Greenhut - Bankruptcy may be only way out for cities, states

San Diego City Councilmember Carl DeMaio, who is also running for Mayor, has put forth a comprehensive pension reform (CPR) plan that may save San Diego from bankruptcy.  Below is Steven Greenhut's editorial on public employee pensions and the unprecedented resistance by Sacramento to deal with the problem.  Enjoy!

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(Steven Greenhut - Special Editorial for the Orange County Register)
SACRAMENTO – I recently documented how the state's pro-union attorney general, Kamala Harris, crafted an unfair and dishonest title and summary for a pair of pension reform ballot initiatives submitted to her office, effectively killing the measures.


Then, last week, the government employee unions tried – and almost succeeded – with an even nastier stunt designed to undermine democracy.

In San Diego, unions are fearful of a new pension reform measure supporters call Comprehensive Pension Reform, or CPR, which has qualified for the June ballot. Instead of simply gearing up to fight this political battle, the unions petitioned one of those ridiculous commissions that most Californians have never even heard of, the Public Employment Relations Board, which is unfriendly turf for taxpayers. The union contended that placing the initiative on the ballot amounted to an unfair labor practice, and PERB called for a court injunction to stop the election until it could complete its sham proceedings.


In essence, the unions and this unelected board insist that the people of San Diego have no right to vote on pension reform. This is just the latest reminder of the totalitarian tactics of a public-sector union movement that doesn't care about anything other than protecting its benefits.

COUNTINUE READING HERE...

State Controller Releases Updated Public Employee Salary Data

SACRAMENTO – State Controller John Chiang has updated his website showing the salary, pension benefits and other compensation for police, fire, transit operators, transportation planning, and waste districts in calendar year 2010.
The new posting includes 57,000 positions across 788 districts, with wages totaling $2.95 billion.
Read more here...

State Controller Releases More Payroll and Pension Data for Public Employees

SACRAMENTO – State Controller John Chiang today updated his website showing the salary, pension benefits and other compensation for 674,000 city and county employees in calendar year 2010.
Today's posting includes wages and other forms of compensation worth $38.8 billion.  Four counties and 37 cities did not file in time for this website update
"Holding public officials accountable for how they manage public dollars relies heavily on transparency," said Chiang. "The struggles of the City of Bell remind us that corruption and fiscal mismanagement are often the byproducts of keeping the public in the dark."
The site was originally created by Controller Chiang in late 2010, after he ordered local governments to provide salary and other wage information for their employees to his office.  In October 2010, the Controller collected and posted 2009 wage information for more than 600,000 city and county employees.  He then added 2009 information for the employees from 2,379 special districts.  In June, he added 2010 compensation information for 256,222 employees from the State of California and 123,406 from the California State University System (CSU).
The data postings drew heavy internet traffic, and the site has logged nearly 5.3 million page views since October 2010.
The website covers elected officials as well as public employees.  It includes the following information for each position:

·       Minimum and maximum salary ranges;

·       Actual wages paid;

·       The applicable retirement formula;

·       Any contributions by the employer to the employee’s share of pension costs;

·       Any contributions by the employer to the employee’s deferred compensation plan; and

·       Any employer payments for the employee’s health, vision and dental premium benefits.

In addition, the website shows employees who hold multiple positions within either State government or the CSU system. The Controller continues to update and expand the site to include more public-sector data.  2010 compensation information for special districts, and 2011 information for State and CSU employees will be phased in over the next six months.
In August, the Controller and Community College Chancellor Jack Scott wrote to all 72 districts across the State, requesting they also submit their payroll data by early 2012.
A list of agencies that failed to file payroll records with the State can also be found on this website.  Each non-complying agency could face a penalty of $5,000.  The Controller’s Office will continue to review and post the relevant data from these local governments as it is reported to the State.

Fullerton's Employee Unions Rearrange the Deck Chairs

Fullerton’s employee unions have come to the bargaining table and rearranged the chairs for new employees. 

The result is an immediate revenue drain due to the end of the 5% pay-back salary reduction that employees have been subject to since 2009.

There are some long-term savings in the MOU but the end results are not nearly enough to dodge the pension tsunami which has been propelling us towards municipal bankruptcy. 

Don’t forget that the City Council approved the FY2011-2013 budget with a $8-million dollar deficit, citing that negotiations with the bargaining units would cover the shortfall. 

