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Public Sector Pay: Transparency and Perspective

Public sector labor leaders in California would rather that the public remain relatively ignorant about how well their members are compensated. But they are fighting a losing battle.

Because of California’s massive unfunded pension liability and other scandals, the public is demanding answers. Interests as diverse as taxpayer groups, business organizations, the media and some elected officials have moved aggressively, not only to address these problems, but also to ensure that there is much greater transparency about public sector compensation than we have seen in the past.

For example, attorneys at Howard Jarvis Taxpayers Association won several Public Records Act lawsuits against government interests — mostly at the local level — who were attempting to shield their compensation data from the public. And PensionTsunami.com is a website which for years has been a clearinghouse for articles on pension abuses.

But it is not just conservative interests who are shining the light. Left-of-center newspapers like the Sacramento Bee and San Jose Mercury News, have fought very hard to expose the truth on employee compensation. Self-styled progressive John Chiang developed a powerful data base open to the public about state worker pay when he was California’s Controller. He is now the State Treasurer and we hope he continues his efforts.

Public sector labor is pushing back against all this disclosure asserting that compensation is not excessive in California. For example, they recently claimed that pension benefits are comparable to Social Security payouts. But a new study by Robert Fellner, Research Director for TransparentCalifornia.com, shows that some retired public employees are receiving five times as much in pension benefits — mostly at taxpayer expense — as comparable private sector retirees receive from Social Security. The objective here is transparency, not a war against public employment. We all know someone who works for government and many are extremely competent in their jobs and deserve the pay they get. But there are several aspects of public sector compensation that aggravate taxpayers.

First is the lack of accountability. Taxpayers would gladly pay the highly competent more if government managers were empowered to fire the incompetent, indolent and criminals. Taxpayers and parents chafe at the fact that school districts can’t even fire child molesters without jumping through bureaucratic hoops costing much in both time and money.

Second, citizens are very concerned about how much of public sector compensation will be assumed by future generations, especially pension benefits and guaranteed health care for life. This is not a legacy of which we should be proud to leave our children.

Third, the personnel practices in government are totally out of sync with the private sector.  Just last week, the Center for Investigative Journalism reported that thousands of state workers are hoarding vacation time. Unlike the vast majority of workers in the real world, some state employees will be able to cash out their vacation time worth hundreds of thousands of dollars when they retire.

Fourth, generous compensation for public employees would be far more palatable if others were doing well. But they aren’t. California continues to have one of the highest unemployment rates in the nation and we rank number one in poverty. The economic recovery, trumpeted by political leaders in Sacramento, is shaky at best as many have simply given up looking for work. While so many Californians have seen a decrease in income and opportunity, businesses large and small continue to flee the state to escape high taxes and costly regulations.

Transparency and a more realistic perspective toward public sector compensation will be critical to California’s future. It is simply not healthy to have one segment of the citizenry treated as a protected class to the detriment of everyone else.

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Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

2013 CalPERS Payouts Online at Transparent California

CalPERS financial struggles are draining state taxpayers. The ever-increasing contribution rates it demands from state and local governments have already bankrupted several cities. Even for more financially stable agencies, increased CalPERS contributions have crowded out other spending priorities or tax relief.

While discussions about unfunded liabilities and projected rates of return are necessary and important, the average member of the public is too busy to dive into the details.

That’s why the recent release of CalPERS’ 2013 base payouts, including retiree names, on TransparentCalifornia.com is so important.

For the first time, average Californians can quickly and easily see how much CalPERS paid out to retirees in 2013. The names and payouts are available here.

Even a casual glance at the data, shows the root cause of CalPERS’ financial struggles: It’s paying tens of thousands of its government retirees pensions that dwarf what private-sector households make while working full-time.

The U.S. Census reports that the median household income in California is $61,400. This includes households where two adults are working full-time. The data on Transparent California though shows that the average 2013 pension for those who worked 30 years or more and received a full year’s pension was $64,448 for the year.

For those who retired in 2000 or later, the average pension was $68,403.

And whose taxes are going to increase to ensure that the retiree making over $64,400 a year receives a generous cost of living adjustment next year and every year thereafter? The working couple, despite making less in salary than the public servant receives in retirement. No wonder so many people have a hard time saving for their own retirement — they’re already subsidizing the retirement of California’s government employees.

Unfortunately, Social Security isn’t going to provide these private-sector families with equity. While the average 30-year government employee will collect an average payout of over $64,400, that’s more than twice the maximum Social Security benefit of $31,704 that a private sector retiree could receive after working for 35 years and retiring at the age of 66. In contrast, some government workers retire as early as 50.

