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The Homeless Industrial Complex is a failure – how many people will die on Chico streets this winter despite all the money shoveled into the system?

30 Nov

The headlines were conflicting this week in Chico – Black Friday shopping, Thanksgiving fun run, community meals, city setting up a “warming tent”, and a woman found dead along Lindo Channel.

Knowing how extensive our “homeless” services are here, I have to wonder – how does this happen?

The city and county continue to bumble the whole operation. We have services, plenty of them, but they are not coordinated, often compete for funding, and work toward their own instead of the public’s best interests. For example, Tom Tenorio gets a very generous salary out of the Esplanade House, even taking one of the apartments intended for housing a family to supplement his office. I’m reminded of a scene from Doctor Zhivago: “All this office, for just one fat-cat bureaucrat!

There’s alot of competing for funds and in-fighting in the Homeless Industrial Complex. They fight over money like crows fighting over road kill. When Stairways manager Mike Madeiros made a decision not to accept a grant because it would mean allowing transgender individuals into his shelter, Tenorio went on the warpath, complaining that they would lose that grant because Madeiros had refused it. Wow, that was an eye opener about the way these “non profits” are operated – too bad so few taxpayers were paying attention.

We also have disagreements over who will be served.  Madeiros was uncomfortable with allowing transgender or women in his all male shelter, worried about conflicts. Some shelters will not accept inebriated people, so CHAT (Chico Housing Action Team) has had set up “low barrier” shelters in houses around town. The city offers a warming tent, set up this weekend, that is supposed to be open to anyone who is cold. So far these tents have served less than 20 people a night, including city officials  and staffers.

And now Chico Housing Action Team wants to install “elderly” transients in Tough Sheds in a field along the freeway. 

All these programs are competing for money. And, as of this weekend, they are failing in their mission to get people off the street. 

In Chico we have many “low-income” subsidized housing projects. I just found out a huge old apartment building around the corner from one of my rentals is owned by HUD.  We have newer stuff, like Jarvis Gardens in south Chico, and 1200 Park Avenue, both built to house low-income seniors. These are public projects, paid for with tax dollars. 

But again, there is a lack of coordination. The Camp Fire is a good example of how these agencies have failed – here we had truly needy people, a natural disaster, and we couldn’t house them? But we spend millions a year on programs set up for drug addicts and criminals? 

CHAT proposes little sheds built on an empty lot along the freeway. These people are duplicitous. They already run low-barrier shelters in homes spread out across Chico, no noticing of the neighbors – CHAT knows they need to keep this project a secret. They have nothing to crow about – no list of names of people permanently taken off the street into stable housing. No success stories. And every year, several people die out on the street, regardless of all their feel-good fascism.

Now they want to build a project with city support –  they’ve already racked up a pile of $taff Time with their demands.  They want to be let out of the regular building process, sub code, no environmental review, NO FEES. And they are not being honest about how much it will cost to provide sanitary infrastructure. They first said there would be a common bathroom – now they show us plumbed sheds with toilets? Those will all have to be hooked up to sewer, which is not available on the property. There isn’t even water or electricity on the lot. 

But when my family bought a crapped out old house, the city and county, the school district, CARD – they all wanted to get their thumb in our pie, with all kinds of fees and constant inspections. The code enforcement officer, without so much as a smile, told us we had to put more Dap on the toilet because we had male children. She demanded a ladder to climb up on our roof.  She told us we had to  tear down an old building on the property before we could get clearance on the house.  And then she told us the tear  down required yet another permit. 

This is how taxpayers get treated. 

The city of Chico is a mess. Our finances are in the red, we have constant threats of bankruptcy, although, you will only hear about these problems in Chris Constantin’s pitch for a sales tax increase. Constantin and Orme are walking a fine line – trying to tell us what a mess our city is in without taking any blame for that mess.  For years they’ve mismanaged our money, putting most of it into their salaries, pensions and benefits, admittedly deferring maintenance on city infrastructure all the while. Management salaries are at an all time high, and Constantin admitted recently we spend more on cops than other California cities our size. 

