Editor,
Two articles in the March 16 Indy illustrate the dilemma Laguna Beach and other public entities have inherited as to defined benefit public employee pension plans.
In the private sector these plans have been eliminated as the costs are impossible to estimate and to cover. Not so in the public sector, particularly as to fire, police, and lifeguarding services and other municipal employees. Most continue to operate under the old defined benefit programs, which are becoming unworkable due to changing demographics and greatly increased longevity.
To quote J.J. Gasporatti, “in our city’s case this unpaid credit card balance is the unfunded obligation for generous pensions given to public employees.” Also, in “Laguna Names a New Fire Chief,” it is mentioned that the new chief’s starting salary will be $192,000 a year. To this we must add indirect costs, such as health insurance, SDI, which is about 35% of base salary, or $67,200. The total comes to $259,200 to start. Under public pension criteria most public employees operate under the 3/30 rule. This means that they accrue 3% of their final salary for 30 years, which equals 90% of final salary per year at retirement until they die. In the case of our just retired fire chief, if he lived 30 years after retirement he would receive 30 years x .03 x $265,000 [final active salary] = $7.1 million plus COLA adjustments.
In the past, public employees made less than in the private sector, but received a modest pension. Now they make more and get unsustainable pension benefits.
Laguna Beach is a microcosm of the problem statewide. Remember, too, that Governor Brown allowed collective bargaining for public employees during his first term in office. Now we have unionized public employees voting for the elected politicians who negotiate their wages, benefits and pensions.
Doesn’t make sense and in the long run, not sustainable.
George Orff, Laguna Beach
