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Firemen’s pensions past due for reform

In the years immediately preceding their retirements, Clark County Fire Department personnel routinely receive artificially fattened up paychecks that substantially increase their retirement pay, according to a Review-Journal analysis of department payrolls.

Fire engineer Colin K. Hedges, for example, retired in 2007 after 29 years of county employment from a Fire Department job which in 2006 offered him a base salary of $79,434. Yet, because his paychecks were larded up with $28,019 in callback pay and $29,873 in conventional overtime in 2006 — allowing him to show an artificially high income of $165,690 for that final year — Mr. Hedges will enjoy retirement pay of about $84,650 a year, as long as he lives.

Capt. Michael G. Dillingham also retired in 2007. Because he received $16,254 in callback pay in 2006, and $1,848 in conventional overtime, Capt. Dillingham’s total pay in 2006 was $133,889. This will allow the former fire captain to draw about $104,549 a year in taxpayer dollars for doing nothing as long as he lives, retiring from a job that paid a base salary of $89,368 in the last full year he worked it.

It’s important to note that these figures do not include disability payments to the rare modern firefighter who may have suffered permanent on-the-job injuries. These are retirement pay obligations that taxpayers must hand to workers who often retire in healthy middle age, many of whom can and do proceed to launch new careers.

It will be argued “That’s what they were promised when they took the job.”

But the fact that such pay “spiking” may be commonplace doesn’t make such manipulation moral or right — not when we consider that those bearing the burden are taxpayers who — even if they earned the equivalent of $106,800 every year for 35 years — must labor till they’re 66 to enjoy a modest (promised) Social Security retirement income of $27,872 per year.

“Spiking” is the main reason certain reforms to the Nevada Public Employee Retirement System were enacted by the 2009 Legislature. Spiking is also thought to be an important reason for the PERS system’s unfunded liability, currently reported at $7.2 billion.

To dent that deficit, county contributions to PERS in the first pay period in July will increase from 33.5 percent to match 37 percent of a firefighter’s or police officer’s earnings, and from 20.5 to 21.5 percent for all other employees.

State Senate Bill 427, passed in the last days of the 2009 Legislature, set a 10 percent limit per year on increases in PERS-eligible compensation during an employee’s last five years of employment.

The Las Vegas Chamber of Commerce proposed changing the law to consider only an employee’s base pay in calculating retirement pay and over the last five years of employment instead of the present three years of highest pay. A compromise retained the three-year calculation basis but added the 10 percent-per-year speed limit on PERS-eligible wage increases. Callback pay will be eliminated from calculations; overtime pay was eliminated years ago.

The fiscal effect of the changes will be gradual, however, since they apply only to employees hired after Jan. 1.

In the old days, employment security and decent benefits were considered necessary to compensate government employees for the relatively low pay, occasionally hazardous duty, and “bare bones” working conditions such jobs entailed. Nowadays, such an analysis seems quaint, at best.

Our cops and firemen are professionals of whom most in the valley are proud. No one wants to see them hobbling in the soup lines in their old age. But taxpayers with tanking 401(k) retirement accounts can no longer afford to finance such luxuries.

The manipulation must end. Pensions must be calculated based on base pay, alone. And government pensions must be changed from “defined benefit” to the kind of “defined contribution” plans more familiar to the private-sector taxpayers who foot the bills. At which point, it’s time to talk about increasing the number of years these workers must put in before being allowed to retire with full pensions, as well.

“Retirement pensions” are supposed to take care of the elderly after they’re too frail to work. Those who wish to quit in their 40s and go launch another career should be free to do so; they may even be due some annual consideration for their service.

But $104,549 a year, to retire from a job with a base salary of $89,368? Come on.

 

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