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Taxpayers prone to wonder why government is so wasteful should take a hard look at government-employee pensions in general and the practice of double-dipping in particular. As this report notes, Bill Carnahan, head of the Southern California Public Power Authority, took both his full-time salary and his pension at the same time, and he did so for more than a decade.
This long-term double-dip largesse was to compensate for a salary Carnahan perceived as too low, and not up to the standards of the private market. Taxpayers might wonder about that. Carnahan got $194,100, with an annual base of $150,000, a $4,500 performance bonus, and $39,600 to cover “overhead” such as car expenses, medical and dental insurance, and other items. The deal surged to as much as $271,000, plus the inflation-adjusted pension of $3,750 a month. Carnahan was living the dream.
When the California Public Employees Retirement System (CalPERS) wanted the pension money back, the Power Authority promptly wrote the checks. But CalPERS now says Carnahan needs to personally pay back $508,985.44. His former wife, who got part of the benefits, at one point owed some $139,000. The parties are now wrangling over these overpayments, but some realities are evident.
Pensions are actually for retirement. Nobody should be able to work full time and draw their full salary and pension at the same time. CalPERS is right to want the money back, but since it took more than a decade to expose the double-dipping, accountability and transparency are obviously lacking. Likewise, pensions are not a means to bulk up an already fat compensation package. With no apology to Mr. Carnahan and his employers, the notion that government salaries lag behind the market is another ruling-class superstition.
To reduce the cost of government, legislators need to make pension reform a top priority. Double-dipping should be one of their primary targets.