Retiree with $183,690 Annual Pension Attacks Pension Critics

“Critics of public employee retirement benefits are engaging in hyperbole and pointing to potholes as evidence that millions of elderly Californians should be stripped of their retirement savings.”
Brian Rice, president, Sacramento Area Fire Fighters, Sacramento Bee, June 2, 2015

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Notwithstanding the possibility that saying pension reformers want to see “millions of elderly Californians stripped of their retirement savings” is itself “hyperbole,” Brian Rice’s recent Sacramento Bee submission requires a detailed rebuttal. Rice’s piece, entitled “Pensions aren’t being paid at expense of filling potholes,” was in response to a study written by Stephen Eide and released by the Manhattan Institute entitled “California Crowd-Out, How Rising Retirement Benefit Costs Threaten Municipal Services,” published in April 2015.

Rice leads off by attempting to link the Manhattan Institute to the supposedly infamous Koch Bros., despite offering zero evidence that the Koch Brothers contribute to that organization. And, of course, he is relying on this unsubstantiated link to discredit Eide’s work, apparently because if the Koch’s funded the work, then the author had to come up with data and conclusions that fit their agenda, instead of the facts and logic.

We’ll get to facts and logic in a moment, but first it is necessary to consider Brian Rice’s agenda. Because there is virtually no comparison between California’s urban firefighters and the “working class,” “minority, low-income and rural communities,” to whom Rice makes reference in his article, and for whom unions are more legitimately challenged to represent. Brian Rice, who retired in 2011 after 28 years of service, collected a pension in 2013 of $183,690, NOT including other benefits which probably add at least another $10,000 to his total retirement package.

Here’s pension data for Brian Rice. Notice how during retirement his pension still increases each year.

Here’s pension data for Rice and his fellow retirees from Sac Metro Fire – and Rice isn’t even in the top 10. The top spot is held by James Eastman, who collected a modest pension of $231,428 in 2013.

Rice writes: “Public employees have traded off other compensation in order to have a secure retirement.”

Really? Here’s payroll and benefits data for Sac Metro Fire’s active employees. Eleven employees made over $300,000 in 2013, 195 made over $200,000 in 2013, and 408 made over $150,000 in 2013. The Sacramento Bee recently published an analysis of average pay, not including benefits, for Sacramento firefighters. The data shows the average firefighter makes $122,677 per year, NOT including current benefits such as health insurance, and not including the employer’s pension contribution. Add those and the average goes up to $194,083. And no, that average does NOT include captains, who average $163,040 before benefits.

Quite a trade off. Modest pay in return for a secure pension. No hidden agenda there, right? No motive to engage in “hyperbole” when you encounter critics?

Back to potholes. A California Policy Center study published in February 2015, “California City Pension Burdens,” documents the average employer pension contribution for California cities in 2013 at 7% of total revenue. CalPERS is increasing their required pension contribution by 50%, meaning the average will become over 10% of total revenue. And that assumes the markets don’t correct downwards. Many cities are in far worse shape. Is it really necessary for 10% of every dollar in local tax revenue go to pay pensions that average over $100,000 per year for public safety employees who retire early and whose pensions get annual cost-of-living increases?

The “crowding out” effect is real, and it affects more than potholes. Rice is perhaps at his most hyperbolic when he writes “each year, the $13 billion that much-maligned CalPERS pays Californians in pension payments creates $30.4 billion in economic activity. The California Public Employees’ Retirement System also invests in big infrastructure projects for the state, and makes capital available to minority, low-income and rural communities.”

Bull. Bull. And Bull. To wit:

(1) The $13 billion creating $30.4 billion in economic activity is known as a “multiplier.” As Rice puts it, “They spend it on housing, food, gasoline, other necessities, gifts for the grandkids and more – which drives economic activity, creates jobs and increases tax revenues.” We hate to break it to you, Mr. Rice, but if we had been able to keep that money, instead of paying higher taxes so you can have your $183,690 per year pension, We would have also been able to “spend it on housing, food, gasoline,” etc. No net benefit there.

(2) Rice claims $13 billion is paid out annually by CalPERS to pensioners. Actually last year it was $17.7 billion (ref. CalPERS CAFR 6-30-2014, page 24). But Rice neglects to mention that 15% of those pensioners have moved out of California. And Rice ignores the other side of the equation, which is that based on their asset allocation to-date, 91% of the $12.6 billion paidinto CalPERS last year was invested out-of-state. CalPERS has $301 billion in assets, and ninety-one percent of that money is invested out-of-state. As it stands today, California’s citizens, their cities, and the overall economy would be a lot better off if CalPERS, and every other pension system in California, did not exist.

(3) When it comes to infrastructure, not only is CalPERS investing a ridiculously minute portion of their portfolio, but the primary reason there isn’t money for infrastructure is because cities, counties, and the state are too busy allocating all of their financial resources to overcompensated public employees. And if CalPERS and the other pension systems were willing to invest for reasonable rates of return, instead of speculating on global markets, they could take their roughly $700 billion in assets and finance revenue producing civil infrastructure such as dams, upgraded water treatment to allow reuse of waste water, desalination plants, aqueduct upgrades, port expansions, road and freeway upgrades, bridge repair – the list is endless.

