In 2013, as a reward for thirty years of humble public service, retired Los Angeles Fire Department Assistant Chief Tony Varela took home a pension payment of $983,319. Two fellow assistant chiefs took home over $850,000.
Their takes, while the highest, were hardly unique. With benefits factored in, 96 retired workers in California took home at least $500,000 in pension payments last year. Almost all of them were police and fire-fighting higher-ups, though some merely held mid-level ranks such as lieutenant.
According to the Census Bureau, as of 2012 the per capita income in California was $29,551, meaning such pension bombs amount to over 15 years of earnings for the typical Californian.
The sky-high pensions paid out to California’s public sector workers in 2013 were revealed in freshly compiled data released by the California Policy Center (CPC).
The primary culprit behind the largest payouts is a program called DROP, heavily used by police and firefighters in Los Angeles as well as public employees in San Diego and other California cities.
DROP stands for Deferred Retirement Option Plan, and is available to employees who have worked for at least 25 years and reached 50 years of age. Under the program, an employee can “retire,” but then immediately return to work for five additional years and be paid both a salary as well as their pension, which is placed in an account that earns a guaranteed five percent interest per year.
When the employee finally retires for good, they receive the accumulated amount in one giant lump-sum payment, and then continue to receive their standard pension for the rest of their life.
“I don’t know anybody that would think it’s fair to be paid to work and to be retired from the same job. It goes against the very definition of retired,” CPC president Mark Bucher told The Daily Caller News Foundation.
In Los Angeles, where the biggest DROP boons are found, the program was created in 2000 to help keep veteran officers on staff following a major police scandal. However, in 2008 a sunset clause was removed, meaning that without action by lawmakers the program is permanent.
While the program was promised to taxpayers as “cost-neutral,” it actually is only cost-neutral for police and firefighter pension funds. No data has ever been made public about the program’s general cost to city finances. A first-ever study of the program was recently completed, but is still under evaluation by city officials.
Even without DROP, however, there are 8,437 retired public workers in California earning at least $100,000 off of ordinary pensions, according to Bucher. Fifty-four are above $200,000. In comparison, the average annual Social Security benefit is a scant $15,528, for workers whose benefits only become fully available at 65.
Bucher said that employees collaborate to ensure they can retire with the most lucrative pensions possible.
“In the last year, what they’ll do is make sure that all the overtime is given to the person retiring,” he said. Since pensions are based on peak earning years and take overtime into account, retirees can boost their annual take by a 25 percent or more.
Pensions aren’t the only way public employees are engorging themselves. Ordinary salaries can be sky-high as well. In Alameda County, County Administrator Susan Muranishi took home $657,000 in combined pay and benefits, while assistant county manager Donna Linton netted $338,000. All told, 21 county administrative officers earn over $200,000, enough to put them in the 95th percentile for all earners in the United States.
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