Behind Measure W, which would allow the city to offer reduced retirement benefits to future employees. is a recent audit that found the city’s pension benefits program unsustainable. The cost of retirement benefits to the city has increased from 6 percent of the budget in 2000 to 17 percent in 2009.
Exacerbating the problem is early retirement, which adds additional costs. City employees are entitled to early retirement at the age of 55, though police officers and fire fighters can retire at 50.
At a City Council meeting yesterday, Bob Brownstein of Working Partnerships blasted the report, saying it was, “filled with flaws and inaccuracies.”
It was a testy exchange, and at one point, City Councilmember Pete Constant, who chaired the meeting, threatened to evict him.
Brownstein and supporters argued that the city had long shortchanged the pension system, and called the current proposal in Measure W a “morale crusher.” Some of his arguments were less convincing, however. For instance, he noted that both American Airlines and Northwestern had rejected a two-tiered pension system, but failed to mention that both later filed for bankruptcy.
The meeting was conducted by a working group of 23 stakeholders from the city and unions designated to come up with ideas on what to do with the sharp rise in retirement costs. The group is expected to produce a proposal by early next month.
Read More at The Mercury News.
Eliminate Collectivism
It wasn’t a City Council meeting. Council meetings are held on Tuesdays. News?
So with all this going on, I wonder what the city will do with the new federal grant awarded to San Jose PD that will pay for 16 new officers for 3 years?
Does this mean the city will reject the $7.1 million federal grant? Hmm.
Increasing the retirement age and also requiring more employee contributions would actually make a huge difference.
Don’t like 2nd Tier pensions, its like I get punished for being younger and have to watch the baby boomers go out with a bang while I will be fated to work longer and see less. Raising the retirement age and increasing employer AND employee contributions to reflect the true costs of a pension would make a huge difference. Also, automatic COLA for retirees is not reasonable, especially when they are already close to matching the paycheck at 90%.
Also, eliminate the corrupt pay spiking and using the highest years pay alone for pension calculation. Pension contributions were based on your salary each year and to allow someone to draw based on a spiked and inflated last years salary exacerbates the problem that you’re drawing out more than was put in for you. Its corrupt, crooked and wrong. At a minimum, average the three highest years like the federal government does.
Greed is not good. Public service is supposed to be about altruistic values and does receive trade-offs in terms of job security and a pension. We’ve got inflated salaries, over the top pensions and the public service motivation seems totally lost in the equation.
Some states are experimenting with hybrid defined benefit / defined contribution where you’d get a base pension plus a 401k type of plan. Share the risk and pain a little more. Research shouldn’t be limited to what special interests and San Jose Insiders bring to the table but should include and honest look at best and worst practices. Its possible no one is doing it well, but lets talk honestly about it.
Its clear that the “worst practices” are pensions. Take that off the table to start.
The city pays $8.00 for every $3.00 paid by the worker. That ratio is almost backwards.
Plus, the city guarantees an 8% annual rate of return. Pension funds are supposed to be invested conservatively, so 8%/year is unsustainable, even in good times.
The line needs to be drawn somewhere. Unfortunately younger folks will suffer a bit, but those who will suffer most are the people who are 50+, since they have less time to make up the inevitable shortfall when the changes take effect, as they must.
Get your facts, the San Jose Police and Fire Pension system does not allow for pension spiking. Overtime is not taken into account when considering final pay.
No one should take Bob Brownstein seriously. He’s never worked in the private sector. The guy has sucked the public tit for decades. When he defends pensions, he’s defending his own wallet.
> Bob Brownstein of Working Partnerships blasted the report, saying it was, “filled with flaws and inaccuracies.”
Some questions:
What exactly is the benefit that human civilization derives from Bob Brownstein’s carbon footprint?
What in tarnation is “Working Partnerships”? Is it just some letterhead organization that sprung from Bob Brownstein’s active and climate warming brow?
Who are the partners that “Working Partnerships” compise?
What is the “work” that the working partners of “Working Partnerships” engages in?
When was the first time that anyone on earth or low earth orbit ever heard of this purported “Working Partnerships” organization?
Does the “Working Partnerships” organization have any kind of external objective existence outside of the interior of Bob Brownstein’s skull?
Is this the Bob Brownstein who, once upon a time, was a spear carrier for a former San Jose mayor (Susan Hammer?)?
