
When city retirement pays better than the job - DrScump
http://www.latimes.com/projects/la-me-el-monte-pensions
======
brandur
If you want a maddening read, Google for "Transparent California salaries" \+
your city name (I won't link it because they have some of anti-adblock thing
going on now) [1]. Many public sector employees have wages that are more than
competitive with the 1% of the private sector; after you factor in the
incredible benefit of a pension and early retirement, it's not even on the
same order.

One problem with government that is usually true is that it can grow, but it
can't shrink. This applies to cost, workforce size, and benefits.

We're at a strange turning point right now. Pensions in the private sector
have all but disappeared. Pensions in the public sector are alive and well
because it doesn't need to be self sustaining, and by running huge deficits it
can steal the money it needs today from future generations.

It's pretty obvious that cities and states should start eliminating pensions,
but the beneficiaries of those same pensions are the people that need to do
that. I'm not holding my breath for the right thing to happen here.

[1] Sorry if you're not in California. Your state/country may have similar
open information.

~~~
caspercrf
I checked for my city and there are a couple fire fighters with salaries of
$45k-$75k a year but made $140k-$180k in just overtime and overall total comp
of $220+. How does that even happen?

~~~
areyousure
My understanding is that overtime scams are common in parts of the public
sector.

The usual scheme is that you are not punished for not showing up to work, but
are paid overtime for taking someone else's shift. As a result, swapping
shifts with someone results in a 50% pay increase for both of you. Together
with other scams, the result may be even greater.

------
smallnamespace
One reason pension plans are perpetually out of money is that they are allowed
to _assume_ that they will make around 6-8% a year from investments, rather
than funding based on a riskless instrument like a T-Bond, which only gets you
2-3% a year. This means most pensions are funded only about half if what they
should be.

You might think this sounds reasonable, because historically equity markets do
return something like 6-8% a year over the very long term, but the pension
benefit is _fixed_ and _riskless_ in the sense that the city must always pay
it out, so the investment should also be similarly risk free.

Otherwise, if investments fail to perform, then taxpayers are always left
holding the bag, as we see every time a market downturn occurs. Heads I win,
tails you lose...

~~~
d4rti
Indeed, it made the news here in the UK when the Bank of England was funding
it's pension liabilities with assets that matched, instead of the more common
"hope for 6-8%" return method.

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Spooky23
What isn't mentioned here is that the state usually mandates binding
arbitration for public safety employees, which eliminates the ability of the
municipality to negotiate. That's how police pensions get so crazy -- the
pension allows the city to kick the can down the road vs a 10% raise or
whatever.

The supplemental pension thing for bigshots is another matter. That's pure
greed, and a city shouldn't be able to do such a thing if the are part of the
state system.

~~~
snarf21
Exactly. Here in PA, the state police cost more in benefits and retirement
than then cost for salary from day 1. Add to that their retirement is based on
their 4 best quarters and that includes overtime.

I'm not saying that they should be paid a good wage plus money for their high
risk occupation. It is just that pensions are pyramid schemes and not
sustainable. And anyone who says just raises taxes to make them sustainable is
proving that they aren't sustainable.

We need to get rid of pensions and switch to fixed contribution. If people run
out of money, then use taxes to fund social programs to help them.

~~~
mavelikara
Counting overtime in that calculation is pure evil.

~~~
snarf21
The state has been unable to get the union to drop it. Also a few years ago
there was a manhunt for a cop killer. The total cost was $11 million, largely
all overtime. How much do you think that is going to cost taxpayers during the
life of all of these cops' retirements? (a _lot_ !!!)

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calcsam
> That puts him in the top one-hundredth of one percent of all public pension
> recipients in California.

If Johansen is unrepresentative of the average, it would be nice to give some
stats on what the average actually is.

~~~
debacle
The median is far more important, I think. I am going to receive a pension
when I retire for the 4 years of full time work I did at a hospital. I think
it's going to be on the order of $28 a month.

------
emidln
> El Monte has a history of generous employee benefits — including a four-day
> work week for civil servants, who put in 10 hours a day and have Fridays
> off.

Working 40 hours per week is a _generous_ benefit?

