So Tuesday night the City Council voted on the new MOUs for public safety bargaining units, here are a few thoughts in no particular order:
Doug deHaan, obviously, voted “no” on the MOUs. The funny thing is that he refused to give a reason why he was voting against it other than to say “it’s not personal.” Here’s the thing about the phrase, generally when you find the need to say, “it’s not personal” it generally is personal.
In more Doug deHaan inconsistencies, he lamented the fact that, unlike how Governor Jerry Brown recently managed to change some pension stuff and got Prop 30 passed, Alameda doesn’t have a new revenue stream like Prop 30. Earlier in the evening, City Manager John Russo pointed out that SOME people, hint hint, didn’t support Measure C which would have provided the revenue stream referenced by Doug deHaan. He clearly didn’t pick up that was a subtle dig at him and then doubled down later that evening on the “we have no additional revenue streams” thing.
I tweeted this yesterday but someone from the teacher’s union — by the way there were a lot of miscellaneous union folks, mostly Alameda residents, who came out to support this MOU — who went on and on about respect and rancor and how this was a model for “labor respect” and then freely admitted that he was one of the folks who handed AUSD superintendent Kirsten Vital the stocking full of coal last year.
Former City Council candidate Jane Sullwold questioned why this was being rushed before the new Council was seated — fair question — but then after two incoming City Council members, Stewart Chen and Marilyn Ezzy-Ashcraft both said they supported the MOU the point was sort of moot.
A member of the Firefighter’s union admitted that he talked to a commenter on this site about the details of the grievance after questions arose as to how the commenter got the information about the legal analysis. He also mentioned that he was in the negotiations at the time with former Interim City Manager Ann Marie Gallant et al and that there was no intent to get rid of the me-too clause and that if the City were to fight the grievance it would end up being a s/he said/s/he said situation.
Those are sort of the only moment that truly stand out, someone tried to convince me that City Treasurer Kevin Kennedy was trying to make a good point about how we keep cutting the budget year after year and at some point there will be nothing left to cut, however he didn’t do a great job of articulating that pretty simple statement and instead went for the whole “feeling it in my gut” sort of vibe. The problem with when people come up to say, “the City is going to go bankrupt” even when they are the elected City Treasurer if you don’t back it up with stuff it just falls flat after years and years of you saying, “I’m going to be the one to turn off the lights and lock up after the City goes bankrupt.” I think Kevin Kennedy would be much more convincing if, one day he detailed all this stuff he is alluding to and warning us about in actual graphs and things. Because the other night he ended up having to back pedal on some of his more impassioned statements and it just made him seem a little wishy washy.
Why do you need charts and graphs? If the money you have coming in is consistently less than what’s going out, you will eventually go broke.
Comment by Denise Shelton — December 13, 2012 @ 7:01 am
It appears that the speculation that the City will “go broke” in x numbers of undefined years is based on the economic outlook never recovering. Also it’s based on assuming that City will do nothing and expenses and expenditures will stay the same.
Since John Russo came in — and starting with Lisa Goldman’s turn at the helm — we know that is not the case and that unless folks who project otherwise come armed with more than just their gut feeling, it’s hard to continue taking them seriously.
Comment by Lauren Do — December 13, 2012 @ 7:15 am
It is exactly that kind of thinking that led to the mess we are in now. If former city councils had been more conservative in their spending, we would have been better able to weather the unforeseen long-term economic slowdown. You cannot spend now hoping everything will work out in a few years. One would think that has been abundantly clear to anyone who has lived here the past five years. Next time, it might not be the economy but something else that puts a hitch in the City’s get along. Without the warnings from the Kevins, the money saving adjustments that have been made to date would never have happened. To say that there is no urgency now that Russo has it all under control is naive at best. No one person can be relied upon to fix everything no matter how competent. Telling a City Council that it really shouldn’t be unduly concerned about fiscal solvency is a curious stance for a taxpayer. They’ll love to believe it, but should they?
