Understanding employee compensation

Yesterday, we looked at the way Oakland’s General Fund is distributed by type of expenditure. More than three-quarters of those expenses are personnel-related. To fully understand the budget, it’s probably a good idea to look a little closer at how those costs break down.

Personnel issues are, in short, complicated. What follows will attempt to present a thorough overview of the way City employees are compensated, although, in the interest of space some things will naturally be left out.

First, who works for the City? Basically, you have public safety employees (police and firefighters) and civilian employees (everyone else). You also have permanent full-time, permanent part-time, and temporary part-time workers. Permanent full and part time employees receive all the benefits listed below, while temporary part-time receive no benefits of any sort. And again, for reference, here’s how the 2008-09 expenditures from the City’s General Fund were distributed:


So, the first (and largest) aspect of personnel costs is payroll. Employee wages are determined by the City’s Salary Schedule (PDF). Almost all city jobs offer a range of salaries, and for most of them this is determined by salary steps. When you start a job, you begin at salary step one. After a year of service, you move on to step two. After another year of service, you move on to step three. And so on. There are a total of five salary steps. So if your job title is, say, “Auto Equipment Mechanic,” and you got hired last March, you spent all last year making $27.28/hour. But now that’s you’ve clocked a year of satisfactory service, you’ve moved on to step two, and you’re now bringing in $28.73/hour. If you get promoted, you start back at step one for your new job.

The City’s contract with each employee union outlines annual salary increases to accommodate cost of living increases. Between 2002 and 2007, the cost of living adjustments (COLA) for civilian employees totaled 24% (PDF). This is 10.1% more than inflation. Civilian employees and firefighters are currently working under contracts that expired last July, meaning there are no built-in salary increases for last year or this year, or basically, until a new contract is signed. The police contract is in effect through June of 2010, and mandated a 4% COLA last year, and another 4% this year.

COLAs are applied to each salary step, not individual salaries. So, if you had started a job as say, “Human Resources Technician” in October 2003, you would have been in step one and earning $3486/month for most of the year. Then, in July, when the COLA went into effect, you were still in step one, but earning $3521/month. Then, in October, you moved up to step two, and earned $3706/month. So basically, even without a COLA, you’re still getting an annual raise unless you’ve been in your job for more than five years.

At last week’s budget town hall, City Administrator Dan Lindheim said the City is requesting a 10% give-back from civilian employees, but declined to offer any details about the nature of the give-back, other than to say it would only save $7 million in the General Fund, which would be consistent with a simple salary reduction. He did not say anything about working with public safety employees on give-backs, but it’s entirely possible those negotiations are going on as well. The City can’t force the Police Department to not take a COLA this year, because of their contract, but they could certainly agree to do so voluntarily to help balance the budget, as the Contra Costa fire fighters have recently done.


The next chunk of personnel costs comes in the form of employee benefits. By far the biggest cost here is health care, and rising health care costs are a large factor in the City’s ever-rising employee costs. This is one of the most frustrating aspects of compensation because the astronomical rate at which medical insurance costs are increasing is outside of the City’s control.

For civilian employees, benefit costs last year came out to about $27.2 million from the General Fund. It breaks down like this:

Benefits for police and fire are not identical, but pretty similar to the above.

City of Oakland employees do not currently pay any contribution to their medical insurance plans. The five-year financial forecast (PDF) released in December estimates that the General Fund could save $2.3 million with a 10% employee contribution to health plans, and $4.4 million if they picked up 20%.


Okay, this is the part that people get the most riled up about, and I think the part that’s the least understood. Here’s how it works. If you are employed in the private sector, 6.2% of your paycheck (assuming you’re not making over $106,800) gets taken away for Social Security. Your employer also pays 6.2% of your compensation. Then, when you retire, you get a monthly check in an amount based on what you paid in over your career.

If you work for the government (this applies to most, although not all, government jobs), you’re not paying that. Instead, you pay into a pension system. If you work for the City of Oakland, or for pretty much any City or County in California, you’ll be getting that pension through the California Public Employees Retirement System (CalPERS). You have to work for five years before you qualify for a pension.

CalPERS offers a number of different retirement plans. Civilian employees with the City of Oakland receive the 2.7% at 55 (PDF) plan. Basically, your annual retirement benefits will be a percentage of whatever your final salary was, and the percentage is determined by how long you worked for the City. So if you retire at the age of 55 after having worked for the City for 5 years, you will be getting 13.5% of your final pay as your retirement benefit. If you retire at 55 after having worked for the City for 20 years, you get 54% of your final pay. There are other factors that come into play when calculating your exact benefit, and depending on what options you take it will probably in practice be less than that, but that’s the general idea. Police and firefighters get a different benefit formula, one specifically for public safety employees, 3% at 50 (PDF).

Once you retire, your pension is no longer the City’s responsibility – it all comes out of CalPERS. While you’re working, your retirement is being funded in two ways. First, there’s the employee share. This is your money and it goes into your account and if for some reason you leave your job with the City, you can get it back and roll it into your IRA or whatever, but of course doing so ends your membership with CalPERS, so no pension. The employee share for civilian employees is 8% of pay, and for public safety it’s 9% of pay. Civilian employees pay 3% out of their paycheck into this, and the City pays the remaining 5% of the employee share. Firefighters pay the entire 9% of the employee share out of their paycheck. The City pays the entire employee share for police.

Then there’s the employer share. Employer contributions are not tied to individual salaries or any individual’s retirement account. They just go to CalPERS where they are invested and used to pay ongoing benefit costs for the system. CalPERS tells the City what percentage of total payroll they have to contribute, and this amount can change throughout the course of the year based on the system’s needs. In July of 2008, the employer rate for civilian employees was 19.553%, and for public safety employees it was 27.088%. These rates are expected to increase every year for the forseeable future, for a variety of reasons, but largely due to losses in CalPERS’s investment portfolio.

In addition to their 9% employee share, firefighters also pay 4% of the employer share, for a total of 13% retirement contributions out of their paycheck. Civilian employees pay none of the employer share, so their total contribution is 3%. Police make no contributions to retirement costs.

If you work for the City for 10 years as a civilian employee and retire, you also receive medical insurance for life as part of your retirement benefit.

And I think that’s pretty much everything. Hopefully this will give people a clearer picture of how City employees are compensated.

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73 thoughts on “Understanding employee compensation

  1. ConcernedOakFF

    Just to correct/expand a few things:

    1) We (Firefighters) do not receive medical benefits after retirement. I am unsure about the Police Officers, but I am fairly certain that they do not.

