Six-figure pensions surge for Sacramento County
By Brad Branan
The Sacramento Bee
Published: Monday, Jul. 18, 2011 - 12:00 am | Page 1A
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Sacramento County retirees drawing pensions of more than $100,000 a year skyrocketed in the last decade, the result of benefit increases and higher-than-expected salaries that have prompted some county employees to retire early and launch new, lucrative careers at other government agencies.
The Bee obtained detailed pension information about Sacramento County retirees for the first time last month when it won a lengthy court case to obtain the records. The 3rd District Court of Appeal ordered the Sacramento County Employees' Retirement System, or SCERS, to release pension documents to The Bee that included names and benefit amounts.
The information reveals that the number of six-figure pensions jumped from 44 in December 2005 to 283 last year. But instead of retiring, some of those pensioners are choosing to take jobs at a different government agency, while others return to the county to work as contract employees. The practice, which is legal, is called "double-dipping" and in some cases is providing individuals a combined annual income of more than $250,000 a year.
Pension-reform advocates point to double-dipping as an example of waste in the public-pension system, one of the issues contributing to the growing unfunded liabilities problem, in which the amount that a pension plan owes its members outpaces its assets.
Marcia Fritz, president of California Foundation for Fiscal Responsibility, said the real problem behind double-dipping is that early retirements are costing the county a fortune.
"Pensions are for retirement," said Fritz of Citrus Heights. "They shouldn't be paid to people who are working."
In Sacramento County, SCERS had an unfunded liability of nearly $1 billion as of June 2010. This year, the county will spend $278 million on retirement costs, a third more than it did five years ago.
Percentage tops CalPERS
An analysis of SCERS records, along with interviews with the system's officials and some of its pensioners, reveals the impact of benefit decisions made in 2003:
The Bee obtained detailed pension information about Sacramento County retirees for the first time last month when it won a lengthy court case to obtain the records. The 3rd District Court of Appeal ordered the Sacramento County Employees' Retirement System, or SCERS, to release pension documents to The Bee that included names and benefit amounts.
The information reveals that the number of six-figure pensions jumped from 44 in December 2005 to 283 last year. But instead of retiring, some of those pensioners are choosing to take jobs at a different government agency, while others return to the county to work as contract employees. The practice, which is legal, is called "double-dipping" and in some cases is providing individuals a combined annual income of more than $250,000 a year.
Pension-reform advocates point to double-dipping as an example of waste in the public-pension system, one of the issues contributing to the growing unfunded liabilities problem, in which the amount that a pension plan owes its members outpaces its assets.
Marcia Fritz, president of California Foundation for Fiscal Responsibility, said the real problem behind double-dipping is that early retirements are costing the county a fortune.
"Pensions are for retirement," said Fritz of Citrus Heights. "They shouldn't be paid to people who are working."
In Sacramento County, SCERS had an unfunded liability of nearly $1 billion as of June 2010. This year, the county will spend $278 million on retirement costs, a third more than it did five years ago.
Percentage tops CalPERS
• SCERS' six-figure pensioners are 3 percent of the people in the system, yet they receive 13 percent of the benefits provided by the pension plan. That's a higher percentage than CalPERS, which pays $100,000 or more to 2 percent of its pensioners.
• Public safety retirees receive the biggest benefits – 3 percent of their final salary multiplied by years of service, compared with about 2 percent for other retirees. As a result public safety retirees, a quarter of county pensioners, take home almost two-thirds of the pension payouts over $100,000.
• The county continues to use retired annuitants, mainly in the Sheriff's Department, to bolster its workforce as employees take advantage of early retirement options. That means SCERS is paying out a pension at the same time the retiree can be earning a paycheck from the county.
Richard Stensrud, chief executive of SCERS, said his agency follows the law in handling double-dippers, but he concedes that issues raised by double-dipping are worthy of discussion by lawmakers.
While big investment losses in recent years explain some of the county's spike in retirement costs, so do increased benefits and higher-than-expected salaries, Stensrud said.
Like many other local governments, Sacramento County increased its retirement benefits in 2003 in response to higher state pension benefits, Stensrud said. At the same time, the county lowered retirement ages.
Public safety retirees, with 10 years of service, receive the full benefit formula at 50 instead of 55. Other retirees receive the full benefit formula at 62 instead of 65.
More double-dippers
Take George Anderson. He was 51 when he retired as undersheriff four years ago, because then-Attorney General Jerry Brown had named him head of the Justice Department's division of law enforcement.
He earned a $143,000 annual salary in the new job, on top of his $173,559-a-year pension, before stepping down in June because of a change in administration at the Justice Department.
Although he benefited from the current system, Anderson said it needs to change. The retirement age needs to be raised and employees need to contribute more, he said.
"The important thing is that the system needs to be sustainable," he said. "It's not now."
That said, he makes no apologies for collecting his pension: "I paid a lot of money into it."
Other Sheriff's Department retirees have moved into top-paying jobs, too. Former Chief Deputy Dan Drummond became chief at the West Sacramento Police Department in 2004, and now makes $165,000 a year in salary. He also receives a $134,000 annual pension from the county.
