Out of Control Policy Blog

Report Details Excessive Public Pensions in San Diego

A new report prepared by California Foundation for Fiscal Responsibility President Marcia Fritz for San Diego Councilman Carl DeMaio details many of the City of San Diego's public employee pension excesses and calls for reforms to the system.  Among the City's pension outrages:

  • Some pensioners can draw four retirement allowances at the same time
  • Some retirees make more in retirement than the current salaries of employees now doing the same jobs
  • City politicians "retiring" as young as age 35
  • City politicians "double-dipping" by receiving a taxpayer-funded salary on top of a city pension.

From the press release issued by Councilmember DeMaio's office:

City Councilmember Carl DeMaio joined the same pension expert who revealed the excessive pension payouts in the City of Bell to release a report documenting excessive pension payouts to retired city employees in the City of San Diego. DeMaio also released a comprehensive list of pension reforms to end abusive payouts at taxpayers’ expense.

 

“I was shocked by what I discovered in the City of Bell and am shocked by what I discovered in the City of San Diego.  San Diego is just like Bell – only bigger in terms of the total collective cost to taxpayers from these outrageous pension allowances,” said Marcia Fritz, a pension expert with the California Foundation for Fiscal Responsibility.

 

“These outrageous pension payouts in city government must end,” commented DeMaio.  “Before taxpayers are asked to put more of their hard-earned money into this city government, we must enact fundamental reforms to the city’s unaffordable pension system.”

 

A slide show on the report can be accessed here.  Among the findings of the report:

·         Getting Four Retirement Checks at Once: Some city retirees are able to receive four separate retirement benefits – including the defined benefit allowance, DROP annuity payments, SPSP 401(k)-style payouts, and preservation of benefits payouts.

 

·         Earning Almost Double in Retirement than While Working for the City: Several city retirees clearly earn considerably more in retirement than those currently working for the City of San Diego.  In one case, the city’s former head librarian receives $227,249 as an annual retirement allowance  – versus the $139,680 budgeted amount for the current head librarian working for the city.


Worse than that, the $227,249 does not include payouts this  former city librarian would receive from another city-funded retirement program known as the Supplemental Pension Savings Program -- where the city has matched up to 6% of many city employees’ salaries for decades.

 

·         Six Figure Pension Payouts: The report found a long list of city retirees earning six-figure pension payments – with the top pension payout hitting a whopping $299,103 – a figure that also does not include payouts under the SPSP retirement program.

 

·         Millions in Total Payouts: Fritz estimated the long-term payouts for the top pensioners in the City of San Diego – showing each is expected to receive between $5 million to $8 million in pension benefits. The top 10 pensioners combined are expected to receive a whopping $ 61 million dollars combined.

 

·         Million Dollar Lump-Sum Payouts: Several city retirees have accumulated million-dollar cash balances under the DROP program, which they can receive as a cash payout or as an annuity payment – all in addition to their annual six-figure pension allowances.

 

·         Cash To Dash: The report revealed that a significant number of city retirees live outside of the State of California and outside the City of San Diego.  In fact, only 38% of retirees live in the City of San Diego.  

 

·         “Early Risers Club:” The report found city politicians receiving retirement allowances at absurdly young ages. One ex-politician started receiving a pension check at age 35, another at age 39, while three others began collecting pension checks while in their forties.

 

·         “Double-Dip Club”: The report also found several former city politicians receiving, or in line to receive, taxpayer-funded salaries on top of their city pension.

 

[. . .]

 

 

DeMaio used the report to highlight the need for comprehensive pension reforms before any new revenues are consumed by the pension system.  DeMaio urged the Mayor and City Council to lead by example through reforming their own pension benefits immediately.

 

“The city politicians should act immediately by paying a full equal share for the cost of their pension benefits – and future politicians should simply receive a strict 401(k)-style defined contribution system,” proposed DeMaio.  “Politicians should not be receiving a massive taxpayer subsidy for these lavish benefits – and they certainly should not be voting on their own pensions.”

 

DeMaio also offered a list of recommended pension reforms (see page 3 of the press release), including:

  • End Supplemental Pension Savings Program (SPSP) pension contributions
  • Eliminate the subsidy for politicians' pensions
  • Eliminate employee pension "offsets," in which the city (i.e., taxpayers) picks up the employee's share of pension contributions in addition to the city's contributions
  • Enact higher employee contribution rates
  • Cap total employee compensation (salary plus benefits) per city classification.

Adam Summers is Senior Policy Analyst


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