The Pension Obligation Bag

15 May

Well, I must be onto something, because Chico Administrative Services Director Scott Dowell came back to my question about who manages the Pension Stabilization Trust with an order to staff to make it a Formal Request for Public Information. He threatened to make me pay 25 cents a page for anything that couldn’t be transmitted electronically. I don’t know how many of you have ever had to pay for documents, but they don’t let you pick the pages you want, they copy the ENTIRE document and charge you for every page.

Excuse me, but what a prick! You know he could have just sent me the answer, he hired them! This is just your basic intimidation.

So I wrote a letter to the editor about what I already found out.

As city staff prepares to implement Pension Obligation Bonds, there are more questions about this risky scheme.

The consultant explained that the city would issue bonds and invest that borrowed money in the stock market, hoping to make enough return to pay back the bond issue as well as make “extra” payments on the Pension Deficit. The consultant said the city might be able to get an interest rate of 3 – 4% on the bonds, which would mean staff would have to make at least twice that in their investments to achieve their farfetched goal. Failure would mean new debt, in addition to the Pension Deficit.

Staff has already established a Pension Stabilization Trust, made up of funds taken from each department by percentage. As the consultant explained, these trusts are managed by an agency which presents staff with various portfolios to choose from. At the 9/23/20 meeting, staff reported their portfolio was returning “about 4%…”, then, “3 to 4%,” finally admitting, “it may be a little bit lower right now…”

The finance reports for March 2021 show the PST returning 2.7% interest. That does not add up. Can city staff promise to do better with borrowed money? Who would borrow money at 4 – 5% interest to make 2.7% interest on the stock market?

I don’t know if staff is too concerned about the future consequences of POBs. By the time the city’s infrastructure is rotten and failing, they will all have skipped off to retirement, even other towns, leaving our kids holding the Pension Obligation Bag.

Juanita Sumner, Chico CA

10 Responses to “The Pension Obligation Bag”

  1. kerygmalori May 15, 2021 at 9:16 pm #

    Nail on the head again Juanita. Thank you!

  2. Dave May 16, 2021 at 7:30 am #

    Does anyone on the City Council know about what San Bernardino and Stockton went through with their POBs? Heck, from Morgan’s and Coolidge’s comments they don’t even understand how POBs work.

    We have ignoramuses on the Council who are lackeys of the special interests, especially the public employee unions. And they are going to gamble our money away for these special interests.

    This is what happens when you have a corrupt political system.

  3. mimsbird May 17, 2021 at 7:21 am #

    You are amazing Juanita. We have been speaking with Terry Rapoza about doing a forensic analysis on Butte County’s finances- especially regarding the Covid/Cares funds. He has been involved in the citizens’ audit of Shasta County’s finances, and he has received death threats. We are dealing with grave, criminal corruption. So many people are waking up! Thank you for all you’ve been doing to inform and lead others in this righteous crusade to hold these crooks and liars accountable.

    • Juanita Sumner May 17, 2021 at 3:48 pm #

      Thank you, this is really exciting news. The city and county and other agencies get to hire their own auditors, I always thought that was whack. Our cousin in Germany is a state auditor – he comes in without any warning, just demands the records. So I always wondered, who you gonna call – Terry Rapoza! Sounds great, please keep us posted.

    • Juanita Sumner May 17, 2021 at 3:26 pm #

      Thanks that’s an interesting take. Chico is also flush right now, $30 million over anticipated revenues.

  4. Dawn Plants May 17, 2021 at 2:36 pm #

    Spot on, Juanita. People who have nothing to hide….hide nothing. I agree with Dave, down here “corrupt” is putting it mildly. Yet the City spends $1.2M on some new “kiddy playground” with everything made of plastic, to distract residents from the planned density and height issues.

    • Juanita Sumner May 17, 2021 at 3:27 pm #

      Thanks Dawn, we have to keep being thorns in their backsides.

      • kerygmalori May 17, 2021 at 5:07 pm #

        Come to the council meeting tomorrow at 1:00. We need to BE the thorns in their backsides. Juanita, you have given us great ammunition. Thank you.

  5. bob May 17, 2021 at 7:29 pm #

    As our local rulers talk about their POB…I can’t help but remember this…

    But I suppose…in a few months…it will be “spilled milk under the bridge.”

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