Comment by Denise Shelton — December 13, 2012 @ 8:11 am
Actually, the statements by Mr. Kennedy (and others) about the fiscal impact of the new contracts on the reserve fund are based on the City’s own data. Here is a chart summarizing the information:
FY 2013-4 FY 2014-5 FY 2015-6 FY 2016-7
Beginning reserve balance $17,147,500 $14,341,178 $9,669,834 $4,388,973
Projected annual deficit ($2,343,492) ($4,005,730) ($4,587,000) ($5,318,000)
MOU increase to deficit ($243,201) ($442,137) ($465,915) ($240,176)
Cost of 21st fire captain ($219,629) ($223,477) ($227,946) ($230,203)
Ending reserve balance $14,341,178 $9,669,834 $4,388,973 ($1,399,406)
• The beginning reserve balance for FY 2013-14 and the “Projected annual deficit” figures are taken from the General Fund Five-Year Projections contained in the FY 2012-13 budget presented to Council on June 26, 2012.
• The “MOU increase to deficit” figures are taken from the Summary MOU Cost Estimate presented to Council Tuesday night.
• The “Cost of 21st fire captain” figures are taken from the cost estimate provided in the staff memorandum for the IAFF MOU presented to Council Tuesday night with the beginning cost increased by the annual minimum raises provided by the contract.
• The “Ending reserve balance” is the beginning balance, less the projected annual deficit, MOU increase to deficit, and cost of 21st fire captain. The ending reserve balance becomes the next year’s beginning reserve balance.
This analysis, and not any “gut feeling,” underlies the concern expressed by Mr. Kennedy (and others) about the City’s financial condition.
Comment by Robert Sullwold — December 13, 2012 @ 8:34 am
Well, I’ve now learned that Excel spreadsheets don’t paste very well into the format in which comments are posted. I’d be happy to send the chart as a .pdf file to anyone who wants it. Just ask by emailing rts@greenstamps.com.
Comment by Robert Sullwold — December 13, 2012 @ 8:41 am
Based on the comments by Stewart Chen, DC,and Marilyn Ezzy Ashcraft–two of the three incoming City Council members–it will be interesting to see how well the City Council proceeds to address Alameda’s continuing fiscal challenges in the new year. Doug DeHaan was usually the strongest voice for fiscal conservatism,whatever one may say about his stances or his “inconsistencies.” Who is most likely to take up the banner of being fiscally conservative? I would bet on Tony Daysog, but I hope to be surprised by one or both of the newcomers to the council on this.
Kevin Kennedy’s message, no matter how imperfectly delivered, needs to be acknowledged and acted on in responsible ways–we ignore the City Auditor and the City Treasurer when they point out our risky financial picture at our peril, even if the fiscal cliff of bankruptcy has not materialized as they previously warned.
I would love to see new revenue streams developed for local jurisdictions. After years of having the state extract (steal?) revenue from school districts, cities. and counties to balance state budgets it is time for Sacramento legislators and the governor to:
a) return some of those “borrowed” (stolen?) funds and
b) offer new “theft-proof” revenue generation options for the beleaguered local agencies.
NOTE: I am not holding my breath in anticipation that economic justice will be done on either a) or b): I know better. But we need to remember that Sacramento is a significant source
of our financial pain….)
Comment by Jon Spangler — December 13, 2012 @ 9:02 am
And you cannot balance a budget on the backs of workers either and expect them to take huge salary cuts. I’m not the biggest cheerleader for unions, but I can recognize that you don’t get something for nothing.
If people want to have a realistic conversation about what service levels they are willing to have and what types of services they are willing to give up, let’s have that conversation. But you can’t have it all, we can’t continue funding everyone’s pet issue without sacrifices either in the form of cuts or additional taxes. Folks like Doug deHaan can complain about Deferred Maintenance until he’s blue in the face, but when the shit got real and there was a realistic proposal to fund Deferred Maintenance in the form of Measure C he actively worked against it.
