Findings from TUA’s pension project on Grand Rapids, Michigan are featured in the following Grand Rapid Business Journal article.
By Business Journal Staff
Published: December 12, 2011
A group called Taxpayers United of America made a visit here last week to announce that retired Grand Rapids and Kent County government employees are receiving “lavish, gold-plated pensions,” and that some of the retirees will become “pension millionaires.”
TUA called the report an exposé.
The comments came from TUA Vice President Christina Tobin, who revealed the results of a new pension-payment report that listed the top 25 highest yearly pension payments made to non-police and fire Grand Rapids retirees, to city police and fire retirees, and to retired county employees.
According to the report, the highest annual pension payments made to former city employees ranged from $67,305 to $96,175, and from $63,249 to $97,125 for retired city police and fire personnel. The lowest annual payment made to a former county worker was $60,363 and the highest of the top 25 was $76,497. Tobin said those payments are higher than the average annual wage here, which TUA reported as $45,000.
But, then, the average worker here hasn’t been employed for at least 20 years with the same employer as the retirees in the study have. One Kent County employee retired a few years ago after 55 years on the job.
In addition, basing the report on the highest 25 pension payments skews the results and doesn’t represent the average payment, which would be a better comparison for the average wage.
TUA also reported the 25 highest estimated pension payouts over a retiree’s lifespan for the three groups. For the city’s non-police and fire retirees, the estimates ranged from $2.35 million to $3.45 million. For the city’s police and fire retirees, the estimates ranged from $2 million to $3.39 million. And for retired county workers, the estimates ranged from $2 million to $2.5 million.
“Grand Rapids and Kent County pension systems are making millionaires out of public employees at taxpayer expense,” said Tobin, who is based in Chicago. When the Business Journal asked Tobin how TUA arrived at the lifetime payouts, she said, “They assume retirement at age 55 and IRS life expectancy of 85.”
But not all employees retire at 55, and the Centers for Disease Control and Prevention reports the average American life expectancy is 77.9 years, so using a 30-year payout period may lead to an inflated lifetime payment estimate.
Kent County Administrator and Controller Daryl Delabbio said the county’s retirement plan is managed very well and funded appropriately. He noted the county has taken steps to modify the system, and employees have agreed to raise their contribution levels in 10 of its 13 bargaining units.
“We will be able to make the same changes in the pension system to the other bargaining units that we are currently in negotiations with,” he said. “In addition, Kent County does not offer retiree health care. In lieu of that, we offer a monthly stipend of up to $350, depending on the length of service of a retiree,” he said.
“The report is accurate in that the figures are correct. What the report does not show is what employees contribute, the funding status of the pension plans, and the years of service that retirees work in order to obtain the level of benefit received,” said Delabbio.
“I could editorialize about the motives of this group, and the fact that its report is far from complete and lumps every public sector employer in the same pot, but I won’t.”
Grand Rapids City Manager Greg Sundstrom said most retired city employees don’t live long enough to collect pension payments for the period TUA calculated. “City employees, on average, do not live longer than the population as a whole, which is something near 80 years of age,” he said.
Like Delabbio, Sundstrom pointed out the report didn’t include employee contributions to the pension plan and said leaving that out makes the story more sensational.
“Soon, most city employees will pay for approximately one-half of the cost for their pension benefits, with some employees contributing up to 11 percent of their wages. The size of an employee’s benefit is not as relevant if the employee is footing a large portion of the bill,” he said, adding that the city has been working hard to control its costs.
“It is our very difficult economic times that I believe has caused groups like the Taxpayers United for America to object to public sector defined-benefit pension plans. I understand this. I have understood this for several years. The city has worked hard to lower the cost of retiree benefits. We have had significant success,” he said.
The complete TUA report is at taxpayersunitedofamerica.org. It also includes pension payments for retired public school teachers and the names of the top 25 retirees in each group.
TUA’s call for Indiana Gov. Mitch Daniels to release pension data was featured in this article on examiner.com.
