CARD pension liability as of June 30, 2014 – $1,700,721

9 Oct

Yes, that’s one million, seven hundred thousand, seven hundred and twenty-one dollars. That is the difference between what CARD owes it’s retirees, and what they have saved to pay them. In other words, CARD is $1,700,721 in the red.  For an average of 30 full-time employees, whose salaries continue to climb and who continue to pay nothing toward the fund they expect to dip into.

I got that information from CARD’s new Business Manager, who hired on at over $100,000/year plus a $30,000 package.  She reminded me that figure for their pension liability is over a year old, she couldn’t give me a newer figure, but use your imagination and whatever math skills you were able to eke out of the public school system.

This is why they want to put a bond on the 2016 ballot, not for an aquatic center, or a skate park, or a pump track – to pay off their pension debt to CalPERS.   The experts have been saying CalPERS will be bankrupt by 2043, because the pension payments are going out a lot faster than they are coming in. At CARD, they keep raising salaries, and that raises pensions, but CARD employees do not contribute anything to their own pensions or health benefits.

If you look at CARD’s budget, available here, you see in 2012, they took about $400,000 to make a pension pay-off to CalPERS. Every year, their salaries and benefits take more of the budget:

http://www.chicorec.com/About-Card/CARD-Resources/Public-Resources/index.html

Here’s how that works – the last director, Steve Visconti, made about $115,000/year salary. He left earlier this year and was replaced by a former underling, Ann Willman, at $124,000/year salary.  She receives about another $24,000 in pension and benefits, for which she pays nothing out of her salary. Out of their $6.9 million budget they pay over $5 million in salaries and benefits, mostly for their 33 full-time employees, and most of that goes to five or six top staffers. Most of the CARD employees who actually get their hands dirty serving the citizens of Chico make less than $20,000/year and get NO BENEFITS. They have to turn to the county when they need medical care. 

CARD actually creates poverty in our town, while the top management get salaries in excess of two times the median income and enjoy “Defined Benefits”.

From   http://www.qdrodesk.com/plans/CALIFORNIA-WATER-SERVICE-CO-PENSION-PLAN-15764.shtml

“CALIFORNIA WATER SERVICE CO PENSION PLAN is a Defined Benefit Plan providing retirees with a predetermined monthly retirement benefit upon reaching a specific age. The retirement benefit paid to a retiree is typically calculated using a formula which often employs years of credited service under the plan and salary information. The retirement benefit is typically payable to the employee upon attainment of their normal retirement age for the remainder of his/her lifetime. “

In the private sector, employees might be offered a “Defined Contribution Plan,” if anything:

http://www.investopedia.com/university/financialstatements/financialstatements9.asp

There are various sorts of pension plans, but here we review only a certain type: the defined benefit pension plan. With a defined benefit plan, an employee knows the terms of the benefit that he or she will receive upon retirement. The company is responsible for investing in a fund in order to meet its obligations to the employee, so the company bears the investment risk. On the other hand, in a defined contribution plan, a 401(k), for example, the company probably makes contributions or matching contributions, but does not promise the future benefit to the employee. As such, the employee bears the investment risk.”

The Investopedia article had an interesting perspective – that of the investor. The general gist of this article was this: don’t invest in companies that offer defined benefits, because you will be on the hook for paying people into perpetuity.  Why would something that is considered a bad investment in the private sector be business as usual for the public sector? 

 

 

 

 

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