Showing posts with label Govt. Pensions: News Articles. Show all posts
Showing posts with label Govt. Pensions: News Articles. Show all posts

August 20, 2010

City of Lakewood responds to LAAG's public records request on city employee salaries

We find it sad and disheartening that Lakewood did not step forward right after the City of Bell scandal broke like so many other cities did and post something about city hall salaries. Not a peep on the Lakewood city website about Bell or the fallout. (typical given Lakewood's usual tendency to "duck and cover") Sadly it was incumbent upon LAAG to make the CPRA (California Public Records Act) request to get something posted for all taxpayers to see. Did the Press Telegram bother? No...Where were these folks before LA Times broke the Bell scandal? Or Attorney General Jerry Brown for that matter? (who is now closing the barn door after the horse got out).... Suffice it to say that we don't trust government officials to be looking into excessive pay of their pals across the hall in government. We were glad to get these Lakewood salaries for our readers but once again a lackadaisical attitude about what city hall is up to and giving Lakewood city leaders a "pass" by letting them continue to keep things "in the dark" forcing residents to do CPRA requests is the type of atmosphere that led to the Bell scandal. Now we see more people starting to "pull their heads out" and look closer at their city halls which quite frankly are run by "rank amateurs" in the best cases and by very suspect people in the worst cases we only now know about. Most are not really "qualified" managers. I guess that is the reason cities pay guys like Rizzo the big bucks...for their excellent management and wisdom.

As for the Lakewood city employee salaries the request once again was here and the response from Lakewood is here (in the original format). Draw your own conclusions.

The problem of taxpayers and whistleblower sites/blogs not watching this topic or their respective cities in general is becoming apparent now that the veneer of "assumed trustworthiness" is being peeled back. The Oxnard story, the Indio story and now Vernon are good examples of more aftershocks (again our hats off to LA Times) 

One of the things that irritates residents and taxpayers in the private sector is that we have born the brunt of the layoffs and unemployment in this recession; not the public sector. We keep asking people to show us one full time government unionized worker that has lost his or her job in the recession permanently. Any takers? We are listening. We'd love to post proof of one real government job loss in the entire state to compare to the hundreds of thousands in the private sector.

Secondly I am tired of the BS excuses that "well we need to pay these salaries as other cities do". Well prior legislation has set limits on city council pay to end that nonsense but not that of city employee pay. I think we need to set limits based on population like the city council. This is out of control. Why should Lakewood's City manager get paid MORE than the Long Beach City manager? Makes no sense. Again folks this is not capitalism. Its tax dollars. The same principles DON'T apply. We need a "race to the bottom" not the "top" when it comes to local government employees making over $100,00 a year. But do we really think Sacramento legislators want to cut their pals pay. Or even publish it like this?

I also get tired of hearing "well people in the private sector make more for the same job". Well first that is bogus. Read this article: Federal workers earning double their private counterparts  Secondly show me a public sector job that's the same as a private sector job. Don't exist. First public sector folks cant be fired and get benefits well beyond what any private sector worker gets. That is now painfully obvious. One retired fireman I know making 140,000 a year at age 50(!) said: Calpers is like "Amway on steroids"..lol indeed.

Another thing to keep in mind about the "low" city council salaries. Some council members already have "day" jobs in the public sector. The city council job is just icing on the cake letting them "spike" their Calpers pension benefits. We already have six (former Lakewood city employees BIEGEL, JOAN $112,153.08 yr; EBNER, CHARLES $129,820.20 yr; GONSALVES, JACK $119,698.44; RODDA, DAVID $139,251.48; SCHROEDER, LAWRENCE $116,251.80; STOVER, MICHAEL $154,147.56) in the Calpers $100,00 club (which they are in for the rest of their lives from age 50 on). (see story below) We don't need any more.  I know people in the private sector already looking at this "spiking" and "piling on" angle. Nice gig. The only people that get "golden parachutes" like this is the private sector are AIG execs and we all know how popular they are. But again if its tax dollars then LAAG really gets mad. We don't care about private money. If a corporation wants to charge high prices and pay its execs a ton of money then they will loose in the "price is all we care about" recession based economy of today.

Folks its time to get real about local government and start paying attention. Stop taking things for granted. You only have yourself to blame for not getting involved and not demanding transparency and accountability from your local elected leaders. We cannot afford to trust them any more. Do we blame the rank and file government employees for accepting a kings ransom for very little work? No we would all like jobs like that. We blame taxpayers for (1) letting local government elected leaders keep things shielded from taxpayers (not timely posted on the web in detail) and (2) taxpayers not calling the city leaders on the salaries pensions and benefits once they know about it and holding them accountable. The city leaders are counting on you to let them get away with murder right in front of you. And if you do they will stick it to you in the end as these salaries will last for LIFE.

Public service pensions over $100,000 per year skyrocket
By Troy Anderson, Staff Writer
Posted: 08/15/2009 04:49:50 PM PDT

At a time when government agencies are cutting back on law enforcement, health care for children and services for the poor, the number of public servants collecting $100,000-plus pensions - including one raking in nearly $500,000 a year - has exploded in recent years, in some cases tripling or even increasing sevenfold.

In Los Angeles County, the number of retired county employees receiving pensions of $100,000 or more has nearly tripled from 1,198 in 2004 to 3,096 today, the Daily News, a sister paper of the Press-Telegram, has learned through a series of Public Records Act requests.

Throughout California, the number of retired state workers collecting $100,000-plus pensions has mushroomed more than sixfold from 816 in 2004 to 5,115 now.

And the number of school administrators and teachers collecting six-figure pensions has rocketed more than sevenfold from 427 in 2004 to 3,088 now.

Los Angeles, excluding the Department of Water and Power, currently has 600 retirees collecting more than $100,000 a year.

"This is just outrageous to me," said Marcia Fritz, vice president of the California Foundation for Fiscal Responsibility, an organization that advocates statewide pension reform. "I would not have expected the number of ($100,000 pension club members) to have increased that much in the last five years."
Nearly $500,000 a year

The dubious honor of collecting the state's highest pension belongs to former Vernon City
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Administrator Bruce Malkenhorst, who receives $499,675 per year - even though he is currently facing two counts of misappropriating public funds for allegedly taking $60,000 in city money for personal use.

Malkenhorst's attorney did not return calls for comment.

The second-largest pension goes to an undisclosed Los Angeles County government retiree who is paid $366,384.

As grand juries throughout the state are investigating pension systems, former Assemblyman Keith Richman, president of CFFR, said these huge pensions are the result of a "corrupt pension system."

California, Richman said, is the only state in the nation that allows employees to use their highest year of salary - including unused vacation, vehicle allowances, bonuses and other compensation - in calculating their pensions.

"The bottom line is we have very extravagant pension benefits that taxpayers can't afford," Richman said. "Pension-spiking has played a large role in this. We have public employees throughout the state who are retiring at age 50 and collecting more than 100 percent of their salaries, getting annual cost-of-living raises and lifetime health benefits."

But union leaders bristle at the suggestion that most public workers receive extravagant retirement benefits.

Barbara Maynard, a consultant for the Coalition of LA City Unions and the Coalition of County Unions, said only a small percentage of retired public servants receive "these exorbitant pensions."

"It's really upper management who are receiving these benefits," Maynard said. "The rank-and-file workers are really struggling to get by on very meager pensions averaging $40,000 a year."
Call for rollback

The revelations about the eye-popping pensions - a by-product of what officials describe as a "Cadillac" pension system elected officials have created at the prodding of public employee unions - come as Gov. Arnold Schwarzenegger, Los Angeles City Councilman Bernard Parks and others are calling on elected officials to roll back generous pension and retiree health care plans.

Schwarzenegger has estimated the unfunded retirement promises - the money the state has promised to pay over the lifetime of its employees and retirees without designating where the funds will come from - could be as much as $300 billion if investments don't meet projections.

When the state's first pension fund - the California State Teachers' Retirement System - was created in 1913, teachers who worked 30 years were paid a $500 annual pension, the equivalent of about $10,500 annually now. Over the years, other public pension systems were created and most were designed to pay public servants about half their salary in retirement.

In 1999 - at the height of the economic boom - labor unions aggressively lobbied state lawmakers to pass SB 400 - the "pension-boosting bill" - retroactively boosting pensions for state employees and allowing them to retire at younger ages with higher pensions.

Then in 2003, the California Supreme Court issued a ruling on a 1997 lawsuit allowing public employees to use bonuses, clothing and auto allowances, unused vacation and other income in calculating their pensions.

Since then, government agencies throughout the state have adopted similar plans and public employees - whose pensions are usually based on the highest year's pay - have used a variety of methods to "spike" their pensions shortly before retirement.

Now, even as the number of government workers collecting $100,000-plus pensions has skyrocketed in recent years, the pension systems charged with dispersing their checks have lost tens of billions of dollars in the stock and real estate markets.

