On The Money: $100,000 Pension Club Update
By Mike Luery
A three-month investigation by CBS 13 reveals the list of retired government workers collecting six-figure pensions has grown by more than 3,000 names in the past year.
Citrus Heights accountant Marcia Fritz has been crunching the numbers. “There’s over 12,000 members on the list now,” Fritz told CBS 13. “I was shocked.”
Fritz, a pension reform advocate, is the president of the California Foundation for Fiscal Responsibility. For years Fritz has used public records from CalPERS to document the rapidly expanding $100,000 Club, a membership that has grown from 9,111 names in 2010 to the new total of 12,199 today – a jump of 34%.
Fritz noted that a 2005 CalPERS list indicated there were only 1,841 retirees receiving pensions greater than $100,000.
Fritz indicated the $100,000 Club has grown over 6 ½ times since June, 2005.
“At this rate, the list will be over 78,000 in just five years,” Fritz predicted.
The new Top Ten list includes the name of Randy Adams, the former police chief from the scandal-ridden city of Bell. He’s now collecting a pension of $265,000 a year.
And closer to home, the Club now includes 112 members of the Sacramento Metropolitan Fire Department – an increase of 32% in one year’s time.
But Sac Metro Chief Kurt Henke makes no apologies.
“The bottom line is I’ve buried a lot of my friends that didn’t make it to retirement or lived only a few years after retirement,” Kurt Henke told On The Money.
“With no disrespect to Miss Fritz, I think that certain entities are trying to take advantage of what I’d call the perfect storm in the economy,” Henke added.
The perfect storm is the Great Recession, which caused the stock market to tank. The most recent numbers from CalPERS show an unfunded liability of $51 billion.
“They’ve only got 60 cents for every dollar they need to pay off their pension liabilities,” Marcia Fritz asserted.
CalPERS claims to be 70 to 75% funded.
But the concern is that taxpayers may have to kick in more money to pay out future benefits for retirees. And the alternative may be even worse.
“We’re going to have to hire fewer teachers, fewer policemen, fewer prison guards, fewer everything if we don’t somehow get control over these pensions,” stated Mike Genest, a pension reform advocate with Capitol Matrix Consulting.
Genest was California’s Finance Director under Governor Arnold Schwarzenegger and is now collecting a pension of $127,000 a year.
He says pensions for public employees are too generous.
“Is this too good for what we the taxpayers can afford? I think the answer to that one is pretty clear. Yes it is.”
Genest’s firm prepared a financial analysis on public pensions for the California Foundation for Fiscal Responsibility.
The conclusions: “Across the board public pensions and public total benefits, in other words salaries, pensions, health care all added together, is substantially better than in the private sector,” Genest told CBS 13.
“It is anywhere from 10 to 50% higher once you take into account all the pensions and the retiree health care and all the benefits,” Genest stated. “That really doesn’t make sense in the long run to have the public servants making more than the people who are paying their salaries,” Genest told On The Money.
In response, CalPERS says the $100,000 Club is just a small piece of the puzzle.
“Less than two and a half percent of the employees, the retirees are in that category,” stated Robert Glazier, CalPERS Deputy Executive Officer for External Affairs.
Glazier told CBS 13, “Ninety-seven and a half percent of our employees, our retirees are receiving an average of about $2,300 a month”, or $27,600 a year in pension benefits. CalPERS is still predicting a 7.75% annual return in the pension fund, despite a 4% drop in value in the 3rd quarter this year – representing a loss of approximately $10 billion. Overall, the CalPERS fund started the year with $225.7 billion in market value and now stands at $229 billion. http://www.calpers.ca.gov/
Marcia Fritz says the $100,000 Club is growing seven times faster than all other retired government workers.
“The total retiree growth in CalPERS last year was only 4%, a little over 4%, “Fritz stated.
She added, “The $100 thousand dollar pension club grew over 30%. So it’s the fastest growing club at CalPERS. We are turning into Greece in California. We’re underwater in what we’ve promised people compared to what we can realistically pay. We just can’t do it.”
Until recently, Sac Metro firefighters paid nothing towards their pensions, but that has changed. They are now contributing 9% of their paychecks, according to Chief Henke.
“Our employees have stepped up to the plate and have been part of the solution, a big part of the solution to that problem,” Henke told CBS 13.
Other public sector workers are now paying more as well.
“The groups that are paying more are the employees,” said David Low, Chairman of Californians for Health Care and Retirement Security.
“Just recently state employees agreed to double their contributions to their own pensions, saving the taxpayers $600 billion dollars,” Low told On The Money.
Governor Jerry Brown has introduced his plan for pension reform.
He’s already getting plenty of push back from organized labor.
Meanwhile, the California legislature is holding hearings around the state on the contentious issue of pensions. The battle is indeed heating up, with billions of dollars at stake.