basic police functions, along with harassing prostitutes and beating uppity citizens.

      1. True. Plus he probably taught dozens of new cops the proper technique of canine assassination.

  8. How the fuck do you get a $204,000 / yr pension for working less than a year?

    1. Usually that only happens when you win the lottery.

  9. We need a state constitutional amendment that limits the ability of politicians to encumber future taxpayers with ballooning, open-ended obligations that are impossible to meet. That politicians can promise all this largesse to fall from the sky in the future and not be around when the sh1t hits the fan is a problem inherent in the system. We can stop this only by writing into our governmental DNA sensible limitations and prohibitions on incurring debt and promising outrageously and ridiculously generous benefits.

    1. Agreed.

      We need to outlaw defined benefit pensions for public employees altogether.

      And separate but related, a public vote should be required to approve all public employee pay. It’s complete bullshit that temporary politicians that are on the payroll of public employee unions are “negotiating” pay packages for those unions.

      1. We need to outlaw defined benefit pensions for public employees altogether.

        THIS

        1. Agreed. But capping them provides 90% of the benefit as switching to a defined contribution. It prevents all forms of chief’s disease.

          1. I like the idea of capping them.

            I don’t mean the benefits.

      2. Or at the very least limit them to 50% of base pay after 30 years. Any pension plan can bankrupt you if you don’t control it. The problem is someone getting a 90% pension after 8 months of work no defined benefit plans in general. That is not a pension plan, that is just legalized looting.

        1. Frankly the whole idea behind defined benefit plans is faulty. It’s bad news for both sides. The employer has a huge liability going into an uncertain future and the employee has no ownership of his retirement funding mechanism. The difference is that employees are often short-sighted and stupid, whereas employers usually have managers, lawyers and accountants who should know better.

          Defined contribution plans fix this problem from both ends.

    2. Pensions, health insurance, and all other job-related benefits ought to be paid for by employees themselves, not employers. Tying them to jobs is asinine, another idiotic unexpected predictable consequence of do-gooders playing god with the economy.

    3. Welcome to the board buddhastalin! FYI, you can type any fucking word you want here. No need to self-censor.

  10. Speaking of pensions:

    But this first-ever default marks the decline of the postal service, illuminating just how precarious its financial position remains without congressional intervention. Some lawmakers believe that such postal poverty threatens Congress’ reputation as well as the future of the mail service and the nation’s economic health.

    “The country’s looking for the Congress to get things done, the president to get things done, especially get things done that actually saves jobs and creates jobs. And there’s some 7 or 8 million jobs that currently depend on the postal service,” Sen. Tom Carper (D-Del.) Congress’ lead Democratic voice on postal reform, told Yahoo News Wednesday. The default, Carper argued, “simply undermines confidence in those who use the post office services, especially the larger mailers,” potentially hurting business and much-needed holiday sales.

    Won’t anyone think of the junk mailers?

    1. It’s odd; there are all sorts of cases and legislation prohibiting or punishing spam, but apparently junk mail is ok. I guess that’s because the government can make money off of junk mail.

    2. Would anyone really be pissed off over 3 day per week delivery instead of daily?

      Personally, I would be fine with everyone having a box at their local PO branch and getting rid of delivery altogether.

      1. Netflix sub would have to go up a notch or two. I’d take that trade-off.

  11. The pensions are the consequence of decisions made when stock markets were soaring, technology money flooded the state, and retirement funds were running surpluses.

    Because everyone knows the good times go on, you know, forever.

  12. But the bankruptcy does wipe out the city’s pension obligations, doesn’t it?

    1. If it was a private business, the court could dismiss some of those obligations – depends how it was funded (sounds like not at all). No idea how it works for a city.

  13. California is like a crazy hot chick. You know she’s crazy, you know any relationship with her will end in tears, or worse, in a pair of handcuffs– being put on by Johnny Law– or even a pine box… but you keep going back. Because… I mean, look at her!

    California’s curse is its weather and beaches. If it didn’t have that, there’s no way people would keep re-enforcing the political climate they have. If California were a shithole– aka a 320 lb woman with bad teeth and horrible fashion sense and a foul attitude, people would just fucking up and leave and it would have to straighten itself out post-haste or die lonely.

    1. Sadly, all those years of taxpayer-funded cigarettes and tanning sessions are finally catching up to the old girl. She looks good, as long as you don’t look too close.

  14. I repeat: It’s going to be great theater watching these cities and counties tear each other apart when the money’s gone and the uproar that will happen when people realize they’ve been used by crooked cronies like this asswipe and his pals.