Time and again, the City Council has refused to heed the advice of countless experts, even ignoring commonsense.

How do you spell Failure?  F-U-L-L-E-R-T-O-N! 

Who gets what...

The Fullerton Municipal Employees Federation (300± members):

• No across-the-board raises.
• 5% salary pay-back is ended.  This will be like a 5% raise and is a salary reinstatement for the 300 or so members.
• $1,000 increase from $1,500 to $2,500 for tuition reimbursement.
• Second tier for retirement for new employees that averages a retiree’s highest 3 years instead of using the single highest year for calculating retirement.
• Eliminated the cap on sick-leave payout.
• 7% employee cost sharing for CalPERS benefits.
• Medical benefits have no change for first year.  Second and third year share 50/50 increases in premiums.
• Capping of retiree benefits for new hires.

The Fullerton Police Officer’s Association - Safety Unit (135± members):

• No across-the-board raises.
• End 5% salary pay-back.  This will be like a 5% raise and is a salary reinstatement for members.
• Second tier retirement for new employees replacing 3%@50 with 3%@55 and the average of a retiree’s highest 3 years instead of using the single highest year for calculating retirement.
• Increase retirement cost sharing from 2.252% for CalPERS to 9.252% for current employees and 9% for those hired under the 3%@55 formula.
• Medical benefits have no change for first year.  Second and third year share 50/50 increases in premiums.

The Fullerton Police Officer’s Association - Dispatchers Unit (15± members):

• No across-the-board raises.
• 5% salary pay-back is ended.  This will be like a 5% raise and is a salary reinstatement for members.
• $1,000 increase from $1,500 to $2,500 for tuition reimbursement.
• Second tier for retirement for new employees that averages a retiree’s highest 3 years instead of using the single highest year for calculating retirement.
• Eliminated the cap on sick-leave payout.
• 7% employee cost sharing for CalPERS benefits.
• Medical benefits have no change for first year.  Second and third year share 50/50 increases in premiums.

The Fullerton Firefighters’ Association (80± members):

• No across-the-board raises.
• End 5% salary pay-back.  This will be like a 5% raise and is a salary reinstatement for members
• Second tier retirement for new employees replacing 3%@50 with 3%@55 and the average of a retiree’s highest 3 years instead of using the single highest year for calculating retirement.
• Increase retirement cost sharing from 2.557% for CalPERS to 9.557% for current employees and 9% for those hired under the 3%@55 formula.
• Medical benefits have no change for first year.  Second and third year share 50/50 increases in premiums.
• 7% cost sharing for all miscellaneous employees represented by unit.
• May later meet and discuss staffing configuration changes.
• “Provision to allow compliance with new DMV requirements for physical examinations.”

Chiang Unveils Costs for State Retiree Health Benefits, Offers Solutions

***UPDATE***
The press release we issued yesterday regarding the actuarial report on health and dental benefits for state retirees contained an error.  In a quote attributed to the Controller, the release said that if the State could reduce the assumed rate of health care inflation by 1 percent, it would cut the unfunded liability by $7.4 billion over 10 years.  The correct period of time is 30 years.
We apologize for the error.  A corrected version has been posted on the Controller’s website at www.sco.ca.gov.

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***END UPDATE***

SACRAMENTO – State Controller John Chiang today unveiled a new actuarial report that shows California faces a $59.9 billion bill to pay for health and dental benefits for state retirees over the next 30 years.

“As the State’s obligation to pay health and dental benefits for its current and retired workforce continues to grow, it is critical that we begin making down payments on this tab and adopt strategies to reduce health care costs,” Chiang said. “Because this bill is not immediately due, California has the time and the opportunity to reduce the impact on future generations by putting additional dollars into the annual payments so that we can invest those funds, grow that money and tackle our obligation in a responsible manner.”

The unfunded obligation as of June 30, 2010, grew $8.1 billion from the $51.8 billion obligation identified in the prior year. Less than half of the increase was simply due to another year of costs, payments and interest. The bulk of the increase was due to a change in the California Public Employees’ Retirement System’s (CalPERS) pension-benefit assumptions based on their latest 10-year study. That study found employees are retiring earlier, retirees are living longer, and actual premiums increased more than previously projected by the actuary. The increase appears larger because in 2008 and 2009, CalPERS decided to use surplus funds from its health care plans to reduce increases in health care premium rates. The 2011 rates were not subsidized, causing the premiums to jump back closer to what the level would have been without the surplus.

