In January 2000, Senate Bill 400, signed by former Governor Gray Davis, went into effect. That is the law that added the 3% @ 50 retirement benefit option for state and local public safety employees. Two years later, Davis signed AB 616, which extended the 3% @ 60 retirement benefit option to non-safety state and local government employees. Immediately, public employee unions representing state and local government workers lobbied elected officials hard to approve the enhanced benefit levels. The unions were successful, and what has followed can only be described as one of the most egregious giveaways of taxpayer money in the history of California.
Prior to SB 400 and AB 616, most government employees in California were limited to a 2% @ 55 pension benefit. When state and local elected officials increased the benefit levels to the 3% formulas, the result was a 50% increase in the pensions of public employees. Since 2001, retirement costs for employees of the State of California have skyrocketed from $157 million to $2.7 billion today, nearly a twenty-fold increase!
As a member of the Bakersfield City Council since 2004, I have been working hard to reign in retirement costs. Our retirement costs increased from $3.9 million to $25 million from 2001-2006. Bakersfield, like many cities, is upside down by millions – in our city we face unfunded liabilities of nearly $200 million for pensions and retiree medical benefits.
Recognizing that the current retirement system is draining city resources and jeopardizing our ability to sustain core services, the Bakersfield City Council has attempted, through collective bargaining with our police and fire unions, to implement a lower cost retirement plan for new employees. Pension benefits for current employees would not be touched.
For nearly a year, the union’s negotiators refused to accept the City Council’s contract offer that would have resulted in an 8% pay raise for our police officers. Instead they demanded even larger raises, and they refused to accept reforms to the retirement system for new-hires. The economy has continued to worsen, city coffers have continued to dwindle, and more financial hardships are on the horizon. Such a national, state and local fiscal crisis has not been seen for generations.
I support the Bakersfield Police Department; I admire the great work they do. I’m working to put more police officers on the street protecting our citizens and property.
Support for the police is not, however, the same as support for the union decision makers of the Bakersfield Police Officers Association (BPOA), and their recent tactics. In response to the council’s effort to reign in retirement costs, the union representing our police officers has been conducting an advertising campaign against our city manager, asserting that our attempt to increase the retirement age from 50 to 55 years will put the officer, and the public, at risk.
Recent union-paid radio and newspaper ads have been less than forthright. The misleading union ads do not mention the following facts:
*Only the pensions of future employees are being discussed; current employees are grandfathered
*Police pension costs have grown from $2.8 million in 2002-03 to $10.0 million in 2007-08, and total costs for all employees exceed $25 million
*Unfunded liability for police pensions is $55 million as of June 30, 2007, and nearly $100 million for all employees
*Police pension costs are 29% of salary
*The City pays the employee’s 9% share of pension costs for those with over 5 years of service; the employee pays nothing
*$10 million was budgeted for future pensions in 2007-08
*A Police officer’s pension benefit with 30 years of service garners 90% of their salary for life. In fact, all current city employees can receive the same benefit after 30 years.
Bakersfield’s pension costs will increase another $6 million within the next two years. Neither the private, nor public sector can afford such costs!
With these circumstances, the City Council has proposed modifications, for new employees only. Those modifications do not force officers to work until they are 55, as has been portrayed in the ads. They will only wait longer, by their own choice, to get the maximum benefit. Other plans are available, such as returning to the formula of 2% at 50, which was the rule until December of 2003; that guaranteed a 30-year employee 60% of their salary. This was a generous benefit; returning to it would save the city millions.
From 2001-2003, a past City Council in Bakersfield made the same mistake many other cities and counties made – they followed the lead of California’s liberal legislature and Governor. As a result, they raised retirement benefits by a whopping 50%, by granting the unions the 3% at 50 benefit. During the years that have followed, that decision has proven to be disastrous for city finances in Bakersfield, as it has for many others.
Simply put, we can afford to put more police on our streets if we adopt a lower-cost pension plan for incoming employees. That’s what hard-working taxpayers want and deserve. Politicians at all levels in California need to hear the message, and act responsibly, or the voters need to boot them out.
Vice-Mayor, City of Bakersfield