Tag Archives: CalPERS

More questions for Ken Campbell – every answer is just another can of worms!

16 Dec

As I was saying in a previous blog, I recently been struggling through the city firefighters’ contracts, and I don’t mind saying, it’s all Greek to me. “Legalese,” I think it’s called. The worst thing is, they treat you like a moranus because you don’t understand the gobble-ty-gook they spin up just to make sure you don’t understand.

Here’s how they explain the pay rate in the current IAFF (International Association of Fire Fighters, the union) contract:

Regular Hourly Rate

 1.2.5. Regular Hourly Rate. Regular Hourly Rate shall mean an hourly rate calculated by summing all non-overtime and non-out of class pay for the bi-weekly pay period, with the specific exception of Holiday Pay as defined in Section 2, Subsection 5.3.1, and dividing the total by 112 for Employees assigned to a fifty-six (56) hour work week, and by 80 for those employees assigned to a forty (40) hour work week.

As my friend Stephanie Taber said recently about the firefighters’ contract, “confused???? so am I!”   Stephanie is way more patient than I am, when she doesn’t understand these documents, she e-mails the appropriate department and asks the questions, then sticks around long enough to get an answer. 

In the letter I wrote to the editor, I asked about the 56 hour week – did that mean 16 hours of guaranteed overtime? Is that how some of these employees almost DOUBLE their salaries?   One person I saw on the salary charts had added $80,000 in OT to his $90,000 salary – and he’s not the only one who does that.  As I pointed out in my letter, the fire department alone bills for over a million dollars a year in overtime. I wonder, how do they do that? 

When Stephanie asked the human resources department about overtime, here was the response: “Under the terms of the IAFF MOU City firefighters get paid overtime for any hours they work in excess of 56 in a seven day period.”

Okay, now I’m confused. You can schedule people for 56 hours without paying them overtime? News to me. And, I still don’t understand, how do they rack up the overtime pay when they have to work over 56 hours a week to get  it? I mean, there’s not a house burning down or an accident every freaking minute. In fact, hours and hours go by, every day, when nothing justifying the use of gasoline even happens around here. 

I got a new question. Are we paying people to sleep? To watch tv? To take the hook and ladder to the grocery store? 

Human Resources offered more explanation: “In addition, under the terms of the Fair Labor Standards Act, they get paid overtime for any hours they work in excess of 182 in a 24 day period.  For the City of Chico this equates to an additional 5 hours of pay for each person every 24 day period.”

I keep seeing that word, “work”, and I keep wondering, “what do they mean by ‘work‘?” 

So I will keep asking my questions.

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CalPERS headed for a cliff?

29 Oct

From Chico News & Review 10/25/2012

“The California Public Employees Retirement System (CalPERS) has made a disturbing announcement for many of its long-term-care clients.

CalPERS has proposed an 85 percent premium increase for 115,000 of its 150,000 long-term beneficiaries, according to the Sacramento Business Journal. Earlier this month, CalPERS officials were considering a 75 percent premium hike, which organization spokesperson Bill Madison called ‘a work in progress’ at the time.

The raised premiums, which would take effect in 2015 and be phased in over two years, are in anticipation of budget shortfalls in the future. Unlike its pension-benefits program, CalPERS’ long-term program is not funded by taxpayers.

‘At current course and speed, we would not have enough money … to pay anticipated claims,’ said CalPERS deputy executive officer Ann Boynton.”

I didn’t know CalPERS offered “long-term-care” insurance. What a scam. They take these premiums fully expecting you to DIE before you collect.  Read more below, from the CalPERS press site.

CalPERS site:  http://www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2012/oct/ltc-premium-increase.xml

Press Release

October 17, 2012

External Affairs Branch
(916) 795-3991
Robert Udall Glazier, Deputy Executive Officer
Brad Pacheco, Chief, Office of Public Affairs
Contact: Bill Madison, Information Officer
pressroom@calpers.ca.gov

 

CalPERS Approves Long-Term Care Premium Increase

Three alternative plans offered to ease impact on policyholders

SACRAMENTO, CA – The California Public Employees’ Retirement System (CalPERS) Board of Administration today approved an 85 percent premium increase for early purchasers of its Long-Term Care (LTC) Insurance Program policies. The increase, to be spread over two years, is being implemented to help stabilize the Program’s underlying Long-Term Care Fund and will take effect July 2015. Members who opt to cover the increase in a single year will pay only 79 percent.

Policyholders affected by the increase purchased two types of policies between 1995 and 2004: policies with lifetime benefits with inflation protection, and policies with lifetime benefits without inflation protection (California Partnership policies will be excluded).

