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Oroville council, cops, take 10 percent salary cuts in face of bankruptcy – meanwhile, raises all around for Chico management!

6 Oct

We were just talking about Oroville’s financial problems  – here’s their action plan:

http://www.chicoer.com/general-news/20171005/oroville-city-council-takes-voluntary-10-percent-pay-cut

As you know, Chico City Council just approved sweet new raises for city management, more than enough to cover their slightly increased PERS shares. With over $180 million in unfunded pension liabilities, the city’s mandated extra “side fund” payments are now over $500,000 a year and expected to increase to $1.5 million within the next couple of years. And come on – at that  rate, we’ll never get rid of the pension bomb.  

Did you know our city council get salaries? Last I heard, their salaries are roughly the same as reported for O-ville, although, I think, a little more. In the article, it says Oroville councilors can also opt for a health benefits package – in Chico, those packages have cost anywhere between $8,000/year and $21,000/year. When I last checked, Ann Schwab and Mark Sorensen were taking the most expensive packages available. Here’s the scam – they pay 2 percent of their council salaries – less than $1,000 a year, do the math – for these packages. 

What kind of package do you have? How much do you pay for it? 

In Hemet, which was left in ashes by Brian Nakamura, Mark Orme, and Chris Constantin, the local Taxpayers Association put an ordinance on the 2010 ballot that ended health benefits for city council members. The voters passed it with over 75% of the vote. It cost the HTA about $7,000 to float two ordinances – the second, term limits for city councilors, also flew through with about 75% of the vote.

https://chicotaxpayers.com/2014/04/19/hemet-taxpayers-association-eliminated-health-benefits-for-council-members-and-instituted-term-limits/

The city shall not pay for, fund, or otherwise contribute to, the premiums, charges, fees or other costs of health benefits made available by the city to elected city officials either during their term or after their term of office.

Just something to think about, as the city of Chico plunges further into debt and continues to cut services, cut services, cut services…

 

 

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O-ville talking bankruptcy? Time for public employees to take a walk in “the real world”

30 Sep

Thanks again Dude, for this link – I’ve been too busy to read the papers lately, get a load of this story from the Oroville Mercury Register – Oroville going bankrupt?

http://www.orovillemr.com/article/NB/20170927/NEWS/170929752

“The city’s finance director Ruth Wright told the California Public Employees’ Retirement System (CalPERS) finance and administration committee last week that the word “bankruptcy” was being thrown around, though not at council meetings.”

Not at council meetings? Council still in denial? Well, here in Chico, we have a $186 million deficit, and council is fully aware. So they handed out raises to top management! Now that’s a plan!

“The city [Oroville] cut down its $1 million deficit to achieve a balanced budget this year but is not exactly thriving financially, operating with low staffing levels and recently negotiating a 10 percent pay cut for police, with more negotiations to come.”

A 10 percent pay cut for police? You could expect Chico PD to walk out on any such negotiations – they threaten to cut service – which is essentially a STRIKE – if they don’t get raises.

Oroville’s finance director Ruth Wright says CalPERS is the problem and CalPERS needs to fix it.

“’All cities and counties cannot keep up with the increases,’ she said. ‘I think it’s up to them (CalPERS). They need to do something. They need to do a better job investing.’ The organization announced in December that discount rates would drop from 7.5 to 7 percent over the next three years in an effort to make the fund more stable, but with impacts to state and local governments.

“’CalPERS has a few levers to pull in dealing with pensions, having to do with discount rates,” said Wayne Davis, head of public affairs for the pension fund. “We’re very much aware of what lowering the discount rate means.’”

Well,  “we all” don’t know what he’s talking about – “lowering the discount rate…”

From CalPERS – straight from the horse’s ass –

https://www.calpers.ca.gov/page/newsroom/calpers-news/2016/calpers-lower-dis

“Lowering the discount rate, also known as the assumed rate of return, means employers that contract with CalPERS to administer their pension plans will see increases in their normal costs and unfunded actuarial liabilities. Active members hired after January 1, 2013, under the Public Employees’ Pension Reform Act will also see their contribution rates rise. Normal cost is the cost of pension benefits for one year.”

Remember, I asked Chico Unified School District finance chief Kevin Bultema about this, right after the passage of Measure K in last November’s election, and he said the district would need to find more funding to pay pension costs or cut programs for the kids.

