State lawmakers may try to tackle the huge problem of public employee pensions in the upcoming lame duck session of the Legislature as billions of dollars in shortfalls go unchecked.

But state House and Senate members should be grateful they don’t face the wildfire of pension expenses that’s emerging in California, where $100,000-plus pensions in the public sector have become commonplace.

In Michigan, lavish pensions are rare but the failure of local officials to set aside sufficient funding to pay future retirement benefits is a messy shortcoming all over the state. Michigan municipalities owe $9.5 billion in long-term unfunded pension and retiree health care benefits, according to one study.

Legislators may take a crack at a two-tier system in the state pension fund for public school teachers, with new hires forced to take a 401(k) rather than a defined benefit plan.

The pension time bomb was identified long ago but officials at all levels failed to act. In 2005, former state school superintendent Tom Watkins warned in a report that, unless substantial pension reforms were enacted, Michigan  schools would face a structural funding crisis in the coming decades.

California serves as the poster child for unchecked pensions but details recently unearthed by Forbes Magazine show a retiree benefits system that is out of control.

Adam Andrzejewski, a Forbes contributor, found that in California nearly 22,000 government retirees – at the state, county, university, school and municipal level — receive pensions worth $100,000 or more, and a few approach the $400,000 mark. The cost of these six-figure pensions is $3 billion a year, which means that it takes all the income taxes paid by about 1.6 billion taxpayers to pay the bill. None of that money finances basic services such as police or fire protection.

The data collected from the massive “CalPERS” retirement system shows that many cities and counties are burdened with hundreds of pensions in the six-figure range. And some of the recipients held fairly routine jobs while on the payroll, according to Andrzejewski, founder and CEO of OpenTheBooks.com.

Nothing tops the situation at the Los Angeles County Sanitary District 2, where the general manager of this trash collection agency retired in 2007 with a pension of $303,000. He was replaced from within and that general manager retired in 2012 with annual pension benefits of $345,000. The new GM in the sanitation district earns a salary of nearly $337,000.

So, one position accounts for about $1 million annually in cost to the taxpayers – for two retirees and one very well-paid manager.

 

 

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