Battle over pension spiking brewing in the Bay Area

When Governor Jerry Brown and the California Legislature rushed through pension reform earlier this year (mainly as a fig leaf for the governor's proposed tax increases on the November ballot), many of us argued that the legislation was a half-measure, making some useful progress on the low-hanging fruit, but failing to bring about the sort of comprehensive reform that is necessary to stave off a fiscal crisis. One area where Brown and company did do some useful work, however, was on pension spiking -- the practice of sharply increasing pay in the last few years of a public worker's tenure to artificially inflate their pension total. Now, one Bay Area county where the practice was ubiquitous is fighting the reform tooth and nail.

From Daniel Borenstein at the Contra Costa Times:

The Contra Costa retirement board members are being told by their lawyer that new state legislation requires them to finally end abusive and costly pension spiking practices they have allowed for years.

The new law, signed by Gov. Jerry Brown last month, prohibits counting most payments at termination for unused vacation and sick leave as income when computing pensions. It takes effect Jan. 1, so board action could spark an end-of-the-year retirement rush by older county workers who want to grab fatter pensions before the rules change.

Some labor representatives on the retirement board are balking at implementing the new law. And the Deputy Sheriffs Association has issued a veiled threat to sue on the grounds that the change would unconstitutionally violate past promises.
...

There's big money at stake. Retirement pay for most current workers is calculated using a formula that takes into account years of service and employees' top year of salary. By adding final payments for unused leave time, Contra Costa workers currently can significantly increase that salary number and thereby receive bigger pensions for the rest of their lives.

Under Contra Costa rules, for example, one fire chief converted a $185,000 annual salary into a starting $241,000 yearly pension; another traded a $221,000 salary for a $284,000 starting retirement. And two-thirds of the retirees from the Central Contra Costa Sanitary District boosted their retirement by 25 percent to 41 percent. The new rules would do away with much of that sort of spiking, affecting workers at all pay levels.

This reform may be insufficient to cure what ails California at a structural level. But if it curbs the excesses of public sector raiders like the ones in Contra Costa County, it was still worth the candle.

Battle over pension spiking brewing in the Bay Area

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