I’m thrilled to see some pushback against the city of Chico’s sales tax measure. For example, yesterday and today there were letters from names I haven’t seen in the letters section before, both calling the mailed “survey” into question. I’ve seen similar remarks, some of them very angry, on various social media sites, including Newsbreak.com
There has also been a city employee named Jeremy Lazarus, who has been trolling my posts and trying to deny that the city of Chico’s biggest debt is the pensions. He’s told me I don’t understand, and I should “get a clue”. Ironically, Transparent California reports that when Lazarus was hired by the city of Chico in 2019, he already had a personal pension debt of $24,305.22, created by his abysmally low employee contributions in Glenn County. The little trough skipper.
Hey, you think Lazarus and other city employees have been told to troll the social media sites to spread the hype? While I have no evidence of that locally, I can relate that my son, when employed by a West Coast city for a short internship, was told to engage people regarding any negative information he heard about his employer, and set them straight. So I know it happens, and I won’t be surprised when I find out City of Chico employees are told same about the tax measure.
One letter writer brought up a point that also troubled me – the survey lists services that are all important, that every city needs to supply, or why be in the business of being a city? They tell us to rank these services – that’s bullshit folks, they are trying to Sophie’s Choice our asses. In the 1979 novel, later made into a very popular movie with Meryl Streep, Sophie is told she must choose between her two small children, one or the other, and that the one she doesn’t choose will be summarily executed.
The city’s survey says we must choose between essential services – “Public Safety, Addressing Homelessness*, Road Maintenance, Parks, Conservation*, and Economic Vibrancy*”. This isn’t really a choice, it’s a threat to cut one or all of these services if we don’t pony up a sales tax increase. (* These ridiculously specious terms deserve their own blog post)
Here’s what they left out – I just opened the city’s 2021-22 budget, here:
I did a routine F-search with words like “pension stabilization trust”, or just “pension”, and here’s something new I found – “CALPERS UNFUNDED LIABILITY RSV FUND” – that’s Fund 903, page 115. That is separate from the “PENSION STABILIZATION TRUST FUND”, Fund 904, page 116. I knew about the PST, and so should you, cause I’ve mentioned it here about 365 times. But wow, another fund I haven’t heard of, with a 2021-22 balance of over $11.6 million. These bastards are finding new nutshells to hide their peas under every time I turn around!
Revenue sources for this fund include transfers from the General Fund. The description for this fund – “Fund to account for annual payments of CalPERS Unfunded Liability.” Apparently, they use this fund to provide revenues for the “Pension Stabilization Fund,” out of which they make the payments to CalPERS. See what I mean about nutshells?
And how is it funded? “Each department will set aside a set percentage of payroll costs to fund the annual payment of the CalPERS unfunded liability. A target reserve of 10 percent of the annual unfunded liability expenditure will be retained in the fund.“
There it is – they’ve been TAKING 10 percent of the liability – now over $150 million – siphoned from existing funds – the road fund, the park fund, the sewer fund, etc. That’s why the street in front of your house looks like something from Downtown Kyiv right now, and the city is talking about taxing you based on the volume of water you get from Cal Water.
I guess I should thank Jeremy Lazarus for challenging me to prove this. He’s been calling me out, telling me to “get a clue.” Well, thanks, you Idiot, I got it, I got it good.
This website is operated by a well-credentialed group of individuals, out of Chicago – a city with big pension problems. It is a really good source of information about pension systems nationwide, including the federal government systems, which have driven our national debt for years. Didn’t you ever wonder how this nation could end up with such astronomical debt?
They are featuring the post I made the other day about the city of Irvine, California, and Defined Contribution Pension Plans. So, I must be onto something, these people are all financial big-shots. I don’t think they’d run it if I were shooting blanks at the moon.
We here in Chico, and all over California, have a big decision to make and we need to make it quick, before it’s made for us by a group of individuals who stand to gain substantially at our expense. If council approves the Pension Obligation Bond, it’s over Folks, we pay for these outrageous pensions. Why would Staffers who make enormous salaries care about our hardships – they want the fucking money.
