SHOCK: Average Orange County, Calif. government employee pension 88% of final salary

July 21, 2014

California Policy Center California Policy Center

The mission of the California Policy Center is to secure a more prosperous future for all Californians by identifying public sector policy barriers to freedom and economic growth. Read more at californiapolicycenter.org

ORANGE COUNTY, Calif. – Would you take a 12 percent pay cut in exchange for a 100 percent reduction in work? In Orange County, if you’ve worked 30 years – say from age 25 until age 55 – that is exactly what you can expect.

brokepensionsAnd many OCERS retirees are receiving pensions in excess of their highest salary.

For instance, Orange County Department of Education’s former deputy superintendent Lynn Hartline retired in 2013 with an OCERS-reported final average salary of $250,018. Hartline won’t have too much trouble adapting to life without a salary, however. Her 2013 full-year pension benefit from OCERS (Orange County Employees Retirement System) was 100 percent of her final average salary – $250,018.

Charles Walters received the second-highest OCERS yearly payout in 2013. Walters was the former Orange County assistant sheriff who retired in 2008 amidst a criminal grand jury probe for the 2006 murder of John Chamberlain in the jails he oversaw. His pension for the 2013 year was also 100 percent of his final average salary — $226,365.

Unfortunately the examples above are hardly extreme outliers, but rather indicative of an underlying trend. For all OCERS full-career retirees — those with 30 or more years of service credit for retirement — the average annual pension benefit received in 2013 was $73,875, or nearly 90 percent of their final salary.

Focusing on only recent retirees prevents older retirees — who’ve received significant cost of living adjustments to their pension benefit — from artificially inflating the comparison of pension benefits as a percentage of final salary. The average pension benefit received by a full-career OCERS retiree who retired in 2004 or later was $81,283, which represents 88 percent of the average final salary.

OCERS retirees who worked for the O.C. Fire Authority received an even larger percentage of their final salary in retirement. The average full-career Fire Authority retiree received a pension benefit of$117,934 in 2013, which was 94 percent of the average retiree’s final salary. Retirees who had retired after 2004 received an average benefit of $119,326, worth 94.5 percent of their final salary. For 2008 or later full-career Fire Authority retirees, the average pension benefit in 2013 was $122,770, which was 94.75 percent of the average retiree’s final salary.

The data from those who retired after 2008 demonstrates that pension benefits worth 94 percent their final salary is indicative of the base pension amount an employee can expect to receive upon retirement.

Reviewing the OCERS 2013 data reveals that this problem goes beyond fire retirees. In addition to Hartline’s quarter million dollar yearly benefit, a former social services directorassistant public defender, and sanitation district manager all receive annual pension benefits well over $150,000 apiece.

As salaries rise, so too will future pension benefits for which taxpayers are responsible. Consider the Orange County Department of Education’s current superintendent, Alfred Mijares, who received a salary of $287,500 in 2013.  If Mijares retires with at least 30 years of service credit, he will likely receive a pension benefit of over $250,000 his very first year of retirement.

Private citizens usually consider an appropriate pension amount to be what is necessary to cover the cost of living during retirement. Yet for many Orange County employees, pensions have become a continuation of the extravagant salaries they took home during their careers.

This system encourages government employees to retire 10 to 20 years earlier than their private- sector counterparts. Taxpayers are left paying for six-figure government pensions that most can only dream of, while simultaneously trying to fund their own, significantly smaller pensions.

Authored by Robert Fellner, research fellow with California Policy Center and a transparency researcher for TransparentCalifornia.com

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