Paul Jacob

Could a mighty earthquake dump much of the California coast into the Pacific Ocean?

You tell me. But I have a more likely scenario: the state’s perilous public employee pension problems, surging like a tsunami, smashing into the state. Soon.

That would be a disaster.

State and local governments in the Golden State have underfunded their golden-parachute pension promises by a terrifying half a trillion dollars. Twenty thousand public employees now collect yearly pensions of $100,000 or more.

In Ventura County, north of Los Angeles, the problem was highlighted last fall when a retired sheriff, Robert Brooks, sued the county claiming he was owed an additional $75,000 a year. That would be on top of his already substantial $283,000 annual pension, which is a whopping $55,000 more than Brooks’ highest-ever salary.

Ventura County leads the state with the most retirees (24) taking home an annual pension of $200,000 or greater, and, according to an analysis by the Los Angeles Times, 84 percent of them make more now in retirement than they did when they were working. In 2011, the chief county executive retired from his measly $228,000 working-stiff salary to begin immediately and leisurely taking home a $272,000 retirement pension.

Nice work — er, rest — if you can get it.

In the last 15 years, pension costs as a percentage of the county’s overall budget have shot up an incredible 1,600 percent.

What can an outraged citizen do?

Take the initiative! Last Wednesday, a group of men and women in beautiful Ventura County brought officials more than 40,000 voter signatures, far in excess of the 26,000 voters required to mandate a vote on reform.

The people “made it clear they want a decisive say in their fiscal future,” said the co-chairs of the effort, David Grau and Dick Thomson, in a news release handed out when they and a group of volunteers wheeled in six big boxes of petitions.

The ballot initiative proposed by the Committee for Pension Fairness would create a 401k-style retirement plan for new county employees. An independent analysis of the measure says it will create enough savings to shore up the woefully underfunded pensions of current employees and retirees.

“People are so excited that finally somebody is going to do something about this problem,” said Jim McDermott with the Ventura County Taxpayers Association, a group supporting the reform initiative.

While California may have been hit first by the pension tsunami, that dangerous wave is now cresting over much more of the nation. Pensions are over promised and underfunded all across the country. To cover the liabilities already accumulated by state and local governments nationwide, the average American household would need to pay an additional $1,350 a year—each and every year . . . for the next 30.

For instance, the pension system covering non-public safety City of Phoenix employees is only 56 percent funded, and has so far racked up an unfunded liability of $1.5 billion. The massive pension debt has already led to the city’s credit rating being downgraded, costing Phoenix taxpayers more to borrow money.

Just since 2011, the cost of pension obligations has shot up 40 percent, forcing the city, as The Arizona Republic reported, to “cut services to residents and [enact] an emergency food tax.” Pension “spiking” has become so widespread and egregious that the newspaper’s analysis found it to cost the city $12 million a year.

“Pension spiking occurs when employees are allowed to add other forms of compensation to their base pay at the end of their careers,” the paper’s report explained, noting that “unused sick leave, vacation time, cellphone allowances, overtime pay and other benefits” were being added to base pay to dramatically increase the basis for calculating a retiree’s annual pension benefit.

Late on Friday, city officials in Phoenix announced that citizens there, too, had gathered far more than the required number of voter signatures to place The Phoenix Pension Reform Act before voters this November. The ballot measure would create a 401k-style plan for newly hired Phoenix employees, while enacting provisions to stop pension spiking by current employees.

“People are tired of the games being played at City Hall,” said Scot Mussi, chairman of the pension reform committee and executive director of the Arizona Free Enterprise Club. “They want real reform.”

Can your elected officials solve the massive problems they’ve created by making big promises and then doing nothing whatsoever to keep them? They can if they are willing to face facts and figures and the future. And have the guts to be leaders.

On the other hand, if, like Mussi and the California citizens noted earlier, you’re tired of turning blue from holding your breath waiting for politicians to fix their mistakes, thank goodness that in most of the country there is a statewide or local initiative petition process whereby citizens can address pension problems (and other problems) directly at the ballot box.


Paul Jacob

Paul Jacob is President of Citizens in Charge Foundation and Citizens in Charge. His daily Common Sense commentary appears on the Web and via e-mail.