25 UC Retirees Receive Annual Pensions Exceeding $300,000

Twenty-five University of California retirees receive more than $300,000 annually in retirement,  the California Policy Center has learned. The information, contained in documents released to CPC through a public records request, comes amidst controversy over excessive compensation at the UC system and revelations of a secret slush fund at the system’s headquarters. CPC’s findings were broadcast by KPIX San Francisco and other CBS affiliates on May 5.

The highest paid pensioner is Professor Lewis L. Judd, a UC San Diego Psychiatry professor. He receives an annual pension of $385,765.

Lewis surpasses previous pension champion, Dr. Fawzy I. Fawzy, a UCLA Psychiatry Professor who retired in 2014 on a $354,469 annual pension. Assuming annual cost of living increases of 2%, Dr. Fawzy is now estimated to be receiving around $369,000 annually. But Fawzy also draws a UC salary, one of several hundred UC retirees brought back to teach after retiring. “Recalled” retirees, such as Fawzy, are eligible to draw both a salary and a pension. Fawzy’s total university income exceeded $650,000 in 2015.

Behind the shocking numbers is a six-month battle with university administrators who tried to block release of compensation. CPC Director of Policy Research Marc Joffe originally sent the UC president’s office a Public Records Act request for pension data in December 2016. After numerous delays and negotiations with CPC General Counsel Craig Alexander, the university released a limited amount of data to Joffe today. CPC made the request in connection with its 100k Pension Club project, a website database that contains a list of 50,000 retired California public sector employees who receive annual pensions greater than $100,000. That website is at http://www.100kclub.com.

Ultimately, UC provided a list of 2015 and 2016 retirees, eight of whom are receiving $300,000 or more. The remaining 17 names were included in UC’s previous pension disclosures, last updated for 2014. UC did not provide precise cost of living adjustments for each retiree. CPC estimated their current pensions by adding 2% per year since their date of retirement.

The complete list appears below:

 

Retiree Name Appointment Type Last Employer Annual Pension Benefit Date of Retirement
JUDD, LEWIS L Teaching Faculty San Diego $ 385,765 Jul 1, 2016
MATTHEWS, DENNIS L Non-Teaching Faculty Davis 370,880 2012
FAWZY, FAWZY I Teaching Faculty Los Angeles 368,790 2014
DE PAOLO, DONALD J Non-Teaching Faculty Lawrence Berkeley 359,922 Jul 1, 2016
HOLST, JAMES E. Staff Los Angeles 358,428 2006
RUDNICK, JOSEPH A Non-Teaching Faculty Los Angeles 344,925 Jul 1, 2016
VAZIRI, NOSRATOLA D Teaching Faculty Irvine 340,410 2011
GREENSPAN, JOHN S Teaching Faculty San Francisco 339,243 2014
GRAY, JOE W Non-Teaching Faculty Lawrence Berkeley 335,482 2011
SCHELBERT, HEINRICH R Teaching Faculty Los Angeles 333,247 2013
BRESLAUER, GEORGE W Non-Teaching Faculty Berkeley 328,476 2014
MARSHALL, LAWRENCE F Teaching Faculty San Diego 324,067 2010
KRUPNICK, JAMES T Non-Teaching Faculty Lawrence Berkeley 323,957 2012
DISAIA, PHILIP J Teaching Faculty Irvine 323,839 2010
GRUNSTEIN, MICHAEL Teaching Faculty Los Angeles 322,150 Jul 1, 2016
SIEFKIN, ALLAN D Non-Teaching Faculty Davis 322,101 2014
KENNEY, ERNEST B Teaching Faculty Los Angeles 320,608 2012
DARLING, BRUCE B. Non-Teaching Faculty Los Angeles 320,403 2012
DONALD, PAUL J. Teaching Faculty Davis 317,156 2011
CHERRY, JAMES D Non-Teaching Faculty Los Angeles 315,449 2013
ROLL, RICHARD W Non-Teaching Faculty Los Angeles 315,418 2014
TILLISCH, JAN H Non-Teaching Faculty Los Angeles 311,732 Aug 1, 2016
CYGAN, RALPH W Teaching Faculty Irvine 306,734 Jul 1, 2015
BRAFF, DAVID L Teaching Faculty San Diego 306,407 Feb 1, 2015
EISENBERG, MELVIN A Teaching Faculty Berkeley 305,012 Jan 1, 2015

State’s Retired Public Workers Earn 26% More than Private-Sector Workers Still on the Job

California’s State and Local Workers Average Pay and Benefits Twice the Average for Private Sector Workers

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California debt now running closer to Italy and Portugal, new study finds

New California Policy Center Study Offers Next Generation Infrastructure Solutions

Top 10: Vernon Leads California Cities with More Public Employees Than Residents

For Immediate Release
October 11, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(714) 573-2231

Vernon, California is so famous for its history of corruption that it was the municipal star of season 2 of HBO’s “True Detective” series. Now the diminutive L.A. County town can claim another achievement: Vernon is the only California city with more public employees than residents.

Vernon’s 210 residents are served by 271 city employees, according to data on the California state controller’s website. 

No. 2 Irwindale is a distant second – though just a 30-minute drive (could be hours – depends on traffic in L.A.’s tortuous downtown) from Vernon. In that East Los Angeles County city, there’s one government employee for every one of Irwindale’s 1,415 residents. San Francisco is the only major city on the Top 10, with one government employee for every 22.7 residents. 

Here’s the Top 10:

top10cities Most Public Employees

Public employees in Vernon earn an average of $107,848 (plus benefits of $37,571). That’s much higher than nearby hegemon, Los Angeles, where public employees average $83,356 (plus benefits of $12,620).

Several top Vernon officials earn salaries in excess of $300,000:

Mark Whitworth (City Administrator): $402,335
Daniel Calleros (Police Chief): $361,644
Michael Wilson (Fire Chief): $361,359
Carlos Fandino Jr. (Director of Gas and Electric): $324,354
Andrew Guth (Fire Battalion Chief): $304,243

While many of Vernon’s city employees continue earn six-figure salaries, the average city resident earns far less. Per capita income in 2010 was $19,973. Median household income in 2010 was $38,500 – down dramatically from 2000, when it was over $60,000. According to the 2010 U.S. Census, 5% of the population lived below the federal poverty line. In 2000, it was 0%.

How does the city fund that dramatic gap in income? By taxing utilities for industry in the city. But because Vernon’s utility rates are among the highest in California, many businesses are moving out. That’s going to put pressure on city officials to trim public services – or to capitulate to the logic of history and become part of a neighboring city. How about Bell?

Conor McGarry is a fall Journalism Fellow at California Policy Center. Andrew Heritage contributed data analysis. Source: California state Controller’s Office.