The premium increase is necessary to offset the effect of higher-than-expected claims, lower-than-expected investment income, the Board’s adoption of a more conservative LTC Fund investment mix, and a lowering of the Fund’s investment discount rate to 5.75 percent to align with the more conservative investment portfolio.

The Board also approved three new optional alternative benefit plans that will provide the affected CalPERS LTC policyholders with options for relief from the financial impact of the 2015 rate increase. These new alternatives will allow policyholders to avoid further premium increases by converting to policies that will still provide adequate protection and possibly lower their premiums.

“We took great care to listen to the concerns of our policyholder constituent groups and weighed staff proposals for these options carefully before making our decision,” said Board President Rob Feckner. “We are taking these actions to ensure the sustainability of the Long-Term Care Fund and the availability of benefits for our policyholders.”

Affected policyholders will be given the opportunity to convert their policies to these new options in the spring of 2013. The policy changes will take effect July 1, 2013. View a list of the proposed new policy conversion options (PDF, 87 KB).

“We feel the plan options we will offer our policyholders make this a win-win situation, especially for those with lifetime benefit policies,” said Priya Mathur, Chair of the Board’s Pension and Health Benefits Committee. “With the average length of stay in a care facility a little over three years, we think the 10-year conversion option will provide more than adequate coverage when our policyholders need it.”

The CalPERS Long-Term Care Program began in 1995 and currently has more than 150,000 members and approximately $3.6 billion in LTC Fund assets. The LTC Program is a voluntary, self-funded, not-for-profit program funded entirely by policyholder premiums and investment earnings.

CalPERS is the nation’s largest public pension fund with approximately $243 billion in assets, providing retirement benefits to more than 1.6 million State, public school, and local public agency employees, retirees, and their families, and health benefits to more than 1.3 million members. The average CalPERS pension is $2,332 per month. The average benefit for those who retired in the fiscal year that ended June 30, 2011, is $3,065 per month. For more information about CalPERS, visit http://www.calpers.ca.gov.        

                                                                                                                                                                                                      ### end of press release ###

There it says, “The premium increase is necessary to offset the effect of higher-than-expected claims, lower-than-expected investment income, the Board’s adoption of a more conservative LTC Fund investment mix, and a lowering of the Fund’s investment discount rate to 5.75 percent to align with the more conservative investment portfolio.”

“higher than expected claims” – that means, people are actually living to collect! How could they NOT have expected that? They sell you insurance, and then they don’t provide for you?  Again I will say, what a SCAM.

“lower than expected investment income” – yes, like the pensions, they’ve gambled this fund on the stock market, and where they predicted they’d be getting somewhere between 7 and 20 percent returns, they’ve been lucky to get ONE PERCENT. They’ve lost millions.

Which led to “the Board’s adoption of a more conservative LTC Fund investment mix” – oooo, I’ll bet!

“”and a lowering of the Fund’s investment discount rate to 5.75 percent to align with the more conservative investment portfolio.” This means, CalPERS clients will pay more toward their own benefits, for the “long-term-care” coverage anyway.

http://www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2012/sept/discount-rate.xml

These articles are like boxes within boxes – every time I read more, I have more questions than I had before. See this link, here above – this article tells how  CalPERS got public employees to buy into this scam by offering them a “discount rate.”  Suckers – anybody who thinks they can get something for nothing deserves to be had.   How could they believe they could pay so little, and then be taken care of indefinitely in some rest home? How could they believe that the stock market, which has behaved very poorly and been outrageously volatile these last ten years, would pay consistently enough to float thousands of retirees who aren’t paying anything?

But it’s not just the employees – we, the taxpayers, are also  the suckers here. A lot of public employees get “long-term-care” paid for by their employer. I haven’t seen the city of Chico contracts – have you? I’m guessing we pay for “long-term-care,” but I’d have to see the contracts. 

This is part of the perfect pension storm. CalPERS is in trouble, they’re just trying not to let on. Right now they are hitting lower level employees, like my friend who earns less than $40,000 a year with Butte County, to pay their own “employee share.” Sounds like no big deal, huh? Well, it’s the beginning of a big deal, so watch it. The lower level county employees – “classified staff” – those making less than $50,000/yr – have been TOLD over the last year that they would be paying their own 7 percent share of their benefits. That’s the deal at the county, at the city it’s 9 percent. Then the employers pay a matching amount – 7 percent for the county, and 9 percent for the city.  I don’t know all the details perfect, but here’s the bottom line – City of Chico employees, with the exception of the fire department,  pay only a small portion toward their health benefits, and NOTHING on their pensions. 

