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

For Immediate Release
March 13, 2017
California Policy Center
Ed Ring, ed@calpolicycenter.org
(916) 524-7534

California’s retired government workers earn 26% more in retirement than private-sector workers earn while still on the job.

That’s the finding of an in-depth analysis released this week by the California Policy Center.

“This is an absolutely upside-down system,” said California Policy Center CEO Mark Bucher. “In the Golden State, it truly pays not to work.”

The new study found that the average pension for a retired public employee in California was $68,673 in 2015, before benefits. By contrast, active private-sector workers earned on average just $54,326.

That same year, the maximum Social Security benefit for a high-wage earner retiring at age 66 was just $32,244 – less than half the benefit of a retired government worker.

Study author Ed Ring analyzed 23 of the largest pension systems in California, representing 95 percent of all state and local government retirees – over 1 million retirees.

State officials at CalPERS claim that benefits to retirees average about $31,500 per year.

But that’s misleading, says Ring, who is vice president of research at CPC.

“They’re not taking into account the average retiree’s length of service. Someone who works half of a normal career should not expect a pension equal to someone who has worked a full career,” Ring says.

Read the full study here: What is the Average Pension for a Retired Government Worker in California?

Other key findings of the study:

  • For all systems evaluated, representing over 1.0 million records of California’s retired state and local government workers, in 2015 the average pension for a post-2000 retiree with between 29.5 and 30.5 years of work was $68,673. This does not include benefits.
  • Using the same criteria – the average full-career pension for a CalPERS retiree was $71,402, for a CalSTRS retiree it was $57,715, and for a University of California retiree it was $61,752.
  • There was a great deal of variation in the major independent county pension systems, with the highest full-career average in 2015 going Contra Costa County, at $85,091, and the lowest going to Tulare County, at $51,932.
  • To compare public safety pensions to pensions for all other employees, we evaluated data from three cities where each city has two independent pension systems, one for public safety, and another for all other employees. The 2015 results summarize as follows:
    Los Angeles – public safety $89,183, all other retirees $54,782,
    San Jose – public safety $130,439, all other retirees $74,649,
    Fresno – public safety $54,860, all other retirees $40,927
  • Another way to compare public safety pensions to pensions for all other employees was to evaluate data from pension systems that reported, for each record, the former employing agency. Los Angeles County provided data that included this information. Los Angeles County was also the only major pension system to provide benefits data, yielding the following summary:
    Sheriffs – pension $88,144, benefits $18,395, total $106,539
    Firefighters – pension $104,905, benefits $20,350, total $125,256
    All other retirees – pension $50,484, benefits $10,581, total $61,065
  • Data on disability pensions was available from two major pensions systems: In Los Angeles County in 2015, disability pensions were reported for 6.5% of former miscellaneous employees, for 40.5% of all retired former sheriffs, and 65.7% of all retired former firefighters; in San Jose’s retirement system exclusively for former public safety employees, 50.0% of the retirees were receiving disability pensions.

“California’s state and local governments face serious financial challenges, including $1.3 trillion in debt and underfunded pensions, plus neglected infrastructure,” says Ring. “State and local elected officials ought to be coming up with policies designed to lower the cost of living for everyone, instead of paying pensions to their government workforce that actually exceed the average of what active private sector citizens earn while still working.”

ABOUT THE CALIFORNIA POLICY CENTER
The California Policy Center produces policy solutions to unleash California’s legendary talent and entrepreneurial spirit. Learn more at CaliforniaPolicyCenter.org.

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

For Immediate Release
January 26, 2017
California Policy Center
Ed Ring, ed@calpolicycenter.org
(916) 524-7534

A in-depth analysis released this week by the California Policy Center finds that the average pay and benefits for California’s full-time state and local public employees in 2015 was $121,843. This is nearly twice what the average full-time private sector worker made in pay and benefits during 2015, $62,475.

Read full study: California’s Public Sector Compensation Trends

The California State Controller provides public pay averages but these are weighed down by part time and part year workers as well as interns and temporary employees. Relying instead on raw data downloaded from the State Controller’s website, CPC researchers combed through 881,021 individual 2015 pay records for California’s city, county and state agency employees to isolate the full-time employees in order to calculate accurate averages. Using data from the U.S. Census Bureau and the California Employment Development Department, the researchers were also able to estimate the average pay and benefits for private sector workers in California.

“If anything we have understated the public sector averages, and overstated the private sector averages,” said Ed Ring, CPC VP of policy research and author of the study. “For example, we calculated the public sector averages would have risen to $139,691 in 2015 if the pension systems had been more adequately funded. We also made, in the absence of better available data, very generous assumptions regarding private sector employer-paid benefits, which meant our $62,475 average total pay and benefits estimate for private sector workers, if anything, is overstated.”