As a result, the amount of taxpayer subsidies for these pension plans will have to be increased by billions of dollars in the years ahead, requiring more tax increases and cuts in public services.

The nation's largest public pension fund, the California Public Employees' Retirement System, has recently lost a third of its value, dropping from a high of $253 billion in December 2007 to $181 billion as of June 30.

Even before the historic stock market downturn, the annual taxpayer contribution to the fund jumped from $4.2 billion in 2003-04 to $7.2 billion last fiscal year.

CalPERS spokesman Ed Fong said the system is planning to meet with representatives from public employee unions and its 26,000 member government agencies to discuss ways to reduce costs to ensure retirees are paid the amounts owed them.

Despite failed efforts in recent years to reform the public pension and benefit systems, David Crane, special adviser to the governor for jobs and economic growth, said a growing number of Democrats and Republicans in Sacramento agree steps have to be taken.

While existing pensions can't be renegotiated, Crane said the governor plans this week to propose several reforms, including less generous pension plans for newly hired workers and increased retirement ages.

"I think the Legislature increasingly understands the nature of this problem," Crane said. "They have been issuing general obligation bonds regularly without voter consent to pay these benefits. But now the programs they care very deeply about are being shut down because we have to pay off these past pension promises."

In the same way as CalPERS recently lost a huge portion of its funds, the teachers system, CalSTRS, has dropped by a third from a high of $172 billion in 2007 to $119 billion as of June 30.

Even as taxpayer contributions to the plan have grown from $1.9 billion in 2004 to $2.3 billion in 2008, CalSTRS now says closing the shortfall will require legislative action to further increase contributions made by school districts.

Similarly, the county's taxpayer contribution to the Los Angeles County Employees Retirement Association fund is expected to increase from $805 million this year to $1.1 billion by 2011-12 as the fund has dropped in value since mid-2007.

But while county officials are confident they can afford the increased costs, Parks, the Los Angeles councilman, said the city's pension funds are "seriously in bad shape" and a rapidly growing proportion of the budget is going to pay for pensions and retiree health care costs.

In response, city officials are drafting a change in the city charter that would allow for the creation of a new, less generous pension plan for newly hired city workers.

Assistant City Administrative Officer Tom Coultas said the City Council could approve the new plan for civilian employees, but any changes for police officers and firefighters would require voter approval.

troy.anderson@dailynews.com, 213-974-8985


Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA A California Non Profit Association | Demanding action and accountability from local government™ click here to receive LAAG posts by email

August 6, 2010

City of Bell..the salaries are only the tip of the Iceberg (and the taxpayers are on the Titanic)

We read these two articles below and became even more outraged at the Bell scandal, which really is only just beginning from what we hear from multiple sources. Likely more cities will be drawn into this mess as they are exposed by the media frenzy fed by outraged taxpayers. CalPERS is totally out of control and is going to bankrupt the state. It already lost 40% of its value in the last few years and will be asking taxpayers to foot the bill for Wall Street's plundering. It needs to be reined in. These articles make that painfully clear. This is just the latest is a series of debacles at CalPERS. The inmates are in charge of the asylum now. You ask any public pension recipient about this mess and they just shrug their shoulders and laugh...and then say so what are you gonna do? There is no political will to get a grip on the public employee union problem. This current public taxpayer furor is short lived and is no match for the public employee union grip. This pension problem has been known publicly for at least 5 years (LAAG published stories about it in 2006) and yet nothing has been done. It will take a bankruptcy judge to deal with it. And that is where Calif. is headed.via campaign contributions and easy, direct access to politicians.


Marcia Fritz summed it up pretty well here and below. Its not the salaries that are the crime. Its the pensions. The salaries are but a mere tip of the iceberg.

CFFR’s president Marcia Fritz was on the CBS Evening News again last night. Here are the segment’s opening comments:

When the angry citizens of Bell, California, forced their outrageously overpaid city manager and police chief to resign, it may be the best thing that ever happened to the two. Consider the pension now due city manager Robert Rizzo.

“His lifetime pension will be roughly $30 million,” said Marcia Fritz of the California Foundation for Fiscal Responsibility.

And the pension due police chief Randy Adams.

“His lifetime pension will be more like $15 to $17 million,” said Fritz.

But it’s taxpayers in other cities who will be shelling out for these lavish pensions because in California every city or county an employee worked for has to pick up a portion of the pension. And the pension is based on the final year’s salary alone, reports CBS News correspondent John Blackstone.

Our editorial comments to the article are below in bold.

http://latimesblogs.latimes.com/lanow/2010/08/pension-fund-knew-about-high-bell-salaries-but-didnt-stop-them-memo-shows.html
Pension fund knew about high Bell salaries but didn't stop them, memo shows
August 3, 2010 | 6:39 pm

Officials at California’s state pension fund became aware four years ago of the exorbitant pay raises being given to administrators in the city of Bell and did nothing to stop them, according to an internal memo obtained by The Times.

The memo, which pension staff sent to board members today, shows that the California Public Employees’ Retirement System granted an exemption to its rules in 2006 so the Bell city manager could get a 47% pay hike and still receive a full pension on his salary.

The pension system learned of the salary hike during the course of an audit and informed Bell officials that the exemption would be needed.

“At the time, the city represented that the city manager was part of the top management groups or class, and all of the employees in this group or class received similarly large increases,” [LAAG: like we said before this was the scheme..he got more so we all get more too..that makes it ok if we all rip off the taxpayers as a group...] said the memo, written by Lori McGartland, head of the pensions fund’s employer services division. “Based upon those representations, CalPERS granted a one-time approval of the city manager’s 2005 increase.”

Just last week, CalPERS officials expressed surprise at the hefty increases for the then-city manager and two other top officials and ordered a freeze on their pension benefits pending completion of an investigation by California Atty. Gen. Jerry Brown. [LAAG: how silly..none of them getting the pension yet so its like freezing something that is not going to happen how lame]

The three have resigned but not applied to receive retirement benefits from CalPERS.

CalPERS spokesman Brad Pacheco said such large pay hikes can be permissible under CalPERS rules as long as they are spread out among a group of employees, as was the case in Bell, as opposed to enriching a single official. [LAAG: like we said before this was the scheme..he got more so we all get more too..that makes it ok if we all rip off the taxpayers as a group...the more the merrier...]

“Our job is to enforce the statutes that govern the retirement law,” he said in a statement. “Pay and compensation is the decision of city and county elected officials.” [LAAG: well looks like we better change the law and fast..or that may be like rearranging deck chairs on the Titanic]

But Pacheco said Bell officials may have violated other rules and regulations, and CalPERS is assisting law enforcement in their investigations. [LAAG: what!? you are just now looking at that? Also not your job? Great]

The memo states that CalPERS has expanded its internal probe beyond the city of Bell. “Staff is currently researching the pay of all CalPERS members paid in excess of $400,000 for appropriateness,” the memo states. [LAAG: What" How about in excess of 150k..oh wait that is all govt employees...]

-- Evan Halper and Marc Lifsher in Sacramento

latimes.com/news/local/la-me-bell-pensions-20100806,0,711701.story
latimes.com
Bell salaries raise more concerns about CalPERS
The state's embattled pension system did not act four years ago when it learned about the city's runaway salaries. The state attorney general and auditors express shock that nothing was done.

By Evan Halper and Marc Lifsher, Los Angeles Times

August 6, 2010

Reporting from Sacramento

The failure of the state's embattled pension system to take action after learning four years ago of Bell city officials' runaway salaries has put the fund under another unwelcome spotlight. [LAAG: I guess a good question would be what the top management at CalPERS makes and what their pensions will cost us..I guess they did not want to blow the whistle on this thing for fear that their own fat paychecks would be questioned. Once gain the you scratch my back Ill scratch yours buddy system. Here is a related CalPERS sob story for you.]

The state attorney general says he is shocked that nobody at the fund alerted law enforcement. Professional auditors are perplexed by the lack of follow-up that even board members at the California Public Employees' Retirement System are at a loss to explain.

During a routine audit in 2006, CalPERS learned that Bell City Manager Robert Rizzo had received a 47% salary increase the year before, driving his pay up to $442,000. CalPERS is supposed to stop pay spikes that can unduly enlarge retiree pensions, but officials signed off on Rizzo's raise because Bell's assistant city manager and City Council members were also getting enormous boosts. CalPERS took no further action. Rizzo's salary would eventually grow to nearly $800,000.

"A 47% increase in salary should have set off alarm bells," said California Atty. Gen. Jerry Brown, who is also the Democratic nominee for governor. "That kind of jump in pay is shocking and completely unacceptable. CalPERS should have told someone, and the attorney general's office would have been a good place to start." [LAAG: So Jerry why didn't you look into it yourself. Could you not hear any alarms? You are no newcomer to state pension ripoffs are you? Taxpayers have to deliver crimes to you on a silver platter? Is your AG office not the chief investigator and law enforcement officer of the state?...perfect timing though for your underfunded gubernatorial campaign. you cant buy press like this]

Documents released by CalPERS on Thursday show that the fund was also informed of a 42% raise for the assistant city manager and nearly 38% raise for City Council members. That brought council members' pay to $62,000 by 2005 for part-time jobs that in other small cities pay about $400 per month. The newly released records include Bell's explanation to CalPERS of why its officials were worthy of such salaries.

