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Watching the city of Chico is like a watching a slasher movie – we keep screaming, “NO!” but they open the door anyway

19 Nov

Every now and then my husband and I have to GTFO. So we hit the road for Oregon and the tax free shopping.

I’ll never forget trying to explain sales tax to my 10-year-old. He was outraged! “Why should we pay a tax to buy something?” he asked me. I was dumbfounded. Kids will do that to you – their minds haven’t been polluted with the illogic that goes for everyday business in the adult world.

When I didn’t have an answer for my kids I said, “I don’t know.” Now I would say, “because they can.” Sales tax is just a taking, you know, like that kid that used to stand at the schoolyard gate, head and shoulders bigger than you, and threaten to punch you really hard in the arm if you didn’t give up your lunch/lunch money. That kid grew up and went to work for the California Franchise Tax Board. My kid moved to Oregon.

So the city of Chico management, desperate to defuse their Pension Time Bomb, has announced they are putting a sales tax increase measure on the 2022 ballot. Because they can. They’ve also announced a business tax, a rental tax, and even a cannabis tax, if they ever get around to approving a local dispensary.

Not all of these are on the ballot, and I’m no lawyer, but I’ve read that at least the cannabis tax is supposed to go before the voters. I would think any tax would have to go before the voters, but you know these guys – they already made an attempt at getting a Pension Obligation Bond over on us without putting it on the ballot. You really have to watch that Mark Orme, he’s a weasel. And council goes along with whatever he says, like a pack of stupid kids. It’s like watching a slasher movie – I keep screaming, “No, don’t open that door!” But they just open it right up anyway.

So, I needed a break. I’m sitting in my motel room in Oregon, waiting for the Walmart next door to open. And then Target, and Big 5, and wow, they have a Lowe’s here too.

It’s my way of retroactively kicking that bully right in the junk.

Stop a train wreck before it happens – email Chico City Council and tell them you won’t support a new tax measure until we have a conversation about the employee contributions

12 Oct

I was actually surprised to see this letter from former city councilor Karl Ory. I’m not surprised that Ory is still active with the local Democrats, but I’m kind of surprised he’d attack a sales tax increase measure that he himself proposed while on council. Sure, it’s partisanship – whenever we have a change in the council majority the losers sit along the sidelines throwing eggs.

Letter: Conservatives have bled the city dry

The council proposal for a general sales tax increase is DOA. Conservatives have bled the city dry for a decade and will oppose any tax increase. Just ask Juanita Sumner and the Chico Taxpayers Assoc. But worse, this council has alienated nearly every moderate voice in the city. On their agenda is denying climate change, steamrolling a 1,448 acre development, doing away with the Greenline, and generally kowtowing to their developer benefactors.

Councilmember Morgan’s KPAY broadcasts show he intends to ride liberal bashing all the way to Sacramento. Tax revenues will be used for salaries and benefits; no assurances any will go for roads and creekways. This is just a sham to make them look good.  Afterward they’ll wring their hands and say they tried. Maybe blame the loss on the previous council.

Karl Ory, Chico

Yeah, we all know, the liberals have done plenty of bleeding in their day. They’ve voted right along with the conservatives to approve every new subdivision that’s come before them. They’ve also unanimously approved the employee contracts with overgenerous salary and benefits and unrealistic employee contributions toward the UAL. They all get money from the unions at election time, and many of them continue to take donations from power players like PG&E and Franklin Construction. But Ory is spot on when he says, “Tax revenues will be used for salaries and benefits; no assurances any will go for roads and creekways. This is just a sham to make them look good.  Afterward they’ll wring their hands and say they tried.