Unlike state pensions, which are pre-funded and allow investment returns to reduce liabilities, California retiree health benefits are covered on a “pay-as-you-go” basis, meaning as the costs come due each year. The latest actuarial report estimates California’s obligation for retiree health and dental benefits, also referred to as Other Postemployment Benefits (OPEB), based on two different funding scenarios:

• The current pay-as-you-go policy results in an actuarial unfunded obligation of $59.9 billion, which represents the total present value of future retiree health benefits earned as of June 30, 2010, by current and future state retirees. Based on this unfunded obligation, California has an annual OPEB cost of $4.2 billion for 2010-11 – or the amount the State would need to pay to cover these benefits. In the 2010-11 Budget Act, the State only provided $1.4 billion for retirees’ health and dental benefits.

• If the State shifted to fully pre-funding the costs of future benefits, the actuarial unfunded obligation would be cut by more than $21 billion to $38.5 billion. Under a full pre-funding approach, the State would set aside money in a separate trust solely for future retirement health care benefits. The investment income generated by that trust would be used to reduce the costs of paying for future benefits. The State would need to contribute $2.9 billion in 2010-11 to fully fund its obligation for this year.

A separate analysis performed at the request of the Controller shows that even incremental steps toward pre-funding the obligation would significantly reduce the State’s liability (see attached chart). For example, if the State pre-funded just 10 percent of its obligation, it would only need to pay $130.3 million more than its current pay-as-you-go contribution. But that additional payment would shave $2.7 billion off of the State’s unfunded liability. The report showed that even partially funding the obligation would cut the actuarial unfunded obligation.

In 2004, the Governmental Accounting Standards Board Statement 45 (GASB 45) required states and local governments to publicly disclose the future costs of paying for post-employment benefits other than pensions for current state retirees and employees. Chiang commissioned California’s first report shortly after taking office in 2007. This report is the fourth to be issued under his administration.

While GASB 45 does not require states to fully fund its obligations, all three credit rating agencies have urged states to at least have a funding plan in place to avoid any future downgrades.

Chiang urged the State to follow the lead of several bargaining units that are starting to pre-fund their obligations. In August 2009, the California Association of Highway Patrolmen established a trust with the California Employers’ Retiree Benefit Trust (CERBT) to prefund its health and dental benefits for retired CHP officers under Bargaining Unit 5. Recently, other bargaining units, such as the International Union of Operating Engineers (Bargaining Unit 12) and the Union of American Physicians and Dentists (Bargaining Unit 16) have contacted the CERBT to begin the process of entering into contracts to begin in 2012 to prefund their post-retirement health and dental benefits obligations.

In addition to cutting costs by prefunding the obligation, Chiang said the State should take steps to contain health care costs by promoting prevention and wellness, and innovations in health care delivery. He also recommends switching from the traditional fees-for-services payment model to one that pays providers based on performance and outcomes.

“If we can reduce the assumed rate of health care inflation by 1 percent, that could cut our unfunded liability by $7.4 billion over 10 years,” Chiang said. “I continue to call on CalPERS to make prevention and chronic disease management a priority to reduce the demand for health care.”

The actuarial report and a chart showing how much pre-funding would cut future costs can be found on the Controller’s Web site at http://www.sco.ca.gov/.

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Controller Urges Support for CalPERS, CalSTRS Reform

PR11:07
2/9/2011

Contact: Hallye Jordan

916-445-2636

SACRAMENTO – State Controller John Chiang today announced he is sponsoring two bills to improve the performance of and the public’s confidence in the nation’s two largest public pension funds – the California Public Employees’ Retirement System (CalPERS) and the California State Teachers’ Retirement System (CalSTRS). The bills would cap the amount of gifts members and staff may receive each year, and require a pension fund board member or employee to wait two years after leaving before working with a firm that has business with the funds.

“The appearance of impropriety by some former board members and investment staff of CalPERS raises concerns that members and staff may be using their past relationships and positions of power to influence decisions regarding the investment of public pension funds,” Chiang said. “I believe these bills are a critical step toward restoring the public’s confidence in the professionalism of all of our activities on behalf of the retired public employees and teachers, and the taxpayers of California.”