And the other thing is, that’s only 14 and 18 percent. The rest of the pension premiums are riding on the stock market. And the market is not paying fast enough to keep up even with the pensions currently being paid out, not to mention the pensions that will be paid to our current employees. So Jerry Brown is trying to get CalPERS to raise the payments – whether the employees pay them, or WE pay them, they’re going to have to be paid. We’re talking BILLIONS in unfunded pensions.  

The problem – the giant defecating elephant – is that thousands of people  currently work for public entities, thinking they will be taken care of for life having only paid a couple thousand dollars a year toward that care. The average premium, according to Cal Pers, is $2500 a year, while the average pension benefit payment is $3200 a month. How could that possibly be sustainable? 

CalPERS convinced the public employment sector, as well as our governor and our  legislature, that they could sustain these outrageous pensions with only 14 – 18 percent of the premium being paid by the employee/employer. They promised they could make these crazy, 20 percent returns on the stock market, and our corrupt and lazy legislators gave them the go ahead to do it. 

The city of Chico does not have to remain on this road to Perdition. The contracts are being hashed over right now. Some of them are already done deals – with all the perks and benies, and even some raises! How nice! But there are still contracts on the table. We must lean on our elected leaders to make our employees pay more of their “share.” Whoever you vote for in this election, take some responsibility for them – like you would your own child. When your child does something wrong, you have to point it out, you have to tell them it won’t be tolerated – not only by you, but more importantly, not by society at large. We have to take our elected officials off to the corner too, tell them when we feel they are not doing their jobs, not listening, not taking correct action. You can tell them sweet or sour, but you should tell them. We need some sort of benefits reform HERE IN CHICO. We don’t have to continue like helpless lemmings off into the Pacific with Governor Moonbeam and his horde. 

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The CalPERS disaster: A housewife tries to make sense of it

25 Sep

 

I’m still reading about how we ended up in this pension mess. This time I found a more recent article that confirmed suspicions I’ve had since I read that last article  from 2003.  The essential problem is, the California Public Employees Retirement System gambled pension money on the stock market, and got eaten alive by their own handlers.

CalPERS has to achieve stock market earnings of at least 7.75 in order to ” to keep its funding levels high enough to avoid further forced taxpayer contributions.”  For awhile last year, during a “volatile” market, they managed to achieve an outrageous 20 percent gain.  Of course  they did a little end-zone dance – “This is a great one-year achievement that powerfully affirms our strategy and the skills of our investment team,” said Chief Investment Officer Joseph Dear. “While we can’t assume that we’ll sustain this high level of earnings, we have averaged a net return on investments of 8.4 percent for 20 years.”

But you  know how that works. They just ripped off a bunch of people, triggering the “Karma Factor.” See, that’s how the stock market works, your gain is somebody else’s tragedy. I met a lady once who had got a handsome retirement payoff, and she wanted to turn it into a college education for her grandkids, so she bought Disney stock. Wow, who woulda thunk it – Disney lost their ass that year, and so did my old lady friend.

When that happened to some stocks my cousins and I inherited – mutual funds that had performed well for my family for a couple of generations – we read months later that the agents had ripped us off. It was a huge scandal, you know, that big pre-911 market melt down. It was found that agents were trading their clients’ mutual funds, without their clients’ (one of whom was me!) knowledge.   They were using their clients’ funds  as their own  – a scam know as “late trading”  – and raking in big amounts of money. That can only last so long, before the stock starts to be devalued, as were mine. I lost thousands of dollars over the span of a week, before I was able to get my agent on the phone ( he just wouldn’t return my call) and dump those funds. I got out of the stock market with what was left, but those people were never investigated or charged with anything, even though the whole scam quickly became common knowledge. They nailed Martha Stewart to the cross, she paid for their sins, and everybody went home and forgot about it.

I learned my lesson, but you can’t teach greedy people, they think with a part of their body that resembles an eyeless fish.  There was CalPERS, sitting pretty on a 20 percent gain like there’s no Tomorrow! And then Tomorrow came, and they too lost their (well, our, really) asses.   According to Cal Watchdog, the  fund lost over $17 billion dollars in just five weeks last August. But don’t worry, our loss was most certainly somebody else’s gain.

With my mutual funds, I was helpless. Like Barack Obama, I inherited a mess. I acted quickly, at first on just “women’s intuition”, then I heard the news. I told my agent what I knew, and he was all helpful all the sudden!  I was able to save over 80 percent of my fund.  But CalPERS walked right into that market and laid all their dough on that table. “These strong returns are a testament to our commitment to our long-term investing principles,” said Anne Stausboll, CalPERS Chief Executive Officer. “Our members, employers and California taxpayers all benefit from our disciplined approach to investing.”

