Corrupt Little City 101: defined benefits vs defined contributions

25 Feb

I was glad to see Ray Schimmel’s letter in Sunday’s paper (2/22/26) – “No, everything is not OK with Chico’s Downtown.” Yes, the kiosks are just another nail in Downtown’s coffin. And just another obvious shake down by city management, desperate for revenue to pay their own salaries and benefits, including the pension deficit.

Pension deficit is created when employees do not pay a rational share of their pension expense. Most cities in California allow employees to pay a small share, while the cities pay a trifle more, and trusts CalPERS to make up the rest with investments on the stock market. When the market doesn’t pay, the debt accrues with interest – and there’s the deficit.

Of course the deficit also goes up with every new hire and salary increase.

So, even though most cities, including Chico, have created pension payment plans, with increasing “catch-up” contributions every year, cities all over California, including Chico, are watching their deficit go up very drastically every year.

The problem is, Chico employees, like employees in other cities, are given “defined benefit plans”, aka, “traditional benefits” in their contracts. The terms – such as salary, and the percentage of the employee share of benefits – are negotiated by council and the city manager.

What is a “defined benefits plan”? From Investopedia – Defined-benefit plans provide eligible employees with guaranteed income for life when they retire. Employers guarantee a specific retirement benefit amount for each participant based on factors such as the employee’s salary and years of service.

Wow, guaranteed for life, that’s a promise! The AI summary adds a very important point –

Defined benefit (DB) plans, or traditional pensions, guarantee a specific, formula-based monthly income in retirement, with employers bearing all investment risks.

Yep, the employers – the taxpayers – bear all the risks. Including CalPERS poor returns. While CalPERS has had some excellent years, they’ve had a lot more bad years, and remain at only 70% solvency. Meaning, the taxpayers have to come up with the rest of that money. Plus interest.

I feel the answer is to switch to “defined contribution plans”. Really Pollyanna? What’s defined contributions? Well thanks for asking!

Defined contribution (DC) plans, such as 401(k)s, are employee-funded accounts where final benefits depend on contributions and market performance, shifting investment risks to the employee.

Defined-contribution plans are funded primarily by the employee. The most common type of defined-contribution plan is a 401(k). Participants can elect to defer a portion of their gross salary via a pre-tax payroll deduction. The company may match the contribution if it chooses, up to a limit it sets.“

While that’s a no-brainer as far as I’m concerned, here’s a point I had not considered – defined benefits plans are more expensive to administer, the cost of which, is of course passed onto the taxpayers.

From investopedia – https://www.investopedia.com/ask/answers/032415/how-does-defined-benefit-pension-plan-differ-defined-contribution-plan.asp#citation-2

“These key differences determine which party—the employer or employee—bears the investment risks and affect the cost of administration for each plan.

With defined benefits plans, “Employees have little control over the funds until they are received in retirement. The company [CalPERS] takes responsibility for the investment and distribution to the retiree. That means the employer [taxpayers] bears the risk that the returns on the investment will not cover the defined-benefit amount due to a retired employee.

Here’s the whammy – “Because of this risk, defined-benefit plans require complex actuarial projections and insurance for guarantees, making administration costs very high.”

Since defined contributions plans shift the risk to the employee, “As the employer has no obligation toward the account’s performance after the funds are deposited, these plans require little work, are low risk to the employer, and cost less to administer.

The city will tell you this is not possible, that there’s no way we can get out of CalPERs, blah blah. We will probably have to continue to pay what we owe on past, retired employees, but we need to put pressure on council to switch whenever there is a contract negotiation or new hire. Starting with whomever they plan to hire for City Manager.

And stop giving raises and hiring new positions.

And we need to discuss the conflict of interest created here, with council members receiving huge campaign contributions from the employee unions. That is as obvious as the stinking heads of a fish that smells so rotten… oh yeah, that’s the sewer boiling up under Downtown Chico…

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As the City Tanks: Council giving out more raises tomorrow night, when will they ever learn?

