Sacramento — After reading through the recently completed state audit of “improper activities by state agencies and employees,” one might wrongly conclude that California’s massive bureaucracy of 131,000-plus employees is a well-oiled machine. After all, if this is all they could find, then the problems in state government must not go very deep.
The California State Auditor’s examination looked into allegations made during a five-month period ending in June. The report is based on investigations into complaints made to the whistleblower hotline, as well as ones sent to the auditor through letters and email. The auditor “found inaccurate reporting, waste of funds, illegal activities and misuses of state resources.”
That sounds bad, and it is … sort of. But the specifics are yawn-inducing given that they amount to essentially pennies’ worth of waste in a government awash in tens of billions of dollars of questionable spending.
For instance, the auditor highlighted a psychiatric technician who didn’t account for his absences and improperly received $7,500 in overtime over the course of year. Then there was the staff at an administrative office that held an unauthorized raffle for the sale of alcoholic beverages. In another case, an analyst sent nearly 400 personal emails on her state email account over 10 months
And there was a supervisor who “did not ensure a subordinate was fully productive during work hours at an estimated cost to the state of $5,400,” and a professor who improperly received $1,200 in travel reimbursements for limousines and other trips. There were employees who slept on the job. It’s hard to understand why this merited the attention of the state auditor.
These complaint-driven investigations might offer some specific help to particular state departments, or might bolster internal disciplinary actions. There’s nothing wrong with this kind of oversight even if it mostly seems of an internal nature. These are the mundane problems that occur whenever large numbers of human beings are employed at any workplace.
But this is the “can’t see the forest for the trees” variety of accountability. The picayune issues detailed in the report are indeed improper. One of them may even have been illegal. But the California government’s fiscal train wreck has nothing to do with these things. It has everything to do with the behaviors and spending priorities that not only are perfectly legal, but have the imprimatur of California officials at the highest level of government.
For instance, “The University of California 10-campus system is spending upwards of tens of millions of dollars on increasingly generous pensions for faculty, while raising in-state tuition for the first time in seven years,” according to the College Fix. “One particularly striking example is the pension of former UC President Mark Yudof, who is receiving a pension of $357,000, even though he only worked at the school for seven years.”
Now that should be criminal. But it’s how the system was designed. The university is free to ramp up pension payments for employees, even as it cries poormouth, muscles the Legislature for more cash and increases tuition for students. It will cost a lot more than a few hundred dollars on limo rides. By the way, the California Policy Center’s public-records request exposed this situation.
The Sacramento Bee reported last week that the “region’s largest local governments will see pension costs go up by an estimated 14 percent next fiscal year, starting a series of annual increases that many city officials say are ‘unsustainable’ and will force service cuts or tax hikes.” In this typical case, local taxpayers pay more and continue to get fewer and shoddier services – again, to pay for escalating costs for retired government workers.
The Sacramento area isn’t the only one facing massive service cutbacks because of rising pension costs. I reported recently for California Policy Center on a new report from Stanford University’s Institute for Economic Policy Research, which found that over the past 15 years, employer pension contributions to the California Public Employees’ Retirement System (CalPERS) have increased an incredible 400 percent, thus consuming ever-larger chunks of municipal budgets.
In 1999, when the Legislature passed the so-called “CalPERS plan” to retroactively increase pensions by 50 percent, CalPERS promised that it wouldn’t cost taxpayers a “dime” because the new costs would be covered by increases in investment earnings. That prediction was sadly off the mark, as it potentially is costing taxpayers hundreds of billions of dollars. But at least no CalPERS employees were caught napping on the job.
“Pension payouts are growing so fast that California’s school districts are being forced to lay off staff and close schools,” according to coverage of the Stanford study in the LA School Report. That shows that the “crowding out” of public services isn’t just happening to local governments and the state’s university systems, but to K-14 school districts, as well.
These are the big fiscal results of the state’s unconscionable pension-hiking spree that started in 1999. Newspaper reports are filled with outrageous examples of it. Transparent California reported in May that “Three Los Angeles Fire Department (LAFD) employees earned a combined $1.36 million last year — $974,779 of which came from overtime pay alone.” It’s not hard to find outrageous examples of common public employees living like CEOs.
After the California public was showing a taste for pension reform in 2012, Gov. Jerry Brown and the Legislature raised taxes, declared the problem over, and have gone about ignoring pretty much any mention of a crisis consuming local agencies. The locals often were part of the problem, as they eagerly gave in to union demands. Now that cities are getting eaten alive by these escalating costs, there’s a renewed push to find more revenue, rather than reform the current system.
Joel Fox, editor of Fox and Hounds Daily, pointed out recently that the latest push to eliminate Prop. 13 protections for commercial property owners (and thus dramatically increase taxes on commercial real estate) is coming just as rising pension costs are strangling local government services. He says the push is all about funding pension costs.
Of course, enriching public employees, allowing them to spike their pensions, sheltering them from accountability – and then hammering California property owners with new taxes to pay for this scam is all perfectly legal and proper. The state employees advocating these schemes will never be exposed for doing so in a state auditor report. We shouldn’t expect otherwise. But we shouldn’t assume, either, that the state is so well run that its oversight officials have nothing else to do than examine a few employees who may have cheated on their timesheets.
Steven Greenhut is contributing editor to the California Policy Center. He is Western region director for the R Street Institute. Write to him at firstname.lastname@example.org.