Pension Crisis

California Pension Fund Mystified That Folks Are Upset About Budget-Busting Bonuses

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That will be an extra $75 a month for flag-raising duties.
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In August, Victor Nava of the Reason Foundation highlighted what is ultimately the destruction of a significant feature of California Gov. Jerry Brown's modest public employee pension reforms. He sought to stop one source of pension spiking—the pursuit of temporary bonuses and extras in pay that ultimately permanently boost an employee's pension payout—by requiring pensions to be calculated from base pay, not including these bonuses.

No problem, said the California Public Employees' Retirement System (CalPERS). They'll just declare all sorts of bonuses to be part of their base pay and force them right back into the pension calculations. CalPERS voted to have 99 bonuses sometimes given to certain public employees for various tasks that most of us would classify as expected job duties (like officers directing traffic) as part of their base pay. And so California's multi-billion-dollar pension crisis gets worse.

Today the Los Angeles Times follows up on the fears raised by Nava to explore the potential financial impact of this vote. Note that CalPERS doesn't know the potential cost to taxpayers of the decision they made. They voted without any sort of estimate. So the Times took the city of Fountain Valley, an Orange County community with a population of around 55,000, and had CalPERS determine what the bonuses are going to cost:

CalPERS found the Fountain Valley perks could hike a worker's gross pay as much as 17%. About half the city's workforce received the extra pay that will also increase their pensions, most of them police and fire employees.

Fountain Valley taxpayers are spending between $147,000 and $179,000 in total compensation, pension and other benefits for each full-time officer on its force, according to city documents. Sergeants, lieutenants, two captains and the chief receive more.

CalPERS executives told the Times they didn't understand why people are so upset with them:

The action simply clarifies the 2012 reform law, which was designed to stem rising pension costs, said Brad Pacheco, a spokesman for the agency.

CalPERS always assumed that new employees would continue to benefit from bonuses just as those hired earlier did, Pacheco said.

"We just changed the definition of 'base pay' to include things that are obviously not base pay. Why is everybody so upset with us?"

When it comes to salary negotiations though, you better believe all those bonuses (and the fact that they permanently boost pensions) will not be part of the numbers tossed out so that employee representatives can make wages appear more modest.

The Times notes that pension contributions from the state and municipal governments within California have jumped from $1.9 billion to $8.1 billion in 10 years. That's not even getting into the massive problem of growing health care costs for government employees.

Nava noted some of the justifications for bonus pay in his August story, but the Times has a longer list here.

Below, Reason Foundation Vice President of Policy Adrian Moore discusses how to end the public sector pension crisis:

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  1. we need to give them bonuses. otherwise these unfireable overpaid retards might quit and go into the private sector and make more money and pay more taxes.

  2. What’s the minimum you have to be a state trough-feeder to lock in some of these sweet pensions? I’d almost consider applying for one if it were only a year or two of volunteering for traffic duty.

    1. One day if you’re a union boss.

      1. Forgot about that one — as a teacher, yes indeed. I could do that.

        1. 30 years of service, retire with 80% pay and full medical for life.

          1. 🙁

            I can’t get 80%, NYSERS caps at 60% Final Average Salary.

    2. Not much at all. I was on City Council in a small town in Idaho for one year. I got paid $100/month to do it, and resigned my position when we moved out of state. I received notice from PERSI (Idaho’s version) that, upon reaching retirement age, I will receive something like $12.00/month for the rest of my life. It’s ridiculous how the gov’t just throws away (other people’s) money like this. And that was in Idaho, which is (supposedly) much more conservative about this stuff than California.

      BTW, hello all. I’ve been a lurker for about 18 months, but finally created an account for this reply.

      1. Welcome. Come out of your cave into the light. It doesn’t burn… much.

      2. In case you weren’t aware, you do not get a pension for commenting here. The best we can do is Warty calling you a pussy if you can’t do squats and Sarcasmic treating you to pictures of what can only be hunger stricken albino stricken Africans, who are sometimes hot.

        1. But will deep-dish be served in the rape dungeon?

          1. It’s tulpa. I want to be the first one to out him for once. Just kidding.

            1. If I was tulpa, my hands would be too full of cop cock to type comments.

              1. Also your comment was coherent and on topic so that is an automatic disqualification.

      3. I was on City Council

        I already hate you.

    3. For NYS ERS, you have to work five or ten years. (five if you started before the patterson administration, ten if after). If you leave before that, you can either leave your contributions in (betting on a future return to state service) or cash out the money you put in. After you’re vested, the money can’t be taken out, but you are guaranteed a pittance.

      My pittance is at about $300 a month given my years of service (I am vested in the retirement system I can’t take my money out, and they have to pay me if I’m not dead)

  3. Hey, it’s not like its their money, and they can always pick the taxpayers pocket if necessary, so who cares?

  4. Shut up and take your civilization, you ingrates.

  5. And it’s SUCH a surprise, since moonbeam ‘balanced the budget’! It’s a toss-up in the lying competition between him and Obo.

  6. It’s so hard to care about California. Will all the sane people (if any are still left) please leave that state, and let the crazies run it into the ground?

  7. What’s truly mindboggling is that, unlike the federal government, California can’t print money or play other shenanigans of that nature to deal with these huge IOUs. Just how do they think this going to end? Mysterious ass-saving boom economy? Federal bailout? Pixie dust?

    1. I am betting on a Federal bailout.

      It will be done TARP style, when there is a huge financial crisis, on the excuse that “the economy will collapse if we don’t.”

      1. That’s what I think, too, though I’m hoping the political and economic environment will be such that Congress doesn’t vote for it.

  8. Note that CalPERS doesn’t know the potential cost to taxpayers of the decision they made.

    Pfft! Only a crazy person would expect Calpers to know (or care) what they are obligating the taxpayers to cover.

    1. Why would anyone match revenues up to expenditures? That sounds like corporation talk to me.

      1. Exactly. Corporations want results. And we know how corrupt all corporations are. Therefore, results are corrupt.

  9. Just how do they think this going to end? Mysterious ass-saving boom economy? Federal bailout? Pixie dust?

    There’s this goose, see?

    And the eggs she lays are solid gold. It lives a little bit south of the Bay Area. It hasn’t flown away, yet, even though they keep poking it with sticks and pelting it with rocks.

  10. match revenues up to expenditures

    Sounds like some kind of a scam.

    1. No, it’s just some discredited philosophy.

  11. Calpers execs received bonuses for responding to the Times article.

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