Other key findings of the study:

  • Average 2015 total compensation for full-time state/local workers by category:
    – Cities: public safety $171,450, miscellaneous (all other employees) $121,431.
    – Counties: public safety $170,728, miscellaneous $108,857.
    – State Agencies: public safety $137,531, miscellaneous $104,867.
  • Between 2012 and 2015 there was a strong correlation between growth in employer costs for overtime and growth in employer costs for pension contributions. Overtime pay was up in 2015 compared to three years ago by 35% for cities, 60% for counties, and 32% for state agencies. Similarly, pension contributions were up in 2015 compared to three years ago by 14% for cities, 26% for counties, and 42% for state agencies.
  • In 2015, the pay (not including benefits) for California’s city and county employees exceeded pay for workers in cities and counties in the rest of the U.S. by 39%; California’s average public safety worker pay exceeded that of their counterparts across the U.S. by 78%; miscellaneous worker pay in California was 16% greater than in the rest of the U.S.
  • Between 2000 and 2015, average private sector pay for full-time workers in California (not including benefits) increased 47%, from $37,012 in 2000 to $54,326 in 2015. During that same period, average pay for public employees in California increased by 59%, from $51,271 in 2000 to $81,549 in 2015.
  • In 2015, the “benefits overhead” for the average private sector full-time worker in California is estimated at 15%; for state, city and county public employees, even when including overtime in the denominator, it is 40%.

“California’s state and local governments face serious financial challenges, including $1.3 trillion in debt and underfunded pensions, plus neglected infrastructure,” said Ring. “State and local elected officials ought to be coming up with policies designed to lower the cost of living for everyone, instead of paying their government workforce twice what ordinary citizens can earn.”

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 shaping more equitable and sustainable management of California’s public institutions. Learn more at CaliforniaPolicyCenter.org.

Friedrichs v. 2.0? U.S. Supreme Court May Get a Second Chance to Free Teachers from Forced Unionism

For Immediate Release
January 19, 2017
California Policy Center
Will Swaim, will@calpolicycenter.org
(949) 274-1911

In a case that will cheer education reformers, four Pennsylvania teachers today sued their unions, school districts and district officials for making union membership a condition of their employment.

The suit – and the likely appointment of a reform-friendly Supreme Court justice under the incoming Trump Administration – immediately raised expectations that Hartnett v. Pennsylvania State Education Association will do for public education what last year’s Friedrichs case could not.

Plaintiffs in Friedrichs persuaded district and circuit courts in California to move that case quickly to the Supreme Court.

“If the Hartnett plaintiffs can do the same, it’s possible Hartnett could become the vehicle for the Supreme Court finally to rule in favor of worker freedom,” said Robert W. Loewen, a retired attorney, court watcher and board chairman of the California Policy Center. “That would give the new court the opportunity to overturn its ill-advised decision in Abood, which has prevailed since the 1970s.”

The Hartnett plaintiffs “do not want the state deciding for them which private organizations they must support and specifically do not want to be compelled by state actors to support labor organizations they have not voluntarily chosen to support and that they may, in fact, oppose,” the teachers assert in their filing.

Hartnett comes just months after the U.S. Supreme Court deadlocked over Friedrichs v. California Teachers Association. Following a January 2016 Supreme Court hearing, Friedrichs appeared certain to unwind mandatory union membership for teachers on First Amendment grounds.

But Friedrichs was derailed by the death of Judge Antonin Scalia just weeks after that hearing. Scalia’s absence left the justices tied 4-4 on Friedrichs. That left standing a lower court’s ruling in favor of the California Teachers Association.

The failure of the Friedrichs case – and the apparently inevitable election of Hillary Clinton – seemed to kill hopes the Supreme Court would overturn Abood, and end union control of public education in the U.S.

Donald Trump’s November win, and the expectation that the new president will nominate a reform-minded Supreme Court appointment to replace Scalia, raised hopes for a new Friedrichs-style case.

Rebecca Friedrichs, the third-grade teacher from Orange County, California, was among the first to celebrate the announcement of Hartnett.

“I’m thrilled to hear school employees and teachers throughout the country are standing united for freedom from forced unionism,” she told the California Policy Center hours after the suit was filed. “Every American worker deserves to innovate and thrive on the job unencumbered by the politics and policies imposed upon them by union domination of our workplaces.

“It’s time for liberation,” she said. “Three cheers for the brave men and women bringing the issues to light.”

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 shaping 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.