So, of course, this means a bigger deficit for Oroville, and don’t forget Chico.

“Oroville’s finance director said the number of city representatives coming to confront CalPERS has been growing. At the meeting last week, officials from cities such as Chico, Santa Rosa, Laguna Hills, Lodi, West Sacramento, Vallejo, Yuba City, Hayward, Manteca and Concord were there. A legislative representative for the League of California Cities also participated.”

Well, that’s funny – this hasn’t come up in the Chico paper, which is edited by the same David Little that edits the Mercury Register. Neither have we talked as a town about the $186 million deficit, or the $500,000/year “side payments” (in addition to the regular premium payments), which will balloon to over $1.5 million/year within the next three years.

And the sky is the limit, since our elected morons – both Chico and Butte County – keep giving out raises as though everything’s just rainbows and lollipops. They’ve acknowledged the mess we’re in – because they want us to pay more taxes.

The reporter finally talked to Chico finance mangler Scott Dowell – formerly with Chico Area Recreation District, which has a $1.7 million deficit for less than 35 employees. Dowell doesn’t think Chico will go into bankruptcy, but has been trying to work with CalPERS.

“Dowell was hoping the pension fund representatives would do some research on the possibility of freezing cost-of-living adjustments, meaning retirees would receive a flat rate every year. They would no longer receive additional money — currently up to 2 percent of their annual salaries — to account for changing inflation.

The other concept was switching all employees onto the same kind of pension plan as employees who started after Jan. 1, 2013. The Public Employees’ Pension Reform Act went into effect then, offering fewer benefits to new employees. That could mean the difference between retiring at 55 and 62, Dowell said.”

Both no-brainers as far as I’m concerned, and “the way it works in the real world”.

 

Loyalton Calif cuts pensions – why can’t Chico do same?

27 Aug

Thanks to Jim for picking up this article, from the Los Angeles Times, about a little town not far from Chico.

http://www.latimes.com/politics/la-pol-ca-loyalton-calpers-pension-problems-20170806-htmlstory.html

I think we have a similar situation here. Early in the 2000’s, a city council including current county supervisors Maureen Kirk and Larry Wahl, at the behest of then city manager Tom Lando, signed an MOU with city employees, attaching salaries “to revenue increases, but not decreases…”  

Staff then went on a permits binge, permitting development all over town, houses piled into Grandma’s back yard, raising city revenues and salaries along with them. Staff got 14, 19, 22 percent raises over a very short period.  Lando’s own salary went from around $65,000 a year to over $120,000 a year within a very short time. 

When this scam was figured out by the public, they stopped it, but started paying the “employer paid member contribution” –  the city started paying most, even all of the employee’s pension share.

We’ve been screeching about that, so lately they just  raise the employee’s salary to cover their new pension share – they are determined that the taxpayer will foot the bill for these pensions (the following list is from 2012, remember, these people get cost of living increases) :

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

Tom Lando hasn’t been pumping the sales tax increase lately, but I’m sure he’s behind it. Lately, in his position as Chico Area Recreation District Board member, he’s been pushing for a bond on our homes. It doesn’t matter which agency gets the money, as long as they pay their CalPERS deficit with it. 

Loyalton only had four employees – can we do the same thing? I think we can sue the city for the outrageous raises given these pensioneers – spiking – right before they retired, like Lando. But I’m not a lawyer. 

What do you think? 

No, Measure K was not “about the kids”

1 Feb

I forwarded the article from the Sacramento Bee that I posted here yesterday

http://www.sacbee.com/news/business/article128942009.html

to Chico Unified School District Finance Director Kevin Bultema, asking how the failure of California Teachers Retirement System would affect our school district. He responded,

Good afternoon Ms. Sumner,

This has been one of the key budget issues facing CUSD.  The recent downward adjustments in CalSTRS estimated investment earnings is adding additional pressure to employer contribution rates in future years.  Employees did have a small increase in their contribution rate in 2015-16 from 10% to 10.25%.  The employer contribution rate has increased since 2015-16 and is projected to increase each year through 2020-21.  We discuss the financial impact of the projected PERS and STRS rates at every budget presentation.  Below is a slide we include in all of our budget presentations to keep our board and the community informed of this issue.  I hope this helps answer your question.  Have a great evening. 

