Rich Government Pensions

Imagine two next-door neighbors who hold identical jobs, one employed by state government and the other with a private company.� The difference in their circumstances is fairly dramatic.

To begin with, the average state/local government employee is paid 34 percent more than his private sector neighbor according to the U.S. Bureau of Labor Statistics.� The average California job in educational support services, for example, pays $48,000 in government but just $32,000 in the private sector. The government employee also has much stronger job security since state governments have never gone out of business and stringent civil service protections make the firing of a state employee an exceedingly rare occurrence. The government employee also gets more vacation time and more holidays than his private sector neighbor, including a day off to celebrate Cesar Chavez's birthday.

� And then there's the pension. Fifty-four percent of private sector employees have no pension at all.� Most of the rest have a defined contribution plan such as a 401(k) that depends upon how prudently the fund is invested.

�� California public employees have a defined benefit plan that guarantees them undiminished benefits regardless of how little the fund actually earns.� In good times, government pension plans have simply added benefits.� The last round of pension augmentations in 1999 now allows many public safety employees to retire at age 50 with 90 percent of their highest year's salary for life.

If they claim disability as they retire (and not surprisingly, many do), half of their pensions are tax free - giving them higher pay in retirement than they earned on the job. And in bad times, as the fund earns less, the taxpayers simply cough up the difference.
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Ironically, the private sector neighbor not only watches his own pension fund shrink, he also pays a premium in taxes to shield his public sector neighbor's pension from exactly the same economic tide.

In 2000, California taxpayers shelled out $145 million for public sector pensions.� In 2001, the bill grew to $677 million; the next year to $1.1 billion; the next year to $2.0 billion.� This year we'll spend $2.5 billion and within four years, $3.3 billion.� Every billion dollars spent at the state level costs an average family about $110, meaning that the private sector family this year will pay nearly $300 in taxes just to support their neighbor's much larger public pension.

Enter Arnold Schwarzenegger.� He has proposed - for anyone hired after June 30, 2007 - that public pensions should be on the same defined contribution basis as most private plans - only larger.� The average private employer provides a five percent match.� The Governor proposes a match of between six and 12 percent for public employees, depending on the job. To hear the howls of protests from the unions, one would think the Governor is throwing elderly civil servants onto the streets.� In fact, every employee already in state service will continue to qualify for the same gold-plated pensions as before.

� Only those hired after June 30, 2007 will be affected, and they will still receive substantially more generous employer contributions to their pensions than the average private sector employee living next door. But, we're told, higher pension benefits are justified for government workers because some of them face dangers every day fighting criminals and fires.� Police and firefighters are indeed called upon to do heroic deeds.� But their jobs are not nearly as dangerous as loggers, fishermen, miners, construction workers, taxi drivers, truck drivers, roofers, farmers and pilots, according to the Bureau of Labor Statistics.� Overall, government workers are much safer than their private sector counterparts.�

At some time, the fleecing of California taxpayers must stop.� The Governor has drawn the line with his proposal that those who serve the public should not have radically greater pensions than the public that supports them.
� Whether he succeeds or fails in this fight will determine the condition of the state's finances - and in a larger sense, its social fabric - for many years to come.

By Calf. Republican State Senator Tom McClintock.

Editor's Note: When Sen. McClintock ran against Gov. Arnold Schwarzenegger, also a Republican, for state Governor, they both got a total of 62% of the vote, which means they got over 40% of the Democratic vote in the State of California.� You cannot win in California unless you get a percentage of the Democratic vote, because the Democrats make up the majority of the voters.

Filed April, 2005