Listening to Robert Koyasaki’s Pension Time Bomb radio show made me so mad I had to take a break. But I finally finished the discussion between Koyasaki, a real estate investor, economist Edward Seidle, and Phoenix Arizona city council member Sal DiCiccio.
DiCiccio explained that cities across America are unable to provide basic services because staffers are pouring all the taxpayers’ money into their own pensions. Because of excessive salaries, ridiculously low contribution rates, and horrific mismanagement of pension funds, the pension deficit, or Unfunded Accrued Liablity, ” will continue to climb. No matter how much money the taxpayers pour into this system, pension expense will continue to outstrip revenues.
First of all salaries excessive – our city manager, for example, at $207,000/year in salary, makes almost 5 times the median income in our area. Many economics experts, including Seidle, have said that if the salaries were more rational, the pension system would work.
Second, agencies pay too little, with employees contributing almost nothing. In fact, until Orme started paying in a few years ago, he was paying NOTHING. His predecessors, like Tom Lando, Greg Jones, Dave Burkland, and Brian Nakamura, paid nothing. Lando is now getting over $155,000/year in pension, plus COLA, having made absolutely no contribution for his entire career.
These agencies have used CalPERS like a credit card, and now they want us to pay. First of all, the agency doesn’t pay enough in total. As of now, the city of Chico is paying, depending on the employee group, between 20 and 30% of total payroll cost, with employees, also depending on bargaining group, paying between 9.75 and 15%. Finance mangler Scott Dowell said in his power point presentation that “City of Chico employees are paying, or are nearly paying, HALF of the CalPERS pension costs.” That is one of the Big Lies. See, he forgets to mention, the Unfunded Actuarial Liablity, or “pension deficit”, which is over 65% of total cost, and the taxpayers pick up that whole tab, with interest.
That UAL is created by agencies that don’t pay enough on payroll, and don’t require enough of their employees. The money they don’t demand becomes the pension deficit, and then the employees are off the hook to pay it. They contribute NOTHING toward the pension deficit, or UAL, payments, the taxpayers are stuck with the whole turd.
And then there’s mismanagement of funds. CalPERS is our pension system. They have been criticized for promising too high a return from the stock market, especially since they make horrible investments. They tell their member agencies they only have to pay so much, and then when their investments tank, they come banging on the door for more.
DiCiccio and Seidle explain that no agency requires any member of their pension boards to have any financial credentials or education – the boards are made up of union members. These people are completely dependent on Wall Street money managers.
DiCiccio says, “The wall street money managers are screwing everybody,” from the taxpayers to the employees. He gives an example, which is verified by Seidle – one Phoenix employee group paid $40 million to their money manager for a $4 million return on their investments. Seidle adds, “In the last 10 years the fees have grown exponentially because they are doing high cost high risk investments, which have much higher fees.” And there he also mentions the high risk investments – in one case, CalPERS board members were caught buying bad stocks off of friends.
https://www.breitbart.com/local/2016/06/03/former-calpers-ceo-sentenced-4-years-taking-huge-bribes/
So, what can we do? Unfortunately, we can’t just stop paying our taxes, that’s not going to go anywhere. Also unfortunate – most states, including California, have passed legislation that protects the pensions of those members hired before 2013. “The California Rule,” passed by the state legislature behind closed doors, says, in fact – we must pay the pensions before we pay for anything else.
Last night, watching Chico City Council’s latest remote meeting, I saw it right in front of my eyes. It was in the report Dowell made to council at last night’s remote meeting. He showed council that list of services that $taff plans to cut. One cut that was taken off the list since he made the same presentation at last week’s Finance Committee meeting was deferring payment of the annual Unfunded Actuarial Liability. That is an annual payment, the penalty for missing it would be about $355,000 in late fees. But last night Dowell said there was plenty of money to make that payment in the General Fund – $9 million. That’s just this years payment, up about $1 million from the payment I saw in last year’s budget.
Dowell, Orme, Constantin and the Public Works staff have acknowledged for about 5 years now that they have not been funding street maintenance or repairs, but they’ve never missed a UAL payment. If that’s not Mutiny folks, I don’t know what to do with my yardarm.
