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Police and Firefighter Pensions Threaten Government Solvency

The dilemma: There are no dedicated funds, but agencies are contractually obligated to pay.

Editor’s Note: This is the third in The county Sheriff’s Department and Orange County Fire Authority are hired by many cities to provide police and fire services. Their contracts are consistently some of the costliest items in local budgets, which are being voted on this month by city officials.

As debate swirls over wages and overtime for police and firefighters, a much bigger nightmare looms: pensions.

In the not-too-distant future, public employee pension costs threaten the solvency of government agencies in California and throughout the nation.

And there's no easy solution. Orange County and other agencies are contractually and legally bound to honor the pension agreements signed long ago with public safety employees. The California Supreme Court this spring shot down an attempt led by O.C. Supervisor John Moorlach to get rid of some generous retirement benefits. The failure has left the county on the hook for what could amount to $5 million in legal bills. 

SHERIFF'S DEPARTMENT PENSIONS

Four years ago, the county–led by Moorlach and his former chief of staff, Mario Mainero—tried to pull back the Orange County Sheriff’s Department’s “3 percent at 50” pension plan for sheriff’s deputies.

This is a common formula offered in 37 counties throughout the state by the California Public Employee Retirement System, according to the Peace Officers Research Association of California.

That's a total of 251 agencies.

Under the plan, at age 50, a sheriff’s deputy can retire and receive 3 percent of his yearly wages for each year he served, according to the Peace Officers Research Association. The 3 percent figure is usually calculated using the highest-paid year's base pay, or using an average of the three highest-paid years' base pay, depending on the contract.

So, according to the Peace Officers Research Association of California’s site, a deputy who retires at 50 after 20 years of service would receive 60 percent of his salary from the Public Employee Retirement System every year until he died.

Under some plans, a spouse or other dependent survivor can continue to receive half the payout after the retiree's death, according to CalPERS literature.

Multiply that by the tens of thousands of California employees with 3-percent-at-50 contracts, and it's easy to see the cost ballooning out of control.

After Orange County lost its court battle to overturn the formula, Moorlach took to his blog, predicting pension costs would undermine other vital services.

“I’m just back from a tour of the Dayle McIntosh Center for the disabled,” Moorlach wrote. “It is programs like these that will suffer in order for the taxpayers to pay for a 50 percent increase in pension benefits for government employees who paid nothing for them and for which no funds were set aside during their careers...

“Wayne Quint [then-president of the Orange County Deputy Sheriff's Association] owes the taxpayers of Orange County a big thank you for this incredible awarding of a life-time guaranteed income,” he continued.

Many taxpayer groups are also unhappy with the pensions that public safety workers receive.

“We think they do deserve a good rate of pay, but when they retire at 50 at full pay, that’s not right,” said Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Association.

“That they can get paid $100,000 every year forever is insane,” said O.C. Supervisor Shawn Nelson.

The top tier of deputies in the OCSD receive 3 percent of their highest-paid year in the calculation of their retirement, whereas a lower-tiered employee gets 3 percent of the average of his or her three highest-paid years, which works out to a lower figure.

FIREFIGHTER PENSIONS

The Orange County Fire Authority renegotiated some of its contracts late last year and this year to increase the employee pay-in for its retirement system, but pensions still pose a looming burden.

OCFA Spokesman Kris Concepcion said he and his colleagues also have a 3-percent-at-50 pension plan. Contrary to popular assumption, overtime is not included in the salary calculation, he said.

In other words, a hypothetical firefighter’s 3 percent would be calculated using his or her $80,000 base salary, not the $120,000 total salary that includes overtime.

Concepcion countered characterizations that most employees retire with 90 percent of their salaries at 50. Though it’s mathematically possible for rank-and-file firefighters to retire at 50 with most of their salary in pension payouts, it seldom happens that way.

Employees don’t tend to start at 20 and work at the same place for 30 years anymore, he said.

Concepcion said the several unions who organize OCFA employees have agreed to concessions over the last seven months—addressed in Part 4 of this series—that will save the authority tens of millions in pension costs. In part, firefighters will be stepping up retirement contributions to 9 percent.

County Supervisor Nelson said all employees should pay in half the cost of their pensions and there should be a cap on how big a pension could be, although he doesn’t know the “right number.”

Nelson said at OCFA, the cost of a typical pension is 60 percent of an employee's base salary.

So, if someone makes $100,000, that's a $60,000-per-year pension, independent of how much overtime that employee took during his or her career.