Authored by Senator Gloria Negrete McLeod, chair of the Senate Public Employment and Retirement Committee, one bill will lower the amount of gifts CalPERS’ and CalSTRS’ members and staff are allowed to receive under the Political Reform Act. By reducing the amount from the current $420 a year to $50 a year, the bill will address the influence-peddling practices revealed when the placement agent scandal broke in the spring of 2009.

“California’s public pension systems are the largest in the country and should be held to a higher standard,” said Negrete McLeod. “Limiting gifts from individuals and organizations trying to influence the decisions of pension boards and government employees is the right thing to do.”

The second measure, by Assembly Member Furutani, chair of the Assembly Public Employees, Retirement and Social Security Committee, would prohibit, for two years, CalPERS’ and CalSTRS’ board members and employees from accepting a job with any employer who had substantial contracts or investments in the five years the employee or board member worked at the fund. Employees or board members who had worked with placement agents during the 10 years prior to leaving CalPERS or CalSTRS would be prohibited from going to work for the agent or the agent’s firm for two years after leaving the public pension system.

“Public trust and government accountability within the nation’s largest pension systems are critical to any of the reform proposals that are on the table,” Furutani said. “Implementing a ‘cooling-off period’ would ensure that decisions being made by board members and staff are being made for the right reasons and not to encourage future employment opportunities.”

In letters to CalPERS’ and CalSTRS’ officials sent late last week, Chiang noted that the placement agent scandal has eroded the public’s confidence in the handling of public funds. “These measures were developed with the principal goal of protecting (CalPERS and CalSTRS) investments from unsound influence and restoring the system’s credibility in the public eye,” Chiang wrote.

The legislation may be discussed at the CalSTRS meetings this week and at the next CalPERS meetings that start February 14. The bills are expected to be in print within the next two weeks.

###

Cheap bail premiums for union members

Friend and fellow blogger Michael Fidelis posted a this on his blog and I feel compelled to share it with my readers for a couple of reasons.  First, there is the self-evident statement which I find very interesting.  Talking about some bail companies are charging as little as 2%, Michael makes one short statement jumped out at me: 

"The standard rate premium in California is 10% percent of the total bail amount. The LOWEST rate premium in the State of California is 8% percent. The 8% premium ONLY applies to individuals that meet the following requirements: attorney referrals, AARP members, and Union members."

The second reason is that we are often faced with an emergent situation that requires us to make a leap of faith in our decision making.  Michael explains how your loved one can get the long end of bubba's stick if they use the wrong bail bond company upfront.  As with most things in life, do your homework and know the implications of the decisions you are making.

I encourage you to read the article in its entirety.  I learn something new everyday!

Even After Filing Bankruptcy, Vallejo's Pension System In the Red $195-Million

(Thanks to PentionTsunami.com for flagging this Bloomberg story) 

Even after filing for Chapter 9 bankruptcy protection, Vallejo continues to fight the public employee's unfunded pension disaster.  Bloomberg.com has a lengthy article on the problems encountered by the city after the public employee unions refused to budge on salaries and pensions.  Is Fullerton headed down the same miserable path?

Vallejo's Bankruptcy `Failure' Scares Cities Into Cutting Costs

By Alison Vekshin and Martin Z. Braun - Dec 13, 2010 9:01 PM PT

When Vallejo, California, filed for bankruptcy in 2008 after failing to win union pay cuts, Councilwoman Stephanie Gomes said officials around the U.S. would have their eyes trained on the city of 120,000.

She was right. The lesson they’ve taken from the two-year- old case, which has cost Vallejo $9.5 million in legal fees and made it a nationwide symbol for distressed municipal finances, is that out-of-court negotiations yield better results.

“They spent a lot of money with very little outcome,” said Jay Goldstone, San Diego’s chief operating officer. Faced with an $82 million deficit in his city’s 2010 budget, Goldstone negotiated pay cuts and higher benefit contributions from unions in 2009 that will save as much as $40 million annually, he said.

Bankruptcy has become less attractive even as U.S. municipal borrowers coped with what the National League of Cities said was the biggest decline in general-fund revenue since 1986 last fiscal year. The mention of Vallejo, the biggest California city and second-largest local government after Orange County to file for bankruptcy, can spook investors and raise interest costs, said Bill Lockyer, the state’s treasurer.

