mead cohen berger shevtsova garfinkle michta grygiel blankenhorn
Florida Pensions Go Ballistic

Add purple Florida to the list of states facing financial disaster from the twin bombshells of the financial crisis and massive union pensions. The Miami Herald has a shocking report of waste and abuse in the state’s pension system. Speaking of one moderately paid, midlevel employee, the paper reports that:

By the time she reaches her mid-70s, the city’s pension fund will have paid her $4,074,000 in her golden years.

Scores of South Florida city employees, particularly police and firefighters, have recently retired in their mid to late 40s or early 50s with six-figure pensions, the result of generous pay and benefits packages that are now costing taxpayers tens of millions of dollars a year.

The deals were agreed to by elected officials in negotiations with politically potent employee unions — especially police and fire unions, whose members face the biggest risks but enjoy higher pay and better benefits.

During the real estate boom, there was plenty of money for pay raises and perks, even as employers in the private sector were ratcheting down health benefits and phasing out traditional pensions in favor of self-funded 401(k) plans.

Then it all went sour.

The problem goes beyond inflated salaries and abuse of overtime rules. Reading the article, it appears the every aspect of the public employment contracts have been spoonfed to the state and municipalities by public unions. The “retirement” benefits are particularly egregious:

Actually, in municipal government-speak, “retiring” doesn’t mean leaving the job now. In another perk not enjoyed by private-sector employees, it often means entering a years-long transition phase called the Deferred Retirement Option Program, or DROP, during which the worker remains on the job, earning both a salary and a pension benefit that is held in a savings account. […]

The average retiree doesn’t come close to raking in a six-figure pension. But with negotiated formulas that have allowed employees to factor into their pensions overtime, unused vacation and sick days, municipal employees have been retiring far younger and more comfortably than those in private industry.

So young that they can enjoy a second act. Donald De Lucca, the former Miami Beach police chief who retired in his 40s and cashes a $182,000-and-growing yearly retirement benefit, recently was hired as chief of the Golden Beach department at $100,000 a year, according to the town manager.

Let’s hope Mr. D’s new job also has a generous pension plan; it would be a terrible shame if the luster of his golden years was dimmed by worries about money.

The crooked collusion between greedy unions and selfish politicians is more than a nuisance.  It is theft from the neediest — those who need the services that high pension costs will force state and municipal governments to cut for many years to come.

In some cases cities and states will be able to claw back some of the money.  In the meantime, a suggestion to insurgent candidates looking for a hot issue: do some oppo research on bad union deals your opponent has either made or supported.  Then find concrete cases of outrageous pensions those deals made possible, and use that information to tell the voters exactly what is going on. This issue is a dog that can hunt.

Features Icon
show comments
  • Mogden

    The portion of a public pension that exceeds the median income for a region should be taxed at a 90% rate.

  • Toni

    Dr. Mead, of course you know that Democrats have long endorsed and supported labor unions, and the unions have responded in kind. Why are local and state union boondoggles worthy of your comments, but not those at the national level?

    No president has done more to shunt federal funds to unions (UAW, government, construction, etc.), nor to bend the law to serve unions (Boeing lawsuit, Delta unionization) than Barack Obama. I daresay no president has benefitted more from back-scratching union donations — for example, $80 million in 2008 from the Service Employees International Union alone. Guess who was the single most frequent non-governmental visitor to the White House in Obama’s first six months. SEIU President Andy Stern.

    All told, unions gave some $400 million to Democratic candidates in 2008.

    May I modestly request that, in addition to your spotlights on local and state back-scratching, you address President Obama’s and the Democrats’ mutually remunerative relationship with labor unions? The difference is in details but not in kind.

    The MSM considers this issue ho-hum. A good overview of recent union struggles and Democratic responses, including Obama’s, appeared in the conservative Weekly Standard. Excerpt:

    “While the White House was trying to demonize the Chamber of Commerce, the Wall Street Journal reported that the biggest donor in the 2010 election was actually the American Federation of State, County, and Municipal Employees (AFSCME). A single public sector union had spent $87.5 million in recycled tax dollars​—​supporting Democrats. AFSCME’s political director even bragged to the Wall Street Journal, “We’re the big dog.””

  • Scott

    The really scary thought is that Judges are public employees who are counting on those cushy retirement packages. Who wants to bet that when the bankrupt states can no longer fund the pensions, and the suddenly cut-off public pensioners start filing scads of lawsuits, that those public employee judges will rule for the people, and against the entrenched bloated pension plans? Not me.

    What type of revolt is going to happen when the judicial branch starts dictating tax and spend policy through court cases that find that states MUST honor pension demands, all other obligations and responsibilities be damned?

© The American Interest LLC 2005-2016 About Us Masthead Submissions Advertise Customer Service