Showing posts with label Govt. Pensions: emails. Show all posts
Showing posts with label Govt. Pensions: emails. Show all posts

September 14, 2010

Getting out while the getting is good... Howard Chambers finally calls it quits

You have to hand it to Howard for great timing. 34 years as city manager must be a state or national record. He has stress? Well no doubt that has increased since the City of Bell debacle, not to mention being "outed" here, here, and here. Oh well he can join his other retired Lakewood Calpers pals and live carefree with lifetime medical and pension benefits that will no doubt cost us taxpayers millions. (the "Lakewood Six" currently costing us taxpayers $771,322.56 Annually) Much like our other noblemen in the state legislature. And for what you ask? Oh I am sure every blade of grass in Lakewood will be dedicated to Howard tonight. I expect some sort of freeway or building to be named after him shortly. Perhaps a new "self promotion shrine" we can pay for. lol indeed.

All we can hope is that the city council resets the clock on these outlandish City Manager salaries and they are more in line with (or have a rational relationship to) other cities with similar populations and total employee counts. But knowing the city council I doubt that. Again the hiring situation works much the same as it did in Bell and on corporate boards. "You pay me well and I will reward you later...some how.." So the game goes on and no one is watching the till. Oh and as for potential candidates to fill Howard's spot I hear there are some dudes from Bell looking for a sweet job....

So LAAG says "c'est la vie! Howard". And I am sure you will keep us residents posted on what you're up to just like you have for the last 38 years. Yeah right. Oh and we have to take Howard at his word that he is in fact retiring for good and will not change his mind, like Donald Waldie did last year, and not going to "run" some other city (for a "bigger" salary increase and nifty "pension spike") and then do a "double dip" on his pension. Time will tell.

http://www.contracostatimes.com/news/ci_16068235
City Manager Howard Chambers will end 38-year Lakewood career
By Phillip Zonkel, Staff Writer
Posted: 09/13/2010 08:57:06 PM PDT

LAKEWOOD - The man who has been a fixture at Lakewood City Hall for 38 years - helping balance budgets and maintain parks - is leaving.

Howard Chambers, city manager for 34 of those years, will publicly announce his retirement at tonight's City Council meeting.

Chambers said his doctor has told him for the past year to manage his stress better. The primary stress culprit is his job, Chambers said.

"Life in the public sector is extremely stressful," [LAAG: "you betcha, ever since Bell corruption story broke]
said Chambers, 65, from his Brea residence. "My body used to metabolize stress like a protein shake. Now it kicks my butt. I wish I could turn back the clock 20 years."

The council will soon begin the process of selecting Chambers' successor, said city spokesman Bill Grady.

The two-hour round trip commute between Brea and Lakewood also was a deciding factor in his retirement, Chambers said. [LAAG: I guess living in the city was out of the question in a city you manage]

Chambers is widely considered the California city manager with the longest tenure in the same city. Before becoming city manager, Chambers, from 1972 to 1976, was the executive assistant to the city manager.

Between 1969 and 1972, Chambers was Rosemead's assistant city manager.

"Howard's entire career reflects an abiding commitment to all of us who live and work here," said Lakewood Mayor Joseph Esquivel. "He truly loves Lakewood and the results can be seen in every neighborhood." [LAAG: please be specific]

Donald Waldie, the assistant to the city manager, was hired by Chambers in December 1977, and said Chambers' management style was supportive and collaborative.

"Howard offered a vision for Lakewood, one where everyone worked together to make a safe, family-orientated city, and shared it with senior managers and city work forces," Waldie said. "That vision made it easy to see the way."

Chambers' ties to Lakewood are lifelong. He grew up near Mayfair Park and worked at the YMCA.

A park director encouraged him to become a recreation leader, a path that led him to become a park director and a fixture at city hall.

After befriending the city administrator at the time, Chambers showed an interest in public administration and began taking classes at Cal State Long Beach.

After earning his degree, Chambers interned at Lakewood for two years, handling youth services. He then went to work with Rosemead as an assistant city manager.

In 1972, Chambers returned to Lakewood, securing the post of executive assistant.

Under Chambers' leadership, Lakewood developed the Civic Center, the Weingart Senior Center, the renovations of the John Sanford Todd Community Center and Mayfair Park, The Centre at Sycamore Plaza, Rynerson Park and the expansion and modernization of the Lakewood Sheriff's Station. [LAAG: thats it?]

Chambers said he takes pride in presenting balanced budgets, managing to keep park programs going and maintaining streets and other infrastructure in times of recession.

Chambers' pride and enthusiasm for the work makes it more difficult to retire.

"You don't know how much I'm going to miss it," he said.

phillip.zonkel@presstelegram.com, 562-499-1258
Want to go?

What: Lakewood City Council meeting.

Where: City Council chambers at The Centre at Sycamore Plaza, 5000 Clark Ave.

When: 7:30 p.m., today

Watch: Broadcast live on CityTV 31 and at www.lakewoodcity.org.