Assistant City Manager Angela Spaccia told CalPERs in writing in October 2006 that the city manager's salary was hiked "to reflect his contributions to the city," which included helping Bell resolve a multimillion-dollar deficit. She said her own pay hike was "provided to reward her for her efforts and new responsibilities" related to a promotion the city had given her.

"It should also be noted that the City Council, also members of the Executive Management classification, were compensated accordingly for their contributions and efforts toward the City's dramatic financial recovery," Spaccia wrote.

CalPERS responded a week later that the city had provided sufficient documentation to authorize "a one-time compensation adjustment" for the officials. The fund conducted no follow-up audits, and Bell salaries continued to soar.

The pension officials' handling of the audit has invited more scrutiny for CalPERS at a time when it is already reeling from a corruption scandal. Brown's office earlier this year accused the fund's former chief executive and a former board member of being engaged in fraud. A civil suit is pending in Los Angeles County Superior Court.

CalPERS has ordered a freeze on the pension benefits of the three highest-paid former Bell officials pending the outcome of an investigation Brown has launched. None of those former officials have yet applied to receive their pensions.

Brad Pacheco, a CalPERS spokesman, said there were no follow-up audits because Bell wasn't scheduled to be looked at until about five years later. Asked why CalPERs did not alert authorities to the salary spikes, he said: "We're not part of that chain of command. It was the elected city officials who negotiated, saw and signed the salaries and who are accountable."

But some CalPERS board members say the fund mishandled the situation.

Among those critics is state Treasurer Bill Lockyer, who says CalPERS staff never alerted the fund's board members to the audit's findings.

"There were no red flags raised for the board," said Lockyer spokesman Tom Dresslar. "That has to change."

He said Lockyer would propose rules requiring CalPERS staff to report to the board any audits that spot excessive salary hikes.

State Controller John Chiang, also a board member, said he would call on CalPERS to require that local governments "immediately notify the pension fund of any proposed salary increase that exceeds a reasonable level, along with a justification and the pay history for that position."

The controller's staff said "reasonable" might be 10% or less.

Political opponents of Lockyer and Chiang, both of whom are running for reelection in November, have sought to blame the two officials for CalPERS' handling of the audit. Lockyer and Chiang said the audit was complete, and CalPERs already had approved the salary hikes, before they joined the board.

Laura Chick, appointed by Gov. Arnold Schwarzenegger as the chief auditor of California's federal stimulus dollars, expressed surprise that nobody at CalPERS flagged the Bell information.

"When you see unusual things and see things that raise eyebrows — and someone's eyebrows go up with a 47% salary increase.…The best thing is to go back and take another look."

Officials at the California Bureau of State Audits say that is their policy. Spokeswoman Margarita Fernandez said her agency routinely does follow-up audits after 60 days, six months and one year.

"If we don't follow up, we don't know if our auditees are taking our recommendations to heart," she said. "Most standards will call for some follow-up."

evan.halper@latimes.com

marc.lifsher@latimes.com


Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA A California Non Profit Association | Demanding action and accountability from local government™ click here to receive LAAG posts by email

December 8, 2008

Their loss is...your loss

Ahhh we hate to say we told you so..but here comes the bad news (well just for you the taxpayer not for you government workers...and we use the term "workers" lightly). You see as we explained before when "Joe the Taxpayer's" company goes belly up or your 401k drops in value, you learn to live on less in retirement or work much longer. Well that won't cut it for those dedicated government workers on CalPERS. Mr. and Mrs. Taxpayer have (are required) to bail them out too just like the fat cats on Wall St. And no you dont get a vote or a choice or a say in the matter. Gotcha! So when you tell little Johnny he won't be going to college (as your 401k just dropped 50%), tell him its okay as he wont need that education. He can get a government job with short hours, high pay, unending perks, free cars, gold plated healthcare for life and a pension that is better than most on Wall St. get. And then if the economy ever hits the skids he can laugh at all the dummies working in the private sector. Obama could solve the recession issue by just giving us all government jobs. Dont ask who would pay for them. Your kid's kids could figure that out later.

State public worker pension fund takes big hit
The market downturn has walloped the nation's largest pension fund.

Carolyn Said, Chronicle Staff Writer
Monday, December 8, 2008

The California Public Employees' Retirement System portfolio has lost 31.1 percent of its value since peaking last fall, a staggering $81.4 billion drop. CalPERS officials say a "rainy day fund" is helping to defray the losses - for now. But if the market slump continues, they will hit up state and local employers for more money. That's a painful prospect as California struggles through a fiscal emergency and municipalities cope with the foreclosure crisis and economic downturn.

The good news for the 1.6 million CalPERS retirees, workers and family members is that their pension benefits are guaranteed.

"Obviously, if there is a downturn, there are going to be ramifications," said Rob Feckner, president of the CalPERS board. "Our job is to make sure we protect the system and the funds that are there for the pensioners."

The CalPERS portfolio hit a high point of $260.6 billion on Oct. 31, 2007. As of market close on Dec. 4, it had fallen to $179.2 billion - almost back to its value in mid-2000.

The portfolio drop comes amid a time of extraordinary financial turmoil, with wrenching contractions on Wall Street that have wiped out trillions of dollars of shareholder value. The Dow Jones Industrial Average has dropped 39.8 percent during the same period that the CalPERS portfolio fell 31.1 percent, for instance.

Unlike many pension funds, CalPERS can require employers to dig deeper when needed. Since those employers are public entities, their funds come from taxpayer dollars. This fall, CalPERS warned that it might ask for more money from the state starting in July 2010 and from local-government employers starting in July 2011.

If the current losses are sustained, CalPERS said the increases could be from 2 to 5 percent of payrolls. That's a hefty rise on top of the 12.7 percent of payrolls employers already contribute to the pension fund. (Employees contribute from 5 to 7 percent of their salaries.) If losses are more moderate, then the potential increases would be smaller. Although it seems highly unlikely, if the fund finishes the year in positive territory, employers could even see their pension obligations reduced.

"We wanted to give an early warning so they had plenty of time to prepare if the worst were to happen," said Pat Macht, a spokeswoman for the agency in Sacramento.
Long-range focus

She and other experts emphasized that CalPERS focuses on long-range planning.

"It's important to remember that public pension funds exist over decades and their liabilities will come due over decades, which provides the time for markets to recover and funding levels to recover," said Keith Brainard, research director of the National Association of State Retirement Administrators. "Yes, this has been a precipitous market decline, but because (CalPERS and other retirement plans) have plans and mechanisms to smooth out peaks and valleys, the actual effect is likely to be far less sharp."

The nation's second-largest public pension fund is the California State Teachers' Retirement System with 794,812 members. It, too, has sustained heavy losses in the market downturn. Its portfolio fell 20.3 percent, or $32.9 billion from June 30 to Oct. 31, going from $162.2 billion to $129.3 billion.

CalSTRS' defined-benefit pensions are guaranteed just like those of CalPERS. Unlike CalPERS, however, the teachers' fund does not have the authority to ask for increased contributions from employers. Any contribution changes would have to be enacted by the Legislature and approved by the governor. CalSTRS is funded by school districts contributing 8.25 percent of payroll, the state general fund paying in a tad over 2 percent of payroll, and members contributing 8 percent of salaries.

"As a patient, long-term investor, we're built to make it through these ups and downs," said Sherry Reser, a CalSTRS spokeswoman in Sacramento. "We're a forever investor. There is going to be a recovery; we've done this before."

Both funds use various "smoothing" mechanisms to help minimize the impact of market volatility.

During four years of double-digit growth from 2004 to 2007, CalPERS reserved 14 percent of its total portfolio to hedge against drops, Macht said.

"If we had not done this, it would have been considerably worse," she said. "The impacts of today are being softened considerably."

However, that cushion is largely depleted. For the fiscal year ended June 30, 2007, the portfolio was down 5 percent. The "rainy day" funds were used to make up that shortfall and provide the returns CalPERS would have experienced if the portfolio had risen 7.75 percent.

The portfolio fell an additional 25 percent from June 30 to Dec. 4. There are still almost seven months in CalPERS' fiscal year, but if the results are still negative on June 30, then it will ask agencies to ante up.

Hoping for best

California Treasurer Bill Lockyer, who sits on the CalPERS board, said he is hopeful that market conditions will improve by then so it won't have to ask for more money.

But if agencies do have to dig deeper to fund pension obligations, "this would be an added burden," he said. "It means both state and local government employers would be spending more on retirement than on some immediate program needs. Paying the commitments to pension obligation is a high priority, and it would take precedence over many other spendings." (LAAG translation: we pay ourselves first from the trough and you the tax payer gets less in return for your tax dollar by way of "services")

Where would the money come from? Government has just two choices, Lockyer said. "You either cut some other program expenditures or you tax something."