    2) Oakland Firefighters pay by far the most into the retirement system, and in fact, pay more than any other Fire Department in the bay area.

    3) Firefighters are working without a contract at the moment, and have not gotten a pay raise in more than 3 years, Cost of Living or otherwise.

  2. Dan Rossi

    I appreciate the post, but there are some errors in your calculations of civilian employee COLAs. The COLAs we received over each of the past 7 years have been 3,3,1,4,4,4,0. (For the first year, our contract says we got 6%, but we also agreed that year to a new 3% retirement pickup, so our real pay raise was only 3%.) This adds up to 19%, or an average of about 2.7% a year. (There was an addition error in the chart you linked to, the numbers add up to only 22%, but it shows a total of 24%). The inflation rate for this period (July 2002 to March 2009) according to InflationData.com was 18.24%. So our actual COLAs increases track inflation pretty darned closely. (I didn’t do any compounding, I’ll leave that to a more sophisticated reader.) You should be careful about relying on data put out by City management during labor negotiations, it’s not necessarily objective or accurate.
    Dan Rossi

  3. V Smoothe Post author

    Thanks, FF. I’ve amended the post to clarify that the medical retirement benefit is for civilian employees.

    Dan, there is no addition error. 24% reflects the correct compounded increase over the period. The 13% CPI comparison reflects the compounded Bay Area CPI over the same period.

  4. livegreen

    V, In yr 3rd to last Paragraph you say “In addition to their 9% employee share, firefighters also pay 4% of the employee share…” Do you mean 4% employer share?

    Either way they are indeed paying more than other employees…

  5. David

    Firemen pay 9%. Ok, and that’s the “worst-off” city employee. The rest of us pay 12.4% for Social Security.

    So, the “worst-off” retirement for firemen is that they pay 9% into the pension fund, and get 3%X years served at age 50 if they retire at 50. So let’s say you’re a 25 yr. old and you finally get into the Fire Dept in the Oak. you work for 25 years and you get 75% of your pay. let’s say you max out at $80K (a farce I know, because starting salaries, at least in police is $80K), and let’s ignore inflation.

    That means at age 50, you get $60,000/year in pension benefits, for 9% of your salary contributed. This kind of annuity is worth ~$2.4 MILLION dollars. All for paying in $7200/year (real dollars, ignoring inflation) for 25 years. Pretty damn good return.

    The rest of us get some amount that can change at any time by whim of Congress when we retire at 67 (for those of us workers currently under 50).

    But let’s assume they stay the same as they are now in current dollars, inflated for whatever that is in the future, like our putative fireman.

    The same 25 year old worker will get $2208/month, or about $26,500/year, in exchange for 12.4% of his salary paid over 42 years, rather than 25 years. This is equivalent to about a $700,000 annuity.

    So in return for over $10,000/yr paid out over 42 years, or over $420,000, our alternative worker gets a massive $700K annuity, whereas our fireman gets $2.4M in exchange for $180,000 in contributions.

    Now, ConcernedOakFF, you might think you’re getting a raw deal by paying out 9% of your wages, but in comparison to what’s available to us private sector suckers, you’re doing pretty darn well.

  6. David


    I don’t think too many of us think firemen & cops should have their salaries cut (we might differ on overtime, but let that go for a sec). What galls me and those who complain about pensions is that the retiree benefits really are well in excess of what many of us could ever hope to have. Let’s face it, you might think that you’ve given up a gold mine by being a public sector worker, but not too many of us private sector schlubs will hit the gold mine in the private sector. The chance to get what is essentially a $2.4M annuity at age 50 is certainly unavailable to the vast (>95%) majority of your peers who make similar salaries ($80-120K). I’d much rather see you guys make more in salary, but cut the fat on the retirement back to something more in-line with the rest of us.


  7. V Smoothe Post author

    David, your numbers are off. Firefighters pay 13% toward retirement benefits, and that’s including their entire salary. For social security, you pay 6.2%, and only up to the cap.

  8. Ralph

    David, your argument ignores one important fact. A number, and certainly not all, employees in the private sector are eligible for some type of employer sponsored pension plan.

    But I agree, I am not in favor of cutting police and fire salaries. I don’t like that we short change our military and I do not think that people who provide us safety should be short-changed in terms of pay.

  9. We Fight Blight

    As a matter of comparison, a massive segment of state employees, excluding public safety, are under a 2% at 55 retirement formula through Calpers. The 0.7% extra that the City of Oakland provides (2.7%) is a huge benefit above and beyond what state employees get and what many other local governments provide. Also, most state employees have not seen true cost of living adjustments since it seems about the Deukmejian Administration or more likely the Wilson Adminstration. You all remember Deukmejian?

    State employees suffered a 9.3% salary cut because of mandatory furloughs. As healthcare costs continue to escalate, State employees have also been paying an increasingly larger portion of their healthcare costs. It seems to me that Oakland employees have a pretty decent deal in comparison to state employees. What is interesting is that Oakland City employees (civilian) have gotten COLAS since 2002 that are approximately 15% greater than the true cost of living in the Bay Area. Yet Lindheim (Dellum’s proxy) and Jean Quan are only looking for a 10% giveback in the form of a furlough/salary cut and greater employee contributions towards Calpers. I would think that at minimum a 15% total employee cut would be in order, perhaps in the form of contribution to their healthcare, to bring the employees in line with the true cost of living. Rather, the City is looking to raise various taxes including asking us all to approve yet another parcel tax. Does that really sound fair when we already have, on average, some of the highest property taxes in the country–according to Forbes Magazine.

    Oh by the way, why is it the Desley Brooks and Hizzoner seem to be above it and are not willing to take a salary cut to help address the deficit? Sounds like a little misplaced leadership or at least some feeding at the public trough. Watch out for the swine flu.

  10. CitizenE

    Fire and Police, like civilian employees, DO get retiree medical reimbursements. The reimbursements do not pay the full cost, but thanks to effective lobbying, Assembly Bill XXX (sorry, not at home at the moment, so don’t have the number handy) provides for annual increases to the City contributions until they equal those afforded active employees. Civilian employees retiree medical reimbursement amounts are set by contract.

    See the report on OPEB (Other Post Employment Benefits), that went to the Finance Committee last year.

  11. livegreen

    Many companies that carry Pension Plans are larger companies, and even among them (esp. in legacy industries like automotive) many are being drastically cut.

    Meanwhile many small and medium companies have none, or have very limited profit sharing or IRA contribution plans.

