Showing posts with label Govt. Unions. Show all posts
Showing posts with label Govt. Unions. Show all posts

September 6, 2020

Why the budget and the budget process is broken in Long Beach California

As there is yet another budget hearing coming up in Long Beach on September 8 2020 we thought we would use our blog post as our comments. Get them into cityclerk@longbeach.gov before noon 9/7/20. Heaven knows these "Citywide Community budget meetings" were a waste of everyone's time.(which we also had to pay city staffers for as we are taxpayers)

 

Long Beach is currently in a budget crisis brought about mainly because of the covid-19 crisis.  Of course it's a double whammy situation where the city spent more money than it had on emergency type services and as a result overpaid for these services (which were under delivered or did not provide much value) For example there were tons of private Labs that were being paid a very costly premium for test results that were being delivered seven and eight days after the test. Anyone that knows anything about testing said that's completely worthless. Any test result delivered after 48 hours should never have been paid for but of course government never demands that kind of accountability from private contractors.


On top of that because of the economic crisis and less sales tax is being generated we have a double whammy.  So now it appears the most local entities are waiting for the state to get a windfall of money from the federal government who of course can print money regardless of its deficit.  State and local governments can't print money but they use other budget shenanigans and tricks to make it look like the budget gets “balanced” every year.


Unlike Lakewood which is mostly a contract City Long Beach tries to provide most services through employees that are employed by the city. This is horrendously cost inefficient because these costs are fixed. Once these people are hired they are basically never fired and you have to pay for their pensions, healthcare vacation and other costs basically as long as they're alive and they are usually very costly employees. The more costly employees are the ones that work in the office and shuffle paper and get very little done in terms of infrastructure and repairs.


In addition there are a number of things that Long Beach claims it has to purchase and it does a very bad job in negotiating good prices. Here are two examples. City spends $372,327 on TWO Chevrolet Silverado 2500HD trucks (2020 Chevrolet Silverado 2500HD start at $34,600) AND $539,331 on TWO CNG-fueled 2021 Freightliner M2112 pothole patch trucks, (LB apparently patches so many streets that we need two new trucks?) Who negotiated these prices for these trucks and why are we buying something NEW that's so expensive right now during a budget crisis? Do we have to have these trucks right now? Are we selling off the used trucks are we trading them in what are we getting for them? These questions are never asked and never presented in the budget or any publicly disseminated documents. As for the pothole trucks no needs were spelled out. Zero. You want them Public Works Dept you got them! No questions asked.


Then you look at outside contracting for services and you have a similar problem. Really no transparency at all in terms of how many hours of time you're getting the hourly rate or bonuses being paid, overhead being paid how many hours of services are you being provided with, what specific tasks are going to be completed etc. Here is a recent example:” a fourth amendment to Contract No. 34265 with West Coast Arborists, Inc., of Anaheim, CA, for as-needed tree trimming services, to extend the term through March 31, 2021, and increase the amount by $3,400,000, for a revised total amount not to exceed $11,340,000. (Citywide)”

 

So taxpayers are paying almost 11.5 million dollars for tree trimming but there's really not much of an indication as to what exactly were going to get for that. Even if you assume that these people are being paid $15 an hour and you do the math that gives us about 59 hours a day of tree trimming assuming 2080 hours per year working time at 8 hours per day 5 days a week. But again this says “as needed” (determined by who?). So that might mean that no trees are being trimmed or half the amount. Again clear as mud.


Contract costs are too high because I assume the city relies on “low bid”. The city should be setting the maximum contract prices with bonuses for early completion. The city should be setting a (realistic low ball) maximum amount for these contracts before the bids ever come in. We also have to assume that there are multiple bids coming in on these projects and I doubt that seriously.  My suspicion is certain favorite companies that contribute to campaigns are invited to submit a bid with a wink knowing that these bids are going to get selected because they're the only bid that's being made.  Again the city should set a maximum price for an amount of service and then provide some sort of incentives for early completion or other types of Contract objectives that can be objectively verified.


With respect to labor provided by city employees of course the picture is much more grim. There really is no way to significantly reduce the costs of employee labor.  This is why City employees should be rarely hired and outside contractors should be used because it's much easier to control costs over time when you have a budget problem. 


The Police Department and the fire department are classic examples of the two costliest groups of city employees. Lawsuit settlements due to police shootings and arrests are not helpful either. These depts are heavily unionized and the unions control all labor activity and contract negotiations.


