Rocklin's $100,000 pensions increase

City vows new tools from state could create more opportunities for reform
By: Jon Brines, Placer Herald Correspondent
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As pension reforms by the City of Rocklin and the state of California begin, the Placer Herald has identified additional members of Rocklin’s $100,000 pension club. The City of Rocklin now has 10 former employees now collecting a lifelong pension greater than $100,000 per year. Former City Manager Carlos Urrutia, who is at the top the list, retired in 2009 with a pension nearly twice that amount at $197,938. The list also includes his assistant city managers Terry Richardson and Mark Riemer as well as senior fire and police officials, including former Police Chief Mark Siemens with a pension of $176,745. The $100,000 Club, as some government watchdog groups call it, is expected to claim another member once the retirement of Rocklin Fire Chief Bill Mikesell’s pension is finalized by CalPERS. Mikesell, who ended his 40-year fire career in July, was earning $208,033. Recessionary pressures and public outcry forced the city of Rocklin to negotiate pension reform measures. With the passage of AB 340, the City of Rocklin has even more tools to reform its pension package. During fiscal year 2012/2013, the city of Rocklin will pay CalPERS $4.2 million for its share of pension contributions. As part of its reform measure, the city is now requiring workers to make their own pension contributions – something the city had not done previously. Management team members now required to make their own pension contributions include City Manager Rick Horst, Police Chief Ron Lawrence and Fire Chief James Summers. Some critics argue this provision will result in an increase of base salaries. Horst reports the problem with the defined benefit plan offered by CalPERS is increased benefit formulas, large losses on pension investments during the economic downtown and the increased life spans of retired employees resulting which have in ballooned city costs which Host calls “unsustainable.” “My personal rate of return when I take care of my 401(k) is far better than what CalPERS is doing,” Horst said. Unlike his predecessor, Horst has a 401(k) funded during his career in city government in other states. However, when he became Rocklin’s city manager in 2012, he was put in the CalPERS pension system as mandated by law. “I’ve been here a year and a half. And even if I stayed here until I retire at 67, which is 14 years times 2 percent, that’s going to be 28 percent,” he said. “So I might get somewhere in the neighborhood of $55,000 to $60,000 based on my current salary.” Last summer the city actively started negotiating with its employee unions to build a two-tier pension system that will put new hires at a lower benefit amount and require them to work longer before they become eligible for a pension. Pension reform advocates said Rocklin’s efforts put them in the top 10 percent of cities that have tried reforms. The new law, which passed last month, includes Rocklin’s reforms plus a few more. Notably the bill would cap the compensation used to calculate the retirement benefit to $132,120 for those hired after Jan. 1, 2013. The average pension for the current 95 Rocklin retirees is $40,963, which is $12,979 over the average state pension, according to CalPERS. The cap could prevent methods used to inflate a salary for a greater pension payout, also known as pension spiking, which sparked public outcry after a watchdog group in 2009 accused then Rocklin senior city officials of it. Horst’s initial reaction to the details of the bill was hopeful. “There are some good moves in there,” Horst said. “It’s much needed. It may take some time, but eventually some of that will trickle down to the local government level.” The bill would create a defined benefit formula of 2 percent at age 62 for non-safety public employees with an early retirement age of 52 and a maximum benefit factor of 2.5 percent at age 67 for new hires, according to a CalPERS report. The idea here is the longer people work, the lower the defined pension benefit cost. It would also create three new defined benefit formulas for public safety employees with a normal retirement age of 50 and a maximum retirement age at 57. Critics say the increased retirement age for officers and firefighters, like aging athletes, may be a bad idea and put them at risk for injuries as they get older. Rocklin Police Officers Association President and 17-year police veteran Adrian Passadore said his union would respect the new rules when they become mandatory. “I still go over fences and I am 44. There are many capable officers in their 50s,” Passadore said. “The retirement age was 55 when I started in 1995. It was moved down to 50 in the late ‘90s. In good times it’s hard to recruit good officers, but we are experiencing hard times. I think as long as a person knows up front what the retirement age is, then they know what they're getting into.” Rocklin City Council member Scott Yuill, a Rocklin pension reform advocate, felt it’s too soon to draw conclusions on how this bill will impact Rocklin. “Many expense reductions on a local level will come through collective bargaining, which also takes time,” Yuill said. “The good news for Rocklin taxpayers is that Rocklin has been out in front of the process and has worked cooperatively with city employees in reaching incremental changes. I’m confident that this amicable track record will continue. It’s a top priority.” ________ Rocklin’s $100,000 Pension Club Former City Employees City Manager Carlos Urrutia:$197,938 Police Chief Mark Siemens:$176,745 Asst. City Mgr. Terry Richardson:$168,914 Fire Battalion Chief Tim Palmer:$113,749 Police Lt. Stephen Newman:$112,418 Asst. City Mgr. Mark Riemer:$111,977 Police Lt. Mike Freeman:$111,211 Police Lt. Stuart Davis:$109,144 Police Lt. David Johnstone:$108,850 Police Sgt. Bob Martin:$105,728 Source: CalPERS