Soaring public pension costs are driving a wave of tax hikes across California, but many officials are reluctant to admit that fact. Instead, voters are told that higher taxes are needed to fund services like parks and public safety, or other items that enjoy similarly positive poll-tested support.
The latest example of this ruse can be found in Oakland, where voters in March will be asked to approve a property tax hike with the ostensible goal of raising an extra $20 million annually for the city’s parks department.
A closer look at the city budget, however, makes clear that exploding pension costs are the real reason the city needs more money.
Retirement costs have more than tripled over the past ten years and currently consume nearly one out of every five dollars in general fund spending. Annual costs are projected to hit an all-time high of $235 million in 2024 — a $77 million increase from last year, which will more than erase the amount raised by the proposed tax hike.
Most of this cost provides no benefit whatsoever to taxpayers or city workers and is spent instead on the benefits of those already retired — which explains why officials prefer not to mention rising pension costs when justifying the need for higher taxes.
Taxpayers aren’t just being misled about the role pensions play in the push for higher taxes, however, they are also being kept in the dark about how the system works, particularly when it comes to so-called disability pensions for police officers.
In 2014, the San Jose Mercury News found that Oakland was awarding police disability pensions at a rate far higher than neighboring cities. Astonishingly, more than half of all retired Oakland police officers are receiving industrial disability pensions.
In addition to being tax-free, these benefits are especially lucrative — and thus especially costly to taxpayers — because they are payable immediately at any age.
Take, for example, Aaron McFarlane, who worked as an Oakland police officer for four years before retiring under disability at age 31 in 2004. McFarlane has already collected nearly $800,000 in pension pay since then and is projected to receive almost $4 million in total lifetime payouts.
Officers who are disabled in the line of duty deserve compensation, but Mr. McFarlane is not disabled, at least not according to the FBI’s hiring standards.
The Boston Globe in 2014 identified McFarlane as the FBI special agent who shot and killed an associate of the Boston marathon bomber. As part of the application process, McFarlane even passed a FBI physical exam which established that he was in “excellent physical condition with no disabilities” that would impede his ability to work in law enforcement, according to a CBS San Francisco report.
This media scrutiny prompted Oakland officials to investigate what appeared to be an obvious violation of state law, but the issue would fade from public view in the three years it would take for the city to reach a conclusion.
The city would ultimately affirm the continued lifetime payment of a disability pension to McFarlane, after an anonymous doctor declared that he remained “substantially incapacitated from performing the work of a police officer.”
This is certainly good news for McFarlane, who will continue to supplement his FBI salary with a nearly $60,000 annual disability pension, paid for in part by Oakland taxpayers.
Most taxpayers, however, would be surprised to learn that they are required to fund disability pensions to those in “excellent physical condition” working in a similar job elsewhere — given that state law suggests the opposite.
It is unknown how many other cases like this are out there, and how much they are costing taxpayers. Answering those questions would first require identifying all those who are drawing tax-funded disability pensions.
Unfortunately, the state retirement system refuses to disclose that information, which is why Transparent California has filed a public records lawsuit against the agency.
The California Public Records Act declares that all citizens have “a fundamental and necessary right” to know what the government is doing with their money.
Nowhere is that right more important than in cases like these, where what the government says it is doing differs significantly, to put it mildly, from what it is actually doing.
Rising pension costs are behind Oakland’s alleged budget crunch and the accompanying push for higher taxes. Voters deserve complete and accurate information about those costs, including how much it costs to fund disability pensions for able-bodied employees who are simultaneously collecting full pay and benefits for performing the same job elsewhere.
Robert Fellner is executive director of Transparent California — a government watchdog dedicated to increasing transparency in government.