We were recently told that the city is budgeting $200,000 per police officer. (That does not include the cost of special units K-9 units, bomb units, helicopters all sorts of special Patrol units, management, office staff, vehicle costs etc) Of course the best way to do the math is to take the total police budget of about 264 million and divided by the number of sworn officers which is about 792 which gives you about $333,000 per year per officer. Now to make matters worse because of the BLM protests and other Union Shenanigans we are now in a situation where every car has to have two officers so we've cut the number of cars in half and so we're spending anywhere between $400,000 to $650,000 a year for each police vehicle you see driving around on patrol.  What's even better with police and fire is they tend to start work at age 25 to 26 or later and then they retire at 50 and their retirement income is at least the highest amount they've ever been paid in their lives. That continues on until they die and also includes Healthcare and a bunch of other cost-of-living perks so you can see how this adds up when you're paying for hundreds and hundreds of officers that don't even work for you anymore. And you're paying for them at a much higher rate than you are for officers currently patrolling the streets. Eventually this house of cards is going to collapse.


There are no efficiency studies being done by people that don't curry favor with the unions or with the city. All the efficiency studies are done by the departments themselves or by those individuals that pass muster with the union. Apparently because the fire department is so popular in Long Beach in terms of public polling they basically came back and said we're not cutting our budget at all for 2021…. so take that City Council. The fire department and the police department are probably the least cost-efficient agencies in the city and use up the most tax money. For example the whole privatization of ambulance services in Long Beach has never been realistically looked at. The reason of course is if you do that you will lose union jobs and give jobs to private companies which cost less. With respect to the the police department they're finally starting to get smart and realizing that they have to have more civilian staff to do a lot of the functions within the department that don't require sworn police officers. (de-fund protests no doubt helping that argument) This is just an example of the stupidity and union nonsense involved when trying to get even simple things done like the administrative enforcement Lakewood did with respect to fireworks.


Another budget-busting problem we have is that a relatively small percentage of the payroll of city employees is too low for those that actually hold shovels versus those that shuffle paper and the paper shufflers in the people in the office tend to cost even more money that other low level worker bee employees This is likely the reason why it takes so long for potholes to get filled and sidewalks to get fixed; there's not enough people actually doing the work.


Another problem with the budget is that the airport revenue/fines and the oil revenue, and the port that money is not being allocated wisely. It's typically trapped in a way that keeps it within the particular Department that it comes from. Fix that.


An ongoing problem with infrastructure ( potholes streets sidewalks bike paths trees parks and other sorts of things) is these were all created many years ago when labor was cheap but there were never any budgets created to support the maintenance of these items and the bills are coming due on almost all of these things especially sewers electricity and water supply. The new money is all allocated for all new projects which get federal and state funding but none of that money is ever allocated or can be allocated towards the maintenance of these projects for 20 or 30 years in the future. Bad idea as it leads to where we are now.


The city spends its time chasing objectives of Sacramento. Not enough of our budget is spent on core infrastructure needs. Too much of it is spent on socialism and other pet projects of administrations. The city received budget funding to create “open streets” for covid yet when it did neighborhood surveys no one wanted the streets to be blocked off from vehicles so the children can play in the streets only to be run over by local delivery trucks. But that money comes with strings attached and you have to spend it on things voters dont want. Much of our budget is being allocated to social projects and not for infrastructure and this loss of focus is responsible for the problem with the infrastructure.


The budget process has very little transparency and taxpayers are never given a seat at the table when Union contracts and other issues are negotiated. There are very few people that could take a look at the current 146 page page proposed budget document and make heads or tails of any of these issues raised above and most don't even care to do it. Most rely of course on their city council member to fight for their objectives. And we see how well that has worked out. 


The budget itself is very obscure and does not provide taxpayers with a clear picture of cost increases cost allocations what goes for health care what goes for pensions what goes for office workers what goes for actual people that perform labor for the city. 


Finally we need to stop penalizing departments for not spending all their budget. They need to be rewarded for not spending all their budget on frivolous matters such as new vehicles. Unfortunately many of these things are going to take many years to change.  California as a whole is running out of money and that includes all of their cities. Cities are still allowed to file bankruptcy (states are not) and a number of cities in California have filed bankruptcy including Stockton. In that case the bankruptcy actually helped Stockton to “de-fund” (reduce funding to) their police department and rethink how they look at public safety. "House Democrats included nearly $1 trillion in state and local aid in the relief bill they passed in May, but the Senate majority leader, Mitch McConnell of Kentucky, has said he doesn’t want to hand out a “blank check” to pay for what he considers fiscal mismanagement, including the enormous public-pension obligations some states have accrued. There has been little movement in that stalemate lately."