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 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

LA City Salary posting and Public Records Act request to Lakewood for same

The City of LA in response to the Bell scandal has posted a 547 page pdf document that is supposed to represent all the salaries of current "full time" employees. It does not list other perks, healthcare contributions or pension costs to taxpayers of course. It is also rather vague in that it does not state definitively if all the positions posted are currently filled or for how long they have been filled and paid at that rate. Nonetheless it is a start and is in line with the full disclosure other cities are making in light of the Bell scandal

So given this most recent developments above we are making a Public Records Act request as follows to the city of Lakewood:

LAAG is requesting all 2010 records that pertain to:

1. stipends or salaries of current city council members;

2. Health care contributions made by the city for current city council members;

3. public employee pension contributions made by the city for current city council members;

4. payments made by the city for perks (i.e. cellphone costs, car allowances, internet access, home offices, travel expenses and seminar fees for non state mandated trips, etc.) for current city council members;

5. stipends or salaries of current top 5 compensated employees in each city department;

6. Health care contributions made by the city for current top 5 compensated employees in each city department;

7. public employee pension contributions made by the city for current top 5 compensated employees in each city department;

8. payments made by the city for perks (i.e. cellphone costs, car allowances, internet access, home offices, travel expenses and seminar fees for non state mandated trips, etc.) for current top 5 compensated employees in each city department;

9. stipends or salaries of current top 5 compensated employees in city managers department;

10. Health care contributions made by the city for current top 5 compensated employees in city managers department;

11. public employee pension contributions made by the city for current top 5 compensated employees in city managers department;

12. payments made by the city for perks (i.e. cellphone costs, car allowances, internet access, home offices, travel expenses and seminar fees for non state mandated trips, etc.) for current top 5 compensated employees in city managers department;

13. All payments made to city attorney in last 12 months.

Please contact LAAG and make arrangement for us to view these materials. We will then make a decision on what materials to copy if any.

See the City's response here

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

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

March 16, 2008

Want to know what state employees make? We did

Well this was too good to pass up. Now we hope this will enlighten the public about where their tax dollars are going. We need databases like this for county and city employees as well as well as a database to tell us how much they will cost us when they retire at 50 with full health care at 90% of their pay. Here is the link to the database. Thank you Sacramento Bee! We need more papers like you.

Public Editor: Public is public and there is just no hiding that
By Armando Acuña -
Published 12:00 am PDT Sunday, March 16, 2008

The fallout from The Bee's decision to post a searchable-by-name database of state worker salaries at sacbee.com continued last week, dominating reader feedback for a second time.

There were, however, a few new twists that weren't apparent in the initial days after the database and the accompanying story about state salaries were published March 4.

While the overall tenor of response from state workers remains critical – though the number of complaints has significantly declined – an increasing number of state employees and just plain citizens say they support the paper's decision to create the database.

And it's more clear than ever that, overwhelmingly, almost every negative response has come from state workers, their spouses or relatives.

The number of complaints from regular folks to my office literally can be counted on one hand.

Meanwhile, the total page views at sacbee.com/statepay have reached about 4 million.

There was also some news as the paper's editors responded to reader requests for database changes.

Added were categories for searches by pay range, job title and agency.

As explained in an editor's note published last Tuesday, you can now "see who makes the most in a department, the pay for everyone in that department with a certain job title, and the number of workers there who make over $100,000 – or under $30,000."

This is an important addition, in my opinion, as it helps satisfy a legitimate complaint that it was difficult to compare and analyze inequities in state salaries on a large scale using the original database.

In addition, new links were added to state worker salary databases in other states, to a searchable database for federal employees and to national data from the U.S. Bureau of Labor Statistics comparing public- and private-sector salaries.

These were all things readers asked for, yet many missed the editor's note about the changes, judging from some of my e-mail.

The paper also has added legislative employee salaries to the database.

In case you were unaware, there was also a protest by about 100 state workers, who picketed in front of The Bee on Wednesday. The protest was organized by one of the public employee unions.

And speaking of the unions, one reader sent a copy of an online newsletter from a unit of the California State University Employees Union. The newsletter tells employees concerned about the database who to complain to at The Bee, including my office.

The newsletter concludes, however, with this: "On the positive side, this should help with researching those equity issues."

It then provides links to The Bee's database and state salary story.

I agree with them. It is one of the positive parts of having the searchable database.

A relatively small but growing number of readers – a few dozen as opposed to hundreds of critical state workers – have sent e-mails or left phone messages supporting the paper's efforts.

Several have been highly critical of the complaining state employees, saying The Bee should also include all benefits – such as retirement contributions, health care, vacations, etc. – to more accurately show total compensation and better compare public- vs. private-sector pay and benefits.

Some want to know whether the paper will expand its database to include the salaries of county, city and public school employees. The answer is yes, though full implementation may take awhile.

A number of responses have come from former and current state workers.

"All of the dust-up over printing state worker names and salaries is a tempest in a tea cup as far as I'm concerned," wrote a reader from Elk Grove. "From 1984 to December 2004, I worked as a staff employee for the Assembly and then for the Senate. About two times a year, a local weekly paper (Capitol Weekly) ran the names, positions and salaries of all California legislative employees. No problem.

