School bus drivers, teachers, police, firefighters, nurses and other public employees are your neighbors, family, and friends. When they retire, they receive pensions they have earned over a lifetime of public service.
Public pension haters want to paint a picture of greedy, overpaid public employees, always taking, never giving. They’d have a lot more credibility if they demonstrated some basic knowledge about who gets pensions and how they spend them.
Here are some facts:
- The average public employee pension is about $3,000 a month.
- Public employees contribute to the retirement fund from their own paychecks to help fund benefits. Teachers, police, and firefighters often don’t get Social Security.
- They spend their pensions on rent, mortgages, food, gas, clothing and an occasional family vacation, after spending careers teaching students, saving lives and protecting property. True to character, many of them volunteer during retirement.
Faye Lane, 80, proves the point.
A secretary for the Ceres Public School District for 32 years, she retired and signed up for the Volunteers in Public Safety Program, which helps the Ceres Police Department fight crime. She is president of the Ceres School Board and volunteers as treasurer for the Stanislaus School Boards Association.
It doesn’t take much thought to blast public pensions with simplistic attacks. Pensions do cost money and they demand budgetary foresight and management. They are a cost of doing government.
They’re also an important tool for recruiting public servants including teachers, police, firefighters, scientists and park rangers.
Most of the dollars received by retired public employees in California are spent within the state. Pension checks get circulated back to state and local services as tax revenue and help drive the economy, from hospitals to restaurants.
The California Public Employees’ Retirement System – CalPERS – has tracked where its pension money goes, as has the California State Teachers’ Retirement System – CalSTRS.
In a study published in July 2017, CalPERS found its retired members spent more than $501 million in California restaurants in the fiscal year 2015-16; $460 million on cell phone service providers and gave $474 million to churches and religious organizations. That was just one year.
Not surprisingly, public pensioners spend to maintain their health. An average of $1.3 billion in public employee benefit payments goes to hospitals and doctors in California each year.
Overall, the economic activity generated by retired public employees results in $850.6 million in annual sales and property tax payments, and support about 130,000 jobs, CalPERS found.
CalSTRS estimates retiree benefits for teachers support 92,000 jobs, and beneficiaries pay about $1.2 billion a year in taxes.
California communities receive big returns on their investments in public employees long after they reach retirement age. These returns are too easily overlooked by critics.
Public employees help fund their pensions by contributing about 15 cents for of every dollar that gets squirreled away for when they retire, while employers—you, the taxpayer—contribute about 22 cents. The remaining money comes from through investment returns.
For the fiscal year ending June 30, CalPERS investments gained 8.6 percent, surpassing the annual target of 7 percent. The pension system had 71 percent of the money need to cover long-term obligations.
Pension critics have been sounding the alarm for almost two decades that we must take retirement benefits away from our teachers, police, firefighters and other public employees or California will be bankrupt. Yet California’s economy is leading the nation and our budget is balanced and sound.
If we want high-quality public services, we must invest in livable wages. That includes providing pensions for the people who keep communities running, and support their neighbors by recirculating their benefits, creating jobs and paying taxes after retirement. It’s Economics 101.
Dave Low is chairman of Californians for Retirement Security, DLOW@csea.com. He wrote this op-ed for CALmatters.