Friday, August 3, 2018

It’s time officials face the facts about public pensions

Marin Voice: It’s time officials face the facts about public pensions

By Jody Morales


Transparent California released alarming data showing the growth of “promised benefits” in the Marin County Employee Retirement Association (MCERA) compared with the growth of countywide personal income, median household income, inflation and population. The association’s members include the county, city of San Rafael, Novato Fire District and six smaller districts.
In a similar study of the California Public Employees’ Retirement System — the largest public pension fund in the United States — Fellner reported that CalPERS’ promised benefits grew by nearly 900 percent. County public agencies that aren’t MCERA members are CalPERS members.
Marin County, with a population of approximately 260,000, has outdone the nation’s public pension fund Goliath in making costly promises.
For MCERA, promised pension benefits from 1986 to 2016 are up 982 percent, while personal income is up 377 percent, median household income is up 167 percent, inflation is up 139 percent and Marin’s population is up only 17 percent.
Part of the problem is the refusal to face facts.
Example: At a Marin Coalition luncheon on Feb. 4, 2015, there was a discussion between Citizens for Sustainable Pension Plans and Rollie Katz, executive director of the Marin Association of Public Employees (MAPE).
One of Katz’s PowerPoint slides contained the following words, verbatim:
What negatively affects pensions?
• Pension enhancements of the late 1990s and early 2000 were ill-advised and added to the cost.
• Increased longevity adds to the cost.
• The primary culprit? The Great Recession.
The primary culprit is an unsustainable pension system, not Wall Street.
Enacted in January 2013, the Public Employee Pension Reform Act made modest reforms to the calculation of public pensions.
These reforms were challenged by county unions that were the first statewide to sue. The plaintiffs are the Marin Association of Public Employees, the Marin County Management Employees Association, SEIU 1021 and the Marin County Firefighters Association.
The suits involve laws no longer allowing “standby” pay, administrative response pay, callback pay and cash payments for waiving health insurance. Previously, these extra payments could be included in the calculation of pensions.
When they lost, MAPE appealed the decision to the state appeals court. The decision was upheld. MAPE appealed to the state Supreme Court.
The appeals court’s summary ruling in MAPE v. MCERA holds the key to reform: “... 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. So long as the Legislature’s modifications do not deprive the employee of a ‘reasonable’ pension, there is no constitutional violation.”
Our supervisors must come to terms with the problem and do all they can to rein in costs. To do otherwise could lead to fiscal disaster for both taxpayers and public retirees.
Dealing with it by reducing the number of current workers or salaries is a Band-Aid. A long-term plan must be adopted. All available legislative tools must be used. Negotiations must be transparent to taxpayers.
Above all, based on the hard facts backed by data, it would be prudent for local elected officials to vigorously support the reform legislation currently before the state Supreme Court. So far, they have been silent. SonomaCounty, on the other hand, filed an amicus brief in support of the reform.
Considering that Marin taxpayers are already burdened with excessive debt caused by excessive promises to public employees — resulting in staggering unfunded public retiree debt — it’s the very least our elected officials owe taxpayers.
Jody Morales of Lucas Valley is the founder of Citizens for Sustainable Pension Plans, a Marin-based group pressing for public pension reform.

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