Archive | May, 2021

Looks like you better get out your hip waders

11 May

As of today over 100 people have downloaded the video of the 9/23/20 City of Chico Finance Committee. Have you seen it?

https://gofile.io/d/8JVqub

I’ve got it loaded into my laptop, and have watched it myself a few times. Every time I watch it, I see something I had not seen before. This time I caught a very quick exchange between Ann Schwab and Scott Dowell regarding the earnings on the Pension Stabilization Trust (Fund 115) that Staff set up a few years ago.

As Dowell explained this scheme to me, the PST/Fund 115 takes money from every department payroll based on a percentage. The money is invested in the stock market, trying to make money for annual “extra” payments to CalPERS. Last July, Dowell reported the city made a $11.5 million “extra” payment.

The consultant who gave the 9/23/20 presentation explained that the PST/Fund 115 is one strategy to manage pension costs. He said making these “extra” payments saves the city three and a half percent (3.5%) in interest.

Schwab asked a good question – yeah, sometimes I miss you Ann – she asked, “do you know what our interest rate is on the Trust (115) funds?”

Dowell quickly replied, “they run about 4%, 3 to 4%.” Ann said, “Okay, thank you.” Followed by an uncomfortable pause, and Dowell added, “it may be a little bit lower right now…” – another uncomfortable pause – “but, but, it… it’s ran that way…”

Wow. That’s kind of troubling. The city wants us to trust them to invest borrowed money, but as it is right now, they are making investments with city funds that aren’t paying off well enough to cover the service on the money they want to borrow. Not to mention that big Elephant in the Room, the UAL. Hey, that’s what Mark Orme calls it! Staff has to make enough money off the Pension Obligation Bonds to cover both the payments on the money they are borrowing, at 3 – 4%, and the 7% owed to CalPERS. Or, excuse me, we’re going to be hip-deep in elephant shit!

I guess the consultant felt the need to come to Dowell’s rescue. But from where I stand, he just dug Dowell into a bigger hole.

With this type of trust (115), “one thing that’s different from CalPERS is that the city does have options in how to invest that money. Most of these companies that manage that 115 trust provide different options, sort of like a 401K, with like 10 different options with portfolios based on risk tolerance so a lot of them are set up so it’s not as aggressive as CalPERS so not the expectation to earn 7% but more downside protection from a market downturn.“

I hear three important points here. First, there is a company that manages these trusts, and they charge money. Second, Staff gets to decide what investments to make. Third, they aren’t going to earn 7%. And I’ll add a fourth – he admits there could be a market downturn. That’s what I’ve been seeing on the news every day lately, the market is in the red, and looking to stay there.

I will stop here, because I’m waiting for a response from Dowell – I asked him what the 115 Trust is making now. I will have to ask him who manages the fund and how much they charge.

And here’s another question: if, as Dowell reported on 9/23/20, we only had $2 million in the PST Fund 115, and we only make “3 – 4%…or “lower”, how does he plan to make the next “extra” payment?

Next time on This Old Lady Goes to the Stock Market!

Joe Azzarito: Let’s DO EQUITY, not just TALK IT!

11 May

Thanks to Joe Azzarito for this thoughtful take on city resource allocation.

The term equity has been bandied about by social progressives lately as cause for radical change in
society. By definition, equality means “the state of being equal, especially in status, rights and
opportunities.” It has to do with giving everyone the exact same resources, whereas equity “involves
distributing resources based on the needs of the recipients”.

Let’s apply these terms to City of Chico expenses, specifically to its employees’ salary, pension and other
benefits. Much has been rebutted against the use of Pension Obligation Bonds as a panacea for its
enormous and growing unfunded actuarial liability due its staff.

If we consider the most appropriate use of available revenue in the service of citizenry, it behooves the
Chico City Council to find a solution to the many ignored uses for money. The recipients of the excessive
largesse, in the form of city paid pensions, would not in the slightest be equitable when balanced off
against needs of citizens. With their six figure incomes, they can well afford to fund their own
retirement, regardless of what has gone before.

Chico’s many problems, such as affordable housing for all, street repaving, safety both from crime and
fire, should be the focused uses for reported increased revenues. The double indebtedness that pension
bonds would create, between bondholders and CALPERS, is not establishing equity. It is exacerbating the
problem. The city‘s citizens have more unmet needs, in the form of services, than well heeled staffs do.
Let’s DO EQUITY not just TALK IT!

Joe Azzarito, Chico CA

I’ll say this – the fox is in charge of the henhouse, so the fox gets what he wants, and the hens, well, they just get it.

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Watch the video – the consultant describes POB’s as “issuing debt to pay off a portion of that UAL…” Morgan and Coolidge need to have their mouths washed out with soap.

6 May

Andrew Coolidge told a room full of people that “my friend Juanita Sumner is a liar...”

A friend of mine told me, “when you call a liar who has called you a liar, a liar, it just sounds like the biggest pissing match in town…” How true. Well, get out your hip waders, cause the piss is running deep these days.

Have you watched the video of the September 23, 2020 Finance Committee meeting yet? Don’t take my word for it, watch the video. And do me a favor – if you hit this link and it doesn’t work, get right back to me at “Comments” here and I will repost it.

https://gofile.io/d/8JVqub

I wrote a letter to the Enterprise Record hoping more people would watch the video. If you watch the video, you’ll see why our clerk Spike Presson does not usually make these recordings available to the public.

Mayor Andrew Coolidge and Councilman Sean Morgan have denied that a Pension Obligation Bond is new debt.

I have a recording of the 9/23/20 Finance Committee meeting at which consultants Mike Meyer and Eric Scriven of NHA introduced the POB to committee members Sean Morgan, Ann Schwab and Randall Stone. Meyer described POB’s as “issuing debt to pay off a portion of that UAL (aka, ‘pension deficit’).”

