Pension Costs

Last year Fremont spent more than $18 million on employee pension contributions. That is a lot more than it spent back in the 1990s when the stock market was good. 

At that time stock market returns were so flush that cities, including Fremont, decided to offer employees more generous pension benefits.

Since then, however, the market has tanked twice. Now cities have to contribute a lot more to the state retirement system to cover their employee pension obligations.

Fremont’s pension contribution rates are currently 29 percent for police and fire and 18 percent for everybody else.

That means that if a police officer makes a base salary of $100,000, the city pays an extra $29,000 a year toward his or her pension. The police officer would pay $9,000, which is 9 percent of salary.

For a non-sworn employee making $100,000, the city pays $18,000 a year and the employee pays $8,000.

The city pays more for police and fire because they have more lucrative pension benefits.

Back in the late 1990s, the pension rates were in the single digits. In a couple of years they are expected to climb above 30 percent for police and fire. The state pension system anticipates annual returns of nearly 8 percent. Last year it lost about 27 percent.

Matt Artz


  1. I wonder if Gus’s “back of the napkin” calculations using a 7% city contribution were in fact on toilet paper.

  2. The cost of the salaries plus the pensions for Fremont City employees, plus full medical for life is exorbitant.
    Granted, the Police and Fireman should get a premium for there jobs. There are few fires in Fremont, but I see the Paramedic trucks often.
    There is no one making that kind of money or Pensions in the private sector or industry.
    The question is can we afford it? Where else could that money be spent?

  3. The reason cities are paying so much now is that they did not pay any of their share to the system for 15-20 years, while the stock market was flush. The employees did however continue paying their share during these flush times. If the cities had paid even half their share during the flush times they would not have the high rates now. DON’T BLAME THE EMPLOYEES. CITY COUNCILS DID IT BY NOT BEING RESPONSIBLE!

  4. Few fires in Fremont??! About 9 years ago we got to see a fire up close for several hours, the hills east of Kimber Park burned down to the back fence line of houses on Canyon Heights. After the fire came over the top of the ridge and down the hill, we watched the firemen standing under the eaves of the Kimber house hosing water down on the flames as they blasted up at them.

    I had friends who were burned out in the Oakland Hills, and I thought we were in for it this time. Our car was packed. The fire crews kept the fires from spreading to the eucalyptus grove on Canyon Heights, saved all the houses on the hill, and stopped the fire from spreading into the neighborhood.

    I’m recounting this to be clear about what we are getting for our money. Firemen love their jobs, but they earn their pay.

  5. Yes, I have been complaining about the exorbitant health benefits that city & state employees have been getting for years. (Just look at Gray DAvis who granted the prison guards could retire at 50 w/ full benefits). Those costs will do to the state what similar Union benefits did to GM. Our city council and governors gave away too much when times were good. And there are no equivalent jobs in the private sector that offer any benefits near that (any more). However, if Obama and Congress manage to pass a universal health care plan then maybe these costs might become reasonable.

  6. Bill, Thanks for noting that police and fire services are important. In my opinion, the question is, can we afford not to have competent, professional fire protection and paramedic services? Do you really want a “lowest bidder” fire department responding to your emergency?

    There are private fire protection companies; they don’t come cheap.



    Plus, they’re only into fire suppression; they’re not paramedics.

  7. Doug, I don’t know if the city will propose paycuts for the next union contracts. I get a strong sense that there is no way they’re going to offer the 3 percent raise that they have already factored into next year’s budget.

  8. I wasn’t really thinking about the rank-and-file. I was thinking about the top brass.

    It would certainly be a magnanimous gesture on the part of those with more than adequate salaries to suggest they take a pay cut to save some of the positions.

  9. Marty, go back and look at the numbers I used. My calculation was based on a 16% city contribution, not 7 as you state. I was low, but, remember I also said it varies year to year based on PERS investment success. I did say that for a ten year period while I was serving, the average city contribution was 7%. My gripe with the way we did it was that, in the years when the PERS contribution was zero, that money was not put aside to accrue a balance for the bad years, but rather spent on operations.

