The following financial graphics can be prepared and used by any local elected official, journalist, or citizen activist who wants to explain to others how pension obligations affect the financial health of their city, county, or other public agency. While these tables depict data for the City of San Jose, the format they use can be replicated. These graphics were compiled by Chuck Reed, who served as mayor of San Jose (the tenth-largest city in the U.S.) from 2007 to 2014. Reed presented these graphics as part of a day-long training and networking event for local public officials sponsored by CLEO and the California Policy Center on Dec. 2, 2017 in San Ramon, California.
As Mayor Reed explained, graphics are one of the only ways to readily explain the role of pension costs in budget deficits, especially when speaking to people without a background in finance. Reed further suggested to be sure to share these graphics with members of the press. Usually there is one, if not a few, local reporters who are assigned to cover pensions, and they are likely to be receptive to information in graphic format. Other suggestions included forming a city or county task force to study pensions, because this starts a public debate and forces the topic to come up on council or board agendas. Also, the annual civic budget process is a good time to hold town halls to highlight the impact of pensions to the public.
PENSION GRAPHICS TO EXPLAIN THE PENSION CRISIS TO COLLEAGUES AND CONSTITUENTS
#1 – San Jose General Fund Deficits
In this slide, it is immediately clear to the viewer that there was a huge correlation between the timing of pension reform in the city, 2011, and the year that the city began to get their deficits under control.
#2 – The Crushing Burden of Retirement Cost Increases
This slide shows how over a ten year period, from 2005 to 2014, pension plan contributions increased from less than $10o million per year to $300 million per year, a cumulative increase of nearly one billion dollars.
#3 – “20 Years of Budget Deficits – How Did We Get Here?”
This slide compares three variables, showing how each changed over ten years. As can be seen, general revenue to the city went up 19%, while the average cost per employee went up more than four times as much, by 85%. Meanwhile, the number of employees actually decreased by 28%.
#4 – A Shrinking Number of City Employees
This slide shows a steady decline in the number of city employees, as the city tried to cope with employee costs rising faster than revenues. But as subsequent slides show, even as headcount decreased, overall employee costs increased.
#5 – Police Department Budget and Staffing Since FY2004-05
Here two ten year trends are presented. One shows the police headcount (“SJPD Staffing”) dropping from 1,824 “Full Time Equivalents” (FTEs) in FY 2004-05 to 1,574 FTEs in FY 2014-15, a drop of 14%. The other trend line shows costs for the city’s police department (“SJPD Budget”) increasing from $238 million in FY 2004-05 to $326 million in FY 2014-15, an increase of 37% despite fewer employees.
#6 – Employer Costs – San Jose Police Officers
This slide shows the cost for veteran “Top Step” police officers in 2014. As can be seen, base pay (including overtime) is only one significant portion of a city employee’s “total compensation.” While the “cash compensation” (base pay plus overtime pay) averaged $123,891, the “employer paid benefits” (mostly pension contributions) added another $95,983 to the average cost for a police officer. Presenting the average total compensation of city employees is an important fact to share with colleagues and constituents.
#7 – Public Safety Retirement Benefits
This slide shows the average total amount of retirement benefits paid to “Tier 1” public safety employees in San Jose who retired between 2009 and 2014. Pensions, at $104,263, comprising nearly all of the total. When retirement health and dental benefits are included, the average retirement benefit for a recently retired San Jose police officer is $119,616 per year.