ABOUT THE CALIFORNIA POLICY
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

Reporter's Notebook: CPC Offers Expert Help with Local School Bond Reporting

For Immediate Release
September 23, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(714) 573-2231

SACRAMENTO, Calif. — Well down the November ballot, obscured by the high-profile battle for the White House, Californians will find more than 100 local school bond measures representing hundreds of millions of dollars of new public debt.

“The bond process is like a rigged game of high-stakes poker,” says CPC president Ed Ring. “Taxpayers may have a seat at the table, but for years haven’t stood a chance against politicians, government union leaders, construction companies and investors colluding for political and financial gain.”

The California Policy Center’s government finance experts can help you show readers why these bond measures matter.

ED RING is president of the California Policy Center. He directs the organization’s research projects and is also the editor of the email newsletters Prosperity Digest and UnionWatch Digest. His work has been cited in the Los Angeles Times, Sacramento Bee, Wall Street Journal, Forbes, and other national and regional publications.

MARC JOFFE is a California Policy Center financial analyst. His research has been published by the California State Treasurer’s Office, the Mercatus Center and the Macdonald-Laurier Institute among others. Before starting PSCS, Marc was a senior director at Moody’s Analytics. He earned his MBA from New York University and his MPA from San Francisco State University.

KEVIN DAYTON authored the landmark study “For the Kids: California voters must become wary of borrowing billions from wealthy investors for educational construction.” That study tracked passage over 14 years of more than 900 California school bonds worth $146.1 billion, and inspired new law (AB 2116, signed this summer by Gov. Jerry Brown) that imposes limits and oversight of local bonds. He is a 1992 graduate of Yale University.

ABOUT THE CALIFORNIA POLICY
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

 

The Highest-Paid Public Employee in the Poorest County in California

Raymond J. Cordova, county executive officer of Imperial County, earns $282,093 with total pay and benefits. That’s 17 times the median per capita income of Imperial County residents, who earned just $16,409. By comparison, San Francisco’s highest paid public official, Chief Investment Officer William J. Coaker Jr., made $633,723 – about 13 times SF’s median income. San Francisco got the better deal: divide salary by population, and we find that San Francisco residents paid just 76 cents each for Coaker; Imperial County residents paid $1.60 each for Cordova.

Cordova is a low-profile guy in a low-profile community. With just 156,000 residents, Mexico-adjacent Imperial County is almost a postscript to the state. Cordova himself is nearly anonymous. The one photo of him on the internet – in which the sartorially splendid CEO is largely blocked from view by Supervisor Raymond Castillo – is the only one we could find; the county did not respond to requests for comment and a photo.

That made it hard for us to personally congratulate Ralph Cordova Jr., who, as Harry Bailey says of his brother George in the classic It’s a Wonderful Life, may be “the richest man in town.”

Imperial County runners-up: Director of Child Support Services Gustavo Roman ($241,717) and Public Defender Timothy J. Reilly ($224,138).

By Conor McGarry. Sources include State Controller’s Office.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

Gov. Brown says yes to school finance reforms inspired by CPC study

For Immediate Release
August 18, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(714) 573-2231

SACRAMENTO — It’s rare that a think-tank study produces real reform, but it happened today when Gov. Jerry Brown signed into law a bill designed to stop school officials before they recklessly spend again.

Assembly Bill 2116 began one year ago with a July 2015 California Policy Center study.

For the Kids: California voters must become wary of borrowing billions from wealthy investors for educational construction,” by CPC researcher Kevin Dayton, tracked passage over 14 years of more than 900 California school bonds worth $146.1 billion.

Inspired by that CPC study, Rep. James Gallagher (R-Sacramento Valley) drafted a bill to limit the ability of school districts to take on debt through new bonds – even authorizing county auditors to stop spending if bond “funds are not being spent appropriately.”

“I am pleased that the governor saw the need to increase oversight of school bonds,” Gallagher said in a press release. “Borrowing for bonds has exploded in the last decade, and it is more important than ever that school construction bond funds be fiscally sound and their financing mechanisms transparent.”

In addition to waste and abuse in the management of those school bonds, Dayton found another problem: the surge in school bond debt has produced a massive “wealth shift” upward – from taxpayers of relatively modest means to “wealthy investors who buy state and local government bonds as a relatively safe investment that generates tax-exempt income through interest payments.”

Gallagher’s bill implements California Policy Center recommendations to kill one of the most pernicious municipal finance practices. The new law limits the ability of bond advisers to exaggerate property values when calculating the taxpayer burden.

“We dedicated tremendous resources to producing this study, and we were naturally pleased to see Rep. Gallagher act on it with such energy,” said Ed Ring, CPC’s president. “We’re especially delighted that the state’s school kids have been placed ahead of the interests of consultants, government unions, politicians and Wall Street banking interests.”

“It’s great to see intellectual research and analysis turn into practical improvements in law,” said Dayton.

ABOUT ANALYST KEVIN DAYTON
Kevin Dayton is a policy analyst for the California Policy Center, an influential writer, and the author of frequent postings about generally unreported California state and local policy issues on the California Policy Center’s Prosperity Forum and Union Watch, as well as on his own website LaborIssuesSolutions.com. Dayton is a 1992 graduate of Yale University. Follow him on Twitter at @DaytonPubPolicy.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

SUITABLE FOR QUOTING: Expert Responses to CalPERS' Monday, July 18 Earnings Report

For Immediate Release
July 18, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(714) 573-2231

California Policy Center Responses to Monday, July 18, 2016 Earnings Report

For reporters and commentary writers, the California Policy Center can make available two public finance experts. We also offer for publication these immediate responses to the CalPERS report:

 

ED RING: is president of the California Policy Center. He directs the organization’s research projects and is also the editor of the email newsletters Prosperity Digest and UnionWatch Digest. His work has been cited in the Los Angeles Times, Sacramento Bee, Wall Street Journal, Forbes, and other national and regional publications.

“Current gains in the market are engineered by low interest rates and stock buy-backs. It is an unsustainable bubble.”

“CalPERS claims that infrastructure investments helped their portfolio returns, but they have less than 1% of their assets invested in infrastructure.

“CalPERS claims ‘fixed Income earned a 9.29 percent return’ in their most recent fiscal year. This is impossible to do without extremely high risk. Most fixed income investments today have returns of 3% or less.”

“If CalPERS is truly committed to transparency, they’ll stop investing in private equity, which by its very nature is not transparent.”

“If CalPERS truly believes they can earn 7.5%, or even 6.5%, then they should set a ceiling on the percent of payroll they demand from cities and counties, instead of perpetually increasing it.”

“If CalPERS truly believes they can earn 7.5%, then they’ll use that rate, instead of 3.8%, when calculating how much to charge a city or county that wants out of their system.”

“CalPERS depends on a Fed engineered asset bubble to remain solvent. As such, they are complicit with the Wall Street financial interests that control our national politicians and whom their union board members regularly decry.”