16 Feb

Tonight Chico City Council will most likely approve more salary increases for Chico PD and Fire. Trying to follow up on suggestions of outsourcing other positions to pay for these raises, I just happened to find a November article in the Chico News and Review. The author paraphrased a blog I posted regarding the effect these raises are having on the deficit, of which CouncilmemberTom Van Overbeek only recently seems to have become aware of.

From Chico CN&R, 11/20/25, https://chico.newsreview.com/2025/11/20/underfunded-chico-city-worker-pensions-addressed/

“The Chico Taxpayer Association maintains that contracts with city workers should have obligated them to pay for more of their own retirement costs, and that Van Overbeek’s motion is irresponsible from a conservative point of view. On its website it asks the councilmember: “You have signed onto contracts offering guaranteed raises and abysmally low shares of benefits costs without wondering where the money would come from to pay for these raises, or what effect the raises and underpayments would do to our CalPERS obligation. Why didn’t you ask these questions during the Measure H campaign?”

Wow, he included a response from VOB, but it’s not exactly an answer.

Van Overbeek answered that 2022’s Measure H sales tax increase primarily funded a police force “that was literally melting down,” and not intended for the UAL. “We said we were going to spend the money on cops and roads,” he said.

In this response, he does not engage the question about making employees pay more, he doesn’t even touch it. He refuses to engage the question about more employees and more raises without requiring higher shares is increasing the deficit. He also insinuates that the measure promised Measure A revenues would be used to fund “cops and roads” – it’s not legal to list specific uses for a “simple” 50+1 ballot measure. He also insists that Measure A funds are not being used to pay down the deficit – how can he promise that? Simple measures go into the General Fund.

Sacramento CN&R Author Ken Magri misstates the deficit payments at $7 million a year. That is way off, I’m pretty sure he got that figure from Artificial Intelligence. The city paid $18 million in 2023, I haven’t checked lately, but I know they go up every year. By millions. I get my figures from staffer Barbara Martin’s reports, available in the minutes from the Finance Committee Meetings.

Yes Mr. VOB, the cops are still melting down. The over-generous salaries are not getting “better” people, as evidenced in the recent revelations about police department inappropriate behavior. These salaries are tanking our town. When will they learn? When they get their ass handed to them at election time, that’s when.

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Letter to the Editor: It’s the contracts, Stupid!

9 Feb

BC asked, Why is it only the taxpayers are on the hook for the unfunded pension liability?

Good question, I wrote a letter about it!

After my last letter a friend asked, “Why is it only the taxpayers are on the hook for the unfunded pension liability?”

It’s in the contracts. Council agrees to the terms regarding salary and benefits. Council also approves the inadequate shares employees are paying toward their benefits, which has left the city wandering deeper and deeper into pension debt with CalPERS.

Year after year, Council approves the increasing annual payments toward the resulting pension deficit – $18 million in 2023 alone. Despite millions in “catch-up” payments, the deficit continues to rise, at last report, over $180 million.

And that’s how the taxpayers get left on the hook. How can we get off?

Elect council members who will negotiate taxpayer-friendly contracts. Employees should shoulder their own pensions. Instead of allowing the pension deficit to “ride the market” down the road to Perdition, set up realistic defined contributions from employees, based on the true cost of their pensions instead of Pollyanna market projections. The taxpayer (“employer”) contribution should be based on merit and length of service. Employees should be responsible for the losses as well as the gains.

Outsource jobs? The city culled positions in 2013, but here we are again. It’s the contracts.

Juanita Sumner, Chico CA

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BC: Why is it only the taxpayers are on the hook for the unfunded pension liability?

2 Feb

Thanks BC for coming over to the last post

We’re about to hire a new city manager – it’s past time to discuss the effect these outrageous salaries and benefits are having on the city budget

You brought up a lot of important points about public employee compensation. The lush salaries and benefits are not conducive to good work ethic. Instead of promising sky’s-the-limit salary and benefits off the top, Council needs to offer a reasonable starting salary and set specific metrics for performance, future salary increases and long-term benefits. And other stuff, thanks for keeping the conversation going!

