May 30, 2006
WRTA
 Brown
Shoes Diary
Payjacking Part I: The Neglected Episode
One of the great movies of all time was
The Godfather Part II. It was one of those rare sequels that was actually as
good as the original. What was particularly interesting about it was that it
not only advanced the Godfather saga, it also used flashbacks to fill in the
gaps of the storyline that bore on the original movie.
Recent reports on the pension payjacking of 2001 are filling in the gaps of
the payjacking of 2005. Indications are that Senator Jubelirer will be
receiving over $100,000 per year from his state pension when he leaves
office. Not bad for 30 years of service. Most non-government pensions pay
only 2% per year of service and are limited to 80% of salary as a maximum; but
thanks to the pension payjacking of Pennsylvania taxpayers back in 2001, our
state legislators voted themselves a 50% increase (3% per year with a 100%
maximum), while voting other state employees a 25% increase. Don't worry
about it breaking the state's budget--they've made sure you and I will cover
the bill.
This bit of news puts the pay raise issue in a better perspective, I think.
I've been wondering all along why most of the General Assembly didn't realize
last July what a huge mistake they were making by voting themselves such a
large increase in salary. It seemed obvious that this was an unreasonable,
excessive, and arrogant grab for money. (Not to mention, illegal.) But now I
see why they thought they would get away with it. After all, when they upped
their retirement benefits by hundreds of thousands of dollars in 2001, it
didn't even get a peep out of us taxpayers. If we weren't going to squeal
when being stuck with such a huge compensation benefit amounting to nearly 1/3
of a million dollars for the lowliest representative of 30 years of service,
why would they expect us to get disgruntled over a pay raise of less value?
Let's work the math a little bit to understand the relative amounts of these
two payjackings. Let's say a representative of 20 years experience voted
himself a 20% annual pay raise. That's about $14,000 a year. Now, even if
they served another 4 terms, the current value of that increase is about
$175,000. (I use a discount rate of 3% since all compensation of legislators
is indexed for inflation and virtually risk-free.) Now, that same
representative got a 50% per year boost in his pension thanks to the pension
grab in 2001. If he didn't serve a day longer, the current value of just the
increase in his pension would be over a quarter of a million dollars. (I'm
assuming a life expectancy of an additional 25 years.) If he served four more
terms, his entire pension would be worth over $1.2 million, with 1/3 of that
benefit a direct result of the pension payjacking of 2001. Best guess is that
the 2001 pension payjacking was, on average, about double the value of 2005
payjacking.
And Senator Jubelirer is not the only prominent local legislator to be covered
by such an exorbitant retirement package. (A retirement package that includes
free lifetime health-care among other nice perks.) Thanks to the 50% pension
increase Rick Geist voted himself in 2001 (while voting a 25% pension benefit
increase for his wife), he will soon be eligible for 90% of his annual salary
in retirement. That's about $65,000 per year. If Mr. Geist has a life
expectancy of at least 25 years, the current value of his pension is well over
$1,000,000.00. But remember, Rick works for us!
Kind of interesting, don't you think, that a public servant, so dedicated and
so selfless, has reached millionaire status on just his pension alone. I
guess Rick (did I mention he works for us?) is one hell of a guy. But what's
so awful about you and me? Any chance we're going to get his kind of deal?
Somehow, I don't think that movie is playing anytime soon.
The opinions and ideas expressed in this essay are those of John D
McGinnis and should not be considered representative of WRTA.com, any
institution with which McGinnis is associated, or anyone else. He can be
contacted at zoiprof@atlanticbb.net.
Contact John D McGinnis
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