~~~
wutbrodo
The claim isn't that forty hours a week is anything special, but that the
flexibility to move around your hours to get a day off is.

Pretty much everyone I know, including the white-collar six-figures
professionals, would consider that a pretty great perk. With the possible
exception of other people in tech, for whom flexibility is more common.

~~~
empath75
It's pretty standard in the federal government.

~~~
wutbrodo
Damn TIL, and to the govts credit

------
Dowwie
If you feel upset or angry about what public employees receive, realize that
the problem isn't that they get too much but that _you_ get too little.

~~~
imgabe
The problem is that what they get is unsustainable. The public is on the hook
for paying those pensions for decades. Which means there will be an ever-
increasing pool of public retirees that that taxpayers will have to fund.

~~~
crdoconnor
Raise taxes on the assets of the wealthy, crack down on tax havens and it
"magically" becomes sustainable again.

~~~
m0llusk
No, it doesn't. California pensions for example are such that even if the
state dropped all other obligations and paid only pensions even with massive
tax increases pensions could not be fully paid. This mess will unwind in the
short term. Yet another argument for some kind of basic income alternative.

------
otoburb
At some point CalPERS and the city of El Monte aren't going to be able to
cover the costs of the defined benefits pension packages - there will
literally be no money left to fund the ongoing costs especially given the
demographics listed in the article.

Presumably some hard decisions will need to be made in the coming years. Given
that "El Monte has more than twice as many [municipal civil servant] retirees
drawing pensions as it does active employees" any attempts to legislate
changes will be met with fierce political opposition until it's too late.

~~~
crdoconnor
Repeal prop 13 and start redirecting the tsunami of unearned income _away_
from landowners in California and towards the state budget and CalPERs could
quite easily be made sustainable again.

~~~
cloakandswagger
Why does every suggestion of yours involve stealing money from someone else to
keep pensions on life support a little longer?

~~~
jacalata
Presumably they think pensions should be funded and aren't stupid enough to
think the money can just be invented from nowhere for it.

------
nugget
Corruption plain and simple. There should be claw backs and reductions on
self-dealt pension benefits such as these.

~~~
empath75
Sure, in the case of the guy that voted for his own pension.

But if you take a job and work it for two decades with the expectation of
getting a pension, that pension is _part of your salary_. Clawing it back
after the fact is complete bullshit.

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HarryHirsch
Facts are a bit thin on the ground in the article - they list the city manager
as poster child, and that's that. You'd like to see averages to get the
picture how generous the city government really is. I guess it's all "fake
news".

~~~
mturmon
This is a general problem with LA Times muckraking. They do a lot of articles
like this, with a single example used to backstop a whole narrative.

