Newly released data show retired Bay Area public employees rake in sky-high pensions that dwarf most working people’s income, supporting claims that public-service retirement packages drain state, city and county coffers.
Or the numbers show former public sector employees receive modest retirement benefits that make up for other financial shortcomings. The interpretation depends on how you slice the numbers — and perhaps your perspective on public pensions.
Transparent California, a spin-off of a Nevada free market think tank, recently released raw data showing all CalPERS pension payouts in 2014.
Among non-safety-related public employees who worked 35 years or longer — which the group defines as a “full career” — the average public employee pulled in a pension worth about $64,545 last year, 20 percent higher than the state’s mean income of $53,890, according to Department of Labor stats.
Some of the highest paid public-service retirees were in the Bay Area.
The average former full-career worker from the city of Mountain View collected a pension of $111,884 last year, former Santa Clara Water District employees made $103,296, and ex-Daly City workers collected $97,352. San Francisco is not included since it has its own pension system.
Full-career police and firefighters — anyone who has worked 30 years or longer, according to the group — had even bigger retirement packages.
“If you work a full career, you have very generous benefits,” said Robert Fellner, research director for Transparent California. “Unfortunately, taxpayers are now being required to pay an equally exorbitant sum to help fund them."
Crunching the numbers
The rub lies in the definition of “full career.”
Transparent California chose the 30-35-year benchmark since it is the minimum amount of time required to collect Social Security without penalty. But only about 8 percent of non-safety related CalPERS recipients last year worked that long — the average employee worked just under two decades.
Isolating long-term workers that pull in high pensions by design unfairly inflates the numbers, said Steven Maviglio, spokesman for Californians for Retirement Security, a public-employee-backed lobbying group.
“They are skimming the cream off the top,” he said. “They use the numbers they want to use to distort reality.”
CalPERS spokeswoman Amy Morgan said a more accurate method of calculating pensions would be finding the average for all recipients — that is, taking the more than $11 billion that CalPERS dished out in 2014 (excluding pensions given to beneficiaries or survivors) and dividing it by the total number of recipients.
Using that method, pensions drop to about $26,150 per-year for the average non-safety retiree — less than half of what “full career” workers collected.
The numbers also plummet at most Bay Area agencies.
In Sunnyvale, the 48 CalPERS recipients who worked 35 years or longer received an average pension of $95,775 in 2014. That amount sinks to just under $39,080 after factoring in all 526 CalPERS recipients — a high payout, but significantly lower than the region’s mean income of $75,770, according to Bureau of Labor statistics.
The average full career BART employee pulled in $72,653 last year, although the figure dips to $40,597 after including all retirees. (Only 14 percent of former BART workers stayed with the agency for 35 years or longer.)
With high emotions and hyperbole common in the debate over public state pensions, the most accurate measure probably falls somewhere between the two stats.
Regardless of how you analyze the data, CalPERS benefits can be generous. Some recipients even make more money in retirement than they did while working.
Pension beats salary
One former Solano County administrator had a pension worth $375,990 last year — six figures higher than the maximum salary for his position ($260,502) at the time of retirement, according to records from the California State Controller’s Office. Another Port of Oakland worker collected a $112,020 pension in 2014, which was about 16 percent higher than his base pay at retirement, according to Fellner.
The high pensions can stress cities and counties during periods of economic tumult, but they also mask financial shortcomings associated with working in the public sector. About 40 percent of CalPERS retirees do not receive Social Security, making pensions their sole source of retirement income other than savings, Morgan said.
Public sector employees also often have lower salaries and lack stock options.
“People are willing to trade that for retirement security, which is becoming rarer and rarer in the private sector,” Maviglio said. “To attract information technology people, judges, firefighters, you need to offer substantial benefits. Otherwise you won’t get anyone.”
Changing the system
Voters may soon have a chance to change California’s pension system.
Former San Jose Mayor Chuck Reed (a Democrat) and ex-San Diego Councilman Carl DeMaio (a Republican) are pushing for a statewide initiative that would require voters to approve traditional pensions for new government workers, or to enhance additional benefits.
If the Voter Empowerment Act qualifies for the 2016 ballot and is approved, it will amend the state Constitution, allowing cities to swap public pensions for something similar to a 401(k).
“It’s absolutely indefensible to see government employees cashing out six-figure payouts,” DeMaio said. “Money is being diverted from other services — after-school programs, police and firefighters, road repairs — so we can create money to prop up pension benefits.”
Critics, though, say the shift would create a public-sector labor shortage.
“I could have made a lot more money doing something in the private sector, but I looked forward to having that security for myself and my family in retirement,” said Mike Sloan, president of the Contra Costa County Retired Employees Association, Local One (Sloan collects his pension from Contra Costa County, not CalPERS). “If Reed and DeMaio goes through, people will be stuck with a 401(k), (which) is not a retirement plan; it’s a savings plan.”
While previous attempts to cutback CalPERS pensions were deemed unconstitutional by Attorney General Kamala Harris since they interfered with vested rights of current retirees, the Voter Empowerment Act would primarily impact future hires.