The transient problem is just another part of the mismanagement. They allow these bums to trash our parks and creeks, predate on our neighborhoods, and spread drugs to our kids because they are a revenue source. When the city council signed the Shelter Crisis Designation, they got an annual grant worth over $4 million. They got another $4 million for handing part of the county fairgrounds over to the Jesus Center. That’s an annual grant, and it will go up. And they don’t have to spend it on the “homeless”, it just goes right into the General Fund. 

Just like the proposed  sales tax increase. 

So, we need to ask ourselves – why would we hand a tax increase to Mark Orme and Chris Constantin?  They stand over this whole mess, it’s their recommendations that council follows, dumb and blind. The best argument against this sales tax increase is our current management, and how they have mismanaged millions already.

Joshua Rauh: Public Pensions are an economic time bomb, and young people will be at the epicenter of the blast

24 Nov

Bob sent a link to a really interesting video that explains the “pension time bomb” in language the average person can understand.

https://www.prageru.com/video/public-pensions-an-economic-time-bomb/

Josuah Rauh is a professor of finance at Stanford School of Business, Director of Research for the Hoover Institute, and has written extensively on the nationwide pension problem. I love his no-nonsense style. This problem is really simple.

Rauh doesn’t mince words.  “I want to talk about three words that should scare the heck out of you, especially if you’re young. PUBLIC PENSION LIABILITIES”

He’s absolutely right, young people will be left holding the bag.  To quote Chico City Manager Mark Orme and Assistant Manager Chris Constantin, this city has “kicked the can down the road” on infrastructure maintenance  for many years. What neither man mentions is that the city has continued to pay increasing salaries and benefits for city management. They both lie through their teeth, claiming to have “stopped the bleeding…” performed “a miracle”. In truth they have both taken very generous pay raises and have already added a 401k plan to their already generous pension packages. More about that later.

So, our kids will get stuck with failing infrastructure and the billions in taxes it will take to fix it. Not to mention, paying for generations of public workers, like Orme and Constantin,  allowed to retire at age 50 – 55 with well over $100,000/year in pension.

Unfortunately, this is a message that mostly falls on deaf ears. Rauh continues, “that’s why all of this is so scary – no one is paying attention.” Well, in defense of the average citizen – myself – I’ll say, it’s been made complicated on purpose – go to a meeting, and listen to staff make it as convoluted as possible. 

Rauh puts it in simple language, as if he is explaining this to someone from another planet, who has never heard of such a ludicrous policy. “What is a public pension liability,” he asks rhetorically. “A guaranteed lifetime payment to somebody after they retire.” That seems simple enough, but the important word here is “guaranteed“.

Years ago,  private sector workers got pensions, but private businesses were not able to keep up with the costs associated, and either dropped their pensions plans for 401K’s or went under. Right now, once giant media conglomerate McClatchy (which formerly owned newspapers and tv stations all over the state), is going under due to unfunded pension liabilities. 

McClatchy’s financial distress has the company exploring options — including a sale

 

But public workers will not cooperate, they demand to keep their guaranteed pensions.  According to public employee unions,  no matter how the economy tanks, they get their money. While CalPERS promised to fund these outrageous pensions via investments in the stock market, they have failed miserable, and now they are laying the bag at our feet. 

Rauh continues, “They are eating state and city budgets alive… more than 62,000 retired public employees are receiving pensions of over $100,000/year…  Currently many cities are paying for multiple public departments at the same time, the department that’s working now, and (due to people living longer) a generation of two of public employees.” Estimates of the state’s total unfunded pension liability go over $200 trillion. 

The problem, he says, is “a corrupt merry go round  – public employee unions give donations to candidates who are then responsible for negotiating how much of your money  goes  to public sector workers“. In Chico the biggest donors in every local election are the employee unions, usually led by Chico Police Officers Association. 