  10. Doug – that’s exactly what Newark Fire top brass is proposing:


    “Speaking to the council Thursday, Newark Fire Chief Demetrious Shaffer — who would lose his job if the hybrid plan is completed — said the deal makes sense both economically and from a service standpoint.”

    Totally eliminating your position (and the position of your Assistant Chief) to improve the economic viability of your department is a pretty magnanimous gesture. When’s the last time anybody in Fremont proposed something like this?

  11. I guess it’s too much to ask when you have become accustom to a particular lifestyle. Plus, just think what that would do to your retirement payout.

    I believe all Newark employees took a pay cut this past year during the summer by having every other Friday off.

    Can anybody verify that?

  12. Gus, my core issue is that the pols, city through state level, will advocate for these exorbitant expenses even when the consequences are staring us straight in the face.

    Our revenue – city and statewide – is on a cliff dive. A wave of foreclosures effecting mid to high earners is about to blast through the state. U-6 unemployment WILL be over 20%.

    As a government official, you represent your constituents, not only your employees. It is blatantly obvious that thousands of qualified people will work as a firefighter for less than the city is paying.

    Why do you and your piers continue to make excuses?

  13. Gus, Marty; deep breath, your discussion at this very moment is very much appreciated. Thank you both.

  14. Marty,

    I agree with much of what you say, but I look at it from a different perspective than you. First off, I have no peers (piers?) because I hold no office. I usually only respond here to bring a different viewpoint from others, one honed by 25 years of service and a great learning experience.

    Fremont was one of the last cities to implement the public safety retirement plan, then called the CHP retirement plan, then 2% at 50. I actually voted against it, but lost. It was argued that it was a recruitment tool, since almost every other city had already implemented it.

    Time went on and the state legislature, lobbied strongly by the various interest groups, continued to kick it up and up, first to 2 1/2% then to 3%, then to 90% of final year. Cities were dragged into the program as the state added correctional officers, parole officers, and other law enforcement peripheral personnel, few of whom have jobs even closely approaching that of our local public safety personnel, either in complexity or in danger.

    The job of a city council is to provide the very best for our residents. I lecture on local government still and I tell people the city council has only three things they must do. The must provide for the safety of the public, they must maintain our investment in streets, parks, and buildings, and they must provide a vision for the future. All the rest of what they do is optional, but they must do those three.

    In providing for the public safety, they must hire the best people they can, provide them the training and equipment to do the job, and they must support them.

    In hiring we compete with cities all over. I recall the statistic that for every police officer we finally hired, we started with 106. Many, maybe most, of our new police recruits are college graduates. All of our new fire recruits have paramedic training and have fire science certificates. Whether I support them in various issues or endeavors, I have a huge degree of respect and admiration for them. Whenever the emergency comes, I will be glad for who we have responding.

    The problem comes from 1978. We have not yet figured out how to fund government at any level. We have a patchwork of taxes, fees, assessments, and subventions. Fremont gets 15$ of the property tax, Oakland gets 28%. Why? Oakland and Fremont have essentially the same assessed valuation, but Oakland gets almost double Fremont’s amount of property tax. We are all facing the problems with the state budget in May, so we can see that failure. We need a constitutional convention to devise a fair method of governmental funding which makes sense.

    With term limits, our legislators never stay long enough to become experts in specific areas, so there is no leadership there. Statewide officers are more interested in which office they will run for next, and we are ham strung by initiatives which carve out portions of the state revenue for specific purposes.

    We need to fix the whole thing before it collapses. Our local people do the very best they can. Change needs to happen from the top down. The city of Fremont built a prudent system of reserves and has been fiscally conservative forever. I’m not sure anyone could have anticipated the level of the economic collapse. I’m not sure they could have prepared for it, especially because of all the competing demands.

  15. Gus, My issue is with firefighter pay, not police pay. I know for a fact that it is magnitudes more difficult to find qualified police candidates than it is to fill a fire house. Perhaps it’s the stigma of being a cop vs the glory of firefighting. I’d like to think one requires a level of intelligence and measure above the other.