Comment by Lauren Do — December 13, 2012 @ 10:09 am
I wonder which union wrote the script from which Ezzy was so obviously reading? I especially loved the union guy who said my math’s not very good, but as I understand it, the public safety “isn’t 2/3rds of the budget, it’s only 8-10%”. And they wonder why the dictatorship of the proletariat would be a bad thing???
Comment by vigi — December 13, 2012 @ 10:37 am
Salary cuts are not the issue. Taxpayer-subsidized health insurance premiums are. As someone who pays my entire health insurance premium out of pocket, I find it positively obscene that public safety employees pay so little of this direct cost to the rest of us. And scream so loudly when that percentage goes up by even a single digit. If the unions only opposed the rising cost of health care as strongly as they oppose everything else, well..maybe then things would change for the better for everyone.
Comment by vigi — December 13, 2012 @ 11:21 am
If only the school district had the City’s reserves of $14M, we would be able to weather economic storms. Our elected officials have been able to maintain a surplus of 18%-20% over the last 8 years, with revenues exceeding expenses. I think this was done by making cuts and increasing revenues like the property transfer tax. We are lot better off than many of our neighboring cities even without sales tax generators like Costco, Target, Walmart, Home Depot or Lowes. We need to see how Obamacare will deal with the retiree medical care expenses.
I think Alameda needs to be more concerned about the school district having to lay off teachers, closing schools or cutting programs with the recent legal ruling on Measure H. We are too parochial to want the state to take over our schools.
Comment by BarbaraK — December 13, 2012 @ 1:06 pm
According to the March 7, 2012 staff report, the following were the “infrastructure needs” to be met from sales tax revenue generated by Measure C:
• Building a new Emergency Operations Center.
• Building a new fire station no. 3.
• Building a new joint training facility for police and fire.
• “Modernizing” fire stations 1, 2 and 4.
• Replacing police vehicles.
• Replacing “antiquated” fire vehicles.
The following were the “quality of life facility needs” to be funded from Measure C revenues:
• Renovating the Carnegie Library.
• Building a 50-meter swimming pool.
At the March 7 Council meeting, Council member Johnson proposed adding to the list “all-weather sports fields and lights for a baseball field” and a new elevator for the library. Council agreed.
I suppose one could characterize a few of these projects as taking care of “deferred maintenance,” at least for the fire and police departments. But not all of them fit into that category. And it does strike me as a bit of stretch to describe Measure C as a whole as a “realistic proposal to fund Deferred Maintenance” – and to condemn Council member deHaan for believing otherwise.
Comment by Robert Sullwold — December 13, 2012 @ 1:07 pm
#11, putting snarky quotes around things doesn’t make them become non-needs.
Councilmember deHaan voted to add all of the things you list into the ballot measure and to put the ballot to the voters, no? In fact just two weeks ago, he bemoaned the needs of more sports fields for Alameda.
Our community pools are falling apart due to deferred maintenance and close frequently. We have fire stations that are seismically unsafe and that can’t fit all their equipment. Vehicles have to be replaced over 30 years, we have equipment that is currently beyond it’s recommended lifespan and even our newer equipment will get old and need replacing.
Kevin Kennedy was a strong proponent of Measure C, he’s also a strong proponent of taking care of deferred maintenance. His argument during the campaign was that the needs funded by measure C were real and important and that the measure would help address the issues around deferred maintenance in the city and would have allowed the City to begin budgeting for vehicle replacement costs.
I’d be interested in your vision for Alameda, what does the budget look like, and what service levels do you propose (and if you are going to pull out the janky ICMA report, please take it a step further and explain why you choose this specific report over the other four reports which state that the current configuration for the city’s fire protection is the right one.)
Comment by jkw — December 13, 2012 @ 1:44 pm
Mr. White,
You should address your objection to the “snarky quotes” to Mr. Russo, since these were the exact words he used in the March 7, 2012 staff report.
