August 18, 2014

Editorial: CalPERS proposal would authorize pension spiking by another name

CalPERS proposal would step back from 2012 pension overhaul.

The California Public Employees’ Retirement System board is preparing to approve rules today affecting employees who have been hired by local governments since 2013 that would, in effect, undo some of the much celebrated pension reform pushed by Gov. Jerry Brown.

Those reforms were intended to rein in the cost of pensions and end “pension spiking” for new employees. Pension spiking was the practice of adding a few extra duties, or a new job title, at the end of a long public-service career to increase the income the public servant received in retirement. The additional job duties or title might have been in effect for only a year, but the extra benefits went on forever.

The new issue involves “pensionable compensation.” In a nutshell, the question is whether pensions for new employees should be based on a job’s base pay or whether “normal monthly pay” – which can include pay for one of nearly 100 bonuses that civil servants might receive – should be the basis for pensions.

Most public employee unions are urging support. That’s their job; they’re supposed to get the most for their members.

But Elk Grove, Beverly Hills and many other cities are asking the board to reject the regulations. The League of California Cities pointed out in a letter that CalPERS is preparing to impose “major pension rate increases” on local governments, and warned the proposal “could increase these already burdening costs unless supported by strict actuarial analysis and standards.”

CalPERS staff could not say whether the new regulations will increase retirement costs to cities and counties. A staff report issued in April offered a vague analysis suggesting there could be savings. We fail to see how this could ever lower costs. Where is the list of situations that would actually lower pension payouts to create any savings?

The question is whether the extra compensation should count toward pensions for employees hired after the new law took effect. Being a detective might be worthy of more base pay and a larger pension. But the number of add-ons is surprisingly long. For instance, officers could get more pension if they are physically fit or a good shot. Shouldn’t all cops be fit and shoot straight?

Officers could get higher pensions if they are assigned to school Drug Abuse Resistance Education programs, regularly enforce laws against drunken driving, find fugitives, fight gangs, direct traffic or work at the front desks at jails. Most of that seems like standard police work.

Newly hired firefighters would qualify for bigger pensions for inspecting buildings for fire-code compliance, investigating causes of fires or if they are “assigned to administrative work during normal hours of employment.” Did they forget polishing the firetruck chrome?

There also are premiums for librarians whose jobs include telling patrons where to find resources. We love librarians, but isn’t assisting patrons fundamental to what librarians do?

Brown has urged the board to reject a part of the proposal that would allow higher pay from temporary promotions to be counted toward pensions. That’s important, but a only a half-step.

With great fanfare, Brown and the Legislature approved a pension overhaul in 2012 that was supposed to reduce the cost of pensions for new public service employees. By counting so many premiums, CalPERS would be stepping back from that commitment and sanctioning spiking by another name.

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