    You touch on the complexity of our state’s funding problems. Like most Californians, I share these frustrations. Where I digress is your assertion that management of revenue and legislator experience is key to out deficiencies. I’ll assert that management of expenditures is far greater a problem, in large part due to overcompensation of staff.

    (I’ll also attribute many of our failures to a hyperpartisan legislature and the initiative process, but that conversation can be left at bay)

    There has been a good amount of chatter about a constitutional convention. And while I think the likely outcome will be a cluster f&%@ of special interests and labor unions, the alternative of continuing the status quo is unsustainable.

    Regardless, four households on my street have experienced a layoff or furlough. All of our retirement investment accounts have been decimated since September. Juxtapose this with city employment at the apex of job security compiled with contributions to employee pensions jacked up to 29% to compensate for market depreciation.

    Why the disparity between the private and public sectors? One has to earn revenue, the other has to obtain it.

    This inequity is unsustainable.

  16. Doug – all employees except for line staff at PD and Fire at City of Newark took a 5% pay cut effective July 1, 2009. Office staff in PD and Fire took the cut; patrol officers and firefighters did not. Also, all City offices have been closed on alternating Fridays lince last July 1.

  17. Marty: I just don’t buy your arguments about fire-fighters in this city. Once again: they are also paramedics; they have advanced training; and they are physically in top form because they can’t do their job otherwise.

    Go with the Scouts on a fire-house visit, then think about it: how many people can walk in off the street, carry hoses up a 4 story stairway, then de-fib someone, start an IV and stabilize for transport?

    I certainly understand your frustration with the economy and the way we fund things here. Fremont in particular has gotten the shaft in funding for schools and government ever since prop 13.

    I’ll even agree that pension funding is out of control. But it doesn’t help your position to equate fire-fighters or police with normal jobs – they are more like professional athletes, with high skills, high risks, and a shorter career than most people.

  18. Has anyone considered the liability issues that would be involved for the City the first time an underpaid, underqualified police officer or firefighter underperformed on duty and someone was permanently injured or killed as a result? These are professional positions that must meet certain standards of care in the course of their duties. It is in the City’s best interests, and the best interests of the residents as well, to assure that we have properly trained and certified public protection staff. That level of service doesn’t come cheap, but you’ll thank them the first time you need their services.

  19. Thanks Fremont Lifer for the verification of Newark pay cuts. I wonder if Fremont considered that before cutting the 20 positions? Maybe they did, or maybe the union contracts don’t allow it.

  20. Bruce – Again, I have no issue with police pay.

    Perry – I believe an equally qualified firefighting staff could be had for a slight decrease in pay and converting the retirement plan to a city-matched 401k/403b .

  21. Marty: sorry if I conflated your position on fire-fighters to apply to police too. I feel particularly strongly about fire-fighters!

    Your suggestion is at least something that could be negotiated about without minimizing the challenges of the jobs.

  22. All firefighers must be EMTs (but not necessarily when they join the department – some departments give a recruit time to complete that requirement or have it as part of the fire academy), but they are not all paramedics.

  23. Jen, the minimum requirement to test for a position with the Fremont Fire Department requires you have a Paramedic license, and you must have a certain level of field experience with it.

    As for the most recent testing and recruitment for a firefighter position in Fremont:

    In 2006 less than 130 qualified applicants applied.
    In 2008 less than 110 qualified applicants applied.

  24. Ron suggests that “less than 130 qualified candidates” applied for (was that one or 2 or 5 open positions ?)
    and I THINK he is indicating that this is representative of a SHORTAGE (?)

    From my experience hiring numerous positions in the private sector over the last several years, I have ben ECSTATIC to have 3-4-5 QUALIFIED candiates for each of the positions I seek to fill . . . .

    To have many 10’s or dozens to choose from is (IMHO) indication of a veritable “flood” of candidates seeking a position….. probably indicative of the relatively attractive position being offered.

  25. Bbox, when the prerequisites were much less, we got the thousands of applicants I talked about earlier. When they made the experience/certification/paramedic requirements higher, the numbers Ron referred to resulted. In my experience, the FD attempts to have sufficient vacancies to justify a recruit training class, 10-12 people who pass all the written, physical, and strength/agility tests.