"We were – and are – being paid with tax money and our names, positions and salaries were and are public data. We found these printings to be of great interest to see who was being paid what. A real education!"

Wrote a woman who works for CalEPA:

"Please don't paint all state workers with the same brush. I have worked for the state for years and did not complain or comment on the salary database because I think my employers should know how much they pay me," she said in her e-mail. "I work for the taxpayers of California and they are all free to know anything about the work they pay me to do."

A woman from Elverta, who said she's read the paper for 45 years, e-mailed to say, "I feel The Bee's intention in making the information more readily accessible to the public is in the community's best interests."

I've excluded the names of these readers to shield them from some of the vitriol and name-calling directed at me by some of those vehemently opposed to the database that might come their way if they were identified.

It comes with my territory, not theirs.

As this situation continues to play itself out, it's apparent some state employees don't understand, as I tried to explain last week, that an important role of the newspaper is to gather and disseminate public information. That includes making it easier for people to find and use public information.

Last Wednesday, a woman said in her e-mail that she and her husband are state workers. She said they were angry at the paper for, among other things, making public information public.

"The Bee states this (salary database) is public information, then erroneously concludes that since it is public, the public should know."

I will let that speak for itself.


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 20, 2006

Govt Pensions: email to Knabe re 11/21/06 vote on raise and benefits (agenda item 17)

See related story on LBReport.com here

Date: Mon, 20 Nov 2006 13:16:28 -0800
To: "Don Knabe Supervisor 4th Dist." , , Yvonne Burke , Michael Antonovich , Zev Yaroslavsky , Gloria Molina
From: "www.LAAG.us | Lakewood Accountability Action Group"
Subject: 11/21/06 vote on raise and benefits (agenda item 17)
Cc: "LBReport.com" , troy.anderson@dailynews.com, molly.hennessy-fiske@latimes.com, info@hjta.org, "Larry Allison, Editorial Page Editor" , speakout@presstelegram.com

Dear Mr. Knabe:

Let me just say that I cant take it any more. After reading article after article like the 4 below (read them first then my letter) I do not understand how any board of supervisors or any city council can continue to give money away at this rate. Full speed a head on the Titanic! I want to make sure my opposition to this increase is noted in the record before your vote on 11/21/06. As a self employed person I do not have the time to appear personally at the meeting on 11/21/06. I am sure it will be unanimous in favor of the govt. employees just like the boards vote on 10/31/06 which includes a three-year, 15.5 percent pay raise and extras such as fully funded health benefits for more than 50,000 members of Local 660. Well I will remember this and make sure the voters in the 4th district remember at election time.

One of the arguments made for the increase is "This agreement ....will result in better services for the public." Are you kidding me? It has not worked for the last 10 years so why now? Lets look at the example of some of the fine public employee work over the last 10 years. Lets see.... MLK hospital. How much is that going to cost the taxpayers? No one can even count that high. Lets just total up the costs of all the Sheriff and LA County fire dept lawsuits over the last 10 years. I am sure the County has never seen any discrimination suits like the one brought by the LA fireman who got 2.5 million for being tricked into eating dog food (it was "his turn to collect"). Or the most recent suit by the 20 sheriffs officers who killed an off duty fireman in Lakewood last month. The list goes on and on. And these quality county employees filter all the way down to the LA Dept of Public Works and the courts.

The other argument for these increases is that you cant hire quality people and you cant match the salaries in the private sector. Right. There is no private sector corollary for most public jobs. Plus the county never reveals just what these individual employees actually earn over their life time, or what their LUCRATIVE lifetime pension and healthcare benefits will cost from when they retire at 50 (assuming they live to age 90 with their great benefits). On average probably over 4 million per employee in total dollars, without looking at the cost of living increases on these pensions. The reason this is not disclosed is that it would outrage most private sector employees who at the federal level have not had a raise in 10 years from 5.50 hr. (just ask the private sector steel and airline workers what happened to their benefits; Now only about 20 percent of private-sector wage and salaried workers are covered by PBGC-insured defined benefit pension plans, down from more than 30 percent in 1985 ) No one looks at the "total cost of ownership" (TCO) on public employees. There is very low value for the total cost. I cannot wait until the new accounting rules take effect in 2008a and taxpayers will be able to see for the first time just how much they're paying to provide benefits to active and retired state and local public employees. (see story below).

We are in a "race to the top" in public sector salaries and benefits while the private sector is in a "race to the bottom" to compete with low global wage rates and no insurance or pensions (but of course once again the politicians has elevated the public sector over private by ensuring that the public sector cannot outsource to over seas labor to save tax dollars) Again, market forces be damned in the public sector. Its government entities in a bidding war against themselves with no market forces, just an unending supply of tax dollars. San Diego is only the first CA city to have to learn this lesson According to the U.S. Census Bureau, California has the highest paid public employees in the nation.

In the private sector (which most people in public service have never experienced except in high school jobs) economic forces reduce wages, eliminate defined benefit pension plans and reduce workforces through mergers and bankruptcies. But these forces dont work in govt. Ever year the costs go up and up and the workforce grows and never "rightsizes". The county argues that property tax revenues are up but apparently no one reads the paper as for the last 6 months they have gone down and will likely do so for the next 3 years (I am sure the county will rush to lower my tax bill to match real values). But hey that does not slow the government down! Government wages never go backwards like in the private sector, just forwards.

