The Contra Costa County Employee Retirement Association (CCCERA) board met in front of a packed room Monday as it attempted to address concerns about possible overpayments of pensions to employees that may have retired since September of 1997.
This is a very complicated issue and county and district retirees, as well as current employees are genuinely concerned as the Retirement Board hashes through who knew what when. See previous coverage of the CCCERA at Halfway To Concord.
It was grand kabuki at the Concord Hilton before a packed ballroom as Counsel for the CCCERA went through a slideshow explaining current law stemming from a 1997 court ruling (Ventura). Despite the grandstanding of several board members it became clear over the course of the meeting that:
1. Employees are not vested to benefits created by a mistake by the board.
2. The CCCERA is in fact culpable for allowing certain kinds of cash payment be used for calculation of final year salary.
3. Whether or not the CCCERA changes its procedures for new hires seems to be shaping up as a sued if you do or damned if you don’t.
A simplistic example would be: why did the board allow an employee with accrued vacation or sick time to be use that time to raise final year salary and thus receive a much more generous pension than an employee that cashed in accrued personal leave time yearly. Additional example of pension spiking the CCCERA allows as “policy” is letting employees “straddle” accrued time over three fiscal years to beef up average salary of three years.
According to the presentation by counsel, the duty of the CCCERA board is fourfold:
1. Preserve and protect the fund, to pay lawful benefits, and collect sufficient contributions to support the benefits
2. May not perpetuate an erroreous interpretation of the (Ventura) law that would cause such distortions outlined above
3. Must act fairly to all members and their beneficiaries across all generations
4. Subordinate duty to mimimize employer contributions, consistent with its fiduciary duty.
The legal issue is that the nothing in the legislation or court law that suggests the Legislature intended pensions should vary so widely on the basis of accrued and unused leave, rather than on the the simple basis of age, years of service, and final salary, defined as compensation for the AVERAGE number of days ordinarily worked by all employees in the same grade or class, counted when earned NOT paid (as in when someone cashes in eight years of sick leave to count as part of their “terminal” compensation.
In other words, such accrued time ought to count toward years of service when accompanied by appropriate employee contributions, but ought not be counted toward final salary above and beyond average compensation for the grade or class.
But this is the sticking point no one wants to face, apparently, as said grandstanding board members repeatedly pointed fingers at the County and other employers for making contracts and policy that the CCCERA simply administered, or the other playing dumb unbefitting someone with over two decades on the board. Yeah, one wag retorted, “Dumb as a fox.”
As the CCCERA counsel pointed out, the board may have nothing to do with setting policy or negotiated agreements with bargaining units when it comes to deciding what kinds of compensation, but it does have a fiduciary responsibility to be in compliance with the law.
It would seem that allowing accrued time to be used to calculate “final compensation” is far beyond the pale.
Unfortunately, if the CCCERA board does not change it’s current policies, it is open to suit for breech of fiduciary responsibility under the law, and if it does change its policy for new hires it basically admits it institutionalized an erroneous interpretation of the law, whether or not it was an egregious mistake, or purely bad judgement. Yet, there are those on the board that will want us to think none of this is their responsibility or lack thereof (more likely).
And why not? The CCCERA is dominated by union friendly representatives, and on these kinds of clubby boards, with clubby oversight, and clubby hearings, it’s always easier to give the house away and say Yes to every case, than to exercise vital fiduciary responsibility and say NO when it is legally and organizationally warranted.
The potential impact of current retirees who have benefitted by this institutionalized “wink-wink nudge-nudge” and active employees counting on the same overly generous promulgated rules and procedures as “vested rights” could be devastating, and be dragged through the court system for years.
The impact of all of these hijinks on the public and taxpayer has yet to be calculated as overpayments, for the most part, must come from tax money taken away from critical services to feed this beast created by a CCCERA board apparently incapable of upholding its fiduciary duty to its members or the public, as they blame someone else.
{ 5 comments… read them below or add one }
Boosting final compensation by crediting unused vacation time is a rip off — at any salary level. Name one non-government pension plan that allows this!
These types of hijinks are found exclusively in public agencies — esp. those controlled by labor interests.
Pointing to the excesses of the highly compensated executives does not excuse practices which artificially inflate final comp calcs to turbo-charge pension benefits.
P.S. Borenstein deserves some kind of an award from Contra Costa taxpayers. He’s exposing stuff in need of a good does of fresh air and sunshine . . . to remove the stench.
I was at the meeting. I did not crib Borenstein’s notes, but look forward to his insightful coverage. Your attempt to maintain some wedge between the rank and file and management and taxpayers, while typical of adversarial union-speak, is not the issue. The issue is County workers have a governing board at CCCERA that is a collection of incompetent clowns and ought to be investigated per the RICO Act. It is about good business practices and acceptable board governance that ought to be compliant with the law. Even the CCCERA attorney pointed out as much.
You just don’t get it: County workers should join taxpayers and County to sue CCCERA.
First off let’s get one thing clear……less than 5% of County Employees get the “generous” retirement that Bornstein has reported. He needs to check his facts before reporting. The average clerk (largest classification in the County) after 30 years of service receives approximately $30,000 a year in retirement benefits. I would not call that “generous”. Yes there are Fire Chiefs, Department Heads and Mr John Cullen that had spiked benefits but that was created by the BOS. Again this is not the case for the average County employee. And while we are at it the BOS also gets pension benefits and Seniority pay. Amazing since it took rank & file employees almost 30 years to receive any kind of seniority pay. So before any of you spout off you need to check the facts for yourself and not believe what that hack Bornstein writes
The more publicity this issue gets, the better. This obscene taxpayer ripoff needs to be exposed and reformed.
Just ask the guy down the street who was laid off last year — or the woman next door who’s underemployed — what they think of this CCCERA pension spiking snafu.
I can tell you this much: No one in my neighborhood is too thrilled at being fleeced.
Required …. Correct going forward AND return of overpayment (via subtraction from future pension payment).
No options … the TAXPAYER is entitled to the money back …PERIOD (actually with interest as well !)