  26. Ron, thanks for enforcing Gus’s point about applicant qualifications.

  27. Actualy Marty, the fire dept use to receive 1000’s of applicants who could run a 7 minute mile and had first responder training(essentialy young adults fresh out of high school). The problem is what to do with them after you hire them. The costs of sending a firefighter to paramedic school costs thousands of dollars, not including their salary, and the overtime to backfill their position while they are off to school for 6 to 9 months. This does not include the 16 week fire academy.

    The department also stands the risk of the employee not being successful in completing the course, or failing the academy.

    Perhaps you should visit the fire dept and discover what they really do. Gus has been involved in city business for a long time and at least can speak to the facts during his tenure. I really dont know what background you have to speak on anything about the fire department, except your assumptions and opinion.

  28. Ron, the inequity in retirement benefits between the private and public sectors is not an assumption.

  29. Gus –

    So the qualifying requirements have reduced the numbers of applicants over the years.

    My point was – having hired and filled copious positions in the private sectore for several decades, I do not recall a time when dozens of qualified candidates were considered or even interviewed for a position.

    By comparison of the facts supplied in this dialogue – there is a veritable flood of candidates (today) for the annual FD positions.

    This seems to speak to the relative desirability of the positions being filled.

    Also – I again make the point, with great respect to all involved – that the physical requirements of a job and willingness to go in harms way is clearly not a consistant basis for determination of compensation.

    If it were, our men and women in the armed forces who risk their lives day in and day out, who rally on the “football field” of battle and who protect my freedoms and physical well being every day – might enjoy a salary or compensation closer to that which our FD and PD enjoy. . . . but they do not. We ask them to give, and offer little in return. I repeat this point as a response to those (in this discussion) who wish to consistantly restate the matters of relative risk, skill and physical demands as a rationalization of pay scale.

  30. Bbox,

    There is a major difference in the hiring procedures for private and public employment. Working for a private employer, one reviews resume’s and selects people who appear to meet the requirements of the job. They are then called for an interview and further screening, but the number who are called is based on the ability of the screener and the time required to screen. I would guess that, usually, fewer than 10 are called in for the interview.

    In the public sector, civil service laws require a much more open process. People must demonstrate their qualifications before they are called for an interview, usually by passing a test of some sort, followed by physical strength or agility (if required) and finally being deemed qualified for further interviews. Once that list of qualified individuals is established, the employer must hire from that list. In some cities, they must hire them in order in which they appear on the list, in others, like Fremont, they hire from the list those who best fit the need.

    When 120-103 people apply, that is the starting point and only those who pass all the tests get on the list, but with rigid prerequisites, I would guess that most of the applicants are deemed qualified.

    Once someone passes the interview, they are still subject to psycological evaluation and background checks before they are finally offered a position.

    And, we are competing with other municipalities for talented individuals. We must be in the range to hire the right people. We don’t have to be the highest paid, but we have to be able to compete. There may come a time when there is a dual pay structure, one for long time employees and another for the newer employees, but that will take some courage from elected officials.

    And, by the way, I think it is shameful that enlisted military families are frequently dependent on food stamps because we pay them so little.

  31. I came across this blog on the recommendation of a friend. Aside from Gus and a few others, I have to admit the dialogue is quite pitiful and based mostly on assumptions and Matt’s hatred of Fremont Firefighters. Most of you really haven’t a clue as to what your Fremont Firefighters do each and every day, and more importantly, what they could do if any number of catastrophic events happen to the city’s population, or just a single citizen.

    I would suggest that all of you visit your nearest Fremont Fire Station and actually sit down and chat with the firefighters. I don’t think they would have any problem with answering your questions about who they are, what they do, how they got there, and where they came from; most of their stories will probably surprise you, given the long and tenuous work/education histories each of them have endured just to become members of one of the best and most professional fire dept.s in the country. Pensions didn’t come easy for the Fremont Firefighters; they gave up raises and other benefits to get that 3%@50 all of you are so concerned about. The private sector for professionals (that’s what firefighters are) is much more lucrative than the public sector, and you only seem to hear this unhappiness about our firefighters’ compensation when the private sector starts suffering. Where were all your comments when the private sector was “riding high?” The firefighters don’t get 401K’s, annual bonus packages, free medical coverage, and all the other perks that private sector “professionals” get/or got.

