Saturday, October 3, 2015

CalPERS admits failure; will charge taxpayers billions more to pay for broken promises

"Oops... I did it again!"

LA Times:
California taxpayers have never paid more for public worker pensions, but it's still not enough to cover the rising number of retirement checks written by the state's largest pension plan.

Even before the stock market's recent fall, staffers at the California Public Employees' Retirement System were worried about what they call "negative cash flows."

The shortfalls — which totaled $5 billion last year — are created when contributions from taxpayers and public employees who are still working aren't enough to cover monthly checks sent to retirees.
Encinitas' annual pension costs have more than doubled since 2005, and were more than $3.5 million (and rising) per year in 2013-14, so that city workers can have early retirement collecting more than median household income for life. But get ready to pay much, much more:
But even its staff acknowledges in a recent report that despite fast-rising contributions from taxpayers, the pension fund faces "a significant amount of risk."

To reduce that financial risk, CalPERS has been working for months on a plan that could cause government pension funds across the country to rethink their investment strategies.

The plan would increase payments from taxpayers even more in coming years with the goal of mitigating the severe financial pain that would happen with another recession and stock market crash.

Under the proposal, CalPERS would begin slowly moving more money into safer investments such as bonds, which aren't usually subject to the severe losses that stocks face.

Because the more conservative investments are expected to reduce CalPERS' future financial returns, taxpayers would have to pick up even more of the cost of workers' pensions.
Despite Encinitas' skyrocketing pension costs, the City Council has in recent years voted repeatedly to expand the bureaucracy, making the problem even worse. The city now spends more money on pensions for workers' early retirement than it does on its underfunded road maintenance.

60 comments:

  1. Barth and Stocks are examples of C students who gave away the farm at taxpayers ongoing expense. But hey let's plant a tree in honor of such awful leadership!

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  2. Expanded bureaucracy? Last time I checked, the ratio of citizens to FTEs has been in a long term favorable trend.

    Given rising fully burdened cost per FTE, it's possible that TCOW per capita is going the wrong direction, but I haven't seen anyone post that analysis.

    On the bright side, the twin whammy of underfunding and low interest rates might be just what the doctor ordered. Everyone with a brain and a calculator knows that eventually picnic sector retirement will need to convert from defined benefit to defined contribution. But the unions, politicians, judges, and voters won't support such a fundamental change until a crisis exposes the current system as hopelessly broken. Many of the variables are lining up to bring us to that crisis point, which is actually a good thing in the long run.

    It will not be a quick or easy process, and I expect much more pain and a lot of shouting before we get to a resolution. The resolution will also likely be full of compromises that make it unpalatable to public sector employees and reform-minded taxpayers alike. Still, it will be better than what we have now--it would be challenging to come up with something worse. (Famous last words?).

    --FP.

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    Replies
    1. Is that "picnic sector retirement" intentional dark humor or a Freudian slip?

      Delete
    2. Last time I checked, population was flat last several years and FTEs are up, especially high-level FTEs (Gus's "cabinet").

      If you have other data i would like to see.

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    3. We have several Deputy Directors--at least 3 that we didn't have until the last couple of years? Exactly what is their return on investment for the $140,000 that they are paid?

      It seems to me that they have made things worse. For example, we had illegal spillage into Rossini Creek that cost us a lot in fines. Couldn't a department with both a director and a deputy director have caught that? Other departments continue to hire out responsibilities to consultants. It seems to me like we have an added layer to fleece taxpayers.

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    4. Voters in San Diego and and San Jose have voted for a change to defined contribution retirement plans for public employees, both were Prop B, on their respective ballots. There is a plan for a state wide initiative. I'm not sure it (the statewide vote) will pass legal muster for municipalities, but should work for state employees.

      Delete
  3. Things just keep getting worse and people like Muir are laughing all the way to the bank. Nothing but pure old greed.

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    Replies
    1. $180K/yr for life - - -robber baron.

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  4. LOLOLOLLLLOOOOOLOLOLLLOOOLOLOLLLLLLLLLL......
    Time to pack your bags and hit the roads out of Calispenditallfornia. The "moonbeam" only makes things worse. Yet the city council recently(behind closed doors) negotiated new salaries and pensions for city staff....

    Meanwhile my/your street goes unrepaired....

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  5. But we have a warm and fuzzy fruit tree grove in Glen Park.

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  6. Your tax dollars at "work" - filling the trough for public workers. Our sister city should be changed to Athens, Greece. Ga$par was Ms. Frugal - where'd that resolution go? O yea - to her Supervisorial campaign.

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  7. You whiners don't seem to understand the primary purpose of state and local CA governments. It's to provide great jobs and opulent pensions for its employees.

    There is not a single jurisdiction in the entire Golden State that lacks this pension unfunded liability problem. We are all "blessed" with this obligation.

    Oddly enough, many of our government employees leave the state upon retirement, after spending their careers calling for more taxes to increase their personal welfare. And when they leave, their pensions are no longer taxed in our state (federal law).