These high pension payouts are actually understating the compensation received by CalPERS retirees. These payout amounts do not include health benefits received by retirees that are worth up to $18,000 a year.

Just a glance at the list of highest paid retirees shows why taxpayers should be so outraged.

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Mark Bucher is the president of the California Policy Center.

Three Ways California Governments Try To Avoid Transparency

Few politicians or government officials publicly oppose transparency in government. After all, transparency isn’t just about information; it’s a tangible acknowledgment that government officials work for citizens, not the other way around.

Still, there’s a big difference between mouthing support for transparency and actually fulfilling public records requests as required by California’s Public Records Act.

TransparentCalifornia.com, a public service website run by the California Policy Center and Nevada Policy Research Institute that contains over 3.4 million salary and pension records, has made over 2,000 public records requests in their efforts to make government compensation information easily and readily accessible to the public at large.

While most government agencies have complied, a few are employing some rather creative stalling techniques or actively refusing to comply.

Technique 1: Provide the requested records in an unusable format

Government Code § 6253.9(a) requires that agencies provide records in their “original, electronic format” when requested as such. Despite this, agencies like the Hacienda la Puente Unified School District, chose to print out and mail the records as their first response to Transparent California’s request for electronic records.

The Town of Apple Valley is trying the electronic variation of this tactic. Transparent California asks agencies to send records as an Excel file to expedite uploading the records. Apple Valley is currently only providing a PDF file that an employee printed out and then scanned through a copier, according to the file’s PDF properties. The file appears to have originally been in Excel format.

Thankfully, some cities, like Sierra Madre, eventually abandoned their ludicrous attempts to avoid transparency and have produced the requested records in the legally required format.

Technique 2: Use a court ruling declaring that records are public to refuse to provide records

The City of McFarland is currently refusing to provide employee names in conjunction with salary data, claiming that they are confidential. McFarland cites International Federation of Professional & Technical Engineers, Local 21, AFL-CIO v. Superior Court as their justification for doing so.

What’s amazing is that in that case, the California Supreme Court held that employee names and salary data must be released in response to records requests. The plaintiff in that case only requested the names of only those who made over $100k, so these agencies are making the absurd claim that a ruling finding that public employees’ salary information are public records grants a privacy exemption to those making under $100k.

It could be worse. The Counties of Alpine, Modoc, and Trinity also are refusing to provide employees names, but haven’t even attempted to justify their refusal to comply with CPRA.

These agencies should consider what the Attorney General’s Office has noted: “The name of every public officer and employee, as well as the amount of his salary is a matter of public record.”

Technique 3: Stall them with kindness

The City of San Luis Obispo has perfected this. Transparent California requested payroll records on June 28th, 2013, and San Luis Obispo promptly responded indicating it received the request.
After a few clarifying emails, on August 15, the city emailed Transparent California that they were processing the request and would “forward the information to you shortly.” The records never came.

Unlike some government agencies where public employees are openly hostile to public records requesters, employees of San Luis Obispo have always been very courteous. They’ve responded promptly to Transparent California’s follow-up correspondence with apologizes for the delay and promises that the information is coming soon. While opacity with a smile is friendly, it still isn’t transparent.

In comparison, the neighboring City of Atascadero provided all of the requested records in less than two weeks time. Farther north, the City of St. Helena provided the requested records the very next day! Yet, San Luis Obispo hasn’t provided this information for the past 258 days and counting.

Government agencies that are currently stalling public record requests should join the thousands of government agencies that are complying with the law. Let the sun shine in.

Update: On March 20, 2014 after this piece was written but prior to its publication, the City of San Luis Obispo provided the records that were first requested on June 28, 2013.

About the Author:  Robert Fellner is a researcher at the Nevada Policy Research Institute (NPRI) and joined the Institute in December 2013. Robert is currently working on the largest privately funded state and local government payroll and pensions records project in California history, TransparentCalifornia, a joint venture of the California Public Policy Center and NPRI. Robert has lived in Las Vegas since 2005 when he moved to Nevada to become a professional poker player. Robert has had a remarkably successfully poker career including two top 10 World Series of Poker finishes. Additionally, his economic analysis on the minimum wage law won first place in a 2011 essay contest hosted by the George Mason University.

Transparency Website Shows True Cost of Unionized Government in California

In light of the strong public policy supporting transparency in government, an individual’s expectation of privacy in a salary earned in public employment is significantly less than the privacy expectation regarding income earned in the private sector.
– Excerpt from California Supreme Court Ruling, 8-27-2007, IFPTE v. Superior Court

Today the California Public Policy Center launched what is the largest online payroll and pension database, searchable by name, downloadable via spreadsheet, ever compiled for active and retired employees of California’s state and local governments. Do you want to see just how much California’s public servants are costing taxpayers? Go to www.TransparentCalifornia.com and have a look.