  15. Related issue, not OT:
    In the SF Comical last week, there were two stories about un-funded retirement liabilities.
    Turns out both Oaktown and SF base their funding on a 7.5% return on investment! And, like most of us, they’re getting 1-2%.
    And neither have been doing any direct finding, hoping I guess that the market will start returning 15-20% to make up for the lack.
    Per many comments, if a publicly-traded business were run like that, there’d be congress-critters by the score lining up to scream.

    1. I’m personally invested 100% in Powerball tickets. It’s a sure thing.

      1. Take the cash payout – doubtful they will still be paying out in 20 years.

      2. Brutus| 8.1.12 @ 9:53PM |#
        “I’m personally invested 100% in Powerball tickets. It’s a sure thing.”

        The Oaktown and SF city gov’ts aren’t that smart.
        You have a chance; they don’t

  16. Churning through people at the top breaks pensions. That’s one of the things that makes pensions fundamentally unviable. When four people in a row pull that stunt, it’s fraud and the whole decision making apparatus in that town should be hit with fraud, conspiracy, RICO, money laundering, and wire fraud.

  17. Obama will go down as the president who single handedly saved America from its own spending problems and debt by making it so obvious that spending cuts need to be done and that government has grown too much. He has made it obvious and the voting public has been energized. He is this generation’s James Buchanan.

    1. Nah. Buchanan didn’t seek a second term. Obama is addicted.

  18. that’s ridiculously obscene

    my pension is generous but it’s also based on substantial CONTRIBUTIONs over a long career. iow, pension payouts are correlated with the aggregate of bimonthly payments in

    i’ve already posted the formula. it’s “reasonable” while certainly generous

    if somebody retires after a few years, let alone 8 months they get back EXACTLY what they pain in, no more , no less. that’s fair.

    california never ceases to amaze me in the amount of govt. fuckupedness it encourages… it gives way too much power to police in specific, and govt. in general. it ignores the 2nd amendment, etc.

    i am so glad i chose a state with a constitutional right to privacy, MUCH more limited govt. power and a police pension system that is well funded.

    my friend, who is a fire captain near san diego is already vested, etc. but he’s still working, justifiably thinking he’s not sure when this shit will pop.

    1. As a taxpayer, I don’t want to be assuming the risk of poor returns, demographic shifts, management skullduggery, etc. Public pensions need to be shifted to defined contribution plans, now.

      1. i wouldn’t have a problem with it.

        personally, i put away about 25% of my income into investments every year. imo, it’s irresponsible to depend solely on one’s retirement plan

        i could deal with defined contribution, but i’ve been paying into a hybrid defined contribution/payout plan for my career, and i expect to be compensated fairly based n my participation

        and im confident i will

        like i said, MY state’s system is overfunded right now

        1. No it’s underfunded. It’s overfunded assuming an unrealistic rate of return. If I assume that the wheel will hit 27 4 times in a row, then I can retire on a dollar. 8 times and the whole state pension can be funded with a dollar. So every pension can be called overfunded. The way you know if it’s really funded is to check the assumed rate of return. If it’s above risk free, then it’s underfunded, no matter who says otherwise.

          1. we’ve been here before

            i’m not talking about the future. i’m talking about NOW.

            you can say whatever you want. if it has substantially more assets than it has liabilities, it’s overfunded.

            i never said in any way, shape of form, how it will play out in the future

            but it offers a stark contrast to california

            you are arguing a completely different point

            1. Dunphy, I don’t think you understand how pensions operate or funded. Its all about having enough current assets to fund future liabilities. You answer that question by assuming a rate of return on your current assets.

              If you try to just look at current liabilities, you are ignoring the whole point of pensions, which is an income stream to beneficiaries over time, which is to say, its all about future liabilities.

              The current assets have to be adequate, at some assumed rate of return, to fund that future payment stream. If it assumes a 7.5% rate of return, it will “need” fewer assets to be fully funded as compared to a 4% rate of return.

              That 7.5% rate is wildly optimistic, and since that’s what you’ve told us your fund assumes, I can assure you it is not overfunded.

      2. Yep.

        It’s also not fair to the lower level employees that are basing their retirement on unrealistic promises from douchebag pols and union reps.

        1. After California goes bust, public sector employees around the country will demand defined benefit plans.

    2. Dunphy they aren’t retiring after 8 months. They are working full careers to earn the full pension, but spending a few months in the chief seat to boost the basis. The minute they take the job, the pension becomes underfunded.

      1. thank you. i did not know that. i was operating under the erroneous assumption that he didn’t have those prior years, and was just appointed (mebbe from another agency or whatnot)

        i still think it’s excessive but that changes the analysis

        thank you for the correction

        fwiw, my system operates under high 5. our payout is based on a percentage of the average of our 5 highest consecutive paid years

        many officers will consciously plan a specific 5 yr attack and over that period work metric assloads of overtime.

        iow, my base is about 100k. but i could work OT to get 140k or so without TOO much difficulty.

        if i did that for 5 yrs straight then my 5 highest consecutive average year would be 140.

        and assuming a 50% pension payout, that would be 70k per year vs. 50k per year, which is a substantial difference.

