Sunday, July 25, 2010

More State and Local Government Layoffs and the Pension Crisis

by Bill McBride on 7/25/2010 08:36:00 AM

From Tom Abate at the San Fransicso Chronicle: Public pensions put state, cities in crisis

The recent layoff of 80 police officers in Oakland could be the harbinger of things to come ...

"This is not unique to Oakland," said Ron Cottingham, president of the Police Officers Research Association of California. "Stockton is having this happen. So is Sacramento."
The author argues that many of these layoffs are happening because pensions are straining state and local government budgets.

The article contains some information on a recent scandal and the size of most pensions:
[T]he city of Bell (Los Angeles County) ... has been paying its city manager nearly $800,000 a year and setting him and other highly paid local officials up for huge pensions.

Scandals like this fuel public outrage and overshadow the reality that while abuses occur, and fatter pension payouts are on the rise, the average CalPERS beneficiary currently gets just over $24,000 a year, and 78 percent of all the fund's recipients get $36,000 or less.
The pension problem is a long term issue, but in the short term, the state and local government layoffs will contribute to the unemployment problem.

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