CalSTRS Fails

Press Release from State Controller John Chiang

SACRAMENTO – State Controller John Chiang today released his review of the California State Teachers' Retirement System's (CalSTRS) ability to detect and prevent pension spiking. The review found CalSTRS does not adequately audit more than 1,900 reporting entities (including school districts), has missed opportunities to reduce instances of suspicious or unjustified salary increases and also failed to adequately use existing electronic systems designed to identify cases of pension spiking. It also includes recommendations to address each of those shortcomings.

"Starting with more rigorous auditing and better use of existing technology, CalSTRS must fortify its ability and resolve to crack down on those seeking unjust enrichment at the expense of their fellow educators and taxpayers," said Chiang. "These recommendations aimed at strengthening CalSTRS' anti-spiking efforts will complement the recently-enacted pension reform package and shut down this form of public theft." 

The review specifically examined the electronic methods that CalSTRS uses to detect and prevent pension payments based on unusually large or excessive final compensation amounts, the auditing processes the system uses to oversee the state's school districts, and the efforts conducted by its newly-formed Comprehensive Review Unit during the review period of July 1, 2009, through June 30, 2011. The scope of the review was expanded to include records from three school districts, one community college district and one county office of education.

The review found that the CalSTRS audit program did not adequately detect or deter pension spiking. Although more than 1,900 agencies are a part of CalSTRS, the pension plan averages only 40 audits a year. During the review, CalSTRS was implementing a new stand-alone Compensation Review Unit charged with specifically detecting pension-spiking activity, which should result in more audits. However, the Controller said more auditors are needed to provide adequate oversight of the reporting by districts to CalSTRS.

The review evaluated pay increases granted prior to retirement to determine whether they were adequately approved, justified and documented. A geographically diverse sample of five local education reporting agencies was chosen: Pajaro Valley Unified School District in Santa Cruz County, the San Francisco and San Diego unified school districts, Foothill-De Anza Community College District in Santa Clara County, and the Los Angeles County Office of Education. Two of the five, or 40 percent, lacked documentation to justify pay increases granted to their employees immediately prior to retirement, such as board or executive approval or written performance evaluations. 

For example, at the San Francisco Unified School District, one executive received a 26% pay increase six months prior to retirement, and another executive received a 20% increase one year prior to retirement. The district was unable to provide any documentation supporting those raises.

After similar and repeated requests were made to the San Diego Unified School District, officials ultimately responded that documentation supporting raises was missing from their files.

CalSTRS uses a system that electronically identifies instances in which an employee's monthly pay increase exceeds a certain percentage, or in which an employee's "special compensation" exceeds a specific dollar amount in one year. However, the review found that during the period evaluated, CalSTRS did not review, verify or follow up on pay increases that were flagged by the system. The Controller urges CalSTRS to review all of the cases that were flagged by the system, require the agencies to provide adequate documentation supporting those increases and better determine if the pay increase thresholds are appropriate to detect pension spiking. 

The findings and recommendations from this review will be presented at the September meeting of the CalSTRS Audit and Risk Management Committee. The Controller also plans to perform a similar review of pension-spiking prevention measures at the state's largest pension system, the California Public Employees' Retirement System (CalPERS).

Can Pensions Be Altered?

Today's OC Watchdog (OC Register) provides some framework for discussion and a little food for thought.

The article concludes with this:

Current pension reform efforts only tackle newly hired workers — and do nothing about what’s owed to current workers. If governments could reduce pension benefits of current workers going forward — not for the past time they’ve already worked, but for the future still to come — they might wrestle those multi-billion-dollar unfunded liabilities down to a more manageable size.

$6,000 Bonuses Part of Fullerton Water Rate Hike

As the Fullerton City Council prepares to hike water rates as "pass-through increases" I thought it would be good to share the sweet deal MWD employees get on April 1, 2012 (no, its not a joke) and see just what is being passed through to us.

Come April 1st the employees of MWD get a $6,000 bonus as part of their contract.

9.3 Effective the first day of the pay period that includes April 1, 2012, each employee in the bargaining unit shall receive a one-time only payment of $6,000 which shall not be considered part of the employee‘s regular pay.

If that wasn't bad enough, July 1, 2013 MWD employees will get a 0.25% raise.  And if you think 0.25% isn't much of a raise, consider what else gets slipped in.  How about creating "higher steps" for employees who have hit the salary ceiling and giving them raises as well?

