The California Public Employees' Retirement System building in Sacramento, California July 21, 2009. CalPERS, the state's public employees retirement fund, reported a loss of 23.4%, its largest annual loss.
The columnist details many of the small games that are played to boost pensions. My favorite: counting your health insurance and auto allowance in ways that count towards the pension.
If you are interested in finding out how much your city manager makes, click on this story for a searchable data base.
"At first, his compensation included allowances for fringe benefits, such as health insurance, and an auto allowance. But, under CalPERS rules, auto allowances cannot be counted toward pensions and fringe benefits usually can't either. In 2004, his contract was amended to say that the city agrees 'to report' those two items to CalPERS as "management incentives" so they would count toward his pension. In 2007, the fringe benefits and auto allowance were removed from his contract and his management incentive pay was increased by a similar amount."
But the big takeaway is this: there's an inherent conflict of interest in letting city officials effectively set their own pensions. While cities need more discretion over their own funding in most areas, this may be one area -- given that decisions made on pensions today are not felt until years or decades later -- where some tight caps and other restrictions are necessary.