The other problem is, “they hide the payments that are  due down the road.” Here in Chico, you have to know the right question to ask, in the proper vernacular, or they just ignore you. You have to watch agendas and read onerous reports printed in the smallest typeset available, sideways on the page. 

You have to be forward with these people.  Even when Dave Howell corrected CARD General Manager about their pension deficit, Willmann overstated employee contribution figures at the informational meetings. She corrected herself in an email when I questioned her about it later, after she’d already been misinforming people for weeks. She made no attempt to correct herself publicly, even after I wrote a letter to the paper about it. 

Rauh points out same. “How do they get away with this? They use a time tested political strategy – they lie.

The first, big lie was that they could pay for these increasingly generous pensions, “not by collecting taxes but by making investments.” Then they went about raising the roof on salaries. For example, former city manager Dave Burkland left in 2012 at $130,000 base salary. His replacement, Brian Nakamura, came in at $219,000. About a year later, Nakamura left for another job, and his assistant manager Mark Orme, also his former assistant in the city of Hemet, replaced him at a salary of $205,000. Now Orme enjoys a base salary of $223,000/year, with a benefits package of over $42,000. 

CalPERS keeps claiming a return of 7% on their investments. But, as Rauh says, ” it’s less and less likely that they will make their investment assessment, because they do risky investements.” So, why, oh why, does our council keep agreeing to annual pay raises for Orme and other management? Why did they give these people, in addition to their costly and generous benefits packages, 401k plans complete with an employer share? 

The problem is the salaries are too generous for the taxpayer to ever be able to guarantee 70 – 90% in retirement. Rauh says, “We need to turn things around using public pressure, discipline and common sense.”

Public pressure – read agendas and reports, do some simple research, and contact your elected officials to tell  them what you know about this problem. Some of our city council members seem genuinely clueless, willing to be led by  staff instead of the people. It’s time for the people to lead.

Discipline – I mean, really, read the damned agendas, read the reports, look up stuff you don’t understand, ask questions. Don’t let yourself believe you can’t make a difference, but yeah, it’s a lot of hard work. 

Common Sense – this issue really is simple, don’t let public employees try to make it sound too complicated. Here’s one common sense question to ask yourself – was I included in the conversation? Did I make these promises? Why should I be on the hook for these outrageous salaries and pensions? 

Now, using public pressure, discipline, and common sense, here’s what Rauh says we need to do:

“We need state and local governments to report their  unfunded liabilities honestly, the real numbers, using the 2 – 3 % yields that sound financial reporting would require. No more pie in the sky stuff…”  We have Stephanie Taber to thank, back in 2011, for demanding the finance reports be given properly. Then Finance Director Jennifer Hennessy was not doing reports at all, her boss Dave Burkland didn’t require her to do it. Can you believe that? What private sector company would get away with that? Taber had to use public pressure, discipline, and common sense. Now the finance reports are given every month and available online. 

And now, using letters to the editor and posts on this blog, Dave Howell is trying to question the city about their true pension costs, demanding they make their Annual Finance Report (CAFR) available to the public. The city is hiding their true liability figures, saying they are only $130 million in deficit when the true figure is over $200 million. 

“the truth should shock  voters into demanding action.”  Yes, it should, but people use the most ridiculous excuses for not paying attention. This is where discipline comes in – I’m not an accountant, but I’ve made myself read and understand those finance reports. You can too. And then open your mouth and squeal like Ned Beatty, cause you are being screwed.

The action Rauh suggests we demand is “to phase out the guaranteed pension programs as quickly as possible and introduce 401k plans…

I agree with Rauh. Public employees who do their jobs should be amply compensated. He calls 401k’s a “win-win’ which,  “if designed properly, can provide excellent retirement benefits…” Here’s the win for taxpayers – employees are responsible for their own investments, and if they choose poorly, the taxpayer is not on the hook to bail them out. 