Comment by Robert Sullwold — December 13, 2012 @ 1:53 pm
Federal firefighter makes about 60K for this region SF OAK San Jose
Using Federal standard of 30 Percent Benefits is 18K per year.
That is equal to 78,000 total compensation and no overtime pay til at 72 hours per week.
City of Alameda Firefighters total compensation average runs about 192K Just for a Firefighter and Goes Up From there.
WE have a great Fire department. But local governments total pay compensation is unsustainable and crippling Cities Budgets. The Federal government pay schedule I think pays pays fairly in this economy.
Here is what 33.00 an hour cost the City that Jeff Del Bono Talked about at the meeting and earlier on this blog.
Quote from Jeff
“We put our name on everything and standby what we say.”
“I also want to point out that as a firefighter I make $32.00/hr. I do not receive any overtime until I work over 52 hrs a week. We work 56/hr weeks”
“I would love to see the salaries for 2011 because I can promise that it is a lot less than 2010. We had employees working an extra 2 months on average in 2010 with Mandatory Overtime. That means we had to stay whether we wanted to or not. If you go back and watch the council meetings the leadership of our associations was warning the council that the overtime was out of control. With the Safer Grant that we have received the last 2 years we have been able to stabilize the staffing levels for the community while reducing the overtime cost.”
Here are 2011 #s That someone sent me . I know you Standby what you say.
Here is Yours for Example.These were from the City and redacted on spreadsheet…For Jeff DelBono 2011 after new Contract.
Total Salary 95,661
Overtime 8,256
Acting Pay 5,665
Other 22,850
Medical 23,161
Retirement 41,058
TotalComp 196,651
Comment by John — December 13, 2012 @ 2:14 pm
Mr. Sullwold,
The staff report says:
your post says:
Only your post has snarky quotation marks used to dismiss the item. Paired with your subsequent comment “I suppose one could characterize a few of these projects as taking care of ‘deferred maintenance,’” it’s clear you employ them for this effect.
Still, am sincerely interested in the vision you have for the city. It’s clear you don’t like the firefighters contract, I’m curious what you propose, and what your proposal looks like in its implementation on services, etc.
Comment by jkw — December 13, 2012 @ 2:42 pm
I am deeply flattered that Mr. White is interested in my “vision” for the City and my views about the budget and appropriate “service levels.” Unfortunately, the time available to me for indulging him is limited. Suffice it to say that, like his colleague, Vice Mayor-elect Ashcraft, I favor a “vibrant, livable community” and a city budget that “sustains” the “quality of life that makes Alameda such a livable city, i.e. — good schools, great neighborhoods, low crime, wonderful parks, a network of bike paths, recreational opportunities and vibrant downtown districts.” (Note to Mr. White: I’m using quotation marks because I’m quoting what somebody else wrote).
Comment by Robert Sullwold — December 13, 2012 @ 4:06 pm
I understand Mr. Sullwold is a Republican, according to his wife during the campaign trail.
Quoting nymag.com: “When the only cuts on the table would inflict real harm on people with modest incomes and save small amounts of money, that is a sign that there’s just not much money to save. It’s not just that Republicans disagree with this; they don’t seem to understand it. The absence of a Republican spending proposal is not just a negotiating tactic but a howling void where a specific grasp of the role of government ought to be. And negotiating around that void is extremely hard to do. The spending cuts aren’t there because they can’t be found.”
At the 12/11/12 City Council meeting, Kennedy, deHaan and Sullwold offered no vision, or proposed cuts in public safety city services. They are anti-union and want to balance the budget on the back of workers.
Comment by Alan — December 13, 2012 @ 5:12 pm
Considering that firemen & policemen typically earn double or more what a teacher earns, and a helluva lot more than average taxpayers earn, and what they earn is ~80% of the city budget, and their outsize earnings are the reason the city is in structural deficit, and the rapid growth in their compensation is why parks & public works are stripped bare, then the budget HAS to be balanced on the backs of those workers. That isn’t Republican so much as it is reality.
