Date: August 9th, 2017 9:18 PM
Author: Grant William Robicheaux MD
Three cities in Orange County are ranked among the top 25 in California when it comes to retirees who make $100,000 or more.
A report released Wednesday by Transparent California, a watchdog group that tracks pension expenses, listed Santa Ana, Anaheim and Newport Beach as the 5th, 6th and 23rd top cities in the state’s $100K club.
Other Southern California public agencies in the top 25 include Riverside, Santa Monica, Glendale, the Metropolitan Water District of Southern California, Burbank and Pasadena.
Overall, the group said the number of retirees with annual pensions of $100,000 or more grew 63 percent in the past five years.
Local cities described pension debt as a big and growing hurdle.
“Our unfunded pension liability is among our most challenging fiscal issues,” Newport Beach City Manager Dave Kiff wrote in an email Wednesday, Aug. 9.
In Newport Beach, 141 of about 970 retirees are collecting more than $100,000 in pensions. The city will pay CalPERS, the agency that manages pensions and health benefits for city and other public workers, about $50 million this fiscal year, $33 million of which will go toward long-term debt payment. The city’s total long-term debt — most in the form of pensions — is estimated at $300 million.
The rise in $100,000 pensions underscores the importance of making public employee pension data public, Robert Fellner, Transparent California’s research director, said in a news release.
Transparent California is an offshoot of the Nevada Policy Research Institute, which describes itself as a “nonpartisan, non-profit think tank that promotes policy ideas consistent with the principles of limited government, individual liberty and free markets.”
A spokesman for Californians for Retirement Security, a coalition of unions and other groups representing public employee retirees, took aim at Transparent California.
“‘Transparent California is neither transparent nor in California,” Steve Maviglio said. “It’s a Nevada-based anti-union group that refuses to disclose its donors, so the irony of publishing the salaries of teachers, firefighters, school bus drivers and other public servants shouldn’t be lost on anyone.”
Maviglio added: “This distorted data represents less than 2 percent of all of the state’s retirees, most of whom had long careers in top level positions in some of the most expensive areas of the state. The average state pension is approximately $2,700 per month and the beneficiaries often do not receive Social Security benefits. That’s hardly enough to live on in many areas of our state.”
The data for Transparent California’s report came from public records, Fellner said.
“We believe it is important for Californians to have access to complete information about how their tax dollars are being spent, which is why we published the entirety of the CalPERS report as it was provided to us in an easily accessible and searchable format so that anyone interested in the data can analyze it for themselves.”
Transparent California’s searchable database is at transparentcalifornia.com.
CalPERS spokeswoman Amy Morgan said the average CalPERS pension for a public safety employee is $33,528, while the average pension for a non-public safety retiree is $29,088.
“Overall only 3 percent of CalPERS service retirees receive pensions of $100,000 per year or more. (They) are executives who hold seats in either city or county offices, or are physicians, or senior managers for police and fire departments,” she said.
The three largest CalPERS pensions went to former Solano County administrator Michael Johnson, $390,485; ex-Los Angeles Sanitation District general manager Stephen Maguin, $345,417; and former UCLA professor Joaquin Fuster, $335,180, according to Transparent California.
The average pension for a “full-career” CalPERS retiree was $66,400, the group reported.
According to Transparent California, Santa Clara County had the most six-figure CalPERS pensions in 2016 with 861. Riverside County was third with 469, Long Beach was fourth with 360. Santa Ana and Anaheim had 270 and 269 respectively.
Santa Ana Mayor Pro Tem Michele Martinez said Wednesday it’s no surprise Santa Ana had the fifth highest number of retirees collecting at least $100,000.
The city had more than 100 employees retire over the past couple of years, she said, adding that most were police officers.
“When we hire police officers, we are technically hiring them for 75-plus years… The question we need to ask (is), ‘Can we afford it?’” Martinez wrote in an email.
The city has given raises to employees in 2014, 2015 and 2017, boosting Santa Ana’s pension debt.
“I am not saying that police officers or public employees are bad people, or that I blame them for negotiating good compensation packages, or that all of them are overpaid,” Martinez said. “We have a system in place that benefits them and it will continue until we can no longer pay for cities services and leaves us only paying out retirement pensions.”
Some cities are working on ways to pay down the expected debt.
In June, Newport Beach approved paying CalPERS up to $9 million more than required specifically to pay off pension debt faster. Kiff said if the city continues overpaying at that rate it could retire its pension debt within 20 years.
Mayor Kevin Muldoon said the challenge in Newport Beach isn’t as big as in some other cities. Newport Beach — which has some of the wealthiest neighborhoods in California — takes in enough revenue from sales and property taxes to cover the pensions, he said.
“In Newport Beach, we are able to maintain a high level of service mostly by just being frugal,” Muldoon said. “As far as daily operations go, we are doing a good job of maintaining our services.”
Pasadena Mayor Terry Tornek did not find the numbers shocking. He noted that similarly sized cities in the area, such as Burbank and Glendale, spent similar amounts on retirees in 2016. He attributed Pasadena’s ranking to the city’s efforts to stay competitive.
“Pasadena’s practice in the past has been to pay its personnel in the top 25 percentile in order to get the best people,” Tornek said, adding the city abandoned the practice “some time ago, because we can’t afford it anymore.”
Pasadena, already facing deficits, expects significant leaps in pension obligations – from $30 million to $80 million per year — in the next two decades.
Still, Tornek said Transparent California’s ranking doesn’t factor in cost reductions over the years as labor groups, particularly police and fire, took salary cuts to preserve higher pension payouts.
Residents expect to receive high quality services, he said.
“If you have chest pains and an EMT shows up to take care of you, you want to make sure he gets there fast, that he is well equipped, well-trained and that he saves your life,” Tornek said. “At that point, you’re not getting upset that he is getting paid in the top 25th percentile of the region.
When data from non-CalPERS retirement systems are factored in, almost 53,000 retired public employees got pensions worth at least $100,000 in 2016, Transparent California found.
The group’s report comes amid an ongoing debate about public employee retirement benefits.
Many cities and counties in California are having to chip in more for CalPERS, taking up taxpayer dollars that could be used for public services. And alarm bells have sounded for years about the size and sustainability of unfunded liabilities for current and future retirees.
To rein in future pension costs, state lawmakers in 2013 passed legislation that gives lower pension benefits to new employees.
Besides pensions, Transparent California also focuses on public employee salaries. In May, the group focused on what it described as exorbitant compensation, including $257,000 in overtime paid to a Riverside Public Utilities dispatcher.
Staff Writers Jason Henry and Jessica Kwong contributed to this report.