You observed and I agree, “The lack of accountability and the lack of responsibility in jobs where a fixed salary is present generates a much different work ethic than incentive based compensation plans in the private sector . ” I’ll add, defined benefits plans – employer-sponsored retirement plans that promise a specific, predetermined monthly income for life after retirement, regardless of performance, and regardless of our town’s financial well being. This type of employee compensation is not only tanking our town financially, but like you said, it’s not an efficient way of guaranteeing quality performance.

A better system would be defined contributions plans. Meaning, essentially, the employees pay more for their benefits, and they shoulder the responsibility when CalTRANS tanks. I don’t pertend to be a expert in these affairs but I been studying up on it. I really don’t trust city management to give me straight answers, I look it up on The Wikipedia.

BC echoed a sentiment I’ve had for years, “Why is it only the taxpayers are on the hook for the unfunded pension liability? I believe it’s because the biggest contributors in the city council elections are the employee unions. That’s another conversation, but it has to be had before we will get any changes in the compensation scam.

I’ll say, if we had good employees, they wouldn’t be feathering their nests with all of our future. Why do we put up with it? Because we have our jobs, and our kids, and our bills to pay. We need to take some time to think about these issues so we can make informed contributions to the conversation Downtown. Especially at Election Time.

Next time, on “This Old Lady Gets the Bill… and so do YOU!”

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We’re about to hire a new city manager – it’s past time to discuss the effect these outrageous salaries and benefits are having on the city budget

26 Jan

When I heard Mark Sorensen is going to retire as of June, I realized that the dipshits on city council will be hiring a new city manager over the next four or five months. These people don’t have bargaining skills, they are too quick to give away the store. Historically, the city of Chico has always paid new hires more than the departing manager, for some dumb reason. Which, of course, raises the rest of the department head salaries all the way around, and hey, look out for that pension deficit increase.

I would think, the smarter thing to do would be to hire at a lower salary, with a reasonable promise of raises to come for a job well done. But it’s a common argument in the public sector – albeit tired and untrue – that “we” have to keep salaries competitive to attract better people. I always have to ask – and just how has that worked out for you? It sure hasn’t worked regarding Chico PD, horny bastards.

Meanwhile, Redding has hired a new city manager at less salary than their departing manager, with a significantly smaller benefits package (see letter below for the figures). Dave, check my math – I think they’re saving at least 10%, just in salary. I don’t know how this guy will work out, but I think it was smart of them to rein in their salaries, starting at the top. We’ll have to watch that.

Wow, that Tippin guy must have been roofie-ing the council coffee pot – a $589,000 total benefits package?

We’ll have to watch the upcoming conversation about our new city manager. My district reprobate, Mayor Kasey Reynolds, has told me she believes the salaries she and council have offered are reasonable and necessary to attract “good people” – and then she went and hired those pervert cops! And signed their contracts!

With the current political atmosphere, it’s hard to get people to pay attention to the nuts and bolts. So I wrote a letter about it!

In June 2024, Chico City Council granted two automatic pay raises to manager Mark Sorensen and clerk Debbie Presson. Sorensen was making $212,307.28, Presson close on his heels at $190,271.02. Each has received a 5% and a 7% raise over the last year and a half, setting them up for an extravagant retirement paid for by the taxpayers. Sorensen has announced his retirement as of June, and I expect Presson to make the same announcement shortly.

At last October’s Finance Committee meeting, Councilmember Tom van Overbeek commented he was concerned with the recent increase in Chico’s unfunded pension liability – from $117 million to $180 million over a short period – calling it “startling”. Where was his curiosity when he approved those automatic pay increases? The time is now to discuss the effect these outrageous salaries have on our pension liability. City employees pay less than 20% of their own pension cost, with management paying less than 10%. Now the same council that has approved these salary increases will hire a new manager.

