State and local workers: Gone but not off the books

Jan. 10 (Bloomberg) -- Pennsylvania Governor Ed Rendell, a Democrat, talks about the need to overhaul the public employee pension system as states face budget deficits. Rendell, who leaves office Jan. 18, speaks with Matt Miller and Carol Massar on Bloomberg Television's "Street Smart." (Source: Bloomberg)
Washington Post Staff Writer
Tuesday, March 8, 2011; 7:56 PM

Whoever it was who came up with the phrase "golden years" might have had Bruce Malkenhorst Sr. in mind.

The retired city administrator of Vernon, Calif., pulls down a pension of $43,320.53 a month - or close to $520,000 a year - through the underfunded California Public Employees' Retirement System (CalPERS), which covers about half of all government workers in the state and is the nation's largest public pension administrator.

Malkenhorst receives that princely stipend by virtue of having held six four-day-a-week jobs at the same time in Vernon, a speck of an industrial town just south of Los Angeles. He was Vernon's city manager, city clerk, finance director, treasurer, redevelopment agency secretary and director of light and power.

Deals like the one he got rankle Californians at a time when the state's public employee pension plans are "dangerously underfunded, the result of overly generous benefit promises, wishful thinking and an unwillingness to plan prudently," a government-appointed panel of experts, the Little Hoover Commission, warned last month.

California is far from alone. Cities and states across the country are grappling with potentially crushing health and pension obligations for their current and future retirees. And as they do, stories of excess and gaming of the system are getting more attention than they have in the past, causing problems for unions as they try to win the battle for public opinion in states where lawmakers are trying to cut worker pay and benefits.

"He's a bad actor," said Steven Kreisberg, director of collective bargaining for the American Federation of State, County and Municipal Employees. "It does inspire taxpayer angst. When people look at it, they don't think it's appropriate - and neither do we."

Fat pensions like Malkenhorst's are not typical, of course. AFSCME, which is the largest public-employee union, says that its average member earns less than $45,000 a year and receives an annual pension of roughly $19,000.

But many retirees from state and local government jobs do much better than that. When the advocacy group California Foundation for Fiscal Responsibility requested state retirement system records in 2009, it discovered that nearly 15,000 of the state's retired government employees were receiving pensions of more than $100,000 a year, with Malkenhorst topping the list.

In the two years since, Malkenhorst's annual benefit has risen by about $20,000, according to figures provided to The Washington Post by CalPERs.

Malkenhorst, now 75, receives his monthly payment despite the fact that, for the past four years, he has been awaiting trial on charges of using city funds to pay for golf games and massages. And he will continue to, even if things don't go his way in court.

"Since we're charging him simply with improper credit card bills," said prosecutor Max Huntsman, "he'll still get his extraordinary pension when we're done." Through his attorney, Malkenhorst declined to comment.

Fred MacFarlane, a spokesman for the city of Vernon, said it has since changed its compensation system so that no similar situation can happen in the future. Although officials may hold more than one position with the city, "they are not paid for more than one position," he said.

CONTINUED     1           >

© 2011 The Washington Post Company