Yes, it's true - Tom Morris is the third of four police chiefs in that city, now in bankruptcy protection, who served less than three years and retires with an average of 92 percent of their final salaries. And it's not just Stockton: Bloomberg went through the pension records of more than a dozen cities that were in financial trouble and discovered all kinds of six-figure lifetime benefits for officials like Morris. Pension abuse is one big reason so many local governments - L.A. among them - are faced with monster structural deficits. The problem is that you can't easily trim these benefits, and with pension funds returning far less investment money than projected cities are on the hook for the balance. "We didn't have very many people looking out for the taxpayers when these deals were negotiated," San Jose Mayor Chuck Reed told Bloomberg.
Many cities are hobbled by retiree obligations that consume 10 percent or more of revenue. And unlike other expenses, which can be cut or deferred, pension costs are intractable, said Eric Friedland, head of municipal-credit research for Schroder Investment Management North America. "As their tax revenues go down, they're stuck with these fixed costs," Friedland said. "I see this as a major driver of fiscal stress." City councils across the state, spurred by then-Governor Gray Davis's move to enhance pensions for California Highway Patrol officers in 1999, sweetened retirement benefits for police, firefighters and other workers in the decade that followed. Public-safety employees could retire after working for 30 years, collect 90 percent of their top salaries and take jobs elsewhere while still in their 50s.
Cities and counties began boosting pensions for police and firefighters after Davis signed the bill enhancing the benefit for state troopers. The Legislature enacted the measure in a year when Calpers, the largest U.S. pension fund, had 138 percent of the assets needed to cover projected liabilities. "It got out of control," said Jay Goldstone, who was Pasadena's finance director from 1996 to 2006 and now is chief operating officer of San Diego. "No one understood the potential impacts of what these increased benefits were and how they were being paid."