Do you know how many members of council are either public pensioners or are married to pensioners? Andrew Coolidge’s wife teaches at Chico State. Sean Morgan is also employed by Chico State, as is Alex Brown. Kami Denlay (married name, Klingbeil) is married to a public safety worker.
And then there are the contributions from public employee unions – Deepika Tandon in the latest election and Kasey Reynolds in 2018 both received their biggest contributions from the unions. I’m not sure about Huber, but he’s already expressed his desire to add more taxes to your bills with as little public participation as possible.
I don’t believe people with such obvious conflict of interest should be allowed to make these kind of decisions. At the very least, they should have to declare their personal interest in furthering the POB and continuing to prop up CalPERS, an agency they all know has put us in horrible debt through mismanagement. At the last finance committee meeting, both Sean Morgan and Andrew Coolidge acknowledged that CalPERS continues to make bad investments. So you have to ask yourself why they won’t ask employees to come to the table with more reasonable contributions. And why they don’t make any effort to get out of CalPERS and ask new employees to take a Defined Contribution Pension Plan.
The main reason is that the voters don’t make it a very important issue. That’s probably because most people have no idea what’s going on. You can blame COVID, but I’d say, the public is very poorly educated as it is, and Staff does everything they can to obfuscate the issue. I’d bet my last $5 that most council members barely understand what they are doing, they are following Mark Orme into the swamp. As long as they have their fingers in each other’s belt loops, they will make it out okay.
But Chico is sinking, look around yourself. And then look at the city budget, millions of dollars that should be spent on streets and other infrastructure going to the Unfunded Actuarial Liability – their obscure term for the pension deficit. And then look at your property tax bill – if you’re a renter, ask your landlord about it.
I think there’s a letter to the editor here, I’ll have to work on it. You too.
Last time we discussed a Defined Contribution Pension Plan offered by the city of Irvine California. The city of Chico uses a Defined Benefits Pension Plan. What’s the difference? Plenty. Here’s a good read from Investopedia:
The operative words here are “Benefits” and “Contribution”. Defined benefits means, whether or not business is good, the employee gets the pension they were promised. ” Defined-benefit plans provide eligible employees guaranteed income for life when they retire. Employers guarantee a specific retirement benefit amount for each participant that is based on factors such as the employee’s salary and years of service. “
In California, the state retirement systems made “guarantees” they couldn’t keep – 70 – 90% of highest years’ pay with minimal to no contribution from the employee. ” Employees are not expected to contribute to the plan, and they do not have individual accounts. Their right is not to an account, but to a stream of payments.”
In the beginning, CalPERS even told employers they didn’t have to contribute much of anything – CalPERS said they would make wise investments, and that would pay for these crazy pensions. That didn’t work out, so the employers – cities, counties, and public agencies all over the state – are on the hook for the pensions. And they are turning to the taxpayers like Mack the Knife. See, the contribution was never defined in this plan, so it’s whatever CalPERS demands. Like a junky on the street corner, they want it NOW!
On the other hand, the most common kind of Defined Contribution Pension Plan is a 401K. “Defined-contribution plans are funded primarily by the employee. But many employers make matching contributions to a certain amount .”
In Irvine, the city put up a little over 12% of salary. The employee is allowed to contribute whatever they want, and to control the investments. An interesting notation in that agreement is that the employee must wait 5 years before they are “100% vested” in the plan, meaning, they don’t get a full pension until they’ve proven to be a good and loyal employee.
And a DCPP is less risk for the employer. “As the employer has no obligation toward the account’s performance after the funds are deposited, these plans require little work, are low risk to the employer, and cost less to administer. The employee is responsible for making the contributions and choosing investments offered by the plan. Contributions are typically invested in select mutual funds, which contain a basket of stocks or securities, and money market funds, but the investment menu can also include annuities and individual stocks.“
Both set-ups are risky for the employee. If CalPERS fails, and that’s looking more likely all the time, pensioners GET NOTHING. With a DCPP, the employee makes their own investments, if they aren’t market savvy, they stand to lose there too. But, given CalPERS’ track record, I can see where an employee would be wise to opt for a DCPP.
