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Aug 2014
Misuse of statistics behind erroneous LA police officer salary claims
LAPPL Board of Directors

Ed Ring can’t be taken seriously, given the bile he regularly spews out, such as public employee unions “are the primary force behind the erosion of our freedoms and the ebb of our prosperity. They must be eliminated” and “A California renaissance requires only one thing-the abolition of public sector unions.”

However, since Ring’s views that are churned out at either his “UnionWatch” or “California Policy Center” websites are sometimes picked up other sites, some obvious misstatements beg to be rebutted.

A case in point: Ring’s latest attempt to opine on pay raises for Los Angeles police officers is the latest demonstration of both his lack of understanding of pension issues and his continual need to invent numbers to fit his preordained conclusions. In this piece, Ring attempted to determine “how much do Los Angeles police officers make?” Well, in “Ring math,” what an officer “makes” includes pay, cost of benefits, and the cost of City contribution to the Police and Fire pension system for pensions and retiree healthcare.

According to Ring, the average officer makes $110,285. To that number, he adds the City contribution last year for pension and retiree health of 49.51 percent. That, exclaimed Ring, means the “average total compensation for LAPD officers is actually $157,151.” Uh, no!

The annual cost of City contributions for employee pensions and retiree healthcare is known as the “normal cost.” For pensions, it is 19.43 percent, and 4.06 percent for the retiree health subsidy. That’s about 23.49 of salary—a far cry from the figure Ring touts.

The other part of the City contribution he cites pays for the unfunded liability, which covers the past investment experience of the plan and fluctuates depending on past performance. For example, prior to the 2008 financial crisis, the unfunded liability was negligible, and the City contribution rate was essentially simply the “normal cost.” Further, unfunded liabilities include pension liabilities of already retired and deferred plan members, not just active officers. The bottom line is that claiming the unfunded liability cost as part of an officer’s compensation is grossly and deliberately misleading—but that should not surprise us when it comes to Ring’s opinion pieces.

Wrong on so many issues, Ring can’t separate himself from an issue he has unsuccessfully pushed for years. Since the 2008 crisis, he and his fellow public pension haters have bashed the assumed return rate assumptions of public pension plans as being too high. Turns out the Los Angeles Fire and Police Pension system return rate was 17.3 percent for 2013-2014, and other public pension funds reported similar double-digit returns and five-year returns exceeding their assumed rates. This isn’t happy news for Ring. But rather than acknowledging these facts, in the same screed in which he inflates officers compensation, Ring deflates assumed return rate assumptions in a desperate attempt to enlarge the unfunded liability of pension funds.

More dissection of Ring’s handiwork isn’t really necessary because as the famous saying goes, Ring uses statistics as a drunk uses a lamppost; for support, not illumination. A bitter worldview to be sure, just not one grounded in reality or facts.

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