        1. Um, one question.

          Why the fuck does OT count in the calculation?

          There is no logical or sane reason why the pension calculation should not be based on the average of your highest 5 years of BASE PAY.

        2. There are a lot of minor misunderstandings about this issue because pensions are so complex. High 5 is much less prone to abuse than last 1 but it’s still subject to gaming as you point out.

    3. Sounds like this city is so stupid, they keep offering bad contracts to new chiefs.

      A private company would put in some tenure and performance clauses before dishing out this ridiculous pension.

      Then, instead of screwing up their pension plan to pay executives, they would simply buy the guy an annuity.

  19. Been watching this guy do gun reviews for a while. I like his presentation.

    He’s obviously a solid Obama supporter.

    Check out his Colorado shooting commentary, it’s informative.

  20. that’s what our union negotiated contracts stipulate so suck it bitchez.

    1. to paraphrase the dead milkmen, if that’s yer union than yer union needs fixin’

    2. DesigNate| 8.1.12 @ 10:31PM |#
      “that’s what our union negotiated contracts stipulate so suck it bitchez.”

      MNG, is that you?!

      1. Damn, I forgot the /dunphy tag.

        1. it would be, as usual, a silly misstatement of my position

          but then, when you have no argument you might as well create a fake enemy to ridicule.

          much like the false claims that i am a cop apologist or not a libertarian.

          if i’m not a libertarian, then neither is ron paul

          1. Just for the record, I don’t think Ron Paul claims he is anymore.

          2. That’s exactly what you said to me when we were complaining about that one chief retiring with that $600k in unpaid sick leave/vacation time, so no, I didn’t misstate your position.

          3. much like the false claims that i am a cop apologist or not a libertarian.

            A non-cop apologist doesn’t excuse police double standards, and a libertarian doesn’t think that “the vast majority of laws are just”. If you want to call that a litmus-test, fine, it is. But it’s also a universally accepted one.

  21. Another day, another war. Glad to see how prescient the Nobel committee was when they selected Obama for the peace prize.

    Washington (CNN) — President Barack Obama has signed a covert directive authorizing U.S. support for Syrian rebels battling President Bashar al-Assad’s forces, U.S. officials told CNN on Wednesday.

    The secret order, referred to as an intelligence “finding,” allows for clandestine support by the CIA and other agencies.

    http://www.cnn.com/2012/08/01/…..?hpt=hp_t2

    Yet surely the supposed anti-war left will cheer him on as a hero, our commander in chief of our Global Force for Good?.

    1. “Yet surely […] the anti-*Bush* left will cheer him on as a hero, our commander in chief of our Global Force for Good?.”

      Fixed. Just ask shriek!
      War was a plausible excuse; no more, no less.

  22. Dunphy, ignore the haters and go see Noel Gallagher.

    1. like i said, love oasis and love noel, just haven’t read reviews of his new band. i don’t see how it could suck, he’s so damn good.

  23. I OT commented about this before but it should be much more than a local story:

    http://www.csmonitor.com/USA/P…..ransit-tax

  24. You could power a small country with the spin in this article.

    Posting Officer Involved Shooting to YouTube a Disgrace.

    1. yes. i often find policeone to be like a funhouse mirror version of hit and run.

      like polar opposites, but equally myopic, and willing to ignore facts that run counter to the narrative

      disingenuous editing is par for the course for police haters

      lets remember that many people, TO THIS day, have not seen the full unedited rodney king video

      1. like polar opposites, but equally myopic, and willing to ignore facts that run counter to the narrative

        Oh, sure. Totally equal. You lying twit. If there is an issue with something here, the commenters call it out. There is discussion. If there is an issue there, the comment is deleted.

        disingenuous editing is par for the course for police haters

        They keep saying “edited video” when all that was added was an audio track of police radio. You’re spinning it right now.

        And you said the other day you were her talking “truth to power” as you put it. What power? Policeone is where the power is. Those assholes have the power of life and death over us. But try to disagree there, and your comment gets deleted. False equivalencies are one of your most common argument techniques.

  25. No honest person expects, or would accept after eight months of work, a very large pension for the rest of their natural life. If this story is true, this police chief has fewer morals than anybody he ever arrested.

    1. That’s not quite what’s happening. They have Calpers credits for other jobs. But then they are boosting their last year’s pay with a few months as chief and a few months vacation. And no, they aren’t honest people.

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