 

MARC JOFFE is a California Policy Center financial analyst and founder of Public Sector Credit Solutions in 2011. PSCS research has been published by the California State Treasurer’s Office, the Mercatus Center and the Macdonald-Laurier Institute among others. Before starting PSCS, Marc was a senior director at Moody’s Analytics. He earned his MBA from New York University and his MPA from San Francisco State University.

“This is the second year of returns well below 7.5%. In 2015, CalPERS returned only 2.4%. The cumulative impact will be greater stress on local budgets as cities, counties and special districts will have to increase their pension contributions to make up for the shortfall.”

 

ABOUT THE CALIFORNIA POLICY
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

FOR PUBLICATION: Ed Ring Response to CalPERS' disastrous 2015-16 earnings report

For Immediate Publication
July 18, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(714) 573-2231

Latest earnings report is more evidence California retirement agency will reform or die

By Ed Ring | California Policy Center

The officials who run California’s public-employee retirement system should have released today’s earnings report with sound effects – a flugelhorn, maybe, or horror-movie screams.

Through the year ending June 30, the California Public Employee Retirement System earned just 0.61% on its investments – not even close to it 7.5% projection.

CalPERS is the nation’s largest public employee pension fund. Like all such funds, it relies on investment earnings to pay retired public employees far more in retirement benefits than those employees – along with their employers – deposited into those funds during their careers. The better the market, the less CalPERS has to lean on local government employers and employees for cash. But when the market goes south, as it has, CalPERs has to push its contributors for more cash.

Today’s report includes grim warnings about future earnings too. And that means everyday Californians should expect government service cuts, higher taxes, delayed maintenance of critical infrastructure, and a push to take on great government debt.

The earnings report directly contracts the system’s recent bullish assessments of fund performance. When the Orange County Register in January asked why CalPERS was still predicting a return of 7.5% when the stock market was producing more anemic results, fund officials offered a political rather than responsible financial response: even a modest downward estimate would force them to demand that local officials bail out the fund. That “would have caused financial strain on many of California’s local municipalities that are still recovering from the financial crisis,” CalPERS officials said in a press release.

In March, the agency was at it again, arguing that its projection of 7.5% returns was “not unrealistic” – is in fact historically reasonable because CalPERS has occasionally hit that number.

Then, reality began to set in. Last month, Ted Eliopoulos, the system’s Chief Investment Officer, warned the public that the next five years will be “a challenging market environment for us. It is going to test us.”

Our own recent analysis shows Eliopoulos is right.

Our analysis relies on three measures of stock-market health: ratios of price/earnings, price/sales, and price/GDP. They show the stock market is overvalued by about 50 percent, suggesting that pension funds are headed for a major correction.

At the moment, California’s state and local agencies contribute an average of about 33 percent of their payroll to CalPERS and other state/local pension funds. In the event of a market slide of 50 percent, followed by annual returns of 5 percent per year, with no changes to retirement benefits, we estimate the required annual contribution from local governments would rise to a crushing 80 percent of payroll. The total cost to California’s taxpayers of keeping CalPERS and the other state/local pension systems afloat: an additional $50 billion per year.

If market returns are just one point lower – 4 percent instead of 5 percent – we estimate local governments having to make annual payments equal to a staggering 113 percent of their payroll. That’s an additional $86 billion per year.

There are ways to preserve the retirement funds and protect taxpayers. But if investment performance falters, reducing the formulas used to calculate defined benefit pensions will have to be part of the solution. Lowering or even suspending cost-of-living increases for retirees and reducing the rate at which pension benefits are earned by new and existing employees would be a good start, as would capping pension benefits and raising the age of eligibility.

But implementing reforms is a political impossibility – unless the people running CalPERS and the other pension systems stop fighting to preserve the status quo. They need to work their client agencies and their union-dominated boards of directors to accept benefit reductions that will restore financial sustainability to these funds without crushing taxpayers. They might even exercise true creativity, and explore new portfolio strategies such as investing in California’s neglected infrastructure.

There’s little chance of that so long as denial characterizes the agency’s response. CalPERS officials accompanied today’s weak earnings report with cheery language. The near-zero return rate was a “positive net return” that the agency “achieved” “despite volatile financial markets and challenging global economic conditions.”

For his part, Eliopoulos, the fund’s top investment officer, expressed a kind of optimism about the future. So be it. But if he and his CalPERS colleagues truly want to prove their optimism – if they are so sure they can hit their numbers – they should freeze the amount they demand from cities and other agencies at a fixed percent of payroll.

That would mean putting an end to the blank checks Californians have sent to Sacramento. And that news could be heralded by something like a trumpet blast of angels or a marching band.

 

ABOUT THE AUTHOR
Ed Ring is president of the California Policy Center. He directs the organization’s research projects and is also the editor of the email newsletters Prosperity Digest and UnionWatch Digest. His work has been cited in the Los Angeles Times, Sacramento Bee, Wall Street Journal, Forbes, and other national and regional publications.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

Red Flags: New Study Offers Grim Warning for California Pension Funds

For Immediate Release
July 12, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(714) 573-2231

Stock market overvaluation will lead to ‘major correction,’ trigger benefits cuts and tax hikes

SACRAMENTO, Calif. – There are more red flags for public-sector pension funds that rely on stock investments for most of their income, a new California Policy Center study finds.

Read the entire study here.

“Three key market indicators show that publicly traded U.S. stocks are overvalued by about 50 percent, suggesting that pension funds are headed for a tough correction,” says CPC President Ed Ring, author of “How a Major Market Correction Will Affect Pension Systems, and How to Cope.”

Ring says the likely downturn will have grave implications for all Californians – not just those who depend upon the pension funds for retirement income. Lower returns on their investments will force pension funds to cut payments to government retirees or require California governments to act dramatically to cover the revenue shortfall.

Using a long-range cash flow model that simulates pension fund performance, Ring calculated the impact on California’s state and local government employee pension funds based on a market slide of 50% in 2017, followed by annual returns of 5% per year. In this case, with no changes to retirement benefits, the required annual contribution from governments would rise to 80% of payroll, costing an additional $50 billion per year. In another case, with post-crash returns projected at only 4% per year, the model estimated annual payments to rise to a staggering 113% of payroll, costing an additional $86 billion per year. Currently, California’s pension funds collect from state and local agencies an amount equivalent to about 33% of their payroll.

The study also provides several specific estimates of how much pension benefits would have to be cut (retirement age, annual multiplier, and COLA) after a severe market correction in order to keep the annual contributions from state and local agencies level at 33% of payroll.

The CPC study includes a link to download Ring’s spreadsheet so that anyone can test a variety of pension-fund assumptions.

You can download the spreadsheet here.

