August 6, 2007

Who in the private sector retires on 70 to $100,000 per year?

Really it does not matter if the liabilities are funded or not. (Long Beach claims they are) Quite frankly I dont trust the accounting shenanigans of most government entities, especially when we are looking at 40-50 years out from now on these pension liabilities. Lets keep this wave going and put taxpayers back in charge. Once they start seeing what public employees are getting and they aren't the sentiment will change, no matter if public employees are heroes or not.

Deflating big pensions
LB Press Telegram
Article Launched: 08/04/2007 05:56:29 PM PDT

Orange County's challenge could help shrink deficits throughout California.

There has been a lot of angst but little action about costly government pensions, but that changed abruptly last week in Orange County. A local confrontation there could affect public employees throughout the state, and save taxpayers billions of dollars at the expense of public employees.

Orange County supervisors, at the instigation of one of them, John Moorlach, voted to test the constitutionality of big pension increases given in 2001 to county employees. If they prevail, the county would be off the hook for up to $550 million over the next 30 years in unfunded pension liabilities.

It also would mean that other cities, counties and the state would be in a similar position, of having passed out big pension benefits that amounted to illegal gifts of public funds.

The theory advanced by Moorlach, and supported by constitutional scholar John Eastman of Chapman University Law School, is that Orange County acted illegally when it granted a big pension increase effective retroactively, not in the sense that already-retired employees would get the increase (they didn't), but that employees would be getting an increase they hadn't
earned for past service, as well as an increase for future service.

Moorlach also argued that the increase violated debt limits, since it was unfunded, and amounted to a gift of public funds, since it was unearned by past service. Although the pension increases had been made permissible by state legislation, the way they were implemented was wrong.

A wave of pension increases throughout California followed that legislation, and created pension liabilities of billions of dollars. In Orange County, as in Long Beach and most other cities and counties as well as state government, public-safety employees got pensions of "3 at 50," meaning that an employee could retire at age 50 with a pension of 3 percent of the highest salary for every year of service.

Many cities and counties, Long Beach among them, followed up with fat pension increases for non-public safety employees as well, some so overly generous an employee could actually retire with a pension bigger than his or her salary.

Most of these aren't backed with a plan to pay for them, although Long Beach's pension liabilities are well funded. Orange County's are not.

If the names of Moorlach and Eastman seem familiar, it's for good reason. In the 1990s, Moorlach was derided as a Chicken Little until the skies did fall in with the bankruptcy of Orange County because of risky investments. He went on to be appointed and elected county treasurer, then county supervisor (his license plate reads SKYFELL). Eastman has involved himself in land-condemnation issues in Long Beach.

Now Moorlach is warning that pensions in Orange County are so far out of line they again could bankrupt the county. Eastman, who is dean of the Chapman University law school, says he thoroughly agrees with Moorlach's points about the pensions' questionable legality.

Rescinding the public-safety pension increases in Orange County would mean a 30 percent cut for employees of the Sheriff's Department, where a retiree now gets an average of $70,000. Another way out of the problem would be for employees to pay for the pension enhancements.

If it turns out the pension increases are constitutional, Moorlach and others seem determined to do something about pension costs Orange County can't afford to pay.

Either way, Moorlach and his colleagues will have done a great service for taxpayers of his county, and, we hope, throughout the state.

Lakewood Accountability Action Group™ LAAG | | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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