Government entities would love to get rid of proposition 13 and would love to sneak in some "temporary" (yeah right) sales tax increases (a la Mr. Baca). Over my dead body, especially when the finds are squandered like in the stories below.

I think elected officials have forgotten who they represent. Its taxpayers. Not public employee unions. I think to some extent the anger at the "new aristocracy" (elected officials form "safe districts") was apparent in the November elections. As the one article hints below I think we are headed into a future of public vs private sector employees.

"Those who cannot remember the past are condemned to repeat it." (George Santayana (1863–1952), U.S. philosopher, poet, Life of Reason, 'Reason in Common Sense,') I think elected officials need to go back and read what happened in the French Revolution as I think the US may be headed for something similar.

LAAG
4th District,
City, County, State and Federal Taxpayer

~~~~~~~~~~~~~~~~~~~~~
County's payday giveaway
15.5% deal extends to nonunion workers

BY TROY ANDERSON, Staff Writer
Article Launched:11/17/2006 11:51:45 PM PST

Los Angeles County's Board of Supervisors has expanded a lucrative raise and benefits deal for union workers to include thousands of additional nonunion employees, according to details released Friday.

The deal - which includes a three-year, 15.5 percent pay raise and extras such as fully funded health benefits - initially was struck last month for more than 50,000 members of the Service Employees International Union, Local 660.

It was recently expanded to include 12,000 nonunion employees - managers, executive secretaries, doctors and most of the supervisors' staffers, said Bart Diener, assistant general manager of the SEIU.

The deal is expected to cost an extra $341 million in 2007-08.

But the plan already has begun to draw sharp warnings that it exceeds salary-inflation assumptions and could swell the county's already massive pension debts.

"It seems to me that it is our hope this deal gets rejected in light of its exorbitant cost," said Jon Coupal, president of the Howard Jarvis Taxpayers Association. "How is the county planning to pay for this?

"The economy and housing market is beginning to cool down and their own advisers are suggesting this will have a negative impact ...It would seem to me to be extraordinarily irresponsible for the Board of Supervisors to approve this magnitude of pay and benefit increases."

County officials, however, defended the deal, noting that the county's budget has grown from $18 billion in 2004-05 to $20.9 billion this year, largely because of rising property tax revenues and the recent passage of a measure that prevents the state from raiding local coffers.

"We are confident the county can afford these agreements," Chief Administrative Officer David Janssen said. "We have around $300 million in a capital surplus. And property tax revenues are still going up, although we expect them to be less than they were.

"We have forecasted a modest growth in the out years of 4 (percent) to 5 percent. This year, it's been growing at 11.9 percent."

Agreement hailed

The county and the SEIU reached the tentative agreement last month, hailing it as key to helping the county retain and hire more nurses and help lift workers who now qualify for food stamps out of poverty.

Diener noted that SEIU members and nonunion workers only received 5 percent in raises in the past three years.

"In recent years, the county has experienced a growing inability to hire qualified employees in many classifications, from law enforcement to health care," Diener said. "This agreement will help the county address that problem, which will result in better services for the public."

But in a letter to the supervisors, the county's pension actuary advised that the proposed salary increases exceed the Los Angeles County Employees Retirement Association's assumptions and "will result in an increase in actuarial liability."

The warning was the first that Buck Consultants has made in the two years since a judge ordered government agencies to include a pension actuary's advice on the fiscal impact of salary and benefit increases.

Buck Consultants tempered its warning, however, noting that the salary increases given to the SEIU and other employees in the past three years somewhat offset the proposed adjustments.

"The bottom line is the actuarial salary assumptions on LACERA have been down for the last three years and just because the assumption is going to be higher for three years, that balances out," said David Sommers, spokesman for Supervisor Don Knabe.

"The CAO has told us this does not pose a great or significant risk to the county by moving forward on this and the supervisor is confident with the CAO's recommendation."

Currently, LACERA's $34 billion pension fund has an unfunded liability of $4.9 billion and is 85.8 percent funded.

Officials in cities and counties throughout California have been paying more attention to these long-term debts.

Officials now estimate that government agencies in the state need more than $300 billion to pay for pension and retiree health benefits.

In recent years, state and local officials have sweetened public-pension plans by expanding the list of bonuses that can be considered as income to determine the size of a worker's retirement check.

Currently, county employees are eligible for more than 110 pensionable bonuses.

These pension enhancements have allowed thousands of employees to retire with six-figure incomes - in many cases, that's more money than they made while working.

"It's transparent pension-spiking and it's offensive to taxpayers who don't have nearly as sweet a deal as public employees and is just another example of how this state is going into bankruptcy," Coupal said of the proposed deal.

Vote on Tuesday

The supervisors will vote Tuesday on the package, which also includes an additional 5.5 percent pay increase over two years for workers who have been at the top of their salary range for at least one year.

It also calls for 10 percent increases per year in the county's contribution to employee health and dental plans.

And in an effort to address an estimated $9.4 billion county retiree health deficit, the contract calls for a joint labor/management retiree health committee to look at ways to control costs.

