Archive for April, 2012

Elected official pensions: target for reform?

April 30, 2012

Stockton has enrolled three mayors and 14 city council members in CalPERS since 1991, despite a provision in the city charter that clearly states no council member shall receive retirement or death benefits, the Stockton Record reported last week.

The discovery of $276,954 in unlawful city pension contributions comes as Stockton is in the national media spotlight during a last-ditch attempt to avoid bankruptcy, mainly by getting unions to agree to cuts in retirement and other costs.

It’s the latest quirk in the hodge-podge of laws and practices, drawing the attention of a legislative committee, that gives some elected officials pensions, prohibits pensions for other elected officials and allows some to choose no pension.

Elected official pensions are “under consideration” and “may be included” in the proposal made by a two-house legislative committee on pension reform, a co-chair, Sen. Gloria Negrete-McLeod, D-Chino, said at a hearing in her district this month.

The nonpartisan Legislative Analyst’s Office told the hearing that the Legislature has attempted to regulate pensions for elected officials in the past, but has not been completely successful.

A bill two decades ago (AB 3664 in 1994) said that members of all local legislative bodies should not receive pension benefits greater than the “most generous” pensions for non-safety employees.

In San Diego, city council members are eligible after four years of service for a “3.5 at 55” pension (3.5 percent of final pay for each year served at age 55), well above the “2 or 2.5 at 55” formulas for most city workers.

Some council members decline to enroll in the pension plan. The council pensions have been mentioned in the debate over an initiative on the June ballot in San Diego that would switch new city employees to a 401(k)-style individual investment plan.

San Diego operates under its own charter, rather than state general law, and has its own pension system, which was plunged deeply into debt by two agreements between the city and unions that lowered city contributions and raised pension benefits.

A legislative committee analysis of the two decade-old bill raised the question of whether the legislation would apply to charter cities, currently 120 of the 482 cities in California.

“It’s possible that is the reason San Diego doesn’t appear to be in compliance,” Jason Sisney of the Legislative Analyst’s Office told the hearing. “That law has never been litigated as best we can determine in talking to the Legislative Counsel.”

Another two decade-old bill (SB 53 in 1993) made some types of elected or appointed officials, such as board members of school districts and special districts, ineligible for pensions through the California Public Employees Retirement System.

“There are a few cases where water districts have figured out a way around that law,” said Sisney. “I think they have the right to do it under the law. But I am not sure that is what the Legislature intended back in ‘93.”

The analyst said at least two water districts contract with CalPERS for pensions for employees and provide pensions for elected board members through the Public Agency Retirement Services, a trust governed by a board of public agency employers.

Last week the Water Replenishment District of Southern California confirmed that its pensions are through PERS for employees and PARS for board members. The West Basin Municipal Water District did not return several calls.

Part of the rationale for prohibiting CalPERS pensions was that even if providing minimal service and receiving only meeting expenses, board members could get full credit for lifetime pensions.

Some elected officials serve full-time and others do not. The analyst said state controller’s data shows that more than half of all California cities, 252, provide pensions for council members. Most of the counties, 51 of 58, provide pensions for supervisors.

In San Jose, where worker pension costs are soaring, the city council voted in January to end CalPERS pensions for council members. A widely watched June ballot measure would cut pensions earned by current San Jose city workers in the future.

San Jose council members receive a salary of about $80,000 a year and are limited to two four-year terms. Councilman Pete Constant said the council pensions, authorized in 1998, already have a debt or “unfunded liability” of more than $400,000.

Last week a bill prohibiting public pensions for part-time elected and appointed local officials (AB 2429) was among several bills that an Assembly committee sent to “interim hearing” because the subject is being considered by the two-house committee.

Marcia Fritz, president of a pension reform group, told the committee the Citrus Heights city council, receiving $600 a month, voted to give council members a retroactive pension.

She said that when a council member moved to a commission job paying $100,000 a year, the retroactive credit for 13 years of part-time service on the Citrus Heights council added about $45,000 a year to his pension.

Another bill sent to interim hearing last week (AB 1874) would close the Legislators Retirement System to new members. An initiative that imposed term limits on legislators, Proposition 140 in 1990, prohibits public pensions for new legislators.

Still eligible for the LRS: the state constitutional officers (governor, lieutenant governor, secretary of state, attorney general, treasurer, controller, superintendent of public instruction), the insurance commissioner, four elected state Board of Equalization members and four top legislative staff members.

With shrinking enrollment, the LRS is a rare public pension system that has been “superfunded” in recent years, requiring no annual contributions from employers or employees.

During fiscal 2009-10, payments to 266 retirees totaled $7.9 million, an average of $29,535. The pension formula is generous, based on 5 percent or more of final pay for legislators and constitutional officers and 3 percent for legislative staff.

But pension payments are capped at 60 to 60 percent of pay. If they pay any additional costs, LRS members can switch while in office to CalPERS, where the main state worker plan has been uncapped.

State Treasurer Bill Lockyer, a former state attorney general and legislator, is an active CalPERS member. One of the most famous former legislators, longtime Assembly Speaker Willie Brown, is a CalPERS retiree receiving a monthly pension of $6,491.

A list of 264 LRS pension recipients in January was topped by Jack O’Connell, a former superintendent of public instruction and legislator, at $95,921 a year. Next was former Gov. George Deukmejian at $94,201.

A dozen current members of Congress receive LRS pensions: John Garamendi $80,442, Dan Lungren $56,709, Jim Costa $7,233, Jackie Speier $6,060, Tom McClintock $6,016, Maxine Waters $5,720, Howard Berman $5,712, Sam Farr $4,989, Jerry Lewis $4,539, Lucille Roybal-Allard $2,285, Wallie Herger $1,951 and Howard Berman $1,827.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at http://calpensions.com/ Posted 30 Apr 12


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