Wednesday, March 8, 2017

Cities should brace for huge rise in pension costs

Sacramento Bee editorial:
New Sacramento City Manager Howard Chan is putting together his first budget proposal, and you might think with the improving economy, he would be able to hand out cash to this program or that.

Instead, he’s warning department heads not to expect many of their pent-up requests, he’s focused on increasing revenue and cutting expenses, and he’s looking at least five years down the road.

There’s a very good reason: Higher pension costs are on the way because CalPERS lowered its expected investment returns. Sacramento’s additional payments are projected to rise from a manageable $3.2 million in 2018-19 to a frightening $29.4 million in 2022-23.

“It keeps me up at night,” Chan told The Sacramento Bee’s editorial board this week.

If the higher CalPERS contributions aren’t the stuff of nightmares for city and county officials across the state, they should at least be a big worry. The League of California Cities calls the pension issue the biggest obstacle facing every full-service city in the state. It is urging its members to run the numbers and to start taking necessary steps. It says some cities may have to consider hiring freezes and service cuts. Even then, the league warns, some cities might eventually veer dangerously close to bankruptcy.
Even the much higher costs coming the next few years will likely not be enough, as experts warn that CalPERS' accounting and assumptions are still far too aggressive.

Encinitas has $154 million in unfunded liabilities according to a conservative Stanford analysis.

53 comments:

  1. A $154,000,000 unfunded liability for a town with a population of less than 100,000 people! Incorporation opened the flood gates for unfettered pillaging of the civil coffers by over-rated, over-compensated "civil servants". Who is the servant here? It's the classic fox guarding the chickens syndrome.

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  2. Lololllllooollloooollloolololooolllllllllooolol.
    Oh wait... it's the taxpayers that get stuck footing the bills. So now you understand why the city allows all the booze joints. Gotta keep the revenue flowing so Muir and company can keep there $100+ pensions.

    Suck it up taxpayers, suck it up!!

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    1. Their, not there.

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    2. But at least our wise city council member Tony Kranz was smart enough to save Pacific View from developers by paying 2.5x more than its true value! According to him, it did not matter what was paid for Pacific View, we'll all be so glad 50 years from now that the city saved it. When CalPERS implodes, maybe the formerly fat city retirees can live at Pacific View in a hobo camp.

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  3. Public Safety workers: police/fire/lifeguards get an exceptional good deal for their pensions. Earn 6 figure salaries per year and retire in their 40s. And often are protected by their unions and politicians wanting their endorsements for elections.

    This is part of the problem.

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    1. I once complained to someone about real estate agents, not working, but getting $30,000 commissions. The person responded and said that its ok if I had a problem with it. And if I thought it was a good deal, then I should be an agent.

      You should be a cop.

      Bottom line, I'm ok with people putting their lives on risk to protect us, including military. We need them. This isn't a problem because council gets to decide what the salaries should be. If we lower the pay scale, we sacrifice the quality of recruitment. You pay for what you get.

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    2. So Muir earned and deserves his $180K pension?

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    3. 1:03 pm, I agree with your logic if you are talking about a free market where wages and salaries are based on productivity and merit. But public employee unions have completely skewed compensation and benefits by paying political bribes (campaign contributions) to those with whom they negotiate their compensation.

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    4. 1:03- Fire princesses and life guards do not earn what they make. They are cushy jobs.

      Cut the Fire princessess and life guards compensation and give more to cops.

      you don't see thousands of people applying to be cops do you?

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  4. But our finances are in fine shape in Encinitas - have we ever heard otherwise from our Council, from $tock$ to Shaffer, to Blakespear no matter what facts informed residents have shoved under their noses?

    As an unhappy taxpayer, I'm going to sit back and watch the boom lower with a certain grim enjoyment. Let Blakespear, a repeater of the "fine shape" lie, explain the math to us when the time comes.

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    1. The City Manager has not said shit about this no. 1 huge pending issue. Why?

      She is more concerned with getting hers that what is good for Encinitas.

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    2. She is operating as directed by the council, 6:26. D'oh.

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  5. When we incorporated, in 1986, the new City of Encinitas had just over 100 employees that were hired. Fast forward to 2017 and we have over 200 employees. This number does not included fire or sheriff. Given that we have only had about a population raise of about 3000 people, I have to wonder why we need so many employees at the city level. Surely we don't need to add additional bars so we can pay for things like Pacific View, the new Moonlight Beach tower, the Encinitas Community Park and, it would be nice to fix the potholes and sinkholes. Who decides the priorities?

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    Replies
    1. The people that you elect. You should run for office and change the priorities.

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    2. 1:03 - Why are you using population as a guide to staffing of the city? That's not the only thing that has grown since 1986. How about commercial square footage? Miles of roadway? Building permits? Utility consumption? and last, bars!

      As for potholes, the city seems to be taking the one in my neighborhood pretty seriously!

      - The Sculpin

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    3. Sculpin, how do increases in commercial square footage and utility consumption require more staff? SDG&E handles utilities and city workers don't maintain or clean commercial buildings. I agree that increased building permits and miles of roadway could have minor staffing impacts (most road maintenance is done by hired contractors, not city employees, and I hardly think our building inspectors are maxed out). The basic truth is that all California public agencies in the past 20 years have hired at rates far in excess of population increase or any other metric that legitimately warrants more manpower.

