Special Compensation for Public Employees Leads to Fiscal Consequences

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

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

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

Taken individually, some of these special-pay arrangements sound disturbing while others are downright laughable. Cumulatively, however, their impact is often staggering. The city of Santa Ana, for example, spent $9.2 million of its $200 million general fund on special pay in 2010, of which about $8.5 million went to public-safety employees. Last year, 441 Santa Ana city workers received more than $10,000 in special pay; 105 city employees collected $20,000; and three firefighters were paid more than $30,000 each. The city boasts at least67 types of special payouts for employees. Santa Ana, it’s worth noting, faces a projected $30 million deficit in the coming fiscal year.

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

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

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

(Brian Calle is an editorial writer for the Orange County Register. This article was first published in City Journal.)


  1. These unionized public employees – “employees” in name only – are mostly parasites on the body of tax-paying society: they mostly do nothing, produce nothing (apart from hindering businesses), but get 2-3 times higher (than comparable private sector jobs) wages and unbelievable outrageous pensions which, in combination with the burden of millions of illegals, resulted in current financial crisis of the state of California. They also put our current sold-out and corrupt governor at the helm who does not want to move a finger against their interests! We need to kick him out as the only way out, reform the public employee structure and their pay and pensions, and ban all the unions of public employees – the current system is simply too sweet and unsustainable!

    • I almost always agree with the articles on this website, except this one. What was not stated was how much the employees pay into the pension system and how much they pay for medical coverage. I for one pay 15% percent into my cities pension system and four hundred plus dollars for medical, and there are other employees who started later in life that are paying almost 25% into pension. The Public Employees Retirement System is the only large government entity that is self sustaining and not broke, that’s why Arnold Swerzenneger tried to barrow money from it to fix this screwed up state.

      As for the cops extra pay, I don’t see any special pay. But to try to get the best candidates for law enforcement, there has to be some perks to the job, beside working long, crumby hours, missing your children’s birthdays and holidays, dying 10-13 years sooner then the average person. Yes, I knew that I was going to go through all that, but I also was promised my pension. There is no other private sector job in comparison to fire fighter or police officer and that compensation is so low.

  2. And the stupid and I mean stupid lawmakers in our failed State are the ones that approved all this garbage instead of going head to head with the employees and cutting all the fat out of the work force until the others got the message and agreed not to display their greed.

  3. Europe is a great example, and California is well on the way to bankruptcy. Every year they have a budget problem, Obama bailed the state out but it wont happen again the money tree is broken. Gov wants more tax money to feed the beast but if the people are smart they will tell him to go to hell we are broke.

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