Sunday Commentary: Public Safety Pensions Are Crippling Local Government and Forcing Governor to Push 12-Point Pension Reform Plan

Last Sunday at the Democratic Bean Feed in Davis, first Assemblymember Mariko Yamada and the newly-redistricted Congressman John Garamendi sung the praises of local firefighters’ union president Bobby Weist.

The same week, Governor Jerry Brown finally came forward with his own twelve-point plan to overhaul the state’s public retirement system, a plan that creates, in part, a hybrid of the defined benefits plan with a 401(k) defined contributions component.

His spokesman, Gil Duran said, “The current system is not sustainable.  I think the governor made that clear back in March.”

Labor has not bought into it.

Steve Smith, a spokesperson for the California Labor Federation, told reporters that public employee unions have already agreed to concessions in recent years, including “forcing” members to pay a greater share of their own pensions and reducing payouts for new workers.

“The Republican attack on pensions has been largely hyperbole, but it’s also been effective,” he said. “They’ve scapegoated public employees for a lot of the state’s problems, unfairly. But when you have Republicans all around the state on the same message for years, that’s going to have an effect.”

Mr. Smith is making the same mistake as our local leadership, failing to note the impact to local government and that one of the reasons that the Republican push for pension reform has been so effective is that they have been joined by Democrats who have to deal with the impact of pensions at the local level.

The critical problem here is public safety.  The average pension for state workers, for instance, who mainly receive 2% at 60, is cited at $27,000.  When Bobby Weist retires, he will receive upwards of $90,000 for his tenure as a firefighter.

The refusal of the unions to sever themselves from public safety employees could very well doom the entire defined benefits system.

Governor Brown’s twelve-point plan would apply to all levels of government – ” all California state, local, school and other public employers, new public employees, and current employees as legally permissible.”

The plan includes equal sharing of pension costs between employees and employers, the hybrid plan, increasing the retirement age to 67 for non-safety and to a lesser number for safety employees, requiring three-year final compensation to stop spiking for new employees, benefits to be based on regular and recurring pay, limitation to post-retirement employment, felons would forfeit pension benefits, a prevention of retroactive pension increases, a prohibition on pension holidays for all employees, prohibiting purchases of service credit, increase pension board independence and a reduction of health care retiree costs to state employees.

“It’s time to fix our pension systems so that they are fair and sustainable over a long time horizon,” said Governor Brown. “My plan raises the retirement age and bans abusive practices like ‘spiking’ and ‘air time’ while mandating that public employees pay an equal share of pension costs.”

The Governor’s office said, “When fully implemented, these reforms will cut roughly in half the cost to taxpayers for providing pension benefits for state employees. It will cut the risk to taxpayers for pension debt by more than half. Similar savings are expected across all systems.”

In our view, these reforms fix most of the problems – at least down the line.  The unfortunate part is that we cannot implement those changes for current employees unless they agree to it.  Governor Brown conceded as much.

The short-term benefits are limited.  However, his administration said that over the next 30 years, the plan could save the state $4 billion to $11 billion.

The effect on existing public employees would be minimal.  However, critically, public safety employees would have to pay 2% more towards their pensions.

“I try to protect working people whenever I can,” said Governor Brown, “but I’m also responsible to the taxpayer and making sure we have a solvent state government.”

And that is the dilemma that we face.  The average state worker is not the problem here.  In fact, neither is the average pension receiver, who receives 2% at 60 and makes an average of less than $40,000.

“We can’t forget that the vast majority of public-sector employees are middle-class workers, and their average pensions are far from exorbitant,” state Senate leader Darrell Steinberg said in a statement.

He is right.  But he forgets the key point: what kills us are those making over $100,000.  Those who are able to retire at 50.  Those who get 3% for every year that they work at the final salary which can be spiked using a variety of means.

The two main culprits are management and public safety.

Republicans and the Chamber of Commerce apparently like his bill.  But the unions who back and bankroll the Democratic legislative majority do not.

Democrats need to understand that they risk killing the entire defined benefit system if they do not agree to most of these very commonsense reforms, most of which have no impact on the current state worker.

Unions need to understand that public safety does not care about the average worker.  They do not care that the average worker is being harmed by their greed.  And it is exactly that.

The Vanguard laid this out two weeks ago in “Pattern of (Mis)Conduct By Davis Firefighters.”

The Yolo Grand Jury Report from 2008 highlighted a string of incidents involving everything from abuse of authority, unfair hiring and promotional practices, hostile work environment, untoward union influence and, oh yes, being drunk and causing fights in the downtown and sleeping off drinking binges in the beds of the local fire station.

What we learned, in addition to a pattern of abuse, was that Mr. Weist was lining his own pockets, earning a five-digit union salary in addition to his more than $150,000 in total compensation.  Moreover, he earned more money by utilizing 724 hours from 2004 to 2008 from the Union Hours Bank.

The Union Hours Bank is completely unregulated by the city, they have no records to show how those hours are used, and the purpose of it is “is solely to provide educational training and development opportunities to Union members and should not involve conducting or participating in other agencies’ unions activities.”

But the lack of any oversight means that Bobby Weist and his associates could potentially be paid for an entire array of activities well outside the stated purview.

By agreement, the City deposits 24 hours per year per firefighter into this fund, which amounts to about 1,080.

But this is the guy our representatives in the Assembly and Congress are cozying up with.

When the rank and file worker has to take concessions both in the next MOU and from the state, they need to remember public safety unions and management groups, because they are the reason why cities are on the verge of bankruptcy and why the Democratic governor is having to push through pension reforms.

—David M. Greenwald reporting

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