Editorials

How hiring spike chipped away at pension reform

The California Public Employees’ Retirement System board meets in December. CalPERS added 20 employees the last week of 2012, days before rules took effect to reduce pensions for new hires.
The California Public Employees’ Retirement System board meets in December. CalPERS added 20 employees the last week of 2012, days before rules took effect to reduce pensions for new hires. The Associated Press

There are some murky questions about an unusual hiring spree at the end of 2012 by some local and state agencies before badly needed pension reform kicked in.

It’s clear who the biggest winners are – the employees who sneaked in under the wire and will retire with a more generous pension formula irresponsibly approved by legislators and then-Gov. Gray Davis in 1999 at organized labor’s behest. Under those old rules, they can retire at age 55 with 2 percent of salary for each year worked. A worker in the same job hired on or after Jan. 1, 2013, will have to work until 62 to get the same benefits. (Public safety employees get higher benefits.)

It’s also clear who the biggest losers are – the government employers who are part of the California Public Employees’ Retirement System and who put themselves, and taxpayers, on the hook for higher pension payments.

As The Sacramento Bee’s Adam Ashton and Phillip Reese reported Sunday, 707 government workers started on the job during the last week of 2012 – triple the average number of new hires in the last week of other years between 2007 and 2014. More than 200 went on government payrolls on Dec. 31, 2012, a Monday, the very last day before the new pension rules took effect.

It’s more than coincidence. The hiring at one agency is already under investigation. Other agencies also ought to review the hiring spike to make sure all personnel policies were followed.

The state Board of Equalization is reviewing its 25 hires in that last week, including at least 10 at a new call center in Culver City. The state Department of Finance has already requested records on those hires as part of an audit that is also looking at special pay raises given to 16 high-level managers in 2015.

CalPERS, which understands pension rules better than any agency, added 20 employees the last week of 2012. It’s a bad example when in December the CalPERS board lowered its projected investment profit rate from 7.5 percent a year to 7 percent – a move that will mean higher contributions from local governments and employees.

The better example was set by agencies that saved taxpayers money by waiting until after the pension change to hire, adding about 3,250 employees in January 2013. Pension reform – inadequate as it was and later watered down by CalPERS – will save a lot of money over the long run.

But when Gov. Jerry Brown signed the law in September 2012, his administration did not specifically direct departments to hold off hiring until after it took effect. In hindsight, it should have.

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