POWIP Piece of Work In Progress – Former Abode of Dan Collins

What’s up, California?

While New Jersey isn't looking too hot, re: public pensions, California is having a good time racing to the bottom on the same issue.

There are similar elements to why California is getting dragged down by pensions, but one of the reasons are some really generous boost to the benefits [sold at the time as having no cost... as investment returns were sure to pay for them!]

Let's look at the specific boosts:

So they proposed a series of retirement formula benefit increases with SB 400 in 1999:

1. Public safety officers were given an annual retirement benefit of 3 percent times the number of years they've worked in a city, instead of 2 percent. (So if someone worked for 30 years, they would receive 90 percent of their highest earnings annually after retirement).

2. A public safety employee with 30 years in the system would receive 90 percent of their salary.

3. The bill also allowed for non-public safety employees to retire at 55 instead of 60-years-old (public safety officers are allowed to retire at 50).

In 2001, employees were also provided increased benefit level options with AB 616. This increased non-public safety employees' percentage from 2 percent times the number of years employed to:

1. 2.5 percent at age 55

2. 2.7 percent at age 55

3. 3 percent at age 60

Although these new policies were not mandatory, they were subject for bargaining during negotiations and have been adopted by many cities in the state.

SO let's think on this - these boosts were made at the market peak - right before it slid down. In giving the plans contribution "holidays" after times were good, they conveniently forgot that when assets get hit, it's usually because the economy isn't doing so hot, and the ability of the state and municipalities to make the needed funding contributions is impaired.

Now, I bet that California taxpayers didn't pay much attention back in 1999 and 2001 when these boosts were made - after all, they weren't having to pay for these boosts right then [and some, I'm sure, are no longer there to be taxed for those benefits. Smart people.]

But I bet they are aware of the issue now:

The camera focuses on an official of the Service Employees International Union (SEIU), California’s largest public-employee union, sitting in a legislative chamber and speaking into a microphone. “We helped to get you into office, and we got a good memory,” she says matter-of-factly to the elected officials outside the shot. “Come November, if you don’t back our program, we’ll get you out of office.’

The video has become a sensation among California taxpayer groups for its vivid depiction of the audacious power that public-sector unions wield in their state. The unions’ political triumphs have molded a California in which government workers thrive at the expense of a struggling private sector. The state’s public school teachers are the highest-paid in the nation. Its prison guards can easily earn six-figure salaries. State workers routinely retire at 55 with pensions higher than their base pay for most of their working life. Meanwhile, what was once the most prosperous state now suffers from an unemployment rate far steeper than the nation’s and a flood of firms and jobs escaping high taxes and stifling regulations. This toxic combination—high public-sector employee costs and sagging economic fortunes—has produced recurring budget crises in Sacramento and in virtually every municipality in the state.

How public employees became members of the elite class in a declining California offers a cautionary tale to the rest of the country, where the same process is happening in slower motion. The story starts half a century ago, when California public workers won bargaining rights and quickly learned how to elect their own bosses—that is, sympathetic politicians who would grant them outsize pay and benefits in exchange for their support. Over time, the unions have turned the state’s politics completely in their favor. The result: unaffordable benefits for civil servants; fiscal chaos in Sacramento and in cities and towns across the state; and angry taxpayers finally confronting the unionized masters of California’s unsustainable government.

It was a nice gravy train while it lasted - it's not fully busted yet, but the SEIU had best watch out. As Thatcher once remarked, other people's money has this habit of running out when you want to spend it on everything.

The thuggish demonstrations of the SEIU and other public employee unions are clear indicators of their desperation. In times past, they could appeal with "Won't somebody think of the children?" [/Mrs. Lovejoy] and now this phrase is turned on them as people see that the children's futures are being sold to fatten the piggies now.

And those kids won't even get to taste the bacon.

Meep

Meep is a member of the Irish Catholic mafia, having a suspiciously high number of green-eyed, red-haired friends. While she doesn’t have red hair herself [except when she goes into the sun (rare for any vampire)], she does have green eyes. She’s a raving Papist and is a life actuary on the side [i.e., she counts dead people]. An amateur pain-in-the-ass [willing to go pro!], she likes covering retirement, mortality, math, and education issues.

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