Furthermore, “401k’s are portable, employees can take them along, don’t have to be locked into government jobs to get retirement benefits.

Now, unfortunately, here’s where the corrupt merry-go-round comes in – our council, fed on employee union donations, has already given management employees a type of 401k called a “457 plan”, in addition to their guaranteed pensions. Here’s Orme’s contract, read it for yourself:

http://www.chico.ca.us/human_resources_and_risk_management/documents/OrmeEmploymentAgreement10-2017.pdf

“The City has established a Deferred Compensation Plan in accordance
with Internal Revenue Code (IRC) 457 (“IRC 457 plan”). Effective from the first pay period in
January 2017 considered in calculating the maximum IRC 457 plan limit and annually, City agrees
to contribute nine thousand dollars ($9,000), to Employee’s IRC 457 plan. Additionally, effective
October 15,2017, the City agrees to contribute four and fifty- two hundredths percent (4.52%) of
base salary to Employee’s IRC 457 plan.”

In Chico, public employee unions SEIU, CPOA, AND IFFA are among the biggest donors in every council election. I think the only donor that gives more money is Franklin Construction.  So, I would add to Rauh’s list – change the laws to restrict donations from public employee unions. Our city council can do this, but as you can guess, that would take a lot of public pressure.

Rauh suggests “lets end the current structure of public sector pensions and move to a sustainable way of compensating our public employees.” He’s not advocating cutting anybody off, but frankly, I am. I would suggest we press council to refuse to approve new contracts for management employees who refuse to take pay and benefits cuts. As stated in Orme’s contract, council has the right to refuse salary increases, and even to ask employees to take a cut. Again, this would take a lot of public pressure. 

So, it’s really up to us. 

 

Dave Howell: This is how democracy dies, strangled by ignorance, debt and taxes

25 Oct

I’ve seen a couple of good letters in the paper lately, questioning the city’s claims that they need more tax revenues to maintain various aspects of public infrastructure. City Mangler Mark Orme repeatedly points the finger at some invisible army of Camp Fire evacuees – bullshit, Mr. Worm. Go out at Rush Hour, and you can see he is lying through his teeth. 

What they’re really worried about Downtown, is whether they will get their sweet pensions – in Orme’s case, at a current salary of $225,000/year, that’s over $140,000/year, plus cost of living increase, for the rest of his life, and then his  wife gets it!

Were you ever consulted in this scheme? No, but if you sign on to this tax increase, you are telling city of Chico $taffers and CalPERS you are willing to hook up like a cow to a milking machine to pay these crazy pensions into perpetuity, screw your infrastructure Folks!

Here’s a guy who knows where it’s at!

Despite city tax revenue growing by 30% in the last four years the City Council is spending over 150,000 of our tax dollars to sell us a sales tax increase. The salient reason for a tax increase now is that for many years the City Council has put unsustainable city employee compensation, particularly pension liability, above everything else including critical infrastructure maintenance.

But it’s not just a sales tax increase they are after. In the April 16th City Council meeting staff mentioned using the sales tax increase revenue to float a bond. How many hundreds of millions in new debt will they take on? Amazingly staff didn’t say and inexplicably no council member asked. In last week’s meeting the subject of bonded debt was not even mentioned, and the Council unanimously approved moving forward with the tax increase.

If the City’s bureaucrats and the City Council have their way not only will the taxpayers face a tax increase but also hundreds of millions in new debt. Not only will this not solve the City’s unfunded liability problems, it could lead to insolvency and will lead to more tax increases. Taking on hundreds of millions in new debt when the City is drowning in unfunded liabilities is the height of irresponsibility. And this in a county with a 21 percent poverty rate where bureaucrats can retire in their fifties with multi-million dollar pensions. 

This is what happens when you have an incompetent and corrupt city government and a citizenry that does not have a clue. This is how democracy dies, strangled by ignorance, debt and taxes.

