Recently we saw a group of “police, firefighters, and labor leaders” start the process of putting a measure on the November ballot adding 1% to the sales tax in Escondido. It is supposedly justified by a need to “address homelessness, repair and maintain streets, sidewalks, parks and other facilities, to expand police and fire services, and to improve emergency response times.”
Isn’t it always about helping the disadvantaged, fixing streets, maintaining parks (and likely libraries), and improving public safety? Missing from that list is what is likely the single largest driver of the need for more money in Escondido — funding city employee pension plans.
Leaving that out is most certainly a lie of omission, but we don’t expect to see the truth there. The groups involved (“police, firefighters and labor leaders”) would personally benefit from this tax, and giving the people of Escondido the truth might lead to more opposition. And, as often happens, we see nothing about this truth in media coverage of this effort.
Public agencies make two types of payment into employee pension plans. What is called the “normal” payment is a regular contribution by the agency to the employee’s pension coverage. The amount of that is a percentage of the employee’s pay as mandated by the California Public Employee Retirement System (CalPERS). This is the equivalent of a 401K contribution in private industry, where your employer contributes a percentage of your pay into your retirement plan.
While that’s where private employers usually stop, that normal contribution is just a part of what public agencies contribute. Another payment is made every year, based on a calculation made by the pension system as needed to make pension payments higher than that normal contribution could fund.
Because those higher payouts are determined by the actuarial need to put more money in the system to make the payments promised but are not funded from the normal contribution, they are called “unfunded actuarial liability” payments. The actual data on these payments is available on the CalPERS website for anyone interested.
In 2018, Escondido’s unfunded payments totaled $13.7 million. The latest data shows that grew to $26.3 million last year. That’s an increase of $12.6 million in six years, up 92%, with a compound annual growth rate of almost 14%. And CalPERS projects it growing another $1.8 million by 2025.
Final inflation numbers for 2023 are not yet available, but from July 2018 to September 2023 we see the rate of inflation in San Diego County has been about 4.5% per year, making the past increases over almost 3 times the rate of inflation.
It’s a very nice benefit for public employees.
And that $26 million payment has nothing to do with addressing homelessness, maintaining streets, or improving police and fire services. Matter of fact it has nothing to do with anything that actually benefits Escondido residents, it’s all about benefitting employees.
Some more facts for you…
In 2022 CalPERS data (as provided on the Transparent California website) shows the median total pension payment of an Escondido city employee who retired after a full career (30+ years) was $95,066 per year. That, of course, is increased by a cost-of-living adjustment every year for the rest of the pensioner’s life.
We often see justification for pension payments made “because public employment pays so poorly.” Actual payroll data, again provided by the city to Transparent California using a public records act request, is also available. Using that we can see in 2022 the average pay of a full-time Escondido employee was $102,891. Again, whether this is too much, too little, or just enough is not for me to decide.
Whether both types of payment are “too little, too much, or just right” is not for me to decide. The Goldilocks question is up to the citizens and taxpayers of Escondido. These are just facts.
Perhaps the residents of Escondido feel both numbers are “just right” and they do need to approve higher taxes to fund better city services. That is their right, but having an honest discussion of this (and a legitimate election debate) has to start by using real data to identify the reason additional revenues are needed.
Maybe it’s time for Escondido to look at solving the root cause of the problem and finding a way to move new employees onto a more affordable program, rather than slapping a taxpayer-funded band aid over that problem?
Todd Maddison is the director of research for Transparent California, a watchdog agency that gathers and publishes over 2 million public employee compensation records annually.
