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HomeMy WebLinkAbout04. (Handout) CC Times ArticleDaniel Sorenstein: Ubiquitous Contra Costa pension spiking spreads across all income levels By Daniel Borenstein, staff columnist © 2014 Bay Area News Group (Handou POSTED: 12/12/2014 04:00:00 PM PST An eye- opening Contra Costa pension - spiking analysis shows that most public employees received significant salary increases during the year before they retired. The study, prepared by staff of the Contra Costa County Employees Retirement Association and released last week, examined records for 3,881 government workers in that pension system who retired from 2004 to 2014. Some findings were so surprising that even one of the most ardent defenders of the status quo on the nine - member association board joined trustees' unanimous decision Wednesday to dig deeper into the numbers. "I saw abuses that I didn't think were there," said Jerry Telles, who is elected by current retirees. The study was prompted by 2013 revelations in this column of pay spikes for county doctors and hazardous material workers, who were collecting large amounts of final -year compensation for being on call. For most past and current workers, top -year salary, usually from the last 12 months on the job, provides a critical component in the calculation of their pensions. Other factors are the number of years on the job and the age at retirement. A salary increase during the final year results in a proportional lifetime hike in retirement pay. The analysis compared retirees' salaries during their final year on the job to their salaries from the year before. Among the results: 75 percent of retirees had a final -year bump of more than 5 percent; 56 percent increased more than 10 percent; and 5 percent increased more than 30 percent. The data also shows that major pension spiking to increase final -year salaries 30 percent or more spreads across all income levels. Contrary to union leaders' frequent assertions, the big abusers are not just top -paid managers. The Contra Costa system administers pensions for 17 government agencies, including the county. The biggest final -year salary spikes, at more than 40 percent, were found at Central Contra Costa Sanitary District, Contra Costa Fire Protection District and within the county at the sheriffs office, public defender's office, and employment and health services departments. Salaries used in the calculations and examined in the study include not only base wages but also items such as on -call pay, longevity pay and money from the sale of unused vacation time. In other words, there are multiple ways to game the system, and workers often use several of them to fatten their pensions -- especially in Contra Costa. The Contra Costa system is one of 20 county -level pension plans that operate under a different set of laws than the mammoth statewide Ca1PERS system. Until this year, the Contra Costa system allowed pension - spiking techniques found nowhere else, even though they ran counter to state court rulings. A new state law, upheld by a trial court this year, ended one of the most abusive practices, counting in pension calculations pay received at termination for unused leave time. But that could be reinstated, depending on the outcome of appellate court rulings on the case. Either way, those changes only address some of the spiking techniques, as the study showed. Another new state law should temper other abuses, but only for new employees. Their pensions will be based on average pay from the final three years on the job, rather than just the last one. That means the effect of last- minute promotions, for example, will be minimized. Significantly, the study looked only at changes in salary in the final year. It did not examine recurring add -ons employees receive each year that also count toward their pensions such as car allowances, uniform allowances, longevity pay and enhancements for completing additional education, standby pay and annual sale of unused leave time. Under the new state law, the retirement board could count only base pay in pension calculations for new employees, and not include the scores of additional pay items. The Contra Costa retirement board opted to go that way, but it might reconsider because Ca1PERS decided to allow new workers in its system to count the items in their pension calculations. In other words, while looking to close one set of abuses, the Contra Costa board might reopen others. Daniel Borenstein is a staff columnist and editorial writer. Reach him at 925-943 -$248 ordborenstein@bayareanewsgroup .coin. Follow him at Twitter.com /BorensteinDan. http:/ /www.contracostatimes.com / News /ci_ 27124830 /Daniel - Borenstein:- Ubiquitous- Contra - Costa- pension- spiking- spreads- across -all- income - levels