Dave Howell
Chico, CA

Letter to editor – staff can’t fix streets but they offer up a skating rink? If it sounds like a lie, it probably is

13 Oct

I couldn’t believe staffer Brendan Ottoboni had the nerve to propose a discussion about an ice skating rink on the city’s new comments mechanism “Chico Engaged!” He and other staffers told the assembled contractors, landlords and other concerned citizens that the city has no money to fix existing streets, or even maintain them properly. “Chico Engaged” is inappropriate – it’s a way for staffers and others with gain to be made to sprinkle little ideas in the public head – like rainbows and lollipops, and skating rinks. It also gives the public the idea that council is listening – oh yeah, they’re listening, they’re listening to the public being duped. 

I had to write a letter about the crazy contradiction between a city that has no money to fix streets or maintain the park but seems to have plenty of money to throw at gimmicks like “Chico Engaged” and ice skating rinks. 

At a morning meeting Downtown, Public Works staffer Brendan Ottoboni stated there is no more money to maintain or fix city streets. He said streets that had been on the repairs list for years were being taken off due to lack of funds. 

So why would Ottoboni propose an ice skating rink on “Chico Engaged!”?  

Look at the agenda for council’s 10/15 meeting – Council will discuss giving management employees a raise while  putting a one cent sales tax measure on the 11/2020 ballot. When  a city  doesn’t even have the money to perform the most basic of services, why even consider giving raises to people already making four times the median income? 

Chico has over $138 million in pension liability. Staff recently established the completely restricted “Pension Stabilization Trust”, and this year have transferred over $1.2 million from other funds into the PST. Employees pay 15% or less of “their share,” paying nothing toward the PST. The sales tax increase, a simple majority measure requiring only 51% voter approval, will go into the general fund, available for salaries, benefits, and the PST. 

Tax measures are being proposed all over California to fund pension packages that were never approved by voters, made by elected officials who receive donations and other political support from employee unions.  The taxpayers even pay for the consultants who guarantee to get the measure passed.

Coincidentally, a tax measure consultant told City of Chico Finance Committee, “We offered them (Heavenly Valley) a skating rink…” and the measure passed.

 

 

 

Getting public information out of city staff is like pulling teeth

26 Sep

Bob sent the article below the other day – it’s a good read for Halloween.

About 7 years ago, short-lived city manager Brian Nakamura told us about the pension liability, and he briefly mentioned the “benefits liability”, but that second topic never came up again. Here below, George Russell talks about the  “OPEB” liability – “other post employment benefits”.

 

George Russell: Marin County public pensions are due for reform

So, the League of California Cities, and city management all over the state are looking out over the back of the boat, the cigarettes are falling out of their mouths, and they’re saying, “You taxpayers are going to need a bigger boat...” 

Here in Chico, they have never told us point-blank about OPEB, but I’m sure it comes up at those small, daytime meetings that nobody attends. So I asked city finance manager Scott Dowell – he’d recently given me a figure for the “unfunded accrued liability” – I didn’t know if that figure was just pensions or included the OPEB. His response, simply, “No, OPEB is separate.” But no figure, I had to ask for that in a separate email. Cause they just don’t want to tell us this stuff, it’s counter to their best interests.

I call this “willful insubordination,” but I went ahead and sent a separate e-mail asking him for the figure. I try to be nice, I apologize for bothering this guy.  I’ll get back to you with his response. 

California League of Cities: local agencies cut maintenance because “revenue growth from the improved economy has been absorbed by pension costs”

6 Sep

Let’s have a good laugh, cause we probably need one.

 

 

I think that clip is a good analogy of the way public agencies spend money.

Seriously, I’ve been mulling over an article from Edward Ring, a financial analyst, co-founder of the California Policy Center. It’s a good read to get you ready for Halloween. See the link at the bottom of this post. 

Okay kids, turn down the lights and let’s sit around in a circle and see who pees their pants first.

In 2018, the League of California Cities released aRetirement System Sustainability Study and Findings.”

