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Critics Say Pension Bill Could Cost California More

KPIX Channel 5

August 12, 2010

The cost of public pensions is one of the biggest drains on government budgets, and the debts are eating into more public services across the Bay Area. A bill working its way through the state legislature is supposed to reign in some of the biggest expenses. But critics say it will only make matters worse.

San Francisco Assemblywoman Fiona Ma is out to curb pension excesses by public employees with Assembly Bill 1987.

"It's called spiking," she explained. "My bill would prevent them from accruing their vacation, their sick days, and any other sort of agreement and cash it out the last year and use that inflated number to get their pensions going forward."

But CPA Marcia Fritz said Ma is wrong.

"It doesn't do what she thinks it's going to do," Fritz said.

She's president of Here's what she said AB 1987 would do for public employees like the notorious highly-paid Bell, California officials:

Bell City Manager Robert Rizzo made $787,000 in his last year, the wage at which his pension was determined. But Fritz explained that with AB 1987 in place, Rizzo could have added cash-outs from unused vacation amounting to $323,880. That would have pushed his final compensation up to $1,110,880. Calculating his pension from that amount instead would give him an extra $230,000 a year.

"She's calling it an anti-spiking bill. Part of it does close a few loopholes, but then she's adding loopholes," Fritz said. "It's not a good bill."

Ma insisted AB 1987 addresses abuses by the state's top earners, like Rizzo. But Fritz is worried it will create opportunities for other staffers to pump up final pay. Contra Costa Supervisor John Gioia agreed.

"It doesn't solve the problem that it's claiming to solve," Gioia said.

Gioia sits on the county's pension board. He said Ma's legislation ties all state agencies to a judge's ruling originally meant for only a few.

"This bill would lock all of us into a court decision and a settlement of that court decision from many years ago that would result in employees being able to use unused vacation in their final year to increase their pensions," Gioia explained. "And then, that could only be changed if the employer and the union bargain that issue away."

Gioia is concerned AB 1987 will end up costing Contra Costa taxpayers even more in the long run, especially considering four of the top ten Bay Area pension-earners retired from the San Ramon Valley Fire District.

"We're facing a drop in revenue in Contra Costa County and across the state. We're facing increased costs. And we're facing an increased demand to pay off our pension debt. All of these combined are resulting in a tighter crunch on services," Gioia said.

Fiona Ma told CBS 5 critics have accused her of letting unions craft the bill, and that that's just not true. She said some people just want a "panacea."

"Some of the critics feel that this bill does not go far enough," said Ma. "This bill seeks to curb the abuses for those highly paid employees that are not part of a bargaining unit."

Fritz added, "She's trying hard, bless her heart, but she needs to go back and redo it."

The Assembly passed AB 1987 unanimously in June. It's now in committee with the Senate.