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Our View: It’s time to flatten Calif. salary spiking

Posted: March 9, 2012 1:55 a.m.
Updated: March 9, 2012 1:55 a.m.
 

From the often-controversial subject of public employee salaries, benefits and retirement packages comes the particularly unscrupulous tactic of “salary spiking,” in which government workers hike their pensions by scamming the system in a legal way, and California taxpayers are forced to pick up the tab.

Salary spiking is the practice of long-time public employees skewing their pension pay by cashing in unused vacation pay, bonuses and any extra benefits just before they retire, gaining them a cushier retirement because retirement pay is based on a percentage of their highest salary year, not an average of an entire career.

For example, Ventura County Chief Executive Marty Robinson was earning $228,000 — a tidy sum for a public employee. But then Robinson cashed out on $34,000 in unused vacation pay, an $11,000 bonus for earning a graduate degree and more than $24,000 in extra pension benefits just before she retired.

Suddenly, Robinson’s salary jumped to $272,000. In turn, her retirement pay reflected a full career at the inflated figure.

The state is already saddled with an estimated $884 billion of unfunded pension liabilities, and salary spiking is one of the reasons why that number has grown by hundreds of billions of dollars in the last few decades.

These retiring employees are trying to exploit a loophole in the system at the expense of their employer — the taxpaying public. To cheat the already-broke taxpaying public by collecting a lifetime of unearned benefits is nothing short of deplorable.

We applaud retiring city, county, safety and law enforcement employees who worked large portions of their lives to make this state a better place for everyone. And while this practice isn’t actually illegal, it sure smacks of cheating.

CalPERS, the state’s largest public employee retirement system, banned salary spiking in 1993 to reduce growing costs that were ultimately going to break the bank. Unfortunately, Los Angeles County, along with 19 others in California, participates in other retirement systems.

The taxpaying public is already paying for some public employees to retire in their 40s or 50s, so the state (read: “all of us”) are potentially paying them to not work for another 50 years.

Gov. Jerry Brown is taking measures to stem salary spiking by pushing to set pensions according to the average of the final three years of salary earned, instead of just the highest year, which is usually the final one. And he’s also proposing to base pensions on salary only, without benefits and vacation added on.

This is definitely a good start, but it’s little more than a Band-Aid solution on a massive fiscal hemorrhage. There needs to be some serious discussion, and many concessions need to be made, to secure the long-term financial health of California itself — not just its public employees.

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