Top-Loaded AOC Perk to Be Cut Back
SAN FRANCISCO (CN) - A pension perk rewarding the top tier of California's court bureaucracy with a 22 percent taxpayer-paid contribution is set to be cut back sharply Oct. 1.
"Those receiving the benefit now will be grandfathered in but their employer pickup will be capped at 5 percent of their salary," said a spokesman for the central court administrative office in an email on Thursday.
The new incoming director, Judge Steven Jahr, will get no contribution on top of his pay, as will be true of all new hires. But three of the top administrators from the former regime who were recently promoted by Jahr will continue to receive a reduced pension perk of 5 percent on top of salary.
The high pension contribution of 22.5 percent on top of pay was reserved for the top 30 court administrators. It had brought pointed criticism from legislators and judges after it was revealed last year.
A pension plan that gives a super-benefit to the top bosses of an agency or a company is outlawed under federal statutes. But state governments are exempt from that law.
A spokesman for the administrative office noted that the top-loaded pension system has not been limited to his office but has extended to the legislative and executive branches in California, as well as a majority of the head clerks in local trial courts.
The court administrative office's top-loaded plan was revealed in April 2011 when the general counsel for the administrative agency, Mary Roberts, sent a letter to Judge Daniel Goldstein in San Diego.
"The overall contribution rate for AOC's executive employees is 22.528%," said the letter, that included a list of the top 30 administrators who were receiving that contribution on top of their salaries, all paid by the taxpayers.
The pension plan then became ammunition in the ongoing battle by trial judges to reform the administrative office that, among many other criticized policies, had transferred hundreds of millions of dollars out of trial court trust funds to pay for an ambitious software system that was ultimately abandoned.
A Senate budget sub-committee chaired by Senator Loni Hancock in May 2012 ordered the court bureaucracy to cut an additional $4 million from the judiciary's budget and submit a report in September on how those savings would be achieved. The Department of Finance had recommended that the administrative office put the elimination of the pension perk toward that $4 million cut, and Hancock's committee agreed.
"Certainly those who are now getting a hundred percent, who may be among the higher paid employees, I think ought to be contributing the same as the average court workers," said Hancock at the time. "I think that part of the proposal would be very good."
As required by Hancock's committee, the Administrative Office of the Courts submitted its report to the legislature by the September deadline. While the report discussed fee increases and layoffs, the top-loaded pension perk was not addressed.
"They apparently said they couldn't get anywhere near the savings by closing the pension loophole," Hancock spokesperson Larry Levin said earlier this week.
Pressure on the pension plan continued to build during the week.
In reference to the administrative office's plan, H.D. Palmer from the California Department of Finance said on Thursday that controlling pension costs for state agencies "is still of interest to the administration." He cited Governor Jerry Brown's action last week in signing statewide pension reform legislation.
Also on Thursday of last week, legislator Hancock said, "I remain concerned about this issue and I'm looking forward to the Judicial Council developing an equitable employee retirement contribution policy for all its employees that is more appropriate to the difficult financial condition that all state agencies are facing."
Senator Hancock's staff then followed up with the court administrative office. The result was that the administrative office was going to report back to Hancock's committee in October for its review of the pension policy.
At 5:00 on Thursday afternoon, a spokesman for the administrative office wrote an email saying, "The Senate budget committee asked the Chief Justice to look at contributions provided to executive-level employees (in which the employer pays the employees' share of a retirement plan.) She has. She has decided to terminate the practice of pension pick-up benefit for staff hired after October 1."
The email also noted that those executives currently receiving the benefit would be "grandfathered" into a reduced pension contribution from the state of 5 percent.
Among the beneficiaries of the old system are ex-director Bill Vickrey and ex-director chief deputy Ron Overholt, who controlled the administrative office for many years and were considered responsible for the direction the agency had taken.
An inquiry with CalPERS revealed that Overholt who retired earning $221,000 a year now collects $69,000 a year for life. Vickrey, who made roughly $227,000 a year when he retired in 2011, now collects a pension of almost $100,000 a year for life.