December 9, 2011. Indianapolis. The citizen watchdog group Taxpayers United of America made a public request that Indiana Governor Mitch Daniels release his state’s government employee pension information. Most states in the US have admitted to being a victim of their own generosity with regard to government employee pensions. Critics would rephrase that, saying the taxpayers are the victims of state employee greed regarding those very same pensions. Without a transparent system, Indiana residents have no idea how fair or unfair the system is they’re being forced to fund.
In neighboring Illinois this year, the reform PAC ‘For the Good of Illinois’ was successful in forcing the Land of Lincoln to release its employee pension records. What the taxpayers found was staggering. Some go so far as to call it criminal. In one indicative case, a teachers union representative was allowed to work for one single day as a teacher. From that one day of service, the union boss has been collecting a six-figure pension each year. In another instance, yet another Washington-based union boss pulled a similar trick and now collects more than $1 million per year in taxpayer-funded pension payments.
Recent discoveries like those are fueling the nationwide movement for transparency in government. It’s also due to last year’s almost $1 trillion dollar Federal bailout of city and state budgets. Those same budgets are being drowned by overly burdensome government employee pension deals. In just one example, last week’s edition of this column titled, ‘Ribeiro Schakowsky rematch in IL CD 9’, quotes US Rep. Jan Schakowsky (D-IL) explaining the need for a teachers union bailout. The Congresswoman took partial credit for passing a bill in Washington that “provides $10 billion dollars to help prevent teacher layoffs due to massive shortfalls in state budgets.”
In Indiana, things are different. There is no transparency.
“I have written a letter to Gov. Daniels, urging him to change the culture of secrecy surrounding government employee pension benefit amounts. He can champion enforcement of Indiana’s existing freedom of information law: IC 5-14-3-1, regarding access to public records” wrote Christina Tobin, Vice President of Taxpayers United of America. She quotes the law, writing, ‘All persons are entitled to full and complete information regarding the affairs of government…’
Tobin goes on to call the Governor to task over Indiana’s apparent secrecy. “Indiana has refused to release the names and pension amounts for its retired employees at every level of government. There is a culture of resistance and secrecy around the salaries of current employees as well. Indiana State and local government officials have been more resistant in providing salary data than any other state in which we have researched the government pensions” Tobin wrote, “In states like Indiana that refuse to disclose individual pensions, we estimate pensions for current employees using their current salaries and the specific pension rules for the fund in which they participate. While this provides a reasonable estimate, the people have a right to know actual pension amounts.”
Christina Tobin and Taxpayers United of America go on to remind Governor Daniels what it’s like to live on Main St. these days. “Speaking of the total pension funds in terms of millions of dollars doesn’t mean anything to average working people who are making $30,000 or $40,000 a year” Tobin wrote the Governor, “But when people see that they are paying to support the lavish, million dollar payouts of their retired neighbors, the problem becomes very clear. In Indiana, the government employee pensions are funded entirely by the taxpayers with no employee contributions. This is the peoples’ money and they have a right to the details of the spending of it.”
The taxpayer advocacy group finished by appealing to the Indiana Governor’s fiscally conservative side, “Governor Daniels has championed some important fiscal improvements in Indiana and we are calling on him to again lead the way to a transparent culture of government, by and for the people.”For more information, visit TaxpayersOfAmericaUnited.org.
Findings from TUA’s pension project on Ann Arbor, Michigan, are featured in the following article from AnnArbor.com.
A new report released by Taxpayers United of America claims many retired Ann Arbor city government employees are receiving lavish taxpayer-funded pensions.
The group released a list of the city’s Top 50 pensioners this week. All of them make above $68,000 a year in retirement and seven make above $100,000, according to the report.
At the top of the list is Thomas Schmid, the city’s former assistant fire chief, who retired in August 2002 after a stint as interim fire chief. He now receives a pension worth $126,224 a year, according to the report.