Critics say that underscores their basic gripe with public pensions: Taxpayers end up footing the bill. (LAAG: There's a shocker!)

"This is another example of why, over time, all public entities in California need to think seriously about changing from the defined benefit to the defined contribution plan," said Jon Coupal, president of the Howard Jarvis Taxpayers Association in Sacramento. "With defined contribution plans, which can still be quite generous, the taxpayers' obligation ends when those contributions are made. You don't get in a situation like we have right now, where the economy is heading in a downward spiral and you ramp up taxpayer obligations to meet those pension obligations."

Attempts to change public pensions meet strong opposition from government workers and their unions. In 2005, Gov. Arnold Schwarzenegger proposed reforming California public pensions with a 401(k)-style plan, but later withdrew the idea.

About CalPERS

Mission: Manages pension and health benefits for public workers from about 2,300 California public entities. Pensions, which are guaranteed by law, are defined benefits determined by a retiree's salary, length of service and age.

Members: 1.6 million public employees, retirees and their families (1,126,133 active and inactive members; 476,252 retirees). Members are drawn about one-third each from state government, schools and local government agencies.

Income: Participating agencies contribute an average of 12.7 percent of payroll. Workers contribute 5 to 7 percent of their salaries.

Source: CalPERS
Possible changes in employer contributions

Depending on investment results when the fiscal year ends on June 30, 2009, CalPERS may request additional contributions from employers, which are taxpayer-funded government entities. So far this fiscal year (from July 1 to Dec. 4), the investment return is -25%. Contribution decreases are smaller with larger returns because CalPERS would hold back some gains as a cushion for future downturns.

2008-09 investment return Change in employer contributions as percentage of payroll
-20% 2% to 5%
-15% 1% to 2%
-10% 0.2% to 0.5%
0 0.1% to 0.2%
7.75% -0.1%
10% -0.1% to -0.2%
20% -0.2% to -0.5%

Source: CalPERS

E-mail Carolyn Said at csaid@sfchronicle.com.

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/12/08/MN1314IRLO.DTL

This article appeared on page A - 1 of the San Francisco Chronicle

Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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November 26, 2008

California moves closer to the egde of the cliff

We are looking for a California debt counter like the one currently on the upper right of our page. I dont think we really need to add much to the statement below which was made on Nov 25, 2008 during the second budget debate this year in the California state legislature. It appears to be code speak for "we have to reform government and get the unions out". State Senator Tom McClintock (R., Thousand Oaks), who is struggling for a Congressional seat in the Sacramento area, ended his state senate seat by stating the following:

"...The recession does not explain why it is that we have spent $11 billion more than we have taken in during this past twelve months...With respect to taxes...the Republican opposition to taxes is not ideological, it is not political, it is practical. As a practical matter, this course has been tried and it was proven to be a disaster. In the first quarter of 1991, the national recession officially ended. In the third quarter of 1991, the Pete Wilson administration imposed the biggest tax increase in the history of this or any state. And in the fourth quarter of 1991, we saw the biggest plunge in retail sales that we had suffered in any time in the prior 30 years. In the following two years, our revenues did not go up; in fact, they declined a billion dollars a year...

The final and most important point that I want to make...is because I want to avail myself of this one last opportunity to try to get through to the majority on this point. I agree with you. Line item reductions, cuts alone, will not bridge this gap. They would have a couple of years ago but we have long past that fiscal tipping point. What we are talking about is redesigning these systems.

Mention was made to the Pat Brown administration. I challenge every one of you to go back and reflect upon what this state produced as services during the Pat Brown administration. We were offering a free university education to every Californian who wanted it. We had the finest highway system in the world...We were producing electricity and water so cheaply that many communities didn't bother to measure the stuff. If you look back at that administration, you will find that we were spending about half, inflation and population adjusted, what we're spending today, about 2/3 as a percentage of personal income of what we we're spending today. You have to look at the way that money was being spent...

We have grossly centralized and bureaucratized and unionized [government's] service delivery systems over the past forty years and that is why we have reached a paradox where despite record levels of spending and record levels of taxes, we can't seem to scrape together enough money to build a decent road system or educate our kids or protect our families from predators...

Please consider that it is not what we are spending but the way we are spending it that has been the problem and that's going to require not reforming these bureaucracies but redesigning and replacing them, and the sooner we get to it, the better.

Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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November 18, 2008

What recession?

As the article from the Wall Street Journal below so aptly noted its never a recession for government employees. Although the article picks in NY California is no different nor is any other state or local government entity. Heathcare and pensions get fatter. Their pensions cant ever really "loose value" in the market because if they do taxpayers bail them out. Their healthcare is gold plated for life. I am sure many federal employees voted against Obama not wanting to share their healthcare with the rest of us "little people". Hiring goes on unabated, raises (not for merit mind you) keep piling up year after year, fattening that pension. Oh and lets not forget that you cant ever be laid off or fired unless you basically want to be or shoot your boss. The point is there is no recession for government employees. Oh and remember they dont pay social security taxes. They are too good for that. Social Security is for "po' folk" pensions. So the next time you wonder how your neighbors are struggling in the recession dont ask your government employed neighbors (likely the ones with the newest SUV's in the driveway) I wonder why in Obama's 30 minute infomercial he never ran across a "middle class" government employee (or retired one) that was "struggling". If Obama really wants to fix things he will federalize every worker in the USA like the TSA did. What is ironic is many of the folks likely crying Obama was a "socialist" during the campaign were likely government employees (I can name two; one shoots Moose).

Take a look at these stats right from the Bureau of Labor Statistics (www.bls.gov) publication entitled: "THE EMPLOYMENT SITUATION: OCTOBER 2008"

Table A shows that all sectors are down except for government employees, which are up 23%. Table A-11 shows that government workers (2.3% unemployment) and people in healthcare and education (also mostly government jobs) (2.7% unemployment) have the lowest percentages of unemployment. It is likely unchanged even in good economic times. Well mining is lower but I dont see people clamoring to those jobs. (gotta keep churning out that greenhouse gas!)






NOVEMBER 18, 2008

The Public Payroll Always Rises
New York spends as if the mortgage boom never ended.
http://online.wsj.com/article/SB122696844505235511.html

As the recession hits home, all across America businesses and families are having to make hard decisions about what not to buy this year, or whether they can afford a vacation or that plane trip home for the holidays. The exception is the government -- federal, state and city.

As a case in point, consider the nearby chart as an addendum to our editorial last week on New York's imploding finances. City and state politicians want voters to believe that they have been careful stewards of taxpayer money, searching out waste far and wide, and genuinely doing everything they can to control government bloat. Ah, no.

New York City did witness a reduction in public employment in 2002 and 2003, during the last period of slower economic growth. But the city quickly resumed its habit of ever-growing payrolls, and they have kept growing rapidly in the years since -- to an estimated record this June 30 of 313,965 employees on the public dime, according to the Mayor's office. That's an increase of more than 40,000 public workers in a year when Wall Street has been enduring historic losses and laying off tens of thousands of people.

Like most of his predecessors, Mayor Michael Bloomberg has been reluctant to challenge the public-employee unions that drive ever-larger public employment. Now, amid the current downturn, he is once again talking about a property-tax increase or a new commuter tax along with some modest reductions in services. That is merely tinkering with the status quo rather than using the current crisis as an opportunity to drive major reform. As Rahm Emanuel likes to say, a crisis is a terrible thing to waste.

Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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October 9, 2008

Bailouts for CA pensions next up

I knew this was coming. You could see the writing on the wall 3 years ago or more. So we the taxpayers bail out the banks and Wall St. Then we bail out AIG. Now we are going to have to bail out the pension funds of those hard working cops who bring lawsuits upon us taxpayers (when the shoot and taser people "accidentally") as well as all their "hard working" civil servant cousins. Yes that's right Joe Taxpayer. You go to end of the line. Too bad your 401k just ate it in the last two weeks. No one to bail you out. But who will pay the cops $100,000 a year retirement and gold plated healthcare for life with cost of living when Wall St. dented their pension funds? YOU WILL of course. Wake up private sector zombies! You better get in line for your bailout before its all gone! You know what rolls down hill...and guess who is at the bottom. You cant really have a bigger train wreck can you? Idiots in government running a pension fund the size of a small country and when they screw up they get bailed out.

Like I say all the time. The solution to the problem is that we all go work for the government and leave the private sector jobs to third world (soon to be first world) countries. Next we will nationalize the banks. Ahh socialism is great ain't it? Well it is if you are a public employee. The rest of us have to pay for it.

Retirement system bailout feared
By Troy Anderson, Staff Writer
Article Launched: 10/08/2008
http://www.dailybreeze.com/ci_10674612

The Wall Street meltdown has siphoned tens of billions of dollars from local and state public pension systems over the past year, and elected officials and taxpayer groups expressed worry Wednesday that taxpayers might ultimately have to bail out the plans.