    The education and training requirement, past and continuing, for Fremont Firefighters might also surprise most of you; they don’t just have the basic high school education and 3 hour first responder class that Matt and Marty would have you believe. Their training is quite extensive and ongoing; it has to be otherwise someone dies or gets injured. The City of Fremont has one of the most highly regarded Fire Departments in the country; why don’t you take the time to meet those folks and find out first-hand just how good the services they actually provide to you are?

    Matt seems to like to “stir up the pot” with sensationalism (as most journalists do); that way he gets crackpots like Marty to join in. Bring it on Marty! You have to know how foolish you look with your comments! I don’t quite know how to take Matt; it would seem that he would want to get a better picture of the real issues before making ignorant comments, given his chosen profession of journalism. You won’t hear from me again; your arguments are too pathetic.

  32. Give us a break, Tom. In many cities firefighting is done quite well by volunteers. Union firefighters throughout California are obscenely overpaid and do not deserve a pension or paid medical one minute after they retire. Period.

  33. Tom: “I came across this blog on the recommendation of a friend.”

    Translation: Firefighter Tom awoke up from his slumber (paid in full, time and a half by the city of Fremont) to the sound of Ron Chaney punching a hole through the firehouse wall, yelling “I can do more push-ups than Marty. Why the f*@k doesn’t he respect that!!”

    Tom: “Most of you really haven’t a clue as to what your Fremont Firefighters do each and every day”

    That’s the problem, Tom. Firefighters spend 2% of their time fighting fires. What ARE you doing the rest of the time?

    Tom: “The private sector for professionals is much more lucrative than the public sector”

    Wrong. Starting base pay for a Fremont firefighter is $76,386. Currently, the average salary for jobs in Fremont is $58,441, less than 77% of an entry level firefighter(1). You want to include overtime and retirement benefits, Tom?

    Tom: “The firefighters don’t get 401K’s”

    In place they get a guaranteed benefit where market depreciation is subsidized by the taxpayer.

    Tom: firefighters don’t get…free medical coverage”

    If the implication was that the private sector does get free medical insurance, then wrong again. Since 2003, private sector employees have seen yearly double digit increases in medical insurance contributions. In 2004, on average, workers in California contributed $2,580 for family coverage(2).

    Tom: “they don’t just have the basic high school education and 3 hour first responder class that Matt and Marty would have you believe”

    I actually said “They are certified operations level first responders, which requires a 3 day class with yearly recert”, not 3 hours(3). In fact, a 24 h class is precisely what the state of CA requires for operations certified (the lowest level) first responder training, which is exactly what is required for a Fremont firefighter. Far from being a “hazmat specialist”.

    And, Tom. There is nothing foolish about advocating for *your family* to take a haircut just like mine has. You better hope and pray the greater Bay Area decides to conduct record amounts of consumer business in Fremont this year and next to fund your exorbitant wages. The chances of that happening are close to zero. And from your tone, I think you’re fully aware of that fact.

    1. http://www.simplyhired.com/a/local-jobs/city/l-Fremont,+CA
    2. California Health Foundation citing a Kaiser Family Foundation study, 2004. http://www.chcf.org/press/view.cfm?itemID=108026
    3. Post #9 http://www.ibabuzz.com/tricitybeat/2009/04/14/salary-primer/#comments

  34. Anon, Thank you for the article
    I found it very informative.
    How do we fix this problem?

  35. Here’s an interesting comment –

    “One day soon you may have to decide whose retirement comes first: yours or the fireman’s? Or the policeman’s? Or your child’s schoolteacher’s?

    Your city and state have made generous pension promises to all those public servants—funded with your tax dollars. Only suddenly it turns out that those pensions aren’t very well-funded, after all!