    Why should Public Safety be exempted from contributing to helping save the City budget, esp. when everyone else is being asked to do the same? They will still be paid more than others (and rightfully so)…

  12. V Smoothe Post author

    Retiree medical benefits are one of the things I skimped on in the interest of space and readability. The short version is that all retirees with 10 years of service are eligible for retiree medical care, but that the City pays a higher amount to cover civilian employee premiums.

    The post-employment benefit report can be found here (PDF).

  13. das88

    @V, I think David like myself might have some self-employment income which means you have to pay both sides of the social security or 12.4%.

    With the self-employment tax, you also pay both sides of medicare which adds up to 15.3% of gross income.

  14. V Smoothe Post author

    Yeah, self employment tax is a bitch. On the other hand, the amount you pay on is still capped, whereas firefighters are paying into retirement from their entire wage.

  15. Ralph

    I could have misread this in one of those reports but I thought there was a cap on CALPers contributions.

    DB plans are being cut. But haven’t a number of companies replaced DBs with DC plans?

  16. ConcernedOakFF

    V – Thank you for the corrections, and for correcting others misinformation.

    David – I am hardly complaining, I just hate it when people speak as if the City of Oakland is paying for us for our retirements (which, by the way averages less than 10 years thanks to our lovely cancer and heart disease rate from job related exposures).

    CalPERS, the largest PRIVATE pension fund in the world is where the money goes into, and comes out of. At least for now, as long as it doesn’t collapse….

    We pay a huge sum of money for our retirements, much more than the average private sector employee, and we do not have anything else in the way of an employer pension or 401K plan. Most people do not retire with a full pension, as most are hired later in life, and do not have 30 years to give to the Fire Department. Also, many people are forced to retire early, due to our lovely workers comp agency that would rather just force a Firefighter into retirement, rather than try to fix them and get them back on the street.

    Let’s play a fake number game. Let’s say you are a firefighter who was hired when you were 35 years old. You want to retire at 50. You have been paying 13% of your salary of 80,000 dollars for those 15 years, for an average of 10,400 dollars per year. You will receive a pension of 36,000 dollars for the rest of your life, (not tax free BTW), as long as you are still able to work during those 15 years.

    However, as is common in a very busy Fire Department such as Oakland, people break. Let’s say you hurt your shoulder at work 5 years in, but shrugged it off and came to work for the next 2 years. Then you go water skiing and it finally gives way. You are off work. They retire you. At 42. Now you have a pension of exactly 16,500 per year. Minus any heath care costs that you now have to pay for yourself and for your spouse. And now you are disabled.

    Not exactly a get rich quick scheme, is it?

  17. TheBoss

    V –

    1. For self-employed people, the cap only applies to the social-security contribution, not the medicare contribution.

    2. You mentioned to someone that for non-self-employed people, the total payout is 6.2% for social security. Numerous studies have shown that this is not really the case, as employers react to the 6.2% they have to pay by simply cutting salaries by 6.2%. This effect was clearly shown by several economists in the wake of the 1980s increases in social security taxes.

    David -

    I have heard from a couple friends who are doctors that public employees in many jurisdictions are encouraged to report any minor injuries so they can get what’s called a “partial disability” when they retire. So, apparently these folks might have enough minor injuries every year to be 3% disabled for that year, adding up to a 60% disability over 20 years of service. Do you have any information on that, as a person working inside the system?

  18. ConcernedOakFF

    The Boss – Really? Third hand hearsay is what you have to offer here? C’mon, it doesn’t work like that. We don’t just get 3% disability per year just because we claim an injury. It just doesn’t work like that! You can’t just slowly add to an imaginary treasure trove of tax free joy!!

    The only way to get a disability retirement at all is to injure yourself at work seriously enough that after 1 year off work, you can not pass the physical agility test or fitness for duty test. Then you have to go before a board of Medical Experts. Then PERS has to approve your retirement. This is a very long process, during which there are long periods of time where the city of Oakland is no longer paying your salary, nor are you contributing to your retirement.

    And even then, often times the disability payment is very short lived.

  19. J-man's Dad

    V – Thank you for your accurate information and correcting the mis-informed.

    Con.OakFF – Well put, and thanks for exploding the myth.

    I’m not complaining about the 13% we pay. I just think the council should make the other groups pay 13%, then that would be a level playing field to commence with your “across the board” cuts.

  20. len raphael

    That link to the actuarial estimate of OPEB liability (other post employment benefits eg. medical and dental )of additional of 43Mill/year was about 10Mill/year worse than guestimated by the city budget people only a year or so ago.

    The report explains how the liability increase per year is very sensitive to the interest rate assumptions. (The 43Mill was 53Mill less the 10Mill or so the city actually pays out each year.) Would think that if the interest rate which the city could earn on any money it set aside to fund future payouts, was only 2.5% instead of the 4% assumed for the 43Mill/year projection, then the number is maybe 74Mill ?

    Question: is that 43 Mill part of the projected deficit our city council is struggling with? or does the deficit only count the 10mill or so cash paid out as we go amount?

    -len raphael

  21. len raphael

    R, i don’t know what the stats are for the number of for-profit private sector employees covered by any employee funded retirement plan, or more importantly what percentage of the retirement plan contributions are employer paid.

    if you ignore auto, steel, coal mining, and health care (usually non profits), industries, that percentage would have to be miniscule.

    In small to medium private business, at best a very modest employer “matching” to
    a 401k will be found.

    Similarly, other than the above industries, never heard of a private employer providing medical benefits post retirement. The cost of supplemental Medicare insurance premiums could easily run over 8k/year in after tax dollars. (say 12K in pre tax money retiree would need to earn)


  22. Ralph

    Len, I was thinking pension plans were a f(x) of when one entered the workforce and type and size of employer. I worked for a bay area company that had a pension plan which was phased out over time. I think I was hired the last year that employees could be covered by both the pension plan and a 401K. Now everyone is in the 401K. The pension plan had similar attributes to a typical govt plan. I am of the mindset that a generous retirement is not bad if you ask employees to forego wages today. But if you pay handsomely today and tomorrow, then at some point something must give. So, I’d really be curious about the overall pay structure and just how far we are from best practices.

