Where Does All the Money Go?

Remember when you could call a local government office and a helpful live person answered the phone? Remember when you could call Public Works about a pothole in the street or a broken drinking fountain at the park, and it would get fixed? Remember when litter along the roadside was regularly cleaned up? Despite being nearly the heaviest taxed state, California today does not deliver good value to its taxpayers. Why is that? Where does all the money go?

It is axiomatic that a dollar can’t be spent twice. If you use it to buy a lottery ticket, you don’t have it to buy bread. Government budgeting works the same way. If a city or county spends money on something other than public services, it has less money left for public services, and must cut things like live receptionists, street and park maintenance, and community beautification.

For most cities and counties, the biggest category of spending for something other than public services is pensions. An enormous slice of the budget pie is consumed by former government employees who obviously, because they are retired, no longer provide any service to the public.

No one begrudges retirees the pensions they earned while employed. But there are ways that employees, especially management employees, can manipulate the factors used to calculate their pensions so they retire on monthly incomes significantly higher than their salaries were.

We believe that the public has a right to know which government employees were “spiking” their pensions, and how they were doing it. Together with the California Foundation for Fiscal Responsibility, we made requests, under the Public Records Act, for the names of every retiree collecting $100,000 a year or more, along with the exact pension amount, employing agency, and calculation worksheet.

We obtained this information from many cities and a few counties who provided it voluntarily. By analyzing the information we discovered that many tricks are available to boost one’s pension.

Take, for example, an employee who retired from the position of “Acting Assistant Manager” whose salary averaged $120,000 a year but who retired with an annual pension of $200,000. He held the position of Acting Assistant Manager for just one year. In fact, all administrative level employees in that agency get promoted to Acting Assistant Manager the year they plan to retire, giving them a huge boost in pay that will then be their final year’s base salary for pension calculation purposes.

During the years of his employment, although he was not paid by the hour, this employee used CTO (compensatory time off for “overtime” worked) in lieu of vacation and sick leave, so that he could accumulate years of “unused” vacation and sick leave. Then, in the year he retired, he cashed it all in, further boosting his final year’s compensation.

This employee was provided a car until the year he retired, at which point he elected a car allowance instead, increasing his final year’s compensation even more.

Eight years earlier, just before a promotion became effective, this employee purchased 10 years of (already discounted) extra service credits at the actuarial price for someone holding his old, lower paying, position. Now it appears on the books as though he worked 30 years, instead of the 20 he actually worked, boosting his pension another 50%.

As these revelations became public, the cities and counties involved were embarrassed. We began to meet resistance from those cities and counties who had not yet disclosed their pension records.

Contra Costa County was the first case we had to litigate. We won in the trial court and the county did not appeal. Despite that victory, Orange County refused our request. We sued again, and won there as well and there was no appeal. Despite these victories, San Diego County refused our request and Sacramento County refused a similar request by the Sacramento Bee newspaper. We won in San Diego, and the Bee won in Sacramento. But this time, both counties appealed.

We defended our victory in the San Diego case, and filed a “friend of the court” brief in the Sacramento case. The counties argued that retirees have a right to privacy in the amount of their pensions. We argued that no one has a right to keep secret the payments they receive from public funds.

Recently, the courts of appeal in both cases ruled in our favor. In published decisions that apply statewide, the courts held that, not just six-figure pensions, but all pensions are a matter public record. Citing the strong public interest in knowing how tax dollars are spent, the courts ruled that government must disclose the names, pension amounts, and calculation details of its retired public employees.

Tim Bittle is the Howard Jarvis Taxpayers Association Director of Legal Affairs.