2010: A year of high profile retirements, gold-plated benefits
Former El Dorado County Sheriff Jeff Neves retired in late 2009, a full year before his term ended. He offered up the tried-and-true but paper-thin “time with family” exculpation to explain his departure.
Neves’ CalPERS retirement benefit, a tidy $15,202 per month, might have also factored into the decision.
With pension reform in the wind, Neves turned out to be just the first trickle in what became a steady stream of public officials throwing in the towel to accept retirement packages.
Given the state of local government finance, the trickle may become a tsunami, a trend that governing boards are not discouraging, given the cost of their union negotiated salary and benefits packages. But even in retirement, this bunch is expensive.
The fact that public sector retirement and health care packages are now collectively underfunded to the tune of $1 trillion nationally became prominent local and national news stories in 2010.
CBS’s Dec. 19 episode of 60 Minutes tackled it head on, leading with the dreary fact that California now spends more money on public employee pensions than it does on the state university system.
Locally, El Dorado County Auditor-Controller Joe Harn recently told the Board of Supervisors the county’s unfunded retiree liability had crossed the quarter billion — with a “B” — dollar mark. Board members countered that other counties are in worse positions, and implied he was sensationalizing the matter because the entire amount won’t be due at once.
The CalPERS system, coming off big losses in the housing crisis, has steadily raised the cost of participation. Harn told the board the county’s contribution to the system rose from 12.9 percent of employee salaries to 17 percent in 2010, and predicted the rate would increase to 26 percent by 2015.
Workers at all levels of governement saw their jobs get more frustrating, difficult and political in 2010. Just ask former El Dorado County CAo Gayle Erbe-Hamlin, who watched as the board disregarded her suggested budget cuts in November. She left the county on Dec. 6.
Erbe-Hamlin’s retirement exemplifies the fact that retirement costs aren’t limited to the rapidly rising CalPERS rate. Her departure year $173,522 regular annual salary, already lowered by furloughs, was supplemented by a lucrative package of benefits that included $9,854 for “Management Leave” (an annual two-week paid holiday) — on top of vacation and sick time — that all non-elected county managers enjoy.
Her last check also contained $92,979 for unused sick and vacation time and a whopping $25,057 in “longevity pay,” a bonus enjoyed by some county workers even as the county tries desperately to downsize with staff furloughs and exit incentives.
All together, Erbe-Hamlin’s 2010 pay came to $307,141.23, according to the Auditor-Controller’s Office, which reports that her CalPERS benefit will be based on 60 percent of her base pay plus longevity — roughly $213,000.
El Dorado Union High School District Superintendent Sherry Smith’s 4 percent raise in August put her at $238,000 per year, a number that included her health benefits. She announced her retirement in November.
A more encouraging story line developed in Placerville’s. City leaders have encouraged early retirements in recent years as a cost cutting measure. Community Development Director Steve Calfee retired in September, but stuck around as a volunteer.
City manager John Driscol and Public Works Director Randy Pesses are retiring at year end. Both will stay on in lower salaried positions, where their institutional knowledge is still available.
A related situation unfolded in El Dorado Hills where the Community Services District Board of Directors failed to renew popular general manager Wayne Lowery’s contract, prompting Lowery to retire then run for the board of directors, to “effect change from the other side of the table,” he said.
In an unusual twist, Lowery was eligible for his relatively modest $4,069 monthly CalPERS retirement benefit even though he accepted a full-time position with the Rio Linda Elverta Parks and Rec District because it does not participate in the CalPERS program.
El Dorado Hills Fire Chief Brian Veerkamp also threw in the towel recently, citing his full vesting in CalPERS along with plans to run for the District 3 supervisor seat (election in 2012). As a safety employee, Veerkamp will receive 3 percent of his final salary for every year in the fire service.
New Jersey Gov. Chris Christy said he thinks the public is ready for drastic reductions to what he called “gold-plated retirement and health care packages,” but predicted a struggle with the unions.
In the current economic and political climate, Christy may have better luck with those unions than outgoing California Gov. Arnold Schwarzenegger did in 2005, when unions mobilized and successfully fought off ballot propositions that would have reformed pension benefits.
That sets the stage for a fight between those same pwerful unions and incoming Gov. Jerry Brown, whose campaign, and those of his Democratic legislature, were funded in part by the those same unions.
At ground level, more public sector workers in their early 50s will hear the vitriol and worry that their retirement benefits might be jeopardized.
Look for more key retirements in 2011, as more managers, many with hair barely grey, opt out of the game, taking their knowledge of our increasingly complex goverment with them.