Comment by Jack Schultz — December 13, 2012 @ 6:04 pm
Here’s the video from the 12/11/12 council meeting — Kevin Kennedy begins speaking at 1:38:00, and as always covers the topic of city finances very knowledgeably and realistically, just as Kevin Kearney does. We are fortunate to have them.
http://alameda.granicus.com/MediaPlayer.php?view_id=6&clip_id=1054
#18: Thanks for the opportunity to post No on C’s infographic on public safety earnings:
http://www.alamedanoonc.com/wp-content/uploads/2012/05/AAMC-Infographic-2011-City-of-Alameda-Worker-Earnings.pdf
Comment by dlm — December 13, 2012 @ 8:28 pm
Nice to see a good discussion of this here. Since my comments from Tuesday night and over the past many years seem to be one of the items being discussed, let me share a few thoughts:
1. Lauren points out that graphs and charts make this finance stuff easier to understand: I (and a dedicated group of volunteers) spent the better part of a year producing just such a set of information, the report of the Fiscal Sustainability Committee. We filled it with graphs and charts to make it understandable for the non-municipal finance expert. You can find it on the City’s website. City CFO Fred Marsh has produced some great charts and graphs for the budget talks the past couple of years, you can also find those on the City website.
2. I spoke up a few years ago when talk of the City being “on the verge of bankruptcy” were circulating, and I’ll stand by the comments I made about this back then: the City isn’t on the verge of bankruptcy, but it is clearly headed down that road. Check out the projections in the staff report from the June 26th meeting. Staff numbers show we have millions more in cuts to make (not even considering the approx $200mil in deferred maintenance and retiree medical liabilities that grow each day), but we just locked in $45mil of the $70mil General Fund budget for four years with not only no savings but cost increases via the public safety contracts. And we can’t change staffing levels in public safety for at least two years, as was clearly stated Tues night.
3. Much of the “budget balancing” over the past couple of years has been achieved through one-time sources of money, which is not sustainable. Sooner or later we’ll have to make real cuts.
4. I’m not anti-union. In fact, as I’ve pointed out many times, when cuts aren’t made in public safety they invariably fall on miscellaneous employees, who have much less political power but who are much more like what we probably picture as “working class citizens” (pay most of their health care costs, don’t have salaries that are well above the median income, don’t have overly generous pensions) who should have representation. There’s only so much pie to go around, and they’re the one’s whose share gets taken when cuts are made.
5. I did support Measure C, I thought (and still think) it was a responsible proposal to address a huge problem that likely won’t get addressed for many years otherwise (until well after we’ve solved the cash-flow problem of balancing our budget). I stepped up to work with firefighters and many other groups to do something I thought would help our City’s finances. Despite some people saying I’m a “Wisconsin Tea Party” member, I’ll pay a tax when I think it will be used properly.The issue of public safety compensation is nothing personal, I’ve shown I can work with these groups, this is simply math and the fact that we don’t have the money to continue doing what we’ve done in the past. We’re all going to have to step up, go outside our comfort zone, and offer up solutions that get this problem solved.
6. And in response to post 17: with salaries now locked in, the only areas left to cut are service reductions outside of public safety (parks, libraries, senior centers, museums, arts, etc), which serve the people who most need government-subsidized services like those things. This is one of my biggest fears, that we continue “privatizing” services as we’ve done with the Animal Shelter, and only those who have the money to pay fee-for-service or have donors willing to step in will be able to access those things. The Animal Shelter has done a great job, but throw 4-5-6 more groups raising money to preserve services and the money just gets thinner for all of the groups in need. I doubt if there are twice as many non-profits in town that we’ll all double the amount we donate every year.
7. Finally, when it comes to solutions, I think everyone should offer up ideas. the Budget Challenge is the first run at gathering public input, if you haven’t gone through it please do. Hopefully the City will do future permutations of that which focus on specific services or issues so more detailed feedback can be gathered (like thoughts on response time, for example). Given that all of our newly-elected Councilmembers said the City’s fiinances were one of their top priorities, I’ll look forward to hearing their ideas soon.