Ring’s prediction of an impending correction cites three key stock market ratios:

  • Price/earnings, now at one of the market’s historic highs
  • Price/sales, now at a 50-year high
  • Stocks/GDP, now near its 60-year high

Ring predicts he’ll have many critics.

“It is easy enough to step back and claim that the rules have changed, that these unusually high stock-market multiples can be sustained for additional decades, and that productivity improvements will enable the U.S. economy to support both massive debt and an aging population,” Ring writes. “Those who argue this position are betting that the U.S. economy will remain a stable refuge for wealth fleeing far more tumultuous economies elsewhere in the world. Staking the future of pension fund systems on this argument is a dangerous gamble.”

Ring’s study appears even as officials at California Public Employees Retirement System, the nation’s largest retirement system, prepare Californians for a poor earnings report next week.

Analyst Ed Ring is available for media interviews. Direct press inquiries to:

Ed Ring
President, California Policy Center
Ed@CalPolicyCenter.org
(916) 524-7534

Or

Will Swaim
Vice President, California Policy Center
Will@CalPolicyCenter.org
(714) 573-2231

ABOUT THE AUTHOR
Ed Ring is president of the California Policy Center. He directs the organization’s research projects and is also the editor of the email newsletters Prosperity Digest and UnionWatch Digest. His work has been cited in the Los Angeles Times, Sacramento Bee, Wall Street Journal, Forbes, and other national and regional publications.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

 

UC Berkeley's 'income inequality' critics earn in top 2%

For Immediate Release
June 23, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(714) 573-2231

 

Income inequality at UC Berkeley worse than world’s-worst Haiti

SACRAMENTO, Calif. – Scholars from the University of California at Berkeley have played a pivotal role in making income inequality a major issue in 2016 political campaigns. But while they decry the inequities of the American capitalist system, Berkeley professors are near the top of a very lopsided income distribution prevailing at the nation’s leading public university, according to a new study by the California Policy Center.

You can read the full study here.

Marc Joffe, the study’s author, examined state salary data to determine that inequality among the 35,000 UC Berkeley employees is worse than that of Haiti.

Ironically, income inequality at Cal shows up dramatically in its Center for Equitable Growth (CEG), the university’s home to critics of income inequality.

According to the most recent data:

  • Center Director Emmanuel Saez received total wages of $349,350.
  • Its three advisory board members are also highly compensated Cal professors: David Card (making $336,367 in 2014), Gerard Roland ($304,608) and Alan Auerbach ($291,782).
  • Aside from their high wages, all four professors are eligible for a defined-benefit pension equal to 2.5% times final average salary times number of years employed.

All four are in the top 2% of UC Berkeley’s salary distribution, and that Saez is in the top 1%.

Says Joffe: “It could be that an effective researcher has to know his or her subject: thus to the study the top 1%, we suppose one has to be in the top 1%.”

Among Berkeley’s most prominent critics of income inequality is former Clinton Labor Secretary Robert Reich, Chancellor’s Professor of Public Policy at the University of California at Berkeley. Reich receives somewhat lower compensation than the four CEG economists, collecting $263,592 in pay during 2014. But Reich’s salary was likely not his only source of income in 2014. Reich makes himself available to give paid speeches through a number of speaking bureaus, charging a fee estimated at $40,000 per talk.

“If UC Berkeley economists are really opposed to income inequality and are concerned about low-paid workers, they might consider sharing some of their compensation with the teaching assistants, graders, readers and administrative staff at the bottom of Cal’s income distribution,” Joffe concludes.

ABOUT THE AUTHOR
Study author Marc Joffe is the founder of Public Sector Credit Solutions and a policy analyst with the California Policy Center. Joffe founded Public Sector Credit Solutions in 2011 to educate policymakers, investors and citizens about government credit risk. PSCS research has been published by the California State Treasurer’s Office, the Mercatus Center and the Macdonald-Laurier Institute among others. Before starting PSCS, Marc was a senior director at Moody’s Analytics. He earned his MBA from New York University and his MPA from San Francisco State University.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

Major-party presidential candidates offer no solutions on federal retirement crises

For Immediate Release

June 2, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(714) 573-2231

SACRAMENTO — Californians may be accustomed to living with the specter of a public pension crisis. But the federal government’s problem with its retirement systems – including Social Security – is far worse, and yet none of the three remaining major-party candidates for president has a plan to do anything about it.

The California Policy Center offers “Comparing Federal and California State Retirement Exposures,” a comparison of California and federal exposure to pension liability. You can read Marc Joffe’s full study here.

Key findings include:

On Social Security
DEBT VS. ASSETS: “Although discussion of Social Security often revolves around the trust fund, this emphasis is misplaced. Unlike CalPERS or CalSTRS, the Social Security trust fund does not contain real assets. Instead, it holds special-issue U.S. Treasury bonds. Total federal assets of $3.2 trillion are easily exceeded by $13.2 trillion of federal debt securities held by the public and $8.2 trillion of other liabilities. So the IOUs held by the Social Security trust fund compete with claims held by many external parties for a relatively small pool of federal assets.”

IMPACT ON FEDERAL DEFICIT: Using projections from the Social Security Actuaries, Joffe reports that the Social Security program is expected to add $371 billion to the annual federal budget deficit (in constant 2015 dollars) by 2040. The Social Security Actuaries say that projecting higher costs (for example, an increase in life expectancy), adds $640 billion (again, in constant dollars) to the annual deficit.

On Federal Employee Retirement Programs
UNFUNDED LIABILITIES: “The Civil Service Retirement and Disability Fund, paid $81 billion of retirement benefits in fiscal year 2015, or 2.49% of federal revenues. The system reported an Unfunded Actuarial Liability of $804.3 billion and Assets of $858.6 billion, implying a funded ratio of only 51.6%.” The Defense Department also offers pensions, and its system is worse than the Civil Service program with a funded ratio of just 35%.

Washington has Bigger Problems – and More Powerful Financial Tools
Joffe concludes that the federal government has tools to deal with a public pension crisis that the states do not:

Constitutional: “In an emergency, Congress and the president can cut or even terminate benefits to Social Security recipients, federal civilian retirees or veterans. This is not the case for the state of California.”

Currency control: “A central government controlling an international reserve currency does have more fiscal flexibility than a state which is legally obligated to balance its budget each year. So the federal government’s ability to absorb pension obligations is greater than California’s. This is fortunate, because the federal governments exposure is so much greater.”

The complete California Policy Center study is available here.