“Declaring bankruptcy is a huge admission of failure on the part of elected officials and their local managers,” Lockyer said in a Dec. 3 telephone interview. Vallejo’s filing “sent a chill through the markets.” Vallejo, a one-time Navy town 32 miles (51 kilometers) north of San Francisco, entered Chapter 9 bankruptcy protection in May 2008. The filing, after employee unions refused to accept salary cuts and the recession eroded tax revenue, allows municipalities to reorganize debt rather than liquidate.

Exit Plan
A five-year budget blueprint approved by the City Council on Nov. 30 spells out how Vallejo will meet $195 million of unfunded pension obligations, its largest liability. It also delays payments to bondholders, trims employee benefits, creates a rainy-day fund and allocates $5 million for unsecured creditors. The city must submit a bankruptcy-exit plan that includes the blueprint to a Sacramento court by Jan. 18.

Vallejo shows that negotiated settlements of budget problems may be better than the distractions of court deadlines and paying millions in legal fees, said Paul Rosenstiel, California’s deputy treasurer from 2007 to 2009.

“A lot of cities looked at Vallejo and concluded that painful as it might be, there must be a better solution,” said Rosenstiel, a principal with municipal-bond underwriter De La Rosa & Co. in San Francisco.

Felt in Tracy
The Vallejo bankruptcy resonates in Tracy, a city of about 82,000 residents 60 miles east of San Francisco, said Zane Johnston, the finance director.

In the face of a $7.5 million budget gap, the police union agreed this year to cancel remaining raises and boost the retirement age to 55 from 50 for new hires even though its contract wasn’t up for renewal, Johnston said in a Dec. 6 telephone interview.

“At the bargaining table,” he said, “Vallejo is the example that everybody knows about that doesn’t have to be mentioned because it can scare the living daylights out of some people.”

The ability of U.S. cities to file bankruptcy is limited. They must be authorized by state law to file under Chapter 9 of the U.S. bankruptcy code. Twenty-five states lack such statutes.

While cities from Detroit to Harrisburg, Pennsylvania, have publicly raised the prospect, the number of filings has declined. Five municipal entities sought protection this year compared with 10 in 2009, according to data compiled by James Spiotto, head of the bankruptcy practice at Chapman & Cutler, a Chicago law firm. The biggest this year was a South Carolina toll road with more than $300 million in debt, he said.

Company Contrast
Since 1937, 619 local government bodies, mostly small utility or sewer districts, have filed for bankruptcy, according to Spiotto. In contrast, there were more than 11,000 Chapter 11 filings, used by companies to reorganize debt, in 2009 alone.

Local-government bankruptcies will “be minimal and isolated to mismanaged or weak credits,” BlackRock Inc., the world’s largest money manager, told clients on Dec. 7. States such as Pennsylvania and Rhode Island have become increasingly active in helping prevent them, it said.
When Harrisburg, the state capital, was weighing a Chapter 9 filing because it couldn’t make $282 million of payments on bonds it guaranteed for a trash incinerator, Governor Ed Rendell stepped in.  Warning that a default by the city of 47,000 could raise borrowing costs elsewhere, Rendell advanced $3.3 million to Harrisburg for a general-obligation debt payment on Sept. 13.

“We couldn’t stand by and let the city default on these bonds,” Rendell said at the time.

State Program
Pennsylvania is considering Harrisburg’s application to the state’s distressed municipalities program, under which it would get help with a recovery plan that finds ways to raise revenue and streamline operations.

BlackRock cited new legislation in Rhode Island prohibiting Chapter 9 filings after the city of Central Falls suggested that path. The town of about 18,000 faced a fiscal 2010 deficit of $3 million, or 17 percent of revenue.

States “will quickly put procedures in place geared toward preventing Chapter 9 filings,” it said in its report.

State oversight boards were created for New York City in the mid-1970s and Philadelphia in 1991. They can bring cities back to an “adult state,” said Spiotto, by requiring balanced budgets, reviewing labor contracts and negotiating debt restructurings.

“We’ve had all sorts of municipalities with problems that were addressed outside of bankruptcy,” said Spiotto.

Bondholder Action
If states don’t act, bondholders will. In September, Bank of New York Mellon Corp. got a judge to appoint a receiver to manage the Jefferson County, Alabama, sewer system after a $3.2 billion debt refinancing collapsed and drove the municipality toward insolvency. Local officials, who are negotiating with bondholders, say a bankruptcy is still possible.

Vallejo made its filing as labor costs, its largest expense, were projected to be about $79.4 million in the 2008- 2009 fiscal year, outpacing estimated net general-fund revenue of about $77.9 million, according to court documents.

