Last week in this space I highlighted a story out of Orange County, California that revealed that local governments had spent nearly $2 billion in 2010 paying the employee portion of public pensions. According to a report in today's Sacramento Bee, this malign trend isn't just limited to Southern California. In California's capitol city, more than 100 public workers face job losses if the government workforce doesn't start picking up the slack on pension contributions (42 police officers -- who contribute nothing to their pensions -- were already let go last year). The numbers are staggering:
[City Manager John] Shirey told the City Council on Tuesday night that half the city's budget deficit over the next two years could be eliminated if all city workers paid the employee share of their CalPERS retirement contributions.
... In Sacramento, the city has budgeted $14.2 million from its general fund this year for payments made on behalf of employees.
In addition to those contributions, the city has also budgeted $41.5 million in employer contributions toward workers' retirement funds. That means roughly $1 out of every $6 in the general fund - which pays for most basic services - goes toward employee pensions.
The situation in Sacramento underscores the reason that public employees themselves should be in favor of pension reform: the party is officially over. It's now a choice between more prudent pension budgeting or outright unemployment. If something's unsustainable, as they say, it will eventually end. The day is nigh.
Focusing on funding w/o addressing the level of pension benefits is short-sided .... and misses the ROOT CAUSE by a mile.
Most studies conclude that "cash pay" in comparable Public and Private Sector jobs (or jobs with similar risks, if no directly comparable job exists) is VERY Close.
With this as the backdrop, there is ZERO (yes ZERO) justification for the granting of future service Public Sector pensions and benefit accruals at a greater rate than that granted Private Sector workers from their employers. Yet we CONTINUE to grant accruals 2, 4 (even 6 times for safety workers) greater than what Private Sector workers get. THIS (the granting of unnecessary and excessive benefits) is the ROOT CAUSE of the problem.
Of course it hard to fund VERY GENEROUS benefits !