  23. Dan Rossi

    OK, on civilian COLAs, using an apples-to-apples comparison, we averaged a 2.7% COLA increase per year from 2002 to 2008 (remember that the 2002 COLA was really 3%, not 6%, since we agreed to an offsetting 3% retirement pickup that year; it’s in the contract). According to your link, the average annual percentage change in Bay Area CPI for these seven years was 2.3%. So the assumption that civilian salaries greatly outpaced inflation is not true. The City’s salary survey was skewed because it compounded a nonexistent 6% COLA the first year. Plus it doesn’t factor in last year, where CPI was at 3.1% and we got 0%. Please don’t take the City salary survey at face value, there’s a clear management spin on the numbers.
    Dan Rossi

  24. V Smoothe Post author

    Sorry, Dan, not buying it. I’m looking at actual COLAs and actual inflation. It’s you, not the City, who is trying to twist the numbers.

  25. David

    So, let’s say you paid $10,400/year for 15 years, 13% of your salary (compared to 12.4% of my salary going to Social Security, and as pointed out above, self-employed pay that, but you pay that too even if you’re “regularly” employed, as employers just cut your wages as pointed out). So that’s $156,000 paid into the system for a $36,000 annual payout, at 50 years old. Again, that’s about equal to a $720,000 annuity, but you only paid in $156K. That’s a pretty darn good return, in fact it’s greater than 15% annualized, compounded monthly for fifteen straight years and again, far superior to Social Security, where you can’t retire at 50, whether you want to or not. Seriously, you’re only 50 years old. you could work half-time somewhere and combined with your salary make as much as you were before. Basically, I’d love to contribute 13% of my salary in order to get a fireman’s pension, rather than pay it out to Social Security.

    As for Ralph’s private sector pensions, you’re joking right? Like those pensions the autoworkers will be getting? Or IBM when they cut all their pensions back? Or the 50, 60, 70% of us employed by small companies?


    43% of private sector workers have pensions, dropping every day. I sure don’t.

  26. V Smoothe Post author

    Well David, maybe you should become a fireman.

    Also, I don’t understand how you came up with the $720k figure.

  27. Robert

    The problem with the city’s employee retirement plans does not really seem to be that they are overly generous, but rather in how they are paid for. But, it is disingenuous to compare the city retirement plans to small companies. The city has a billion dollar budget and over 4000 employees, putting it firmly into the medium to large company category. Most of those companies will have 401k plans with a company match, and some do have employer sponsored defined benefit plans.

    I most recently worked for a large company, with a 401k plan with a company match. So social security tax consisted of 12%, split between company and employee, and I contributed about 9% to a 401k, with accompany match of 4%. So the total retirement contribution was 25%. So the overall retirement contribution is right between the civilian and public safety rates. The big difference is that I paid three-fifths of this from my salary, while the civilian employees in the city don’t have to pay much of anything. The real result of this is that city employees, except firefighters, in addition to a fairly generous pay scale, are functionally given a 15% salary increase by not having to pay into their retirement.

  28. Robert

    The CalPERS payouts are calculated according to a formula that takes into account life expectancy and expected return on investment. The fund is supposed to break even over time.

    Is it better than social security? It is a meaningless comparison. SS is not an investment. Money you pay in is goes to current retirees. It is not invested for your retirement. SS is intended as a safety net, not as a primary retirement account.

  29. Robert

    A question before I start off on a rant about the salary schedule. My understanding is that the COLA is on top of the annual raises set out in the schedule. Meaning that the pay rates for every grade and step are increased by the COLA each year? So that step 1 for an Accountant I hired next year would be 3% higher than an Accountant I hired this year? (17.23 instead of 16.73)

  30. livegreen

    Which is an important issue: Why pay for COLA -AND- annual raises set out in the schedule? These seem to duplicate themselves, if not in name, then in practice.

    BTW, when I ask this question, I ask looking for real reasons. Not endless self-justifications like “it’s always been done this way”, “other cities do it”, the “state does it”, “the CEO’s at Fortune 500 companies and UC Chancellors do it”, “they do this in private business”, “my next door neighbor gets one”, etc., etc. ad hominem.

    Besides the schedule being a negotiated agreement with the union, is it a legal issue, ie. to avoid variances in promotions, thus avoiding lawsuits over unequal treatment?

    Then again, I guess not, since there’s no promotion involved, it’s just automatic pay increases…

  31. len raphael

    LG, heavily unionized industries like muni govt pay step raises because unions oppose merit raises on the principal that they are used to bust unions and lower rank and file’s wages. Probably true, but muni/federal unions have never come up with a solution to the too often resulting low productivity, quality, customer attentiveness. Trade unions do a much better job with their apprenticeship, journeyperson, selection/training process but have nepotism etc. problems.

    -len raphael

  32. len raphael

    btw, FICA (aka social security w/o the medicare portion) rate of 6.2% which is paid by both the employee and employer, applies to the first 102,000 of gross wages (ie. before reduction for employee’s 401k contribution). (you’re just sol if your self employed)

    the medicare tax of 1.45% paid by both ee and er, has no ceiling.

    ss is only a “good” retirement plan if you earned lower than average bay area wages because your ss benefits after you retire are much higher percentage of your contributions than they would be for someone who paid in the max each year.

    the Social Security site has a quick calculator to estimate what you’ll get at age 62 or so. It calc’d 17k/year for someone who’s wages in the last ten years was 80k.

    unlike private and public sector retirement plans, the ss benefits most of you will receive before age 67 are reduced by your earned income above a very low threshold.


    So that extra percentage that govt employees pay in, above what they would have paid if they had been subject to fica is a huge benefit.

    -len raphael

  33. Robert

    So city employees get a 5% to 8%, depending on how large a COLA, every year just for showing up to work and not getting fired. My experience in med/large private industry, non-unionized, is the average raise each year is more like 3%, performance based, and with no other COLA. It is no wonder that city salaries seem high compared to private industry.

    The best solution is probably to use performance to determine yearly raise, but the unions will fight this. So I guess as an alternative I can go along with the COLA, but then no step raises just for being there. Then if they do a good job they can get promoted to the next grade.

  34. David

    V Smoothe,

    Maybe everyone should be employed by the gov’t. That will make a thriving economy.

    As for the $720K, that’s how much I would have to save up by age 50 to have $36,000/year in income (5% withdrawal rate) or to have roughly that income if I were to buy an annuity (actually I’d probably need a bit more, because the payout rates for someone that young are lower, because the insurance company actually has to, you know, pay it out of funds at hand instead by sticking it to the taxpayer).

    Robert, I know full well how CalPers is “designed.” Now grow a synapse and figure out how much money CalPers lost, and how they”re making it up. Hint: It’s not through the magic money fairy.