Of course the liberals would do same if they had the majority, Ory himself proposed a 1-cent general sales tax increase when he was on council. If you haven’t noticed this pattern before, you just moved here, or you’re deaf, dumb and blind. But I’m not going to squabble over that – when the liberals get the majority again I’ll criticize their poor management. The common thread here is that the money is not going to the roads or any public services, it’s going to service a bond(s). Remember this bit from the 9/21/21 council staff report:

General Obligation Bond
If the City were to pass a general sales tax, the Council could also consider issuing bonds to fund infrastructure, facilities, and equipment. The debt would be repaid over time with anticipated increased
revenues. A general obligation bond would require a two-thirds vote of the electorate to pass.
If the electorate were to pass a bond for infrastructure in the amount of $180,000,000 with interest at a
rate of 3.5 percent over a twenty (20) year period, the annual payment would be $12,664,994
.”

They want to use the sales tax increase revenues to get us deeper into debt. Think about that – not only will they NOT be using the sales tax money toward infrastructure as Coolidge keeps saying, they will be taking another 12 and a half million dollars away from infrastructure to pay off the bonds.

And yes, “bonds”, plural. They want money to pay the pension deficit, having failed in their attempt to make an end-run around the voters with their proposed Pension Obligation Bond.

Read the reports people, don’t just allow yourself to be mesmerized by their moving lips. They are liars, and they will lie to get what they want. Coolidge is one of the most bald-faced liars I’ve ever heard. And the local media just eats it up without question.

I can’t just sit by and watch the insanity, I had to respond to Ory’s letter.

Karl Ory is right, (10/9/21) “Tax revenues will be used for salaries and benefits; no assurances any will go for roads and creekways.” Correct, council has approved a general sales tax increase measure, meaning revenues will go to the General Fund and be spent as council determines.

Ory, a two-time council member, knows that the pension deficit (Unfunded Actuarial Liability) is the city’s only real debt, created by unrealistically high salaries/benefits and unreasonably low employee contributions. He knows that council directed staff to establish a “Pension Stabilization Trust,” into which money is purloined from each department – money that should go toward city services – to pay down the UAL. Recently, council and Staff tried to establish a “Pension Obligation Bond” without voter approval, only the threat of a lawsuit from Howard Jarvis Taxpayers Association stopped them. They told us they’d spend the garbage tax on the roads, but as Ory has also pointed out, the money has gone to the General Fund every year, spent on salaries, benefits, and new positions.

Look at the city budget – the city’s biggest expense is staff, taking almost the entire budget. Where are the services? Last year over $11.5 million went to the pension deficit. But the deficit keeps going up, because council keeps approving unsustainable contracts. Mark Orme created three new positions last year, at salaries over $100,000.

Until we have a real conversation about who owns the UAL, Chico Taxpayers Association will definitely oppose any new tax increases.

Juanita Sumner, Chico CA

Here’s another blurb from that 9/21 report:

  • there will be costs associated with educating the public on the proposed measure (hiring a consultant to conduct such work) and costs associated with placing the measure on the 2022 ballot (such costs will be estimated by the City Clerk in working with the County Elections Office)
  • Yes, the rules for using taxpayer money to run political campaigns are foggy, the FPPC seems to be standing down on this. So, they will be going up your ass with your own money. Let’s try to stop this taxpayer-funded train wreck before it gets out of the station – email your district rep, and tell them not only will you not support this tax measure, but you might just be voting for somebody else when the time comes.

    Howard Jarvis Taxpayers Association has successfully sued at least twice to stop POBs on the grounds that they must have voter approval

    29 May
    This article from the Howard Jarvis Taxpayers Association sheds some legal doubts on the whole POB scam.

    On a tip from a reader, I found this article, originally printed in January 2020. Jon Coupal begins with statewide bond measures, but picks up with a warning about Pension Obligation Bonds. “...at the local level, taxpayers need to be aware of a recent resurgence in the use of pension obligation bonds, a risky financing method that fell out of favor during the recession but is now making a comeback.”

    Coupal analogizes, “A POB is basically paying your Visa bill with your MasterCard,” adding, “Pension obligation bonds (POBs) are bonds issued to fund, in whole or in part, the unfunded portion of public pension liabilities by the creation of new debt.

