Posted on 08/02/2012 9:37:15 AM PDT by SeekAndFind
Want to know how California finds itself in debt at the state level by tens of billions each budget cycle? Why three of their cities have already declared bankruptcy this year, and more may be on the way? Here's a cautionary tale from Stockton, one of the three Golden State cities to shield itself from its creditors this year, where they pay a retired police chief in pension slightly more than half of what the President of the United States makes. That's a fine reward for devoted service of --- eight months?
Stockton, California, Police Chief Tom Morris was supposed to bring stability to law enforcement when he was appointed to the job four years ago.
He lasted eight months and left the now-bankrupt city at age 52 with an annual pension that pays more than $204,000 --- the third of four chiefs who stayed in the position for less than three years and retired with an average of 92 percent of their final salaries.
Stockton, which filed for bankruptcy protection on June 28, is among California cities from the Mexican border to the San Francisco Bay confronting rising pension costs as they contend with growing unemployment and declining property- and sales-tax revenue. The pensions are the consequence of decisions made when stock markets were soaring, technology money flooded the state, and retirement funds were running surpluses.
Actually, it's the consequence of the pension structure itself. California, like most other states, use defined-benefit pensions for their public employees, rather than the defined-contribution plans used by almost everyone in the private sector. The latter either utilizes a 401K plan or something similar, where both employees and employers deposit funds, which get invested over the time of service. When employees retire, they own their own fund and draw off of it for their retirement income, which leaves no overhang of debt for the employer and gives the employee control over the investment strategies used.
The defined-benefit structure, on the other hand, guarantees certain levels of payment regardless of whether the retirement fund has actually performed to that level or whether the employer has made the requisite deposits. The payout levels usually hinge on the average compensation paid during the final three to five years of service. This structure lends itself to all sorts of mischief. People work large amounts of paid overtime to pad the average and boost their retirement checks, for instance. Employers defer plan payments in order to cover other spending, figuring that contemporary tax receipts will cover the eventual costs of retirement; that is why San Diego and San Jose were forced to offer referendums to revise their benefit plans, because those costs ate over 20% of the operating budgets of both cities. Finally, that kind of retirement leads to very perverse outcomes for people who only work a short period of time, and who draw the same kind of pension as those who have worked for decades.
That’s also one of the main problems for San Bernardino, which declared bankruptcy last month:
San Bernardino, a city of 209,000 about 60 miles (100 kilometers) east of Los Angeles, is typical of the phenomenon. Its city council voted July 18 to approve an emergency bankruptcy filing, about six years after the panel unanimously lowered the retirement age for public-safety workers to 50 from 55.
The council acted in August 2006 even though Aon Plc, the city’s risk-management consultant, had warned it that such a change would add millions of dollars to San Bernardino’s long- term pension costs. In the fiscal year that ended in June, pensions consumed 13 percent of the city’s general fund, up from 9 percent in fiscal 2007.
Two of San Bernardino’s former police chiefs receive pensions above the $200K mark. Keith Kilmer actually took another job — as interim police chief in Seal Beach.
The city is not paying the $200k, CALPERS pays. If CALPERS is short, the state makes up the diff.
I read he has 36 years of service and started as a police cadet. A “safety” employee gets 3% of final pay, times years of service.
A cap on the calculation seems to be in order.
If they just build a high speed train all their problems will be solved.
When are theStockton peasants going to get their pitchforks out????? This is DISGUSTING!!
........................The city is not paying the $200k, CALPERS pays. If CALPERS is short, the state makes up the diff.
I read he has 36 years of service and started as a police cadet. A “safety” employee gets 3% of final pay, times years of service......................
1. What difference whether the city, Calpers, or the state is paying his pension. The taxpayers funded it, and had to fund any shortfall that Calpers amassed by it’s investment strategy.
2. If that’s really the formula for pension, at his fianl pay - for eight months - he gets 3% x 36 years, or 108% of his final pay - starting at his age 52 retirement!
I must be a real stupid schmuck, because after 17 years at a Fortune 50 corporation, where I earned a hundred grand per year, way back when a dollar was worth a dollar, I had to wait nineteen years, until age 65, to get my pension of $20,400 per year.
And, I’m happy to receive that much!
“If that’s really the formula for pension”
It is.
Other state and local employees (other than police and fire)
get 2% or 2 1/2% at age 55.
You can see why CA is finished. I give them 4-5 years, at most.
WRONG,, The Unions ARE the problem in Mexifornia..
Guess you missed the word "alone." Without both, government and unions working together to bring about the problems there wouldn't be any. The elected officials approved the agreements, the unions didn't force them on the state or cities. It took two groups to cause this problem, well three when you add the voters.
“Other state and local employees (other than police and fire)
get 2% or 2 1/2% at age 55.
You can see why CA is finished. I give them 4-5 years, at most.”
It’s actually worse than that as most of the pension benefits is is based on an average of the last tow or three years of service. What a lot of people of is save up sick and vacation pay that they get in one lump sum the last year and counts towards their retire pay. Commonly called pension spiking it can result in you actually getting more in retirement than you made while working. Also most of our “brave” first responders scam the system by retiring on disability which shelters them from paying some taxes on their income.
[ Guess you missed the word “alone.” Without both, government and unions working together to bring about the problems ]
duuuuugh.. the people in the givernment of Mexiforia ARE UNIONS..
You cannot work for the givernment of Mexifornia unless you are a Union drone..
Its much like the “Borg” on Star Trek..
AKA....
Resistance as you know it is over. We will add your biological and technological distinctiveness to our own
You will be assimilated. Resistance is futile.
Resistance is futile. Your life as it has been, is over. From this time forward, you will service us
You are an imperfect being, created by an imperfect being
When a drone is damaged beyond repair, it is discarded, but its memories continue to exist in the collective consciousness. To use a human term, the Borg are immortal
LIKE THAT........ be a democrat -OR- be human...
I can go one better, or worse as the case may be, my town provides retirement and health care benefits to an ex-mayor who is in prison for child pornography. There is no legal way they can get out of it.
I know of other obscene cases as well...
Not only is federal givernment crazy obscene but so is almost all State givernment and Local givernment as well..
The American Brain Wash is immense..
Americans treat the word “democracy” as a HOLY word..
This is nasty filthy word.. accepted as clean..
Democracy was is and will be a lie.. its Mob Rule by mobsters..
Which WHY? american politics (fed,State,local) is a MAFIA..
Not kinda like a mafia but literally IS A MAFIA..
I can only see revolt or States succeeding as the only cure..
Even if States succeed there is still the State and local problem..
The MOBS worldwide are getting organized.. and already are in power in most places.. China URP and Russia is fully connected.. The future looks dicey..
Police chiefs tend to be appointees of liberal mayors. Giving them lavish “retirement” benefits is nothing more than a payoff to their liberal buddies using other people’s money.
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