Despite Mr. Rice’s hyperbole, most pension reformers do not want to abolish defined benefit pensions for public employees, if these pensions could be made fair and financially sustainable. That would require returning to the conservative investment guidelines in place until Prop. 21 was passed in 1984, and it would require returning to the modest and fair benefit formulas that were in place until SB 400 was passed in 1999. Taking these steps would not only save defined benefit pensions, but enable massive investment by the pension systems in revenue producing civil infrastructure.

There’s a lot of middle ground between someone collecting a pension of $183,690 per year, and being “stripped of their retirement savings,” Mr. Rice.

Originally published by UnionWatch.org

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Ed Ring is the executive director of the California Policy Center.

Comments

  1. kellog64 says

    I always enjoy a lecture from public servants. what a joke.

  2. sweetsuzee says

    He retired at 50 yrs of age on a pension most of us would give their right arm to have and he has the right to say they traded off compensation to earn the pension. I don’t want to shock him but the agreement we taxpayers had when civil service first began was that they would work for between 30 and 40% LESS than their private sector counterparts and in return, for their sacrifice and suffering, we would pay them for their entire lifetime including benefits along with their surviving spouse. Today they make 30 and 40% MORE than their private sector counterparts on the backs of the taxpayers. He is currently the President at Sacramento Area Fire Fighters Local 522. I wonder if he’s being paid their, too.

  3. Michael McDermott says

    The 5 year Post Retirement Cancer Death Rate amongst Professional Firefighters has been nearly 40% – meaning that % Die of Cancer within 5 years of Retiring.

    Not All Departments are the same as regards type and number of calls, and many are more exposed to infectious diseases through Medical and Rescue operations exposing them to blood and fluids in the field where thin rubber gloves are often useless after a moments use.

    The hazards are particularly nasty when involving automobiles – which leads first responders to extricate bleeding people (and frequently corpses) amidst the ‘mud & the blood & the beer’ of many car wrecks. When cars burn they are veritable stew of toxics (boiling sulfuric battery acid & oils & fluids & wiring…) that can enter the system by breathing, skin contact, ‘protective’ gear contamination etc.

    Some of the Pensions are indeed excessive – and often result from Spiking at the end of career – where ole carl was a water carrier for the big wigs and gets a gold badge and big payoff just before he goes. This can lead to promoting incompetents and high turnover at important ranks – but so long as every body plays along, every body gets well.

  4. Some people have a lot of nerve!

  5. Gotta Gedada Displace says

    Another falsehood by way of omission from Mr. Rice is the implication that the pension payments creating that “economic activity” are 100% spent. I would hope Mr. Rice IS saving some of his, since the intersection of millennial unemployment, population and business loss by the state, over-assumptions about CALPERS investment return, and continuing lack of State budget restraint, will, when it collides, leave HIM with an empty bag expecting blood from unsqueezable stones, right along with the REST of us (IF still here!)
    I don’t know how far back the data in transparent California dot com goes back, but it would be interesting to see what percentage of public salaries accelerate before retirement, which is DEFINITELY NOT the case in the private sector, (except for mercenary CEOs.)

  6. And here we go again, public servants taking advantage of public employee unions, which by the way, really are illegal and very much immoral. After all, public servants can effectively hire their salary and pension advocates.
    California legislatures have no plan but to perpetuate the consumption of tax dollars, even now the drool over the excess they currently have in the hopes of spending it by purchasing more votes like firefighters, teachers, police, guards, and so on. Some of these jobs are so highly sought after that applicants can exceed most towns populations! Wake up all you tax payers they are coming for your personal property…

  7. NOT ONLY ARE THESE TYPE PF PENSIONS ABSURD BUT THIS IS IN YOUR FACE THIEFT! THE LONGER PEOPLE REFRAIN FROM GETTING INVOLVED THE MORE OF THIS YOU WILL SEE. THESE PEOPLE SHOULD RECIVE NO SOCIAL SECURITY.

  8. Oh that I had worked for the State or County. I’d be living pretty darn good. OH and traveling too. They are paid way to much in TAXPAYER MONEY. They need to be on the SS system like those of us who PAY their wages.

  9. i think the term ” public parasites ” should be incorporated into all public employee wage disputes! nothing worse than our glorified welfare to the public servants of the of this once great state! their dedication to hard work & their selfless zeal brings tears to my eyes.

  10. TheRandyGuy says

    Our military gets 50% of their best year’s pay after 20 years, 75% at 30. Should be the same for firemen, cops, and every other “first responder”. If it’s good enough for the military, it’s damn well sufficient for these folks. Truth is, as these costs continue to grow, there will indeed be a choice to be made between pensions (many to people working the same job in a different jurisdiction) and current services. CA already has the highest tax burden in America. That day is coming.

  11. Are you kidding with us, this is totally a joke and You know I always enjoy lectures.

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