The annual public release of the Transparent California summation of the county pension’s payouts is a needed reminder that without meaningful reform, local governments will continue to play a costly game of catch-up to cover their past promises.
Those promises to former and current employees, however, looked a lot better when pension fund returns were routinely bringing in double-digit increases, easily covering the local cost for covering those pensions.
Those council members who boosted pension benefits, who let short-term gains cloud the reality of long-term risk, have left today’s municipal leaders with the problem of large shares of yearly budgets going to pay retirees.
Private business saw the downside of these so-called legacy promises and shifted away from defined-benefit pensions where the employer was on the hook for any fund shortfalls. They transitioned to defined-payment plans, such as the widely used 401(k).
But public agencies have resisted making that and other possible reforms, mostly because unions, understandably, have opposed them.
So, local supervisors, council members, trustees, directors and others avoid the issue. They can’t avoid the cost to their budgets, but they raise fees and taxes and cut back local services to help cover the rising outlay. They ask voters to approve taxes for police and fire services and to fix roads and pipes without publicly facing up to the fact that the rising cost of pensions are a big reason why tax dollars aren’t keeping pace with expenses.
The annual Transparent California report details the annual pension payouts for the Marin County Employees’ Retirement Association. MCERA is the pension fund for county, San Rafael and Novato and Southern Marin fire districts.
According to Transparent California, MCERA wrote $142 million in pension checks in 2018, up 37 percent since 2013.
The county’s annual MCERA payout was $48.3 million in 2018, just above $400 in local tax dollars per household. That’s a significant public cost.
Most of Marin’s public agencies are members of either the California Public Employees System or California State Teachers’ Retirement System, which have taken similar tolls on local budgets.
While Transparent California focuses on its count that MCERA’s full-career pension payout is $100,437, up 4% since 2017, local pension and union officials prefer to focus on an average — $43,384 per pensioner — that also includes shorter-term workers’ and survivors’ benefits.
That average, however, does not paint a correct picture, especially since it is affected by a growing list of top-management retirees who are getting annual payouts of $280,325, $246,788, $245,224 or $232,654.
These long-time employees essentially are getting paid close to the full paychecks they earned while working, plus an annual cost-of-living increase.
We’re not sure today’s officials would make that same promise today. They’d realize they can’t afford it. We would hope.
While some agencies have tinkered with local pension promises their workers’ contracts, most have said they can’t make any big changes without state lawmakers approving statewide reforms. California’s lawmakers have been quiet on this issue since passage of the 2011 California Pension Reform Act, which was considered an important first step toward fixing public pensions. Lawmakers have steadfastly avoided taking any more steps.
Gov. Gavin Newsom has done little to address the issue.
So, taxpayers are on the hook to pay for the promises their elected representative have made — and aren’t doing much to change.
Employees and retirees deserve to be treated fairly and respectfully, but the rising cost of public pensions should also be fair to taxpayers, most of whom have to get by on social security, 401(k) accounts and other savings.
The annual Transparent California tally, at least, keeps this issue and its growing costs in front of the public, where it deserves to be.