    While you’ve been worried about your shrinking 40l(k), our public servants have been smiling. They know their defined-benefits pensions are guaranteed by your local taxing body.”

    The entire article covers a lot of ground and after the first 1/3rd or so isn’t worth the read. If interested check out


  36. “How do we fix this problem?”

    From today on, every taxpayer-funded new hire pays in to a 401k/403b type retirement plan with city matched contributions up to the federal maximum.

    Current employee retirement plans are rewritten, transferring obligations to an employee managed 401k/403b plan. The portion of one’s retirement being transferred to employee managed vs remaining in current pension depends on years away from retirement so there’s no surprises for those public servants who are close to retirement.

  37. is Marty suggesting that Bruce Malkenhorst transfer his current annual pension of $499k to an “employee managed 401k/403b” ? you can Read more about Mr. Malkenhorst here if you missed the forbes article on him last year-


    or what about the others that have six-digit retirements ? I dont think it is the choices we make now that are going to sink us, the hull has already been breached but now its a question of how we take back what has been given out Seems like the only course is for municipalities to go Ch 9 and divest themselves of these outraggeous pension obligations – same as the private sector has been doing for the last decade.

  38. “The CFFR put on the Web a list of nearly 5,000 retired state and municipal workers who are collecting $100,000 a year or more in pension money from the California Public Employees Retirement System.”

    Ron, Tom – This is what a swarm of pitch forks sound like.

  39. Ron Chaney, Tom – This is what a swarm of pitch forks sound like.

    Funny, sounds more like the yapping of poodles on the roof, imagining themselves as wolves… 🙂

  40. I agree AMac. Public employee unions have our representatives in a choke hold, and some have extorted such high wages that our state and local governments are at the brink of bankruptcy.

    Those who have a problem with this are virtually powerless. It’s curious that you find that “funny”.

  41. Sorry, the use of ‘funny’ is a colloquialism from my formative years in Chicago and the Midwest. In this case it’s used in the same sense as ‘odd,’ or ‘strange.’ As in, “There’s something kind of funny about this…” or in reference to counterfeit bills as ‘funny money,’ neither of which is meant to suggest humor.

  42. In case you think that firefighters are unaware of the current economic environment and unwilling to do what they can to deal with the situation:

    “Nearly 300 Santa Rosa police and fire department employees are giving up all or part of their projected pay raises over the next two years — moves expected to save the city more than $5 million and 30 jobs.”

    “Contra Costa’s largest fire union and the county have tentatively agreed to postpone pay increases for two years in exchange for a two-year contract extension, saving an estimated $5.1 million.”

    And they’ll even get you out of some tight spots:


  43. Apropos of nothing, but since this seems to be the most currently active thread, exerpts from an interesting article on anonymous postings to news stories:

    “Here’s the basic rules of legal liability about story comments or forums for news organizations according to David Ardia, director of the Citizen Media Law Project and former assistant counsel for The Washington Post” (see link below for the rules)

    “They contend comments shouldn’t be managed, reader comments are part of the larger story and the days are gone when readers are going to passively sit back and be just consumers of news and information. And many argue that protected anonymous speech is absolute.”

    “The problem with online discussion threads is that any useful comments get buried beneath an avalanche of garbage.

    “There’s a roaming horde of Internet users out there who like to blow off steam by posting comments on Web sites and blogs. Here’s how it works: The first few comments on a discussion thread will seem useful, but then the horde comes. As the thread grows longer and longer, it decays into an unread mess of nothingness. Yet that doesn’t stop the horde from posting more comments. You don’t have to look far to find examples that prove that point.”


    First we were a “mob”, now we’re a “horde”. Commenters are apparently the Rodney Dangerfields of the news system.

  44. I hope the families of Conta Costa firefighters are able to make due on six figures and guaranteed employment. Perhaps we can set up a fund to cover the shortfalls?

    It will be kind of like buying supplies for teachers, but instead of pencils, art supplies and books, it will be camper shells for fully loaded Ford F250s, outdoor bbq sets, motor boats and toy haulers.

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