    Council members Andrew Coolidge and Sean Morgan, and other proponents of POBs, are denying that a POB is new debt, they chant it like a mantra, because they think they can hypnotize us into believing it.

    Coupal continues, “The use of POBs relies on an assumption that the bond proceeds, when invested with pension assets in higher-yielding assets, will be able to achieve a rate of return that is greater than the interest rate owed over the term of the bonds.

    Even Staffer Scott Dowell has used the word, “gamble“, even while he and city manager Mark Orme have pressed forward with this scheme. Council has given them permission to send this bond for judicial approval. The consultant told council and staff that this type of bond does not require voter approval. They said it would only take approval from a judge, which should only take a few months. The expect to implement this thing within the next few months.

    If this seems odd to you, you’re not alone, the HJTA is on your side.

    Back in 2003, the state of California attempted to float a statewide pension obligation bond without voter approval.

    The Howard Jarvis Taxpayers Association sued to invalidate the bonds and prevailed in court.

    That’s not the only lawsuit HJTA has pursued against POBs. The reader who tipped me to all this sent me the story of HJTA vs the city of Simi Valley.

    The Simi Valley City Council voted 5-0 on April 6, 2020, to rescind a December 2019 resolution authorizing a $150 million pension obligation bond and future similar bonds, thanking the Ventura County Taxpayers Association for working with the City in avoiding what could have been a lengthy battle over legally questionable bonds. The rescission was part of a settlement agreement with the VCTA and the Howard Jarvis Taxpayers Association.

    Apparently, the city asked for validation from the Ventura County Superior Court. HJTA and the Ventura County Taxpayers Association then “answered” the suit. And the city backed down, but I’m not really sure why.

    “In settling, the Simi Valley City Council recognized the constitutional concern in the VCTA/HJTA answer to the City’s lawsuit — whether the California Constitution requires two-thirds voter approval of any such bond. Agreeing to wait for legal clarity, and with each side bearing its own costs, the City agreed to dismiss its lawsuit with prejudice, and rescind the bond authorization resolution.

    recognized the constitutional concern” ? ” Agreeing to wait for legal clarity” ? I’m not sure what has happened since then – has the court given any further ruling on these bonds? Any legal clarity? I’ll have to look into that. But I think that’s a good question for Staff at that POB forum.

    DAY: Tuesday, June 8, 2021
    TIME: 2:00 P.M.
    PLACE: City Council Chamber – 421 Main Street

    CANCELLED: City hosting an interactive forum to discuss POBs

    27 May

    I got this notice from Dave – thanks Dave!

    I also got the cancellation notice from Dave – thanks again Dave!

    DAY: Tuesday, June 8, 2021
    TIME: 2:00 P.M.
    PLACE: City Council Chamber – 421 Main Street


    The City of Chico’s employees and retirees participate in the CalPERS retirement system. CalPERS has
    determined that the City has an unfunded accrued liability (UAL) of over $140,000,000 which carries an
    interest rate of 7%. As such, the City Council is researching all options on reducing this liability. One
    possibility is to issue pension obligation bonds (POBs) at a lower interest rate than 7% and use the
    proceeds to pay down the CalPERS UAL.


    The City is hosting an interactive forum to discuss POBs including the benefits and risks associated with
    their issuance. The consulting firm of NHA Advisors will be conducting the forum on June 8th starting at
    2:00 pm and concluding by 4:00pm. This forum will be interactive and participants are encouraged to ask
    questions and provide feedback to the consultant. Attendees are encouraged to join in person at the City
    Council Chambers or watch online. There is no cost to attend this educational forum.

