‘Land a State Job and Become an Instant Millionaire’

As we read earlier this month the following story appeared: “SACRAMENTO — California Gov. Arnold Schwarzenegger, alarmed by the ongoing national financial crisis, warned Treasury Secretary Henry M. Paulson on Thursday that the state might need an emergency loan of as much as $7 billion from the federal government within weeks.”

Let me now share a report from fellow activist Jack Dean who a few years ago received the prestigious “Faces of Freedom” recognition from the OC Register. Jack is former southern CA Vice Chair Libertarian Party.

‘Land a State Job and Become an Instant Millionaire’

By Jack Dean

In 2004, I read an article by Ken Mandler in the Capitol Weekly promoting his seminars on how to land a job with the State of California. I was astounded at what I read and began to investigate the world of public employee pensions. This website and its companion e-mail list was the result (Pension Crisis News Headlines is a daily headline summary that now goes out to more than 1,100 members of the media who write about pensions and benefits).

Last week, Ed Ring at EcoWorld used the article as a basis for his excellent editorial “Abolish Public Employee Pensions” and I’ve been receiving inquiries about it ever since. So I decided to print the piece in its entirety right here so you, too, can be astounded. As an interesting aside, Ken Mandler has become a good online friend and regular correspondent on this issue.

Following is a more recent version of Ken’s amazing article as it was published last year in August (reproduced here with his permission):

Land a State Job and Become an Instant Millionaire By Ken Mandler

It’s a tough job saving for retirement. Most of us have difficulty even putting away $500-1000 a year in our retirement accounts. And when the car breaks down — that money goes as well!

Others have access to 401(k) programs at work and employers sometimes match the contributions with up to $4-5,000/year. Then again, during bad profit or no profit years, the employers utilize that ubiquitous phrase subject to change” and provide no match. Or they merge and change the “plan”.

But California state government employees have an employer who regularly and by law provides a $40-50,000 contribution to each employee’s pension account — year in and year out — good budget times and bad. (And in bad years they borrow the money!)

The California state government provides a “defined benefit” pension plan to each of its employees. Such “defined benefit” pension plans are far more generous than any 401(k) or defined contribution pension plan available from any other employer in the state! In fact, the plan is so generous that it makes the average state employee a millionaire after only 22 years of work!

Here’s how it works. Say you start working for the state at age 41 and retire at 63. The average state employee makes $55,625/year in salary — and that’s before benefits! At the age of 63, you’d be able to retire on 55% of your pay rate — 67.5% if you purchase 5 additional service years at a pretty nominal cost.

That’s 67.5% of your final pay. Let’s say you retire at the average state employee pay rate of $55,625/year — your annual pension for life would be $37,546/year. Currently state employees are saving $1.8 billion of their money in the State’s Pooled Money account which pays only 2% per year in interest. However, Let’s say you were able to earn an interest rate of 3% on your retirement account — how much would you have to have in that account to yield an annual benefit for life of $37,546?

Here’s how you calculate that amount — you divide $37,546 by 3% ($37,546/0.03= $1,251,562). To provide this level of annual pension on your own would require you to save $1,251,562 during your 22 year working career between the ages of 41 and 63. Could you do that on your own?

It would require putting $56,889 ($1,251,562/22 years = $56,889) into your 401(k)/IRA or other retirement account every single year during those 22 years! When you work for the state, the state does this for you!

Is the state’s pension plan overly generous? The Sacramento Bee and Governor Arnold Schwarzenegger have been whining about it lately — are they jealous? The state’s own Legislative Analyst has determined that California’s pension plan provides nearly twice the benefit of the next highest state.

Other comparisons are in order. The vast majority of American corporations have now eliminated “defined benefit” pension plans — only 6% of Americans in the private sector have access to such plans.
American companies have terminated over 17,000 such plans in the last 20 years. IBM, one of the bluest of the blue chip companies, terminated its “defined benefit” pension plan in 2005.
Hewlett Packard, a major California employer, followed by terminating its plan later that same year.

You’ve seen the headlines this year about possible changes in the state’s pension plan. However, that shouldn’t stop you from signing up today as your pension is guaranteed the moment you land a state job.
They can change the benefit for future employees — but not you!

Landing a California state government job is not an easy process as everyone wants to be a millionaire! And you are a millionaire the moment you land a state government job. Capitol Weekly’s How to Get a State Job Workshop provides valuable insights into landing a California state government job. Sign up for the August 28th class today!

Ken Mandler teaches a monthly workshop on How to Land a State Job.
The workshop focuses on a variety of tactics and strategies designed to make the state job process an effective one for you. The workshops are 3 hours and include over 400 pages of information for your review. The cost is $84. You can sign up at www.statejobworkshops.com or by calling Ken Mandler at (916) 443-6788 today. You can e-mail Ken Mandler at ken.mandler(at)capitolweekly.net.

Jack Dean is president of the Fullerton Association of Concerned Taxpayers and editor of PensionTsunami.com.

Juice readers. My apology for a post filled with FACTs and numbers but the efforts of Jack to expose this pension benefit clearly shows why we are in such a deep hole.

Eighteen months ago Dr. Keith Richman made the following statement:

“The LAUSD’s own study estimates that the district owes $10 billion in retiree health care costs. In order to pay off that $10 billion it will cost every LAUSD student $2,000 per year for the next 30 years. That’s 20% of the entire operating budget to cover retiree health care.

“On the state level. California annually pays $3 billion for pensions and $6 billion for retiree health care. That’s $9 billion – equal to the amount we spend each year on higher education. California has a total of $250 to $300 billion in unfunded liabilities to pass on to its children.” This comes at a time when the state requires $150 billion in infrastructure improvements.

Our “ship of state” is drowning in fixed obligations forcing Arnold to call Washington for a life preserver.  Look at the LA Unified School District obligation as some want us to throw MORE of our revenue for education.
It’s not a revenue problem we face, it’s a spending problem.

That’s my thoughts and we welcome yours.

About Larry Gilbert