by Bob Walsh
Yesterday SCOTUS heard a case from two California counties on the practice of pension spiking which could have a great deal of down-stream effect on many local pension systems in the state.
The cases are from Merced, Alameda and Contra Costa counties. The system pegs the retirement to the last year compensation, or the average of the last three years compensation. In some cases employees retire with 125% of their basic compensation due to a practice known as pension spiking, which hinges on the definition of compensation.
I worked under CalPers. Overtime and final compensation (paid of leave balances, etc.) did NOT count as compensation for figuring pensions, which personally I think is fair. (My last months paycheck was clear over $100,000 due to paid off leave balances.) Many systems do not work that way. This means that, when you are getting short, you can rack up every nickle of overtime you can and hoard your vacation and comp time and get a HUGE bump in your pension by doing so. This is getting to be a big deal for some of these counties as far as expenses.
The unions view this practice as a 'vested right." That point of view is not total bullshit from a legal standpoint. Under what has become known as the California Rule it is virtually impossible to reduce compensation, including retirement, to public employees. So if you accumulate pension at 3% per year when you start, you are "entitled" to that rate, or a higher rate, throughout your employment. Some of the counties are being beaten to death fiscally from this practice and have moved to end it. It is one of those things that maybe was not completely legal, but maybe not completely illegal, and has in fact been past practice for a very long time.
It will be interesting to see what SCOTUS has to say on the issue.
1 comment:
Common practice with Texas Counties. The State doesn't allow it.
Post a Comment