9.4 Effective the first day of the pay period that includes July 1, 2013, there shall be an across-the-board salary increase of 0.25%. In addition, all bargaining unit classifications shall be moved two (2) salary grades higher (approximately 2.75% for each grade), and placed at the equivalent salary step in the new grade (e.g. an employee at step 11 on June 30, 2013 would be placed at step 9 of his new salary grade).

All bargaining unit employees will be place on the same evaluation date, and will receive a performance evaluation for the period ending July 1, 2013. Employees will be eligible for a merit increase pursuant to ARTICLE 65—MERIT INCREASES.

These generous employee benefits are being passed along to Fullerton water customers in the form of "pass-through" rate increases.  When the City Council pushes for a rate hike this year, be sure to speak up in opposition.  The City Council will be happy to pass the buck so long as we sit quietly and let them.

You can read the MWD employee agreement here.

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!

_______________________________

(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...

$62.1 BILLION - CalPERS Unfunded Liability

SACRAMENTO – State Controller John Chiang today released a new actuarial report showing the 30-year cost of providing health and dental benefits for state retirees is $62.1 billion.

"Even as California continues its struggle to get back on firm fiscal footing, we must begin to address our obligation to pay health and dental benefits for current and retired state employees," Chiang said.  "Even slight amounts set aside will help lessen the impact on future generations, and ensure that we fulfill our responsibilities to the state workforce and our taxpayers."

The unfunded obligation as of June 30, 2011, grew $2.2 billion from the $59.9 billion obligation identified as of June 30 2010.  The accrued liability grew less than expected due to favorable healthcare claim experiences linked to a combination of fewer claims, less expensive claims, less utilization of services, and the implementation of new California Public Employees' Retirement System’s (CalPERS) health programs designed to reduce costs.  

While state pensions are pre-funded, allowing investment returns to reduce liabilities, California pays for retiree health benefits on a "pay-as-you-go" basis, or the minimum amount needed to fund the costs as they are due.  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 $62.1 billion, which represents the total the State would need to pay for future retiree health benefits earned as of June 30, 2011, by current and future state retirees.  Based on this unfunded obligation, California should pay $4.7 billion in 2011-12 to pay for present and future retiree health benefits. In the 2011-12 Budget Act, the State provided $1.71 billion to only cover current 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 $40.7 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 the trust would be used to reduce the costs to the State and its employees of paying for future benefits. To take advantage of the tremendous cost savings resulting from fully-prefunding, the State would need to contribute $3.3 billion in 2011-12, or $1.6 billion more than the State currently pays.

Recognizing that fully funding the health and dental benefits obligation is unlikely given the State's tight budget, Controller Chiang noted that even incremental steps toward pre-funding the obligation would significantly reduce the State’s liability (see chart ).  For example, if the State pre-funded just 10 percent of its obligation, it would only need to pay $160 million more than its current pay-as-you-go contribution.  However, that additional payment would shave $2.7 billion off of the State's unfunded liability.

Pre-funding 25% of its obligations would cost the State $400 million more than the pay-as-you-go contribution, but would reduce the total unfunded liability by $6.54 billion.

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 fifth 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.

The actuarial report  and a chart  showing how much pre-funding would cut future costs can be found on the Controller's website at www.sco.ca.gov.

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.

FERPing - It's as bad as it sounds

Back in April 2010 I brought you FERPing. 

The Faculty Early Retirement Program, as the name implies, allows faculty to retire early and then come right back to work. On the surface it creates a lower fiscal burden on local university funding which looks like a cost savings for guys like Milton A. Gordon, who gets $302,042 per year while living rent-free at the El Dorado Ranch. The reality is that it costs tax payers and students statewide more than utilizing the lower paid part-time faculty who, under FERP, are forced out.

Even the Fullerton Observer could see the problem with FERPing.

Now FERPing is back but this time the Orange County Register picked up the story.  As the Register's Timothy Sandoval surmises about one professor, "Kreiner benefits from an obscure California State University program that allows professors and librarians to retire and continue to work part time, collecting both a pension and a paycheck."

The bottom line is simple:  WE PAY MORE.  We get nothing in return.  Students have to pay higher fees and tuition while full-time faculty cash in.