Likewise, former Sheriff's Capt. Robert Craft makes $118,000 a year from his pension, on top of his $112,000-a-year salary as chief of police at Cal Expo. Craft and Drummond did not return repeated calls from The Bee.
Marjorie Koller retired from the county after 30 years with the Sheriff's Department, the District Attorney's Office and Superior Court. She left county employment after winning an uncontested election to a Sacramento Superior Court judgeship in 2008, the same year the court left the county pension system.
As a judge, she collects a $168,000 yearly salary and a $107,000 pension. "I chose to collect my pension because I earned it and it will be my only pension," she said, noting that she will not qualify for a state pension as a judge.
Some payroll savings
Twenty-five of the contract employees collect pensions of $100,000 or more. They all work as on-call deputy sheriffs, making $37 an hour for no more than 960 hours a year, said Kerri Aiello, county spokeswoman.
Using on-call deputies allows the Sheriff's Department to fill jobs with staffing requirements, such as correctional work, without having to pay benefits or overtime, said spokesman Deputy Jason Ramos.
James Hunt, a county retiree who collects the county's third-largest pension, $183,791 a year, came under fire a couple of years ago for returning to work while receiving retirement benefits. Working as acting head of the Countywide Services Agency, Hunt made $223,000 a year – on top of his pension – until he left in January 2010.
At the time, Hunt defended the arrangement as giving the county needed experience when another administrator left the office. That's the argument government officials generally make for rehiring retirees, Stensrud said.
Contract employees can't get additional time credit for their retirement benefits, officials say.
Fritz, the Citrus Heights pension-reform advocate, says the county's hiring of so many retirees shows its retirement age is too low.
Stensrud said the county Board of Supervisors lowered retirement ages at a time when people are living longer. The board may want to consider raising the age or possibly making working retirees give up some of their benefits, he said.
SCERS, which provides benefits for retirees of the county and a number of special districts, limits the amount of work a retiree can do with his or her original employer, but no limits are placed on a retiree when he or she is hired by a new employer, he said.
TWO DRAW BIG PENSIONS AFTER CRIMINAL ACTIVITY
Two Sacramento County retirees collect pensions of more than $100,000 a year, despite having lost their jobs due to criminal activity.
Michael Patrick Leary was fired from the Sheriff's Department after he was charged with real-estate fraud last year. He eventually pleaded no contest to charges of grand theft, attempted grand theft of real property and forging a property transfer with intent to defraud.
The retired sheriff's lieutenant and former Elk Grove City Council member continues to collect a $141,000 annual pension.
Another former sheriff's lieutenant, Mark Kessell, pleaded guilty to possession of hundreds of images of child pornography two years ago. He collects a $108,000 pension.
Under state law, SCERS can revoke a pension only if an official has been convicted of bribery, embezzlement, extortion or theft of public money arising from his or her official duties, said Richard Stensrud, SCERS chief executive.
The law was approved after the conviction of San Joaquin Sheriff Baxter Dunn on corruption charges in 2005. Stensrud said he's not aware of the law being invoked in Sacramento County.
Records show that 93 retirees collecting pensions have come back to work for the county as contract employees. Most of them work for the sheriff, while the rest work for several different county departments.
Lowering the retirement age allowed more pensioners to move into new jobs, with some earning more than $250,000 a year with retirement and work income.
An analysis of SCERS records, along with interviews with the system's officials and some of its pensioners, reveals the impact of benefit decisions made in 2003:Take George Anderson. He was 51 when he retired as undersheriff four years ago, because then-Attorney General Jerry Brown had named him head of the Justice Department's division of law enforcement.
He earned a $143,000 annual salary in the new job, on top of his $173,559-a-year pension, before stepping down in June because of a change in administration at the Justice Department.
Although he benefited from the current system, Anderson said it needs to change. The retirement age needs to be raised and employees need to contribute more, he said.
"The important thing is that the system needs to be sustainable," he said. "It's not now."
That said, he makes no apologies for collecting his pension: "I paid a lot of money into it."
Other Sheriff's Department retirees have moved into top-paying jobs, too. Former Chief Deputy Dan Drummond became chief at the West Sacramento Police Department in 2004, and now makes $165,000 a year in salary. He also receives a $134,000 annual pension from the county.
Likewise, former Sheriff's Capt. Robert Craft makes $118,000 a year from his pension, on top of his $112,000-a-year salary as chief of police at Cal Expo. Craft and Drummond did not return repeated calls from The Bee.
Marjorie Koller retired from the county after 30 years with the Sheriff's Department, the District Attorney's Office and Superior Court. She left county employment after winning an uncontested election to a Sacramento Superior Court judgeship in 2008, the same year the court left the county pension system.
As a judge, she collects a $168,000 yearly salary and a $107,000 pension. "I chose to collect my pension because I earned it and it will be my only pension," she said, noting that she will not qualify for a state pension as a judge.
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