Jim Adams, chief of the CAO's Employee Relations Division, said the county decided to provide fully paid health benefits because health care costs have risen so sharply in recent years.

"This hit the lower-paid employees pretty furiously," Adams said.

He said the addition of nonunion workers to the deal was simply a matter of timing and that nonunion employees typically get the same deal as the SEIU.

"What is unusual this time around is we have done it en masse," Adams said. "In the past, bargaining units kind of trickled in and this time we had a total settlement."

The plan also includes a range of new benefits including a 5.25 percent "manpower shortage range" bonus for clerks and librarians, a $1-an-hour weekend bonus and a 5.5 percent bonus for district attorney, public defender and alternate public defender employees who work in the Antelope Valley and reside more than 30 miles from the courthouses where they work.

Envious that firefighters and sheriff's employees get longevity bonuses that periodically boost employees' salaries and their pensionable incomes as they near retirement, social workers also sought longevity bonuses - which now total up to 6 percent.

And after firefighters and lifeguards recently negotiated a 3 percent "fitness for life" bonus, their nonunion management counterparts in the Fire Department and Department of Parks and Recreation clamored for the bonus, too.

"It's an effort to try to develop some healthy patterns and reward people for staying healthy and getting their checkups," Adams said. "When we settled the lifeguard contract last spring that started it, and the managers piggybacked onto that."

troy.anderson@dailynews.com

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Retiree health care may overwhelm gov'ts

By BOB PORTERFIELD, Associated Press Writer Sun Sep 24, 5:42 PM ET

SAN FRANCISCO - The bill is coming due for years of generous benefits bestowed upon the nation's public employees, and it's a stunner: hundreds of billions of dollars over the next three decades, threatening some local governments with bankruptcy and all but guaranteeing cuts in services like education and public safety.

This staggering burden is coming to light because of new accounting rules issued by the Government Accounting Standards Board. They require public agencies to disclose the future cost of health care and other benefits ­ such as dental, vision and life insurance ­ promised alongside traditional pensions to the nation's estimated 24.5 million active and retired state and local public employees.

Retiree health care costs have been quietly mounting for decades while public agencies have passed out generous retirement benefits during labor negotiations ­ often in lieu of salary increases. But government negotiators rarely considered the long-term financial consequences of awarding such perks, according to Brian Whitworth, a retirement benefits specialist with JP Morgan Chase and Co.

"A surprising number of public entities didn't even make informal estimates of long-term costs prior to the new accounting rules," Whitworth said.

Many cities and state agencies already are struggling to fully fund their pension obligations, but experts say those liabilities pale in comparison to the debt accumulated for other retirement benefits.

Last month, JP Morgan released what it considers the most comprehensive preliminary estimate. It projects the present value of unfunded health care and other non-pension benefits at between $600 billion and $1.3 trillion.

By comparison, the debt rating agency Standard and Poors estimates the country's total unfunded public pension debt at around $285 billion.

"There's a good chance some government entities are going to go bankrupt," said California Assemblyman Keith Richman, a Republican from Chatsworth. "But the issue isn't just bankruptcy, it's governments dying of a thousand cuts in services. The costs of promises that have been made are going to be astronomical."

Union officials say it's not their fault municipalities put themselves in a hole by promising more than they can deliver.

"This is a monumental problem and government is going to have to deal with it," said Steve Regenstrief, head of the retirement division at the American Federation of State, County and Municipal Employees.

When the new accounting rules take effect in 2008, taxpayers will be able to see for the first time just how much they're paying to provide benefits to active and retired state and local public employees.

"When the numbers are produced, they're going to be shocking," said Ronald Snell, director of state services for the National Conference of State Legislatures. "They'll be in the hundreds of billions, and it's definitely something that policy-makers are going to have to take notice of and act upon. ... There are consequences of decisions made in the past."

The Government Accounting Standards Board is an independent nonprofit organization that establishes accounting standards for public agencies. Seeing a need to bring public sector disclosure rules in line with those of the private sector, the board unveiled the rules change in 2004 and gave governments several years to implement them.

The new rules don't require governments to come up with the money right away, just to disclose the present value of these future costs and estimate how much more money is needed to pay for them. To prepare for these disclosures, public officials across the country already are beginning to calculate how much they might owe.

So far, California, New York, and Maryland appear to have the biggest burdens, but that could change when estimates begin trickling in from Florida, Texas, Illinois and Pennsylvania. Of the country's 10 most populous states, none has completed a formal estimate of their liabilities, but those that have completed preliminary assessments are reporting astounding numbers.

_The California Legislative Analyst's Office estimates $40 billion to $70 billion in retiree health care and related liabilities for the state. With cities and counties included, JP Morgan pegs California's debt at $70 billion to $200 billion. The state controller is just now beginning a detailed study.

_New York's preliminary analysis puts state liabilities between $47 billion and $54 billion. In a recent budget report, the state acknowledged "these costs are substantial and would significantly reduce or even potentially eliminate" New York's current $49.1 billion in positive net assets.