“Vallejo’s problem was that they could make no further cuts without breaking legal contracts,” Michael Coleman, a fiscal policy adviser at the League of California Cities, said in a telephone interview Dec. 6. “That’s unique to virtually any other city in California.”

Vallejo had no other options, Marc Levinson, a partner with the Sacramento-based law firm Orrick, Herrington & Sutcliffe LLP who is drafting Vallejo’s bankruptcy-exit plan, said in a Dec. 3 telephone interview.

Lack of Concessions
“Negotiations broke down and we couldn’t get the concessions from the unions and from the bondholders that would keep us out of bankruptcy,” Levinson said.

The city has reached agreements with administrative and police unions that yielded $6 million in savings through June 2010, its website says. The firefighters union agreed to a new contract that was approved by the council in March.

Vallejo still has to sort out more than 1,000 creditor claims as part of its exit plan. And funding of $5 million for unsecured creditors won’t be completed until the 2012-2013 fiscal year.

The bankruptcy process could take another six months, further distracting local officials, said Christopher Mier, chief strategist with Loop Capital Markets LLC in Chicago.

Meanwhile, city residents will have 159 fewer fire and police personnel than seven years ago, road maintenance at 10 percent of recommended levels and no grants for arts and cultural programs.

“Bankruptcy hasn’t been a panacea for the city or the unions,” said Ron Oliner, a partner at Duane Morris LLP in San Francisco who represents Vallejo’s police union.

Gomes, the council member, said the city learned a lesson.

“It’s best to negotiate your way out of the fiscal problem,” she said, “before you go into bankruptcy.”

The case is In re City of Vallejo, 08-26813, U.S. Bankruptcy Court, Eastern District of California (Sacramento).

To contact the reporters on this story: Alison Vekshin in San Francisco at avekshin@bloomberg.net; Martin Z. Braun in New York at mbraun6@bloomberg.net.

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net.

OC Register: Govt. job compensation 44% higher than private

September 8th, 2010, 11:09 am · 32 Comments · posted by Mary Ann Milbourn

Workers in government received an average $39.74 an hour in wages and benefits in June compared to $27.64 an hour for private sector employees, the Bureau of Labor Statistics reported today.


Total compensation for government and private workers combined averaged $29.52 an hour.

In private industry, wages and salary made up 70.6% of total compensation in June while it was 65.7% for government workers.

Legally-required benefits such as Social Security, Medicare and workers compensation insurance were 8.3% of total compensation for private workers while insurance was 8%.

Insurance costs was the largest benefit for state and local workers, making up 11.8% of total compensation. Retirement and savings were second at 8%.

Compensation for private workers and government workers is not directly comparable, the BLS notes. There are differences. For instance, manufacturing and sales make up a large portion of private sector jobs but are rare in government. Professional and administrative support services make up two-thirds of government work but only half of jobs in the private sector.

Management, business and financial jobs had the highest total compensation in June: $55.27 an hour, including $38.29 in wages and salaries. Primary, secondary and special education school teachers were second at $51.09 of which $36.45 was wages and salaries.

Services industry workers were at the bottom of the compensation ladder getting $16.20 total per hour. That included $11.52 for wages and salaries.

Read the full report HERE.

Public Pay Rises Despite Recession

August 31st, 2010, 4:12 pm
by Teri Sforza, Register staff writer

"In the five years between 2002 and 2007, the number of full-time equivalent employees in all state and local governments in California grew just three percent, while the cost of paying those folks grew 26 percent."

What is more amazing are the special districts like water and sanitation districts.

"How this breaks down may tell us something interesting about this government transparency thing. Stay with us here!

• State government, alone (a rather closely-watched entity), saw employees rise 2 percent, and payroll rise 23 percent, between 2002 and 2007.
• Local government, alone (less closely-watched?), saw employees rise 4 percent and payroll rise 27 percent.
• School districts, alone (a mixed-bag on how well they’re watched), also saw employees rise 3 percent and payroll rise 27 percent.
• But special districts, alone (perhaps the most unwatched governments of all), saw employees rise 14 percent, and payroll rise 40 percent."

