The Truth Behind the "Foundation" for Fiscal Responsibility's Study & Mike Genest's Study on Pensions


Posted on 13 May 2011

Printer-friendly versionPrinter-friendly versionSend by emailSend by email

By Allan Clark
California School Employees Association

Al and Wilma Diggle live in a mobile home on a small swath of desert in the town of Inyokern, Calif. They drive an 11-year-old station wagon, and the total $1,500-a-month pension for each working more than a decade at public schools barely covers their health bills.

Theirs is the typical story of many teachers and school employees, janitors, cops, firefighters and nurses who carry on the daily work of educating, protecting and serving the public. And theirs is the story that the right-wing and corporate interests who are attacking public pensions in California don’t want you to hear.

This week, the so-called California "Foundation" for Fiscal Responsibility, a group bankrolled by a mysterious out-of-state billionaire, trotted out its latest ammunition in its attack: a flawed report on California pensions.

The report - masquerading as a legitimate study – in fact is a political document that relies on outdated and skewed data that provides an inaccurate view of retirement benefits for public employees. It breaks no new factual ground, having drawn most of its conclusions from two-year-old data from the Little Hoover Commission’s roundly criticized report on pensions.

The report on the supposedly unsupportable costs of public pensions hammers away about the tiny minority of public retirees who receive $100,000 a year pensions. But Al Diggle, 79, who repaired school air conditioners and heaters for 10 years, chuckles when he hears talk of government workers living large off of fat pensions. “We would not be able to subsist if we did not have the pensions,” he says. “Without them supplementing our Social Security, I don’t know, we’d probably have to move in with kids or something.”

The report, which CalPERS CEO Anne Stausboll said, “raises significant policy and legal questions,” uses numbers taken when the state’s largest pension systems were at the bottom of the recent market crash.  Both funds have had double-digit increases in their market value since that time.

And it misleads in its effort to show that public sector pensions are generally larger than those in the private sector. Indeed, in the real world of middle class America, vast numbers of private sector workers have had their pension savings trashed, forcing them to work far longer for retirements, a shadow of what they had hoped for.

But several studies and even the report’s own authors find that public sector workers collect smaller or comparable salaries to those in the private. The report fails to note that public employees in California have agreed to concessions including contributing more toward their retirements that have saved the state and local governments hundreds of millions of dollars.

Half of state workers have pensions of $18,000 a year or less. The average retired state employee receives only $2,000 a month.  The average classified school employee receives only $1,193 a month. Neither police nor teachers receive Social Security. Most public employees are barely getting by on their pensions.

David Miller, a state scientist whose work helps protect the public from toxic substances, says he and others in his field have passed up more lucrative private sector opportunities. “You trade off the salary and the bonuses for the promise of a safe, modest living wage and retirement and health benefits,” Miller says. “That is what you hope the public is going to return to you for the sacrifices you’ve made and that promise is being threatened.”

The report and the corporate and right-wing interests behind this report also are glossing over another important point: Public employee pensions amount to just 3 percent of the state budget. Gutting retirement security for public workers would not make a dent in this state’s current budget mess.

Californians should take this study for what it is: An ideologically-driven report, mysteriously financed and shaped by corporate interests whose greed plunged this nation and state into its fiscal problems. Instead, we must rely on facts and the true stories of the workers who dedicate themselves to serving the public in exchange for the promise of a moderate pension and some retirement security.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Allan Clark is president of the California School Employees Association. Allan works as a general maintenance/grounds worker with Riverbank Unified School District, where he has worked since 1982.

The author picks poor examples to support his thesis. Where is the data to show that the same skills in the private sector will pay better than those skills in the public sector? As for $1,500 a month for two for ten years work - that is as good or better than what you would get in the private sector. 10 years at a salary of $50,000 at a private sector pension rate of .015 would yield $525 a month, or $1,250 for two. Plus, the private sector doesn't give cost of living increases.
Show us the math.

Fixpensionsfirst.com provides another perspective - a list of names of every California Public retiree drawing more than $100,000 per year in pension. I assume that cost of health care is included. There are 9,111 names on the list. You can search by name or by employer. Working for government in California pays well, for the rest of your life. They do point out that school teachers' pensions are not as good.
I wonder how it works, politically. I suppose that the City of Bell was an exception, but city administrators seem to make out well.