Why hasn’t the city of Chico (or the county of Butte, or any of the local gov agencies…) offered a DCPP? I think that’s a no brainer. The DBPP is more lucrative, as long as they can keep propping up the failing CalPERS. The most popular form of prop these days is the Pension Obligation Bond.
It’s time for The Discussion about who will pay for these outrageous pensions. Will the employees step up to the plate and do the right thing, or will council allow Staff to force the taxpayers to the wheel with new debt and higher taxes?
As far as I’m concerned, this is another reason we need to get out of CalPERS. But our council (aka Ship of Fools) is so union-friendly they would never even consider such a move. I asked them to consider some changes to the public safety contracts that came up for review at this past Tuesday’s meeting, but they just approved the MOU’s (Memo of Understanding) without a second thought.
Our council is too union-friendly. Morgan, Brown and Schwab are union members, and Stone is married to a union member. All of them depend on the union contributions at election time. So, they approve poor contracts again and again, sending us deeper into the pension pit.
This morning I read that Sean Morgan is going to run for re-election in District 1, and that a challenger has stepped forward, Curtis Pahlka. My immediate problem with Pahlka is that he works for Chico State – another union member. He also champions “public safety” – I hear another rubber stamp.
We need somebody who is willing to stand up and ask for changes to details that end up costing the taxpayers a lot of money. For example, Compensated Time Off (CTO). It’s complicated, and there will be a quiz.
Public safety employees are guaranteed a certain amount of overtime. They call it “mandatory” overtime, but that doesn’t mean the employee is forced to work that OT, it means the city is forced to pay them for it. And, here’s the thing – the department (union) demands a lot more overtime than they need, and the employee ends up with un-worked OT hours (hang on the twists get wild). The employee can choose to exchange those un-worked OT hours for “Compensated Time Off” ( CTO ). Meaning, time off with pay. Un-huh – paid for overtime they didn’t need to work in the first place.
From the recently approved MOU – “CTO shall be accrued at the rate of one and one-half (1½) hours for each hour of overtime.” That means, they get the same amount of pay for not working an hour and a half as they would have got for working the hour of OT.
Hang in there Kitty, this is like one of those tube slides at Water Works Park.
The employee can take that time off, at the discretion of their commander, OR, (pay attention and hold your nose) ” Employees may request payment for part or all of unused CTO. ” Now remember, they already got an hour and a half of CTO for each hour of un-worked OT, so they are essentially being paid for that un-worked OT.
And it just gets crazier.
“Employees who work overtime may accrue Selective Time Off (STO) in lieu of overtime payment or CTO, and may utilize such STO in accordance with the following conditions and provisions.”
These contracts have more turns than the average colon.
“STO shall be accrued at the rate of two (2) hours for each hour of overtime worked.” So, they can take time off in lieu of payment for their OT worked, but they get two hours for each hour worked. So, in this way, they get more money for the time off than they would have got for the overtime.
“Payment for Unused STO. There shall be no payment made for unused STO. Upon termination from City service, for whatever reason, or as used for an approved leave of absence, STO hours shall be converted to CTO in accordance with the formula set forth in this section, and Employee shall be compensated pursuant to Subarticle 5.3, entitled “’CTO In Lieu of Payment.’”
Did you see how they did that? They should drive for NASCAR! They won’t pay for STO, but they’ll slip it under a walnut shell like a dried pea and swish it around – in front of your very eyes it becomes CTO, and that’s as good as cash.
Here’s the point – they tack this payment onto their annual salary – this is how they spike their pensions well beyond their agreed-upon salaries.
I always have to wonder what is going through council members’ heads when they approve these contracts without discussion. Are they just stupid, do they even read this stuff? Are they so afraid of the police and fire department unions that they won’t stick up a finger of question? Do they really believe we can sustain these ridiculous pensions, or maybe they are just in denial that they have any control over it?
