Total Fecklessness

If a city government cannot bring itself to end something so obviously abusive as pension spiking, what hope is there of any real reforms on tougher matters?  Government employees are increasingly running government in their own favor.

After nearly three hours of contentious debate, Phoenix city leaders were so divided over how to tackle pension “spiking” on Tuesday that they ended up doing nothing at all.

They walked into the City Council chambers prepared to make changes, but after splintering into three ideological factions, voted 5-4 against a plan to combat spiking, generally seen as the artificial inflation of a city employee’s income to boost his or her retirement benefit.

Several high-profile cases have come to light, pushing the effort to eliminate pension boosting to the forefront of the council’s agenda.

Former Phoenix City Manager David Cavazos, who retired last week to lead another city, was able to apply unused sick pay and other perks to spike his pension to an estimated $235,863, the second-largest retirement benefit in city history.

Earlier this month, a subcommittee of council members proposed modest reforms that they said would reduce pension spiking and provide transparency. They said the plan treated existing employees fairly and avoided potential litigation.

But the proposal fell apart Tuesday night, when a group of liberal-leaning council members joined the body’s fiscal conservatives in voting against it, though their rationales were vastly different.

After the motion to approve the proposal failed, the meeting ended. The result, greeted by cheers from employee unions in the crowd

  • JoshK

    We are so done here in the US.

  • Daublin

    It is another example of why governments should not be giving out pensions. If the employees had to put the money in a 401k instead of in a government pension, then it simply wouldn't be possible to spike.

    There's a worse problem pensions, though, as I believe you have pointed out before. Pensions are fundamentally a promise about what a future government is going to pay out, but the promise is made by the current government. Such an arrangement just begs for abuse. The current government has every incentive to pad the pension plans, because none of the people involved will still be around when it's time to start paying them out.

  • bigmaq1980

    Given the baby boom becoming the retiree boom and the accounting shenanigans that government officials undertake to hide or minimize the level of underfunding to the pensions, all the government employees are in for a rude awakening in their "golden years".

    Think Detroit.

    To be sure it won't be pleasant for the rest of us either, but they are the ones who are delusional about all this and are unprepared.

  • John O.

    What a shame. The road to financial disaster is closer than we realize in our major cities as they absolutely refuse to change the game. Looks like it will require a brutal and very nasty initiative petition and be decided at the polls. Inaction now makes this issue much more divisive in the future.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    Correct.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    This is when you start naming individuals in government and suing them directly.

    Goldwater has already filed suit against the City of Phoenix to end spiking, so we’ll see where that goes

    http://goldwaterinstitute.org/sites/default/files/Wright%20v.%20Stanton%20Complaint_part%201.pdf

    There may be a way to sue as private individuals, to claw back ill-gotten taxpayer money. That’s next.

    Government employees and unions are out of control.

  • obloodyhell

    Total Fecklessness

    Well, not really...

    "If a city government cannot bring itself to end something so obviously abusive as pension spiking"... then face it: you are well and truly fecked.

    Jus' sayin'.

  • obloodyhell

    I dunno... I agree it's clearly WAY too late to fix things, but the day we start the hangings is certainly looming on the horizon. It's kinda like the final trump of Revelation. No one knows when it's gonna happen, so it may well indeed happen while the current crop of thieves, quacks, and self-aggrandizing charlatans are in office.

  • Not Sure

    "If a city government cannot bring itself to end something so obviously abusive as pension spiking..."

    I suspect city government is less interested in ending pension spiking than they are in appearing to do so.

    Mel Brooks, as Governor William J. Le Petomane:
    Holy underwear! Sheriff murdered! Innocent women and children blown to bits! We have to protect our phoney baloney jobs here, gentlemen! We must do something about this immediately! Immediately! Immediately! Harrumph! Harrumph! Harrumph!

  • sch

    The several California cities that invoked bankruptcy in an attempt to break pension agreements were cut off at the pass by the courts, who ruled that pension agreements
    can't be abrogated by bankruptcy. Rule changes for future employees is acceptable, but in the meantime, projected payments to CalPers are expected to skyrocket over the
    next 10 yrs, meaning civic services will be progressively proscribed. Minimal police coverage, road paving delayed or abandoned, limited hours at the courthouse etc etc.
    Not this year but by 2020 or so local and county governments in California are going to be in deep water.

  • Canvasback

    It's an old trick, but still a problem.

    “Chief’s Disease,” as these disability pension spikes are commonly
    called, were all the rage in law enforcement circles in the 80′s and
    90′s. At one point, eighty percent of senior CHP retirees had curiously
    developed debilitating injuries in the last two years of service, which
    made up to 50% of their pensions tax-free for the rest of their lives.

    Courtesy of fullertonsfuture.org

  • irandom419

    So let me get this straight we need to micromanage businesses through licenses and permits to make sure they aren't unfairly making money off the public, but if you do that in the public service it is okay?