The database, created in partnership with the Nevada Policy Research Institute, has been nearly a year in the making and provides information not available anywhere else. For example, the database includes CalPERS pension records, including not only the participant’s name, pension, and other retirement benefits, but also their year of retirement and years of service. Having this information is necessary to understand just how generous public sector pensions are, because the “average service life” of public servants in California is only around 20 years. And if you work a normal full-length career? Buried on page 169 of CalPERS FYE 6-30-2013 Annual Report is the answer – after 30+ years the average pension is $60,312 per year.

The real shockers, however, are in the individual examples. On the Transparent California website, click on “All Pensions – 2012” and view the results. Three retired public servants collected pensions of over $500,000! Try your hand at Excel – click on “Download all Pension data for 2012” and sort by amount. The $200,000 pension club now has a respectable showing at 582 members. And the much vaunted $100,000 “pension club” now has 31,527 members. But why stop there?

The maximum Social Security benefit is currently a whopping $31,704 per year. For that you have to work until you’re 67 years old, and contribute 12.4% of your total compensation – presumably for over 40 years. How many retired state and local government workers – that we know of – collect twice that much? Transparent California’s data shows 140,461 retirees collecting $63,408 or more in pensions during 2012. Since the “average service life” of a government pensioner is 20 years, very few worked 40 years before retiring.

If you just stopped paying any of these retirees more than twice the maximum Social Security benefit, you would save California’s taxpayers at least $3.5 billion per year.

But generous pensions used to be compensation for poor salaries. Remember those days? Those days are done.

Transparent California also reveals the pay and benefits received by active state and local government employees in California. Does it surprise anyone to learn that an orthopedic surgeon employed by Kern County earned over $1.0 million in 2012, or that two University of California employees both earned over $900,000? What about the fact that 114 employees earned over a half-million? Is this what public service is supposed to entail? Are these examples of the career sacrifices that justify such generous pensions? What about the 396 public employees in California who pulled down a Presidential $400,000+ compensation package in 2012, or the 2,201 who made $300,000+? And how would Joe-the-Plumber feel about the 25,885 public servants in California whose pay package exceeded $200,000 in 2012?

We might add this almost as an afterthought – but for completeness here it is: 227,059 public employees in California collected $100,000+ compensation packages in 2012.

It is easy to look at these numbers and suggest they are outliers. After all, what about the average pay and benefits for California’s public sector workers? The California Public Policy Center took a good look at averages using the comprehensive pay and benefit data for 2012 recently released by the California State controller’s office on their website “Government Compensation in California.” In a study published last week entitled “How Much Do California’s State, City and County Workers Really Make?,” the part-time records were eliminated from the pool of data in order to determine averages for full-time workers. The results, entirely consistent with the data independently acquired by the Transparent California project, showed the following compensation averages, by entity, by category of pay, and split between public safety and miscellaneous employees:

Average Compensation, Public Safety vs. Miscellaneous Employees – 2012

20140131_CA-Gov-Pay_Table3-b

It is easy to get so familiar with these numbers that they start to lose their impact. Stepping back for a moment, consider this: The base pay for state workers – the lowest paid of any category, exceeds the average 2012 household income in California, $65,211 to $58,328. The pay and benefits for miscellaneous state workers, $90,402 – again the lowest category – exceeds the average household income in California by 55%. At the other extreme, the average public safety employee’s pay and benefits in California’s cities, $170,104, is nearly three times the average household income in California. The average CalPERS pension, for any recently retired participant who has worked 30+ years, also exceeds the average household income in California, $60,312 to $58,328. Shall we discuss time off with pay – something that doesn’t show up in the data? The 12 (or more) paid holidays and personal days, plus the four weeks (or more) of annual paid vacation days off for veteran workers, or the common “9/80” program whereby you work 9 hour days for 9 days then get every second Friday off as “comp time” with pay?

It is extremely unlikely that those many public servants who are not overpaid in California’s state and local government service will be embarrassed by the disclosures on Transparent California. But the averages, and the plain excess that shows anywhere above the median, reveal an out-of-control government that has put its own self-interest above the people it serves. Hopefully this data, transparent and very personal, will achieve a higher purpose, to help citizens realize that higher taxes or lower services are not their only choices. And maybe it will also stimulate a discussion regarding policies that would actually help to lower the cost of living in California.

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Ed Ring is the executive director of the California Public Policy Center