I think WE need to elect better people. That means being better voters and doing our homework, making our demands up front. Let Curtis and Sean know we’re done with council members that just rubber stamp bad contracts.
QUICK QUIZ:
What’s more expensive, an hour of OT or an hour and a half of CTO?
If you take one hour of OT and convert it to STO which is then converted to CTO, how many hours do you end up with?
If a CTO marries an STO, what would their babies look like?
Had to throw that last one in to make sure you’re awake!
This article makes a very important point that I never get around to making – public employees have become so expensive we can’t afford to hire enough of them to provide even the most essential services. Ever.
Radio commentator Joe Mathews uses the police as an example,
“The escalating police pensions, along with lucrative disability benefits and costly retiree health coverage, crushed city budgets. They also contribute to the ironies of the current crisis.
One irony is that today’s young protestors will spend decades paying the unaffordable retirements of the cops who are using tear gas and rubber bullets against them. Another irony is that massive increases in police budgets haven’t produced more police. Most cities have fewer sworn officers than they did in 2008. That’s why police departments are now struggling to muster personnel to protect property from vandalism and looting. “
but it’s not just the cops. Since 2012 Chico city management has pared away lower-paid staffers while raising management salaries all around. They’ve laid off maintenance workers and deferred maintenance in favor of raising management salaries. In 2017, City Manager Mark Orme added a Fund 457 to his contract – a type of 401K for public workers. In addition to over 80% of his CalPERS pension costs, the city of Chico gives Orme $10,000 + 4.5% of his $207,000/year salary via this slush fund.
Hey, did I ever tell you guys – your city council members receive salaries and health insurance benefits? The salary might not seem like much – only $600/month ($720 for mayor). But that’s the catch – they only pay 2% of their salary toward benefit packages of their choosing. According to publicpay.gov, in 2018, their benefits packages ranged from a low of about $7200 (one member) to a high of nearly $20,000 (most members chose packages over $15,000/year). Do the math – 2% of a $7200 council salary is $144 of a $20,000 package. Well, duh, of course they choose the $20,000 package. The taxpayers pay the rest.
Okay, just tell me to stop – the city of Chico also has a very common clause in the contracts, including those made with city council members, that if they have insurance from another job, they can choose between that package and the city’s package, and if they choose the package they get with their job, the city will give them cash in lieu of health insurance.
And stop right there, I already know what you’re going to ask – yes, council sets the terms of their own salaries and benefits, and of course can give themselves raises.
So when you are staring buggy-eyed at your tv, watching the world gone mad, you better wonder what’s going on at city hall.
Bob sent a link to an article from Forbes – Why California is in Trouble” It’s a good read. If you can’t make the link below work, just google the author, Adam Andrzejewski, or “Forbes, Why California is in Trouble” (Thanks Donna!)
The author, Adam Andrzejewski (Angie-eff-ski) is the CEO & Founder of OpenTheBooks.com – one of the largest private databases of government spending in the world. Andrzejewski documents salaries all over the US, and tells us, there are 340,000 public employees in California making over $100,000.
“Our auditors at OpentheBooks.com found truck drivers in San Francisco making $159,000 per year; lifeguards in LA County costing taxpayers $365,000; nurses at UCSF making up to $501,000; the UCLA athletic director earning $1.8 million; and 1,420 city employees out-earning all 50 state governors ($202,000).”
Lifeguards costing $365,000/year? You say, that’s nuts? No, it’s not. LA has miles of public beaches. Just think what would happen if CARD ran LA beaches – yeah, lifeguards would make $365,000/year. That’s what happens when nobody is watching the purse strings, except the thieves.
Right now this man, beaming like a ghoul, is running our town. Did you vote for him?
Chico City Manager (High Dollar Whore) Mark Orme at the CARD Center following the State of the City forum in January. Photo by Ashiah Scharaga
No, he was hired by the pack of ninnies we know as “Chico City Council.” We had nothing to say about his hire, and we have nothing to say about his salary – now $207,000, plus a $56,000 benefits package. We pay that, he pays another $24,000/year, and gets 70% of his highest year’s salary for the rest of his life.
