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Brian Calle
Premium Abuse
Public pensions aren’t the only costs breaking the bank in California.
December 7, 2011

Much of the debate surrounding public-employee compensation in California focuses on platinum pension plans, gold-plated health-care benefits, and salaries that often top private-sector pay. These salaries and benefits may be enviable, but perhaps more so is the range of bonus-pay categories for which public employees qualify. In fact, in the Golden State, public-employee unions have negotiated at least 400 categories of bonuses, covering everything from subsidized sunscreen for lifeguards to cash bonuses for police officers who actually wear their uniforms. The result: public workers accumulate bonuses and bolster salary by hundreds or even thousands of dollars each year. Described in union contracts as “premium pay,” “incentive pay,” and “differential pay,” the bonuses cost taxpayers billions.

Using state payroll data, a recent analysis by Bloomberg reporter Michael Marois found that “California’s public workers collected $1.7 billion of extra pay last year, more than half of it in overtime.” Some state workers qualify for “arduous-duty pay” of up to $1,200 a year; some prison guards are eligible to collect $130 per month for taking physical fitness tests; and some employees of the state Department of General Services qualify for a bonus of up to $10,000 for “exceptional performance.”

Such peculiar payouts are not just rampant at the state level; they are also customary even among cash-strapped cities. For instance, in Costa Mesa, police officers are entitled to “Uniform Assignment Pay” amounting to 2.5 percent of their salaries for wearing their uniforms. This is the same city, recall, where the city council this spring voted to lay off half of its workers and outsource most municipal services. In neighboring Newport Beach, motorcycle officers earn special pay to wash their bikes, bumping their pay up by as much as 5 percent. In the city’s latest memorandum of understanding with the Newport Beach Police Association, the payout is described as follows: “Assigned Motor Officers are responsible for keeping the motorcycle assigned to him/her cleaned and polished at all times. This work shall be performed outside of the regularly scheduled work hours; and compensated at the rate of six (6) additional hours overtime per month (six [6] hours at time and one half equals 9 hours compensation).”

Taken individually, some of these special-pay arrangements sound disturbing while others are downright laughable. Cumulatively, however, their impact is often staggering. The city of Santa Ana, for example, spent $9.2 million of its $200 million general fund on special pay in 2010, of which about $8.5 million went to public-safety employees. Last year, 441 Santa Ana city workers received more than $10,000 in special pay; 105 city employees collected $20,000; and three firefighters were paid more than $30,000 each. The city boasts at least 67 types of special payouts for employees. Santa Ana, it’s worth noting, faces a projected $30 million deficit in the coming fiscal year.

Similar stories can be found in other cities. The city of Irvine paid out $2,612,879 in special compensation to 329 city employees in 2010, an average of $7,941 per recipient. The city of Orange doled out $2,885,495.93 in special pay from October 2010 to October of this year.

Special payouts have become common in local and state government as part of the collective-bargaining process and as a strategic negotiating tool for public-employee unions and elected officials alike. Unions can garner additional pay perks for employees when an outright raise is not obtainable, and elected officials can claim that they didn’t “officially” give raises to government workers. It’s a win-win for elected officials and unions but a major loss for taxpayers.

As with pensions and salaries, special pay tends to have a ratcheting effect. Unions and their contract negotiators use benefits in one city as leverage to win commensurate benefits in neighboring cities. Lawmakers all too often capitulate—with unsustainable fiscal consequences.

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