SAN RAMON City Manager Herb Moniz, speaking to an East Bay business group last month, blamed CalPERS policies and the economic downturn for "unsustainable" public employee pension costs. Indeed, those are key contributing factors to the ballooning expenses. But if Moniz wants to reform the system, he might also look at his own city -- and at his own pending pension.
Moniz earns a jaw-dropping $344,200 a year, making him the top-paid city manager in the state, according to a new salary survey by the League of California Cities in which 90 percent of municipalities responded. His income doubled in the last decade. Although he runs a city of 63,000 people, he makes far more than, say, the city manager of San Jose (population 1 million) or the city administrator of Oakland (population 425,000).
Consequently, Moniz, who is 65, could retire now with a starting pension for roughly 26 years of public work of about $261,000 a year -- and perhaps a lot more. Whenever he leaves, he will benefit from pension increases his top staff negotiated with city workers in 2006 and 2007 -- benefits that will boost his own retirement pay by about 18 percent.
Clearly, as Moniz said last month, public agency pensions have suffered severe investment losses. But the problem began because state and local governments granted costly pension increases with risky expectations to pay for them in large part from unrealistic annual investment returns of about 8 percent.
That fantasy has deeply damaged the finances of state and local governments. In San Ramon's case, the most recent actuarial evaluation, which does not include the sharp stock market decline in the fall of 2008, shows the pension plan for non-police employees had only 72 percent of the funds it needed, a $15.3 million shortfall. To balance that account, the city sold bonds that it will be paying off through 2039.
Moniz should accept some responsibility for exacerbating the problem. Instead, speaking last month on a panel about the ballooning public employee pension crisis, he never mentioning his own role.
The Contra Costa Council had convened the panel, of which I was also a member, and Moniz was presenting the East Bay city managers' plan for reforming the system. As I've written before, the city managers' proposal would provide some savings, but basically fiddles on the margin.
It's not surprising. After all, top public agency administrators like the city managers, who supposedly negotiate on behalf of the public, stand to benefit greatly themselves if their workers receive pension increases. Moniz is a classic example.
On his watch, the city has significantly increased pension benefits for its workers. In addition, during the past decade Moniz has negotiated a series of contracts for himself that have driven up the salary on which his pension will be based to stratospheric levels. And he has inserted provisions along the way that will further boost his retirement pay.
Moniz came to San Ramon as parks director in 1985 after working similar jobs in the Sacramento area. In 1989, he was appointed city manager, a position he held until 2002, when newly elected council members fired him. But after the next election, he was rehired and has served in the job ever since.
When he retires, Moniz will receive a starting annual pension equal to 2.7 percent of his top salary multiplied by his credited years of work. During the past decade, Moniz has done an excellent job of maximizing that formula. In 2000, he earned $170,000 in salary and benefits. Raises since then have brought it to $344,200 -- and now all of it can count as income for his pension calculation.
At first, his compensation included allowances for fringe benefits, such as health insurance, and an auto allowance. But, under CalPERS rules, auto allowances cannot be counted toward pensions and fringe benefits usually can't either. In 2004, his contract was amended to say that the city agrees "to report" those two items to CalPERS as "management incentives" so they would count toward his pension. In 2007, the fringe benefits and auto allowance were removed from his contract and his management incentive pay was increased by a similar amount.
In addition to the $344,200 salary, the city also pays an amount equal to 24 percent of his salary toward his pension costs. Under an agreement his staff negotiated in 2006 for all city workers, 7 percent can be counted toward the income used for calculating his pension, bringing that total to $368,300.
In 2007, a provision was added to his contract stating that he would be credited with nine months of unused sick leave accrued before his firing in 2002. Under the city's agreement with CalPERS, sick leave counts toward years of service used in calculating pensions.
And, about the same time, the city agreed to change the pension benefit formulas for its workers. It was a major windfall for Moniz, who will now receive 2.7 percent of his final salary for every year of work instead of 2.4 percent.
Moniz says he also has CalPERS service credit for nearly two years he worked at the Fulton-El Camino Recreation and Park District and for about six months he served as Colma city manager after he was fired from San Ramon in 2002. What's key here is that, under CalPERS rules, his top salary for San Ramon will be used to compute the portion of his pension from the park district and Colma.
Add it all together and, I estimate, Moniz is looking at a pension of about $261,000 if he were to retire today.
Moniz also worked for the Mission Oaks Recreation and Park District for 91/2 years. When I asked him about that, he wrote back ambiguously, "I don't think I have any service credit" there. That's possible if, say, he cashed out his pension contributions when he left there. But if he does have credit, the pension from there would also be based on his San Ramon salary, and would drive up his total to about $353,000.
Whether it's $261,000 for 26 years of service or $353,000 for nearly 36 years, Moniz's pension will be exorbitant. Perhaps he's not the best person to sell the city manager's pension reform plan.
Daniel Borenstein is a staff columnist and editorial writer. Reach him at 925-943-8248 or email@example.com.