CSU faculty apparently aren't afraid to strut their sense of entitlement either:

"I think it's fair," Kreiner said. "If you work for a place for 40 years and contribute to its growth, you have earned it."
Kreiner said in addition to classes, he advises graduate students and continues to conduct research papers, which adds to the university's reputation. He also notes that he is one of the "founding fathers" of the mechanical engineering department at the school.

FERP is by far the clearest form of pension abuse.  As Jon Coupal of the Howard Jarvis Taxpayer's Association said to the OC Register, "When someone retires one week and shows up for work on Monday – even if it is part-time work – it is a reflection of a system with a low retirement age."

Many government workers retire from government job "A" and go to work at government job "B".  Then they retire AGAIN and go to work for government job "C".  They do this while collecting multiple pensions.  The double and triple dipping, as it is often referred to, is indicative of a broken retirement system.

People used to retire because they could no longer work productively at a given age, such as 65 or 70.  Now public employees retire simply because they can, some as early as age 38.  Then they skip off to the next public trough until they hit 50 or 55.  Many head to yet the third trough.  And who can blame them for gaming the system...

Despite $1.7-Million Savings, City Still Operating MILLION$ in the Red

Between the City of Fullerton's Press Release and the Orange County Register, you would think that last night's passage of employee MOU labor agreements was the best thing to happen in Fullerton in many months.  Maybe for the employees it is.

The city's press release is quick to state that the City will "save" nearly $1.7-million in FY2011-12 and FY2012-13. 

The problem is that the budget mentioned had an $8-MILLION deficit. 

Between these MOUs and some recent financial reports with some cost-saving measures, the City has closed that gap to a little less than $6-MILLION.

But there still exists a multi-million dollar deficit.  Unless someone can show me the financial reports that explain how that gap was closed, I'm inclined to continue my fight to cut at City Hall.

Remember back on April 26 of this year when Administrative Manager Julia James said the budget was short by $8-million?  And remember when she said the City would make up the deficit by renegotiating with employees??  You don't?  Well, here is the report she issued, read DISCUSSION:

click to see full-size

click to see full-size

It was a nice thought but a complete failure.  We are still $6-MILLION in the red.

Mileage Tax Coming Soon?

As a licensed professional land surveyor, I have an acute awareness of our infrastructure.  Our roads and utilities are aging and no one wants to deal with it. 

President Obama thinks infrastructure maintenance and construction jobs are the answer to our economy even though they are all temporary employment.

Some of my engineering counterparts like the idea of big federal expenditures on our infrastructure and the lucrative contract to be gained.  Indeed, I too could benefit from a Big Dig. 

One of the ideas being promoted by my engineering colleagues is the Vehicle-Miles-Traveled Fee or mileage tax as I prefer to call it. 

There is a notion in the engineering community that the current gas tax just isn't sufficient for keeping up with the wear and tear on our roads because of mileage efficient vehicles and that a usage-based tax is more appropriate.

How quickly we have forgotten one of the principle reasons for implementing the gas tax: to encourage use of public transportation systems. 

Additionally, we have forgotten what we used to do before the gas tax.  Not that long ago, we relied on the general fund to pay for roads. 

President Obama’s National Commission on Fiscal Responsibility and Reform recommended a gas tax increase at the federal level last December when it issued its report to America.  The financial "experts" who came up with this recommendation made this argument: The current transportation trust fund is falling behind the government’s outlays, once again requiring transfers from the general fund to cover transportation costs. The commission called for additional gas tax revenues to be dedicated to fully funding the transportation trust funds and therefore eliminating the need for dipping in further to general fund.  The gas tax has freed up funds making it possible for the President and Congress to funding pet projects like wars. 

It could be argued that the best way to prevent unnecessary military conflicts might be to end all of the various special taxes and fees so that Congress must fund domestic  programs ahead of foreign military campaigns with obscure objectives.

A quick internet search of "gas tax" brings up numerous blogs, PR pieces, and reports about why we need a higher gas tax. 

According to http://www.gaspricewatch.com/usgastaxes.asp California's gas tax is $0.18 per gallon.  Other California gas taxes include a 6% state sales tax and 1.25% county, plus additional local sales taxes and 1.2 cents per gallon state under-ground storage tank (UST) fee.