Bultema ran the Measure K campaign, but gee Beav, none of this stuff came up in his Argument For, nor in the rebuttal to my argument, where he and Mark Sorensen chastised me for not getting it. 

Maureen Kirk told me she was supporting Measure K because “The more I looked into it, I came to the conclusion that the schools really need our help and support. This does not support retirement and benefits and directly helps the students.”

I wrote to Kirk and Sorensen and chastised them for their support of Measure K, forwarding Bultema’s e-mail with the link to the Sac Bee. I hope you will do same:

mkirk@buttecounty.net

mark.sorensen@chicoca.gov

The rebuttal to my argument against Measure K claimed I didn’t “get it.” Well, do you get it now Mark?  Here Kevin Bultema admits, CalSTRS has been failing, but nobody mentioned that during the Measure K campaign.  It’s all about the kids, huh Maureen?  Just in case you don’t read The Bee, I included a link to the article I had referenced to Bultema, although I know Mark already knows exactly what’s going on.  Sincerely disgusted, Juanita

Kirk and Sorensen are both up in 2018.  Where can we find suitable replacements? 

Meanwhile, another thing to remember, Chico Area Recreation District has hired the same consultant to run their bond/assessment campaign, so be ready for LIES LIES LIES.

Thank a Teacher! California taxpayers will pay $153 million more a year for school district pensions

30 Jan

Thanks Bob for this article from the Sacramento Bee.

“CalSTRS will consider lowering its official investment forecast in a move expected to require higher contributions from state taxpayers once again for the teachers’ pension fund. The cost to the state could be an additional $153 million starting with the next fiscal year.”

 

I didn’t know this was legal:

Three years ago, the Legislature agreed to raise contributions to CalSTRS by billions of dollars a year. Assembly Bill 1469 affected the state, local school districts and teachers themselves. For example, the annual contributions from school districts is growing from $2 billion to $6 billion, although the increases are being phased in over several years.

The 2014 law does give CalSTRS some latitude to impose higher rates on state taxpayers without going back to the Legislature for permission. According to the staff report, Gov. Jerry Brown’s budget proposal for the new fiscal year includes an additional $153 million for CalSTRS, bringing the annual contribution to $2.8 billion.

No matter what Chico Unified said about crumbling classrooms, rot, mold, asbestos, old computers – it’s the pensions folks, it always has been.

Why should the public be saddled with the “burden” of public worker pension debt?

28 Dec

Here’s a letter I sent to the Enterprise Record in response to the editorial run Monday – “CalPERS keeps loading public with huge debt”.  

In answer to the editor, I’ll ask why the taxpayers should be stuck with the “burden” of public employee pensions? 

At Chico Area Recreation District, for example, management has only recently started paying into their own pensions – at a rate of 6.25 percent.  “Classic” management members pay 2 percent. For 70 percent of their highest year’s salary at age 55. The current CARD director makes over $110,000/year in salary.  

The median household income in Chico is about $43,000/year, while the average city of Chico worker makes over $80,000.  Many public safety workers and  most of city management make over $100,000, plus perks. Why can’t they contribute more than 12 and 9 percent, respectively?

The state mandated that “new hires” – that’s an employee who has never been in any public retirement system – pay 50 percent. Why aren’t existing employees asked to pay 50 percent?

Our current mayor, and vice mayor, and two council members are or have been enrolled in the public retirement system. The spouses of two others are enrolled in the system.  Does this make it difficult for council to demand more from our city employees? 

Join me at chicotaxpayers.com to demand that  public “servants” pick up more of the tab for their retirement.

For some reason, Little failed to post that editorial in the online edition. That is a physical job, requiring intent. Little once admitted to me that he doesn’t print every letter he gets in the paper edition, but chooses instead to post them online. So, it’s definitely a choice he makes, whether or not to post in the online edition.  

What? Didn’t want to open the editorial to discussion on Disqus? 

So, something tells me, he’s not going to print my letter. Well, there it is. I hope the rest of you will give him your two cents.

NOTE: I contacted the San Jose Mercury register, a managing editor told me the editorial had been written by one of his co-workers. He explained to me that the ER is owned by the same company at the MR, and has permission to reprint.

