The State Worker

Chronicling civil-service life for California state workers

May 5, 2011
Study: Benefits give public employees an edge on private sector

California's state and local government employees' pay is roughly equal to counterparts' salaries in the private sector, but pension and health benefits push public workers' total compensation costs about 10 percent higher, a new report says.

The two-part study, commissioned by the California Foundation for Fiscal Responsibility , also cautions that public pension obligations threaten to crowd out money for public services. The foundation, headed by long-time pension change advocate Marcia Fritz, has proposed several pension cost-cutting ideas including a cap on pension payouts, higher employee contributions and higher retiree health premiums. The proposals would affect both current workers and future hires.

The study by Sacramento-based Capitol Matrix Consulting estimates the impact of those proposals on various employees based on length of service and whether they are safety or miscellaneous workers. Nearly every scenario envisions deep cuts to employee benefits and employer costs.

Steve Maviglio, spokesman for union coalition Californians for Secure Retirement, blasted the report, its authors and the foundation. "The report is a political document that relies on outdated and skewed data that provides an inaccurate view of retirement benefits for public employees," he said this morning in an e-mail.

CalPERS CEO Anne Stausboll issued a statement this afternoon that said the fund is reviewing the report, but "what we have seen reported raises significant policy and legal questions. We will closely examine the research, methodology and implications through the lens of our role to provide retirement security and health benefits for our members and their families."

Capitol Matrix, co-founded by former Finance Department Director Mike Genest, looked only at what employers pay for benefits, not what employees contribute. It echoes some of the unsustainable public pension warnings contained in February's Little Hoover Commission pension report, although Genest and co-authors Brad Williams and Jay Peters took care to strike a neutral tone during a teleconference with reporters.

"I don't know what the right retirement system is," Genest said.

Comparing public sector and private sector compensation is difficult, Peters said, since so many government jobs have no private-side counterpart. The study focused on comparable state and private jobs using federal statistics, Kaiser Family Foundation health benefits figures, U.S. Chamber of Commerce data, retirement information from large employers and state union contracts.

A 45-year-old California state employee halfway through a 30-year career making $60,000 per year -- $5,000 less than a private sector counterpart -- receives on average $46,492 in health, retirement and other benefits for a total compensation of $106,492, according to the study. The private sector worker in the state receives, on average, $31,737 in benefits for $96,737 in total compensation.

"We were trying to capture a mid-range employee," Peters said. "Our purpose was to model the impact on the employer."

The foundation and Capitol Matrix plan to release a third part of the study that looks in more detail at the fiscal impact of various proposals to lower public employee compensation costs. The date of its release hasn't yet been announced.

110505 Capitol Matrix table.JPG

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About The State Worker

Jon Ortiz The Author

Jon Ortiz launched The State Worker blog and a companion column in 2008 to cover state government from the perspective of California government employees. Every day he filters the news through a single question: "What does this mean for state workers?" Join Ortiz for updates and debate on state pay, benefits, pensions, contracts and jobs. Contact him at (916) 321-1043 and at jortiz@sacbee.com.

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