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How Government Mistakes “Balloon into Sizable Money”

Thursday September 8th, 2016   •   Posted by K. Lloyd Billingsley at 10:28am PDT   •  

Last year an independent audit revealed that the City of Sacramento, California’s capital, had overpaid city retirees by $2.8 million. The overpayments, which had been going on since 2005, prompted the Sacramento Bee to editorialize that “a mistake can balloon into sizable money,” citing a $60 million gap between projected payouts and expected revenue for the city’s old retirement system in which the overpayments occurred. Add in CalPERS, the editorial said, and the total unfunded liability increases to $675 million, a big jump from $161 million in 2004-05. “It’s going to be tough to whittle down that debt,” the Bee’s editorial lamented. “Paying out more than retirees are owed only made it worse.” That turned out to be true, in more ways than one.

Since the overpayments went undetected for a decade, the city’s own oversight process is obviously useless and unaccountable to taxpayers. On the other hand, the overpayment of nearly $3 million did not prompt the City of Sacramento to fire those responsible. The only city employee named in connection with the overpayment is “human resources analyst” Kimberly Isaacs. According to the Bee’s Anita Chabria, last July Isaacs’ “title and duties were reduced but her pay remained the same.” So she got the same money for less work until May of 2016, when she took a pay cut of “more than $20,000.” As Chabria reports, Isaacs is now charging that her demotion was based on “race and age,” and the 54-year-old African American has filed a complaint with the state Department of Fair Employment and Housing.

However this turns out, it will not whittle down any pension debt, which the overpayment made worse. Indeed, the complaint will consume more public resources. The city’s new human resources director, Melissa Chaney, wants to hire a new “diversity manager” at a salary of $180,000. That won’t help whittle down the pension debt either, but it does confirm the dynamic. At all levels of government, mistakes can quickly balloon into sizable money.

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September 2016