    As for not comparing it to Social Security, um…There are 2 kinds of retiree benefits. Guaranteed, gold-plated ones that public sector workers have, and the rest of us that get to make do with Social Security. It certainly is a valid comparison. The rest of us have to save our own money and invest it for retirement; public sector workers get to have the taxpayer back up their plans if they underperform.

    I’m tired of being the sucker. F that. F your pensions.

  35. J-man's Dad

    Step raises do not continue ad infinitum. I’ve been a firefighter (I have not promoted to engineer or lieutenant or fire investigator) for 20 years. my last step raise was 15 years ago. Through our Local’s negotiations we have had some years of good COLA’s, and we have had some 0% years as well. David I invite you to come do what I do and feel how I physically feel sometimes before you start dropping F bombs.

  36. Patrick

    The bottom line is: Oakland can’t afford it. As I’ve stated before, public workers used to make less than their counterparts who worked in “the real world”. In return, they got the assurance of pensions and benefits until they died. Now, it seems they have the best of both worlds, while many in the public sector have neither. I won’t drop any F bombs, but I will again use the B bomb: bankruptcy. A city in which the average HOUSEHOLD income (in 2007) was just a little over $44K cannot afford 1413 city employees who make over $100,000.00 a year (some MUCH more). Plus benefits. Plus pensions. Plus retirement benefits. Not to mention the 1000s of other employees (and lets not forget the “non-employees” we fund via crap like Measure OO). It’s simple economics – and unless public employees come to terms with this fact, they face losing everything. As does Oakland.

    Anyone who takes a drive down one of our many uneven, pothole filled streets, walks down one of our litter-strewn, broken sidewalks, looks at the condition of our city buildings, parks, lighting, schools, landscaping – or even compares what we pay against the services we receive has to come to the same conclusion. We should be so lucky that we have nothing better to worry about than if the color of the new Safeway is “feces brown” or “chocolate”.

    J-man’s Dad, I’m sure you work very hard. And, I believe you deserve every cent you receive. Unfortunately, I can’t afford it. I can’t afford paying Oakland’s public employees the highest wages in the Bay Area (and some of the highest in the country) – and I guarantee most of my neighbors can’t either. It’s a champagne budget on a crack addict’s wages.

  37. Ralph

    A champagne budget on a crack addict’s wage…i love it. I was talking with a friend about DB not taking the salary cut, and I have come to realize that, if true, I have no problems with her decision. Unlike her BH colleagues, she did not support a vote to give a raise to those meddling kids. She acted in a fiscally responsible manner. Dellums does not get the pass as he sat on his hands. And IDLF gets a pass from pay cut. For being fiscally irresponsible, the rest should take the cut, cover IDLF and DB and take another 25% for being irresponsible.

  38. ConcernedOakFF

    Patrick – In no way are Oakland’s Public Safety employees the highest paid. Just look across the bay and north and south of Oakland to see that…

    You are not looking beyond the surface level at all.

    Because we pay our own pension, the city is not really paying us the amount that it shows on our pay scale.

    When cities pay their employees less money, but pay all of their retirement, then what is the benefit? For the city OR the employee?

  39. VivekB

    Re: Retirement comparisons between CALPers & SS:

    I find it entirely humorous that anyone that’s in the 21-50 year old range still believe Social Security will be around for us when we retire.

    Never forget the 1994 poll of 18-34 year olds (now 33-49 years old) by the Third Millenium, where
    - 9% believed Social Security will have any money left to reimburse us for our contributions,
    - 25% believed Social Security will still exist
    - 46% believed in UFOs

    (google it, TONS of references to it)

    Run whatever #s you want about Social Security, but it’s a joke, there’s no money there, everything we’ve put in will be gone (and it goes negative by 2018). The only way to “cover” social security is by raising taxes, which won’t be popular so SS will be cut. By 2029, it’s nearly totally bankrupt, and who here thinks the next generation won’t want to pay a colossal payroll/etc tax without reducing benefits to laughable levels.

    I’m happy CALPers is privately run and not running into these same problems, really I am. That means at least some California residents won’t be destitute. The rest of us are left with whatever additional amounts we can save up, which after the recent decimation i’ve personally lost everything i’ve put over the past 12 years, and i’m back to 1998 levels (which may not even get me through one year of “retirement”).

    Get real, fellow regular folks – none of us will be retiring until we’re all but dead. The reason i’m in favor of privatizing Social Security is because it’s a faster path to it’s destruction than the current slow death. It’s all a sham, and the sooner we wake up and realize that the better.

  40. V Smoothe

    1. Social security isn’t going anywhere, folks. The fearmongerer’s myth that the system is going bankrupt has been repeatedly debunked in pretty much every media outlet except for maybe Fox News, so let’s please not repeat it here. The system, with no changes whatsoever, is 100% solvent through 2053.

    2. FF, you aren’t paying the entirety of your own pension. You’re paying 13% of your salary, which hardly seems unreasonable for the benefits you get in return. But the City is paying 23% of your salary into CalPERS on top of what you pay. It seems like you’re forgetting that.

  41. Ralph

    COFF, help me understand…assume your normal pay is $100K per annum. You chip 13% into your pension. How is this different than private sector guy earning $100K per annum and chipping in 13K into a 401K. Both of you are still taking home $87K for the year.

    Given that your contribution is required, you should feel a bit better about retirement. Ol’ PS guy may opt to reduce his contribution and put his retirement at risk.

  42. Patrick

    Ralph, it’s different because the value of a 401k can drop to $0, while a pension is guaranteed – unless the entity that provides it goes bankrupt.

    I need to keep a link to V’s salary comparison on my desktop. It seems to me that our Public Safety employees would still be the highest paid in the area (or nearly so) even if we account for that 13%.

    COFF – isn’t the portion of your wages paid into your retirement account pre-tax?

  43. VivekB

    Do you have a link to the SS debunking? I haven’t seen any credible rebuttals, although I admit I may have missed something.

  44. J-man's Dad

    In terms of Oakland’s overall issues: If the Firefighters can chip in 13%, why can’t the other employee groups, especially the OPOA?

    I live here too. I drive the potholed streets, I’ve waited for OPD to show up 2 days later for a burglary report, and I’ve had to pick up the trash myself in my local park. But if someone dials 911 for a fire, medical emergency, flooded basement, technical rescue,etc. We show up in minutes and start to make things better 24-7-365. Regardless of where in the city you are. to the tune of nearly 70,000 calls a year. Does public works, parks & rec, the building dept. or OPD provide the same customer service?