-- San Clemente Patch Editor Adam Townsend contributed to this article

Dr. Zillman August 11, 2011 at 06:22 AM
-"The average is $26,000 a year." The $26k figure is very misleading. Just like the national average income. I find it hard to believe that number is for Orange county. Every single person I know that is retired on a government pension is making at least double that number. Add to that guaranteed "cost of living" increases, and you have a completely unsustainable financial drain on tax revenue. "...far smaller than the $100,000 a year pensions that have become the boogeyman for public pension opponents." -They are called-out for a reason. Believe it or not, a large number of OCFD are in the $100k club. Quite a few are in the multi-six figure club. I know a Captain that is retired with more pension compensation than a friend who is a surgeon. "Pensions for police and firefighters are larger than those for other public workers but for a sound reason: their work requires great physical stamina." -So dry wallers and framers should receive large pensions as well? Ridiculous. Are you aware that the average time a firefighter spends actually responding to or fighting a fire is 5%? Most of their time is spent on medical transport and EMT calls. This is why over 3400 applicants turned-out for the last call for 320 firefighter positions.
Dr. Zillman August 11, 2011 at 06:23 AM
"...funds are experiencing a robust recovery from the historic market downturn of 2008-2009 – reporting strong investment returns..." -Proof? So the investments for public pensions are experiencing a special "magical" robust recovery, but everyone else's 401k's are tanking in the markets. Absurd. You would have to be a fool to believe this. "...funding levels on track to meet obligations." -Complete fluff. This outrage is a result of more awareness by the public. Government worker salary and benefit data is available online, so there isn't really any "boogeyman." All of this is occurring during a historic economic downturn, with many if not most private sector workers experiencing double-digit salary cuts.
J. Billman October 06, 2012 at 06:22 AM
I first caught wind of the outrageous retirement compensation & overtime firefighters and law enforcement receive quite by accident. Attending a dinner with a friend. two female friends were also there, one with a 52 y.o. retired firefighter, the other with a retired 54 y.o.lieutenant from South OC. Both men were fit, tan and relaxed. I soon found out why. Both were collecting monthly pension checks over $11,000.00. Both had dual incomes, one owned a small electrical contracting Co., The other was a security consultant. Based on conversations, I would guesstimate that each was pocketing $20,000.00/month in dual income. The dinner's host,worked as CFO at a Financial services co in OC for the last 24 years, 59 years old and in quite a different situation. Due to the economy,, he and Sr Staff Members have taken pay cuts of 5%/year for last 4 years Medical Ins. that 5 years cost nothing for employees, cut completely!.Co. funded portion of 401K plan, eliminated! Why? Because, a private enterprise requires profitability for survival,Everyone accepts cuts in pay & benefits or they have no job! These survivors felt lucky, 100 workers were let go. No golden parachutes here. Just, sorry. good luck. Why should gov't workers be insulated from the economic realities private sector workers accept as norm?. If a co. prospers, you prosper If times are bad, like now, take the cuts or take a hike.I doubt these two overcompensated gov;t leeches have ever given such things any thought. ..
Dr. Zillman October 06, 2012 at 03:50 PM
J. Billman: Good example of current private sector vs. public sector compensation. Your experience is similar to many of mine. What a wpnderful fantasy of entitlement to expect to maintain such ridiculous pension obligations.
met00 October 08, 2012 at 06:56 AM
When we hired these two guys we didn't pay them a wage that would compensate them well enough to take the jobs, so our government cut a deal in which they would work for a period of time and then after they retired we would continue to pay them. Was it a good deal? A smart deal? I personally don't think so, but then I wasn't the elected representative that wanted to pay them more then and didn't have the money to do so. I didn't negotiate to pay them a smaller salary NOW and promised to pay them when they were not working later to make up for it. But they honestly provided the service we paid them for at the time we made the deal, and they agreed to accept their additional payment from us as a part of their overall compensation package. They kept their end of the bargain, now we have to keep ours. You seem to forget that we aren't "paying for them now", we are paying them for services provided years ago, that we cut a deal to pay for later rather than pay for at the time the service was rendered. You don't like the deal? Too friggin bad. Go find the elected officials that cut the deals and go hang them, not the guys that agreed to work for those conditions. I don't like the fact that some of these guys are "double dipping" the system, but I don't blame them for the deal, I blame the elected officials that cut the deal and then UNDERFUNDED to pension plans so we get stuck with the bills today.

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