I wrote to Chico Administrative Services Director Scott Dowell the other day and asked him what is the current interest return on the investments that have been made with the Pension Stabilization Trust. Remember, the PST is made up of “allocations” (stealing) from all the other city department funds, a percentage of department payroll. The money is invested in the stock market, very much like the proposed Pension Obligation Bond scheme.
I was kind of perturbed when Dowell responded with a 265 page download, telling me, “The information you want is on page 264…” You know he knows the exact figure, he just doesn’t want to admit it. I think, frankly, he’s in denial, he’s desperate to get council to agree to this.
But there it was, and I can see why he’d have trouble actually saying it, or even typing it into an email – it’s kind of embarrassing. Especially when he is trying to convince city council to go along with the POB scheme. See, if they don’t make enough money off investing the BORROWED money they will get from the POB holders, gee, they not only won’t be able to make those “extra” payments toward the Pension Deficit, but they won’t be able to pay back the bond money either. Oh my goodness, you know what that means – another day older, and deeper in debt.
New debt.
Here’s the bad news – the PST has only been returning 2.7%. With an investment of $1,868,000, taken from the streets, sewer and other city funds, Staff got $3,887. Three thousand, eight hundred and eighty-seven dollars. Staff reports our “extra” payments, now $11.5 million, will be $13 million within a few years.
I know, I’m starting to sound like a late-night waterbed salesman, but I’ll say it again – watch the video!
The consultant from NHA spoke of borrowing bond money at 3-4%. CalPERS, to whom we owe a whopping $146 million, charges 7% interest. Dowell reports we get a 3.5% “discount” for making those “extra” payments, but I’m not sure how that works. The PST is only returning at 2.7%. The market, volatile for a year now, is not looking good lately.
https://www.cnbc.com/2021/05/11/stock-market-futures-open-to-close-news.html
This POB plan looks more ludicrous every day.
I also asked Dowell who manages the PST and how much do they charge. That’s another issue – these investment firms charge high fees, how much do they eat? We’ll see if he gets back to me there.
Dear Juanita and Taxpayer-hawks. The POB’s are a crap game that will be played with taxpayer money. The biggest player is Police Chief Matt Madden. Chief Madden is always asking for more cops and he just got a huge raise. Your city budget is dominated by the police department expenses and Madden wants that domination to increase. There is a reason why the word “PLAY” is in the cliche “PLAY the stock market.” The definition of the word “PLAY” in the Merriam-Webster dictionary includes the words “GAMBLING and GAMING.” Do you want Chief Madden and his cronies at city hall PLAYING THE STOCK MARKET?
https://www.propublica.org/article/how-the-federal-reserve-is-increasing-wealth-inequality?utm_source=sailthru&utm_medium=email&utm_campaign=dailynewsletter&utm_content=feature#
When the Fed quits propping up the stack market with low interest rates, there will be a major correction…a downturn. The POB will plan will backfire. The business cycle is just that, a cycle. Whatever goes up must come down. Taxpayers cannot risk “playing” the market. The city has to live within its budget. The attached ProPublica article points out the volatility of politics and the government manipulation of the stock market.
Thank you Scott, I feel this is the obvious takeaway from the whole conversation. I just don’t know how to get my council members to listen.