Key Findings”:  (1) City pension costs will dramatically increase to unsustainable levels, (2) Rising pension costs will require cities to nearly double the percentage of their general fund dollars they pay to CalPERS, and (3) Cities have few options to address growing pension liabilities.

According to CalPERSPublic Agency Actuarial Valuation Reports,”  over the next six years, participating agencies will need to increase their payments to CalPERS by 87%, from $3.1 billion in the 2017-18 fiscal year to $5.8 billion by the 2024-25 fiscal year.

And that, according to Edward Ring, is a “best case scenario”.   This guy could scare the shit out of Stephen King.

“Bartel Associates used the existing CalPERS’ discount rate and projections for local revenue growth. To the extent CalPERS market return performance and local revenue growth do not achieve those estimates, impacts to local agencies will increase.”

Now remember, the actual authors here are CalPERS and the League of California Cities, Ring is just the storyteller, and I’m just repeating what he says. Here’s what I’ll add – Chico is a member of the LCC, in fact, Mayor Randall Stone has held office in the League. So this story is about Chico.

Ring continues his analysis, “The report from the League of California Cities includes a section entitled “What Cities Can Do Today.” This section merits a read between the lines”

You can go ahead and read his full article yourself, at least he’s got a sense of humor, but I’ll tell you what the league said, as it relates to the city of Chico, as well as Chico Area Recreation District.

1 – “Develop and implement a plan to pay down the city’s Unfunded Actuarial Liability (UAL): Possible methods include shorter amortization periods and pre-payment of cities UAL. This option may only work for cities in a better financial condition.”

Both the city and CARD have already done this. For example, in 2015, CARD ignored a consultant’s report that Shapiro Pool could be saved for about $550,000, instead making a $400,000 side fund payoff to CalPERS.  The city of Chico has also been stepping up their payments, we’ll get to where that comes from in a minute.

2 – “Consider local ballot measures to enhance revenues: Some cities have been successful in passing a measure to increase revenues. Others have been unsuccessful. Given that these are voter approved measures, success varies depending on location.”

The city of Chico and CARD have been hiring consultants to pursue tax measures since 2012. The common factor is former Chico city manager Tom Lando, who has sat on the board at CARD for over 4 years now, and who has also managed the Feather River Park and Rec District in Oroville. Lando is a pensioner, and receives one of the biggest pensions paid out to a city of Chico employee since the death of his predecessor Fred Davis. Of course Lando Man wants CalPERS to be funded.

https://chicotaxpayers.com/2012/01/30/heres-why-lando-wants-to-raise-your-sales-tax/

Lando was the guy who floated an MOU in the early 2000’s to attach city salaries to revenue increases “but not decreases“. Ring discusses such measures.  We’ll discuss that later.

3 – “Create a Pension Rate Stabilization Program (PRSP): Establishing and funding a local Section 115 Trust Fund can help offset unanticipated spikes in employer contributions. Initial funds still must be identified. Again, this is an option that may work for cities that are in a better financial condition.”

Back to #1.  Despite claims that they are in poor financial condition,  both local agencies have established such programs, and have been siphoning money that should have gone into maintenance and capital projects to “step up their payments” into their pensions. That leads to # 4.

4 – “Change service delivery methods and levels of certain public services: Many cities have already consolidated and cut local services during the Great Recession and have not been able to restore those service levels. Often, revenue growth from the improved economy has been absorbed by pension costs. The next round of service cuts will be even harder.”

That’s where I had to stop reading for about a week, I felt like my blood pressure was going to blow my eyeballs out of my head. This is the evidence, I mean, we all knew it. This is where they admit it.  ” revenue growth from the improved economy has been absorbed by pension costs.”  We’ve been lied to – the economy has been improving but the public employees have been stealing all the money for their pensions. And now, as Chico Assistant Manager Chris Constantin has been threatening in his presentations, “The next round of service cuts will be even harder.” You know it and I know it – they’ve been screwing us on purpose. Think Bridgegate.