    Joe Azzarito: Council needs to “serve notice to all city employees that as of a determinable date they will be paying the full cost of their ‘silver spoon’ pensions”

    30 Mar

    Joe Azzarito is a retired accountant who lives in Chico. Here’s a letter he recently sent to the city of Chico regarding the Tax-a-rama council has embarked upon since a “conservative” Super Majority took over in January. Thanks Joe, I hope this email inspires other people to express their outrage with this obvious ploy to leave the taxpayers holding the Pension Deficit Bag.

    To all Chico city councilors and Senior City Staff:

    The topics of municipal revenue enhancements, namely a sales tax increase and pension obligation bonds keep surfacing in the course of discourse and analysis by concerned citizens such as myself

    Now why would that be? Could it be that you all are not listening to your constituents demands that these disastrously wrong ill conceived options, for funding the massive unfunded pension obligations that this city has forced upon its citizens, be abandoned? Whenever I read or hear about these plans of enduring us to untold costs to fund city staff’s, be they unionized or not, exorbitant salaries and pensions, it makes my blood boil. Your dark of the night surreptitious intents, without transparency, to enact either of these programs is a dereliction of duty, maybe not to your sponsors, the unions, or your fellow colleagues, but certainly to your constituents – the people that pay your salary through taxes. 

    I have heard that programs such as these can be implemented, without the consent of the voters. How dare you! It is not enough to seek input from us but for us to approve of these wild schemes fraught with danger. Given that the ruling class of Chico earns far and away much more than the median income of the people of Chico, you have the gall to push these down our throats.

     For those on the council, recently elected and those previously, you are not conservatives, in the slightest sense fiscally. You all seem to some how, symbiotically, look after each other’s tail. Unions give you campaign funds so that you can win elected office. In turn, you fulfill their needs by ensuring their members are well paid. Wherein do the citizens fit into your scenario? Oh, yes, we are to fill the city coffers with the funds you promised your benefactors. Our needs lay at the bottom of a very deep hole, somehow they are only minimally attended to. It shouldn’t be that way! We should come first as it is our sweat and toil that makes it all possible. 

    I have spoken many times of the badly written about California Rule that keeps you from “doing the right thing” – that being to serve notice to all city employees that as of a determinable date they will be paying the full cost of their “silver spoon” pensions and that salary structures must be revised, downward, to allow the city to adequately meets its obligations to its citizens, first. Promises, previously made in prior eras when economic conditions were much more rosier than now, need to be upended. It would necessitate that pay scales, merit raises, benefits, including pensions, be approved by a body, inclusive of a citizenry board, and not by the likes of City Manager, his staff and/or City Council. To keep the decision making in their hands alone is why these financial problems came about in the first place. Those that pay the salaries should be the ones deciding, not so now. To have city staff analyzing, recommending and being on the receiving end of the decisions made is tantamount to “conflict of interest. 

    At the very least a referendum should be devised and agreed to by vote of the electorate on all of the above. The unfunded elephant in the room must be sequestered and controlled. CALPERS should be informed of any changes and any separations be established. The pensions of all covered city employees would need to be renegotiated, with the stipulation that staff would be paying the full load of costs.  Any conflict with current law needs to be assessed and corrected. It is high time that city pay the piper his due!

     Respectfully, Joe Azzarito  

    Kenny Rogers: You got to know when to hold ’em, and know when to fold ’em. Too bad we can’t get Kenny Rogers to run our city finances

    19 Mar

    The worst thing about Pension Obligation Bonds is that the proceeds would be gambled on the stock market. The assumption is that the investments would pay both the bond service and the pension deficit.  How nuts is that?

    I’ve heard various analogies – taking a credit card to the casino, taking a second mortgage on your house to pay the first mortgage, paying your credit card with your other credit card, etc. Of course people do all these things, and we’ve seen what happens to them. We’ve watched neighbors, friends, even family members lose it all in gambits like that, and we’ve shaken our heads and wondered how they could be so stupid.  How is it suddenly prudent just because it’s a government agency doing the dumb thing? 

