The average pension payout last year to full-career retirees in the Marin County Employees’ Retirement Association was $96,401, according to the Nevada Policy Research Institute, a “free-market” think tank.
The institute has posted new data for calendar year 2017 on its Transparent California website. The pension information posted last week is for Marin County Employees’ Retirement Association’s 379 full-career retirees — employees who worked for association members for 30 or more years. MCERA’s members include Marin County, the city of San Rafael and the Novato and Southern Marin fire districts.
Jeff Wickman, administrator of the Marin County Employees Retirement Association, noted that when including all 3,152 MCERA beneficiaries, including survivors who get reduced benefits, the average pension in 2017 amounted to $42,912.
The annual average pension of $96,401 for full-career MCERA retirees compared with an average pension of $66,987 for full-career retirees in the California Public Employees’ Retirement System, or CalPERS. The average pension for full-career MCERA retirees has increased 12 percent since 2013, said Robert Fellner, the institute staff member who wrote the report.
Fellner said MCERA’s total pension payout grew to $133.8 million in 2017, up 29 percent since 2013. This payout doesn’t include another nearly $12 million in benefits which were covered by MCERA’s individual members.
Marin County, which along with its employees pays the lion’s share of MCERA’s costs, paid out $47.4 million in 2017 for pensions compared with $48.2 million in 2016.
Marin County Administrator Matthew Hymel received permission from county supervisors at the April 24 meeting to deposit $1.9 million in savings realized due to the Public Employees Pension Reform Act (PEPRA) into the county’s pension stabilization reserve. The county now has $8.9 million in this reserve.
Bret Uppendahl, Marin County’s budget manager, said the $1.9 million savings is attributable to the reduced tier of benefits for new employees that was ushered in with PEPRA.
Under PEPRA, employees hired after Jan. 1, 2013, are required to contribute more to their pensions, and must also work longer before they can retire and begin to receive the benefits promised by their employers.
“Since the savings is generated only on employees hired after 2013, this savings will grow over time,” Uppendahl said.
‘Unsustainable’
Jody Morales, founder of Marin’s Citizens for Sustainable Pension Plans, said the main takeaways from the new data are the size of MCERA’s average pension and the fact that 28 percent of MCERA’s total pension payouts came from retirees receiving $100,000 or more.
“This is both alarming and unsustainable,” Morales said. “Marin is seeing an unending avalanche of taxes, rates and fees. The county needs to support reform measures that will prevent this from continuing into future generations.”
Roland Katz, executive director of the Marin Association of Public Employees, said, “I took a very cursory look at the information and quickly found three retirees who had more than 30 years of service whose pensions are less than $55,000 a year. I found another whose pension is less than $46,500 a year. Then there are the widows and widowers, with pensions under $50,000.”
As of June 30, 2017, MCERA had an unfunded pension liability of $423.7 million. The unfunded liability attributable to the county of Marin alone at that time amounted to $261.8 million and that came after the county made a $32 million one-time payment toward addressing the liability in June 2013. Uppendahl said the county has reduced its unfunded pension liability by more than $140 million since 2013 mainly due to investment income.
In October 2017, MCERA’s board voted to reduce the fund’s assumed annual rate of return from 7.25 percent to 7 percent. The rate was last cut in 2014 from 7.5 percent to 7.25 percent. That resulted in member agencies and employees paying more to finance the program.
Pension hawks such as Morales have been warning for some time now that the financial drag of pensions is affecting local governments’ ability to provide services without creating new fees or taxes.
Unfilled positions
Mary Hao, Marin County’s director of human resources, said 270 of the county’s 2,304 budgeted positions are unfilled. Since 2013, 340 county employees have retired, 88 last year.
The average pension of the 157 full-career MCERA retirees making over $100,000 in 2017 was $141,555. The average pension of the 222 making less than $100,000 was $64,468.
Sixteen of MCERA’s retirees are receiving pensions that exceed $200,000.
The MCERA retiree with the largest pension in 2017 was former Marin County Administrator Mark Riesenfeld, who received a pension of $245,665 and an additional $8,850 in benefits in 2017. Riesenfeld’s pension was calculated after extra pay, an auto allowance and other credits were added in.
Following behind Riesenfeld in ranked order by total pension and benefit amounts were Patrick Faulkner, former county counsel, $240,115; Ken Massucco, former county fire chief, $238,597; Mehdi Madjd-Sadjadi, former county public works chief, $225,878; Dennis Finnegan, former county undersheriff, $223,784; Jerry Herman, former Marin district attorney, $220,283; Harold Rowan, former county fire chief, $218,925; and Michael Cronin, $216,139.
Cronin retired as San Rafael police chief in 2004 at age 56. In 2007, he became police chief in Tiburon and still works there.
Wickman said that when Cronin went to work for Tiburon he established a separate membership in CalPERS.
“He may eventually be eligible for a CalPERS benefit but any benefit he receives from CalPERS will have no impact on what he receives from MCERA,” Wickman said.
In addition to creating a reduced tier of benefits for new employees, PEPRA enacted additional reforms aimed at keeping pension funds solvent. It prohibited retroactively enhanced benefits, contribution holidays and “spiking” of pensionable compensation.
Nevertheless, because only new employees are subject to the lower wage tiers, pension hawks do not see PEPRA as the solution to the pension dilemma.
‘California Rule’
They’re hoping that the state Supreme Court will strike down the so-called “California Rule,” which was established by court rulings dating back to 1947. State courts have traditionally ruled that retirement benefits granted when a worker is hired cannot be taken away unless replaced with similar benefits, but a case involving MCERA could challenge this rule.
After PEPRA was passed into law in 2012, MCERA’s board reacted by excluding standby pay, administrative response pay, callback pay and cash payments for waiving health insurance from the calculation of members’ final compensation.
Then four unions — the Marin Association of Public Employees, known as MAPE; the Marin County Management Employees Association; Service Employees International Union 1021; and the Marin County Fire Department Firefighters’ Association — sued MCERA, asserting that the value of these benefits had been a factor in determining the wage and benefit packages offered to their members.
In August 2016, the 1st District Court of Appeal in San Francisco ruled that “while a public employee does have a ‘vested right’ to a pension, that right is only to a ‘reasonable’ pension — not an immutable entitlement to the most optimal formula of calculating the pension. And the Legislature may, prior to the employee’s retirement, alter the formula, thereby reducing the anticipated pension.”
The unions have appealed this rule to the state Supreme Court, which has agreed to hear the case. But before that can happen the Supreme Court must render a decision on a consolidation of cases from Alameda, Contra Costa and Merced counties that involves a union challenge to “anti-spiking” provisions in PEPRA.
As a result, Wickman said he doubts the Marin case will be heard by the Supreme Court in 2018.