ABOUT THE AUTHOR
Study author Marc Joffe is the founder of Public Sector Credit Solutions and a policy analyst with the California Policy Center. Joffe founded Public Sector Credit Solutions in 2011 to educate policymakers, investors and citizens about government credit risk. PSCS research has been published by the California State Treasurer’s Office, the Mercatus Center and the Macdonald-Laurier Institute among others. Before starting PSCS, Marc was a senior director at Moody’s Analytics. He earned his MBA from New York University and his MPA from San Francisco State University.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

 

Taxes up, retirements slashed, governments in crisis: Ed Ring on California’s coming public pension apocalypse

For Immediate Release

May 18, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(949) 274-1911

SACRAMENTO – America’s already troubled public-employee pension funds will go broke in the next economic slowdown, creating the likelihood that millions of public employees will see their retirements slashed – even as state and local governments raise taxes dramatically and scramble to find new sources of cash.

That’s analyst Ed Ring’s conclusion in “The Coming Public Pension Apocalypse, and What to Do About It,” a path-breaking new study from the California Policy Center.

Read the study here.

“It’ll be the worst financial crisis in nearly a century, and California is destined to be among the hardest hit,” said Ring, president of the California Policy Center.

Ring cites as evidence three nearly unprecedented trends already visible in the U.S. economy:

  • HISTORIC DEBT: “Consumer debt, commercial debt, financial debt, state and federal debt (not including unfunded liabilities, by the way), is now estimated at 340% of U.S. GDP. The last time it was this high was 1929” – the year of the stock market crash that signaled the beginning of the Great Depression.
  • LIMITED LIQUIDITY: Because of that debt, few consumers and business can take advantage of historic low rates on borrowing. That eliminates interest rates as a key tool of economic stimulus. “Low interest rates – now at or near zero – no longer stimulate a net increase in total borrowing,” concludes Ring.
  • EXAGGERATED RETURNS ON PENSION INVESTMENTS: In determining their debt, pension funds estimate returns on investments of 7.5%. That’s already generally higher than actual investment returns. Any future stock market drop will lead to far lower returns on investments for all public-employee pension plans – and that will generate a crisis in payouts to retirees.

In his most important contribution, Ring calculates California governments’ total required pension contributions at various returns on investment and breaks out the normal versus the unfunded contributions. That has never been done.

“The implications of this are staggering,” Ring says. “A city that pays 10% of its total revenues into the pension funds – and there are plenty of them – at an ROI (return of investment) of 7.5% and an honest repayment plan for the unfunded liability, should in fact be paying 17% of their revenues into the pension systems.” If investment returns drop one percentage point, to 6.5%, “these cities would have to pay 24% of their revenue to pensions. At 5.5%, that number becomes 32%, and so on.

“It is impossible for these levels of payments to be sustained, but that’s exactly what will be necessary if the markets drop, and reforms are not implemented.”

The coming crisis – normally understated, Ring calls it “an apocalypse” – is not well understood by reporters or even public officials. Part of the problem is a lack of government transparency.

“One of the biggest reasons is the lack of good financial information about California’s government worker pension systems,” Ring writes. As an example, he cites the elimination of the California State Controller’s “Public Retirement Systems Annual Report.”

“That report used to consolidate all of California’s 80 independent state and local public employee pension systems into one set of financials, but they discontinued the practice in 2013,” Ring notes. “The most recent one issued, released in May 2013, was itself almost two years behind with financial data (using FYE 6-30-2011 financial statements), and it was almost three years behind with actuarial data used to report funding ratios (using FYE 6-30-2010 actuarial analysis). Now the state controller has created a By the Numbers website, but it’s hard to use and does not provide summaries.”

The report is not all gloomy. Ring offers several suggestions to mitigate the coming financial apocalypse. Reforms include adjusting pension formulas, strategies for economic growth and financial-industry reforms.

Analyst Ed Ring is available for media interviews. Direct press inquiries to:

Ed Ring
President, California Policy Center
Ed@CalPolicyCenter.org
(916) 524-7534

Or

Will Swaim
Vice President, California Policy Center
Will@CalPolicyCenter.org
(714) 573-2231

Sonoma and Marin county officials voted to hike their own retirement pay

For Immediate Release

April 29, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(714) 573-2231

 

Retroactive pension bump likely violated multiple state transparency and accounting laws

Sacramento — County supervisors members and other senior county officials in Marin and Sonoma may have violated state law when voting for massive retroactive pension increases for themselves and other government employees, according to John Moore’s analysis published by the California Policy Center.

The retirement pay hikes were available to all county employees, and retroactive to the employee’s date of hire.

In both counties, officials paid outside attorneys to assert state laws were not mandatory.

The apparent violations were initially discovered by the county’s respective civil grand juries following citizen complaints. The Marin grand jury report documented 38 violations of the government code.

Section 7507 of the California Government Code is supposed to ensure that the public knows how tax dollars are spent and that spending increases do not violate constitutional debt limits. Under 7507, before increasing pension benefits, officials are required to:

  1. Secure the services of an enrolled actuary to determine the future annual cost of an increase in order to ensure they are aware of the cost and that the spending does not require voter approval; and
  2. Provide the public with the information at a noticed board meeting so taxpayers know how their money is being spent and can respond to the proposed increase.

In both counties, staff could identify no documents indicating that supervisors relied on actuarial calculations of future annual costs, and were therefore unable to meet the public-disclosure requirements.

Ken Churchill, who filed the grand jury complaint in Sonoma County, said, “Since 2000, our pension costs have grown about 500%, while our unfunded pension liabilities and pension bond debt have grown about 900%. Now we have no money to maintain our roads and basic infrastructure.”

Marin County resident David Brown filed a lawsuit in Marin. Brown said, “I believe that our county government should comply with the law and am simply asking that a judge determine if laws were violated – and if so, what the appropriate remedy should be.”

Find the complete report with links to the grand jury’s reports and the county’s responses here.

Read the story of David Brown’s lawsuit here.

Retroactive pension increases erupted in other California counties with their own pension systems, including: Alameda, Contra Costa, Fresno, Imperial, Kern, Los Angeles, Mendocino, Merced, Orange, Sacramento, San Bernardino, San Diego, San Joaquin, Santa Barbara, Stanislaus and Ventura.

Grand juries in those counties along with taxpayer groups can investigate how the increases were enacted in their county to ensure they complied with the law.

Contacts for additional information:

John Moore
(831) 655-4540
jmoore052@gmail.com

David Brown
Marin County Citizens for Sustainable Pensions
(415) 987-1619
ahb1027@yahoo.com

Ken Churchill
New Sonoma
(707) 578-3403
ken@churchill-cellars.com

Transparency organization wins 'total victory' in Lynwood records case

For Immediate Release
April 26, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(949) 274-1911

SACRAMENTO  – The city of Lynwood will pay $22,000, part of a judge’s decision that city officials failed to disclose to the California Policy Center the names and salaries of Lynwood public employees.

You can read the April 22 judgment here.

CPC President Ed Ring declared the Los Angeles Superior Court judgment “a total victory for government transparency and the First Amendment.”