    They will tell us they know what they’re doing, just like CalPERS told the governor and all the state agencies that they knew what they were doing. They don’t. 

    The consultant who pitched this horror story in the making to the Chico City Council said the key would be to borrow the bond money at a rate of 3 – 4% interest. He speculated that money would make a good enough return on the market to pay that rate, and then some for the pension fund. But he made it clear, constantly, that a “downturn” in the market would be a very bad thing – then the city would owe both the bond money and the pension payments, both with interest. 

    The difference between those two debts, as reported by the consultant, is that CalPERS won’t dump us for not being able to make our full payments, our “obligation”. As long as we pay SOMETHING, they will keep on paying out the crazy pension payments. In fact, each agency negotiates their own deal with CalPERS and sets the employee contributions.  Of course, if they don’t pay enough, the debt grows, with interest – that creates the Unfunded Actuarial Liability, or, the “pension deficit”. 

    On the other hand, a Pension Obligation Bond has to be paid, in regular installments, or the bond holders can demand either the back payments or the entire debt, on the spot.  This means, they could empty the General Fund, and every other fund the city holds, except the Pension Stabilization Trust. The PST is the only truly, legally restricted fund the city has established. All other funds, from the streets fund to the park fund to the sewer fund and on, are available for allocation to the General Fund. 

    The proponents keep trying to tell us this is a fool proof scheme. They won’t acknowledge the fact that the market can turn ugly on a dime. Really ugly. Pension systems around the country are making some really desperate, stupid investments, according to this article from the Reason Foundation. 

     
    In the United States, public pension funds, which have an average investment return target of 7.25 percent, will likely struggle to meet those investment targets and could be severely impacted by plummeting interest rates. Without changes to pension plans’ assumed rates of return, many public pension systems will see an increase in debt.

    Unfortunately, many public pension plan managers are not interested in adjusting their investment return targets to realistic levels at this time. Instead, they are seeking riskier, potentially higher-yielding investments in an effort to make up for depressed interest rates and hit their targets.

    What’s super frustrating is the double talk. Our mayor, Andrew Coolidge, acknowledges that CalPERS is doing horribly, but tries to assure us that our staff can pull of successful investments. In this market? 

    According to this article, government agencies’ share of the UAL is about to go up again, due to risky investments. For example, “New Mexico’s Educational Retirement Board (ERB), which serves the state’s teachers, is one such plan that dedicates roughly a quarter of its portfolio to fixed-income assets. Within New Mexico ERB’s fixed income-investment allocation, 7 percent of funds go to emerging market debt, which is essentially sovereign bonds issued by countries classified by the World Bank as lower-to-middle-income to upper-middle-income. This includes countries such as Brazil, India, and Nigeria.”

    “Even though emerging market debt carries much higher yields that are attractive to pension funds, those benefits can be outweighed by enormous risks since several of these countries have defaulted on their debt in the past. Due to this risk, public pension investment allocations to emerging market debt have historically been used sparingly in pension fund portfolios. However, in recent months, pension fund managers have signaled a growing appetite for allocating more assets to this asset class.”

    As more pension funds take on these risky investments, more will fail, debt will increase, and be passed on to government agencies. In California, CalPERS has a horrible record of corruption, with various board members leaving in disgrace over manipulating the public trust to their own gain. Most recently an investments advisor left after he was found to be using CalPERS funds to buy stock in funds he owned. CalPERS is also floundering under huge board member salaries – here’s a thought – CalPERS has it’s own pension deficit.

    Instead of screaming for investigations and reform, I think those public employees who stand to get pensions are getting desperate to make sure the pension systems are funded.  I just can’t decide whether our council members are being led by the nose or if they are coming to the table knowing exactly what they are doing. 

    What do you think?

