California public employees gain generous benefits while public sleeps

By JIM BOREN
The special interests usually have their way when the public doesn't pay attention to policy decisions on issues that seem arcane to most taxpayers. Quite simply, the ones paying the bills get ripped off because government bores them.

Then they wake up one day to find they've been funding political giveaways for years, and that's threatening their favorite programs. Elementary school music is being cut; a fire station is being closed; a program for seniors is being eliminated. Now they're mad, but often it's too late.

Generous public employee pensions in California and excessive health benefits for the retirees are examples of the public not giving a thought to costly programs that could fundamentally change the mission of public agencies. But who cares about actuarial tables and unfunded liabilities? Besides, we have a short attention span and the problems won't be felt for a generation.

It's interesting to see what upsets the public. Californians started an election rebellion over paying an excessive car tax, but they didn't say a word about lucrative pension programs that may give public employees more money in retirement than they were paid for working.

The high car tax in California helped to get Gov. Gray Davis recalled in 2003, but a more serious Davis misstep _ heaping benefits on public employees that the state couldn't afford _ didn't make the voters' radar.

But decisions on employee benefits at all levels of government threaten the ability of agencies to provide the services they were created to perform. In school districts, for example, money is being sucked out of the classroom to pay for health benefits. The biggest problem is the increasing burden of retiree benefits.

School trustees in the Fresno Unified School District began controlling these costs last year and the retirees responded by suing them. Even though they were being asked to contribute a tiny amount toward their health care, they've rebelled.

Unfortunately, they think the money to pay for health benefits somehow magically appears. One retiree said the other day that it doesn't matter what the actuarial tables say, the state will bail out the school districts.

But this could be a house of cards, and one day retirees may have nothing at all as the government agencies supporting them go bankrupt. Who will they sue then?

A new report underscores the problem in California. Local governments and school districts in California face rising retiree health care costs and that could divert money from community services, according to the California HealthCare Foundation.

New federal accounting rules are beginning to reveal the huge liability that has been mounting in most public agencies in recent years. The rules, which will be phased in beginning next year, will require public agencies to report the cost of retiree benefits.

That should draw "increased attention to retiree health care spending," according to the CHCF. "This report is intended to stimulate a frank conversation about this important issue," said Mark D. Smith, the CHCF's CEO.

But a frank discussion will only occur if the public pressures elected officials to deal with the problem. In the current environment, public employees control the political agenda.

The Center for Government Analysis estimates that retiree health care costs for public employees in California will be $31 billion per year by 2020.

Pensions for public employees are another big problem. San Diego was the poster child for the problem. The city's pension fund was nearly $2 billion upside down last year, and it threatened every city program, including public safety.

In Fresno County, a grand jury investigation said the county faces "insurmountable debt" if retirement costs aren't contained. The report said the county couldn't afford to pay retirement benefits owed to its 4,000 retirees and 7,000 current employees without going to the taxpayers for more money.

The problem was magnified in Fresno because the county allowed retirees to manipulate the method for calculating their pay. The "Fresno method" resulted in some retirees getting more money in retirement than they earned while working. A judge ruled in 2004 that the Fresno method was improper and the pensions of about 600 employees had to be recalculated.

Employee unions continually push for increases in benefits, even when it's not financially wise. But unions take no responsibility if government agencies give benefits when they shouldn't.

Consider this union response in an Associated Press story last week: "If they haven't been looking at the numbers, shame on them," said John Abraham of the American Federation of Teachers.

That's another reason taxpayers should be paying attention to public employee benefits. Unfortunately, they're more interested in the latest antic of Paris Hilton.

Jim Boren is The Fresno Bee's editorial page editor. E-mail him at jboren(at)fresnobee.com or write him at 1626 E St., Fresno 93786.