Former Mayor Mary Verner's salary and pension request, which was denied by the city, has raised questions from several readers who wonder how an elected leader can be eligible to start receiving a pension at 55 after eight years of service.
Spokane's City Council and mayor are eligible for a pension under the Spokane Employees Retirement System, which includes most city workers who aren't police officers or firefighters.
But to be eligible they must work at the city for at least five years. That means an a elected official needs to win reelection to earn a pension. Verner served on City Council before becoming mayor, so she qualifies. Former City Councilman Richard Rush, who lost reelection, does not.
Employees who are part of the pension system currently contribute 7.75 percent of their pay toward the pension plan. The city contributes an equal amount. That amount was increased in 2008 from 6.72 percent of an employee's pay.
Here's how the basic pension works for workers hired or starting a term of office before 2009.
A retired city worker is eligible to start receiving a pension once they turn 50.
The basic pension formula is:
(The largest two years of pay / 24 months) X 2.15 percent X years of service = monthly pension
So, it's simple to calculate Verner's pension, assuming her salary was capped at around $100,000.
($100,000 X 2) / 24) X 2.15 percent X 8 years = $1,433
(This isn't exact because some years Verner earned slightly more and others slightly less. She also didn't work a full eight years because she was appointed to her City Council seat a few months into 2004.)
It's also easy to calculate what Verner's pension would be if she had earned the salary mandated by the City Charter, which says she should have had a salary at least equal to the highest paid city worker other than the city administrator. The most recent data I have on file is from 2010, which shows that the highest paid worker was Police Chief Anne Kirkpatrick, who earned about $172,800.
So, here is a rough estimate of what Verner's monthly pension would have been had she accepted full pay:
($172,800 X 2) / 24) X 2.15 percent X 8 years = $2,477
There are other formulas workers can choose for their pension, for instance, if a worker has a spouse he or she wants to take over benefits in the event of his or her death. The other formulas have been determined to cost the pension plans an equal amount.
Under the basic formula, an employee cannot earn a pension higher than 64.5 percent of his or her highest salary, though members with a long service record could choose a different formula that would increase their pension up to 70 percent of their highest salary.
Workers hired in 2009 or after must meet stricter guidelines before earning retirement. Not only does a retiree need to have worked at least five years and be at least 50 years old, if the worker is younger than 62, his or her age plus the number of years he or she worked at the city must be at least 75.
If Verner had fallen under the new rules, she would not be eligible for pension until she turns 62. As it is, she will start receiving her pension this year.
The newer rules also use a slightly different formula for calculating benefits:
(The largest two years of pay / 24 months) X 2 percent X years of service = monthly pension
The rules cap a retiree's pension at 70 percent of their highest salary.
The city's pension rules are explained in two handbooks available here.