    Why we need to dump collective bargaining – to end the union domination of California – and Chico! – politics

    17 Mar

    Thanks Dave, for this great article from David Crane:

    https://www.hoover.org/research/bipartisan-opportunism-blame-californias-high-tax-rate

    Crane gives us the history of collective bargaining in California, “which endowed police and other local personnel with the power to bargain collectively with the governments that employed them, handing political power over local budgets to government employees who were the principal beneficiaries of those budgets…”

    Established by Ronald Reagan in 1968, this agreement “created a piggy bank to help finance GOP legislators.” But of course, it works for whichever party is in power, son when he became governor in 1975, Jerry Brown extended this agreement to school teachers and employees. This has resulted in elections controlled not by the Russians or the Iranians but by the public employee unions.

    In Chico the biggest contributors in every election are the SEIU (management) and the CPOA (cops), with the IFFA (firefighters) coming in a close third.

    In my opinion, this relationship is completely inappropriate – council approves hires, salaries, and benefits, sets staffing levels, and then accepts huge campaign contributions from the very people who benefit from their actions. I can’t believe the voters don’t see the conflict of interest in this system, but I’m guessing, most people don’t know. Everybody’s got their panties in a knot over the notion that Russia and Iran have influenced elections, but they don’t see corruption that is as plain as the nose on their faces. 

    So City of Chico and County of Butte, both of whom have outrageous pension deficits, are considering Pension Obligation Bonds. This action would forever place the burden of the pension deficit – created by the ridiculous salaries, overly-generous benefits, and completely unrealistically low employee contributions approved by our “local leaders” – on the backs of the taxpayers. 

    Instead, I suggest we dump collective bargaining – this could be done by city ordinance, and could be accomplished by a petition of citizens. Another option would be a city ordinance that cut the union PAC donations down to the same level as individual donations – about $1,000 per candidate. 

    Crane agrees on point #1 – “The antidotes are to repeal collective bargaining rights for government employees or to offset these voters’ power with persistent support of our political parties from donors who care about the general interest (full disclosure: Govern for California provides such support), not to whine about one-party dominance.

    Right now, as Doug Ose has said, “we are going backwards” as a state. Over-taxation has made housing too expensive, while infrastructure all over the state is failing. Chico Mayor Andrew Coolidge acknowledges the poor condition of streets in Chico, but advocates a POB, which would suck all the money out of the General Fund, which is made from allocations out of all the other funds – the streets fund, the park fund, the sewer fund, etc. You get the picture every time you drive or bike around town, or open your new sewer bill. Did you get the picture last night when council voted to INSTITUTE A FEE FOR USE OF UPPER PARK? 

    Wake the hell up Chico, and write a note to your mayor – that’s andrew.coolidge@chicoca.gov

    Who will pay the unfunded liability? Taxpayers living on a median income of $43,000/year, or well-paid, well-heeled, entitled public employees making over $100,000/year?

    5 Nov

    It’s been said, the campaign begins the day after an election.  I like to hit the ground running. Here’s a letter I just sent to the ER. 

    Butte County, like the city of Chico, is considering a Pension Obligation Bond.

    POBs are a financing scheme that allows state and local governments to get the taxpayers to pay unfunded pension liabilities by issuing a bond guaranteed by tax revenues. Like CalPERS, POB proponents claim investments will pay for both the bond and the retirement fund. According to Oregon PERS manager Mike Cleary, “Some people call this arbitrage, but it’s not, it’s really an investment gamble.”

    In fact, in 2013, Stockton and San Bernardino went bankrupt. According to the court, “Generous pensions awkwardly propped up with ill-timed POBs contributed to both debacles.”

    In recent years, returns on POBs have often fallen below the interest rate paid by agencies to borrow the money, digging the liability hole even deeper. Nonetheless, they remain popular because they are instant money without voter approval.

    Chico’s Unfunded Pension Liability has grown enormously over the past year – from $123,000,000 to $140,000,000, with another $146,000,000 interest – because of unrealistic employee contributions. Chico employees pay, at most, 15% for pensions that run from 70 – 90% percent of hundred-thousand-plus salaries. Meanwhile, taxpayers not only contribute a payroll share, but the annual “catch-up” payments come at the expense of city services – this year $11,000,000.