Sorry this is a bit long, but since discussions of the City finances like this come along relatively rarely, I wanted to take advantage of the opportunity to share my thoughts.
thanks-
Kevin Kennedy
City Treasurer
Comment by Kevin Kennedy — December 13, 2012 @ 8:36 pm
I hope Kennedy has a better vision for Bank of Alameda. While he has been on the Board of Directors, it has been posting $2M losses almost every quarter. Based on his advice, it should cut all the salaries of the executives, layoff half the staff, and simple just transition out of business.
Comment by Alan — December 14, 2012 @ 11:09 am
R/e Alan’s post #21: Actually, the Bank has posted a profit in 4 of the past 5 quarters. Sorry, I guess you’ll have to find something else to snipe about. Or stay on the subject at hand, as hard as that is.
Comment by Kevin Kennedy — December 14, 2012 @ 12:15 pm
Kevin,
With private business offering a average match for retirement of 3.95% of salary for retirement plans what percentage of Salary is the City commited to under our contracts.
Thanks for all your hard work .
The number of companies offering a 401(k) match is back to nearly 2008 prefinancial crisis levels, according to data released today by Schwab Retirement Plan Services, which administers plans for approximately 1,000 companies. Of these, 73% offered matches in 2011, up from 68% in 2010, Schwab reports. In 2007, 75% of plans contributed a match.
Still, the size of the match is lower than before the latest recession hit. In 2007, the match averaged 4.19% of compensation; for 2011, it averaged 3.95%. Between 2007 and 2011, the low-point for the match was 2009 when 67% of plans had a match that averaged 3.90%.
http://www.forbes.com/sites/deborahljacobs/2012/08/27/how-does-your-companys-401k-plan-stack-up/
Employer Contributions
Companies contributed an average of 4.1% of participants’ pay to the plan. Profit sharing plans tend to offer the most generous contributions, averaging 8.5% of pay. The average company contribution in 401k plans is 2.5% of pay and in combination plans it is 4.4% of pay. Nine-five point five (95.5) percent of plans that have a match provision in the plan, made the match in 2011, up from 91.0% in 2010.
http://www.401khelpcenter.com/benchmarking.html
Comment by John — December 14, 2012 @ 2:07 pm
Hi John-
Here’s the City’s contribution (just the City share, not the employee’s share) to PERS for both Public Safety (first % listed) and Miscellaneous (second %) over the past 10yrs. Hopefully this posts clearly.
2002-03 20% 8.77%
2003-04 24.7% 3.9%
2004 -05 34% 9.4%
2005-06 34% 13.7%
2006-07 30% 12.6%
2007-08 30% 12.6%
2008-09 30% 13.2%
2009-10 31% 13%
2010-11 31% 12.7%
2011-12 37% 14.6%
The actuarial report the City received in Jan 2012 estimated that these contribution rates would stay at current levels if investment returns at CalPERS are good. If the returns are bad they could escalate dramatically, with safety reaching the 45-50% range and misc in the 20-25% range.
Comment by Kevin Kennedy — December 14, 2012 @ 2:50 pm
Kevin, are you saying this article in the Alameda Patch is wrong? http://alameda.patch.com/articles/bank-of-alameda-reports-2-1-million-loss
Comment by Alan — December 14, 2012 @ 3:55 pm
Kevin,
Thanks for clearing this up. So were paying about 9 Times as much as Private Sector for Retirement benefits on average .Up from 7 Times as much. I can see why they were upset about not getting everything they wanted in contract. There were a few nickels left in a few pillows of old couch in City storage they missed.
Comment by John — December 14, 2012 @ 4:36 pm
Not that it matters Alan….But I Bank there and like the people also.
