AN OBSCENE TRANSFER OF PUBLIC FUNDS – AT 8:49 A.M. ET:  We've all read stories recently, shocking stories really, that the average public employee now earns considerably more in wages and benefits than does the average employee in the private sector. 

Now the Wall Street Journal, in a superb editorial, examines the impact that giveaways to public employees are having even on other public services, especially education.  California college "students" have been protesting tuition hikes and cutbacks in services, reminding us of California campus protests of the 1960s.  Even the pro-Communist signs are the same.  But the "students" have little understanding of the source of their plight:

In 1999, the Democratic legislature ran a reckless gamble that makes Wall Street's bankers look cautious. At the top of a bull market, they assumed their investment returns would grow at a 8.25% rate in perpetuity—equivalent to assuming that the Dow would reach 25,000 by 2009—and enacted a huge pension boon for public-safety and industrial unions.

The bill refigured the compensation formula for pension benefits of all public-safety employees who retired on or after January 1, 2000. It let firefighters retire at age 50 and receive 3% of their final year's compensation times the number of years they worked. If a firefighter started working at the age of 20, he could retire at 50 and earn 90% of his final salary, in perpetuity. One San Ramon Valley fire chief's yearly pension amounted to $284,000—more than his $221,000 annual salary.

In 2002, the state legislature further extended benefits to many nonsafety classifications, such as milk and billboard inspectors. More than 15,000 public employees have retired with annual pensions greater than $100,000. Who needs college when you can get a state job and make out like that?

It has always been my dream to be a billboard inspector in California. 

This year alone $3 billion was diverted from other programs to fund pensions, including more than $800 million from the UC system. It is becoming clear that in the most strapped liberal states there's a pecking order: Unions get the lifeboats, and everyone else gets thrown over the side. Sorry, kids.

And...

The governor's office projects that over the next decade the annual taxpayer contributions to retiree pensions and health care will grow to $15 billion from $5.5 billion, and that's assuming the stock market doubles every 10 years. With unfunded pension and health-care liabilities totaling more than $122 billion, California will continue chopping at higher-ed.

Mr. Schwarzenegger has routinely called for pension reform, but the Democratic legislature has tossed aside the Terminator like a paper doll.

And the politicians?

California has a governor's race on, and the candidates are semi-mum on this catastrophe. Democratic candidate Jerry Brown has supported modifying public employee benefits but hasn't offered specific proposals and opposes defined contribution plans. Republican Meg Whitman supports increasing the retirement age to 65 from 55 and asking employees to contribute more to their benefits, but she won't support a reform ballot measure for fear it would drive up union turn-out in November.

COMMENT:  It's the same story in many liberal states, like New York.  These are the states in the most trouble.  You can be sure they'll go begging to Washington for help. 

We just learned, here in New York, that a local school superintendent earns almost as much as the president of the United States.  And the schools aren't getting any better.

March 10, 2010