Local pensions: who’s minding the store?

SAN RAMON — Directors of the San Ramon fire district were accused at a public hearing this week of not protecting taxpayers as the pensions of high-ranking officials ballooned.

Unhappy citizens repeatedly praised columnist Daniel Borenstein of the Contra Costa Times for revealing that four retired district officials have annual pensions of roughly a quarter-million dollars, far more than they earned on the job.

“I find it appalling that it took Dan Borenstein’s article for this to come to your attention,” said Ed Miller. “This is something that should have been brought up from the board, if there is interest in representing taxpayers.”

Three of the four directors (Ken Sandy resigned last week) raised their hands when Miller asked if they currently are employed at other fire districts: president Nick Dickson, Jennifer Price, and Tom Linari.

Miller said there is an “inherent conflict of interest” when firefighters on a district board negotiate labor contracts that will be used as a comparison during collective bargaining in their own districts.

“I’m concerned about the close ties between some of the board members and the people they are supposed to be overseeing,” said Walter Welti. “I would like to know who the board primarily represents, firefighters or taxpayers?”

The lone non-firefighter on the board, vice president Roxanne Lindsay, said she is the only director remaining from a previous board that made many of the pension decisions.

“We are doing this rather painful process to try and fix the system that is not working right now,” said Lindsay. “So we thank you for coming. I understand. I’m a taxpayer. I understand the economic times.”

The board president, Dickson, said the current board is the “first” with a majority of firefighters. He said the current board launched the investigation and intends to “find where the gaps are” and fix the problems if necessary.

“Before this, this hasn’t been uncovered,” Dickson said, referring to previous boards not dominated by firefighters. “Thank you, Mr. Borenstein, for uncovering this for us.”

Borenstein reported in May that a San Ramon fire chief, Craig Bowen, had a final salary of about $221,000 before retiring last December at age 51 with an annual pension of $284,000.

After a court order forced the release of more information, Borenstein reported this month that three other San Ramon officials who retired in recent years (a chief, a deputy chief, and an assistant chief) have pensions far exceeding their final salary.

Borenstein also revealed that a chief in the nearby Moraga Orinda fire district, Peter Nowicki, had a final salary of $185,000 before retiring in January at age 50 with an annual pension of $241,000.

The Nowicki pension drew national attention with a story in the Wall Street Journal in July. The Moraga Orinda board made a last-minute contract change that helped boost his pension.

Then the board rehired Nowicki to work as a consultant to the fire district at an annual salary of $176,000 on top of his $241,000 pension.

What the San Ramon and Moraga Orinda fire districts have in common are independent boards elected by voters. Their pensions are handled through the Contra Costa County Employees Retirement Association.

It’s one of 20 county systems covered by legislation enacted in 1937. The giant California Public Employees Retirement System, covering state workers and 1,500 local agencies, sponsored legislation in 1993 to reduce the boosting or “spiking” of pensions.

But similar anti-spiking legislation for the “1937 act” county systems failed in 1994. Pensions are based on age, years of service and final pay, which can be boosted in a number of ways to spike a pension.

Among the many types of pay that can be used to boost the base salary in the San Ramon district are unused vacation and sick leave, management incentive, standby, vehicle allowance, retirement allotment and administrative leave.

The San Ramon board hired a legal firm, Meyers Nave, to deliver a report at the public hearing Tuesday (Aug. 25) on options for controlling the final pay used to set pension amounts.

Attorney Arthur Hartinger reported that the state Supreme Court has ruled that, under the 1937 act, “most premiums and payouts” made during a final year must count toward the pension.

But for current employees, he said, the law firm believes that lump sum payments for unused vacation and other things that “are not earned in a members’ final year should not be counted toward pension.”

Hartinger said the law firm also thinks the district has the option of reducing or eliminating the formulas for some things that boost the base salary: management pay, administrative leave pay, standby pay and vehicle allowances.

He said the pension formula for current employees cannot be “changed without substitution of a comparable benefit.“ But for new hires, the district is free to adopt any retirement plan it chooses.

A resident of Pleasanton urged the board to boldly “challenge those assumptions” and not be “afraid of the courts.” He said the Obama administration used the General Motors bankruptcy to redefine bankruptcy laws for “the betterment of the people.”

Several of the citizens said managers who are not “climbing ladders and dragging hoses” should not retire at age 50. One said pay in the low-risk suburban district, without major airports or fuel storage tanks, should not be compared with urban districts.

Kris Hunt, executive director of the Contra Costa Taxpayers Association, said that the court order revealed that 432 public employee retirees in the county are receiving annual pensions of $100,000 or more.

Hunt said investment losses by the Costa County Employees Retirement Association and high pension benefits have the potential to force cuts in county services. She urged the board to act on the options presented by the law firm.

“Move forward as quickly as possible,” Hunt said. “Fix the problems that you can. It’s unfortunate the barn door is closed on some people. But stop it as quickly as possible.’

The board voted to form an “ad hoc committee” among its members to work on the pension problem. Another public hearing will be held next month.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at https://calpensions.com/ Posted 27 Aug 09

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