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The annual update of the CalPers $100,000 pension club (a list of CalPers pensioners receiving more than $100,000 per year) was recently published. It continues to show remarkable growth. The Club had 1,841 members in 2005. By 2009 it had grown to 6,133. 2010 membership was 9,111 and this year's membership is 12,199. That is 99% growth in just the past two years! Current club rolls show Helix Water District with five members, City of La Mesa with seven, and City of El Cajon with 27. Given the higher public sector salaries of recent years and the extremely generous increases in pension formulas granted by our elected representatives a few years ago, membership in the $100,000 pension club is expected to continue to grow at exponentially for many years.
The unaffordability of current pensions is well documented. Pension costs have stretched the budgets of virtually every city in the county (and state). Unfunded pension liabilities (less money in pension accounts than necessary to meet pension obligations) threaten to keep those costs high for many years to come. The Little Hoover Commission (LHC) report published in February of this year warned that if significant measures to reduce pensions for new employees - and for current employees going forward - are not made soon, pension costs will force counties and cities to severely reduce services and layoff employees.
Although the affordability problem is well documented, much less has been written about the fundamental unfairness of it all. For many years, all of the money contributed to CalPers came from taxpayers. Even with recent changes that require employees to resume paying some of the cost, most of the enormous financial burden continues to fall on taxpayers. That being the case, it makes sense to me that public sector retirement programs should be roughly comparable to those common in the private sector.
Right now, they aren't even close. Public sector retirement programs generally pay much more than those in the private sector, much earlier in life, with payments guaranteed by taxpayers who assume all of the risk for underperformance of the pension system. While paying ever more to support the generous public sector pensions, many taxpayers struggle to manage their own much more modest retirement accounts. As the LHC report also noted, public sector pensions, whose initial objective was to provide retirement security, have morphed into wealth generators. Our elected representatives have been no match for the relentless push from employee unions and associations for more.
Governor Brown has finally started to openly discuss pension reform (what took him so long?) and there is talk of some pension reform groups getting a measure on the ballot next year. We will have to wait and see what comes of those efforts. But in the end Cities and Water Districts must bargain with their employees to make the necessary changes. Time is running out. For now, stay tuned for more exponential growth when next years $100,000 club membership is published.