Massive pension spiking uncovered at Contra Costa County

SEE JANUARY 11, 2010 UPDATE

UPDATE Massive, systemic miscalculation of employee pension benefits over decades may have been uncovered at Contra Costa County’s Retirement Association.

A ReedSmith report to the board of the Contra Costa Retirement Association (CCCERA) has found that “inadequate reporting systems” may be “enabling overstatement of pensionable compensation” for county retirees. The report, originally sent to the CCERA October 28, 2009, shows examples including that of a compensation overstatement that produced $37,526 more annual retirement benefits than the employee was actually entitled to.

If true, thousands of current CCCERA pensions, based on last year salary, may have to be recalculated, benefits changed, and employee contributions in arrears collected from current and future retirement system members.

The CCCERA has planned a special meeting to discuss this issue Monday, January 11, 2010, at 9 a.m. The meeting will be held at the Concord Hilton, 1970 Diamond Blvd., Concord, CA.

While noting that retiring employees ought to receive every dime due to them by law, the report recommends that the CCCERA:

- Investigate employer pay and reporting practices just to find out the extent to which possible widespread overstatement of final compensation has been occurring throughout the retirement system and for how long.

- Determine what employee contributions, if any, have been collected on elements of compensation mistakenly included in final compensation figures.

- Determine what changes ought to be made to bring the system into compliance with current applicable law.

- Determine whether and what corrective measures to take vis a vis current and future, active and deferred members of the retirement system—including recalculation of benefits, arrears, contributions, and other actions.

- Insure new system delivers proper benefits to members of the retirement system.

Contra Costa Pension Spiking Reed-Smith

Print Friendly

Comments

  1. 20+ year County Manager says

    This letter posted is an opinion. The Ventura decision in 1997 set the stage. When Contra Costa County decided what would be included in terminal pay and then the projected increase, the employees had to increase their contributions.
    Instead of pointing the finger at every public employee perhaps those of you with such a negativity towards public employees should investigate the blantant rape of the retirement system by Safety members and upper County management, such as that given to the CAOs and Department heads. These members will bankrupt the system with their greed. The Board of Supervisors and the various fire district boards should be ashamed of what they have given. When a firefighter makes more in retirement than while they are working, something is really wrong. Let’s all remember it was the BOS that gave Safety 3% at 50. Safety is notorious for boosting their terminal pay by working extraordinary amounts of overtime in the last year before retirement. One might also want to look at the number of Safety who get disability medical retirement, where they do not have to pay taxes. Wake up people. The average county employee has no means or no connections to enhance their retirement. The average county manager has no means to spike their terminal pay either. Put the blame where is belongs – the BOS, the CAO, and the Department heads.

    • says

      I agree with you that BOS deserves most if not all of the blame and should be indicted for collusion and racketeering under the Rico Act and treat the current fiscal calamity like the organized crime that it is. And if you think for one second that SEIU, Nurses, and Local One would not be deeply implicated along with Publuc Safety, you were no County Mgr for 20 yrs.

  2. says

    Pension spiking is increasing one’s final pay for the purpose of increasing his pension benefits. There are many ways to pension spike. For example, an employee can receive a promotion and therefore a raise right before he retires. He can sell his vacation time back on his way out of the door. He can spend his last year working night shift and therefore receiving a pay differential or bonus. He can also work overtime. Any one of these things would increase his final pay and therefore spike his pension.

    According to news reports, pension spiking is a big problem in our county government. It reportedly costs tax payers tens of millions of dollars every year. The practice should be stopped. Here is how.

    First, county employees who receive promotions should have to stay in their new positions for at least five years before they can retire at their higher salary. Second, unused vacation time, sick leave, personal days, and the like should not be considered for purposes of calculating pension benefits. Third, pay differentials, bonuses, overtime, perks, and the like should not be considered either.

    In other words, pension benefits should be a percentage of the employee’s base pay and nothing else. To the extent possible savings from stopping pension spiking and double dipping should be used to increase inadequate county staffing levels starting with rehiring laid off county employees.

  3. Mister Phillips says

    End Double Dipping

    Double dipping is receiving a paycheck and pension benefits at the same time from the same employer. Double dipping goes on in our county government. It should not.

    First, people who work over 20 hours per week for the county should not be receiving pension benefits from the county. They are not retired.

    Second, the county cannot afford to pay pension benefits to people who are not retired from its employ. As of December 31, 2008, Contra Costa County had over $524 million in unfunded pension liability (future retirement payments it does not have money set aside to pay), according to the actuary of the Contra Costa County Employees’ Retirement Association.

    Third, allowing people to double dip while others are being laid off and furloughed and having their wages and benefits cut due to lack of funds is unfair. The Contra Costa County Board of Supervisors should end double dipping.

  4. Richard S. Colman says

    Privatize. Privatize. Privatize.

    Place limits on the amount of money Contra Costa County can spend.

    Place limits on county taxation.

    Place limits on the number of county employees.

    For 2010, why not cut the size of county government by 50%?

    The county has done nothing to attract new business or retain existing businesses.

    Where are Contra Costa County’s start-up firms and venture capital businesses?

    Contra Costa County should be the next Silicon Valley.

    Sadly, Contra Costa County, with its taxes and regulations, is becoming sclerotic.

    Let’s try something new!

    Richard S. Colman
    Orinda, CA
    Dec. 3, 2009

  5. Edi Birsan says

    There are several issues here in this thread
    1. The overpayment of funds, which should be corrected ASAP
    2. The practice of spiking which should be changed
    3. The level of pensions as paid and at what level.

    The point Marion makes about the level of average pay out being under 30K seems to fit in with some of the data from Calpers site:
    http://www.calpers.ca.gov/eip-docs/about/facts/retiremem.pdf

    • says

      Problem is, like ClimateGate, the CCERA will not release data without court order. So no one can say anything that can be corroborated publicly about average pension, including me, or Mary. It’s all guessing.

  6. Marion Miller says

    I am a retired public employee who does not receive an excessive pension. Most of us receive well under $30,000 and we pay our medical out of that. Part of the pension problem stems from cities and counties spending what should have been put aside for pensions when their required contribution was either very low or non-existent. Instead they spent it, knowing full well that their contribution would go up in the future. They pay their management salaries excessive amounts which are at times 50 to 100% higher than the average employee. If they cut their management staff in half and cut the salaries of the other half their deficit would be cut by a large margin.

    • says

      No disrespect, but for argument’s sake, I will challenge both premises of your contention that

      A) the median of coco county pensions is below $30k, and

      B) reduction of management by half and cut remaining management salaries (or compensation) by %50 does not touch the structural fiscal fiasco the county faces

      Prove me wrong

  7. Bull says

    ANY and ALL overpayments MUST be clawed back … no bleeding heart BS please.

    If they refuse to pay it back, it MUST be deducted from future pension payments by taking out no less than 50% of each future check.

    If they have alreardy died, the estate must pay it back.

    The TAXPAYERS are tired of being suckered.

    • says

      Let’s see. They are not even going to begin talking about it until January. That means at least six months of denial, then another six months of dithering. Then another six months at least to actually come up with a plan and implement it six months later. So we are already into 2012. Set aside another two years for 8-10 people to investigate and recalculate every single active pension. Then add another three years for law suits to slow down or stop process.

      Say hello to 2017.

      Justice in America and Contra Costa County where only some of the animals are equal.