While Orme boasts that he has not had a raise for several years now, he certainly managed to negotiate himself a second pension – a 457 plan, which is a special kind of 401K for public workers. Orme wormed the city into paying $10,000 a year into that fund, PLUS 4.5% of his salary. In addition to the money paid toward his CalPERS pension and health benefits.
That is why not only Chico is in trouble, but our entire state is in horrible financial straits – over generous salaries, and a crazy retirement scheme. CalPERS clients are paying less than half the cost of these pensions, with employees contributing little or nothing, but expecting to get 70% of their ridiculous salaries, with COLA, for the rest of their lives.
Ex Chico City Manager Tom Lando, for example, retired at about $134,000/year, but now makes about $155,000 – IN RETIREMENT. That’s the “cost of living adjustment” . He also gets himself hired for various interim positions – like city manager of Oroville – and those salaries add to his pension. That’s why Lando was the first one to raise the notion of a sales tax increase for Chico, and used his own money to pay for a survey to push it. He also donated $6,000 to the Yes on Measure A campaign for CARD’s parcel tax. Lando knows better than anybody that CalPERS must be funded, or he’s out $155,000/year and counting.
Essentially, CalPERS has led the taxpayers to a room full of straw and is demanding we make enough gold to keep our public workers like a pack of high-dollar whores for the rest of their lives.
Right now, the city of Chico is working behind closed doors, using ConVID to keep us out of the tax measure conversation. They’re spending taxpayer money on consultants to write the measure and strategize the campaign, just like CARD.
Don’t be discouraged by the remote meetings. I won’t recommend Chico Engaged, I’ll say, write to council members directly, and tell them we resent them spending taxpayer money on a sales tax increase when they’ve done nothing to reform the pensions and contracts.
I’ve been busy with a lot of stuff, but like I promised, I wrote a letter to the ER about Robert Koyasaki’s “Pension Time Bomb” series. I’m embarrassed – I mis-spelled Siedle through the entire post, I have to go back and fix that, sorry. But I think I got a good letter out of it – you tell me.
Cities across America, like Chico, are unable to provide basic services because all the money is going to pay for pensions. No matter how much money the taxpayers pour into this system, pension expense will continue to outstrip revenues.
Salaries are excessive. Chico city management positions pay four to five times the median income.
The city pays too little, with employees contributing even less. Until the Public Employee Pension Reform Act of 2013, management employees paid nothing toward their pensions. Now they pay between 10 and 15% of total cost, the total payment being 20 – 30%.
Pension deficit is created by agencies and employees that don’t pay enough on payroll. The excess becomes the Unfunded Actuarial Liability. Employees contribute nothing toward the UAL, which is over 65% of total employee cost. The California Rule mandates that the pension deficit must be paid ahead of everything else. For example, our finance director says we have no money to fix streets, but in July he will make the annual $9 million (and growing) payment toward the UAL.
A tax measure would be spit on the griddle in this situation. Here are my suggestions:
Negotiate lower salaries for management, or hire somebody else
Get all new employees off CalPERS, switch to 401Ks
Pay more in payroll, which would mean, ALL employees would have to pay more, even based on their current shares.
Pre-PEPRA employees should have to pay toward the UAL, or “catch up” payments – they should pay the same shares they pay toward the payroll portion.
Listening to Robert Koyasaki’s Pension Time Bomb radio show made me so mad I had to take a break. But I finally finished the discussion between Koyasaki, a real estate investor, economist Edward Seidle, and Phoenix Arizona city council member Sal DiCiccio.
DiCiccio explained that cities across America are unable to provide basic services because staffers are pouring all the taxpayers’ money into their own pensions. Because of excessive salaries, ridiculously low contribution rates, and horrific mismanagement of pension funds, the pension deficit, or Unfunded Accrued Liablity, ” will continue to climb. No matter how much money the taxpayers pour into this system, pension expense will continue to outstrip revenues.