Redding recently hired a new manager, with a new salary of $295,000 – a decrease from the former manager salary of $329,979. Will Chico follow Redding’s example, taking this opportunity to reel in the outrageous and ever-increasing pension deficit?

Ask Van Overbeek, Winslow, and Reynolds – they’re all up for re-election, which is when these people are usually most willing to talk.

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A day in the life of another, more friendly and vibrant town

10 Jan

You know I like to make my own bread, it’s way better than store bread and lots cheaper. My husband enjoys it too, so he bought us a new bread knife. Caution, sharp! I’ve cut myself with it about three times, most recently a nasty gash right across the edge of my index finger. It was a gusher, I had to use two bandages. And it keeps getting in the way – how to get around without using my hands, I haven’t figured that out yet. So it just kept getting ripped open again, getting all over the place. Like a lot of injuries, if you could just keep from using that part of the body, it would heel up in a day.

I needed a distraction. So we hit the road for Orland, a great day trip, neat little town,. We wanted to see if we could get any mandarins – too late! It’s been a tough winter for citrus farmers in Glenn County. Between that crazy fog, so wet, and then the dumping rain – mandarins are over. I was glad we’d run out to Bouldin Farms and got a few bags before the end.

But Orland still has a nice downtown, lots of restaurants and bakeries, and tons of those little “antique” stores. Yep, Orland has a penny sales tax – but like I always say, when you are paying reasonable prices, sales tax doesn’t make a blip on the radar.

Free parking! Fuck you Chico! Polite drivers – ever stepped out across Hwy 32 in Chico? You better be damn sure before you stick that foot out. In Orland they not only stop for pedestrians, they wave hello at you and you say “Thank you!”

Here’s the routine – we leash ourselves up and we hit the bakery for some dulces. We could get fat and diabetic in that town, walking out of a bakery with a full bag for less than $4. We got a huge jelly roll and a Danish, to eat while we walked around town. We already had lunch in mind for later.

I always have a list of household needs when I hit the shops. My husband and I live in a tiny space, and we always need things that help with organization. I always look for battery lights, as well as shelf racks and hangers. And I have a weakness for sweaters and other outerwear, cause it’s expensive new.

Everything at the various Downtown shops was marked down from Christmas – I found a ginchee hanging lamp for my battery candles at the first shop, marked down to $1. They had clothes, dishes, racks and cabinets, as well as other furniture, all used but in good condition, and reasonably priced. I’m not just filling my own wishes and needs – when you’re shopping at an “antique” store, you’re diverting perfectly good stuff from the landfill. One shop had an entire cart full of nice fleece blankets for $5 or less. I have to stop myself from buying things I don’t need, it’s good to have a list of what you’re looking for.

My husband always looks for tools, he’s found quite a few bargains. He has a good eye for tiny things, he found me a trivet for the oven in the woodstove, so we can heat leftovers and whatever in the woodstove. Which was also a thrift store score, one of our best.

And it was lunch time before we knew it. I don’t like Chico restaurants, but I get a craving for the Farwood Grill on occasion. They have a pickup window, super convenient. For $20 we got a huge hamburger to split between us, with a full order of really good fries. Dogs aren’t allowed in restaurants, so once we got the food in the car, we had to hold back until we made it to the city park – Orland’s version of The Plaza. No bums, no tents, no garbage, nicely maintained landscaping and big, clean tables with plenty of garbage cans, thank you!

Just as we were leaving, we saw the museum was open, and FREE!, but we had to get home. The sign says it’s open the first Friday of each month, but it was open when we were there, so I will check the website next time and I’ll keep you posted.

Call me a broken record, but I’ll say it again – Chico is in trouble, and here’s why – they have none of the above.

Sorensen flees failure – what next for Chico? What rough beast?

1 Jan

I’ve been watching on the news about Nashville, Tennessee – recovering from a bombing that was centered in their historic retail district five years ago, business owners are complaining that the city is not being helpful. Like the city of Chico, property and business owners are being hit with fees, fees, fees.

Their disaster relief money went mostly to public safety agencies, with business and property owners offered “low interest loans”.

