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To understand the hidden costs of one of California's sweetest public employee perks, feast your eyes on Exhibit A: Alameda County's top-paid public official, Susan Muranishi.
Not only did the county administrator rack up $462,000 in gross pay last year, and not only did taxpayers contribute an additional $118,000 to her retirement plan, they also picked up the bill for something Muranishi was supposed to pay: the $43,000 "employee" contribution to her pension.
It's called the "pension pickup" -- and like a rich uncle picking up the tab at a big family dinner, Bay Area taxpayers footed the bill for more than $221 million last year for the employee share of 63,000 public workers' pension contributions. The practice undermines retirement rules that were designed to force employees to share the burden for their pensions.
Muranishi was the Bay Area's biggest beneficiary of the little-known, lucrative benefit that most taxpayers don't know exists. But at least 28 other Bay Area public employees received pickups of more than $20,000 last year.
"Wow, that's real money," said Ralph Kanz, an Alameda County activist and former chairman of Oakland's Public Ethics Commission. "The system has gotten twisted up from what it was meant to be."
A new analysis of the Bay Area News Group's latest collection of government compensation data revealed that at least 117 public agencies from as far south as Gilroy to as far north as Cloverdale picked up a portion of their employees' retirement contributions in 2012 -- a growing concern as governments scramble to find ways to control runaway pension costs.
'Out of whack'
This often hush-hush benefit negotiated during rosier economic times can put thousands of extra dollars in public employees' paychecks by relieving them of costly payroll deductions. But the practice can get so expensive for local governments that last year state lawmakers banned agencies that belong to the giant California Public Employees Retirement System from offering pickups to anyone hired after Jan. 1, 2013. Reforms led by Gov. Jerry Brown are designed to get workers to pay a higher share of their retirement costs. The state retirement system for teachers has never allowed the practice.
That hasn't stopped agencies such as BART, the Association of Bay Area Governments and towns such as Portola Valley, Scotts Valley and Hollister from lavishing more than 99 percent of their employees with pension pickups of 100 percent. Last year, BART spent $17 million covering what employees were supposed to be contributing to their pensions.
"It's gotten out of whack," said BART's general manager, Grace Crunican, who is pushing in labor negotiations to halt all pickups, even though taxpayers last year picked up $17,500 of her pension costs. "It's called the 'employee share' for a reason."
The 3,373 BART workers who received pickups last year were among 63,713 government employees in the region who had at least part of their pension share paid on their behalf in 2012, according to the compensation data. That's in addition to what state law already requires governments to pay for each employee as a standard benefit.
The figures are revealed in this newspaper's annual survey of Bay Area public agencies and governments, compiled through the state's Public Records Act as part of an ongoing effort to show taxpayers how their money is spent. The newspaper collected salary and benefit costs for 279,017 public employees at 330 local agencies, accounting for more than $17.6 billion in government spending on personnel costs in 2012. Readers can search the database at www.mercurynews.com/salaries/bay-area.
A negotiated perk
California's pension systems require all public employees to pay roughly 8 to 10 percent of their gross pay toward their pensions through payroll deductions. Law enforcement officers pay more because they are able to collect full pensions as early as age 50 and receive more generous benefits than other workers.
However, nothing stops unions and managers from negotiating to get the "employee share" of their pension costs picked up as an extra sweetener -- and many do.
"People may think the employees are paying 8 percent. Well, it turns out (some) are not," said Joe Nation, a public policy professor at Stanford University who studies California pensions. "They are paying a smaller amount."
Data show that nearly 6,000 police officers, sheriff's deputies and firefighters received pickups across the region last year, worth an average of about $5,200.
Still, the data show, some local governments are starting to eliminate the costly perk when contracts are renegotiated. Cash-strapped Oakland cut it last year, slashing $3.5 million from its personnel costs. Pinole, in Contra Costa County, made a similar move.
Pickups began "as a tumbleweed," said retired labor lawyer Chris Burdick of Marin County, who has written a legal textbook on California pension laws. Unionized employees realized nothing stopped governments from paying an employee's share of pension benefits and began negotiating for it, he said.
"As it began to tumble down the road, it got bigger and bigger," he said. "Everyone knows what everyone else is getting, and they want to get it, too. There's only one good reason to be a public employee, and that's to get the pension."
The number of government workers across the state who receive a pickup remains unknown. CalPERS doesn't track it, said Brad Pacheco, the pension agency's spokesman.
In exclusive company
Santa Clara County dwarfs the rest of the Bay Area in paying the "employee" share of its workers' pension contributions -- kicking in nearly $72 million last year -- but that comes with a twist: The employees reimbursed the county $57.5 million of that money. It's called a "reverse pension pickup," a trick that effectively bumps up the size of employees' future pensions without costing the county more in salary.
In Alameda County, less than 25 percent of county employees received the pickup benefit last year, data show. Muranishi's payment was more than five times higher than any other employee's. In fact, the $43,000 pension contribution topped the gross salaries of 1,861 Alameda County government employees last year, including janitors, clerks and secretaries. Muranishi didn't respond to requests for comment.
She was one of 29 people who received a pickup of more than $20,000 last year, data show. That list also included San Rafael City Manager Nancy Mackle, Gilroy police Chief Denise Turner and Hayward fire Chief Garrett Contreras.
Turner is just one of 16 people in Gilroy's government who received a pickup last year, a number that included six members of the City Council, who had 100 percent of their pensions paid for.
Mayor Don Gage, a former Santa Clara County supervisor who took office this year and declined city benefits because he is already drawing a government pension, said he was unaware of the perk in city government. "I don't pay too much attention to that," he said.
Gilroy was one of 68 cities in the region that offered a pickup to at least some employees last year. Of those, 17 paid it to all employees in the pension system. Those included Cupertino, Pleasanton and Oakley, which recently ended four years of employee furloughs.
Small agencies
Data show that pickups are more common at small agencies that receive little scrutiny.
Water agencies, sewer providers, irrigation and mosquito abatement districts, even public cemeteries and the Santa-Rosa based California Authority of Racing Fairs, which regulates betting on horse races at county fairs, offered the benefit last year, often at higher rates than at other kinds of agencies.
Of 34 special districts that paid a pickup for all their workers in the pension system, a third of them paid 100 percent of the employees portion, data show.
The West County Wastewater District in Richmond, which serves about 36,000 sewer customers and has a yearly budget of $20 million, even gave pickups last year of $1,276.29 each to three part-time elected directors, covering two-thirds of their pension costs.
The district's president, Alfred Granzella, 87, said the district began paying toward a pension, complete with a pickup of his share, when he was first elected 28 years ago, and he has never questioned it. "They provided it at the time and it carried on. I am entitled to it."
All of the district's 56 employees in the pension system receive a pickup ranging from 25 to 100 percent of their shares of pension costs.
All of those promised perks during fatter times now are coming back to haunt governments, which are struggling to cover millions of dollars in obligations for their employees' retirements. As some Bay Area officials are finding, few of the beneficiaries are willing to turn back the clock and pick up the tab themselves.
"Once you are in the club," Nation said, "boy, are you set."
Contact investigative reporter Thomas Peele at tpeele@bayareanewsgroup.com. Follow him at Twitter.com/thomas_peele. ___
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