First of all salaries excessive – our city manager, for example, at $207,000/year in salary, makes almost 5 times the median income in our area. Many economics experts, including Seidle, have said that if the salaries were more rational, the pension system would work.
Second, agencies pay too little, with employees contributing almost nothing. In fact, until Orme started paying in a few years ago, he was paying NOTHING. His predecessors, like Tom Lando, Greg Jones, Dave Burkland, and Brian Nakamura, paid nothing. Lando is now getting over $155,000/year in pension, plus COLA, having made absolutely no contribution for his entire career.
These agencies have used CalPERS like a credit card, and now they want us to pay. First of all, the agency doesn’t pay enough in total. As of now, the city of Chico is paying, depending on the employee group, between 20 and 30% of total payroll cost, with employees, also depending on bargaining group, paying between 9.75 and 15%. Finance mangler Scott Dowell said in his power point presentation that “City of Chico employees are paying, or are nearly paying, HALF of the CalPERS pension costs.” That is one of the Big Lies. See, he forgets to mention, the Unfunded Actuarial Liablity, or “pension deficit”, which is over 65% of total cost, and the taxpayers pick up that whole tab, with interest.
That UAL is created by agencies that don’t pay enough on payroll, and don’t require enough of their employees. The money they don’t demand becomes the pension deficit, and then the employees are off the hook to pay it. They contribute NOTHING toward the pension deficit, or UAL, payments, the taxpayers are stuck with the whole turd.
And then there’s mismanagement of funds. CalPERS is our pension system. They have been criticized for promising too high a return from the stock market, especially since they make horrible investments. They tell their member agencies they only have to pay so much, and then when their investments tank, they come banging on the door for more.
DiCiccio and Seidle explain that no agency requires any member of their pension boards to have any financial credentials or education – the boards are made up of union members. These people are completely dependent on Wall Street money managers.
DiCiccio says, “The wall street money managers are screwing everybody,” from the taxpayers to the employees. He gives an example, which is verified by Seidle – one Phoenix employee group paid $40 million to their money manager for a $4 million return on their investments. Seidle adds, “In the last 10 years the fees have grown exponentially because they are doing high cost high risk investments, which have much higher fees.” And there he also mentions the high risk investments – in one case, CalPERS board members were caught buying bad stocks off of friends.
So, what can we do? Unfortunately, we can’t just stop paying our taxes, that’s not going to go anywhere. Also unfortunate – most states, including California, have passed legislation that protects the pensions of those members hired before 2013. “The California Rule,” passed by the state legislature behind closed doors, says, in fact – we must pay the pensions before we pay for anything else.
Last night, watching Chico City Council’s latest remote meeting, I saw it right in front of my eyes. It was in the report Dowell made to council at last night’s remote meeting. He showed council that list of services that $taff plans to cut. One cut that was taken off the list since he made the same presentation at last week’s Finance Committee meeting was deferring payment of the annual Unfunded Actuarial Liability. That is an annual payment, the penalty for missing it would be about $355,000 in late fees. But last night Dowell said there was plenty of money to make that payment in the General Fund – $9 million. That’s just this years payment, up about $1 million from the payment I saw in last year’s budget.
Dowell, Orme, Constantin and the Public Works staff have acknowledged for about 5 years now that they have not been funding street maintenance or repairs, but they’ve never missed a UAL payment. If that’s not Mutiny folks, I don’t know what to do with my yardarm.
So here are my solutions to this mess:
Get all new employees off CalPERS and give them 401Ks
The city of Chico needs to pay more in payroll, which would mean, all pre-PEPRA employees would have to pay more, despite their ridiculous shares.
Pre-PEPRA employees should have to pay toward the “catch-up payments” or “UAL” – they should pay at least the same shares they pay toward the payroll portion.
Retired employees making more than $(??,???) per year in pension should have to contribute or lose benefits.
Thanks Dave, for sending me the link to this ongoing discussion about the Pension Time Bomb.
Robert Kiyosaki, entrepreneur, author, and radio show host, just published his latest book (co-author Ed Siedle) in January, “Who Stole My Pension? How You Can Stop the Looting” .
