A Fair to the Taxpayers, Fair to employees pension program for new hires in La Mesa

Today's Council meeting was mostly in closed session with representatives of the four labor unions. There was however a public comment session prior to the closed session. I was the only one there (aside from the City Council/employees) and I don't believe it was broadcast, so I thought you might like to know what I think our Council needs to do about pensions. Here is what I said (please notice my final sentence):
"I am here to again urge you to adopt a revised pension plan for new-hires. As you well know, union sponsored legislation precludes us from reducing pension arrangements for anyone already hired - even for years not yet served. I can't help but note that it is perfectly OK to make pension plans more generous for those already hired - and even to do so retroactively. That is exactly what you did in 2001 and again in 2003. None-the-less, the Unions now act as if 3% annual multipliers are a long-standing, god-given right. Our very one-sided laws make it imperative that you take action to reduce pensions for new-hires now. Savings to taxpayers from less generous pension plans start small but increase to very significant amounts - in the millions I expect - by the time they are fully implemented.
I favor providing a reasonable pension for our employees - a pension somewhere in the ballpark of the pensions that those who pay the taxes can expect to receive. In my judgment a reasonable pension is about 75% of salary -- that is a number recommended by many financial planners as about what is needed to maintain a pre-retirement standard of living. Importantly, that pension should be earned by working for a full career. I think 40 years is a minimum "full career" in these days of ever-longer life spans. Certainly one who works only 25 or 30 years with our city should not expect taxpayers to provide all of their pensions.
Right now non-safety workers can retire at 60 years of age and receive 3% of final years salary for each year worked. In addition, taxpayers pay Social Security for them. Non-safety workers stand to receive far more than 75% of salary - and at a significantly younger age than Social Security recipients. What do they do that qualifies them for a pension so much more generous than the taxpayers who foot the bill can expect to receive?
I recommend changing to a defined contribution plan with the City paying 10 - 12% of salary (including taxpayer Social Security contributions). Our employees can manage that money, take it with them when they leave, and add to it if they want a more lavish retirement. Most important, future generations aren't stuck paying the bills that we ring up.
If you, or the employees union, are not willing to shift to a defined contribution plan, I next recommend that you shift to the CalPers option of a 1.5% multiplier effective at 65 years of age. Sixty-Five is two years sooner than full Social Security payments start. A 1.5% multiplier with 40 years of work gives a pension of 60% of salary at age 65. Add to that another 20 - 40% of salary from Social Security, depending on when one decides to begin drawing it. A guaranteed pension of 80% to 100% of salary sounds mighty fair to me. If you don't agree, I certainly wish you would explain why."

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Tags: Government

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Comment by Russell Buckley on May 24, 2010 at 8:24pm
Hi Jason. As I said earlier, I haven't yet looked into salaries. I may do that next year. If La Mesa is having trouble finding qualified people, or retaining them, then salaries need to be raised. But, what I have read indicates just the opposite - public sector employees overall make higher salaries, much higher benefits, have much more job security, and have lower turnover than those who work in the private sector. I think the discussion of salaries is a smoke screen to detract from the point I raise about the outrageous pensions we pay our employees and the outrageous costs of paying for them. Our non-safety employees receive a multiplier of 3% of salary for each year worked - and they receive Social Security on top of that. That means a La Mesa employee can work for 40 years - a fairly nominal working career, especially in this day of increasing life spans - and retire at age 60, with 120% of final years salary - guaranteed by the taxpayers! Then, when they reach Social Security age, they receive another 30% or so: 150% of what they made when they worked! Most financial planners say we can maintain our pre-retirement lifestyle with about 75% of final years salary. Most people in the private sector would be happy with a guarantee of 75% of salary for life upon reaching Social Security age. What makes public sector workers so special? Our State is going broke. Our City has an unfunded pension and healthcare liability of 27 million dollars. We recently assessed every man, woman and child in this city an additional $100 per year in large part to maintain these overly generous pensions (Prop L). We are rapidly becoming a nation of two classes - public sector workers and others. Reducing the multiplier to 1.5% per year (as I have suggested) still leaves our non-safety workers with guaranteed pensions above those received by most in the private sector.
Comment by Johnson Thompson on May 24, 2010 at 5:57pm
An Assistant Engineer for the CIty of La Mesa makes $58-$71K.
http://www.cityoflamesa.com/index.aspx?nid=436
Phil, the Engineering Project Manager is a different class than the glassdoor.com comparison. That position is more in line with a principal or senior engineering position.
So you can see that they are on the low end in comparison and that doesn't take into consideration the bonuses that are paid in the private sector.
Comment by Phil Sluder on May 21, 2010 at 8:37am
Civil Engineers on http://www.glassdoor.com
Caltrans $69k-$77k
Black & Veatch $55k-$90k
Dewberry $49k-$75k
CH2M HILL $50k-$97k
Greeley and Hansen $53k-$68k
Jacobs Engineering $54k-$81k
Bechtel $60k-$92k

"The City only employs Civil Engineers" I looked again on http://agency.governmentjobs.com/lamesa and could not a class specification for Civil Engineer.