_Maryland has initially estimated its liability at $20 billion.

_Other states also have reported significant amounts: Alabama estimates $19.8 billion, Massachusetts $13.2 billion, Alaska at least $7.9 billion, and Nevada between $1.62 billion and $4.1 billion.

Many local governments also are beginning to acknowledge huge liabilities. The City of San Francisco reported its burden at $4.9 billion, and the Los Angeles Unified School District said its liability is $10 billion. New York City has yet to complete its analysis, but is expecting a large shortfall and already has set aside $2 billion to help cover it.

How this will impact citizens depends upon the size of their government's obligation and how it's handled.

At the least, experts say, the public can expect increased taxes and fees or reduced public safety and public works services as governments adjust their budgets to amortize the debt.

They probably can't expect much in the way of concessions from public employee unions, said Suzi Rader, director of district and financial services for the California School Boards Association. Any attempt to limit benefits already granted in future negotiations will be a contentious issue, she said, so employers must instead hold the line on granting additional perks to future retirees.

John Abraham of the American Federation of Teachers said union negotiators have long been aware that future retirement benefits must be paid from shrinking resources.

"If they haven't been looking at the numbers, shame on them," he said. "Do we recognize there is a cost problem? Absolutely. As costs have gone up we've made accommodations."

Lori Moore, spokeswoman for the International Association of Fire Fighters, said nothing is really changing except the need for cities to reveal how much they'll owe in non-pension retirement benefits.

"The liability has always been there," she said. "They had to know in the back of their minds that it was there."

Most governments now fund retiree health care on a pay-as-you-go basis, with annual appropriations from their general funds, focusing most of their attention on current expenses.

Under the new accounting rules, the liability can be paid over 30 years, just like a home mortgage, but it forces public officials to recognize the debt and calculate an annual payment.

If officials choose not to set aside additional money each year to cover the payment, it counts against net assets, potentially putting a city or agency deeper into the red. Because assets are a critical component in the credit ratings that allow governments to borrow money at lower interest rates, governments that don't handle their liability properly could end up insolvent.

Parry Young, director of public finance at Standard and Poors, said few governments are prepared for the annual contributions they'll be expected to make.

"It's been a growing liability that wasn't being addressed. But now the chickens are coming to roost," he said. "For some it's going to be a big credit issue depending upon what resources they have."

Young says one way governments can get a jump on their liabilities is by putting more money into retiree health care plans, something "easier said that done."

Public officials "might also choose to issue bonds, or review benefit costs and maybe make changes in the benefits themselves," he said.

Some states have taken a proactive stance. Ohio sought to address its future liabilities by establishing a Post Employment Health Care Fund containing more than $12 billion, an amount the fund's trustees say will not be enough. In order to cut health care costs, the state has reduced the amount it will pay for employees who retire with less than 30 years of service.

Utah, with a relatively small liability estimated at between $536 and $828 million, has taken a unique approach, earmarking unused sick leave for retiree health care expenses. Under a law passed last year and upheld by the Utah Supreme Court, retirees can no longer cash out unused sick leave earned after January 2006. Instead, 25 percent must be placed in an employee's 401K and the remainder in a Health Reimbursement Account.

"The law really stopped the out-of-control-escalation of health care costs," said John C. Reidhead, director of Utah's Division of Finance. "From a financial perspective it's a good deal. From the employee perspective, maybe not."

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
Private-Sector Anger Builds as Public Pension Costs Rise

Lawmakers feel the heat from taxpayers who see their own benefits wither, and traditional payouts give way to 401(k)-style plans.

By Molly Hennessy-Fiske
Times Staff Writer

October 2, 2006

HADDONFIELD, N.J.­For insurance agent Steve Adams, 51, the resentment began two years ago.

As he worried whether his stagnant 401(k) account would be adequate for retirement, his wife's employer ended her pension plan, forcing her to rely on a 401(k) as well. Then New Jersey lawmakers raised his property taxes to maintain state workers' pensions.

Last spring Adams joined a taxpayer group called Americans for Prosperity that is seeking limits on government employee pensions.

In June he attended a rally in Seaside Heights, N.J., where about 200 people urged state legislators to make cuts in such things as pensions rather than raise taxes again ­ this time, a proposal to raise the state sales tax.

"We don't get anything nearly as generous in the private sector" as public pensions, Adams said.

Public employee pensions, one of the last bastions of guaranteed retirement plans in America, are under assault as cash-strapped state and local governments struggle to cover rising costs and as resentful taxpayers refuse to pay more to cover them.

The development has led to "pension envy" among people like Adams, as baby boomers struggling to make it to retirement see state workers retire early to reap rewards they may never enjoy. The tension has crept into relationships between friends, neighbors, parents and teachers.

The struggle to fund public employee pension plans is a familiar topic in California, where last year Gov. Arnold Schwarzenegger unsuccessfully sought to replace state workers' pensions with 401(k)s.