They lost over half the fund, in a system that seems to me not much more sophisticated than a dice game. Former Orange County treasurer/tax collector and current county supe John Moorlach calls it the “’Peter Pan Portfolio’ that led to Orange County’s bankruptcy in 1994. The meaning: If you just believe, the fund will be all right.”

That’s what I’d call Dave Burkland and Jennifer Hennessy’s accounting style –  Jennifer Hennessy keeps “predicting” that sales and homeowners’ tax revenues will go up – when one call to a local retailer or real estate agent would set her straight, she’d rather believe she’s Tinker Bell.  She doesn’t “predict” she “wishes”. Like I’ve said before, if wishes were horses around here, we’d all be hip-deep in horseshit. 

The city of Orange rode their wish horse right into bankruptcy – geez, way back in 1994!  They were surfing interest rates, and a pack of sharks ate them.  

CalPERS can’t go bankrupt. We have guaranteed them with our taxes. In the event that they can’t pay, we are on the hook for billions in pension payments, many of those payments going to people like Tom Lando – who makes over $140,000 a year in pension, plus health benefits. There’s also a yearly cost of living increase. 

All because of the outrageous pension packages promised by elected leaders like our Mayor Ann Schwab and her council – who just signed off a new cop contract through which we continue to pay all their pension premiums, including “the employees’ share”.  And, they still get 90 percent of their highest years’ salary, including overtime, in pension, at 50 years old. That is how a cop who agrees to $65,000 a year salary ends up retiring at over $100,000 a year.  And, ex-police chiefs Mike Efford and Mike Maloney have both gone on to public salaries at Butte College, in addition to their pensions. All agreed upon and signed by Ann Schwab and council. 

Reform is coming, slowly, but the public pensioners fight tooth and nail. All we ask is that they pay more of their own pension premiums, and that CalPERS stop gambling on the stock market. Here’s what Steve Maviglio, spokesman for the union-backed Californians for Retirement Security, says to that – “My point was that the pension-bashing crowd used the depths of the recession as the reference point to sound an alarm about pensions instead of the long term returns actuaries use. And given the last two days on the market [August 5 and 8], the alternative that reformers are pushing — 401(k)s — are looking even worse than before.”

Maviglio accuses “pension bashers” of poor logic – he bases his claims on one short period of volatility on the market – any idiot knows, when you get a 20 percent gain, you are riding a short-lived high, and you better be ready for the come-down. CalPERS was apparently asleep at the wheel.

But, their handlers were there, like prowling sharks. Handlers they didn’t even need. According to CalWatchdog reporter Wayne Lusvardi, “An index fund is a passively managed fund designed to match the performance of the whole market or mix of funds.  So whatever commissions CalPERS paid all its external fund managers to invest in public stocks apparently could have been saved just by passively investing in the S&P 500 Index.”

That’s what I said last time – there was a little pack of sharks that fed off this whole mess, the “fund managers.” And the folks at CalPERS, confident that they’d continue to get their five and six-figure salaries and their 70 percent at 55 retirement packages, went right along with the scam – you scratch my back, and I’ll scratch yours! 

But the real villains here are your publicly elected leaders, at the city, county and state level. They’ve approved the contracts, the salaries, the pensions and the pension payments, every damned one of them. In Chico, most of our council members – with the exception of Jim Walker, somehow – are on the public dole. They all get public pensions, and you know, that doesn’t exactly put them on  very good footing to demand pension reform of their, our, employees. That’s exactly why we need more “regular” citizens on council – a small business owner like Toby Schindelbeck would at least be different. Schwab calls herself a small business owner, and she’s done everything she could during her tenure to promote that business – a bike shop. She’s used her position to promote her private business while making decisions that hurt businesses all over town. I’d like to see a person in there who has everybody’s business interests at heart, and I think that’s Toby Schindelbeck. 

I must say, I don’t like being in bed with Chico Firefighters, who have also endorsed  Schindelbeck.  But, Schindelbeck has told Chico Taxpayers Association that he would like to see the  “public safety” workers  PAY MORE OF THEIR OWN PENSION. We haven’t heard that from Bob Evans or any of the others, including Sean Morgan, who is also expected to get the public safety endorsement.  We’ll be holding Toby Schindelbeck to his word, and I think he will make some welcome changes on council.

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CalPERS – how we got here

21 Sep

 

As we hear more about how pensions have taken down our economy and Jerry Brown’s feeble attempts to leash train his SEIU pitbulls, I have been doing some reading, trying to understand this whole mess, how it happened, and exactly what we, the taxpayers, are on the hook for.