The state retirement system has lost about $50 billion in investment value since June 30, 2007, a drop of about 20 percent in just over a year.

Los Angeles County's system has dropped 8 percent, from $40.9 billion down to $37.8 billion, during the same period.

The city of Los Angeles Fire and Police Pension System dropped 13 percent, to $12.1 billion.

And the state teachers retirement system has also dropped 8 percent, down to $158.6 billion.

Former Assemblyman Keith Richman, who heads a foundation seeking pension reform in California, said the drop in assets "is going to put a severe financial strain on the taxpayers."

He noted that state taxpayers already are on the hook for several hundred billion dollars in unfunded liabilities for public employee pensions and retiree health care plans.

"The public employee pensions were going to place a heavy cost on the taxpayers before the drop in the stock market and it's going to be even more costly now," said Richman, president of the California Foundation for Fiscal Responsibility.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, said the drops in the funds, especially the $49.2 billion drop in CalPERS, are "Exhibit A" in why state lawmakers should have adopted Richman's plan a few years ago to shift new state employees into 401(k)-type retirement plans.

"So not only do private employees see their own 401(k) retirement accounts shrinking, they are now also on the hook to pay additional costs for public sector pensions that are unfunded," Coupal said. "This is highly unjust."

But California Public Employees Retirement System spokeswoman Patricia Macht said the system has experienced heavy losses before, only to recover fairly quickly. After the Sept. 11, 2001, terrorist attacks, the fund lost about $50 billion but ultimately rebounded with a $120 billion gain, she said.

CalPERS holds about 56 percent of its investment portfolio in the stock market, she said, but no more than 0.5 percent of that in any single public company, with additional diverse investment in bonds, real estate and commodities.

"One lesson we learned in the early 2000s was the need to hold back some of our gains - to spread our gains over a longer period of a time," she said.

Macht said the taxpayer contribution to CalPERS won't need to be increased in the fiscal year starting July 1. But she said CalPERS will have to wait to see how the market does before determining if the taxpayer contribution will need to be increased in future years.

Les Robbins, chairman of the Los Angeles County Employees Retirement Association, said the board has plenty of money to pay for county employees' pensions.

"We haven't seen anything like this since 1929," said Robbins, a retired sheriff's sergeant. [is this not inconsistent with his prior statement...never mind he is a cop already on the dole...LAAG Editor] "But we're in this for the long haul. We work in 30-year cycles. We are a conservative fund." [Yes and so were my 401k stocks..again public employees in denial of reality]

Michael Perez, general manager of the city's Fire and Police Pension, said the fund has dropped significantly and he's gotten lots of calls from worried members.

"It's affected us as it has every other public pension system," Perez said. "We're a well-funded and well-diversified plan and we smooth asset values over a five-year period. We've been in existence since 1899 and have been through a lot of market cycles."

At Tuesday's Board of Supervisors meeting, Supervisor Zev Yaroslavsky expressed concerns about a recent LACERA report noting the fund has exposure to several large investment banks that filed for bankruptcy, received a federal bailout or were purchased by another bank, including Lehman Brothers Holdings Inc., American International Group Inc. and Merrill Lynch Co. Inc.

LACERA Chief Investment Officer Lisa Mazzocco wrote that the fund has more than $150 million invested in companies that could be at risk.

"The magnitude of this week's events is incomprehensible," Mazzocco wrote. "In a matter of 10 short days, the country's financial system has been dramatically altered."

Supervisor Yvonne Brathwaite Burke said LACERA had initially estimated it may lose $84 million.

"We had a lot of warning," Burke said. "And so I was really surprised that there was such a difference in terms of the approach of the county and the approach of LACERA as it related to some of those investments."

But Yaroslavsky said the $84million is "pocket change" compared to what the losses may eventually total. Yaroslavsky said the county may ultimately have to bolster the LACERA fund with hundreds of millions of dollars.

The annual taxpayer contribution to the fund has risen from $194million in 2001 to $752 million last year.

"The real impact is going to be when we have to make up what could be in the nine figures on the retirement contribution - to make up the difference between what they lost in earnings and what has to be put in to meet the requirements of funding the pension plan," Yaroslavsky said.

troy.anderson@dailynews.com

Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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August 2, 2008

Are there any more tax or budget "tricks" left?

The true scope of the recession is now becoming clear. The recession in the so called "private sector" is finally starting to hit home in the public sector. Here come the tax increases. And new taxes in areas or on items you have not seen before. You see while people in the private sector and at home learn to do with less, the little piggies in the public sector can't as they have never learned how to do that. Every year must bring new ("well deserved") raises, more pension goodies and more perks like cars and blackberries. Well its going to be really hard to "sell" these new state and local tax increases to people in the private sector now netting less money (due to inflation, energy and food prices, and home devaluations). The private sector is saying "Hey why should we be financing you fat government cats when we dont get the same". Good question. I guess it finally will be the sour economy that gets the taxpayers to stop swallowing the BS. Quite frankly I could do with less government "social" programs at the state and local level. Use what money you have for infrastructure. And lets cut way back on the billion wasted on forest fires. As you have surely read from the latest news posts on this we are pouring money down the fire department "overtime rathole" when it some to fighting the wildland fires that are not endangering homes.


August 2, 2008

State, local governments flirt with fiscal disaster as budgets grow bigger

http://www.delawareonline.com/apps/pbcs.dll/article?AID=/20080802/OPINION11/808020312/1004/OPINION

State and local governments in this country seem to be running out of budgetary tricks.

In June Delaware's General Assembly had to swallow hard and cut deep into the state budget.

In California this week, Gov. Schwarzenegger escalated his fiscal battle with the Democratic Legislature by cutting the pay of 200,000 state employees. In New York, Gov. Paterson called the state's revenue situation dire, asked for federal help and suggested privatizing the New York City subway.

The economic slowdown is hurting revenues. In addition, expenses at the state and local levels are mounting across the country.

USA Today estimated on Friday that state and local governments are likely to spend $3 trillion in 2008. That's about 13 percent of the country's gross domestic product.

On top of that, many state and local governments are in hock for pension and post-employment health benefits they have promised an ever-growing number of public employees. In addition, every state has seen mounting costs for the state share of Medicaid health and nursing costs.

The federal General Accountability Office warned earlier this year that those bills will come due within 10 years as the employees begin retiring in large numbers and more older citizens need long-term care paid for by Medicaid.

The scramble is on for extra sources of revenue. And that's where the tricks are starting to miss. Maryland, for example, just raised its tax on cigarettes by $1 a pack. But so many people have simply stopped smoking that despite the tax increase the state will be short $40 million t0 $60 million in revenue this year.

The rise in gasoline prices forced Americans to cut driving so much that the Highway Trust Fund is near bankruptcy. Fewer driven miles translates into fewer dollars collected from gasoline taxes. The downturn in the financial markets is crippling New York's economy and reducing revenues in every state, including Delaware, that depends on the credit industry for revenue.

The housing slump has cut revenue from real estate transfer taxes. Likewise, the high cost of gasoline and the shaky economy have depressed the market for cars. That, in turn, means fewer autoworkers.

Help from the federal government is likely to be limited. Just this week it was announced that the 2009 budget deficit will be $482 billion. That is beginning to worry a lot of investors.

Some of these developments may turn out to be temporary. But others won't. The long-term outlook, at least, calls for an end to tinkering with budget. Cuts are in order. So are better management and, unfortunately, increased fees and taxes where appropriate.

Most of all, the tricks must stop.

Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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July 13, 2008

Can LAAG get on the grand jury?

Oh man LAAG loves it when common taxpayers are given power. Go Grand Jury go! Don't mind those politicians paid off by the unions...they won't bite you. The quotes and statements in the article below would be hilarious if they were not so alarming and true. City councils for the most part don't have time for independent thought and even if many were capable of such thought I would not want to hear their thoughts. Their job is to represent the taxpayers of the city. All of them. And to conserve tax dollars and hold down spending. Not to kiss the staff's a__ and suck up to rank and file union members. Gov. Schwarzenegger already does that, all the time claiming he is a republican. (don't forget his failed initiatives)

Grand jury slams Live Oak over pension OK
By Robert LaHue/Appeal-Democrat
July 12, 2008 - 10:32PM
http://www.appeal-democrat.com/news/jury_66291___article.html/pension_increases.html

The Sutter County CA grand jury targeted pension increases in its latest report, but not the long-disputed pensions of county employees.

Instead, the jury scrutinized pension increases approved for Live Oak's workers.

In the annual report released this month, the grand jury said the City Council didn't do enough independent research into the long-term impact of pension increases and did not make a strong enough attempt to inform the public — findings disputed by the city manager.

The council in March approved an increase in the pension, from a 2.5 at 55 benefit to a 2.7 at 55, meaning employees receive 2.7 percent of their salary for every year worked and are eligible to receive full retirement at age 55.

