O-ville talking bankruptcy? Time for public employees to take a walk in “the real world”

30 Sep

Thanks again Dude, for this link – I’ve been too busy to read the papers lately, get a load of this story from the Oroville Mercury Register – Oroville going bankrupt?

http://www.orovillemr.com/article/NB/20170927/NEWS/170929752

“The city’s finance director Ruth Wright told the California Public Employees’ Retirement System (CalPERS) finance and administration committee last week that the word “bankruptcy” was being thrown around, though not at council meetings.”

Not at council meetings? Council still in denial? Well, here in Chico, we have a $186 million deficit, and council is fully aware. So they handed out raises to top management! Now that’s a plan!

“The city [Oroville] cut down its $1 million deficit to achieve a balanced budget this year but is not exactly thriving financially, operating with low staffing levels and recently negotiating a 10 percent pay cut for police, with more negotiations to come.”

A 10 percent pay cut for police? You could expect Chico PD to walk out on any such negotiations – they threaten to cut service – which is essentially a STRIKE – if they don’t get raises.

Oroville’s finance director Ruth Wright says CalPERS is the problem and CalPERS needs to fix it.

“’All cities and counties cannot keep up with the increases,’ she said. ‘I think it’s up to them (CalPERS). They need to do something. They need to do a better job investing.’ The organization announced in December that discount rates would drop from 7.5 to 7 percent over the next three years in an effort to make the fund more stable, but with impacts to state and local governments.

“’CalPERS has a few levers to pull in dealing with pensions, having to do with discount rates,” said Wayne Davis, head of public affairs for the pension fund. “We’re very much aware of what lowering the discount rate means.’”

Well,  “we all” don’t know what he’s talking about – “lowering the discount rate…”

From CalPERS – straight from the horse’s ass –

https://www.calpers.ca.gov/page/newsroom/calpers-news/2016/calpers-lower-dis

“Lowering the discount rate, also known as the assumed rate of return, means employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1, 2013, under the Public Employees’ Pension Reform Act will also see their contribution rates rise. Normal cost is the cost of pension benefits for one year.”

Remember, I asked Chico Unified School District finance chief Kevin Bultema about this, right after the passage of Measure K in last November’s election, and he said the district would need to find more funding to pay pension costs or cut programs for the kids.

So, of course, this means a bigger deficit for Oroville, and don’t forget Chico.

“Oroville’s finance director said the number of city representatives coming to confront CalPERS has been growing. At the meeting last week, officials from cities such as Chico, Santa Rosa, Laguna Hills, Lodi, West Sacramento, Vallejo, Yuba City, Hayward, Manteca and Concord were there. A legislative representative for the League of California Cities also participated.”

Well, that’s funny – this hasn’t come up in the Chico paper, which is edited by the same David Little that edits the Mercury Register. Neither have we talked as a town about the $186 million deficit, or the $500,000/year “side payments” (in addition to the regular premium payments), which will balloon to over $1.5 million/year within the next three years.

And the sky is the limit, since our elected morons – both Chico and Butte County – keep giving out raises as though everything’s just rainbows and lollipops. They’ve acknowledged the mess we’re in – because they want us to pay more taxes.

The reporter finally talked to Chico finance mangler Scott Dowell – formerly with Chico Area Recreation District, which has a $1.7 million deficit for less than 35 employees. Dowell doesn’t think Chico will go into bankruptcy, but has been trying to work with CalPERS.

“Dowell was hoping the pension fund representatives would do some research on the possibility of freezing cost-of-living adjustments, meaning retirees would receive a flat rate every year. They would no longer receive additional money — currently up to 2 percent of their annual salaries — to account for changing inflation.

The other concept was switching all employees onto the same kind of pension plan as employees who started after Jan. 1, 2013. The Public Employees’ Pension Reform Act went into effect then, offering fewer benefits to new employees. That could mean the difference between retiring at 55 and 62, Dowell said.”

Both no-brainers as far as I’m concerned, and “the way it works in the real world”.

 

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5 Responses to “O-ville talking bankruptcy? Time for public employees to take a walk in “the real world””

  1. Jim September 30, 2017 at 6:59 am #

    This article talks about how dire this problem is for cities.

    “by fiscal year ’27-’28 as much as 94 cents of every current dollar of payroll will be allocated to CalPERS contributions.”

    That is just 10 years away!

    Chico is just burying it’s head in the sand. Of course the fat cats will be retired by the time the shit hits the fan.

    http://reason.com/archives/2017/09/29/cities-facing-fiscal-mess-plead-with-cal

    • Juanita Sumner September 30, 2017 at 7:41 am #

      Thanks Jim I’ll have to blog this separately

  2. bob September 30, 2017 at 8:34 am #

    Here in Chico, we have a $186 million deficit, and council is fully aware. So they handed out raises to top management!

    It’s completely insane. Who are the idiots who vote for these people?

    It is quite clear the corrupt politicians and bureaucrats plan is to let the roads and everything else fall apart and do all they can to raise taxes and “fees” and go deeper in debt through more bonds so these criminals can continue to feast off the taxpayers.

  3. bob September 30, 2017 at 8:42 am #

    They need to do a better job investing.

    And this woman is a finance director? That’s scary. She is clueless or so partisan she can’t think straight. Calpers 7% “discount rate” is still insanely high. There’s no way Calpers or any other pension is going to get that or anything close to it. The markets are a house of cards due for a serious down turn. Just wait until the next bear market takes a bite out of Calpers.

    But I guarantee you what will get discounted is our pay checks and bank accounts as the politicians raise taxes and “fees” to try to paper over the inevitable.

    • Juanita Sumner September 30, 2017 at 9:02 am #

      Yeah you got that – at first I wanted to salute this gal – but that’s her best shot? Would she be willing to pay more out of here check? No, she and her co-workers first tried to raise sales tax and then cut services.

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