5. “Use procedures and transparent bargaining to increase employee pension contributions:  Many local agencies and their employee organizations have already entered into such agreements.”

Ring says,   “(reading between the lines) – MAKE BENEFICIARIES PAY MORE. Good idea. The League of California Cities might expand on the feasibility of this recommendation and provide examples of where it actually happened (cases where employees agreed to pay more towards their pension benefits but received an equivalent pay increase do not count)”

Yeah, cases where employees agreed to pay more towards their pension benefits but received an equivalent pay increase do not count.  Ann Willmann of CARD and city of Chico management have all been given raises to more than cover their “extra shares”. And now, only now, “classified” CARD employees (management) pay 8%, and PEPRA (essentially, non-management employees) only pay 5.5% of the total agency contribution of 14%. City employees pay confusing shares, covered below.

The Public Employee Pension Reform Act (PEPRA) supposedly requires all employees pay 50% of agency costs. CARD “classic” staff has agreed to pay 1% more. I don’t know why CARD PEPRA employees are only paying 5..5%, they may still be phasing in.  

City of Chico employees have a totally different set-up, which confirms that the individual boards and employees have a lot more to say about this arrangement than either Chris Constantin or Ann Willmann will admit. 

I asked City Finance Mangler Scott Dowell (formerly with CARD, there’s just so much footsie in local government) what the shares were.  According to Dowell, the city pays different amounts for “miscellaneous” (everybody who is not a cop or  firefighter) employees and “public safety”, as well as “classic” and “PEPRA”.  Pay attention.

While CARD pays 14% total on all employees, City of Chico pays a  total of 21% for miscellaneous classic  and 20% for PEPRA.  For public safety employees (CPOA, IAFF), the city pays 31% for classic, and  33% for PEPRA. The employer/employee split is as follows:

  • miscellaneous employees: classic – employer cost  10.235%,  employee cost 11%;  PEPRA –  employer cost 10.235%   employee cost  9.75%
  • public safety: classic – employer cost 18.843%, employee cost 12%;  PEPRA – employer cost  18.843%, employee cost 15%

Dowell says the figures above include a 3% share of “employer cost” paid by employees. That’s confusing. That would make the “employee share” less than half the total cost. According to PEPRA, shouldn’t they just be paying half? Why say they are paying 3% of the employer’s share, and it only amounts to half? And, management (classic) make big yaya about paying 1% of “employer cost” – but PEPRA pay less than the employer share? What the heck?

Dowell also said that CPSA (public safety) employees pay 6% of “employer cost”. What? He says that is included in the figures above. You see, both classic and PEPRA public safety employees pay less than half.  And that includes 6% of the “employer cost”? What? Look – fire department classic members are paying 12% to the city’s 18.843% (19%). That’s not 50% of total costs. Do they think we don’t know the math?

So that all leads to the POB – pension obligation bond.

 6 – “Issue a pension obligation bond (POB): However, financial experts including the Government Finance Officers Association (GFOA) strongly discourage local agencies from issuing POBs. Moreover, this approach only delays and compounds the inevitable financial impacts.”

Both the city of Chico and CARD have said they will use the proceeds from their proposed tax measures to secure a bond. What kind of bond they have not specified, but I don’t know if they need voter approval to do this. Constantin has suggested issuing bonds for road and street maintenance. Whether or not Contantin is lying, here’s Ring’s analysis:

6 (reading between the lines) – GO INTO DEBT TO PAY OFF DEBT. Pension obligation bonds are at best a dangerous gamble, at worst a deceptive scam. The recommendation itself (above) dismisses itself in the final sentence, where it states “this approach only delays and compounds the inevitable financial impacts.”

Yeah, going into debt to pay off debt. I think the old people called that “robbing Peter to pay Paul.”

Ring makes an interesting observation. “Not everyone wants to blow up the defined benefit system,”  referring to the CalPERS’ model of guaranteed payouts.