The council approved the increase 4-1. Vice Mayor Judy Richards dissented.

"The recent, and highly publicized, pension increases enacted by Sutter County should have informed the City Council as to the significance of the issue and all the variables surrounding it," the grand jury wrote.

"If the importance of their decision was evident to the City Council, it wasn't evidenced by their efforts to fully inform the public or engage the citizens of Live Oak in a meaningful dialog."

City Manager Tom Lando said the city held "two or three separate public meetings" on the pension increases, and allowed the public to speak on multiple occasions.

"The City Council deliberated over a number of sessions about an appropriate compensation package for employees," he said.

The pension increase was requested by city employees, who aren't represented by a union. Lando also noted staff members took the pension increase instead of a cost-of-living increase in pay.

"In terms of net impact on the city and its budget, it was better for the city and it's what the employees wanted," he said. [we dont care what the taxpayers want; LAAG]

The grand jury also noted concerns about the fact-finding efforts of the City Council. Public Employees' Retirement System actuary Richard Santos told the jury "he was disappointed that not even one question was asked of him by any member of the Live Oak City Council."

The panel also noted testimony by Mayor Diane Hodges about her reason for supporting the pension increase.

"Her response was, 'Staff thought it was a good idea and that's why they're there for,'" the grand jury wrote. "Asked if she had an independent thought as to the wisdom of the increase, she replied, 'No.'"

The grand jury labeled Hodges' response an admitted "rubber stamp" of the pension increases.

Hodges could not be reached for comment Friday. Lando defended Hodges and other council members as "diligent" in their deliberations about the pension increases.

"I have found the mayor to be very good about doing her homework on each issue," Lando said.

The grand jury said it wasn't passing judgment on whether the pension increases should have been enacted, saying its "focus is on the process that preceded the decision."

However, the jury also noted that costs of public employee benefits "have become a significant area of concern in recent years."

Lando said he could say "with certainty" the approval was not a rubber stamp.

"We will provide an official response to the grand jury report, but in my opinion it was well thought-out with the City Council," he said.

Contact Appeal-Democrat reporter Robert LaHue at 749-4713 or rlahue@appealdemocrat.com


Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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May 23, 2008

Vallejo CA pulls the plug: Calpers holding the bag on 219 million in unfunded pension benfits

Well this is the shot that will be heard round the world. The question really is what kind of precedent will this set for other cities in the US and in Calif. to deal with the massive public employee pension problem. Like most issues the government deals with I smell a bailout. Taxpayers better grab their wallets and run. I think the time has come for the voters to become the city managers and to hold elections on the "pension giveaways". God knows the politicians cannot be trusted anymore with the public employee unions.


City of Vallejo, California files for bankruptcy
Fri May 23, 2008 5:03pm EDT
http://www.reuters.com/article/domesticNews/idUSN2352179020080523

By Adam Tanner

SAN FRANCISCO (Reuters) - The city of Vallejo, California, filed for bankruptcy on Friday, a move signaled by its city council earlier this month as it struggles to avoid running out of money amid steep city personnel costs and sliding revenues from a housing slump.

The Chapter 9 filing by Vallejo, a blue-collar, former Navy town in the San Francisco Bay Area, in U.S. bankruptcy court in Sacramento had been expected since May 6, when the city council approved the drastic move.

Vallejo, with over 100,000 residents, is the first sizable city in California to file for bankruptcy. Chapter 9 is a bankruptcy filing for municipalities.

Although many California towns are coping with shrinking tax revenues and some of the highest home foreclosure rates in the nation, they are not likely to follow Vallejo's suit.

Moody's Investors Service said earlier this month that Vallejo's expected bankruptcy filing would be a "unique case."

The state's last bankruptcy filing was in 1994 when Orange County's finances ran aground on soured investments linked to derivatives.

LEVERAGE WITH EMPLOYEES?

According to the filing signed by City Manager Joseph Tanner, the city has 1,000 to 5,000 creditors, estimated assets of half a billion to $1 billion and liabilities of $100 million to $500 million. Tanner had previously said that the city's general fund would be depleted at the end of June.

Vallejo's main financial difficulty is the high spending on public safety employees, whose costs eat up three-quarters of the city's general fund.

Although the city reached a deal with employees in February for pay cuts and other short-term measures to keep paying bills, the city council said earlier this month that filing for bankruptcy might give it more leverage in talks with workers on wages and benefits.

A document accompanying the filing said that the California Public Employees Retirement System, the nation's largest pension fund, known as Calpers, held the largest unsecured claim, with $135.4 million in retiree health benefits, and another $83.9 million in unfunded pension plan benefits.

Wells Fargo Bank was a bond trustee with $27.3 million in unsecured claims, and the Union Bank of California with $26.2 million in unsecured claims, the document said.

(Reporting by Adam Tanner, writing by Mary Milliken; editing by Leslie Adler)

Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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May 18, 2008

In California, unions have the upper hand and will eventually take over

This pretty much sums up the current situation with public unions and how they are contrasted with private unions. Again we are reaching a tipping point as the Vallejo potential bankruptcy all but too painfully points out. this is all about greed and control and "we want what they have" mentality. It has to come to an end sooner or later. The Housing crisis may bring it to a head quicker due to the shortfall in property tax revenue which will be hitting home soon. This is a showdown between the taxpayers and the "ruling elite"...the public employee unions, the spinless political hacks we let get elected and their pork barrel dog and pony show.

The trouble with unions
By MICHAEL HALEY
Napa Valley Register
http://www.napavalleyregister.com/articles/2008/05/18/opinion/michael_haley/doc482b723f46256162341736.txt

When I read the recent Register article about the service workers unions approaching the City Council for support in unionizing new hotel workers, all I could think was here comes trouble. I hope the City Council does not help them.

I think most people believe that unions counterbalance management in a sort of equal relationship, one side representing one point of view, the other another, and that it all balances out equally assuring fairness. But it is not an equal relationship, the unions soon grow to have more power than management and can control the entire situation to the point that the employer becomes harmed, even bankrupt.

Let me first of all say that often times unions have done a lot of good, so I am not necessarily opposed to them in total.

But there are two main reasons for unions having an unfair advantage that it is important for people to understand. This happens in both private unions and even more so in government.

The first reason is that labor unions all link together as a large unit, while the employers, be they government or private, have to act independently by law. If you can control the position of labor across a whole field of employment, say all the firefighters in the state acting together, then each individual local government is far out manned.

The second is that they are not a feature of a free marketplace, but are an invention of the government to control a free market place. Unions only exist because government laws and regulations mandate them. A marketplace, on the other hand, would exist whether the government regulated it or not.

What that means is that by taking away some of the freedom of employers and employees to freely associate on whatever terms they prefer, you lose economic efficiency. On an economic basis, there is just no way around it.

Vallejo's safety unions are a good example of how that harms us.

The salaries they have negotiated are a shocker they are so high, yet they have refused to negotiate and caused the city to go into bankruptcy. And yet they still won‚t negotiate, they have no incentive to do so. And there is little that the city can do about it. In a non-union environment, Vallejo would have cut salaries, benefits, rearranged work schedules and a number of other things that would have saved the city through tough times. The same thing any household would do when budgets were tight.

The lesson? Union contracts cause the management of a company or government to lose control of the very thing they are supposed to run. And the unions have no responsibility to manage it themselves, even though they control it.

Of course, the automotive companies are yet another example where union demands and economically unfeasible contracts could not be gotten out of and they have bankrupted the entire auto industry in America. And which automaker has risen to the top and avoided all this? Toyota, which does not have unions.

Because unions are a government regulatory creation, they are slow to respond to changing economic circumstances, if at all. The only real control over them is whatever the employer can exert.

An employer, be that the government or private, has an organic limit on its behavior. A company has to please its customers or it will go out of business. The government is limited by what it can extract from taxpayers.

But the unions have no organic limit built into their economic system. The company or government can go bust and the unions can remain unaffected. We have seen that with both Vallejo and the auto industry. They are only limited by moral suasion and whatever the management can convince them to do.

The auto industry could have chosen to keep their prices high, but if customers won't buy that is it, they are done. On the other hand, if General Motors had just decided not to pay their union workers as much, they would have been hauled into court and fined.

This is an incredibly important point for the public to understand about unions, because this is not about whether anyone or I likes them or not, it is about the way economic reality functions. There is an organic limit built into what a government or company can do, but there is no limit built into what a union can do. Therein lies the problem.

If you doubt this, all you have to do is look at what has happened. The auto industry, Vallejo, state worker pension and medical benefit unfunded liabilities, the fact that the city of Napa is mandated to pay a salary rate based on bankrupt Vallejo salaries even when it makes no sense, these are all things that no one would do unless mandated by law.

The fact is that the way the system is structured, especially in California, unions automatically have the upper hand and they eventually will take over. This is pretty much what has already happened to the California state legislature. Lets not encourage this in Napa.


Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

click here to receive LAAG posts by email

May 8, 2008

Taxation Without Representation

As Vallejo readies for Bankruptcy due to public employee salaries, LBReport.com did an article today on Logn Beach's action regarding public employees costs noting: "...Almost all of LB's Councilmembers voted to obligate LB taxpayers to incur at least $26.5 million in General Fund costs over the next five years to provide raises and add'l benefits in separate contracts with LB's non-public-safety city employees and firefighters. The Council majority did so despite a continuing structural deficit, declining property tax revenues...and multi-million dollar increases previously granted by the Council for the LB Police Officers' contract...."

Last week LBReport.com did an editorial on the mess in advance of this story. You can read it here. It looks like the same old pattern is repeated over and over endlessly..they got a raise so now we want one.

LAAG responded to the LBReport editorial as follows:

Subject: "Taxation Without Representation"

What an appropriate picture. Here is the wikipedia link for your readers that goes with the picture and to learn a little history. http://en.wikipedia.org/wiki/No_taxation_without_representation LAAG has been fed up with local politicians pandering to public employee unions. We started this crusade before the mainstream media got on board. At first it was limited to giveaways to "public safety" employees. Now its the full spectrum of public employees with no end in site. The problem is that all these giveaways are done in "plain view" yet concealed from most taxpayers. We need more info on the internet. More disclosure. More timely. Easier to find. The other thing that need to be done is we need to start telling private sector employees what employees like them are making for less work, less skill, less education and less hours. Once taxpayers see that then they will get angry and throw out the politicians that hide or fail to fix the problems. Check out our site for details www.LAAG.us as well as http://www.pensiontsunami.com/ and this little gem courtesy of the Sacramento Bee (what a great paper; sort of like LB Report on steroids) http://www.laag.us/2008/03/want-to-know-what-state-employees-make.html


Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

click here to receive LAAG posts by email

Vallejo, CA Bankruptcy Looms

This is a really big story that is not getting much press coverage. Astute LAAG readers have seen this coming for some time. The question is really whether or not this will spell out the future for many small California cities that are being held in a chokehold by public employee unions who refuse to bend during the downturn in the economy. Their feeling is just raise taxes. The hell with the taxpayers. We want our six figure retirements! We are the new elite in CA. This will be a big showdown and Vallejo needs to be watched to see if it is the model for future bankrupt cities. I am sure Long Beach is watching closely. I hope the public unions are.

Vallejo, California, Residents Foresee Cuts as Bankruptcy Looms

By Michael B. Marois and William Selway
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May 8 (Bloomberg) -- As Vallejo, California's home prices plunged, the once-humming Navy town on the north edge of the San Francisco Bay seemed like a good place to settle down, said Tim Medrow, a manager at a store that sells floor and bathroom tiles.

Then came the city council meeting Tuesday night, when elected leaders voted to turn Vallejo into the largest California city to declare bankruptcy. ``It's crippling the city,'' said Medrow, 32. ``It's already feast or famine. And it's only going to get worse now.''

Vallejo, with a population of 117,000, is being squeezed by declining home sales that have rippled through its economy, cutting into the taxes it relies on from local retailers and home owners. It has been pushed to the breaking point, city officials say, by union contracts with firefighters and police it can't afford or renegotiate.

After talks with unions stalled, the seven members of Vallejo's city council decided unanimously to approve filing for bankruptcy. According to a report by City Manager Joseph Tanner, the city would otherwise face ``draconian'' cuts to close a $16 million budget shortfall that would leave the community faced with deteriorating roads and public buildings and rising crime.

``This is dire,'' said Councilwoman Erin Hannigan. ``We are at rock bottom.''

Bankruptcies Rare

Cities and towns rarely go bankrupt. Since 1937 there have been 543 municipal bankruptcies, two-thirds of them small districts established to sell municipal bonds for projects, according to James Spiotto, a municipal bankruptcy specialist at Chapman and Cutler LLP in Chicago.

The last California city to go bankrupt, Desert Hot Springs, a town of 20,000 near Palm Springs, did so in 2001 because it was hit by a legal verdict it couldn't afford to pay. Orange County, California, was felled by bad bets with leveraged investments in 1994.

Vallejo residents worry that a filing will hurt a city that struggled even in the best of times, when median home prices more than doubled between 2000 and 2005, according to the city manager's report. In interviews, they said they were concerned it could scare away new residents, hurt city services, and push Vallejo deeper into the hole.

``What business is going to want to come to a city with no money?'' said Josef Klaus, the owner of a vacuum and janitorial supply shop.

Vallejo, on the San Francisco Bay, was home to the West Coast's first shipyard, and residents and business owners say its economy never recovered after 1996, when the facility was closed by the U.S. Navy as the military pared spending following the end of the Cold War.

Housing Slump

The area has since been one of the hardest hit in Northern California by the housing market slump. Home prices in Solano County, which includes Vallejo, dropped 26 percent in March from the year before, according to DataQuick Information Systems, a firm which tracks real-estate markets in the state.

That helped fuel a projected sales tax drop of 7 percent to $12.4 million, according to city figures, while the taxes collected when property changes hands are expected to fall by more than $1.6 million.

Vallejo is also being hurt by its contracts with unions, which have wielded clout in the blue-collar town. As budget shortfalls emerged this year, the city has been unable to wrest permanent concessions from the police and firefighters that account for $58 million, or 69 percent, of the city's general fund budget last year.

Seeking Concessions

The permission to file bankruptcy may give the city more leverage with unions concerned that a federal judge might order more onerous cuts. Joanne Schivley, a city councilwoman, said Vallejo may stave off filing for protection from its creditors.

``We can pull the plug on bankruptcy at any time,'' she said.

Should Vallejo file, a federal bankruptcy judge must decide whether the city is actually insolvent. Assistant City Manager Craig Whittom said a plan to emerge from bankruptcy might include asking voters for more taxes.

Without additional revenue, he said, spending for road maintenance, libraries and health clinics may be curtailed. He said police and fire fighting services are already at minimum levels because of previous layoffs aimed at cutting public safety labor costs. Police no longer have enough officers to investigate property crimes, he said.

Businesses Suffer

Megan Bolton is feeling the squeeze. Bolton, who owns a commercial and residential window business with her husband, said building and remodeling fees rose fourfold last year, and she's had to pass it along to customers.

``Vallejo doesn't value businesses,'' said Bolton, 28.

Ivonne Johnson, a 38-year-old cheerleading and dance instructor, moved to Vallejo in October from San Francisco, looking to get away from crime and high-priced real estate. She stepped back from buying a home after she saw $80,000 cut from the asking price of one she was looking at. After this week's news, she's set her sights elsewhere.

``If city services are going to lose funding, and that means there might be less police officers who can respond, we're afraid it might turn into the kind of place we just left,'' she said.

To contact the reporter on this story: Michael B. Marois in Sacramento at mmarois@bloomberg.net; William Selway in San Francisco at wselway@bloomberg.net.


Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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January 13, 2008

Spending ourselves over a cliff

We recalled Gray Davis for this mess? Arnie is Democrat in republican clothing. People need to listen to what presidential candidate Ron Paul is saying. We are spending ourselves over the edge of a cliff. Once we go over thats it. It will make the housing crisis look like a hang nail. In a way I dont blame the State Legislature that much as most people run their own households the same way. Spend more than you make and get into as much debt as possible hoping you can ride the silly housing bubble before it bursts. This irresponsibility cause the sub prime meltdown. Well we all know the bubbles burst. But like Paul said we need to stop the boom and bust cycle and take some responsibility for our greed and spending. And dont think this Indian Casino scam on the ballot this February will save us. It will just encourage more irresponsibility. People just dont seem to care. They keep voting for these silly politicians (and propositions) then give the legislature a pass when these "crises" pop up "unexpectedly" (yeah right). You know as much as people say they care about their kids futures and making sure they have a better life than their parents, saddling their kids with debt is one sure way to make sure their future enslaves them to government for the "Sins of their Fathers".


Budget woes not inherent — governor creates them
Sunday, January 13, 2008
http://www.venturacountystar.com/news/2008/jan/13/budget-woes-not-inherent-8212-governor-creates/
By Sen. Tom McClintock

Abraham Lincoln finally had enough of Stephen Douglas' obfuscations when they met to debate in Charleston, Ill. He said, "Judge Douglas is playing cuttlefish — a small species of fish that has no mode of defending himself when pursued except by throwing out a black fluid which makes the water so dark the enemy cannot see it, and thus it escapes."

Lincoln's cuttlefish story came to mind during the governor's State of the State message when he blamed the state's massive budget deficit on formulas that lock in spending. On the same day, a gubernatorial minion penned a column that claimed, "About 90 percent of the state's budget is tied to spending formulas, contracts and/or statutes, requiring spending to increase by specific amounts each year."

Behind that cloud of sophistry is a species of politician trying to escape responsibility for a budget crisis of his own making.