“In the back of every Californian’s mind is – or should be – the specter of Vallejo, Stockton and San Bernardino, cities driven into bankruptcy by reckless spending and excessive public-employee compensation,” said Ring. “The broader message in our legal win in is that vigilance alone isn’t enough. Without the threat of litigation, it seems, organizations like CPC and ordinary citizen watchdogs often haven’t got a prayer of seeing their city’s finances.”

CPC attorney Chad D. Morgan agreed, saying, “Unfortunately, the city refused to comply with the Public Records Act until CPC filed a lawsuit.”

The legal battle began in October 2014 when the public records were first requested. Nearly two months later, on December 2, Lynwood responded with a 2013 report that included job titles and compensation data but not employee names. The city dug in, refusing to release employee names.

In April 2015, CPC asked the superior court to step in. Months later, following a volley of demands and refusals for employee names and their compensation, Lynwood handed over two files. One of those was “a PDF file containing 146 pages listing 165 employee names, positions and information about each employee’s gross pay and benefits.” But the second file cast doubts on the first: it included compensation data for 250 positions – without names.

In his response to the release, Morgan pointed out the disparity and noted that “certain ‘lower-level’ positions” were missing from the second file. More alarming, the documents did not include the names of several executives and managers – including the city manager, council members, mayor, deputy city clerk, public information officer, and interim city manager.

Morgan wondered why the city spent so much time and money refusing to produce documents it was required to produce.

“The city’s refusal to provide the documents and subsequent delays caused us to incur $22,000 in legal fees to enforce the Public Records Act,” Morgan said. “This is in addition to whatever they paid their own outside counsel in defense of their frivolous attempt to conceal public records.”

McCune & Harber represented Lynwood.

ABOUT CHAD D. MORGAN
Chad Morgan represents the California Policy Center in matters related to the Public Records Act. As a public records attorney, Morgan has represented clients in litigation in courts throughout California. While still in law school, he served as chief of staff for a member of the state Legislature. Morgan is a graduate of Western State University College of Law and received his undergraduate degree in Business Administration from California State University, Fullerton.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

Citing CPC study, new Assembly bill seeks to stop runaway school bond debt

For Immediate Release
March 24, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(949) 274-1911

SACRAMENTO — A California Assemblyman hopes to stop school officials before they recklessly spend again.

AB 2116 author Rep. James Gallagher (R-Sacramento Valley) says his bill would limit the ability of school districts to take on debt through new bonds – even authorizing county auditors to stop spending if bond “funds are not being spent appropriately.”

“Borrowing for school construction has exploded in the last decade,” Gallagher said.“As borrowing hits record highs, it is more important than ever that school construction bond funds be fiscally sound, and their financing mechanisms transparent.

“AB 2116 ensures that future school construction bonds are subject to stricter scrutiny and transparency.”

Gallagher said his Assembly bill is built on research and recommendations in a July 2015 California Policy Center study.

“For the Kids: California voters must become wary of borrowing billions from wealthy investors for educational construction,” by CPC researcher Kevin Dayton, tracked passage over 14 years of more than 900 California school bonds worth $146.1 billion.

In addition to waste and abuse in the management of those school bonds, Dayton found another problem: the surge in school bond debt has produced a massive wealth shift upward – from taxpayers of relatively modest means to “wealthy investors who buy state and local government bonds as a relatively safe investment that generates tax-exempt income through interest payments.”

Gallagher’s bill would implement three of the California Policy Center’s recommendations – requiring independent audits of a bond’s drain on local tax revenue; establishing annual reviews of bond issuing and repayment; and empowering auditors to halt spending that is inconsistent with the bond’s purpose.

The bill will be heard April 6 at 1:30 pm in the Assembly Education Committee of the California State Capitol, Room 2116.

ABOUT ANALYST KEVIN DAYTON
Kevin Dayton is a policy analyst for the California Policy Center, a prolific writer, and the author of frequent postings about generally unreported California state and local policy issues on the California Policy Center’s Prosperity Forum and Union Watch, as well as on his own website www.LaborIssuesSolutions.com. His other policy reports include Legacy Issues: The Citizens for California High-Speed Rail Accountability 2014 Business Plan for the California High-Speed Passenger Train System and four editions of Are Charter Cities Taking Advantage of State-Mandated Construction Wage Rate (“Prevailing Wage”) Exemptions? — a publication that sparked high-profile policy debates in cities throughout California and in the state legislature. His 2003 journal article “Labor History in Public Schools: Unions Get ’Em While They’re Young,” endures as the leading critical analysis of that movement. Dayton is a 1992 graduate of Yale University. Follow him on Twitter at @DaytonPubPolicy.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

Annual ranking: California's best and worst counties by pension burden

For Immediate Release
March 15, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(949) 274-1911

SACRAMENTO — Years after the Great Recession slammed their Wall Street investments, at least four California counties have broken through the 10 percent ceiling, spending one of out of every $10 to fund their government-employee retirement programs.

The resulting strain on local budgets, called the pension burden, is one of the revelations in California Policy Center’s latest analysis of county reports.

Study author Marc Joffe said county pension burdens may be worse than his analysis reveals.

“Because pension systems usually require their actuaries to assume high rates of return on their assets, it’s arguable that counties understate their actual pension burdens,” Joffe said. “The financial stress on local governments is likely more critical than even our numbers reveal.”

Four California counties reported their pension contributions now exceed 10 percent of total revenues: Santa Barbara County (13.1 percent), Kern County (11 percent), Fresno County (10.7 percent) and San Mateo County (10 percent).

A fifth county, Merced, is also expected to report that its required contributions topped 10 percent of 2015 revenue when it files its audit.

“For years, public employee union leaders denied the pension burden was even close to 10 percent,” California Policy Center president Ed Ring noted. “This study shows the burden in some places is now approaching 15 percent of total revenues.”

The surveyed counties, which account for more than 95 percent of California’s population, made over $5.4 billion in pension contributions during the fiscal year. These counties also made $660 million of debt service payments on pension obligation bonds, raising total pension costs to over $6 billion last year.

That figure accounts for about one sixth of all California state and local pension contributions (not including payments on pension obligation bonds), estimated at $30.1 billion in 2014.

As investment markets remain relatively flat, it seems likely that many California counties will bow to pressure to cut government services or to raise cash through debt instruments or taxes.

The complete California Policy Center study is available here.