And who runs these districts?  We, the People, though indirectly.  Often, our local city council members are appointed by their respective councils to represent their city's interests in a particular district.  It is convenient for these representatives (elected by us and appointed by fellow council members) to raise taxes disguised as fees to cover the costs of rising pensions, executive board per diem, cost of living adjustments, insurance premiums, and environmental mitigation.  These are all controlled by local districts except certain environmental requirements.  Our local elected representatives are completely responsible for the "passing along rate hikes".  They are the ones who we elect to represent our interests.  They are supposed to fight to keep rates low.  But do they?  No!  They continually raise taxes and push it off onto the end user, you and me, and call them fees.  And ultimately, when questioned, they say "we just got to recover our costs." 

Please remember that your vote in November will have a far reaching impact on your taxes, personal income, local businesses, and how your community is represented.  Think before you vote.

ADRIAN MOORE DISCUSSES EXORBITANT GOVERNMENT PAY IN CALIFORNIA ON VARNEY & CO.

Click HERE to view video.

The Orange County Register Continues to Pound the Pension Tsunami Drum

In yesterday's online Op Ed, the OC Register once again bangs the drum for fiscal responsibility by our elected representatives. With many seats opening up on city councils throughout California, thanks in part to term limits (more on that later), we have an opportunity to fix a broken system.

The OC Register points out Orange County's estimated unfunded pension gap of $3,700,000,000, which has enough zeros to strain my eyes on any computer monitor and should make you mad!

But how do we fix the mess? Some say the quickest fix is for municipalities to file for bankruptcy. That is an unethical response that will cause more harm than good. Orange County hit the financial reset button on December 6, 1994 when we filed for bankruptcy. It was a hard recovery which has been made worse by errant spending and overly generous pensions. Did we not learn anything? Of course not.

If not bankruptcy, what can we do? The other day I heard someone suggest a bond measure to bail out the pension systems of California (including cities and counties). It is a known liability versus an unknown liability.  The socialistic idea that the wealthier, more conservative agencies would help pay for the liberally generous agencies reeks of a Bush/Obama bailout on the backs of tax payers. No, a bond is not the solution.

Sue the bastards! Sue the employee associations for being smart enough to pull the wool over the eyes of our elected representatives. Yeah, that’ll teach them! Meanwhile, we will spend millions on attorneys and court fees, etc. etc. Throwing good money after bad money is not a practical solution for many municipalities who are already cash-strapped and making deep cuts. However, should the County Board of Supervisor’s suit against the Orange County Employees Retirement System win, I could see many more agencies heading to court with high hopes of victory.

The first step in fixing the pension mess is recognizing opportunities. One opportunity will arrive on November 2 when you can cast your vote and choose pension-minded candidates for your local offices.

Another opportunity exists due to this economic depression. With some of the highest unemployment numbers since 1939, we have a deep labor pool. As the OC Register reports, we need to engage the employee associations in negotiations and help them come to terms with the inevitable: the pension ship is sinking and the deals on the table will continue to shrink the longer they wait.

The next step is realizing that the switch from the current defined-benefit plan to the defined-contribution plan cannot be optional. Defined-contribution plans must be standard fair for all new hires.

The final step is accountability. We hold our elected representatives accountable by voting for new candidates who haven’t succumbed to the will of the workers. Public employee association leaders must be held responsible for their complicity in the entitlement foray.

Somewhere in this fix we must include education for the tax payer and education for the employees. When I was a young green Orange County worker, there was no one to help explain retirement benefits. There was one option and it was mandatory. Employees need to know how to invest in their future which includes short-term investment in their employer and long-term investment in their retirement. If public employees hurt their employers today, there may be nothing left for tomorrow.

The Orange County Pension Law Suit Is "Radical", Says Att. Gen. Brown

In yesterday's Op-Ed, The OC Register's editorial staff said, "... his brief in opposition to the board lawsuit called it 'radical.'"  Yes, our own Attorney General will not defend tax payers.  As the OCR points out:

"What is really radical is the $3.7 billion unfunded pension gap the county faces, of which the retroactive pension spike accounts for about $100 million. Mr. Brown, supported for governor by a number of public worker unions, discounted the lavish benefits given to county workers. We'd like to hear what he would do about the runaway pension situation."

Indeed, we would all like to know his plan.  Unfortunately, his plan will surely include higher taxes.