So, this is “local” journalism?

Enterprise Record a “conservative” paper? Really?

26 Dec

Here’ s the latest editorial from the man who endorsed Measure K and then refused to interview me when I mounted official opposition to the bond measure.  I had to post the whole thing because it’s not available online, there’s no link.

NOTE:  This editorial ran in the Monday December 26 edition of the Enterprise Record, but for some reason,  as of Wednesday the 28, it has still not appeared in the online edition.

NOTE-NOTE:  Looks like Little picked up this editorial from the Mercury News, but failed to identify it as a pick-up in the the e-edition that I get.

So, I took the opportunity to add my own commentary.

CalPERS keeps loading public with huge debt

Chico Enterprise Record, Monday December 26,  2016

The nation’s largest pension system last week demonstrated once again that it’s willing to drive taxpayers deeper into debt to placate government worker labor unions.

Why drive the taxpayers deeper into debt? Why not demand that the workers either pay their own pensions or lower their expectations for retirement bling?

Directors of the California Public Employees’ Retirement System voted to lower their investment forecast, a move in the right direction that means employers and in many cases employees will contribute more to shore up the ailing pension plan.

Again he’s saying employers – and that’s the taxpayers – should have to pay this debt – why? 

But the changes will be phased in at a glacial rate over the next eight years and CalPERS’ own numbers show they’re not nearly enough.

CalPERS has known about this pension debt problem for at least ten years, I’ve been blogging it myself for at least four years. 

By its actions Wednesday, CalPERS acknowledged it has only 63.5 percent of the assets it should. That places the system’s shortfall at about $170 billion and on the backs of taxpayers. It averages more than $13,000 of debt for each California household.

The backs of the taxpayers? Why? We were never consulted when Gray  Davis made this scheme, we recalled him, but we still got stuck with the deal he struck with the employees’ unions.

It’s actually worse than that. And the longer the union- dominated CalPERS board fails to comprehensively address its funding problems, the larger that debt will likely grow. Unlike upfront contributions that are shared between government employers and workers, the shortfall lands solely on taxpayers.

Why?!

Nevertheless, Gov. Jerry Brown touted the deal, which his office struck behind the scenes with labor. He said the change is “ more reflective of the financial returns (CalPERS) can expect in the future. This will make for a more sustainable system.”

More than what? Yes, it’s closer to a reasonable target than the past policy, which was completely divorced from reality, but it doesn’t come close to actually putting CalPERS on a sustainable path.

Like the governor’s muchtouted pension law changes of 2012, this CalPERS adjustment only marginally slows the bleeding. It doesn’t come close to solving the problem.

Specifically, the CalPERS board voted to lower its assumed rate of investment return from 7.5 percent to 7.375 percent in fiscal year 2017, 7.25 percent in 2018 and 7.0 percent in 2019.

That means the pension system will lower its expectation for how much interest it can earn from its assets and instead turn to government employers to kick in more.

But that increase in contribution rates for state and local governments, many of whom are likely to pass on some of the burden to workers, won’t be fully phased in until 2024.

Oh my God – he’s calling pensions of 70 – 90 percent of a worker’s highest year’s earnings a burden on the workers!

To understand how far short this move falls, consider that CalPERS announced Wednesday that it hadn’t hit a 7 percent average over the last 20 years and, going forward, it estimates that there’s only roughly a 1-in- 4 chance that it will meet that target.

And CalPERS’ consultant warns that the pension system should anticipate only an average 6.2 percent in each of the next 10 years.

CalPERS officials rationalize that state and local governments couldn’t afford higher payments that would result from lower investment forecasts.

If that’s true, the solution is to change the system, not keep denying reality.

I believe Little is talking about further raising taxes to float these pensions. That’s why he endorsed Measure K, and that’s why I believe he will back up CARD and eventually the city of Chico when they put their own tax increase measures on the ballot. He refuses to admit that these pensions are unsustainable, period, he just keeps expecting the rest of us to set up these public workers like Phay-rohs!

When are we going to get a real newspaper in this town?

NOTE: I contacted a managing editor at the San Jose Mercury Register – this piece was actually written by one of his co-workers and reprinted by permission in the ER (same owner owns both papers…)