On the other hand, they can go long (rarely!) with great results, as they did
with the self-dealing of politicians in the small city of Bell (in LA County)
-- ([http://www.latimes.com/local/la-watchdog-me-bell-sg-
storygal...](http://www.latimes.com/local/la-watchdog-me-bell-sg-
storygallery.html)).

~~~
fencepost
_This is a general problem with LA Times muckraking. They do a lot of articles
like this, with a single example used to backstop a whole narrative._

I'd call it Tribune more than just LA Times, and I'd note that the single
example they use is generally an outlier. If they used an example from the
median it'd be a lot harder to get people worked up.

------
edblarney
Public sector unions are the most powerful bodies on earth, more powerful than
'big oil' etc..

I'm definitely not an 'anti government' type of person, but this kind of
dysfunction is systematic.

They have the power to pay themselves a lot, and they do it, it's not even a
public/private issue, it's just measure of power.

If progressives want to make actual progress, they need to tackle this issue.

------
fencepost
Pensions are a way for negotiators to kick the can down the road - and often
they're negotiators who by the time it becomes a problem will have taken their
own pensions or golden parachutes and retired far away from the town or state
in question.

It's also a lot easier to blame the people still around hoping to collect the
pensions they were promised (and for which they took lower wages) than to
blame others who screwed things up. I kind of feel that it's perfectly
legitimate for legislatures to cut pensions as long as they also come to a
retroactive agreement with the people affected to compensate them for the
lowered pay that they took all those years ago, plus interest, and if it's
going to be a lump sum cover any increased tax burden due to the size as well.
Basically if you want to cut the pension, you have to retroactively fund the
401k or IRA that would make up for it.

Or of course they could work out a formula that attempts to cover part of the
shortfall from the pensions of those who created the problem by chronically
underfunding - legislators, governors, mayors, council members,
superintendents, etc. for public pensions, the retired CEOs and board members
and their estates for private pensions. I can't imagine that there'd be _any_
screaming about that. It wouldn't make much difference in the amount of cuts,
but it might be a deterrent to prevent similar issues in the future.

Consider Illinois, which has massive pension problems at the state and local
levels. The state and towns/cities negotiated contracts that included pensions
at a known level and had a pretty good idea of how much they needed to be
funding in advance to cover those obligations, but instead of actually doing
so they spent the money elsewhere on things more likely to get them reelected.
It's like putting 1% in a 401k so you can spend the rest on parties every
weekend, then screaming at retirement time that there's not enough in there to
support you.

There are absolutely abuses and outliers - abuses where the senior decision
makers implement policies that dramatically increase payouts, then retire to
take advantage of those increases as I believe was the case in this article.
Abuses like that happen in the corporate world as well, where they're often
called "golden parachutes." Anyone else here remember reading about companies
paying senior executives tens or hundreds of millions in compensation just to
get rid of them?

There are also folks who've worked several different jobs, each of them with a
pension that vests fully after 15 or 20 years, so once they actually retire
they're able to collect separate full pensions from several different bodies
or even occasionally from the same one - consider someone who was a police
officer or fireman for 20 years, then "retired" and moved to another job in
the same municipality. That person may well have a police/fire pension plus
another civil service pension. I'm pretty sure Illinois and probably other
places are working on reducing those with rules that limit the number of full
pensions from one entity that people can get, but that won't make a huge
difference.

What happens regularly is that you'll see stories like this that highlight the
outliers - particularly outliers that were previously in the most senior
positions - and use them as an argument for how the whole system is broken and
needs to be scrapped. Expect to see those most often from the Tribune
companies (multiple papers, headlined by the Chicago Tribune and LA Times) and
Wall Street Journal (News Corp).

~~~
DrScump
"There are also folks who've worked several different jobs, each of them with
a pension that vests fully after 15 or 20 years, so once they actually retire
they're able to collect separate full pensions from several different bodies
or even occasionally from the same one..."

This. It's common in CA for posts like Chiefs of Police to "retire" as soon as
they are fully vested and split for another jurisdiction and a fresh pension
hunt.

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analog31
I honestly can't say if public salaries and benefits, including pensions, are
too high or too low. But one thing I've noticed is that when salaries become a
matter of public debate, it always invites a reaction from folks who believe
that salaries are too high. There could be a variety of factors involved:

1\. Most people make less money than people such as government officials,
research professors, and the like, because most people are unskilled laborers.
So it always looks like the salaries that we read about are exceptionally
generous.

2\. There's a cultural belief that government workers are lazy and
incompetent, and their jobs are "easy" in a physical sense compared to
unskilled labor and the construction trades, so we assume they're overpaid.

The result is a natural political pressure to reduce salaries and benefits for
public workers.

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losteverything
The concept on anonymity in the future for these pensioners will go away
whether they like it or not.

Instant facial recognition will present pensioners (& others) to everyone.

I can see where citizens charge them more or demand they pay for public
services - or spend their money on the tax region from which it was sourced.

Legislation wont bring change but people will.