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  8. The average California firefighter is paid 60% more than paid firefighters in other 49 states (let's ignore the 70+% who are VOLUNTEER firefighters). CA cops and sheriffs are paid 56% more. Yet the CA 2011 median household income (including gov’t workers) is only 13.4% above the national average.
    www.tinyurl.com/CA-ff-and-cop-pay
    and
    www.en.wikipedia.org/wiki/List_of_U.S._states_by_income

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  9. Encinitas is thick with excess non needed positions as well. The Art Director making over $150k in salary and benefits is unheard of. All the lifeguards should make $50k or less including benefits. In fact, Encinitas is stupid to even have lifeguards. Carlsbad has zero lifeguard costs because they have all State lifeguards.

    Encinitas volunteers $millions of $$$$ so that Larry and other slackers can play bay watch while enjoying the beach seen. Encinitas could sure tighten its belt.

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    Replies
    1. One look at city hall tells anyone Encinitas is a community with zero atheistic sense. Only local art talent has contributed and nothing but strip mall art has been offered up by our leadership in the past decade.

      Delete
    2. "..Encinitas is a community with zero atheistic sense". Praise God!

      Delete
  10. For a small community, Encinitas appears to have an excessively burdensome Admini$trative infra$tructure. The City Manager needs to start cutting positions; yea - Art Director should head the list. How is that a full time position?

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  11. Go away Mr. Rider. You have nothing to contribute because you buy into the crap. Try moving out of CA. Then let others follow your lead. Make my day!

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    Replies
    1. A rep of the Firemans' Union. no doubt.

      Delete
    2. Think I'll stink around a while longer. I would leave, but it would just make too many of the wrong people happy!

      Besides, distributing annotated facts drives y'all nuts! It's clear who has "nothing to contribute."

      Delete
  12. Stay around, Mr. Rider. You document your comments, unlike others here who only attack.

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  13. Stink around as long as you like.

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  14. The first time I heard of a right-wing commentator named Richard Rider, I thought it was a fictional Colbert Report-type character.

    I'm still not sure he's serious.

    Whatever your true politics, I hope you have a sense of humor, Mr. Dick Rider.

    (hee hee)

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    Replies
    1. I tell fun stories of my "Dick Rider" signs (I became a cult figure in the U-C system in the 1990's. Yes, I definitely keep my sense of humor, but did change my name to save on sign costs!

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  15. Richard Rider is a real person. He gave Jerome Stocks no end of grief on the huge cost overruns on the Sprinter when Stocks was Chairman of Board at NCTD. Go to SDRostra to read his responses to Stocks.

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  16. Also gave $tock$ honest feedback for $tock$ 35% windfall increase for all City Employees retroactive and for all employees forever. That one costs the taxpayers millions for the next 50 years. $tock$ is beyond RINO- I call him crooked.

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  17. Right, Stocks the dictator imposed the 35% increase all by himself.

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    Replies
    1. He twisted the arms of the other numb nuts that were serving with him. They were just as bad.

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  18. $tock$ was the ringleader and $tock$ bears the scare. Jim Bond, while know not to be the brightest star in the room, was easily able to see the peril in $tock$ actions and voted against the increase.

    $tock$ is a nightmare for all taxpayer and true Republicans alike.

    $tock$ was essentially laughed out of office after running for re-election as Mayor and Chair of SANDAG and got smeared!!

    Shows the taxpayers can still smell a rotting rat feeding at the public trough.

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    Replies
    1. Shows you're close to illiterate. Stop posting.

      Delete
    2. $tock$ WAS the ringleader. How soon some forget. He still thinks he's hot shit!

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    3. C'mon, dude! Stocks didn't control Houlihan. He didn't even control Bond fer chrissakes! Stop with the Stocks uber alles crap. He was reprehensible, but he wasn't the all powerful authoritarian dictator you're imaging he was. Plus, he gone forever, so pick a current issue that actually matters. What's done is done. You're beating a dead horse.

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    4. Hardly a dead horse. The consequences of Stocks' vote and leadership will echo down through the city budgets for decades to come. With his chairmanship of the North County Leadership Council it looks like he will try to regain his negative influence.

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    5. Unless you can rescind the 35% increase, it's a dead issue. You gain nothing by continuing to post about it.

      If you want to have a positive influence, pick a current issue and push it in a direction that benefits most of the community.

      Otherwise, you're just griping about something you can't change.

      Delete
    6. 7:07,

      There is a lot that could easily be done to mitigate the damage.

      You're quite the defeatist. Or are you a government union triumphalist?

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    7. Only if you get council and staff with the will to execute that line of thinking. For the moment, 7:07 is sadly correct.

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    8. Like what? The absurd increase happened 10 years ago. What's been easily done since 2005 to "mitigate the damage," to use your wording.

      Delete
    9. Sorry. This blog will continue to cover important issues regardless of whether current council members care.

      If you only want to read about what the current council members care about, you could stick to their newsletters. I hear there's a new fruit tree grove.

      Delete
  19. Hmmmmm, and yet no comment from anyone on the council.......(sigh) I know now that my street will never be fixed.

