Saturday, May 9, 2015 – 12:00 a.m.
When you read the story on San Bernardino County pensions, published in The Sun newspaper on Friday, one takeaway is evident.
The pensions are high. Neighboring counties are perplexed and probably dismayed, and likely a little envious.
The burning question is how could the pensions get this high?
Out of California’s 58 counties, 20 run their own pension systems, The other 38 participate in the California Public Employees Retirement System (CALPERS). San Bernardino County, of course, runs its own system, the San Bernardino County Employees Retirement Association (SBCERA).
Each system, in conjunction with the county administration, controls what type of compensation factors into a retiree’s pension formula.
It should be noted that, like San Bernardino County, most CALPERS member agencies, such as Riverside County, do not pay into, nor receive, Social Security Benefits, other than possibly medicare. San Bernardino County retirees also receive no vested health or dental benefits. They must pay there own.
Prior to 2013, when the California Legislature passed pension reform, the county systems could pretty much do whatever they wanted. CALPERS member agencies were pretty much limited as to what they could pile on. In essence, compared to San Bernardino County, it was virtually nothing.
San Bernardino County was by far the worst offender at spiking the pension formula.
If there was a special pay, or allowance, or leave cash out that could be made pensionable, it was!
You name it! The cell phone allowance, car allowance, excess retirement contribution paid in cash, vacation cash out, administrative leave cash out, holiday pay cash-out, bilingual pay, benefit plan allowance, etc. It was all fair game.
While San Bernardino County Administrator’s were ripping modest retirement formula enhancements from its rank and file employees, they were ringing up the cash register for themselves.
The only uniformly-banned pay for retirement statewide was overtime pay. So that’s not at issue here.
Recently, the county has enacted some changes to limit the amount of pension spiking, while the state has capped pensions at well below $200,000 per year.
Actually, back when this type of largess was taking place, there was a maximum pension that SBCERA could, in fact, pay. Internal Revenue Code 415, placed limits on what a public defined benefit plan, like SBCERA, could pay.
The 2015 limit is $215,000.
But San Bernardino County found a way around the limit.
The County, in 2003, adopted what it called a “Replacement Benefits Plan”, designed to pay any additional pension amount above the I.R.C. 415 limit, from the county general fund.
County executives, in particular, quickly learned to game the system. Many amassed thousands of hours in various leave balances that would eventually be used to spike their annual pensions.
For example, in the County Counsel’s office, amazingly enough, the county’s legal operation, attorneys were allowed to accrue off-the-books “overtime” they purportedly worked above eight hours per day. Even though they were actually classified and highly-compensated as “professional” staff, and thus exempt from federal overtime laws.
Attorneys were allowed to use this so-called “white time” instead of properly accrued vacation, administrative or holiday leave time.
The effect was that employees, involved in the practice, amassed thousands of hours of leave time to cash out at retirement, with hundreds of the hours ending up counting in final pension calculations, not to mention providing for a golden parachute-type “lump sum” payment.
You can look at every other public retirement system in the state. But you won’t find anything close to San Bernardino County.