I found an article from 2003, from the California Job Journal, that explained how it started. You can read the whole thing here:

http://www.zoominfo.com/CachedPage/?archive_id=0&page_id=523523781&page_url=//www.jobjournal.com/article_full_text.asp?artid=919&page_last_updated=2004-08-17T12:28:33

Right away you see that this is an article about finding lucrative jobs, and it’s steering people into the world of pension management.  “With baby boomers retiring at an escalating rate and becoming more concerned about their financial future, careers in institutional investing are likely to become hotter than a half-price sale at a Lexus dealership.”

As a baby boomer myself, I feel like I just picked up a menu that described ME as the main course.

This article, “Careers in Finance,” directs the job seeker first to the California Public Employee Retirement System. Apparently, CalPERS is a great jumping off point for those who want to make a bunch of money.    According to recruitment manager Linda Miller, the pay is low (stop laughing!), but the experience is money in the bank.   “Many return to million-dollar jobs in the private sector after learning about institutional investing with us,’ Miller reports.”

Here I have a question: do these people get public pensions? I’m pretty sure they do. You only have to work for the state for a few years at full time before you are eligible for a pension.  She says, they “return” to the private sector…” So, was that the whole point? Get a job at CalPERS to learn, then return to the private sector with your nice fat public pension? And benefits? And everything you need to know about ripping off the taxpayers?

What I really found interesting about this article:

  • in 2003 there were over 140 employees of CalPERS. Miller says people make more money in the private sector, but admits they’d work longer hours. And, she says, “We offer sick leave, retirement and lots of holidays, and that is a plus. In addition, there is stability and training available.” All paid for by US, the taxpayers.
  • in 2003, CalPERS had “assets totaling over $137.8 billion. “
  • nine years later they’re flat broke and costing us millions in interest to pay off their obligations

And if you want to work in the private sector, you will not be trained, you will need either a Bachelor’s degree, subsidized by the taxpayers,  or experience in the public sector, provided of course by the taxpayers.  According to Maripili Tovar, of Bear Stearns in San Francisco, “”We look for people with a strong background in finance and business and a bachelor’s degree in either of those two fields.”  She adds,  “We are not hiring at this time because we are still feeling the effects of 9/11. But slowly I feel the market and the economy getting healthier.”

But, at  the same time,  CalPERS was recruiting, offering training,  benefits, pensions and “lots of holidays”?

Here we have the story of an agency that has been embezzled by it’s former employees. These people went to CalPERS, not necessarily for training, but to find out what they need to know to get over $137 billion in assets.

How would you explain what happened?

The article goes on to describe how ANYBODY can make a killing in the world of high finance. There are the “third party administrators,” or as my grandma would say, “another layer of fat you don’t need.”

“In a nutshell, we’re third-party administrators and we don’t sponsor or write investments plans,” explains consultant Bob de Montigny. “We do the accounting, tax-form preparation and consulting for long-term retirement. We rely solely on the information from the plan’s administrators.”  

So, here’s a guy who doesn’t even write your package for you, he just takes care of it.  This hound is full of fleas.

“We are looking out for the little guy in the retirement plan to make sure the business owner isn’t getting all the money,” states de Montigny. “We do 100 percent of benefit consulting and administration, and take care to see that all the deadlines and deduction limits are met. It’s a very detailed job.”  Wow, I had no idea – how does the business owner “get all the money”? Sounds like the world of finance is a regular snake pit, doesn’t it?  Or, at least, it behooves some people for the pensioner to think that way.

The article says, “Prerequisites for this career include a strong accounting background, knowledge of investments, and proficiency in math. You have to know your way around monthly balance and income statements and understand what money is going in and out of a trust, and why. You also need a fairly strong background in composition and business English.”  Frankly, I’d think if you were competent to do the job that got you the pension, you’re competent to administer your own pension, but hey, we’re talking about public workers here. As we ascertained above, public workers don’t need as much skill to do their jobs as do private workers, so maybe that lack of skill is also at play in their personal lives? They can’t do their own bookkeeping, but they can do ours, that’s just great.

Furthermore, “The field (of third party administrators) is a niche business and there are job opportunities if you have the qualifications. The ups and down of the stock market has little effect on the business.”  Oh, that’s great, these people can send their clients down the market toilet, but the same market “has little effect” on them.

My, oh my, have I learned something about the CalPERS disaster. We have an industry that uses a taxpayer supported agency to train their workers. These workers took  knowledge they gained in their public trough experience through the revolving door to the private industry and then proceeded to rip off their former employers for over $137 BILLION.

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