Marin County’s civil grand jury has again proved itself to be a proactive agent for reform and good government. The publication of its latest report, “Pension Enhancement: A Case of Government Code Violations and A Lack of Transparency,” is an exposure from a Marin perspective how the Golden State’s public employee pension systems zoomed out of control.
The grand jurors explain that in just one six-year period, between 2001 and 2006, there were 36 pension enhancements by just four Marin agencies, “each of which appears to have violated disclosure requirements and fiscal responsibility requirements” of California law.
The report looks at Marin’s county government, the city of San Rafael and two fire districts, Novato and Southern Marin. Those four were selected because unlike other Marin cities and special districts that belong to the state retirement system, CalPERS, they are members of the Marin County Employees Retirement Association.
The jury reports that during the critical periods and upon advice from their attorneys, the four agencies broke the law by not holding public hearings when “enhancing” their employees’ retirement benefits. More critically, they failed to conduct accurate or timely actuarial evaluations of the future cost of those enhancements.
This is a big deal.
The jury is saying that the public was kept in the dark while “the unfunded pension liability of MCERA ... increased from a surplus of $26.5 million in 2000 to a deficit of $538.8 million in 2013.”
Since the granting of these benefits was in violation of California law, arguably they’re not properly vested and subject to cancellation.
As Marin’s Citizens for Sustainable Pensions has long pointed out, public pension deficits have broad implications.
While senior bureaucrats benefit, lower-income residents dependent on the frayed public safety net are most harmed by these excesses. Money diverted to fund rich pensions necessitates cuts to essential social services and infrastructure maintenance.
The reality is that the bulk of pension cash funds retirements and lifetime health insurance for those civil servants at the top of the government food chain. As a percentage, relatively little goes to those employees earning under $100,000.
The poster boy for this propensity may be Marin County Counsel Steven Woodside. A competent attorney who has served as the top lawyer for Marin, Santa Clara and Sonoma counties, Woodside is a triple dipper enjoying the fruits of pension enhancements.
It’s chronicled in California Policy Institute’s “Transparent California” database, assembled from information obtained via the Public Records Act.
On top of his $256,636 total compensation package from Marin, Woodside now receives two pensions from his past employers. He annually reaps $94,779 from the Santa Clara retirement system and gets another $82,606 a year from Sonoma.
The county’s senior civil lawyer has an annual gross income from all governmental agencies of $434,020.
Perhaps the violation exposed by the grand jury with the greatest negative impact was the failure to publicly document “the fiscal impact that the proposed benefit changes or salary increases will have on the funding status of the county’s employee retirement system.”
Without accurate and timely actuarial studies, it’s impossible for decision makers or the public to know the impact of actions often shrugged off as inconsequential and buried on council and supervisorial “consent calendars.” Certainly the public was unaware that these “enhancements” would cause the county to face a half-billion-dollar pension deficit.
Imagine the brouhaha if that fact had been known before any decision was made. That would be a mere kerfuffle compared to the explosive that will occur if the public pension house of cards ultimately collapses and taxpayers find out that they’re holding an empty bag.
April 25, 2015
Marin Independent Journal
By Dick Spotswood, Columnist