Sorry, you have NO right to know
May 2, 2013

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Note: Parts of the following have been published here previously.

We are no longer entitled to information on pensions of individual public employees. That has been the case since the end of March, but the reality was brought home to me yesterday when my FOIA request for former Lansing police chief Teresa Szymanski's pension calculation sheet was denied. The basis given for the denial is MCL 15.243(1)(d) and 2012 PA 347. MCL 15.243(1) is the section of the Freedom of Information Act that lists the circumstances in which a public body may exempt a public record from disclosure, and (d) is "Records or information specifically described and exempted from disclosure by statute." Public Act 347 of 2012 is that statute. Section 20h(3) of the Act says

Except as otherwise provided in this subsection, information regarding the calculation of actual or estimated retirement benefits for members of the system is exempt from disclosure by the system or the political subdivision sponsoring the system pursuant to section 13(1)(d) of the freedom of information act, 1976 PA 442, MCL 15.243.

The exemption was part of Senate Bill 797, an amendment to the Public Employee Retirement System Act. The bill passed in November and was signed by Governor Snyder on December 5. The timing is suspicious. Public employee unions are feeling the heat, and apparently have plenty of friends in both parties in the state legislature.

State and local governments all over the country are faced with with public employee pension systems they cannot afford, and Lansing is no exception. According to the Report of the Lansing Financial Health Team (page 41), the City of Lansing has an unfunded long-term liability of nearly $650 million. $218 million of it is for pensions and $431 is for "other post-employment benefits" - primarily, health insurance. According to the Lansing City Pulse (3/27/2013), former mayor and Financial Health Team member David Hollister believes that if left unaddressed, these unfunded long-term liabilities could lead to bankruptcy or appointment of a emergency financial manager, and it could happen in 3-5 years.

The reason we need to see actual pension calculations is that pensions are complicated. Typically, they are calculated by multiplying these 3 factors together:

Years of service
Final average compensation (FAC)
Multiplier

Years of service is usually pretty obvious if you have the hire date and termination date.

The multiplier or "pension factor" is usually available on the employer's website. For state employees and teachers, it is 1.5%. For state police, it is 2.4%. For Lansing's police and firefighters, it is 3.2%. For other City of Lansing employees, it varies between 2.3% and 2.8%, depending on the employee group.

The mysterious one is FAC. An employee's salary is not so easy to obtain, and salary isn't all that goes into FAC. For example, FAC for a Lansing policeman includes the following:

Annual base salary

Overtime pay (including holiday pay)

Longevity

Gun allowance

Clothing allowance

Sick leave reimbursement (buy-back)

Shift premium

Retroactive pay (prorated by effective date)

In the collective bargaining process, unions push the employer to include anything that remotely resembles compensation, because the higher the FAC, the higher the pension. And to further increase that "final" average, individual employees do all they can to delay payments until those last 2 or 3 years before retirement. They let their sick leave accumulate, get as much overtime as possible, and so on. For 24 Lansing police whose pension details I obtained before the new law was passed, FAC exceeded salary by an average of $11,573. For 3 of them (highlighted), FAC was so high that their pensions exceed their salaries. And this was with only 25 years of service.

FAC

Pension Salary FAC-Salary
68,829 55,063 61,194 7,635
67,289 53,831 61,194 6,095
112,944 90,356 109,075 3,869
77,122 61,698 67,184 9,938
80,603 64,482 57,179 23,424
74,358 59,846 67,184 7,174
83,971 67,177 67,184 16,787
75,182 60,146 63,294 11,888
67,283 53,826 61,194 6,089
85,198 68,159 73,923 11,275
70,789 56,631 61,194 9,595
87,283 69,827 67,184 20,099
83,330 66,664 67,184 16,146
67,596 54,077 61,194 6,402
83,133 66,507 73,923 9,210
66,975 53,580 61,194 5,781
89,326 71,461 73,923 15,403
69,958 55,966 57,179 12,779
66,083 52,867 57,179 8,904
91,386 73,109 73,923 17,463
63,798 51,039 57,179 6,619
73,118 58,495 61,194 11,924
88,161 70,529 67,184 20,977
91,472 73,178 79,206 12,266

Pensions and other post-employment benefits are a wonderful way to conceal excessive compensation. Over the last two years, I've collected a lot of information on the City's pension systems:

Overview

Actual pensions:

     Police and Firefighters Retirement System
     Employees Retirement System

Opinion:

     A Collective Bargaining Triumph - June 14, 2012

     City supplements $103,000 salary with $73,000 pension - March 23, 2012

     A Counter-productive Pension System - December 23, 2011

     Do we pay police and firefighters too much? - October 26, 2011

     Hefty Pensions for City of Lansing Retirees - October 6, 2011

     Police and Fire Pensions Exceed Salaries - September 29, 2011