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    Replies
    1. I wrote to the Council about the Barth Tree Grove, and I did not receive an answer as well. Guess they didn't care all that much.

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  20. I have never heard $tock$ go on the news and apologize to the Encinitas tax payers for his million dollar theft. I have never seen the DA investigate the issue for criminal prosecution. The issue is not dead until its reversed. We will never let the tax payers of Encinitas forget the criminal behavior of $tock$.

    $tock$ is bad for the Enciintas Tax Payer.

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    Replies
    1. I wouldn't go that far, but there's plenty the current council could do to reduce costs going forward... if they cared... which they don't...

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    2. You haven't given specifics on "a lot" the current or any council could do to "mitigate the damage" of the 2005 35% pension increase.

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    3. 1:22- Here's 1 of "a lot", how about not over paying for a falling down school!!!!! Here's 2 of " a lot", how about not offering more than the sales price?? When was the last time you went to a car dealer and offered more than the sticker price??
      I'm sure others here will be more than happy to help you understand the ripoff called "city hall"

      Delete
    4. #3 - put management in a 401k. They are not required to be given pensions at all, much less the mega-pensions the city council gives them.

      #4 - put new employees in a 401k. The pension guarantee applies only to legacy employees. Every new employee the city council gives a pension to makes the problem worse.

      #5 stop hiring Communications Directors and full-time Code Enforcement people who make a total of 11 night-time bar visits all summer

      #6 - cut head count

      #7 - freeze wages until they bear some resemblance to private sector pay

      How's that for a start?

      Delete
    5. Only those that relate to pensions are on point. Anybody with even superficial knowledge of city administration could suggest the others.

      How likely is it that any cited that relate to pensions will be done? Since 10 years have passed without such action, seems unlikely to start now. That was 7:07's point above.

      Delete
    6. EU calls out two tiers:

      1.) Younger and new employees get 401k-type defined contribution plans

      2.) Older staff closer to retirement keep their pension.

      I would suggest a third category: give mid-career staffers their choice. Either stay in the pension, or accept a lump sum rollover into an IRA, and a separate zero-balance 401k to accumulate contributions going forward.

      Of course, conversion has a cost, and some states have seen their unfunded liability double in the short term when those transition costs are accounted for.

      Delete
  21. "Nobody ever tried to fix anything before -- why should we start now?"

    Fat, drunk, and stupid is no way to go through life, son.

    Inertia is never a good reason for public policy... especially a public policy this expensive and cancerous on the fiscal health of the city.

    Frankly, I find it appalling that anyone would suggest it's "beating a dead horse" to hold politicians accountable for continuing fiscal negligence of this magnitude.

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  22. Griping about politicians on this blog is not holding them accountable.

    You are bright enough to get that, right?

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  23. Story in today's New York Times that the Teamsters union is cutting 400,000 pensions....Hmmmm, what will the city council do??? Oh yeah, increase pay and pensions. ( sigh) I know my street will never be fixed.

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  24. Can the city legally cut pensions retroactively? I think the courts upheld the pension obligations in the bankruptcy proceedings in Stockton. The 6 figure payouts to former employees is unsustainable and getting worse by the day.

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    Replies
    1. No, they can't cut individuals' pensions as long as they're working, but they can lay people off so they stop accruing more.

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  25. I wonder if EU read our fiscal conservative CFO/mayor's recent editorial in the Seaside Courier?

    "It is no secret that Encinitas has experienced a high key-employee loss rate during recent years. I am confident that Karen will work well with current and future Councils to help the city improve its customer service and staff retention."

    Hmmmm. I wonder how they'll keep staff from leaving for greener pastures. Perhaps a little more green will be thrown into our pasture?

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    Replies
    1. The staff is made up of fool and idiots, they are a reflection of the council. The taxpayers get the shaft.

      Delete
    2. Let's review who we've lost over the last several years.

      City Manager Gus Vina
      Planning Director Patrick Murphy
      Planning Director Jeff Murphy
      Finance Director Jennifer Smith
      Contract liaison Peder Norby
      Communications Director Marlena Medford
      Finance Analyst Rhonda Graves

      Who else?

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    3. Can the citizens sue to get our monies back?? Each one listed a waste of flesh.
      Helix water district raises rates 56% over the next 5 years...Why?? To pay pensions.
      Norby doesn't get a pension as the La Veta one is fond of telling us.

      Delete
    4. Others who have retired or left the city.

      Fire Chief Mark Muir
      Assistant City Manager Richard Phillips
      Head of Human Resources Tom Beckord
      City Clerk Deborah Cervone
      Parks & Rec Director Chris Hazeltine
      Financial Adviser Jay Lembach
      Public Works Director Larry Watt
      Engineering Director Peter Cota Robles (died)

      Gus Vina was able to replace all heads of departments.

      Delete
  26. Vina had tried to replace our General Plan with his strategic plan for which he hired consultants and Medford to "market" it.

    Shaffer is going to be writing for the Coast News to "educate" readers about important issues.

    They will force feed their plans one way or another.

    ReplyDelete