  • http://itsaboutliberty.com/index.php MNHawk

    Ironic, it's a city in a state full of cities spiraling towards bankruptcy, that sees this piece of corrupt garbage as their future.

  • Tom Lindmark

    Actually, the cities Vallejo and Stockton elected not to include pensions in their reorganization plans under threat of legal action by Calpers. The city of San Bernadino hasn't made a final determination but has restarted its funding of Calpers payments. No court has so far ruled on the core issue.

  • obloodyhell

    It's called "Make it the next guy's problem." It's a common rule of thumb in bureaucracies, and hence governments are the worst exemplars of it, being nothing but bureaucracies It's worked for Social Security for decades.

    Some of the most creative accounting techniques, and the most contorted rationalizations ever conceived, have been invented in the pursuit of this goal.

  • http://itsaboutliberty.com/index.php MNHawk

    I suspect the Phoenix City Council are full time positions. I don't know for sure, maybe Warren could clarify. As such, they're sucking at the same teat as this city manager, and they probably don't want to cut it off.

  • Chris in NY

    For over a decade, New York State's comptrollers website actually had instructions for public employees on how to spike your pension.... http://blog.syracuse.com/opinion/2010/09/pension_padding_taxpayers_face.html

  • Benjamin Cole

    I'll say it again: No to all public pensions, civilian and military.
    It may be un-PC to say it, but locally the worst pension abusers are fire and police departments; and nationally it is the VA.
    Imagine getting lifetime full pensions and medical after just 20 years of employment.

  • markm

    Yep. And taxation without representation is okay, too. (The money was committed before many of those who will pay the taxes were old enough to vote.)

    There's a point where legal means won't do, you just have to shoot the bass turds.

  • markm

    For the military, retirement at 20 to 30 years is necessary. The physical demands of wartime service are just too much for old people. There are always lots of desk jobs, but an effective military really needs to be able to get nearly everyone out from behind their desk in a crunch, whether it's toting a rifle and an 80 pound pack, or loading cargo when the forklift breaks down. So, except when war requires keeping as many warm bodies as possible, most service members do not have a choice about retiring at or soon after 20 years. You have to make a fairly high rank to stay in. There are two reasons for favoring retention of the guys who made rank fastest: they are the best (in some sense), and generals and Sergeant Majors can usually arrange their jobs to avoid too much physical effort even in wartime, but an old man in the lower ranks during wartime is screwed. So they push them out. Back before the US Army started doing this, each new war would embarrassingly begin with having to fire a bunch of doddering senior officers and NCO's at the same time they were recruiting young men as fast as possible and often promoting them into highly responsible jobs before they were ready. For an example, look up "Fuss and Feathers Scott".

    The pension plan is in large part compensation for having to go find a new career at around 40 or 50. It is far from overgenerous for most retirees. If you retire at 20, you get 50% of base pay, but base pay is rather low for your job skills - and unlike many police and public works departments, there is no way to inflate it in your final year by hogging the overtime. You just get to work overtime without extra pay... Military families only survive in the first place because they get additional pay (housing and living allowances, sometimes combat pay, etc.) that is not included in the retirement pay calculation, plus great fringe benefits. I don't know the current numbers, but when I served (1978-87), a man who wasn't getting free housing or food would get about 50% added to his pay - so the 20-year retirement pay was about 1/3 of his last paycheck. He would probably move away from the subsidized base grocery and exchange stores, and exchange fairly good free medical at the base hospital for lousy service from the VA - and have to swear poverty to even get this. On the plus side, he'd be young enough to start a new career, building upon his copious experience in, uhhh, driving tanks, firing tank guns, and supervising tank drivers and gunners... (Some have more relevant experience, e.g. I was an electronic tech, but 11 more years would have made me a guy that supervised the guys that supervised techs rather than a tech with currently relevant experience.) That 1/3 pay sure helps a man get through that career change, but it doesn't go far in sending your kids to college.

    If you can stay in, you get another 2.5% of base pay for every year, and that base pay is becoming respectable. But you're also getting farther removed from any skills except management and paperwork, and too old to be starting on the management track in most companies. (The exception is defense contractors, if you have something special to contribute to a contract such as friendship with the officers who award it. But most members are never in such a position.) So at 30 years you get 75% of base pay, or about half of your actual pay (including the rental value of the fancy house you got for free, but not the medical, etc.), and that's likely to be most of your income for the rest of your life. It should be enough to live on, but you won't get much luxury unless you scratch up a good job.

  • markm

    OTOH, the _way_ the military and most government agencies do pensions is wrong. They should be fully funded in advance, or better yet, 401(k) type plans where the government commits _only_ to putting in a certain amount, not to how much the retiree will get. Anything else throws the burden of paying the pensions onto those who were not old enough to vote when the pensions were promised. What was it _real_ Americans once did about taxation without representation?