PD Editorial: California pension costs keep on climbing
Nine years ago, citing data from a pension watchdog group, we took note that there were 9,111 retired state and local government employees collecting pensions of at least $100,000 a year from the California Public Employee Retirement System. A year earlier, there were 6,133.
The $100,000 club has now grown to 30,969 — a fivefold increase in 10 years — according to figures published last week by Transparent California.
California’s median household income, by comparison, was $71,805 in 2017, the most recent figure available.
The rise in six-figure pensions isn’t the only concern in the Transparent California report. Average retirement benefits for full-career employees — those who work at least 30 years — are at least as alarming.
For non-safety state employees, the figure is now $63,057 a year. For their counterparts in local government, the average is $74,599.
The averages are higher still for police, firefighters and other public safety workers. For state-employed public safety workers, it’s now $84,197 a year. For local public safety workers, the average pension is $108,320 per year.
As we have said in the past, we believe retirement benefits ought to be included in public employment.
But the cost of enhanced benefits granted in the late 1990s and early 2000s, coupled with mixed results for CalPERS investments, have created enormous shortfalls that, in turn, are driving up taxpayer costs and draining money from public treasuries at the expense of public services.
It’s a vicious circle, and the minimal reforms enacted to date haven’t eased the crunch.
CalPERS is at least $146 billion short of what it needs to meet its obligations. Some critics believe the unfunded liability is almost double the official figure.
Santa Rosa, a CalPERS member city, listed its unfunded liability as $338.5 million as of June 30, 2017.
The state’s annual cost for employee retirement benefits increased by a factor 30 between 2000 and 2016, according to a Los Angeles Times report. Local governments are in the same vise, and the costs will keep growing for the foreseeable future.
In a report released last year, the League of California Cities estimated that cities will nearly double the portion of their general funds paid to CalPERS by 2025. That means less money for police and fire protection, parks and pothole repair.
There are risks for public employees as well, including fewer jobs and smaller paychecks as public employers struggle to balance the books. CalPERS has terminated benefits for employees of small public agencies that shut down or couldn’t make their payments, and a federal judge ruled that local governments can reduce payments through the bankruptcy process, though that has yet to happen anywhere in California.
Gov. Gavin Newsom’s budget proposal includes some relief for school districts as well an advance payment to CalPERS to reduce the state’s future obligations. Those are good investments for a state with a large budget surplus, but the day of reckoning is still looming.
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