April 10, 2013 in City

Shawn Vestal: Spiking public safety pensions hurts poor kids the most

By The Spokesman-Review
 

Shawn Vestal
(Full-size photo)

For more information

Read the three-day series on public pensions in Washington state at www.spokesman.com.

The firefighters and city governments who gamed the system – and the taxpayers – for massive extra pension payments have cost the state more than the extra million bucks or so they’ll collect in retirement.

They’ve dumped gasoline on the fire that is blistering the foundation of public life in Washington – scorching our sense of common cause. They’ve legitimized arguments that have undercut every recent effort at public investment in this state. As Washingtonians snip ever more holes in the social safety net and withdraw ever more good will from the bank of faith in government, we will have this kind of thing, in part, to thank for where we end up.

They stuck it to all of us, and not just financially. They stuck it to poor kids most – just as certainly as lawmakers who are failing to close a single loophole to bring more pennies into the coffers are sticking it to poor kids. Because it is primarily poor kids – lacking the campaign contributory influence of firefighters – who suffer the long-term, generational effects of all-cuts budgets.

If you missed the news about pension-spiking firefighters, here’s a summary: Mike Baker of the Associated Press recently reported the results of a two-year investigation into looming issues in state employees’ retirement and medical costs. Baker’s three-part series is vital public service journalism, and it identified many of the financial issues surrounding the aging population of state workers.

A lot of those costs have to do with keeping promises made to state workers – lavish, unrealistic promises, perhaps, but promises nonetheless. However, Baker’s report also detailed several distressing ways in which the system is being gamed for maximum lootage.

Chief among them is pension-spiking. Baker detailed the cases of three retired Lakewood fire department managers who received retirement-eve pay raises that drove up their lifetime pension payments by more than $1,000 a month.

Two of them received salary boosts of $20,000 four days before they retired. The third received a raise 13 weeks before retirement. These raises put their salaries into the $200,000 range. All retired in their mid-50s. One subsequently took a contract position as the fire chief in a small town, where he continues to draw a full annual retirement of $184,000.

All told, these shady raises are likely to cost the state $1 million, if not more, according to the AP’s analysis.

That’s made more outrageous by the evidence that last-minute raises meant to spike pension payments are simply standard procedure for firefighters around the state, in part because budget-cutting local governments used the raises to make retirement appealing and move expensive employees from city budgets into a state retirement plan.

So, as the state cuts budgets, lays off workers and eliminates programs, firefighters are getting big final-year raises from their cities, which drive up their state pensions for life. As lawmakers fail to add a single penny to shrinking state revenues while posturing about what they won’t cut, late-career firefighters are getting lifetime raises on the way out the door, thanks to creative accounting in city halls.

Baker found that the average first responder retiring into the LOEFF-1 pension system – the oldest, and most unrealistically lavish, system – was being paid 5.5 percent more than the previous year. The firefighters’ late-career raises were more than double the average for all retiring state workers.

This pension-spiking, as it is known, is not unheard-of, but Washington’s firefighters appear to be taking it to new heights. And it comes at a time when public employee pensions are raising very real concerns for governments everywhere. It also comes at a time when the value of unions and collective bargaining is under attack – and is withering in the private sector, where labor unions are arguably more crucial – and this kind of nonsense simply fuels the corrosive anti-union fire.

The retirement boom is going to be costly. The state estimates that long-term care costs for cities and counties are going to rise by 250 percent in the next 20 years, and that the long-term unfunded liability of medical care for those retirees reaches $1.8 billion.

This pension-spiking is a separate question from whether we should pay firefighters and cops well. We should. These jobs are vital and these people are providing crucial services to our communities. We need them, and should reward them.

In return, perhaps they should not scam us.

Shawn Vestal can be reached at (509) 459-5431 or shawnv@spokesman.com. Follow him on Twitter at @vestal13.

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