In this five radio part series, he speaks with his co-author, Ed Siedle, and his local city council member Sal DiCiccio (Phoenix, AR) how public pensions are ruining our economy.
Kiyosaki states what should be obvious, “This pension thing is very suppressed, people don’t know much about it. If you think COVID is big, the pension failure will be bigger.”
Yes, we’re being misled as to the enormity of the problem by public $taffers that put their own interests first. Chico City Manager Mark Orme and his Ass City Mangler Chris Constantin, along with “Services Director” Scott Dowell, have walked a tight rope – they tell us we need more revenues but they won’t say why. Even when they tell us that revenues have been ahead of budget, they keep saying we don’t have enough money to maintain infrastructure. If you pay attention, you see what Kiyosaki and his guests are saying – the city gets more revenue every year, but it’s just never enough.
Phoenix AR council member Sal DiCiccio says it very plainly. “If you see more revenues coming in to your city, and you keep wondering why your roads are looking like crap, and you believe you’re not getting the type of services you should be getting, it’s the pensions. Every city and state is on the same plan. Phoenix is a growing economy but we still have crappy roads because more and more money is being sucked into government pensions.”
Regardless of whether you live in a “right to work state“, DiCiccio explains, the unions elect all the politicians, putting millions into elections every year.In Chico the biggest donors are the Chico Police Officers Association and the Service Employees International Union – SEIU was the biggest single contributor to CARD’s ill-fated Measure A, and CPOA president Jim Parrott ran the campaign pac.
DiCiccio says “We’re becoming a pension machine, and they’re making the cities unliveable.” Next time we’ll talk about why. And get ready for the next installment in Kiyosaki’s series – “Kentucky Fried Pensions.” You can see more at his website,
Oh for cripe’s sake, another letter from the Measure A people. Like a friend of mine has observed, they are still really mad they didn’t get this measure past the voters. I was hoping they’d just stomp their foot and disappear through the floor, but you can bet they’ll be back in 2022.
Great and timely article in the Sunday, April 5 Enterprise Record regarding “No Sports.” For those of us who sports and athletics is such a large part of our lives it is hard to not get our daily “Sports Fix.” We know professional, collegiate, high school and other amateur sports will resume as we recover from this COVID-19 Virus. Our hearts go out to those directly infected with the virus and all of us indirectly affected by staying home and not participating in work or athletic activities. It is a good time to reflect on why Measure A failed and how to move our local recreation and sports programs forward.
In the beginning I was in favor of Measure A. Over the course of the campaign I changed my opinion that the measure would fulfill our facility and program needs. There are too many reasons to cite in 250 words for the failure. No sunset and a CPI were two along with few specifics on what facilities were needed and would be provided by the parcel tax if passed. CARD ignored half of the electorate when they planned the measure.
We need to analyze what facilities are really needed and what programs need to be re-energized and focused on. The October 2018 facilities assessment study should have done this but did not. It was an overall marketing study of the amateur sports market with two of the three proposals being private/public partnerships with no explanation by CARD.
— Terry Cleland, Chico
Cleland is right about the the “no sunset” and annual increase with the Consumer Price Index – the measure was bad. He is also right about the lack of specifics – the measure promised nothing, except more revenues for CARD to spend as they pleased.
But he left out the bond measure – General Manager Ann Willmann admitted several times that the parcel tax proceeds were not nearly enough to pay for any of the over-the-rainbow projects mentioned in the Measure A campaign. Willmann said they would use the parcel tax proceeds to secure a $30-something-million bond, the debt service for which would have cost $2 million a year while only providing $1 million for projects. A million dollars a year? Let me put that into perspective – several years ago, the city of Chico spent a million dollars “upgrading” the public restroom at One Mile. Get it?
Cleland also neglected to mention the pension deficit, or the fact that a simple majority measure goes into the General Fund, to be spent at the pleasure of the board and staff. He wouldn’t admit – the salaries and pensions at CARD are not sustainable, that they have bottomed out the General Fund to pay down the deficit created by their employees’ unrealistic and unreasonable “shares”. Willmann admitted many times they had deferred maintenance while paying their pensions.