In fact, virtually all of the "formulas, contracts and/or statutes" can be suspended with the same two-thirds vote that is required to adopt the budget in the first place. Our budget crisis isn't because these politicians can't suspend these "mandates" — it's because they won't.

True, there are a few expenditures required by the state constitution. The state's annual debt payments can't be suspended, although less borrowing can reduce them in the future. Unfortunately, Gov. Arnold Schwarzenegger's borrowing binge has increased our annual debt obligation from $2 billion in 2003 to more than $7 billion today.

The state's pension payments are contractual obligations that can't be suspended, but shrinking the public work force or reforming pensions for new hires can reduce future obligations. Unfortunately, under Schwarzenegger, the state employee rolls have grown at nearly twice the rate of population growth.

In addition, there is one ballot proposition that is beyond the control of the Legislature and the governor to suspend: Schwarzenegger's own "After School Program" that now consumes roughly a half-billion dollars each year.

Everything else can be suspended by the same vote that adopts the budget — including every statute on the books. Even most constitutional mandates provide for their own suspension. For example, Proposition 98, which "mandates" that nearly half of the budget must go to public schools, can be suspended by two-thirds vote. Not only did Schwarzenegger refuse to do so through the last three years of declining public school enrollment, he increased the Proposition 98 base — and, therefore, future budgets — by billions of dollars above what Proposition 98 called for. That is precisely why the governor is now forced to propose school cuts that are far deeper than would otherwise have been necessary.

Similarly, the state Legislature can force virtually any contract back to the bargaining table by refusing to fund it fully in the annual budget act. When Sen. Jackie Speier and I proposed doing so in 2004 in an attempt to bring state prison guard salaries under control, Schwarzenegger opposed it. Now, four years later, the governor proposes releasing 22,000 dangerous felons.

Perhaps the most telling point is simply this: When Senate Republicans desperately warned last summer that the budget was dangerously unbalanced and attempted to enact reforms to avert the crisis, Schwarzenegger campaigned against them.

When the budget was adopted in August, I warned on the Senate floor: "Today, we set in motion events that will require far more difficult and painful decisions starting just five months from now in what is likely to be a much worse economy . For the second time in a decade, this state is being driven to another Gray Davis-sized fiscal crisis."

The same day, the governor said: "I am pleased that the Legislature has passed a responsible budget that protects California's priorities and keeps our economy strong. It was a challenging process but, in the end, our legislative leaders came together to deliver a spending plan that does not raise taxes, creates the largest reserve in history and reduces our operating deficit after the spending vetoes that I have promised."

It's going to require more than a cloud of rhetorical ink to cover that escape.

— Sen. Tom McClintock represents the 19th Senate District in the state Legislature.

Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™

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November 30, 2007

We told you so

We hate saying that but its true. We objected to this free for all spending way back in Nov 2006. Unfortunately elected officials are just like 16 year old girls with their first credit card. Of course as the savings rate in this country is negative 1% I guess we could say that politicians are just a reflection of the nations reckless spending habits which is now going to cost the taxpayers but also the savers. It really is too bad that government no longer responds to or works for the people. It only operates to serve and feed itself. I suggest county Chief Executive Officer Bill Fujioka take the first step and cut his nearly 400,000 yearly salary.

L.A. County awaits fiscal wallop
By Troy Anderson, Staff Writer
Article Last Updated: 11/28/2007 11:58:10 PM PST
http://www.dailynews.com/news/ci_7584881

Los Angeles County officials are bracing for a round of belt-tightening as property tax revenues fall short of expectations on drooping home values and the state prepares to cut off additional funds.

While soaring property values have poured millions into county coffers in recent years, officials say they expect revenues to increase just 2 percent to 5 percent next year - compared with 9 percent this year - as the real estate market cools.

At the same time, California's fiscal woes are worsening as Gov. Arnold Schwarzenegger has asked all state departments to prepare for 10 percent cuts amid a slowing economy and unexpected setbacks that have created a nearly $10 billion budget shortfall over the next two years.

While county Chief Executive Officer Bill Fujioka said he is optimistic, he is preparing a report on the potential effects on the county budget as the first property tax checks start rolling in Dec. 10.

"We aren't seeing any negatives in that area yet," Fujioka said. "As far as the state budget, it's early ... I've been talking to friends of mine in the Legislature and they are saying the problem is much worse than what is being publicly reported."

In the past five years, property tax revenues collected countywide have nearly doubled to $4.6 billion, helping to boost the county budget to $21.8 billion.

Flush with cash, the Board of Supervisors has approved hundreds of millions of dollars on everything from
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pay raises, bonuses, pension and health-benefits improvements for the 100,000 county employees.

Hundreds of millions of dollars also have been spent to reopen jails, hire new sheriff's deputies, probation officers and social workers, and set aside about $100 million to address homelessness in the county.

Financial problems

Still, the county continues to face a variety of financial problems, including a health department deficit expected to hit as much as $854 million by 2010-11 and liabilities to pay for retirees' health-care costs estimated at $13 billion to $20 billion.

"My only observation is, the government will spend every dollar they are given and then some," said Jon Coupal, president of the Howard Jarvis Taxpayers Association.

"There is no discipline to save for the future. The warning signs with the subprime fallout have been there and yet the county and the city continue to spend like nothing is wrong - as if taxpayers have an endless supply of revenues for government needs."

The city of Los Angeles collects about $1 billion in property taxes each year, providing 20 percent of the general fund. So far this year, property tax revenues are still strong and the collection rate is 97 percent, finance specialist Rex Olliff said Wednesday.

"There's no reason to think there will be a big drop in property tax this year. It's (in) the 2008-09 budget that we'll start to see the effect of the real estate downturn," he said.

Collection rates are expected to fall as foreclosures rise. And the big boost in tax receipts generated by home sales and high new prices will slow.

But the cooling market already has had an effect on money generated by the real estate transfer tax, which is a fee charged when a property is sold.

Transfer tax receipts from November have dropped 35 percent compared to the same period last year.

"While the real estate decline has not played out fully in the city of Los Angeles, as it has in other surrounding markets, these latest numbers do not bode well for the city budget or local economy," said Controller Laura Chick.

As the housing market slumps in California, local governments are seeing declines in property tax and sales tax revenues, said Paul McIntosh, executive director of the California State Association of Counties.

"So most counties are starting to take a look at their budgets in the current year to see how they are faring," McIntosh said. "I haven't heard about anybody having to make any cuts, but they are certainly concerned about the next budget.

"And we expect the state to have a $10 billion deficit and look for ways to balance that. Counties are always cautious and concerned when that happens."

Despite a measure that bars California from raiding local coffers, it does allow the Legislature to borrow local governments' property tax revenues in times of need.

While Board of Supervisors Chairman Zev Yaroslavsky said he doesn't see that as likely, he said because the county is a pass-through agency for state and federal funds, any broad cuts could affect health, welfare and other services the county provides.

"The degree of seriousness will vary from county to county and city to city depending on how they have managed their budgets," Yaroslavsky said. "We are better positioned than, say, the city of Los Angeles, or other counties.

"But we will be impacted. If we have to dip into reserves, that will be an impact. If we have to defer capital spending, that's an impact. Those are things we'll do before making cuts."

Values dropping

Meanwhile, although the assessed values of properties in the county rose from $570 billion in 2000 to more than $1 trillion this year, the rate of increase is expected to significantly slow next year.

And as some people who recently bought homes watch the values drop, Assessor Rick Auerbach said he's seen a slight increase in the number of people appealing their assessed values.

Two years ago, 12,172 homeowners appealed their valuations - this year that's expected to hit 13,000 to 14,000.

Auerbach said he doesn't expect to see that increase significantly until 2008, when people get property tax bills reflecting the recent declines in housing prices.

The bills homeowners will receive next month reflect January 2007 assessments.

Meanwhile, the number of foreclosures as of Sept. 29 totaled about 8,800 - or 8 percent of reappraised transactions - nearly triple the 3,184 last year that accounted for 1.7 percent of transactions.

"My general impression is we're lower than most places because most places have had more development in the last couple of years and the areas with more development have had the newer loans, the problem loans, and so there is more chance of foreclosures," Auerbach said.

In an effort to properly assess the value of homes that may have dropped in price, Auerbach said his office will use computer modeling to determine homes that will need reductions for property tax purposes.

"Hopefully by the end of May, we'll be notifying taxpayers for their 2008 assessment if they deserve a reduction in value," Auerbach said.

"Obviously, for most people, a reduction in value means the actual value of the property has gone down in the last year. That's the bad news because, for most people, their home is their largest investment.

"The good news, at least in some small way, is that their property taxes will also go down."

Staff Writer Kerry Cavanaugh contributed to this report.

troy.anderson@dailynews.com 213-974-8985

Lakewood Accountability Action Group™ LAAG | www.LAAG.us | Lakewood, CA
A California Non Profit Association | Demanding action and accountability from local government™