|
|
|
Hocus Pocus Pensions Will Croak Us
By Robert Schussel, Ph.D 5/2/13
Purpose To analyze the pension contributions being paid to CalPERS (California Public Employee Retirement System) on behalf of Vallejo City employees.
Background The City of Vallejo participates in the CalPERS pension plans for its employees. Until recent changes in the law, Public Safety employees could retire at age 50 and receive 3% of their final salary for each year they worked. The actual amount a retiree receives each year increases due to a cost of living adjustment. All other employees receive 2.7% of their final salary at age 55 for each year of service. Overtime and some other wages are not considered PERSable wages.
In 2010 the City contributed 28.31% of a public safety employees salary to CalPERS [link to 6/28/10 Vallejo Public Safety Retirees -- it's better than winning the Lottery]. Starting in January 2013 the City is contributing 44.101% of a new public safety employees wages-- a 56% increase in 3 years. The pension contribution for all other new employees is 25.762%. Vallejo City Employees contribute between 6.25% and 13.4% to their pension.
It should be noted that in the private sector employers are only contributing 6.2% .
Caveats The data used in the analyses were supplied by the Finance Department of the City of Vallejo and may change slightly when final W-2 calculations are made.
The wages used to calculate pension contributions are based on the last 6 months of the City's fiscal year 2011/12 and the first 6 months of fiscal year 2012/13.
Employees who only worked part of a fiscal year are included in some of the calculations. There are a few individuals who appeared to have not worked in calendar year 2012 for whom the City made a contribution to their pension.
Findings 1) For calendar year 2012 the City contributed $12,353,844 to CalPERS which is approximately 15% of the General Fund Budget.
2) The City contributed $7,892,864 for Public safety which was 64% of the total pension contributions . The average contribution per Public Safety employee is $44,094 . Of only those who worked the entire year the average pension contribution increased to approximately $48,000.--nearly 3 times the average contributed for other employees.
3) For all other employees the total pension contribution was $4,554,249 which averaged $14,550 per employee. The average increased to $17,368 if individuals with contributions of less than $9,500 were eliminated-- (equivalent to the lowest wage of a full time employee).
4) While 4% (13/314) of the Non-Safety employees had a pension contribution greater than $30,000, 87% of the Public Safety employees had a City pension contribution greater than $30,000. All of the Non-Safety individuals with high contributions were department heads/Senior Management.
The next page shows the top 46 pension contributions.( the maximum I could get on one page) The only Non-Safety employee on the list is the City Manager
5) There are various "other wages" that increase the size of the pension an individual receives. Added together they become a significant factor in the pension contribution the City must make.
They include:
--Uniform allowance Because this benefit is PERsable the total cost to the City is approximately $215,000 . $155,741 goes for uniforms/equipment and approximately $60,000 for pension contribution.
--Educational Incentives Members of VPOA and IAFF continue to receive an Educational Incentive (for an AA or Bachelors Degree) of 3.5% or 5% respectively All police hires have a Bachelors degree. Because it is buried in base wages an exact amount is not provided. It's estimated value is $531,000 plus $223K in pension contributions. An issue that has never been adequately explained is: Why does the City pays a percentage based on wages rather than a set amount?
--Paramedic Pay All entry level hires must have a Paramedic Certificate for which they receive a 10% bonus. If only the Firefighter rank maintain their Paramedic certificate the cost is approximately $291,000 plus a pension contribution of $122K.
--Longevity Pay Employees in VPOA and CAMP receive a 5% bonus after 20 years of service and a 10% bonus for 25 years of service. Current cost of the Longevity Pay is $63,082 plus an estimated pension contribution of $24K.
--Management Incentive Pay CAMP employees receive a 5% bonus that is estimated at $344,000 plus a pension contribution of $85K.
--Holiday Buyback Pay Employees can receive Holiday pay in lieu of taking time off at time and a half. The current cost is $689,029 with an estimated pension contribution of $280K.
Other PERSable wages include Motorcycle Duty Pay(2.5%) Bilingual Pay (1%), SWAT team (1%),Hazmat pay (5%),Canine Pay (7.5%),Mask Room Pay (5%) ,Paramedic Preceptor Pay (5%) and EMT Pay (5%).
Comments Even after the Bankruptcy I still hear people say that the City is hiding money and/or that the City can afford the wages and benefits being paid. In fact they say we need more Police and Fire employees but offer no realistic plan that would enable the City to hire them. I don't know if there will ever be enough evidence to convince the doubters that the City is financially hanging on by a thread.
As shown in these analyses pensions have become unsustainable and increased by 56% for Public Safety in the last three years. Approximately 15% ($12,353,844 ) of the City's entire General Fund goes for pension contributions. Currently the City contribution for Public Safety employees is 44.1% of wages and 25.762% for all other employees. We can no longer afford to pay 3 times the amount for Public Safety pensions.
Pension contributions are projected to increase to 52.9% by 2015-16. Some discussions suggest the City's contribution will grow to 65% over the next 6 to 8 years due to CalPERS current $56,000,000,000 shortfall statewide. I know of no private sector company that is able to survive with the pension liabilities the City of Vallejo faces.
Some employee unions have shown disdain for the City, seem unwilling to address financial problems we have and are not willing to accept any responsibility or make compromises. Without Binding Arbitration, the City Council can now impose conditions if contract negotiations go to impasse. I can only hope that several of the City Council members stop their practice of caving in to try to please the unions. Even with major concessions it is going to be touch and go for many years until revenues return to their former levels. After all we have been through with Bankruptcy, I hope the City employee unions realize it's time to be partners rather than an opportunists.
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||