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    4. Population only speaks to people who live in Encinitas, not the people who are in Encinitas at any given time. Commercial square footage speaks to traffic of all types and manner, and the infrastructure needed to support that square footage. My point is that residential population may not be the right or best metric. It's possible that the City's staffing levels may be correct but they're just paid too much!

      I saw an interesting piece about how blue collar workers have been portrayed in the movies over the last 15 years and it's possible effect on young people willing to learn a trade. Who would want to work a blue collar job if it had no redeeming social status?

      - The Sculpin

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    5. Building inspections are also hired out, to Esgil, a private contractor.

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    6. Sculpin rambles on, as usual. Conversing on a subject that he is totally clueless about - but that is his usual MO.

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  6. Bureaucracy expands and perpetuates itself.

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  7. 1:40- Don't know if you were a Star Trek fan, but the bureaucracy is this neck of the woods reminds me of the Tribbles in Star Trek.The keep multiplying and multiplying. What to do, what to do?

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    Replies
    1. Transport them to Del Mar.

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  8. Pensions were once a noble ideal. Blue collar and white collar middle management got a pension for a long successful career without the privileged benefit package that was customary with upper management stock options and executive pay.

    Now fat fuck Directors like Muir who made an obscene paycheck have co-opted pensions for themselves at 95% of what they made before career retirement have gamed and screwed the system.

    Corporate or Government...Always fucking the little guy!

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    Replies
    1. No one would describe Muir as " little"....

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  9. Are you ready for the flaming torches and pitchforks yet?? No?? You will be soon.

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  10. I still don't understand the problem. According to all city officials, including the council, city finances are in "fine shape." Why, the mayor told us so just a couple of months ago.

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    Replies
    1. Like Jeff Sessions explaining how he never met the Russians.

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  11. DON'T BLAME THE EMPLOYEES: The answer is EASY! When contracts come up for renewal, cut the salaries and benefits or Shut the F up!

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  12. Is there any action to close the pension to new hires? This is the first step that companies such as GE took in the late 90s to cap the bloodletting. All new hires should be offered a 401k or equivalent. Close the pension!

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    1. Progressives are ideologically committed to pensions. We have a 4-1 progressive supermajority on the council, and the 5th guy likes pensions for personal reasons.

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    2. An oversimplification, like saying conservatives are ideologically committed to smaller government. I believe higher taxes are a reasonable price to pay for a secure social safety net; that climate change is real and driven by CO2 in the atmosphere; that income inequality is a threat to social stability; that the hatred of Obama was subconsciously based on race...and that public employees today are no longer sacrificing salary for the security of a defined benefit pension. They are getting both and the drain on taxpayers is clearly unsustainable in the long term. I suggest you narrow the tip of your brush.

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    3. OK, but the fifth guy does like pensions for personal reasons.

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    4. 2:18, show me an elected progressive who has ever pushed for replacing pensions with 401(k)s.

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    5. I'll accept that as a narrowing of the brush.

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  13. After how many years of employment are Encinitas employees fully vested and entitled to a pension? Given the liability, why would the city continue to add people to the unsustainable program? Thats just bad governance...

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    Replies
    1. No government is better than bad government.
      Encinitas = bad government.

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    2. 8:00PM Do you think they care???? They are all at the trough.

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  14. She serves "at the pleasure of the Council." Anyone really believe she hasn't been told to keep quiet on this??

    Buck stops with the five "finances in fine shape" stooges.

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  15. What don't you get? The council is all collecting a pension from the state for being on the council. They would have to vote against their own council pensions.

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    Replies
    1. Council members have to serve more than one term to get a pension, and since their salaries are tiny, their pensions are tiny.

      The pension bust comes from firefighters and staff members. Muir's pension is about $180K a year.

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    2. Some of the higher ex-city administrators crack over $200K/year! Simply outrageous!

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  16. They can keep their pensions - but, there is no reason why new hires should add to the liability. No pension for new hires! And please don't tell me the city could not draw talent without the benefit. Pay a higher base salary and give them a savings plan like the private sector.

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  17. The ONLY possibility of pension reform will come from a voter sponsored initiative. It will NEVER come from the internal ranks of city government.

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  18. This should be a pretty easy story to tell. Put together a simple petition, have an attorney check it to ensure it doesn't conflict with our general plan, get some volunteers to stand in front of stores and PEOPLE WILL SIGN.

    Seriously, we all drive our ridiculously-potholed roads and know the money is not being spent on the infrastructure we all depend on. Now Boerner-Horvath is busy cooking up ways to "develop business" (read: bring in more revenue) to cover the tidal wave pension shortfall. Among other bright ideas to get us to cover the pension costs she'll suggest parking meters, Shaffer's favorite topic. Guaranteed she will.

    People would sign in a heartbeat and you need just 10% of registered voters in order to get it on a general ballot (15% to force a single-topic special election, as Prop A did).

    Going around the council and taking it to the people seems to be the only way to get anything significant done in this town. Do it!

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    Replies
    1. OK, 11:14, you get it rolling and I'll sign.

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    2. Been there, done that on Prop A - your turn, dude.

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    3. Obviously as part of a large group; we all worked very hard.

      You?

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    4. Countless hours.

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    5. I think not.

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    6. Well, you're wrong.

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    7. Excuse me while I don't take your word for it.

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    8. Ignorance is not a virtue.

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