Deals So Sweet They’ll Kill Us

Worried about your 401(k) tanking in your golden years?

You should become a cop.

Ticked off about your company yanking healthcare benefits in retirement?

Get a teaching job.

If you hadn’t already noticed, while the rest of us watch our retirement benefits shrivel up and blow away, public sector retirement deals are sweeter than ever. And we’re footing the bill.

Gov. Arnold Schwarzenegger tried to sound an alert last year. But the big gorilla killed any chance for a serious discussion by bullying cops, teachers and firefighters, making them out to be the bad guys.

Now there’s even less of a chance for honest leadership, because it’s an election year -- a time when no politician dares speak the truth, especially if it means risking donations from public employee unions. Meanwhile, evidence is mounting across the state that we’re headed for disaster as the bills come due on all the Cadillac retirement plans out there.

Take the Los Angeles Unified School District, where teachers can walk away in their 50s with lifetime medical insurance for themselves.

And their spouses.

And their sons and daughters, up to their 26th birthday if they’re in college.

Are they kidding?

Look, I don’t want teachers, cops or any other public employees to starve in retirement or die from medical neglect, and I know teachers have historically traded pay hikes for full benefits. But this is ridiculous, and it ain’t cheap either.

The state legislative analyst’s office puts the tab for LAUSD’s unfunded retiree healthcare costs at $5 billion over the next 30 years. That’s $5 billion that’s now entirely unbudgeted. The district would have to come up with $500 million a year to fill that hole.

And that’s the rosy scenario.

The $5-billion estimate could grow to $11 billion, depending on investment returns and other factors.

“It’s a time bomb, ticking,” said LAUSD chief Roy Romer, who fears having to shortchange kids to cover the debt.

So how did we create problems like this in Los Angeles and across California?

It’s all pretty simple.

Hordes of Democratic politicians and a few oddball Republicans from Sacramento to San Diego have won election and reelection by saying yes, yes, yes to every demand from the public employee unions.

The unions, just like corporate donors, pony up millions to have their way. And if they’re not still sending thank you cards to former Gov. Gray Davis every day of the year, they should be ashamed of themselves.

As a result of all this love, many cops and firefighters in California can retire at age 50 with up to 90% of their active duty pay. The amount is calculated on years of service, and it’s based on the highest annual amount an employee ever made, said Assemblyman Keith Richman (R-Northridge).

In other words, a firefighter who averages $80,000 a year on active duty can retire at $100,000 or more by basing it on a year in which his salary was inflated by overtime, accrued vacation, shift differentials and other factors.

“And then he gets cost-of-living adjustments on top of that,” said Richman. “We are currently paying for two police departments or two fire departments” in many cities, Richman added, meaning that the total payout to retired public safety employees is as much as the pay for active employees.

“And it’s going to get worse, because the retirement age has been lowered to 50 over the past few years, and at the same time people are living longer.”

Another problem is that it’s the most experienced employees who leave. Why continue working if you can sit on a beach at 90% of your salary, or get a job somewhere else and double your money, as hundreds of cops have done?

John Welter was assistant police chief in San Diego when, at 55, he became chief of police in Anaheim. Now 56, he’s got a $100,000 pension from San Diego and $175,000 salary in Anaheim.

You can’t blame the guy for taking advantage of the double-dip opportunity. But the system he handsomely benefits from also works against him in his role as chief. Welter said that for dicey problems on the street, he’d often rather send an experienced 50-year-old cop than a rookie.

But those are the cops he’s losing.

“It’s very difficult to see these people walk out the door,” he said, “but there’s not much incentive to keep them around.”

In Santa Ana, Police Chief Paul Walters topped out on his pension benefits in 2001 at the age of 56. But he didn’t want to leave, and the city didn’t want him to go. So it hired him on a contract basis, and Walters now makes north of $300,000 a year between pension and salary.

Walters argued that without an attractive pension plan for cops, it might be difficult to find new recruits willing to risk their lives. Maybe so, but this is beyond attractive, and the same is true of many other public employee deals.

“Everything’s gone loopy here,” said Orange County Treasurer John Moorlach, who’s quitting his job to run for supervisor on the issue of fiscal irresponsibility.

Moorlach says there’s a $2.34-billion hole in his county’s pension fund, and services may get whacked to cover the debt. Dips in returns on pension fund investments could magnify the problem, and this is all happening just 11 years after Orange County declared bankruptcy.

So what do the union bosses say?

There’s no problem, just a lot of blather from conservative saber-rattlers.

Nick Berardino, chief of the Orange County Employees Assn., insists that the debt projections are hyped, the retirement packages are fair and there’s no need for employees to make any concessions. Just because private sector employees are “being exploited and essentially thrown to the corporate wolves” doesn’t make it right, Berardino said.

I can’t disagree with him on that, especially with corporate profits and executive compensation at staggering levels, even as fixed pensions go the way of the dinosaur.

But there’s a happy medium between retirement deals designed by Scrooge and those designed by Santa Claus. A national healthcare plan would be a nice way to get around much of this trouble, but we’ll have a simplified tax code and a Wal-Mart on Jupiter before that happens.

On pensions, I’m leery of Richman’s call for a switch to 401(k)s, because I’ve got one, and I’m acutely aware that it could put me under a bridge one day, begging for Snickers bars.

Look, I’m the son of a Teamster, and I’ve been a union member most of my working life. But at the very least, the unions are going to have to give some ground on early exits. I like firefighters. I think they deserve comfortable retirements. But should we pay them as much to sit on a park bench for 30 years as we did for the 30 they fought fires?

A.J. Duffy, head of United Teachers Los Angeles, said he’s reluctantly willing to “possibly” look at trimming retirement packages for the next generation of teachers.

Possibly?

Come on, Duffy. You’re right about teachers being undervalued. But you’ve got everyone but the family dog on the healthcare plan, and it’s time to retire that gravy train.

*

Reach the columnist at steve.lopez@latimes.com and read previous columns at latimes.com/lopez.