While Retired City Manager Golfs, New Americans in El Monte Struggle to Make Ends Meet

This is one in a series of CPC profiles of members of California’s $100k Pension Club.  Learn about the elite members of this club in our new video.

Vigilant as always, Lady Liberty keeps a keen watch over the republic, representing the opportunity and freedom that is America. She stands tall, with her eternal torch beckoning the poor, the tired, and the huddled masses … of El Monte, California.

Donated by a local physician in 1986, there is a 23-foot replica of the Statue of Liberty outside El Monte’s Civic Center. She may lack the commanding presence of the original, but the location of statue is surprisingly fitting, as over half of El Monte’s population is foreign born, and over a fourth of El Monte’s residents live in poverty. The poor, huddled masses are numerous here.

Among public-sector workers, however, poverty is unlikely.

Retired City Manager James Mundessen told the LA Times that he personally receives $216,000 a year in retirement – an amount that finances a lavish lifestyle that includes golfing trips in Scotland.

Mundessen is one of eight city officials collecting over $200,000 per year. He is even granted two pensions; the traditional CalPERS and a private supplemental pension known as PARS. This adds an additional 50% to retirement checks, equalizing their benefits with the unusually high pensions enjoyed by El Monte police.

One of the most amazing aspects of this is that these employees do not pay the typical employee contribution – the city of El Monte’s taxpayers pay everything. That means that not only do the taxpayers foot the entire bill for the pension itself, they pay the legally required share that employees are supposed to pay into their own pensions. This is unheard of in the private sector, where employees are partially responsible for their 401k contributions.

Predictably, El Monte is strapped with one of the highest pension burdens in any California city – $16.5 million in 2016, which is over 28 percent of the city’s general fund expenditures.

That unusual feature is reflected in the taxes El Monte citizens pay. The sales tax in El Monte is 9.5 percent, above the LA County minimum of 9 percent, and way above the statewide  minimum of 7.5 percent. Mayor Andre Quintero believes that without his city’s unusually high property taxes, El Monte would have already gone bankrupt. Homeowners in El Monte pay an extra 0.15 percent tax based on the assessed value of their property for the purpose of paying the pensions.

Even that won’t be enough. While the property tax surcharge generated over $9.4 million last year, the total sum of El Monte’s pension obligations for the year was a staggering $16.5 million. The portion left unpaid by the property tax had to come from the general fund. According to El Monte’s 2016 budget, the city’s longterm debts total $244 million.

Pension debt is crowding out spending on other line items in the city budget, including public safety, infrastructure and social services.

The city has taken steps to curb its inflated pensions. In 2008, it closed off the plan to new employees, and the city council later eliminated the possibility of reinstating such plans.

But the benefit is written into collective bargaining agreements with unions, and California courts have concluded that employees are entitled to the benefits that they were offered when hired. Negotiations with unions are potentially dangerous, as any changes to the policy would almost certainly lead to costly lawsuits.

Throughout California, legislators are beginning to address the issue with series of minor fixes, but these tweaks don’t seem to be enough. In 2015, despite minor reforms, California was still overwhelmed with $78.9 billion in unfunded benefits for public employees.

El Monte is just a single example of a failing system that incentivizes government workers to use public funds to get rich. There is no penalty, only a shrug – and a golfing trip to Scotland.

5 replies
  1. Pierre
    Pierre says:

    Is there any hope left to adjust the exaggerated pensions paid to Public employees.
    Every city, town &a village in California can point to one of their own who draws down $175,000 annually in pension payment.
    Our ELECTED officials must have an answer to this problem and should give an answer regarding the lack of funds for future pension payments.
    Look at the roads and demand that repairs be made.

    Reply
  2. Sandrs
    Sandrs says:

    Stories like this are happening now all over California. The red flags however have been raised raised by integrity-minded public officials for over 20 years. Pete Wilson’s government tried to address this snowball of pension promises over 20 years ago following dire projections and sensible recommendations in the mid-nineties Little Hoover Report. Wilson’s government had to fight Public Unions, Calpers,Calstrs, and public Union Funded elected officials every step of the way to modest Pension reforms back then. The outraged Public Unions poured money in defeating him in the next election and supported their puppet Gray Davis who won and promptly rolled back the reforms and doubled down on the goodies. Today, with CA cities breaking under the load of these outrageous pensions, Mr Davis now is on record as regretting the 1999 Pension giveaways and only wishes he could have known more then. Odd. The actuarial prediction were firm and readily available back then. Hard to read though when you are blinded by political greed.

    Reply
  3. Richard Rider
    Richard Rider says:

    The politicians appoint the top admin people. These people (especially city managers) who are hired both personally benefit from excessive, overpriced, underfunded pensions AND are doing what their employers (the union-purchased politicians) want them to do.

    It’s insanity to rely on the financial acumen and judgement of the HIGHEST PAID city employee (the city manager) who gets the BIGGEST pension. HUGE conflict of interest.

    These financially sophisticated bureaucrats KNOW that the real bills will come later, and HAVE to be paid — when these city managers are drawing their opulent pensions.

    And it’s all legal. Sorta.

    Reply
  4. S Moderation Douglas
    S Moderation Douglas says:

    PEPRA limits pensionable pay to a little over $100,000, so $216,000 pensions will be a thing of the past.
    By the same token, jobs like city manager will almost certainly require higher salaries to compensate for the lower pensions.

    PEPRA savings are in the distant future? Already over a third of state workers are subject to PEPRA, as they have been hired since 1/1/2013.

    Reply
  5. S Moderation Douglas
    S Moderation Douglas says:

    Wonder who he’s playing golf with? Probably not the janitor or a retired factory worker. One in ten Americans have a net worth over a million dollars. Some way over a million. The population of El Monte is 115,000, so there are potentially 11,000 millionaires for him to play with. At least 1,000 of them are worth over $8,000,000. His $216,000 pension is a pittance to them.

    Quote: “This is one in a series of CPC profiles of members of California’s $100k Pension Club.”

    If the “$100k Pension Club” is the top three percent, or even five percent, of public retirees, why not compare them to the top five percent of the private sector?

    Reply

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