    Then don’t cut or punish us until everyone else can come up to our level in terms of employee contributions or customer service…

  45. Patrick

    No one singled out firefighters – at least I didn’t.

    I can’t compare the response time between OPD and firefighters, but I can say that while I guarantee there are quite a few crimes being committed at any single moment in Oakland, fires and flooded basements are less of a concern, barring natural catastrophe.

    No one is out to punish anyone. But, I’ve stated a fact I will again repeat: Oakland can’t afford it. And when Public Safety wages, benefits and retirement account for slightly over 50% of all wages, there has to be some wiggle room somewhere. Whether it is wholly within OPD is a matter of debate, but there has to be a compromise somewhere.

  46. ConcernedOakFF

    We are taxed on 100% of our income, including all of the money that goes into our pension, so in some ways we are double taxed.

    The only thing that is pre-tax is our Deferred Comp (457) which is exactly like a 401K, but we do not have any matching funds from the city.

    Social Security was never meant to provide total and secure income for the vast majority of the United States. It was meant as a known stream of income to keep a base level of living possible. Private sector employees had to save, 401K, invest or utilize other manner of tools to have a source of retirement later in life. Unfortunately at the moment, this is not exactly where I would want to be.

    We do have that advantage, I agree of having a relatively guaranteed pension.

    As far as salaries, we do not have anywhere near the highest salary, nor do the police. Hidden in otheres salaries are various bonuses, incentive pay, education pay etc, that (much to my chagrin) Oakland does not have.

    I realize that police matters often take a front seat in the lives of Oaklanders, and often seems that crime and terror are the biggest issues in Oakland. I do not dispute that. However, what the Fire Department responds to rarely makes the news, unlike the PD.

    For example, on an average DAY in Oakland, there are around 165 Medical Emergency and Rescue calls, from a fall to a Car Accident, to a shooting to someone not breathing. We have a response time standard of 4-5 minutes city wide. If you call, we WILL show up. We have about 30 misc calls per day, such as power lines down, gasoline spills, hazardous material incidents etc..We have about 20 reported Fire Alarms per day, and we have about 15 reported fires per day.

    Per capita, we are the busiest in the Bay Area, and one of the busiest Fire Departments in the US. We are also quite understaffed for the volume of calls that we respond to, but obviously, we are not exactly able to grow in this current climate.

  47. Ralph

    COFF, well that sucks.

    PS: Thanks. I don’t see OFD as much as I see OPD in my day to day. Definitely a lot less since construction has stopped at my bldg. So for all that you do, I offer my appreciation.

  48. len raphael

    COFF, how and when did cops get the city to pay their entire retirement contribution? Has there ever been a police or fireperson strike or sickout here?

    COFF, your 13% is part of you box 1 W2 wages? If so, you really did get scrooged cf to cops.

    You don’t pay into SS, do you? But do pay Medicare tax?

    My impression ? is that much of the Bay Area compensates their public safety people much more than the rest of the state, so comparing to SF or SJ is uselful but once one major city extracts give backs, the rest might follow.

    -len raphael

  49. len raphael

    VB, my understanding is that it’s not SS funding that is shaky, it’s Medicare.

    Free comprehensive medical insurance for life for oneself and dependents after 10 years service. What are the deductibles? If it covers prescription drugs (Medicare has very limited coverage), that coverage for an older couple now would probably cost that couple 12k/year in after tax dollars. and say 18k before tax. ie. much of your private sector retiree’s social security income could go to a good private supplemental insurance plan premiums.

    -len raphael

  50. AMR.EMTP

    With all due respect to the above discussion — which is great — I must comment on COFF’s last post.

    The biggest advantage that FF’s have is tenure. While they don’t have bonuses and/or incentives, they also don’t face the risk of layoffs or — to a large degree — firings. I would posit that there are few to no non-probationary firings at OFD; once you make it past probation, you’re golden. Rational people will ALWAYS take a steady, certain cash flow over an uncertain, fluctuating one.

    With all due respect to COFF and J-man’s Dad, you guys need to get off your high horse and look honestly at the level of service provided by the OFD. There are many hardworking, honest, caring folks in OFD (probably including COFF and JM’SD). That being said, OFD is one of the highest paid departments in the country, yet if the people of Oakland knew how their department stacked up against ACFD, LPFD, FFD, UCFD, and BFD, they’d demand their money back. I won’t go into specifics, but many OFD companies have terrible EMS response times, poorly trained crews and medics, apathetic officers, and a great sense of entitlement. As an AMR paramedic, I see it every day. And as an Oakland taxpayer, it drives me nuts.

    Just like OPD, OFD has a TON of problems — most beginning at the top. Unfortunately, Oakland citizens just can’t easily compare the service OFD provides to other departments. If they only knew…

  51. ConcernedOakFF

    AMR.EMTP – I will not get into a back and forth session over a how a member of a NON-Sworn PRIVATE FOR PROFIT Ambulance company that is mostly staffed by Paramedics that can not pass a Fire Department test has any right to comment over how our response times are poor or how our medics are trained.

    I’ll put it simply. You are full of it. Completely and absolutely.

    With one exception : our upper management is completely rotten, corrupt and needs to go.

    As someone that in the past has done an actual study of our response times for EMS and Fire Calls, Oakland has the fastest response time in Alameda County. Over 2 minutes faster on average than 5 of the other departments. We do have the advantage of having more stations.

    The attitude, response times and overall ability level of the average American Medical Response Medic is often somewhere between “EHHHH” and non-existent, to downright terrible. I would be careful who you compare in attitudes.

    If you had a clue about the other aspects of our jobs other than the 5 minutes a day’s worth of contact that you have with us, maybe you wouldn’t be sitting down there on a south county unit hoping for your shot at a fire job.

    The major difference between Oakland Fire Department and the others that you mention is our staffing levels, as well as (not to denigrate the other departments, because they do what they can) but their Firefighting ability is often not up to par.

    As this is obviously an attempt to troll for a more virulent response, I’ll let the rest go, but seriously how you can say a lot of this with so little to back it up is astonishing.

  52. AMR.EMTP

    First: I am a citizen of the City of Oakland. I own a home here. I live here. My kids go to school here. I pay your salary. I HAVE *EVERY* RIGHT TO COMMENT ON OFD’S PERFORMANCE.

    Second: So address my points. Your ad hominem attack provides no refutation of what I contend in my previous post. It only demonstrates your attitude of entitlement: Clearly, since you’re the sworn “hero”, you must be above criticism.