Sound familiar? Chico was also bombed – with the COVID shutdown, the Shelter Crisis Designation, and now the failing sewer system that is running beneath our Downtown and older neighborhoods. And recovery is not even on the horizon. The COVID relief money, Camp Fire relief money – that’s all gone to salaries and pensions.

That’s what Sorensen is fleeing – total FAILURE. He’ll wear that around his neck like an albatross for the rest of his life. I predict he will move to another town, we’ll have to watch his little compound over on Manzanita to see the For Sale sign.

And now Eric Gustafson, who has been a failure as Public Works Director, is our interim city manager. Oh, God.

Safe Space Shelter? What a bad joke.

25 Dec

I think the biggest problem I have with the “Homeless Industrial Complex” in Chico is they are not interested in getting people off the street, I think it’s just a way for them to feel good about themselves without really putting themselves into harm’s way. They won’t admit that the drugs are the problem, because getting people off drugs is really too much work and commitment.

At this time my husband and I have two friends who are on the street, living off handouts from the HIC, doing drugs and alcohol on a daily basis, and scraping along to find shelter and avoid contact with the cops. They have contacted me at times when they couldn’t take it anymore, begged for help – “I’ll do anything you want!” – only to lapse back onto the street. My husband and I have contacted various local and state agencies, hospitals, counseling clinics, begging for help, but they’ve told us they are full, too expensive, or would not accept California Covered as insurance. We haven’t heard from either of our street survivors for over a year, only seen snatches of them as we’ve driven around town, heard from friends who’ve run into them, or seen their names in the police reports.

From what we’ve seen, the cops just ticket people for drugs now, take their drugs away, and leave the person on the street with a summons to come to court. We’ve taken friends to court, repeatedly – they just have a check-in system, telling the person to come back at another date, over and over. Neither of our friends have a phone, so how are they supposed to keep track of these summons? How does a person without a car get from Chico to Oroville?

We had to give one friend five rides to Oroville over a three month period, just to have the charges dropped. Not that we want our friends to go to jail – we’ve actually posted bail for people because the jail is a dangerous shithole, the overdoses, beatings and deaths don’t usually make the news. But our friend was in trouble, and he needed a referral to drug treatment. It had been that threat of going to jail that made him cooperate with us, he got off the stuff for a while, got cleaned up, ate regular meals. But, sadly, as soon as that threat was gone, he was gone. Everything we thought we had accomplished was kaput.

If you follow Butte County Accidents and Crimes, you see that there is an overdose almost every day in Chico. Sometimes you read that the “patient” was administered Narcan, and walked away refusing medical help. But too many times – right here in a town I’ve known since I was a child – the announcement that the “patient has passed…” We need intervention, not Narcan.

Last year, a boy we’d known eversince he was born died of an overdose in the porta-potty at the “Safe Space” shelter. So I tried to attend Safe Space’s “memorial for people who have died on the street” that was held Downtown on Sunday December 21. I was 20 minutes late, and they were packing it up. I saw members of CHAT and Safe Space, one woman walked over to pet our dog. We asked why the service was ending so soon – she blamed the rain.

Fuck you Safe Space – ENABLERS! You let my friend bring heroine into your “radically low barrier shelter,” and you let him go into the bathroom unsupervised with drugs, and you LET HIM KILL HIMSELF.

And then I saw a member of CHAT that I recognized, packing up his stuff, I guy who has regularly commented on this blog, championing drug addicts’ rights to live and die in their own filth on the street. Despite our numerous differences in opinion, he had always seemed friendly. I walked over to introduce myself, and I got the limpest handshake I’ve ever had. I suddenly realized he didn’t really like me. I had actually thought this person was truly interested in “helping” – no, Charles, you are just another member of the HIC, who loves to pat himself on the back and believe he is really doing something good. You are not. You are an enabler.

Patrick Newman, I read you latest missive in the Sunday paper – you are an enabler. As long as you continue to tell the youth of our town that they have the right to live on alcohol and drugs and sleep in their own vomit in the park, you are guilty of manslaughter.