So, as the gas tax is not quite keeping up with the needed infrastructure repairs, many are looking for the quick fix solution in rate hikes for everything from water, gas, roads, and even emergency services in some jurisdictions.  I don't think raising the gas tax will change anything.  Our same lack of fiscal discipline will soon find us looking to raise taxes elsewhere.

The elephant in the room being ignored are the various allocations from General Funds to cover salaries and benefits.  Locally, in Fullerton California, 80.2% of the General Fund is spent on Public Safety and 69.8% of the City's General Fund is spent paying the Public Safety salaries and benefits (City of Fullerton FY2011-2012 Adopted Budget). 

The question shouldn't be which tax or fee to raise but rather where to cut spending.

Deferred Compensation, the Preferred Compensation

In its simplest form, deferred compensation is a benefit paid after services are rendered. 

It’s an interesting concept; paying someone today for services performed and then paying them again at some later date for those same services already rendered.

With that in mind, let’s look at what we might pay one of our public safety employees who retires at age 50 with 30 years of service and the “3%@50” defined benefit.  We’ll call her “Sara”.

For the sake of discussion, Sara will die of old age on her 85^th birthday which means she will receive her pension for 35 years. 

If Sara was paid $124,730 for her last year’s employment, she will receive $112,500 for those 35 retired years. 

Her pension check alone will cost taxpayers $3,937,500 after she has stopped rendering services to the City assuming she does not get cost of living adjustments which our current public safety retirees enjoy.  We have also excluded the lifetime medical benefit as well.

When she dies at 85 she will have received $6,695,940 for her 30 years of service (not including medical or pension COLA).

That would be the same as if taxpayers had paid her $223,198 for each of her 30 years of service.  Of course she started at $65,000 per year and never received a stepped increase in pay, only cost of living adjustments valued at 6% her first year and 2% for most years after and still was able to earn $124,730.  Not bad for no promotions.

The entire notion of deferred compensation has me convinced we are handling pensions completely wrong.

I see two possible ways to deal with this.  We could pay higher salaries now and let the employees figure out the best investment plan for their future (think 401-K) or workers will need to be productive for 40-50 years instead of 30 years.

State Controller Releases Salary and Pension Data

SACRAMENTO – State Controller John Chiang today updated his website showing the salary, pension benefits and other compensation for 256,222 State of California employees as well as 123,406 California State University (CSU) employees.
Last October, the Controller collected and posted wage information for more than 600,000 city and county employees. He also added 2,379 special districts’ payroll earlier this year.

The Government Compensation in California 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 the site weekly with new information from local government agencies. A list of agencies that failed to file their payroll records with the State can also be found on this website.  Each non-complying agency could face a penalty of $5,000.

State Controller Releases More Salary & Benefit Info

SACRAMENTO – State Controller John Chiang today updated his website showing the salary, pension benefits and other employee compensation for several hundred land reclamation, levee maintenance, health, hospital, and local water districts.
Last October, the Controller collected and posted wage information for more than 600,000 city and county employees. He then ordered special districts across the State to report the same information, and the first 746 districts were loaded last month.
Compensation information for employees of special districts is being collected and posted on the website in four phases. The second phase – launched today – includes almost $5 billion in payroll reported by 539 local agencies. The next phase, expected at the end of April, will include cemetery, electric, financing or construction facilities, flood control, water conservation, recreation, and community service districts.
The Local Government Compensation Reporting 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 a single local government. Postings are updated weekly with any new information received.
Seventy-seven percent of all special districts in the second phase successfully followed the new reporting requirements. A list of agencies that failed to file in time for today’s launch can also be found on this website. Each non-complying agency could face a penalty of $5,000. The Controller anticipates completing the website with all special district information, along with compensation for state employees, in June of 2011.

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KATHERINE MANGU-WARD DISCUSSES CHARITY AND GOVERNMENT ON FREEDOM WATCH

Reason Senior Editor Katherine Mangu-Ward appeared on Freedom Watch with Judge Napolitano to discuss the Obama administration's efforts to eliminate tax deductions for charitable contributions and the effects of publicly-funded social programs on private charities. Airdate: November 25, 2010.

Approximately 5 minutes.

City of Fullerton Employee Sets Me Straight

Below is an email I received from a City of Fullerton employee.  He asked that I keep his identity confidential so I have removed his name and department.  In the interest of fairness I wanted to share this.  Hopefully it will spark some debate regarding pensions and the inequity which exists within the same agency.  The employee wanted to let me know that not all employees are treated as well as public safety. 