The California Public Employee Retirement System and California State Teachers Retirement System cover more than 2 million workers. CalPERS is 88% funded and CalSTRS 82% funded, according to their financial records ­ levels that researchers at the conservative Pacific Research Institute say are high compared with states such as Illinois and New Jersey.

Alaska and Colorado have made changes to state pensions, and Illinois, Oklahoma, Montana, New Jersey, Pennsylvania and Providence, R.I., are contemplating similar steps.

About 90% of state and local workers in the U.S. have pensions, compared with about 20% of private-sector workers, said Keith Brainard, research director at the National Assn. of State Retirement Administrators.

Instead of company-paid pensions with guaranteed payments, most private-sector workers now are offered 401(k) plans, investment accounts that employees pay into and manage while they're working, then tap when they retire. Some employers contribute to 401(k) plans.

With state pensions, investment management is up to the state, but taxpayers are often called on to cover costs. As of last year, 84% of state pension plans were underfunded, meaning their assets don't cover projected payments, according to Santa Monica-based Wilshire Associates. Some lawmakers plan to make up the difference by raising taxes.

The tension between public employees and taxpayers is playing out across the country, but nowhere more sharply than in New Jersey.

Several of New Jersey's major private employers recently eliminated pensions. Telecom giants Sprint Nextel Corp. and Verizon Communications partially froze pensions last year, affecting some 18,000 workers in New Jersey. DuPont Co., which employs about 1,300 in New Jersey, announced plans this summer to freeze pensions, meaning the company intends to drastically reduce its pension fund for current employees and deny any coverage to new hires.

"More and more New Jerseyans find themselves without pensions and become resentful of the double whammy that they face: fewer benefits for themselves and higher taxes so that the public-sector workers can receive generous benefits," said David Rebovich, managing director of the Institute for New Jersey Politics at Rider University in Lawrenceville.

Nancy Burwell, 52, of Morristown, N.J., is one of them. She's been attending and organizing meetings of Americans for Prosperity ­ seven were scheduled in September across the state, seven this month ­ where organizers explain the public pension system and how it contributes to local tax increases.

Burwell, who works in sales, said she and her husband, a computer programmer, were saving for retirement without a pension or 401(k) because their jobs didn't offer them.

"We don't expect anybody else to help us out; we take care of it ourselves," Burwell said. "I really resent these public workers. Why should I pay for their retirement?"

State Assemblyman Paul D. Moriarty is pushing pension changes. "In New Jersey, life is still about keeping up with Mr. and Mrs. Jones. And the Joneses have state pensions and health care coverage," the Democrat said.

Retired construction contractor Charles Reveliotty, 67, of Cherry Hill, N.J., complains about public pensions but doesn't talk about them with his neighbor, a town engineer.

"It's a little bit like talking to somebody about religion," Reveliotty said. "If you say to somebody, 'You have to give back half your pension,' you can imagine what the results are going to be."

Public employees say resentful taxpayers should instead defend private-sector benefits, which continue to erode.

"Private-sector workers, who should be angry as hell at their employers for walking away from pensions, are angry at public employees," said Jon Shure, president of New Jersey Policy Perspective, a nonpartisan Trenton think tank.

He said eliminating state pensions would feed further cuts in the private sector, leaving all workers with less for retirement. "If the people who are fomenting this have their way, public benefits will stink too and we'll have dumbed it down to the way it is in the private sector," Shure said. "If anything, the public sector should set an example for how benefits should be."

If anyone in New Jersey would be expected to defend workers' pension benefits, it would be state Sen. Stephen M. Sweeney. A Democrat, longtime ironworker and union official from a blue-collar South Jersey family, Sweeney heads the state Senate's labor committee. But Sweeney has become an unexpected ally of the anti-pension crowd.

When Gov. Jon Corzine proposed raising the sales tax to fund state pensions this summer, Sweeney and two other lawmakers proposed cutting state retirement plans instead.

Their announcement split the state AFL-CIO, which includes both public- and private-sector unions. Public workers' unions dogged Sweeney, shouting him down at Trenton meetings, mailing him a pink slip, and showing up at his events with an inflatable rat usually reserved for union-busters.

Some in the AFL-CIO say pension changes are driven less by pension envy than by conservative groups such as Americans for Prosperity, Americans for Tax Reform and the Heritage Foundation. Union officials say Wall Street money managers are also pushing the changes so they can earn a windfall of fees once public pension plans are converted to 401(k)s.

But Sweeney says he received praise from private-sector union workers ­ refinery shop stewards, pipe fitters and ironworkers thanked him on the streets. "The private side is looking at the public side and realizing pensions are luxuries they cannot afford," Sweeney said.

In a recent interview at the Ironworkers Union Local 399 in Westville, N.J., where he still serves as business representative, Sweeney noted that ironworkers contribute 14% of their pay to their pensions, and members of Local 399 went without a raise this year to cover rising pension costs, paying 3% more into the fund.

State workers, by contrast, received a 4.65% raise, even as their pension costs rose. State workers in New Jersey receive an average pension of $24,317 annually, compared with the national average of $19,856, according to the American Federation of State, County and Municipal Employees.

State workers have long defended their pension benefits as compensation for lower pay, but New Jersey state workers earn an average $54,742, compared with $43,970 in the private sector, according to the New Jersey labor department.

