Three South Bay cities—Torrance, Redondo Beach and Inglewood—now rank in the top in 10 Los Angeles County for retired city workers who make more than $100,000 annually, according to new data released Thursday by government watchdog Transparent California.
The cities were ranked second, eighth and ninth, respectively, on a list of communities with at least 25 retirees pulling in more than $100K annually. Long Beach was ranked first in the county with 390 former workers pulling in six figures in retirement.
Last year, the nonprofit government watchdog ranked Long Beach top in the entire state and Torrance second. This is the first year Transparent California has compiled a top 10 list of Los Angeles County cities.
“The issue is as pension costs continue to go up — and they will — you’re asking (private sector) South Bay residents, who on average make much less and will get much less in retirement, to pay for them,” said Robert Fellner, Transparent California’s executive director. “To me, that’s the issue; is that fair and is that sustainable?”
But even more telling, Fellner said, is the fact that retirees who collect more than $100,000 a year have an outsized impact on the total outlay each jurisdiction pays for retirement benefits.
For example, the 237 Torrance retirees and 97 Redondo Beach retirees who receive more than $100,000 annually account for 44 percent of the entire amount the two cities pay in retirement benefits. That’s about equal to what Manhattan Beach pays, too.
And that trio of South Bay cities trail only El Segundo (46 percent), which is second in the state only to Santa Fe Spings.
To put those figures in perspective, the average percentage for all agencies that participate in the California Public Employee Retirement System is just 14.5 percent going toward retirement benefits for retirees receiving more than $100K.
It’s the first time Transparent California has broken out public retirement benefits in that fashion.
It’s significant, Fellner said, because municipal officials often downplay the number of retirees raking in more than $100K. But the data shows that a relatively small number of former employees with large retirement benefits can cost jurisdictions a lot of money.
But why the large number of South Bay cities with big benefits?
First, Fellner notes, those cities pay their police officers and firefighters well because public safety is valued in those communities. Second, cities have a habit of surveying salaries of neighboring cities, ostensibly to remain competitive in attracting quality employees. But that strategy constantly raises the average salaries higher and higher, which can lead to a massive unfunded liability.
State Sen. John Moorlach, R-Costa Mesa, recently ranked cities in the state by how their unfunded liability is affecting municipal finances.
Torrance, it turns out, is one of the 25 cities in the state in the poorest financial shape. (In the South Bay, only the balance sheets of El Segundo—second worst in California—and Inglewood were worse off.)
Yet when one mayoral candidate said last week at the city’s first political forum of the campaign season that the biggest challenge facing Torrance was its unfunded liability, Mayor Pat Furey downplayed the issue. He said the city was taking care of the issue, recently making a one-time payment of $3 million to reduce the unfunded liability and adding another $5 million to an investment fund to help bring down the debt.
“The council has addressed those (issues) with all eyes open and very transparently,” he said. “There is a light at the end of the tunnel, there is no possibility of going bankrupt. … We can work through this and our employees can keep their pensions.”