    Who will pay the unfunded liability? Taxpayers living on a median income of $43,000/year, or well-paid, well-heeled, entitled public employees making over $100,000/year?

    Let your elected representative know what you think of this scheme to leave the taxpayers holding the Pension Deficit Bag.

    Juanita Sumner, Chico

    Chico’s Unfunded Pension Liability – the 8,000 pound gorilla in the room that none of the candidates want to talk about

    13 Sep

    As Dave reminded us yesterday, “the 8,000 pound gorilla in the room” that nobody will talk about in this election is the Unfunded Pension Liability (UAL).

    The UAL has been created and perpetuated by the tiny shares that employees pay toward their own pensions – they pay less than 15% but expect to get 70 – 90% in retirement. That only works if somebody picks up the other 80 – 90%. They expect us to be that somebody, and I’m saying, NO!

    And while the city manager claims repeatedly that “staff” has not had raises “for years”, the new police chief just got $21,000 more a year than the old police chief. Chico police officers get automatic raises, they are on a “step increase” plan. They also get to “cash out” unused overtime, sick and vacation days on a formula that actually pays them more not to work. They also use these cash-outs to “spike” their salaries and therefor their pensions.  Look at their contracts here:

    https://www.chico.ca.us/post/labor-agreements

    Finance manager Dowell told me, in August 2019, that city employees pay between 9.75 and 15% of their pension cost, depending on their union group. See, the city manager negotiates these contracts with each group, and then the council just rubberstamps them. It’s time for council to do some of the negotiating. And that means, we have to hold a candle to their rear-end.

    Other towns are actually cutting salaries, Chico is not only raising salaries but creating new positions – the new Public Information Officer and another management position for Public Works. This is like throwing gas on the UAL fire. Another thing that goes up automatically every year is the UAL “catch up” payment.  Finance director Scott Dowell just paid almost $10 million to CalPERS. And next year he says it will be over $11 million.

    Here are questions for your district candidate:

    1. What is the UAL?  (answer: Unfunded Actuarial Liability, or pension deficit)
    2. How much is Chico’s current UAL?  (the last figure I have from Scott Dowell is $128 million, I believe it’s now over $130 million)
    3. How much money did Scott Dowell just pay toward the UAL in July of this year? (over $9 million)
    4. What are the various shares paid by different employee groups? (between 9.75 and 15%, depending on employee group)

    These are terms any council member or candidate should know and understand, since they agree to all this stuff when they roll over the contracts every year. If they don’t, it’s a deal breaker as far as I’m concerned, they should not be in office.  The main reason we are currently in financial trouble is ignorance of these terms. 

    So don’t let the candidates tell us what the issues are in this election – don’t let them distract you with pictures of bum camps and trash piles.  Tell them, the issue is the UAL, and who is going to pay it. 

    These public agencies need to clean house before we should even consider revenue measures

    15 Apr

    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.

    Letter: Reflecting on the failure of Measure A

    By  |

    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.

    https://www.calpers.ca.gov/page/employers/actuarial-services/employer-contributions/public-agency-actuarial-valuation-reports

    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 – 

    1. 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. 
    2. According to the report linked above, “The employer contributions in this report do not reflect any cost sharing arrangements you 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) :

    1. new general manager 
    2. Tom Lando off the board
    3. ratify a new agreement with employees that they work toward paying more of the agency’s payroll costs (a LOT more)
    4. 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. 

    Click to access chico-area-recreation-and-park-district-miscellaneous-2018.pdf

    Click to access chico-area-recreation-and-park-district-miscellaneous-2018.pdf

    Click to access chico-area-recreation-and-park-district-miscellaneous-2018.pdf

    Click to access chico-area-recreation-and-park-district-miscellaneous-2018.pdf