 

OC Watchdog Has Inside Scoop On Orange County Employee Pensions

The OC Watchdog is barking up the OC pension tree and have discovered a few interesting facts.  Before we get into what they found, though, we have to put it all in the right context.  The OC Register "told the court, we will use the information for research and analysis and not just post the raw data."  Why would they tell the court that?  Why not publish the raw data?  Anyway, you might remember  a few of these folk's names, like Bob Citron and Mike Carona:

"Robert Citron, the disgraced treasurer whose risky investments led Orange County into the largest municipal bankruptcy of its time, is collecting around $148, 327 a year. That’s an increase of more than 50 percent above the $92,904 a year pension that he made when he retired in 1994 – thanks to cost of living raises."

And then there is retired OC sheriff Mike Carona who is receiving $217,457 per year while out on bail appealing his federal witness tampering conviction.

Another top OC pension earner is Blake Anderson, who came in fourth on the County's pension list:

"... former Orange County Sanitation District general manager Blake Anderson, who was forced to resign in 2005 after hiring a leadership guru at $180,000 to help the sewer agency find its corporate soul. Dharma Consulting was hired by Anderson on a no-bid contract at $15,000 a month. Anderson, who was criticized in a later audit for exceeding his authority, now lives on about $228,025 a year."

I hope the list is released in its entirety and without redacting.  I think tax payers deserve to know how much is spent on county employee pensions.  Something that we always need to keep in mind is that the people we elect today will be the bloodsucking pensioners of tomorrow.  Stop defined-contribution pension plans for ALL elected officials!

Big Announcement Expected Monday

Fullerton taxpayers will soon have an opportunity to hit the RESET button at City Hall.  I'll tell you all about it right here Monday morning. 

Forbes: The Millionaire Cop Next Door

Forbes blogger Rich Karlgaard wrote a provocative article on police officer pensions.  I'll leave you with his opening thought:

It is said that government workers now make, on average, 30% more than private sector workers. Put that fantasy aside. It far underestimates the real figures. By my calculations, government workers make more than twice as much. Government workers are America's fastest-growing millionaires.

To read the article in it's entirety, click HERE.

One Teacher Can See the Light

The other day I spoke with a person from North Orange County who felt compelled to share some of their personal philosophy with me on public employee unions, fat pensions, and job security. The person, we’ll call them Jo, gave me some information I would like to share with you.

Jo opted out of the California Teachers Association (CTA) when she was hired by the local school district. She decided it was worth the payroll deduction to opt out rather than feed the union beast. You see, Jo isn’t your typical CTA dues-paying teacher; she is that inspirational teacher who lives to stimulate you minds.

Jo said she couldn’t believe just how bad some teachers really were and how the union protects them from being held accountable. When Jo first earned her teaching credential she was a substitute for several districts. One of those had a teacher who would call in sick at least once a month. Jo would regularly show up to sub only to find that there was no lesson plan or activities planned by the teacher. Jo finally refused to take the calls from this flaky teacher. A couple of years later, Jo read that the flaky teacher who was always being reprimanded was elected as the local teacher’s union president. Fitting, isn’t it?

Jo recounted for me several instances of lazy and incompetent teachers being shuffled around to various assignments and protected by the union rather than being fired. She has told district officials that she earns too much money when considering she has, in her opinion, the best job ever. That’s the spirit of a good teacher who isn’t just simply riding the gravy train of public education.

Jo’s story is a matter of supply and demand. Here is a quality teacher inspiring children everyday to learn and grow while her peers are stagnant and hardly effective as educators. Every time there is an opening for a teacher, the district receives hundred of inquiries, resumes, and applications – for a single opening! The supply of teachers exceeds the demands of the school. When this occurs, the parties must reevaluate their respective values. Teachers should have more to offer (not necessarily advanced degrees) and schools should have less to offer (not necessarily lower salaries). This creates an equitable balance between the two parties so that the school gets the absolute best at a reasonable price. These basic principles are applicable to every job field, including providing professional land surveying services.

The economic disaster taxpayers have stepped in will soon force public employee unions to reconsider their position. The employees do not dictate who runs an agency or how it is run, although they certainly would like us to think they do. We, the People, run agencies by electing officials, who will be held accountable this November.

The apparent ineffectual leadership of our public agencies can be corrected November 2, 2010 by choosing candidates who hold the public’s trust paramount to the interests of the employees. But I have my doubts. There were several candidates who should have been tossed out with the primary election but weren’t. It seems common sense has succumbed to name recognition.

It's Just Union Noise

As one family member put it yesterday, "the day of reckoning is upon us." 

Sidhu and Friends