So here are my solutions to this mess:
- Get all new employees off CalPERS and give them 401Ks
- The city of Chico needs to pay more in payroll, which would mean, all pre-PEPRA employees would have to pay more, despite their ridiculous shares.
- Pre-PEPRA employees should have to pay toward the “catch-up payments” or “UAL” – they should pay at least the same shares they pay toward the payroll portion.
- Retired employees making more than $(??,???) per year in pension should have to contribute or lose benefits.
Let me know what you think.
Chico Taxpayers Association 
Calpers is an out of control train looking for a location and time to crash.
Hi Juanita You have the right idea to get the retirement system under control with new and recent hires. The employees should contribute to their retirement and have a matching contribution from the taxpayer, say 5% of salary, i.e., the employee making $60,000 gross a year who puts $3,000 into their 401K, and the taxpayer contributes $3,000 match. This money goes into the stock market and is self-directed by the employee who can hire an advisor…. at their discretion and expense. NO GUARANTEES as to the eventual retirement amount…..the guaranteed amount plan has to end with all newer employees.
If the employee works for the city 30 years and keeps contributing and allowing the stock portfolio to grow with the ups and downs of the market then like a private worker they should come out with a nest egg to support their personal savings. If they are smart and buy a home with a 30-year mortgage then that would be free and clear. The result is a comfortable retirement, not a golden parachute. This is not brain surgery! However, your city, like my city management team, all want to win the lottery when they retire at taxpayer expense. NOT SUSTAINABLE. Gov Newsom and his progressives better do their job and keep the state financially solvent…..right? Scott
On Wed, May 6, 2020 at 2:53 PM Chico Taxpayers Association wrote:
> Juanita Sumner posted: “Listening to Robert Koyasaki’s Pension Time Bomb > radio show made me so mad I had to take a break. But I finally finished the > discussion between Koyasaki, a real estate investor, economist Edward > Seidle, and Phoenix Arizona city council member Sal DiCiccio” >
Thanks Scott – Golden Parachute, that’s a good one!
The unsustainable pensions and other post-employment benefits will always be the top priority of the city council. It always has been. If you doubt that just look at the roads. They will let the most basic functions of government go to h#ll in a futile attempt fund the unsustainable pensions.
And they will take every penny from us they can to keep this up. That was what the garbage tax was all about, it’s what CARD’s tax was all about and it’s what the sales tax increase is all about. But the media will never tell you that. And instead they will endorse the sales tax. Wolcott said so in so many words last year. I don’t understand why the Safe Chico and Chico First people do not seem to be interested in pension reform. As long as pensions are first, Chico will never be first.
The Safe Chico, One Chico and Chico First people are badge bunnies. They work for Chico PD, not for the community.
For example – lawyer Rob Berry, of Chico First, posted a long-winded speech about how the Chico Chief of Police holds an obligation not to City Council but to the law. He can enforce the no camping and other laws any time he wants, just like they do in Redding. But the chief DOESN’T enforce the laws, he sits there wringing his hands and saying he can’t. Let’s face it – Fat Ass O’Brien only took the position to spike his salary, he’s just another spiker in Spike Town. So how do Chico First, Safe Chico and One Chico respond? They get in their gas-guzzling polluters and circle city hall like a bunch of smelt, honking their horns – All Hail The Chief!
Anybody who uses Facebook, excluding others from their conversation, is full of shit as far as I’m concerned.
Government will do anything to safeguard their holier than thou power. And in Chico, it means screwing the masses for the sake of a few. The California Rule must be overturned somehow, that might be where we can see some success in local politics. Their cover will have been blown and they will have no choice but to accede to public outcries to do the right thing – fix our streets, improve lighting, tighten not loosen accountability for crime and public space destruction, etc.
The love fest between council, city staff and their union representatives must be ended. Conflicts of interest, involving which responsible group is charged with setting salaries should transfer to the voting public (those that pay). Just as in tax increase measures requiring voter approval, so should salary settings be for city employees. Currently, we have no say yet we pay, either through taxes or through services not performed.