These people are as bad for the “unsheltered” and our town as are the drug dealers. And they are fakes and phonies, period. Let me ask – how many times have they taken anybody into their own home, let them sleep in their own bed, fed them off their own income instead of bullying and berating those of us who are just trying to make it ourselves?

Next month will be a year since our friend died, and we expect another of our “unsheltered” friends to be very depressed about it. We routinely check the police reports – he just got a ticket for “controlled substance“. We’ve been searching town for him and we’re about at our wit’s end. Other of our friends are looking for him too, with no luck. When I emailed “Safe Space,” asking them if they had some sort of message board, I got a mailer daemon stating that the address was invalid. We’ve tried to call – the person who answered the phone was uncooperative. The are very secretive about their activities – they don’t want people to know where their clients are being housed, moving them around. I don’t know how they expect anybody who needs help to get ahold of them.

“Safe Space”, you are a very cruel and expensive joke.

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Ramin RealTalk: They got the pension, you got the bill!

18 Dec

Thanks to The Dude, for introducing me to Ramin RealTalk.

According to his youtube site, Ramin Ekhtiar is a loan officer located in California. And he’s even more pissed off about the pensions than I am. Go Ramin! Take a minute to listen to his post “They got the pension, you got the bill…”

https://www.youtube.com/@RaminRealTalk

I feel like I’m living in a zombie movie

16 Dec

Yes, I saw that Mark Sorensen is tucking his tail and jumping the ship that he has sailed onto the rocks. He’s been at the head of the ship for years – first, as city council member, then mayor, and finally, a very lucrative jaunt as city manager – very profitable for Mr. Sorensen, not so good for city of Chico. He will retire with 70% of his $211,000+ salary.

Meanwhile, those of us not hooked up to the public teat struggle to keep up with the tax increments, the petty but steady increases in our utility rates, and the ever-increasing “quality of life” crimes and gawdawful traffic. Sometimes I feel like I’m living in a zombie movie.

Speaking of taxes, my husband and I had a heck of a time paying our latest installment of property taxes this year. It’s been a long-time tradition for me to mail our property tax payment the Monday after Thanksgiving. Never had a problem. Until this year. We always use the county website to make sure that our payment has been posted by the tax collector. This year, it just didn’t turn up, didn’t turn up. So when December 10th rolled around, my husband was finally able to contact the office – our check had not arrived, and the employee recommended we just pay it online, with a fee, of course. The county employee said that if they received our check they would send it back to us. (yeah, by way of the same post office…)

She also went on at length about what a pile of shit the post office is these days. Like I need a lecture from some sack of a county worker about how crappy the post office is.

This is asinine. You take your tax payment to the post office and hand it over to the staff, and it still can’t make it to Oroville within a week and a half?

Yes, by jiminy, it’s Christmas – and we ordered our gifts online. When my son’s gift arrived here on December 9th, we realized, the size was way off – our mistake. But Amazon has a great return process. We immediately got busy with the return process, and ordered a new item at the correct size. Wow, maybe Amazon should run the post office – we received the replacement on December 12th. The package we returned was received and posted on our account by the 15th. No fees, no fuss.

Our government is insubordinate. When you look that word up you also get “churlish” – yes, public employees are just plain rooooooood!

In these days of lawlessness and disorder, we have to stick together and hold our position. My position is, I will not spend a taxable dime in Chico, or Butte County. We actually went to Orland last week to do some last minute shopping. Orderly little town, great “antique stores”, felt safe leaving our car on the street. Yes, they have a penny sales tax, but that hardly matters when you are buying tiny trifles at the thrift store. I got some incredible vintage Christmas cards and handmade soap, less than $10. Went to the Farwood Grill and where my husband and I split a ginormous BLT – local bacon, on REAL bread. Picked up 20 lbs of mandarins, small bag of meyer lemons and a $4 dozen eggs at a local farm.

Don’t just sit there. Do something.

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