For Immediate Release
October 25, 2012
Company Press Release
NorCal Community Bancorp Announces Third Quarter Profit
ALAMEDA, Calif. – (BUSINESS WIRE) – October 25, 2012. NorCal Community
Bancorp (the “Company”) (NCLC), parent company for Bank of Alameda, today reported third
quarter net income of $265,000, or $0.02 per diluted share, compared to net income of $98,000,
or $0.01 per diluted share for the third quarter in 2011.
“We are pleased to report a return to quarterly earnings following the second quarter loss
associated with a one-time provision expense of $2.575 million.” President and CEO, Stephen G.
Andrews stated. Andrews further stated, “We believe the Company is on track to build quarterly
profitability, with significant growth in mortgage brokerage fee income and modestly increasing
loan demand. We are also pleased to report continued growth in new customers and the resulting
deposit growth, up 7% over a year ago, while maintaining a very favorable cost of funds. Demand
for the Company’s electronic banking, cash management and mobile banking services continue to
increase.”
As of September 30, 2012, total assets were $271.9 million; up 6.7% or $17.2 million
compared to September 30, 2011 total assets of $254.7 million. Total loans and leases increased
$1.2 million, or 0.7% to $162.5 million at September 30, 2012 compared to $161.3 million at
September 30, 2011. Total deposits increased $16.2 million, or 7.2% to $240.2 million at
September 30, 2012, compared to $224.0 million at September 30, 2011
A copy of the Company’s information and disclosure statement pursuant to Securities and
Exchange Commission Rule 15c2-11 can be found on the home page of the Company’s website
at http://www.bankofalameda.com under the Investor Relations section.
Comment by John — December 14, 2012 @ 4:47 pm
Alan, the article is correct, and as I said the Bank has posted profits in 4 of the past 5 quarters. Please show me where I’m wrong on that.
And while you’re at it, maybe instead of your weak attempts at attacking people’s character you can actually post something useful for people to read, like ideas on how to solve the City’s financial problems?
Comment by Kevin Kennedy — December 14, 2012 @ 5:43 pm
John, you’re right, the contribution rates are high in the public sector. And don’t forget, their pensions are guaranteed for life, unlike those of us in the private sector who have to manage our money wisely and hope it lasts through our lifetime.
In fairness to the City employees, and as I said Tuesday night, they have stepped up to contribute more toward their pensions, that shouldn’t go overlooked. But as you can see from the huge jump in contribution rates, the City’s share continues to be 50-100% higher than it was 10 years ago. Based on the actuarial reports, there’s a real chance the additional 4% public safety agreed to pay towards their pensions will be fully offset by increases in the overall rate in the next four years, meaning the City saves nothing. Tough for both sides, but that’s the hand they’re dealt.
Comment by Kevin Kennedy — December 14, 2012 @ 5:51 pm
Kevin, thanks. I know you and Kevin have been warning about this for 10 years plus and politicians just keep kicking the can down the road.. Why wouldn’t cities go to same pay structures as Federal Government . They have regional pay parameters and seem to be more on top of their administrative costs even though some would say they have gone over the edge and are unsustainable and we are paying more than double in total compensation..
Could we just buy out all the contracts now and then start over and set up something sustainable?
We are basically buying 4 – 8 million dollar retirement benefits for our employees if you had to buy it in private sector as a business or as a individual..
That’s a pretty good lotto ticket .
Thanks for all the work that you guys have done. It’s a thankless job.
Comment by John — December 14, 2012 @ 7:41 pm
Not so sure you’d want to change to this system, John
.
“When benefits such as health care and pensions are included, the federal compensation advantage over private workers is even larger, according to the BEA data. In 2010, federal worker compensation averaged $126,141, or double the private-sector average of $62,757. Figure 2 shows that average federal compensation has grown rapidly over the last decade.” http://www.downsizinggovernment.org/overpaid-federal-workers
Comment by Jack Richard — December 15, 2012 @ 9:41 am
Jack , your probably right. How about the City just contributing 7 times as much as Private Sector for Retirement benefits and spend that 2 times as much on new pools and new lighted sports field for the city. Considering 47% of the kids that are members of Alameda Boys and Girls club come from families considered living at or below the poverty line. Maybe sponsor all the kids for free sports in all the programs so the parents are not totally broke. The system seems broke……The kids and parents don’t have the money to buy the politicians so it will never happen.