  53. David

    Let’s agree that Firemen bust their butts. Let’s agree that cops bust their butts. You know what, most people who make $80, 90, 100, 120K/year bust their butts.

    And most of those latter people 1) don’t have a pension (again, it’s at 43% of private sector employees and dropping every year)–certainly not one that’s guaranteed (witness car companies, airlines) and 2) certainly don’t have essentially a guaranteed job.

    Rationally, a person would be willing to accept LOWER compensation for job security and a secure pension. Yet as has been shown by comparative studies, public sector (not just cops & firemen) have HIGHER compensation than similar jobs in the private sector. Therein lies the conflict here.

    It’s not just that Firemen & cops make far more money than the average college graduate (and more money than many masters’ or PhDs), they have better job security and FAR better retirement benefits.

    You may think that you earn every penny of that compensation. But when you sit there and stew that there are some private sector folks (i.e. the top 5%, literally) who make $200K/year, realize that there are a LOT more private sector folks making $60K/year, no pension, watching their 401(k)’s evaporate, paying about 10K/year in income taxes & social security (never mind property taxes, assuming someone making that little can’t afford a house), wondering how he’s ever going to retire, and just MAYBE you could see why there are a lot of ticked off people.

  54. Ralph

    You know you live in the bay area when you can say about someone making $60K a yr that they are not house eligible. Sure there is some jest in there, but a person making $60K can afford a home.

    But to your point, I am glad you gave firemen and police their due. I’ve relatives and friends who have served in each, not here, and I know how hard they work. So, it is a bit frustrating to see people accuse them of eating off the govt trough. But which is equally frustrating taxpayers stating that they pay taxes so you answer to them.

    One last item, some might argue that there is a risk element to the police/fire job that warrants both better pay and enhanced retirement benefits. Frankly, I do not get why genpop is annoyed. People make choices. It is hard for me to be upset about a person who leaves one career and goes into another b/c they love the work. And don’t kid yourself, gone are they days that one graduates h.s. and enters the force. Maybe someone with better info can provide stats on those with at least a bachelor degree and for kicks pct with adv. degrees. Should they not be paid accordingly?

  55. ConcernedOakFF

    To answer the question, yes, I DO live in Oakland.

    And I did refute your points sir (or ma’am).

    And while you might have the right to criticize, you do NOT have the right to spread falsehoods about my workplace in a public forum.

    If you have an issue with the OFD or our responses, let the Officer on the response know, and I assure you it will be dealt with.

    Otherwise it just sounds like sour grapes…

  56. David


    I’m assuming that all Oakland cops and firemen have at least a college degree.

    Just for kicks, here’s the average wage for a college grad:

    Full-time workers age 25 and over without a high school diploma
    had median weekly earnings of $450, compared with $620 for high
    school graduates (no college) and $1,138 for those holding at
    least a bachelor’s degree. Among college graduates with advanced
    degrees (professional or master’s degree and above), the highest
    earning 10 percent of male workers made $3,224 or more per week,
    compared with $2,092 or more for their female counterparts. (See
    table 4.)

    $1138/week, or just under $60K/year.
    Now, can a person making $60K/year afford a house? Well, that would mean he can afford $1550/month in mortgage (P&I) payments, according to the “new” lending standards of pretty much no one paying more than 31% of his/her pre-tax income.

    According to that standard, he can afford a $288K mortgage (30 year, 5%), so if he saved up ~$70,000, he can put 20% down on a ~$350K house.

    Even after the recent bust, there are not many houses for sale at $350K that are move-in ready in neighborhoods where most college graduates would like to live. So I was a little tongue in cheek, but not entirely. Yes, you could afford an Oakland house on $60K/year. You’re not going to be living a very good neighborhood, and if you have kids, probably not one where you’d want to send them to the local school….or let them out of the house. (there are 6 houses above 580 with a price<$350K on the MLS at this very moment–not exactly a huge selection)

    just sayin.

  57. David

    PS. There’s a huge risk (higher actually) involved in being a cab driver. Should we pay taxes to support their retirements?

  58. V Smoothe Post author

    Honestly, it seems to me the question is not about what first responders should be paid for the work they do, but what we can afford to pay them. We’re clearly beyond our means at this point.

  59. David

    Yes, that’s very true. Oakland, SF, the entire state has built a bureaucracy that it cannot afford. Period. We have the 4th highest tax burden in the country, and still are running 10, 20, 40% budget deficits.

  60. ConcernedOakFF

    David –

    I am not sure I understand your points. Our benefits are negotiated amounts agreed upon by the union and the city.

    If you desire the same benefits, the opportunity to become a member of a Fire or Police department is open to everyone that is physically capable.

    The reality is, I am hearing a real sour note of jealously in many of these comments, when often times these same people can not, or would not do our job.

    We have a free and open society that allows you to make your own career choices based on what is best for you. If you choose to be a day trader, you may have a great salary, but poor job prospects or retirement.

    If you choose private employment, you may recieve higher pay, but may be laid off.

    You also will, by and large, not be exposed to carcinogeic substaces and illnesses that we can (and sometime do) take home to our families and kids.

    When people spend on average 5-7 years trying to enter the Fire Department (I tested with 14 other departments before I was hired in Oakland) they have an opportunity to receive what is admittedly generous benefits.

    However, the job takes a huge toll on the minds and bodies of the people who are in the occupation, far beyond what basic statistics can show. When most Oakland Fire stations average 3-4 responses between Midnight and 0700 in the morning (some stations are more like 5-6 calls, basically 1 hour of sleep), the repeated lack of sleep leads to innumerable sleep and physical disorders, namely cardiac issues. When then have that next day off to recover (most of us go to sleep when we get back, killing that day) sleep one night at home, have one day at home, sleep at home that night and then go back at 0600 to do it all over again.

    When people then work a trade or overtime (often manditory, which means you are not allowed to go home, no matter what you had to do that day) they are in the Fire Station for anywhere from 48 to 168 hours straight.

    I personally have had weeks when I was not ALLOWED to go home for 5 days straight, and was able to get about 10 hours of sleep in 5 DAYS – TOTAL.

    I am not complaining. I made the effort, and the choice to join the Oakland Fire Department. I love my job. I also think that we deserve every benefit that we receive.

  61. Robert

    COFF, I have a freind who works for SFFD, and his story of how long it takes to get in is essentially the same as yours. And to me this says that pay/benefits are too high, because there are more people who want to be firefighters than there is a need for. I know an OFD fireman who runs a construction business while he serves for the OFD. So I am really not buying in to the sob story about how hard the job is.