I feel Cleland is trying to nudge the conversation away from the fact that CARD is poorly managed and is not fulfilling their mission statement.
Cleland attended CARD General Manager Ann Willmann’s “informational” propaganda sessions. He heard her tell the group that CARD is without debt, and he sat right behind Dave Howell as he corrected Willmann. Howell quoted the latest figure on CARD’s Unfunded Pension Liability as $2.7 million, because that was the figure Willmann had recently given the Enterprise Record. She admitted to him and the rest of us that it is actually over $3 million. How does it grow so fast? Because, only 5 years ago, agency management was paying NOTHING toward their own pensions. CARD was paying, in total, less than 10% of the cost. These agencies have put off paying the pensions, because they expect the taxpayers to foot it.
As of 2017 Willmann was only paying 2.5% of the cost of her pension, with an annual salary increase, that’s why CARD’s deficit is growing so quickly. As of 2019, she was paying 8%, with another salary increase, up to $127,000/year.
If you want to see the consequences of this kind of pyramid scheme, read the latest CalPERS “actuarial valuation report” for CARD.
Just type “Chico Area Recreation District” into the search engine.
Look at what CalPERs will expect CARD to pay in “catch up” payments within the next few years – and then remember, the taxpayers pay ALL OF IT, in addition to half the payroll contribution.
And here’s another lie Willmann floated to the public during her little propaganda blitz – she said that CARD has no control over the shares or amounts they pay to CalPERS. “this needs to be handled at the CalPERS level and the legislative level…” she lied.
Here’s two holes in that lie –
If it’s out of the agency’s hands what they pay to CalPERS, why are the city of Chico and CARD’s payments so radically different? CARD pays 14%, while the city of Chico pays 21 – 31%. You can see the city even negotiates different payments for different employee groups, as well as very different shares per employee group.
According to the report linked above, “The employer contributions in this report do not reflect any cost sharing arrangementsyou may have with your employees.” There’s the truth – Willmann told the public at those sessions that the board doesn’t have any control over the shares. Liar.
Okay, here’s where it gets even murkier – Willmann claimed in those sessions that her 8% was more than half of the agency’s cost – she bragged about that repeatedly. But, when I asked her, in front of the rest of the group, why the city and CARD pay totally different percentages, she would not answer me in the meeting, saying she needed to check her figures. No, it was because she didn’t want to tell the others the truth – her 8% is not MORE THAN half of what the agency pays, it’s not even half. She admitted to me via email later, the agency pays 17%. “The Total Normal Cost is then split in to the Employee Contribution Rate and the Employer Normal Cost Rate. I was incorrect regarding our Total Normal Cost, it is currently 17.127% for our classic members not 14%.”
Why did she tell everybody else CARD only pays 14%? Obviously, Willmann knows the truth, she knows she pays less than half, but misleads the public, because it’s in her best interest to do so.
And, here’s the real pig sticker – the taxpayers not only pay over half the payroll portion, but make the entire “catch up” payments on the resulting Unfunded Accrued Liability.
So, in answer to Mr. Cleland, I’ll say, before I would even consider a revenue measure for this sad little agency, I would demand the following (and this is just for starters) :
new general manager
Tom Lando off the board
ratify a new agreement with employees that they work toward paying more of the agency’s payroll costs (a LOT more)
ratify a new agreement with employees that they will pay the same “share” toward the “unfunded liability”, or “catch up” payments
Meanwhile, we do need to poke our legislators to dump the California Rule, and to start dissolving CalPERS and working toward a more sustainable pension system for our certainly needed but much overcompensated public employees.
Next time we’ll apply the same argument to the City of Chico, who may not be discussing their one cent sales tax increase measure in front of the public right now, but I assure you they are planning to put it on the 2020 ballot. You can find the same actuarial report for the city at the website I linked above, just punch in City of Chico.
Chico Taxpayers Association 