Comment by John — December 15, 2012 @ 1:05 pm
Another source on the legal issues facing the state public sector and pensions: http://www.educationsector.org/sites/default/files/publications/PensionLegalGuide_RELEASE.pdf
Comment by Mike McMahon (@MikeMcMahonAUSD) — December 16, 2012 @ 10:10 am
29
When dealt a hand like that, a smart player would fold.
Comment by Jack Richard — December 16, 2012 @ 11:02 am
Jack,
When you have a huge sucker in the the game you empty him out til you get his last dollar. When he is down to lint in his pocket and leaves the game is over. Everyone hasn’t left yet and they are still chumming .
Comment by John — December 16, 2012 @ 12:16 pm
Mike, is there anything in those contracts that protect the Employer. I can see why they are # 1 Contributors to Politicians and Ballot measures in California spending Hundreds of Millions of Dollars.
In Business they would call this Bribery and would be sitting in Jail. Makes Bernie Madoff look like children’s play when you add up all the obligations and future obligations.
Teach your Children Well.
California State Pension Protections
Type of Protection
rights vest on first day of employment
Changes to Future Benefit Accrual
Cannot be reduced or eliminated
Changes to Cost-of-Living Adjustments
Cannot be changed to the employee’s detriment
Comment by John — December 16, 2012 @ 3:46 pm
Interesting Times
http://www.cbsnews.com/8301-505123_162-57446280/why-you-shouldnt-buy-california-go-bonds/
New York Post article, Kyle Smith made these observations:
California contains about one-third of the nation’s welfare recipients, despite having 12 percent of the nation’s population.
Despite its problems, the state is planning a high-speed rail system that will cost an estimated $68 billion, including $4 billion on a section The Los Angeles Times dubbed a “train to nowhere.”
Its pension costs for public employees, 85 percent of which are unionized, rose 2,000 percent in the first decade of this century, which is only 1,976 percent more than revenues increased.
A CEO survey in April ruled that California was the least business-friendly state in the U.S.
In 1999, the state allowed government workers as young as 50 to retire on 90 percent of salary they earned in their final year, when they would ramp up the overtime. In order to cover these commitments through the CALPERS investment fund, the Dow Jones Industrial Average would have to be over 25,000 by now.
Pension and health-care spending for retirees are set to triple this decade. More than 12,000 state and local workers are collecting more than $100,000 a year in pensions. Even convicted felons can collect pensions.
As Smith rightly points out, Greek and Californian politicians made the same mistakes. “They wanted union backing so badly that they promised far more than they could ever deliver,” he writes. “They knew that they’d be long gone before the crisis kicked in, or maybe it would solve itself. Either way, they didn’t care. They were happy to use tomorrow’s seed corn to buy themselves power. California’s pension plans face a $500 billion hole in unfunded promises.”
Although Brown says he wants to overhaul the cost structure of California by raising the retirement age, it seems unlikely he will be able to push these reforms through the state’s Democratic legislature (some would say a legislature that has been bought with union funds).
The bottom line is this: Greece was a bubble that was just waiting to pop. While there are some similarities, California’s situation is very different, as reflected by both the investment grade rating its bonds still carry and the spreads its bonds trade at versus similarly rated bonds. The state still has time to address these problems, and the likelihood of a default on the bonds in the near future is remote.
Comment by John — December 16, 2012 @ 4:05 pm
Number 33. Imagine what the District’s obligations might be if it provided fully paid medical for the teachers the way it does for the superintendent
Comment by Mike Henneberry — December 20, 2012 @ 9:02 pm