El Monte, California is a city of roughly 100,000 residents in East Los Angeles, many of whom struggle to make ends meet with a median household income of ~$39,000 and nearly 25% of people living below the poverty line. But while most of the people of El Monte struggle to meet monthly expenses, the city’s public employees are living the high life courtesy of one of the most egregious taxpayer funded pension plans in the country. Just ask the retired City Manager, James Mussenden, who told the LA Times that he gets paid $216,000 per year in retirement to tour the world on extravagant golf trips.
The retired city manager of El Monte collects more than $216,000 a year, plus cost-of-living increases and fully paid health insurance.
“It’s giving me an opportunity to do a number of things I didn’t get to do when I was younger, like travel to Europe, take some things off my bucket list,” Mussenden, 66, said recently. He even flew to Scotland to play the famed Old Course at St. Andrews, a mecca for golf enthusiasts.
Mussenden recognizes that few Americans have pensions anymore — least of all the El Monte taxpayers who are funding his retirement. So while he enjoys his monthly retirement check, he’s discreet about it.
“The guys I play golf with, they get very angry about my pension because they don’t have anything like it,” he said.
El Monte’s total retirement costs for public employees in 2016 totaled $16.5 million, or a staggering 28% of the city’s total budget.
But taxpayer funded pension payouts weren’t always so generous in El Monte. A fact that changed in 1999 when a decade-long bull market tripled the value of California’s massive public pension fund, CalPERS. Of course, the CalPERS board of directors, dominated by public employee union leaders and their political allies, voted to spend the surplus lowering retirement ages and raising pensions for public employees all across the state.
Unfortunately, the CalPERS board was blinded by endless wall street reports suggesting that “pets.com” was worth at least $1 trillion and forgot that markets actually cycle. Alas, shortly after granting 200,000 civil servants sweet new retirement packages, at the absolute peak of the market, the tech bubble burst and CalPERs found itself in a crisis that still plagues the state to this day.
California Highway Patrol officers got an especially sweet deal. Their pensions had been 2% of their highest salaries, multiplied by the number of years they worked. The percentage of peak salary was raised to 3%.
That meant officers with 30 years of service could collect up to 90% of their highest pay for life. And they would be eligible to retire at 50.
El Monte adopted the new pension formula (known as “3% at 50”) in 2000, and the effect was dramatic. Officers who retired before 2000 with more than 25 years of service collect $82,000 a year on average, according to CalPERS data.
Those who retired after 2000 collect an average of $120,000.
But former City Manager Harold O. Johanson didn’t think it was “fair” that police officers got a sweetened retirement deal while other city employs had their pensions capped at two-thirds of their final salary. So he set out to implement a “supplemental plan” for other El Monte public employees that would boost their retirement checks by ~50%. Johanson subsequently retired three years later, at 58, and now collects $250,000 per year from taxpayers putting him in the top one-hundredth of one percent of all public pension recipients in California.
The idea for the supplemental plan arose in 2000, after the city council granted El Monte police officers the right to retire with up to 90% of their highest salary guaranteed for life.
But it created a gap between El Monte police and the city’s non-uniformed employees: Under CalPERS rules, civilian pensions were capped at two-thirds of final salary.
It would boost civilians’ retirement checks by 50% and put their pensions nearly on a par with police. The city council approved the idea in May 2000, unanimously and without public debate.
Johanson retired three years later, at 58. Today, he is the top beneficiary of the program he championed, collecting a combined pension of more than $250,000 per year, state and city records show. That puts him in the top one-hundredth of one percent of all public pension recipients in California.
But sweet pensions aren’t the only perk afforded to El Monte public employees who also get Fridays off if they work 10 hours per day Monday – Thursday and annual cost of living adjustments of up to 5%
El Monte has a history of generous employee benefits — including a four-day work week for civil servants, who put in 10 hours a day and have Fridays off. Liberal pension provisions are another part of that tradition.
Under state law, police are supposed to contribute 9% of their paychecks toward their pensions, and civilian workers 7%. But El Monte covers the employee contribution as well as the employer share, a legacy of collective bargaining agreements dating to the early 1980s.
On top of that, retired El Monte employees receive annual cost of living increases at the high end of what CalPERS allows: up to 4% for police retirees and 5% for civilians, depending on inflation. Most CalPERS pension recipients receive increases of 2% annually.
Benefits that lavish do not come cheap: For every $100 the city paid a police officer in 2016, it had to pay an additional $71 to CalPERS to fund payments to current and future retirees.
Perhaps at some point we can all stop talking about “Russian hackers” and actually focus on the real corruption plaguing our country.