Pension Payouts Not Considered Compensation
The league of California Cities is not a public agency, and can not be expected to providea complete, full, accounting of the costs of City government. Nonetheless, these outlaysof public funds exist, and need to be identified for the public to fully understand the costof local government. While there are no doubt many “benefits” that City Managers enjoy, such as housingallowances, car allowances, and travel budgets, post-retirement “benefits” are notconsidered in these sorts of surveys. The most significant dollar amount that needs to beconsidered is the pension payout that Cities guarantee their employees. Rather than beingconsidered as “deferred compensation”, the current pension system sees these payouts as“defined benefits” (without any consideration for the magnitude of the “benefit”).Given that the Compensation Survey provided by the League of Cities identifies anumber of Bay Area City Managers/Executives as having salaries over $300,000, whatkind of post-retirement “benefit” (ie-pension) has been offered to these already highly- paid government employees?The following table provides estimates of the payouts for City Managers/Executivesmaking at least $300,000 a year at the time of retirement:
Years of Pension Payouts Years of Employ-mentBasePensionPayout10-Years20-Years30-Years
In this example, the table estimates the payouts for an employee retiring from agovernment agency that offers a 2.5% per-year pension. The table points out that pension payouts are dependent on the number of years worked, and the lifetime of the employeeduring retirement. The “multiplier” could be larger, or small, than the 2.5% used in thisexample, based on the pension program selected by the government agency andCalPERS. Finally, COLAs have been included in the payout calculations.The yellow zone in the table highlights pension payouts that most CityManagers/Executives might expect to receive, based on their possible years of employment and their possible lifetime after leaving active employment. As can be seen,retired City Managers/Executives can easily expect to see between $3.7M and $9.3M inretirement. Yet, “compensation surveys” do not include these dollars, even though it is possible that these pension payouts are larger than the retiree received from hisgovernment job when he/she was actively working.