MORE ON THE UNDERFUNDED PUBLIC PENSION PROBLEM:

Pension spiking (e.g., retroactive increases in pension benefits or pre-retirement promotions that qualify workers for bigger pension benefits), has been a major trend in California since our dot-com boom. . . . In June, it was reported that San Pablo proposed reducing police officers’ retirement age from 55 to 50, with members supposedly to contribute 3.3 percent of their payroll to partly cover the costs. But four days after the pension deal, San Pablo’s new police contract included an additional 3.3 percent raise to offset the payroll deduction, making the pension spike free to employees. This is just one illustration of combining government union power with politicians’ short-term bias, due to re-election campaigns that come before all the effects of their policies become apparent.

The logic for such a back-loaded compensation approach is obvious, despite its harm to citizens. Public employee groups are well-informed about their compensation packages, and do not hesitate to use their political clout to expand them. In contrast, citizens who know their votes won’t alter election outcomes pay little attention. But mushrooming budgets, which become scandals, can get their interest. The political solution has been to reward the influential generously, but dodge public scrutiny by deferring the big bills until retirement. When those obligations come due, politicians will have moved on or be able to hide behind the fait accompli with “there’s nothing we can do now.”

Don’t say you weren’t warned.