According to Wikipedia, “a bond is an instrument of indebtedness, of the bond issuer to the holder.” Investopedia defines “issuing debt” as “a financial obligation that allows the issuer to raise funds by promising to repay the lender…”

Meyer described a scheme by which bond issue (borrowed money) would be invested in the stock market, in an attempt to make enough money to pay both the bond debt and the UAL.

The consultants pointedly ignored the obvious solution – employees need to pay more. Currently they only pay between 9 and 15% for pensions of 70 – 90% of salaries of over $100,000/yr.

City leaders also need to better manage employee costs. Even while UAL payments have increased by millions, at the cost of city infrastructure and services, the UAL has grown 43% over 5 years. Instead of observing attrition measures recommended by the Government Finance Officers Association, management has added three new management positions, raised the police chief’s salary by $30,000/yr, and raised the clerk’s salary by $10,000/yr.

POB’s are a crackpot scheme at best and Coolidge and Morgan should be ashamed for perpetuating misinformation.

The video is available at https://gofile.io/d/8JVqub

Juanita Sumner, Chico CA

Business as Usual at the City of Chico: Pass a new tax without voter approval, spike your pay like the retiring city clerk, hand the bag to the taxpayers! And only then do they “open” the meetings…

4 May

A couple of members of Chico Republican Women Federated recently told me that Mayor Andrew Coolidge, speaking to an unmasked assemblage of the club, called me a liar, in exactly those words. He says the Pension Obligation Bonds are “not new debt.”

Hey Jackass, trying to “cancel” me? Well here’s the video of the September 23, 2020 Finance Committee meeting at which the city’s consultant said exactly the opposite.

https://gofile.io/d/8JVqub

I’ll tell you something else – ever since Dave Howell posted that video at Gofile, it’s been repeatedly removed. I don’t know by whom, but the “remove” button is right there at the bottom of the screen. Obviously, somebody doesn’t want the citizens of Chico to see this meeting. In fact, I think it was a total mistake that I got a recording of it – I asked a lower level staffer and she gave it to me. But now the clerk – who will be getting a salary spike of roughly $10,000 at tonight’s meeting, in anticipation of her pending retirement – says they don’t record the meetings because they aren’t required by law. That’s not true, they record the meeting so they can produce the minutes – how do you think I got the recording? Then they show the minutes to full council, who are allowed to redact comments and who knows what, and when she’s done “amending” the minutes, she tosses that recording so nobody will be the wiser.

Tonight she’ll spike her salary up to $144,000+ a year, like they all do. She’ll receive 70% of that figure in retirement. I’ll admit, she’s pretty good at her job, but she’s better at looking out for her own interests than those of the public.

So, there it is. They got their Pension Obligation Bond and now the spiking begins. They will make no real attempt to control employee costs – why bother? They’re on The Gravy Train now!

But, what they won’t admit, is that there’s trouble on the horizon if they can’t get the sales tax increase that Andrew Coolidge is pushing. He wants a separate road bond too, because, as he already acknowledged, the sales tax revenue will be used to secure the POB. The consultant made it pretty clear – watch that video – they will need a revenue stream to secure the bonds, because the market is tricky, and they may not be able to earn enough in investments to cover either the POB. OR! the pension deficit. See, their investments have to pay off well enough to pay both the bond service AND the pension deficit, or this whole plan is BUST.

Dave Howell watched the meeting and then wrote a good analysis of what’s happening:

That finance meeting WAS PACKED with crazy and outrageous information. And the local media DIDN’T MENTION ANY OF IT!

Here are some key takeaways the local media should have covered:

Last year at this time we thought the unfunded pension liability we were on the hook for was $128 million. Well, this year the bureaucrats and consultants say $146 million. AND NOW THEY TELL US WE OWE ANOTHER $140 MILLION IN INTEREST! But these numbers are low because they don’t include the 4.7% under performance from last year and also the prior year’s under performance. IT IS OBSCENE! WHERE THE HELL IS THE LOCAL MEDIA ON THIS?

UAL for CalPERs is 146.3 million which is a 43% increase over the last 5 years. UAL payments are now 9.9 million in 2021 and will grow to 13.2 in 2026. And remember this is assuming an unrealistic 7% CalPERs return. In all likelihood this number will be even worse as over the last 20 years CalPERs hasn’t come close to 7%. CalPERs return has only been 5.5%.

The City’s pensions are only 67% funded.

In addition to leasing the streets Morgan talked about the possibility of leasing the airport! WHAT A SCAMMER!

What was just as revealing was after the snake oil consultants left the meeting. Dowell went into the June and August financial statements. (What happened to July?) The city’s cash flow is up OVER $30 MILLION from last year resulting in an $8.8 million surplus! (You would think with a 30 million increase in cash flow the surplus would be even more.) And it sounds like these numbers will probably increase over the next few months. It turns out that despite the doom we were told the COVID crisis would have on the City’s finance, the crisis has generated a huge windfall for the City, similar to the Camp Fire situation.

Naturally, they didn’t even think of giving any of the surplus back to the taxpayers or using it to fix the streets. They are pigs at the trough and will take everything they can get, so even with millions in surplus you can bet they will be talking tax and fee increases next year! It just shows that no matter how much money they take, all of it and more will be devoured by pensions, other post employment benefits and raises. These people are parasites and they will bleed the people of this community dry! DON’T LET THEM DO THIS TO YOU!

And thanks Dave, for bringing up that $30 million “surplus”. What happened to that? Slight of hand? Peas and walnut shells? That’s Business As Usual at the City of Chico!

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