Chico’s Unfunded Pension Liability – the 8,000 pound gorilla in the room that none of the candidates want to talk about

13 Sep

As Dave reminded us yesterday, “the 8,000 pound gorilla in the room” that nobody will talk about in this election is the Unfunded Pension Liability (UAL).

The UAL has been created and perpetuated by the tiny shares that employees pay toward their own pensions – they pay less than 15% but expect to get 70 – 90% in retirement. That only works if somebody picks up the other 80 – 90%. They expect us to be that somebody, and I’m saying, NO!

And while the city manager claims repeatedly that “staff” has not had raises “for years”, the new police chief just got $21,000 more a year than the old police chief. Chico police officers get automatic raises, they are on a “step increase” plan. They also get to “cash out” unused overtime, sick and vacation days on a formula that actually pays them more not to work. They also use these cash-outs to “spike” their salaries and therefor their pensions.  Look at their contracts here:

https://www.chico.ca.us/post/labor-agreements

Finance manager Dowell told me, in August 2019, that city employees pay between 9.75 and 15% of their pension cost, depending on their union group. See, the city manager negotiates these contracts with each group, and then the council just rubberstamps them. It’s time for council to do some of the negotiating. And that means, we have to hold a candle to their rear-end.

Other towns are actually cutting salaries, Chico is not only raising salaries but creating new positions – the new Public Information Officer and another management position for Public Works. This is like throwing gas on the UAL fire. Another thing that goes up automatically every year is the UAL “catch up” payment.  Finance director Scott Dowell just paid almost $10 million to CalPERS. And next year he says it will be over $11 million.

Here are questions for your district candidate:

  1. What is the UAL?  (answer: Unfunded Actuarial Liability, or pension deficit)
  2. How much is Chico’s current UAL?  (the last figure I have from Scott Dowell is $128 million, I believe it’s now over $130 million)
  3. How much money did Scott Dowell just pay toward the UAL in July of this year? (over $9 million)
  4. What are the various shares paid by different employee groups? (between 9.75 and 15%, depending on employee group)

These are terms any council member or candidate should know and understand, since they agree to all this stuff when they roll over the contracts every year. If they don’t, it’s a deal breaker as far as I’m concerned, they should not be in office.  The main reason we are currently in financial trouble is ignorance of these terms. 

So don’t let the candidates tell us what the issues are in this election – don’t let them distract you with pictures of bum camps and trash piles.  Tell them, the issue is the UAL, and who is going to pay it. 

2 Responses to “Chico’s Unfunded Pension Liability – the 8,000 pound gorilla in the room that none of the candidates want to talk about”

  1. Dave September 13, 2020 at 11:59 am #

    It’s the biggest problem the city faces yet not one word from any of the candidates. Do you need any more proof that these people are beholden to special interests? They don’t represent us and never will.

    And not one word from the local media. Is that due to incompetence or are they in on it? Maybe that Carlin quote applies to this situation: “It’s one big club and you ain’t in it.”

    And not one word about this vital issue from the Chico Firsters.

    This is an issue for the ages yet there is not one word about it from the people who call the shots or want to call the shots in this little city. Amazing.

    I guarantee you that whatever shysters wind up on the city council, they will do all they can to get another sales tax increase on the ballot, and as Orme wants they will use the money from that tax increase to get us hundreds of millions more in debt so they can kick the UAL time bomb down the road a couple more election cycles. Of course it won’t be enough so they will try to raise other taxes or introduce new “franchise fees.”

    And in the meantime every year they will steal $9 million, $10 million or more for their UAL fund – money that should go for what we elect them to oversee – items such as maintenance of streets and new infrastructure.

    This is corruption, pure and simple. And one can only conclude that from their silence on the issue the candidates, their supporters and the media want the corrupt status quo to continue.

    Will the people be sheep and allow this to continue? Absolutely.

  2. bob September 13, 2020 at 12:07 pm #

    “…depending on their union group.”

    That’s the problem. The public employee unions are destroying public finance. Even if they keep raising taxes your roads will never be what they were 20 years ago. Until the public employee unions are reigned in things only get worse.

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