ABOUT THE AUTHOR
Study author Marc Joffe is the founder of Public Sector Credit Solutions and a policy analyst with the California Policy Center. Joffe founded Public Sector Credit Solutions in 2011 to educate policymakers, investors and citizens about government credit risk. PSCS research has been published by the California State Treasurer’s Office, the Mercatus Center and the Macdonald-Laurier Institute among others. Before starting PSCS, Marc was a senior director at Moody’s Analytics. He earned his MBA from New York University and his MPA from San Francisco State University.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

Study: Stress test reveals Fresno County ranks No. 3 among California’s worst for pension burden

For Immediate Release
March 15, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(949) 274-1911

Annual ranking: California’s best and worst counties by pension burden

SACRAMENTO — Years after the Great Recession slammed their Wall Street investments, at least four California counties have broken through the 10 percent ceiling, spending one of out of every $10 to fund their government-employee retirement programs.

The resulting strain on local budgets, called the pension burden, is one of the revelations in California Policy Center’s latest analysis of county reports.

Study author Marc Joffe said county pension burdens may be worse than his analysis reveals.

“Because pension systems usually require their actuaries to assume high rates of return on their assets, it’s arguable that counties understate their actual pension burdens,” Joffe said. “The financial stress on local governments is likely more critical than even our numbers reveal.”

Four California counties reported their pension contributions now exceed 10 percent of total revenues: Santa Barbara County (13.1 percent), Kern County (11 percent), Fresno County (10.7 percent) and San Mateo County (10 percent).

A fifth county, Merced, is also expected to report that its required contributions topped 10 percent of 2015 revenue when it files its audit.

“For years, public employee union leaders denied the pension burden was even close to 10 percent,” California Policy Center president Ed Ring noted. “This study shows the burden in some places is now approaching 15 percent of total revenues.”

The surveyed counties, which account for more than 95 percent of California’s population, made over $5.4 billion in pension contributions during the fiscal year. These counties also made $660 million of debt service payments on pension obligation bonds, raising total pension costs to over $6 billion last year.

That figure accounts for about one sixth of all California state and local pension contributions (not including payments on pension obligation bonds), estimated at $30.1 billion in 2014.

As investment markets remain relatively flat, it seems likely that many California counties will bow to pressure to cut government services or to raise cash through debt instruments or taxes.

The complete California Policy Center study is available here.

ABOUT THE AUTHOR
Study author Marc Joffe is the founder of Public Sector Credit Solutions and a policy analyst with the California Policy Center. Joffe founded Public Sector Credit Solutions in 2011 to educate policymakers, investors and citizens about government credit risk. PSCS research has been published by the California State Treasurer’s Office, the Mercatus Center and the Macdonald-Laurier Institute among others. Before starting PSCS, Marc was a senior director at Moody’s Analytics. He earned his MBA from New York University and his MPA from San Francisco State University.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

You’re No. 1! New study shows Santa Barbara County suffers state’s highest pension burden

For Immediate Release
March 15, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(949) 274-1911

Annual ranking: California’s worst counties for pension burden include Santa Barbara, Kern, Fresno

SACRAMENTO — Years after the Great Recession slammed their Wall Street investments, at least four California counties have broken through the 10 percent ceiling, spending one of out of every $10 to fund their government-employee retirement programs.

The resulting strain on local budgets, called the pension burden, is one of the revelations in California Policy Center’s latest analysis of county reports.

Study author Marc Joffe said county pension burdens may be worse than his analysis reveals.

“Because pension systems usually require their actuaries to assume high rates of return on their assets, it’s arguable that counties understate their actual pension burdens,” Joffe said. “The financial stress on local governments is likely more critical than even our numbers reveal.”

Four California counties reported their pension contributions now exceed 10 percent of total revenues: Santa Barbara County (13.1 percent), Kern County (11 percent), Fresno County (10.7 percent) and San Mateo County (10 percent).

A fifth county, Merced, is also expected to report that its required contributions topped 10 percent of 2015 revenue when it files its audit.

“For years, public employee union leaders denied the pension burden was even close to 10 percent,” California Policy Center president Ed Ring noted. “This study shows the burden in some places is now approaching 15 percent of total revenues.”

The surveyed counties, which account for more than 95 percent of California’s population, made over $5.4 billion in pension contributions during the fiscal year. These counties also made $660 million of debt service payments on pension obligation bonds, raising total pension costs to over $6 billion last year.

That figure accounts for about one sixth of all California state and local pension contributions (not including payments on pension obligation bonds), estimated at $30.1 billion in 2014.

As investment markets remain relatively flat, it seems likely that many California counties will bow to pressure to cut government services or to raise cash through debt instruments or taxes.

The complete California Policy Center study is available here.

ABOUT THE AUTHOR
Study author Marc Joffe is the founder of Public Sector Credit Solutions and a policy analyst with the California Policy Center. Joffe founded Public Sector Credit Solutions in 2011 to educate policymakers, investors and citizens about government credit risk. PSCS research has been published by the California State Treasurer’s Office, the Mercatus Center and the Macdonald-Laurier Institute among others. Before starting PSCS, Marc was a senior director at Moody’s Analytics. He earned his MBA from New York University and his MPA from San Francisco State University.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

Study ranks San Mateo, Merced among CA's worst counties for pension burden

For Immediate Release
March 15, 2016
California Policy Center
Contact: Will Swaim
Will@CalPolicyCenter.org
(949) 274-1911

Annual ranking: California’s best and worst counties by pension burden

SACRAMENTO — Years after the Great Recession slammed their Wall Street investments, at least four California counties have broken through the 10 percent ceiling, spending one of out of every $10 to fund their government-employee retirement programs.

The resulting strain on local budgets, called the pension burden, is one of the revelations in California Policy Center’s latest analysis of county reports.

Study author Marc Joffe said county pension burdens may be worse than his analysis reveals.

“Because pension systems usually require their actuaries to assume high rates of return on their assets, it’s arguable that counties understate their actual pension burdens,” Joffe said. “The financial stress on local governments is likely more critical than even our numbers reveal.”

Four California counties reported their pension contributions now exceed 10 percent of total revenues: Santa Barbara County (13.1 percent), Kern County (11 percent), Fresno County (10.7 percent) and San Mateo County (10 percent).

A fifth county, Merced, is also expected to report that its required contributions topped 10 percent of 2015 revenue when it files its audit.

“For years, public employee union leaders denied the pension burden was even close to 10 percent,” California Policy Center president Ed Ring noted. “This study shows the burden in some places is now approaching 15 percent of total revenues.”

The surveyed counties, which account for more than 95 percent of California’s population, made over $5.4 billion in pension contributions during the fiscal year. These counties also made $660 million of debt service payments on pension obligation bonds, raising total pension costs to over $6 billion last year.

That figure accounts for about one sixth of all California state and local pension contributions (not including payments on pension obligation bonds), estimated at $30.1 billion in 2014.

As investment markets remain relatively flat, it seems likely that many California counties will bow to pressure to cut government services or to raise cash through debt instruments or taxes.

The complete California Policy Center study is available here.

