Pensions

California Mayor Says There's 'No Rational Justification' For City's Six-Figure Pensions

But there's not much he can do to change it, because the city signed off on the benefits in collective bargaining agreements. It's a common story.

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AURELIA VENTURA/LA OPINION/Newscom

A few weeks back, I noted the story of James Mussenden, a retired city manager from El Monte, California.

A quick recap: in a town where more than a quarter of the population is living below the poverty line, and where the median household income is a mere $32,000, Mussenden is pulling down a $216,000 annual pension (along with free healthcare and annual cost of living increases). The Los Angeles Times uncovered Mussenden's outrageous pension—which, as the paper reported, he feels awkward talking about with his golf buddies.

With retirement promises like that, it's no surprise that El Monte is dealing with one of the worst pension crises in a state full of municipal pension messes. Last year, more than a quarter of the city's budget was spent on benefits for retired public workers.

Now, Mayor Andre Quintero tells the Los Angeles Times that there's "no rational justification" for the extraordinary pensions that are busting his city's budget and enriching a few hundred former employees. Yet, because those benefits are written into the city's collective bargaining agreements, he tells the Times that it can be undone only through negotiations with unions.

As the Times put it: "El Monte's predicament reflects the deep difficulty of reining in public pension costs."

Yes, but there's more to it than that. El Monte's "predicament," like similar predicaments facing municipalities from coast to coast, is of its own making. City officials signed off on these generous pension benefits when they reached collective bargaining deals with public sector unions. El Monte's pension problems are particularly acute because of a special loophole opened by the city in 2000 allowing El Monte city employees to qualify for a second pension as county employees too.

Some 200 former city employees, including Mussenden, are legally double-dipping because of that loophole.

The problem is one of incentives. Public sector unions have a strong incentive to get the best possible benefits for their members, of course. City officials are supposed to be negotiating on behalf of taxpayers, but often times they have a stronger incentive to give in to union demands in order to maintain labor peace or to reward valuable political allies who help keep election coffers filled.

The same story plays out in small cities like El Monte and big ones like Chicago.

Adding to El Monte's predicament is the fact that courts in California (and most other states) have long held that pensions are locked-in and cannot be reduced even if a city is unable to meet the obligations.

That's one thing that might be changing. The California Supreme Court will take up a case later this year challenging that long-standing legal framework—known as the "California Rule." If the state Supreme Court upholds a lower court ruling (which upheld a pension reform signed by Gov. Jerry Brown in 2011) saying that says municipalities can cut unearned benefits for future employees, it would give places like El Monte a little bit of flexibility when it comes to paying off their debt.

Even if the Supreme Court upholds the reform, it won't affect already-retired workers like Mussenden, who will get to keep cashing his six-figure pension checks until he dies.

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  1. Something, something, rent seekers.

    1. FREE SHITZ!

  2. It’s just like a Trumpian to want to steal the benefits these loyal public servants worked so hard to grant themselves bribe earn.

  3. There is no rational justification for pensions in the first place.

    Something something deferred costs something something scam.

    I wouldn’t want a pension, give me a 401K match instead so I don’t care if you go bankrupt. Why are you giving me less now so you can give me more later? Fuck that.

    1. It is the perfect scam. How people let themselves get hoodwinked into this baffles me.

      1. Something something diffuse something concentrated something.

      2. There is always someone at the top of the ponzi scheme playing golf.

        Everyone wants to be that guy.

        1. Damn straight!

  4. The Los Angeles Times uncovered Mussenden’s outrageous pension

    I wonder how many barrels of ink has the L.A. Times spilled over the last couple of decades editorializing over strengthening public sector unions.

    If they haven’t, good on them. But it’s my experience that a newspaper will talk about the importance of powerful public sector unions in the abstract, then later uncover outrages like the above– but never connect the dots between the two.

    1. connecting the dots is not covered in journalism school…

      1. Connecting the dots would be a waste of the ink they need to keep editorializing over strengthening public sector unions.

  5. Would it be legal to pass an “excessive public pension tax” and claw some of it back?

    1. Cadillac pension tax. I’m diggin’ it.

  6. Question: how does the “city manager” classification become part of a bargaining unit? Because that sounds an awful lot like, you know, management.

    1. Oh man, you’re gonna love the American Federation of School Administrators.

    2. Pennsylvania state liquor stores have a clerk’s union and a manager’s union. The only LCB staff not in a union are the three board members.

  7. Even if the Supreme Court upholds the reform, it won’t affect already-retired workers like Mussenden, who will get to keep cashing his six-figure pension checks until he dies.

    Seems to me there would be fifth amendment issues if they reduced existing pensions.

    1. Seems to me there could be second amendment issues if they don’t.

    2. Seems to me there would be fifth amendment issues if they reduced existing pensions.

      SCOTUS has held there is no property right to Social Security benefits. I don’t see a material difference between a public pension and Social Security (although the courts might).

      1. SS is a program. I’m thinking a pension is more like a contract that can’t be impaired.

        1. Maybe, but the key distinction would probably be that public pension contributions are voluntary where SS contributions are taxes.

    3. Seems like it would be trivial to work around, anyway. Just levy a special 99% tax on CA public sector pension earnings over a certain level, regardless of where the recipient is currently living.

    4. What does reducing pensions have to do with self-incrimination? Pensions aren’t Constitutionally sacred – they’ve been clawed back and pared down in lots of precedents.

    5. Not a Fifth Amendment issue. But an Article 1 issue.
      Article 1, Section 10: “No State shall… pass any… Law impairing the Obligation of Contracts…”
      The employment agreement, that includes the pension, is a contract.

  8. “management”….hahahahahahahahahah

    1. made milk come out my nose…

  9. City officials are supposed to be negotiating on behalf of taxpayers, but often times they have a stronger incentive to give in to union demands in order to maintain labor peace or to reward valuable political allies who help keep election coffers filled

    This is the whole reason why public employee unions should not be allowed. There is no true adversarial relationship in their collective bargaining like there is in private sector negotiations between a union and a company.

    1. Posted by someone, who has obviously never been involved in public employee collective bargaining negotiations.

  10. That’s nothing the fine people of Mexifornia can’t solve with a tax. And if they can’t, just send the cops around to rob people at gunpoint.

  11. That’s not anything the fine people of Mexifornia can’t fix with a tax. And if they can’t, just send the cops around to rob people at gunpoint.

  12. Vernon-Bell Syndrome is more far reaching than was originally believed. It infects every municipality, county, and creature of State Government.

  13. Vested aristocracy bleeding the peasants dry.

    Serfdom makes a comeback.

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