Posts Tagged ‘Pensions’
The San Diego County Taxpayers Association (SDCTA) is keeping a close eye on several significant changes to public employee pensions expected to impact state and local governments starting next year.
Several stem from Assembly Bill 340, or “Public Employees’ Pension Reform Act of 2013.” The bill, recently signed by Governor Jerry Brown, impacts new state and local public employees enrolled in CalPERS and the pension benefits they receive. SDCTA prepared a brief summary comparing the changes to current law, as well as to initial pension reforms Governor Brown suggested.
Councilmember Carl DeMaio, one of the primary authors of the Prop B Comprehensive Pension Reform (CPR) Initiative, today unveiled another sweeping pension reform proposal to end the notorious DROP Program in the city’s pension system.
The DROP Program allows city employees to retire in place and retain their jobs for up to five years – resulting in a “double dipping” perk where city employees continue receiving a full salary while simultaneously receiving a full pension payout.
One common labor union objection to defined contribution pension plans (401-k plans) is that the administration costs are “1%-3%” annually. They assert that it’s much less expensive to let CalPERS or other “experts” manage a huge pooled account.
And indeed that high 1-3% individual account annual cost would be a major impediment. IF it were true.
It’s not. Not if one makes even a rudimentary effort to control costs down to 0.2%. And in some cases, the cost can approach 0.1% a year.
No, not 1% a year. That’s ONE-TENTH of ONE PERCENT annually –TOTAL cost. And it can be even less.
There are many, many fallacies in the sometimes explicit but often IMPLICIT reasons given for paying out great government pensions. Here’s my selection for the top ten excuses:
1. “Public employees deserve high pensions because they work for low wages.”
FALSE. Perhaps true at one time, but not any more. In many instances, today’s government employee is earning 10%-30% more than their true private sector counterparts — and with far better job guarantees. BTW, the bogus union salary comparisons usually cherry pick the private sector — including in their “surveys” only the largest and wealthiest private sector employers — along with monopoly public utilities.
The public worker pension debate rages on. And “rage” is the operative term when the unions and their allies discuss switching to 401-k plans from their current guaranteed defined benefit plans.
Carefully selected sob stories are popping up to justify continuing the public worker guaranteed pensions that are roughly three to four times what private sector workers can expect to receive upon retirement.
Rather than rehash the usual talking points, I’d like to here list what I consider some key often UNSTATED (and false) assumptions underlying the labor unions’ propaganda:
Recently there have been a spate of “studies,” press releases and articles about how we all prosper from government pension fund investing and pensioners’ spending. Here’s my pithy response:
Actually, if the Crips and Bloods had good PR departments, they could put out similar and equally accurate “analysis” and press releases.
The titles could read something like this:
“Crips’ Thefts Stimulate Economy.”
“Bloods’ Blood Money Energizes Commerce”
A thief who steals someone else’s money and spends (or, indeed, invests) the funds is doing just as much for the economy as the taxes confiscated (under threat of force) for the benefit of our public employee aristocracy.
The Little Hoover Commission just released a bipartisan report on public employee pensions. The data is sobering to say the least.
· The 10 largest public pension plans in California faced a combined shortfall of more than $240 Billion in 2010.
· Major cities in California including San Diego are or will be spending 1/3 of their operating budgets on retirement costs.
· Pension costs will crush governments at the local level: Few municipalities will be able to absorb the financial blows without making further severe cuts to vital local services.
When it comes to solutions, the report suggests capping pensionable pay, which happens to be a major component of my Roadmap to Recovery. I’m happy to see this common sense solution gaining traction beyond San Diego.
As other local governments and the state continue into the fiscal abyss, they will be forced to make the same tough decisions San Diego faces… Do we cut basic functions of government like road maintenance? Or, do we finally demand that public employee benefits fall in line with those of the private and non-profit sectors?
The full report is worth a read: http://www.lhc.ca.gov/studies/204/report204.html
Dave Maass asked me earlier about what I thought the Tea Party would be watching locally in 2011. As the unofficial chief ideologist, I thought the question deserved an answer. (By the way, no one selected me, in a decentralized organization, people just do the job that needs to get done. Shared vision is the glue that keeps the Tea Party together, not a party organization.) Here is what we will be watching:
Councilman Carl DeMaio spelled out his ‘Roadmap to Recovery’ for City government last night in Mission Valley, and the GOP County Committee responded with applause and cheers at their monthly meeting. Introduced by Chairman Tony Krvaric as “the man who makes Reform seem exciting and achievable,” DeMaio delivered with a summary of his 90-page plan to stabilize City finances and resume real services to the public.
DeMaio’s ‘Clean Up City Hall’ website is: http://www.cleanupcityhall.com/ His full 90-page Roadmap Plan is here: http://cleanupcityhall.com/uploaded/FinancialReport.pdf
……………….Getting Back to the Three “Rs”
“10 former city employees will split $61 million dollars for the rest of their lives. Did they win the lottery? No…they will receive it in payouts from the City of San Diego pension system.”
“I was shocked by what I discovered in the City of Bell and am shocked by what I discovered in the City of San Diego. San Diego is just like Bell – only bigger,” Marcia Fritz, CPA, CFFR
These are just two of several shocking revelations about the City of San Diego’s pension system contained in a report being released Monday morning. The report was compiled by Marcia Fritz — the pension expert who revealed the outrageous pension payouts in the City of Bell.
As most San Diego U-T readers have probably seen, this morning had another great piece highlighting opulent retirement compensation by the city. This SD U-T’s “Watchdog” group is proving to be a very refreshing read, digging beyond what politicians and labor union media outlets spin as “the truth.”