Dear Greg,

I have been reading on your website tonight.  There is some information i.e.,

"Further, today’s public employee will enjoy 90% to 100% of their current salary for the rest of their life along with adjustments for inflation."

I work for the City of Fullerton and just wanted you to know that my retirement at the city is through CalPERS, however it is at the 2% at 55 formula, which means if I work for 20 years I will get 2% X 20 = 40% of my highest year's salary.  If I work 30 years I will get 2% X 30 = 60%. 

I think in the above referenced sentence from your web site you are referring to safety personnel who get the 3% at 50 formula; which means if a person becomes an officer at 21 and retires after 30 years at the age of 51 he/she receives 3% X 30 = 90% of their highest year's salary.  Individuals who retire can then go to work at other agencies, like the DA's Office, which is under a different retirement program, thereby making them eligible for another pension.

This is how Chief McKinley got his double pension - and both retirements are/will be paid in full, with no reduction due to the fact that you get two retirements.  When I retire I will be eligible for Social Security as I worked in the private sector.  At the time of my retirement Social Security will call my city retirement a "Windfall", and they will in turn reduce my Social Security benefits since I am now getting a "Windfall" in the form of my city retirement.

Well, just wanted to let you know that the sentence is very misleading as it references "today's public employees"; but does not reference that there are about 10 levels in CalPERS.  I am apparently in the second to the lowest level, i.e. 2% at 55 and the safety personnel are apparently at the top level.

Best wishes tomorrow. 

It was good to get this insider's perspective especially considering how many new employees are brought in from the private sector at age 40+ and the impact (or lack thereof) that their employment will have on the pension tsunami.  Further, this was the ONLY City of Fullerton employee to contact me throughout the election.  Too bad we don't have more who are willing to come forward.

Greenhut: Public Pay Study Seems Bogus

Writer Steven Greenhut wrote yesterday on Cal Watchdog that, "this 'study' is far more about politics than research."

The study Greenhut is referring to has been plastered on just about every left-leaning blog and print media for the better part of two weeks. 

Read Greenhut's column here...

Pension Spiking and Fraud 101

I was watching a short interview with Steven Greenhut on Reason.TV and heard Steven mention "Chief's Disease".  After a few quick google entries, I tripped over this 2005 exerpt from Reason.org.  Click HERE to read and download the entire PDF.

THE GATHERING PENSION STORM: HOW GOVERNMENT PENSION PLANS ARE BREAKING THE BANK AND STRATEGIES FOR REFORM
By George Passantino and Adam B. Summers
June 2005

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!

Pension Reform Receives Court Backing

Those interested in Orange County government accountability and pension reform won a legal battle Wednesday.

In a ruling over a petition filed in December 2009 by the California Foundation For Fiscal Responsibility vs. the Orange County Employees Retirement System (OCERS), the Superior Court of Orange County ordered the OCERS to disclose “…gross amount paid to the payee member, the name of the payee, and the identification of the prior public employer of the named payee and no other information contained in the records OCRES.”

The presiding judge, Hon. Luis Rodriguez, says in his ruling, “Individuals must have access to government files to hold governments accountable for their actions. Personal embarrassment is outweighed by the strong public policy supporting transparency in government and the strong public interest in knowing how it spends its money ‘to expose corruption, incompetence, inefficiency, prejudice and favoritism.’”

This ruling is consistent with the premise that government can only be held accountable when there is transparency. Without transparency, corruption, incompetence, inefficiency, prejudice and favoritism cannot be identified, much less routed out. When I read those pervasive flaws outlined by the court, I immediately thought of Tom Daly, Annie Mezzacappa (covering for Sidhu), Linda Andal (covering for Sidhu), Bryn Morley (covering for Sidhu), the OC Children and Families Commission (Cunningham, et al), the OC DA Chief of Staff Susan Schroeder, appointed OC Sheriff Sandra Hutchens, SAPD Chief Paul Walters, and the public employee unions just to name a few. All of those people seem to fall under one of those categories (corruption, incompetence, inefficiency, prejudice, favoritism) that the court has recognized in the ruling. It is up to the public to police our government and Judge Luis Rodriguez seems to agree.

Case Number: 30-2009-00330855-CU-WM-CJC