Raising the retirement age for Police and Fire is very problematic. Due to the physical nature of both jobs and the physical toll of a 25-30 year career in either job, retirement age needs to be kept in the 50-55 range. Do you want a 60 year old trying to do the job of a firefighter or police officer? The injury rate would be very high for that age range, costing even more for the city. They’re are not enough administrative jobs for the line personnel to promote into either.
Also, while 50 may seem early for retirement, a police officer or firefighter can only retire at 50 after working for a minimum of 25 years, which will reduce their pension. The only way to retire at 50 with full pension is to get hired at 20, which is very unlikely. It’s not as if these guys are retiring after working for 10 years with full pensions.
“Increasing the retirement age and also requiring more employee contributions would actually make a huge difference.”
Blair, police officers put nearly 25% of their pay check into their retirement. How much more do you want them to contribute? Are you aware that the City quite contributing to the retirement fund back when times where good but required the employees to continue their contribution?
The City knew that the market is a roller coaster. Instead once the retirement fund was solid, they stopped contributing and started spending like a drunken sailor in port on other pet projects to generate votes. If the City of San Jose would have managed their money like most small business owners and responsible citizens, they would have saved money for the hard times. They did not do this and now their employees are at fault?
“Also, eliminate the corrupt pay spiking and using the highest years pay alone for pension calculation.”
Sorry again Blair. At least for the police officers their pension is based upon their highest 12 months base pay. Let me say that again, base pay. If a cop works overtime it isn’t calculated in their retirement formula. Nor is any other pay add ons like a uniform allowance, occasional overtime buyouts, etc. I would also add that now in these lean times it looks good to use the highest three years average, or in the case of PERS, the last three years average. This is because many agencies are now cutting base salary and therefore effecting retirement payouts.
However, how about when times are good again? A simple look at history can show where some organizations saw pay raises in consecutive years continually rising as the economy boomed. So in the good times that formula is irrelevant.
“Greed is not good. Public service is supposed to be about altruistic values and does receive trade-offs in terms of job security and a pension.”
Blair you seem to have answered your own statement there. For some reason there is this belief that public employees are too stupid or lack the necessary talent to succeed in the private sector. So I suppose those with their noses in the air feel that public employees should just be grateful for whatever is thrown their way. Public employees should be like a loyal donkey hauling heavy loads without a whmper and happy to have a feed bag slapped on their faces once in a while to keep from starving.
I beg to differ. There are many very talented employees in public service who are there for altruistic reasons. Nevertheless, everyone has the same goals and dreams of a comfortable life for their families and a good retirement. Are you saying that public employees should be satisfied with table scraps? Oh, I know, now we get to hear how public employee pensions are unsustainable, unreasonable, and over inflated. Funny, I never heard a peep about public retirements back when the economy was hot.
Now that private sector jobs are being cut, 401K systems are at rock bottom, and pay checks are not guaranteed, public employees are rich spoiled brats. Has it dawned on anyone that the economy will rise again? When it does can public employees enjoy the same benefits that many in the private sector had during the good times? My spouse was one of those and begged me to quite public service to triple my salary in the private sector. Stock options, company trips, Friday beer busts, take home cars, extravagant work campuses with huge cafeterias, free food and drink, a gym that would rival any sports team and the list goes on. I held on to my, at the time, average paying job and ignored the ridicule of my private sector rich friends who were making a killing in the stock market and at their Silicon Valley jobs.
I remember going on a trip with the spouse and sitting at dinner listening to these private sector employees brag about their bonus checks, second homes, fancy cars, etc. When they asked what I did I couldn’t help but notice the furtive snickers and quick change of topic. After all I was just a name tag wearing public servant barely worthy of acknowledgement. My salary was a bit of an embarrassment to the spouse and rarely brought up in polite conversation. I certainly could not mention that I worked overtime whenever it was offered at the expense of my family, took side jobs when offered, and pinched pennies to make sure my family had all the things it needed.
Now those same people are calling me a greedy pig at the trough? Miraculously I am suddenly filthy rich. Sorry, I have little sympathy for those people and even less for the City of San Jose government who squandered the extra money when they had it. The mayor and some members of the City Council have completely BS’ed the public with the Mercury News totally complicit in their scam. Much like dictators of the past (think Germany), Mayor Reed has found a scapegoat to blame all the City’s financial woes upon. It is sad that so many intelligent thoughtful citizens are buying it hook, line, and sinker. It is just so convenient to focus anger at one single target instead of engaging the brain and demanding truthful answers to complex financial questions.