A New Jersey legislative committee now is considering state pension changes including a pension freeze, increasing public workers' contributions and raising the minimum retirement age.

Beyond New Jersey, the debate over public pensions has become an election issue.

In Massachusetts, Illinois, New York and Oregon, Republican candidates for governor proposed new 401(k)-style plans for state workers, as did Republican candidates for comptroller in Maryland and New York.

In April, Colorado began offering state workers a defined contribution plan such as 401(k)s. The mayor of Providence, R.I. plans to switch all new hires from pensions to 401(k)s in July. In Alaska, legislators voted last year to close the public pension system to new employees in an effort to stem a $6.9-billion deficit in the retirement fund.

Alaska state Sen. Bert Stedman, a Republican, warns that if states like California and New Jersey don't change public retirement benefits, they may soon face angry taxpayers.

"When the private sector has to pay for the public-sector benefit packages they can't get themselves, you're going to have a lot of political and social unrest," Stedman said. "The average homeowner, when he gets his property tax jacked up to pay his neighbor's benefit package, he's going to get upset about it. And that's what we don't want to happen in Alaska."
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San Diego Isn't the Only City With Pension Troubles: Joe Mysak

By Joe Mysak

Nov. 17 (Bloomberg) -- What other municipalities are committing fraud when they sell bonds, by not coming clean about the size of their pension shortfall?

How many are committing that kind of fraud?

These are the questions investors have to pose after the city of San Diego settled fraud charges with the Securities and Exchange Commission this week.

The city sold five bond issues totaling $260 million in 2002 and 2003. ``At the time of these offerings, City officials knew that the City faced severe difficulty funding its future pension and health-care obligations unless new revenues were obtained, pension and health-care benefits were reduced, or City services were cut,'' the SEC said in the settlement with the city.

San Diego provided some disclosure of the city's pension and health-care obligations. ``It did not reveal the gravity of the City's financial problems,'' the SEC said.

That's fraud.

``The City, through its officials, acted with scienter,'' the SEC said. That is, the city officials knew they weren't providing the whole story in their bond-offering documents, and went ahead with the sale anyway.

What Happened

You know there are more out there. States and municipalities are looking at a gap that has been estimated at something like $2 trillion, with pension shortfalls of $700 billion and health-care costs -- also known as ``other post-employment benefits,'' or OPEB, as the analysts so felicitously put it -- of $1.4 trillion.

It's hard to believe that the San Diego story only really dates -- at least if you're not a resident of San Diego -- from January 2004. That's when the city admitted it had major concerns with its pension system, and the rating companies lowered and then suspended their gradings on San Diego debt.

Maybe the reason it feels like this story has been dragging on for so long is because it has been featured in two big studies, one by a law firm, and the other by an audit committee. Now, finally, the SEC weighs in.

What happened in San Diego? In the simplest terms, city officials were obsessed with the City Employees' Retirement System, or CERS. They spent decades figuring out how to increase pension checks and health benefits without making adequate contributions to the pension fund.

`Surplus Earnings'

That's basically what it comes down to, and yes, they were at it for decades.

``In fiscal year 1980, the City began instructing CERS to use `surplus earnings' -- i.e., earnings above the actuarially projected 8 percent return rate -- to fund an ever-increasing amount of additional benefits for CERS members,'' the SEC said.

How it's supposed to work in the real world, or at least in the old days when you still provided employees with pensions, is that you put money away every year into a big pot and invested it in bonds, stocks or something else. Your actuaries came up with a number and you said, ``OK, if we keep putting aside X amount of cash a year, and make X amount on that money, then we'll have enough to pay everyone's pension.''

How it's also supposed to work is that there is no such thing as ``surplus earnings.'' In some years, you make 15 percent, in others 2 percent, or sometimes you actually lose money. Yet it should all average out to 8 percent a year, or whatever number the actuary tells you.

And Who Else?

Try telling that to San Diego -- and who else? States and municipalities found themselves holding these enormous hoards of cash that were spinning off some very nice investment returns, and some of them thought, ``Hey, wait a minute, look how much the pension fund is earning! Let's cut down on the contribution to the fund -- it clearly doesn't need it -- and spend that money elsewhere.''

This is exactly the wrong thing to do if you are trying to manage a liability that is long term. In fact, the retirement ``liability'' doesn't really have an end in sight. It's like railroad tracks. It looks like it meets somewhere out on the horizon, but it doesn't.

San Diego -- and who else? -- kept playing games for years. It is bad enough that they were stinting on steady city contributions; they were also increasing retirement benefits.

The end came only when the stock market swooned. This is why so many states and localities have run up $700 billion in unfunded pension liabilities.

As for the health-care benefits, that OPEB business, well, they never put aside money in a fund to pay for those, like they do for pensions. Those costs were going to be paid out as they were incurred -- pay as you go. Except now everyone is being asked to calculate that figure, too, and disclose it in their bond documents.

The SEC settlement with San Diego makes for exasperating reading. Surely other municipalities haven't carried on this way. Or have they?

(Joe Mysak is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: Joe Mysak in New York at jmysakjr@bloomberg.net
Last Updated: November 17, 2006 00:05 EST