We need to dump CalPERS – and the first employee we need to throw out is City Manager Mark Orme

29 Jan

I’m not the only person who is anxious about the Pension Obligation Bond currently being shoved through the process by Chico City Manager Mark Orme. Here’s a note from Joe Azzarito: 

With that said, I wish to concentrate on something much closer to home – Chico city counsel’s effort to “restructure our city’s debt” with a much disclaimed process – that being pension obligation bonds, without people’s consent to boot.. 

To put this complicated action to address Chico’s unfunded pension debt of some $146 million and growing in perspective, a comparison can be made to refinancing one’s residence and using the funds to invest in the stock market, with the hope of making a killing. Financial planners will tell you to never do this. The risk of losing both the invested capital and one’s home is enormous. This is what city counselors hope to do to satisfy a need that should never have happened in the first place. Compelled to honor a salary structure and benefits to the detriment of all, except the few, is unconscionable. Contracts can be rewritten to right past wrongs. No one in a city our size needs the excessive compensation when so many more compelling needs are ongoing in this pandemic economy. Strongly urge all city employees to offer, if not forced, either pay cuts or submit to benefit payment increases as a means of paying their own way to the promised land of retirement. 

Joe is right – these contracts can be rewritten, they come up before council for consideration every year. Council has the right, under contract, to either adjust agreements with consent of employees or terminate the contract and hire somebody else.

Here’s a letter to the Marin Independent Journal that reminds us how risky these POB’s are.

(January 28, 2021 at 12:12 p.m.)

Corte Madera plan gambles taxpayer money

I am writing in regard to the article published Jan. 21 with the headline, “Corte Madera moves to refinance pension obligation.” Town Manager Todd Cusimano is incorrect by stating the issuance of pension obligation bonds is like refinancing a 20-year mortgage at 7% with a 3% rate and the difference being “savings.”

In substance, Corte Madera is gambling with taxpayer money in the stock market using margin (leverage). On Wall Street this is called the “carry trade” and is a rudimentary form of arbitrage. On Main Street, it is akin to taking out a home equity line of credit and buying stocks.

The entire reason Corte Madera has an unfunded pension liability is because CalPERS uses extremely aggressive assumed plan returns. If CalPERS fails to earn 7% going forward, then Corte Madera’s debt will grow and the forecast “savings” will evaporate.

Until citizens force pension reform, debt will continue to accumulate quietly in the background and encumber the next generation.

The past is literally devouring the future.

— Ken Broad, Mill Valley

That’s right, CalPERS assumes a high rate of return on their investments, despite years of poor returns. Read this article from Bloomberg that attempts to explain why CalPERS ends up on the shit-end of the stick, along with retirement systems all over the United States.

https://www.bloomberg.com/opinion/articles/2021-01-29/bond-yield-slump-market-madness-puts-pension-funds-in-a-risky-bind?sref=zJTivdEs

Because of an overcompetitive market, “pension funds will struggle to find assets that generate sufficient cash flows to fulfil their obligations to retirees.”

This article leaves me feeling that gambling retirement assets on the market is just an unacceptable practice. But Mark Orme continues to tell us we can’t get out of CalPERS. 

It wouldn’t be so bad if the employees were willing to share in the risks, but they expect their pensions no matter what, while making completely unrealistic contributions on their end.  Public employees expect the taxpayers to double-pay them – they expect their overgenerous salary, and then they expect it again as retirees, without chipping in Jack Shit. Like Joe says, “Compelled to honor a salary structure and benefits to the detriment of all, except the few, is unconscionable.”

The first contract that needs to be thrown out and rewritten is Mark Orme’s. 

3 Responses to “We need to dump CalPERS – and the first employee we need to throw out is City Manager Mark Orme”

  1. Dave January 29, 2021 at 6:07 pm #

    They are gambling our future away so they can have fat salaries and pensions plus other benefits.

    They call themselves “public servants,” but the truth is the only ones they serve are themselves.

    • Juanita Sumner January 30, 2021 at 6:08 am #

      Wait til you read the rest of the agenda – $32 million in Camp Fire relief. I’m hard pressed to understand why Chico gets $32 million in Camp Fire relief.

      • bob January 30, 2021 at 9:19 am #

        “…$32 million in Camp Fire relief…”

        Sorry, you misspelled pension bailout. 🙂 Although it’s not nearly enough. 😦

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