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Jeff Ackerman asked in his June 23 column, “how did government workers become the aristocracy?”
Fact is that we haven't.
There are many in the media, Legislature and business community who want to paint that picture because it plays well. I am not going to deny the reports of what is being called the $100,000 annual pension club, nor am I going to deny that there are an estimated 5,000 public employees who may qualify for an annual pension in excess of $100,000 per year.
These employees by and large are at the executive level, have more than 30 years or service and have unusual qualifications. I am certain that the light of day will disclose any abuses that may have occurred.
What I want is honest reporting that as of June 30, 2008, there were 476,252 retired members in the California Public Employees Retirement System (CalPERS).
CalPERS is the predominant public retirement system in Nevada County but there are more than 80 public retirement systems in California. These other systems have their own boards of directors, retirement investments and retirement policies. Sacramento County has its own retirement system as does San Diego.
CalPERS has three classes of members: state employees, classified (not certificated) school employees and local public agency employees. In these three classes there are three types of membership: active, inactive and retired. CalPERS has a total of 1,602,385 members. Of those, 1,126,133 are either active or inactive and 476,252 retired.
The average monthly retirement for state employees is $2,291 ($27,492 annually); who have on average 22.7 years of service. Classified school employees have on average 16.6 years of service at retirement for a monthly pension of $1,079 ($12,948 annually). The average monthly pension of all retirees is $1,985 ($23,820) after 20 years of service.
CalPERS covered employees are eligible for pension benefits after vesting, which is normally five years, and is calculated by a preset contract formula. The formula is determined by the numbers of years of service while covered by CalPERS, multiplied by the service retirement factor, times the highest annual salary (in some jurisdictions it is the average of the highest three years).
The point I am making here is that this was not a giveaway by public employers or a holdout by public employees. It was a process of give and take. Some of the more notable takes were the elimination of retiree health insurance for new employees, higher health care contributions for existing employees, two-tiered retirement systems for new employees and higher pension contribution rates for employees.
Public employees have always contributed to their retirement system in a similar fashion to Social Security. The employer pays half and the employee pays half.
Admittedly, most employers agreed to “pick up” all or portion of the employee's share because it was cheaper to the employer than giving cost-of-living increases. Many public employees also pay into the Social Security system as well as CalPERS.
So now, I get the source of resentment in Jeff's article. Public employee's pensions did not cause the state financial morass existing today. The collapse of the savings and loan system, the dot com debacle, the electric energy crisis, fuel manipulations, state taxing system, housing mortgage system and the current financial, banking and credit system are the leading, far-and-away cause of our budget woes today. Public employees were not players in the decisions of the finance and business world that got us here.
Finally, have you considered that public employees do not get stock options, reduced prices on stock purchases, employee discounts, annual bonuses or Christmas gifts from their employers? They do not own the business and cannot sell it for their retirement.
How many would there be in the $100,000 club if we counted up the private sector executives and upper level employees who took golden parachutes, bonuses or used insider information? How many more got commissions based on selling financial products to people who could not afford, qualify or pay for them?
Recent events have clearly shown that 401(k) pension systems doomed the retirements of public and private sector employees equally. Public employee pensions all considered equally, were not more generous than private sector union pensions or corporate sponsored pensions.
What is different is that the aforementioned pension systems were wholly owned by the union and business interests that sponsored them. When they failed, so did the pension system.
Fact is that we haven't.
There are many in the media, Legislature and business community who want to paint that picture because it plays well. I am not going to deny the reports of what is being called the $100,000 annual pension club, nor am I going to deny that there are an estimated 5,000 public employees who may qualify for an annual pension in excess of $100,000 per year.
These employees by and large are at the executive level, have more than 30 years or service and have unusual qualifications. I am certain that the light of day will disclose any abuses that may have occurred.
What I want is honest reporting that as of June 30, 2008, there were 476,252 retired members in the California Public Employees Retirement System (CalPERS).
CalPERS is the predominant public retirement system in Nevada County but there are more than 80 public retirement systems in California. These other systems have their own boards of directors, retirement investments and retirement policies. Sacramento County has its own retirement system as does San Diego.
CalPERS has three classes of members: state employees, classified (not certificated) school employees and local public agency employees. In these three classes there are three types of membership: active, inactive and retired. CalPERS has a total of 1,602,385 members. Of those, 1,126,133 are either active or inactive and 476,252 retired.
The average monthly retirement for state employees is $2,291 ($27,492 annually); who have on average 22.7 years of service. Classified school employees have on average 16.6 years of service at retirement for a monthly pension of $1,079 ($12,948 annually). The average monthly pension of all retirees is $1,985 ($23,820) after 20 years of service.
CalPERS covered employees are eligible for pension benefits after vesting, which is normally five years, and is calculated by a preset contract formula. The formula is determined by the numbers of years of service while covered by CalPERS, multiplied by the service retirement factor, times the highest annual salary (in some jurisdictions it is the average of the highest three years).
The point I am making here is that this was not a giveaway by public employers or a holdout by public employees. It was a process of give and take. Some of the more notable takes were the elimination of retiree health insurance for new employees, higher health care contributions for existing employees, two-tiered retirement systems for new employees and higher pension contribution rates for employees.
Public employees have always contributed to their retirement system in a similar fashion to Social Security. The employer pays half and the employee pays half.
Admittedly, most employers agreed to “pick up” all or portion of the employee's share because it was cheaper to the employer than giving cost-of-living increases. Many public employees also pay into the Social Security system as well as CalPERS.
So now, I get the source of resentment in Jeff's article. Public employee's pensions did not cause the state financial morass existing today. The collapse of the savings and loan system, the dot com debacle, the electric energy crisis, fuel manipulations, state taxing system, housing mortgage system and the current financial, banking and credit system are the leading, far-and-away cause of our budget woes today. Public employees were not players in the decisions of the finance and business world that got us here.
Finally, have you considered that public employees do not get stock options, reduced prices on stock purchases, employee discounts, annual bonuses or Christmas gifts from their employers? They do not own the business and cannot sell it for their retirement.
How many would there be in the $100,000 club if we counted up the private sector executives and upper level employees who took golden parachutes, bonuses or used insider information? How many more got commissions based on selling financial products to people who could not afford, qualify or pay for them?
Recent events have clearly shown that 401(k) pension systems doomed the retirements of public and private sector employees equally. Public employee pensions all considered equally, were not more generous than private sector union pensions or corporate sponsored pensions.
What is different is that the aforementioned pension systems were wholly owned by the union and business interests that sponsored them. When they failed, so did the pension system.
Dennis Cassella is the retired director of Nevada County General and Emergency Services.