Engineering Project Manager
$83,532 - $101,545
Comment by Johnson Thompson on May 20, 2010 at 8:08pm
Good comments by all of you. My comparison for engineers was more closely to the truth when comparing apples to apples. The City only employs Civil Engineers and no Mechanical Engineers. They are low in comparison to the private sector and to the rest of the county public sectors. I hope you can understand some of the affects your actions will have on families. Last year they took a 4% paycut to appease the masses and now this. I know you are looking at future hires, but what about tranfers or promotions to other municipalities. Will those affected be faced with a lower pension? What will that do to the competition or inncentive to progress. I know the system is not perfect but we need to give these people a break. Craig, CIty of La Mesa Employees do work hard but I guess thats my opinion.
Comment by Russell Buckley on May 20, 2010 at 12:01pm
Hi Phil - thanks for getting the data about engineers. I'm certainly not surprised at what you found. Most of the studies I have seen recently are broad but they say that the public sector received both better salaries and better benefits - to go along with the job security that Craig mentioned. Don't know whether or not you saw the article in yesterdays U/T about approval of a second tier pension program for new hires for Firemen in Carlsbad - as well as relieving the taxpayers there from the burden of paying the "employee portion" of pension costs. Well done to the Carlsbad council! I hope that ours will follow their lead in ongoing negotiations.
Comment by Craig S. Maxwell on May 20, 2010 at 10:45am
Thanks, Phil. I didn't see your post before offering mine. Good wage comparison. Doesn't look like those in public "service" are making too great a sacrifice!
Comment by Craig S. Maxwell on May 20, 2010 at 10:42am
Good thoughts from both Johnson and Russell. I would reiterate that those public employees who make less than their private counterparts are compensated by both greater security (beyond a certain tenure it takes dynamite to dislodge them, regardless of their performance) and much less stress. Let's be frank: they don't, in general, work as long or as hard.
Comment by Phil Sluder on May 20, 2010 at 10:35am
From http://www.glassdoor.com
Salaries for mechanical engineer (no mention of registration or benefits):
GE $80K avg $55-96 range
Lockheed Martin 73K avg 51-100
Raytheon 71K avg 58-78
Catapillar 71K avg 60-90
HP 85K avg 63-120
Motorola 79K avg 61-110

From http://agency.governmentjobs.com/lamesa
This was the only engineering position I saw that required a degree.
A Bachelor’s degree from an accredited college or university in engineering, land surveying, business/ public administration or closely related field. Possession of a registration as a professional engineer in the State of California is highly desirable.
Engineering Project Manager
$83,532 - $101,545
Comment by Russell Buckley on May 19, 2010 at 11:36pm
Hi Johnson - good to hear from you again. You do jump around a good bit with your comments, but let me try to respond to a couple of them. First, about unions: The non-safety employees are represented by the SEIU - and that U stands for union. The Police and Fire employee organizations call themselves Associations - but they function like unions. If it quacks like a duck .... Second, the law in place only allows taxpayers to grant higher pensions to existing employees (as was done less than 10 years ago). So I am not asking for anyone already retired or presently employed by the City to have their pension reduced. I have suggested changes that will apply to new hires only. Third, I have been at many of the Council meetings - not pounding my fist, but saying my piece. Fourth, I'm not well informed about engineers pay in La Mesa so I won't comment on it for now. All I have so far argued for is that city pensions be reduced to be more in line with what the taxpayers who foot the bill can expect to receive and can afford to pay for. If you take the time to read about the sorry state of finances in our state and most of our cities, it quickly becomes clear that employee costs - particularly pension costs - have been allowed to escalate to the point that they have broken the bank. They simply must be reigned in.
Comment by Johnson Thompson on May 19, 2010 at 7:47pm
Well fellas, once again you make half points in your favor only. I can understand your attacks on the Police but for the general employees most of them make far less than the private sector. Look at some of our Engineers. They make maybe $70k/year. In the private sector the same engineer makes $90-$120k/year plus bonuses. So to compare the public to the private I see that in favor of the private sector. Take a look at some of the other posiistions of the guys who repair potholes during the day and then go to Costco at night collecting shopping carts to make ends meet. You are right that the younger generation will be left with nothing. They are the ones that had to pay 10 times their annual salary for a home when their parents only paid 2 or 3 times. Times are hard. I am not saying that people in the past have not experienced hardship, but it doesn't mean that it doesn't existing today. Gentlemen, I know my thoughts have jumped around a little bit, but there are two sides to every coin. Please do not ruin life for a so many who have taken this job with expectations for their future. If pension reform is your mission then you should be at the council meetings pounding your fist on the podium demanding raises for the workers (excluding the police) AND pension reform. Trust me the salaries are posted on the CIty website. The general employees get zero overtime and they are underpaid compared to the rest of the County and private sector. I am a private citizen and still support the jobs they signed up for. Another note: there are no more unions in the city. The employees have their own association that has no other outside influences. It seems unfair to keep saying that the "unions keep doing...". The employees themselves decided that reform in that sense was necessary. Good move guys.

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