California Gold

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I have reflected before on how California and states like it appear to be serving as incubators of statist pestilence. Californians (and New Yorkers) vote in large and wasteful government programs, which lead to high taxes, lousy schools, lousy infrastructure, and no jobs. Then the Californians flee their state. But the emigres are a disease vector; they carry to their new states the same attitudes that led to the ruination of their home state. And I have talked before about the growing crisis in state employee health and pension funds. A recent article brings both these thoughts to my mind anew.

The article is a piece of first-rate investigative journalism in the Orange County Register (May 15) called “The $200,000 Club: State Pensioners Who Collect 10 Times Average.” It was written by Tony Saavedra and Ronald Campbell. The article reveals some of the outrageously high pensions that public employees now receive.

The facts are amazing. While the average California Public Employees’ Retirement System (CaIPERS) retiree receives less than $24,000 a year, about 4,800 of these people receive pensions of more than $100,000 a year, and a couple of dozen receive more than $200,000. For life! This, as CalPERS faces possible insolvency because of a drop in value of about $73 billion from its asset base.

The individual cases that Saavedra and Campbell discuss are remarkable. The pip is one Bruce Malkenhorst, Sr., who held six different city executive positions at once for the city of Vernon, a major metropolis of 110 people. He got $600,000 a year salary, and wound up with a lifetime annual pension of almost a half-million dollars a year. (He is currently under criminal indictment for embezzling 60 grand.)

Another indigent civil servant, Anaheim City Manager Jim Ruth, retired in 2001 with a lifetime pension of nearly $220,000, and now works as the city’s sanitation chief at a salary of $225,000. So he clears a tidy $445,000 a year.

But the bulk of the people receiving pensions over $100,000 are retired public safety employees – police, firefighters, and prison guards. Their unions have proven very effective at using general public goodwill to get “3 at 50″contracts, which allow an employee to retire at age 50 with a pension equal to 30/0 of the final salary for each year worked. So after 34 years, the pension is 100% of the final pay.

And as the Sacramento Bee reported on March 2, fully 38% of the 11,454 Highway Patrol officers are paid over $100,000 a year, as are 23% of the 63,287 corrections officers. Add to this the fact that public safety workers can enhance their last year’s salary in a number of ways (such as putting in overtime, or getting last-minute promotions), and we can expect that the number of public safety retirees receiving over $100,000 a year in pensions will explode in the near future.

The problem here is that the public has allowed feelings of gratitude to undeniably wonderful public safety employees to be exploited by the unions. Rewarding someone who risks his or her life on the job is right, but going beyond reasonable compensation and saying that the sky is the limit is not. Compassion, like any other noble emotion, has to be governed by rationality.

The problem for California is that the voters have been ignorant and emotional. The problem for other states is that many of these voters are moving.


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