ABOUT THE AUTHOR
Study author Marc Joffe is the founder of Public Sector Credit Solutions and a policy analyst with the California Policy Center. Joffe founded Public Sector Credit Solutions in 2011 to educate policymakers, investors and citizens about government credit risk. PSCS research has been published by the California State Treasurer’s Office, the Mercatus Center and the Macdonald-Laurier Institute among others. Before starting PSCS, Marc was a senior director at Moody’s Analytics. He earned his MBA from New York University and his MPA from San Francisco State University.

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center is a non-partisan public policy think tank providing information that elevates the public dialogue on vital issues facing Californians, with the goal of helping to foster constructive progress towards more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

 

Transparent California Releases 2014 Salary Data for California K-12 School Employees

For Immediate Release
August 12, 2015
California Policy Center
Contact: Robert Fellner
Robert@CalPolicyCenter.org
(201) 206-6469

Data: No correlation between teacher compensation and academic performance

TUSTIN — K-12 employee compensation data released today by Transparent California shows there is no meaningful correlation between teacher compensation and student performance; when the compensation of all district employees is compared to performance, there is a negative correlation.

A geographically-diverse survey of 75 of the largest school districts statewide – accounting for nearly half of total statewide enrollment – found average teacher compensation that ranged from $81,000 to $120,000, with no correlation to district performance:

PR-20150812-1

The Academic Performance Index (API) ranges from a low of 200 to a high of 1000, with 800 being the targeted goal for all schools. The comparison relies on 2013 scores, the most recent data available.

The average full-time teacher compensation was $94,796 and the average API score was 795. Compensation is defined as wages plus the employer-cost of health and retirement benefits.

The average total employee cost per enrolled student was $6,946 and was negativelycorrelated against the district’s API scores.

Over 740,000 employee compensation records from 555 K-12 school districts – representing nearly 80 percent of total enrollment statewide – was obtained by and published on TransparentCalifornia.com, a public service website that provides accurate, comprehensive and easily searchable information on the compensation of public employees in California.

Statewide, the Chaffey Joint Union High School’s average compensation package for full-time teachers topped the list at $119,942, while receiving only a 777 API score in 2013. San Ramon Valley Unified earned a 923 API score in 2013, the highest of all schools surveyed, with average teacher compensation and total employee cost per student both below average at $88,638 and $6,763, respectively.

The top 3 highest earners statewide were:

  1. John Deasy, Emeritus Superintendent of Schools at Los Angeles Unified received $485,634 in compensation.
  2. John Collins, Superintendent at Poway Unified received $478,008 in compensation.
  3. Michael Hanson, Superintendent at Fresno Unified received $460,890 in compensation.

Greater LA Area

The greater Los Angeles area includes schools in the counties of: Los Angeles, Orange, San Bernardino and Riverside.

The average greater Los Angeles area K-12 employee received a compensation package worth $88,581 with over 56,000 employees making more than $100,000.

Chaffey Joint and Anaheim Union High both received below-target API scores of 777 in 2013, despite leading the state in average teacher compensation of $119,942 and $115,437, respectively.

The average compensation for full-time teachers at 10 of the largest school districts in the greater Los Angeles area is displayed below:

PR-20150812-2

Greater San Diego Area

For the greater San Diego area, the average K-12 employee received a compensation package worth $85,584 with over 10,000 employees making more than $100,000.

The top 3 highest earners in the greater San Diego area after John Collins were:

  1. Kevin Holt, Superintendent at San Marcos Unified received $356,672 in compensation.
  2. Randolph Eugene Ward, Superintendent at San Diego County Office of Education received $347,430 in compensation.
  3. Cynthia Marten, Superintendent at San Diego Unified received $316,255 in compensation.

The average compensation for full-time teachers at 10 of the largest school districts in San Diego County is displayed below:

PR-20150812-3

Central Coast Area

The Central Coast area includes schools in the counties of: Monterey, San Benito, San Luis Obispo, Santa Barbara, Santa Cruz and Ventura.

The average Central Coast K-12 employee received a compensation package worth $85,522 with nearly 5,000 employees making over $100,000.

Lucia Mar Unified’s average teacher compensation was just over $81,000, but their 816 API score was considerably higher than Hueneme Elementary’s 734 score, despite Hueneme spending over 30% more on teacher compensation.

The top 3 Central Coast earners were:

  1. David Cash, Superintendent of Santa Barbara Unified received $306,111.
  2. Marvin Biasotti, Superintendent of Carmel Unified received $301,935.
  3. Tammy Murphy, Superintendent of Montecito Union Elementary received $301,239.

The average compensation for full-time teachers at 10 of the largest Central Coast school districts is displayed below:

PR-20150812-4

Bay Area

For the Bay Area, the average K-12 employee received a compensation package worth $87,295 with over 16,000 employees making more than $100,000.

The top 3 highest Bay Area earners were:

  1. Polly Bove, Superintendent at Fremont Union High received $363,736 in compensation.
  2. Elizabeth Mcmanus, Deputy Superintendent at San Mateo Union High received $349,292 in compensation.
  3. Bruce Harter, Superintendent of Schools at West Contra Costa Unified received $337,973 in compensation.

The average compensation for full-time teachers at 10 of the largest school districts in the Bay Area is displayed below:

PR-20150812-5

Greater Sacramento and Central Valley area

For the greater Sacramento and Central Valley area, the average K-12 employee received a compensation package worth $84,012 with over 15,000 employees making more than $100,000.

Michael Hanson’s $460,000 compensation package was over $125,000 more than the next 3 top highest earners for the Greater Sacramento and Central Valley area:

  1. Steven Ladd, Superintendent at Elk Grove Unified received $331,855 in compensation.
  2. David Gordon, Superintendent at Sacramento County Office of Education received $315,423 in compensation.
  3. Steven Martinez, Superintendent at Twin Rivers Unified received $314,742.

The average compensation for full-time teachers at 10 of the largest school districts in the Greater Sacramento and Central Valley area is displayed below:

PR-20150812-6

To view the entire dataset in a searchable and downloadable format, visit TransparentCalifornia.com.

“The lack of meaningful correlation between average teacher compensation and school performance, as measured by the district’s 2013 API score, is stunning” said Mark Bucher, president of the California Policy Center. “It does show, however, that simply increasing funding is not an effective way to improve performance.”

Bucher added that, “The doubling of employer contributions towards CalSTRS in the coming years will pose a significant challenge to schools already paying nearly $95,000 a year on average teacher compensation. The data also suggests that this increase in employee compensation is unlikely to improve educational outcomes.”

To schedule an interview with California Policy Center president Mark Bucher, please contact Robert Fellner at 201 206-6469 or Robert@CalPolicyCenter.org.

Transparent California is California’s largest and most comprehensive database of public sector compensation and is a project of two nonpartisan, free-market think tanks, the California Policy Center and Nevada Policy Research Institute. Learn more at TransparentCalifornia.com.