“I think defined benefit is a tremendous opportunity. It can be sustainable. It was sustainable. And then they jacked up all the benefits by 50 percent and made it retroactive — basically doubled liability overnight. Now, they’re not sustainable. Make them sustainable again.”

Look back to #2 – that’s where Tom Lando, in the early 2000’s, pushed through a “memo of understanding”, getting a weak and stupid bunch of council members to sign off on attaching salaries to revenue increases “but not decreases”. That guy is the head of a very foul smelling fish.

Ring is a good read, he’s written extensively on this crises, how we got here, and how he thinks we can get out. 

https://search.yahoo.com/search?fr=mcafee&type=E2 LLP11US105G10&p=Edward+Ring+-+how+to+make+CalPERS+sustainable+again

 

How to Restore Financial Sustainability to Public Pensions

Dave Howell: Do they take us for fools?

29 Aug

I’ve seen some interesting letters to the Enterprise Record lately. A lady wrote the other day saying Chico streets are in such horrible condition she hates driving her car around Chico. I hear that – we just traded our son our F-150 for his tiny Chevy Cavalier. The F-150 sat higher off the ground, I could see the potholes but I didn’t feel them so keenly. The little Chevy feels like a Radio Flyer headed off Dead Man’s Hill, every crack in the road goes right through the seat covers, and sometimes there’s the sound of metal on asphalt as we hit a particularly bad hole. 

And of course, my 1956 Raleigh Superbe has seen her days, those skinny tires tooling along the park and neighborhood streets. I hit a pothole Downtown one day coming home from a meeting – ha ha, I was looking at another pothole instead of watching the street in front of my wheels – and CRASH! My bike basket flipped off the mounts and landed in the street. My feet slid off the pedals, which caught me right across the shins. And my bike seat stuck me one right in the small of my back. God I was so pissed off. 

There’s potholes on my street that look big enough to eat a stroller, complete with attached mom. But if you want to see something that looks like a third world country, head over to the neighborhood bordering the freeway off East Avenue, behind the old McDonalds and the abandoned For Kid’s Only Store. Check out the South Campus neighborhood, imagine out-of-town college parents seeing that for the first time.  

Sure everybody knows Chico streets are a mess – but do they know why? The city is going to tell everybody, in their campaign for a sales tax increase, that the streets are horrible because there aren’t enough revenues. But you know, if you go to meetings and listen to Constantin and Orme, they’ll admit that maintenance has been purposely deferred, while the city has been making, as CARD’s Ann Willmann likes to call them, “aggressive payments” on their pension deficit. 

So it’s good to hear from letter writer Dave Howell, who has it right – it’s the pensions. 

Howell asks, “will the people be fooled?” Well, he seems to be doing his best to prevent that. And thanks for the shout out Dave, I appreciate it.

Hats off to Juanita Sumner for shedding light on CARD’s tax increase measure. CARD has been considering a tax increase for years and has spent over $100,000 of our tax dollars on high priced consulting firms in an effort to get a tax increase measure on the ballot.  One consulting firm they paid openly brags about its ability to help get tax increases passed.  Yet CARD’s attorney claims these consulting firms are merely involved in informational surveys.  Only a fool would believe that.

The fact is that CARD, like the rest of local government, has made unsustainable compensation promises to its employees, especially regarding pensions. These promises are devouring money that should be going for infrastructure.  Like CARD, the City Council has used our tax dollars to hire a high priced consulting firm for a proposed tax increase.  The push for tax increases from our local government is all about unfunded liabilities that are unsustainable.

Without true reform we will face endless rounds of tax increases in a futile effort to fund unsustainable liabilities.  Scores of cities and counties raised taxes in the last several years and not one has solved their unfunded liabilities problem.  All passage of the latest round of proposed tax increases will do is kick the can down the road a couple of election cycles, but our local politicians and bureaucrats will never admit this.

Will the people be fooled?  We will find out next March when CARD’s tax increase will be on the ballot.

Dave Howell, Chico