As for the 401K idea, I support it wholeheartedly. Somebody else here on this site posted that some police and fire departments across the country are being pushed by their own employees to switch from a pension to a 401K system. Why is this? Because you can take it from job to job. Now if you get a job as a fire fighter with one agency and don’t like them, you can take your 401K with you to another agency. There goes your altruistic motives for being a public servant in San Jose or elsewhere. If I can jump from city to county to city and haul my 401K plan, which might possibly be quite solvent if I put over 20% of my pay check into it, why should I feel bound to stay with any agency or citizenry who doesn’t appreciate my efforts? Be careful what you wish for.
San Jose has benefited from having an independent pension system in that employees are encouraged to stay through retirement. And…it has benefited employees who can start drawing the full SJ pension while working a post retirement job (police chief at a small town, etc.)
Liability, however, is a bit much for a medium sized city with a bad record of planning for the future in terms of setting aside the money to pay those future pensions.
Pensions are a good thing. Would be nice if we had more of them. Trouble is paying for them and its been “best practices” to underfund pensions so there’s more cash on hand to spend for current council priorities.
Appreciate you feelings…good discussion.
“Liability, however, is a bit much for a medium sized city with a bad record of planning for the future in terms of setting aside the money to pay those future pensions.”
And therein lies the key. Our lovely City leaders, with a bad record despite term limits, intentionally did not set aside money in the good times to pay for pensions during the hard times. And now City employees are being vilified for expecting the City, and therefore their fellow citizens, to adhere to the promises they made during previous contract negotiations. Mayor Reed and his cronies have found a wonderful tactic in redirecting citizen angst over the economy towards their own employees rather than answer to decades of financial mismanagement.
I’m fed up with hearing the whining of private sector people who point to their 401K problems and employment challenges. There has always been a choice available to all regarding private versus public careers with trade-offs in each. Private employment is a roller coaster with far greater potential in earnings and benefits but with continual risk of being demoted, downsized, or laid off. Public service is a long slow incremental rise in pay with a good retirement system.
Those of us who chose public service knew we would never be wealthy, but comfortable and with reasonably good job security. We intentionally chose this over the possibility of becoming affluent or enjoying the excessive perks associated with the boom times. Now the private sector wants the public employee to suffer all the negatives that private employment brings but I would bet a pay check that those same people would throw a hissy fit if the City of San Jose started throwing out the same perks as the private sector when times improve.
Can you imagine the City of San Jose providing free dry cleaning and day care? How about a coffee shop with a barista and free sodas in each City building along with a Foosball and ping pong table? How about meals delivered to employees cubicles? Perhaps some sand volleyball courts out in front of City Hall for the employees? I know a company that still offers these perks and much more.
Sorry private sector folks, you can’t have it both ways. Either you take the significant private company risks but hope to strike it rich, or you choose public service and to be satisfied with a steady moderate income and good retirement absent the possibility of fortuitously choosing a rapidly rising company with stock options and a fast track career path. Somehow this whole argument reminds me of when Mom used to tell me the tale of the tortoise and the hare….
> I’m fed up with hearing the whining of private sector people who point to their 401K problems and employment challenges.
Well, too bad.
I’m not finished yet. I have a lot of whining left in me.
“Well, too bad. I’m not finished yet. I have a lot of whining left in me.”
Of course you do. That is all most of you will do instead of doing some homework and finding out the true culprit for our financial mess in the City of San Jose. It is far easier to snivel than actually ask hard questions and demand the truth from your elected officials. Besides, it feels good doesn’t it? It is always nice to see somebody else suffer the same misfortune as you right? No wonder we have oodles of tabloid TV shows that spend all their time reporting on the woes of celebrities and politicians. Pathetic…
The problem is the City (our elected officials) did not pay their agreed share or percentage into the pension fund when times were good. The pension fund was over funded so the City reduced its contribution for a New City Hall. maybe? The city employee’s did not have this option and continued to pay the agreed percentage into the pension fund every year. The stock market has dropped and the economy was in a recession. The city now has to make up the amount that they under-funded the pension and they are blaming the employee’s for the short fall. Some city employees pay as much as 20% of their salaries toward the city pension fund and they do not have the option to reduce that contribution. Have they paid enough for that benefit?
Mike,
Just to add…I think the figure was $170 million, when the pension fund was over funded, the city used that money to reduce their contribution costs if I recall correctly.