Second on the list is Bill Wheeler, a city engineer who retired in May 2010 but remained under contract through part of this year to oversee the Ann Arbor Municipal Center project. Wheeler now receives an annual pension of $121,861, according to the report.
At the top of the list is Thomas Schmid, the city’s former assistant fire chief, who retired in August 2002 after a stint as interim fire chief. He now receives a pension worth $126,224 a year, according to the report.
Second on the list is Bill Wheeler, a city engineer who retired in May 2010 but remained under contract through part of this year to oversee the Ann Arbor Municipal Center project. Wheeler now receives an annual pension of $121,861, according to the report.
City Administrator Steve Powerssaid he believes TUA is targeting high pension earners for political purposes, but the reality is that the average Ann Arbor benefit payment is $31,258 and city employees are contributing to their retirement benefits.
Powers said retirement benefits for city employees have been changed by City Council and employees several times.
He also said TUA’s report lists pensions earned before many of the changes were made, and most individuals on the list were hired and retired many years ago.
“Even in the last couple of years as collective bargaining agreements expired, there were significant and specific changes made to the pension ordinance,” Powers said. “The changes were made in response to difficult economic and budgetary conditions and to ensure the retirement benefit is financially sustainable.”
Total payouts for pensioners making above $100,000 could range from $3 million to $4 million in their lifetime, according to TUA’s analysis, which assumes the individual retires at 55 and then receives benefits for another 30 years with modest cost of living adjustments.
“While Ann Arbor stagnates with 8 percent unemployment, a median home value of $223,000 and an average annual wage of $52,000, retired Ann Arbor government employees are enjoying lavish, gold-plated pensions that have made some of them pension millionaires,” said Christina Tobin, vice president for the national taxpayers’ rights group.
Ending pensions for all new hires would eventually eliminate unfunded government pensions, Tobin said, recommending putting new hires into Social Security and 401k plans.
“If each current government employee were required to contribute 10 percent toward his or her pension, taxpayers would save billions of dollars,” she added. “We need to knock all politicians out of office who make deals with bad government union bosses and bad corporate power brokers at the expense of the taxpayers.”
The City Council recently approved pension ordinance changes that increase both the vesting period and final average compensation period used for calculating pensions of nonunion city employees hired after July 1, 2011.
Eventually, when all nonunion employees are under the revised plan provisions, an actuary estimates the city’s costs would be about $230,000 less per year.
Powers said it was an Arizona resident who sent a Freedom of Information Act request to the Ann Arbor Employees’ Retirement System recently, requesting names, salaries and pension, information presumably on behalf of TUA. The retirement system released the requested information of names, dates of retirement and amount of annual pension.
As of June 30, the city’s pension system was 88 percent funded, compared to being 90.3 percent funded the year before and 126.8 percent funded in 2002.
The city’s unfunded pension liability has grown to $57.6 million, up from $45.5 million a year ago — and significantly up from $1.7 million in 2008. City officials hope recent changes to retiree benefits will help the city chip away at that obligation.
A recent actuarial valuation report for the city’s retirement system showed the city had 798 retirees and 135 beneficiaries receiving benefits as of June 30. The average age of persons receiving benefits is 67.2 and the average annual benefit payments equal $31,258.
The number of retired members and beneficiaries increased by 6.1 percent in the past year, while the average age of the retired members remained the same. The total annual benefit payments for those members increased by 7.3 percent in the past year.
As of June 30, there also were 664 city employees in active service covered under the provisions of the city’s retirement plan.
On average, Powers said, 25 percent of the city’s total pension benefits now in “pay status” are attributable to individual contributions plus interest. For most employees, he added, their pension contributions have increased recently.
Powers also said the funded status of pensions is merely a snapshot in time and includes many variables. He said there are various estimates of funded levels of public plans, including one survey of 215 pension funds that found an average funding level of 76.1 percent.
Corporate funding levels of defined benefit plans are estimated to be about 75 percent, according to several sources, Powers said.
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com’s e-mail newsletters.