  62. AMR.EMTP

    COFF: You ARE complaining.

    You’re whining about not being able to sleep while you’re on the clock getting paid.

    You’re complaining about getting paid an OT wage of AT LEAST $62/hour, with a flat rate overtime payment per pay period — whether you actually work overtime or not. Meanwhile, five of Oakland’s top 10 highest-paid employees work for OFD — making at least a quarter-million per year. You won’t see that in any other city in Alameda County.

    You’re bellyaching that every workday for you is a Friday (i.e. one day on followed by two days off). You don’t mention the RDO (required day off) you get.

    You’re deliberately not mentioning the stations in the hills that average less than one call a day. Some stations average less than one call per WEEK.

    You’re moaning about “cardiac issues” while ignoring engineers and officers whose guts hang over their turnout pants. Lack of sleep doesn’t cause that; steaks & caesars every night does. OFD culture and leadership allow it continue.

    But what’s really off-putting is your contention that “We have a free and open society that allows you to make your own career choices based on what is best for you.” Really? Those kids slinging rock in the 60′s chose to do that instead of going to Harvard Law? That single mom working two minimum-wage jobs while going to Merritt opted to do that instead of doing business strategy consulting for Bain & Co.? Really? Your comments betray an astounding ignorance of the realities of this country and this city.

    Seriously, COFF, stop. Stop making your hole deeper. There are a lot of good people in OFD who read this blog, and your comments are not reflecting well on them or the department. You don’t represent them, and you certainly don’t represent OFD. Maybe you should spend less time defending an organization and culture that you yourself admit is flawed, and direct your efforts at making OFD a better department. I know that everyone who reads this blog would be happier with a better OFD.

  63. V Smoothe Post author

    Okay, enough. There are substantive points buried in all these long comments, and I’m all for providing a place to air those issues. But this not blog is not here to provide a venue for a pissing contest between various emergency responders.

  64. David

    Perhaps I can make my points simpler.

    1) Public pensions & retiree benefits are much better than anybody in the private sector can reasonably hope to expect, even those with college degrees and skills.
    2) These superior benefits come even though the position pays MORE than the median college degree holder’s job, AND at the same time is more secure (your point about private sector employment paying more is incorrect; again, the median college degree holder’s salary is almost exactly $60,000). Risk-adjusted, that means you earn far more.
    3) These benefits, while you may believe them to be appropriate, are unsupportable by the tax base, not only here but in municipalities/states across the country. (Look at the recent news regarding New York’s budget, Illinois, Wisconsin, etc)
    4) Finally, your point that it takes 5-7 years to get in PROVES the fact that these jobs are desirable. Not too many people are willing to work for 5-7 years to get one particular job. Ergo, the pay & benefits are more than sufficient for the job. QED.

    As an addendum, your argument about health effects is simply an assertion. I have seen no evidence that being a fireman or cop significantly shortens one’s life. I’d love to see some hard evidence that this is so. (of course one could argue that retiring at 50 makes up for that, but set that aside for the moment).

    You are correct that I would not be a fireman. However, my arguments hold whether or not you think I am envious of your benefits. They are simply unsupportable by the tax base, and with the typical fireman/cop’s income, you should be able to and expected to save for your own retirement, LIKE THE REST OF US. No matter what you think, you are in the top quartile of earners, and those of us in that segment in the private sector are not only expected to work for 40+ years, but we’re also expected to save for our own retirement and get a pittance from Social Security (if it even exists for top earners in the future; I have my doubts because it, like your pensions, are unsupportable in their current forms).

  65. Chris Kidd

    Clearly, this beef between COFF and AMR.EMTP can only be solved by a Battle Royale in Max Allstadt’s Thunderdome. It demands nothing less.

  66. ConcernedOakFF

    This is my last comment on this.

    Apparently any attempt at defense of what I consider to be rightly earned and negotiated benefits is seen as protectionist and greedy. You are all entitled to your opinion I suppose. I just think you are wrong.

    However, I can not stand the misinformation that is perpetrated on this blog at times.

    I am not going to AGAIN go over our overtime situation, however, remember that when the year end tallies are made, those 5 people in the top of the 10 highest paid are paid by the STATE OF CALIFORNIA for STRIKE TEAMS, not by the city. And for gods sake, I wish we got a flat overtime rate per week. Patently false.

    The slowest station in Oakland by the way averages more than 1 call a day, but they are an anomaly, and serve an area that would take other companies more than 15 minutes to get to. The average OFD station averages 2500 calls per year. The busiest averages more than 4000 per year.

    I am sick of the Fire Department being the first place that all of the cities in the US cut. We cannot always do more with less. Cut somewhere else for once. Or make other departments pay more.

    if you would like to continue the conversation off this forum, feel free to email me at concernedoakff at hot mail.

  67. Gayle Zanca

    Thank you OakFF for pulling back the curtain on your own finances and what goes on in the OFD and instigating this great debate. Too bad we don’t have any OPD’s (are they forbidden via contract?) or employees, current or retired, of other departments, ie., city attorney, auditor, permits, parks, who are willing to discuss pay/pension line items like this.
    And David, Patrick, Doug, Len, Ralph, et al., do you go to the city council meetings with this kind of information in-hand? I don’t recall seeing anyone as articulate as the people on this website speaking up. Waving sheets of facts, figures, audits and reports during the alloted minutes.
    What’s up with that?

  68. David

    Gayle, I was at a City Council meeting many moons ago. I dimly recall being shouted down for pointing out several wasteful practices of the schools, and never bothered to return.

    I admit, I’m weak, but I only have a certain amount of willpower, and I prefer to allocate that to doing other unpleasant things like cleaning the toilet or my gutters.

  69. Robert

    Social Security goes goes into negative cash flow in 2017, which simply means that more will need to be paid in benefits than will be collected in taxes. In theory, nore later, this is not a problem, becuase they will just start drawing down the Social Security Trust Fund. That will last until 2041, at which time the fund will be empty, and taxes will only cover 78 cents for every dollar in benefits. Medicare is a different problems, and the last time I checked was actually in worse shape.

    But back to the Trust Fund that will be needed to fund full SS benefits after 2017. This money is not sitting in some bank account, it was ‘loaned’ to the government. Which will mean that the government will have to borrow more money starting in 2017 in order to pay back the trust fund obligation in order to pay full SS benefits. Which will mean further large increases in the national debt.

    Insolvent? Technically not until 2041. But there really is not a viable plan in place to deal with 2017 – which is only 8 years from now.