The reason we have a budget problem is the city is using "other people's money" (yours and mine) and they dont give a damn. Their “solution” to all problems is to shovel more money into the trough (Like Measure A...how is that vote tally suit going? ). At the end of the day it's not really their problem they're going to continue to get paid for going to work, continue to get their nearly free health care, and they're going to continue to get their ludicrously costly pensions. Meanwhile city services and infrastructure spending will just crawl to a complete standstill and our city will decay even further. Until people show up at City Hall with “pitchforks and torches” this is not going to change. The only thing that will really make any difference is to elect a majority of the city council to come in from outside city government not feeding from the trough (real outsiders).  They will have to take a hard look from the outside as to how the budget is going to have to work going forward into these very lean years which we are going to be facing for the next 5 to 10 years most likely ( assuming continued fires, floods, climate change, power outages, disasters, earthquakes, pandemics Etc) California is almost in a constant state of emergency now. Long Beach is in the same situation. It's on life support.

 

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

July 7, 2014

Lakewood is correct in opposing a California Assembly resolution which seeks to eliminate the ability of cities to outsource services

The City of Lakewood is opposing this California Assembly resolution (also reprinted below as of this posting; House Resolution No. 29) which seeks to eliminate the ability of cities to outsource services, including law enforcement and fire. The problem of course is that those two services are just provided for other government bureaucracies (LASheriffs Dept.; LACoFire) so there is no threat to government unions. Don't fret Assembly Democrats. Now as for trash services and street sweeping etc, as the recent price increase in Lakewood suggests, we need to make sure there is full transparency at the city level for all services provided. Transparency heads off problems (like this Assembly resolution) but people at the city of Lakewood try their hardest to keep things "hidden" in plain view. ["oh you can always come into the clerk's office and ask to see a document"...yeah like voters have the time, energy and know how to do that...they can't even find time to vote!] All documents regarding outside contracting need to be posted on the city's website. How many times have we brought this up? What are you afraid of [Lakewood City Council] if someone sees an outside services contract? All those contracts should have a clause in them that says they are to be web posted as well as all documents that relate to the contract. Don't like that Mr. Contractor then don't contract with the city. Can you imagine how much Lakewood services would cost (i.e. taxes) if we had to pay government union level benefits and wages to all service providers? We are already paying outrageous sums to "grass cutters" for parks and center medians vs what private contractors would likely cost. This resolution is opposed by cities and of course supported by bloated over priced public unions who are bankrupting the state. This Assembly resolution needs to be stopped...now. And they way to do it is with more transparency.

Amended IN Assembly April 03, 2014 Amended IN Assembly March 13, 2014 CALIFORNIA LEGISLATURE— 2013–2014 REGULAR SESSION House Resolution No. 29

 Introduced by Assembly Member Gomez (Coauthors: Assembly Members Alejo, Ammiano, Atkins, Bloom, Bocanegra, Bonilla, Bonta, Bradford, Buchanan, Campos, Chau, Chesbro, Dababneh, Dickinson, Fong, Frazier, Gatto, Gonzalez, Hall, Roger Hernández, Holden, Jones-Sawyer, Lowenthal, Nazarian, Pan, John A. Pérez, Quirk, Rendon, Ridley-Thomas, Rodriguez, Skinner, Stone, Ting, Weber, Wieckowski, Williams, and Yamada)

 February 04, 2014 Relative to outsourcing public services.

LEGISLATIVE COUNSEL'S DIGEST HR 29, as amended, Gomez.

WHEREAS, Public services and assets are the fabric that binds our communities together. They are also a ladder to the middle class; and WHEREAS, Faced with severe budget problems in the wake of the Great Recession, state and local governments across America are handing over control of public services and assets to corporations that promise to operate them better, faster, and cheaper; and WHEREAS, Outsourcing these services and assets often fails to keep these promises, and too often it undermines transparency, accountability, and shared prosperity and competition - the underpinnings of democracy itself; and WHEREAS, Outsourcing means that taxpayers have less say over how future tax dollars are spent and have no ability to vote out executives who make decisions that could harm the public interest; and WHEREAS, Outsourcing means taxpayers are often contractually limited to a single for-profit corporation; and WHEREAS, Outsourcing frequently means that wages and benefits for public service workers fall and the local economy suffers while corporate profits rise. The Center for American Progress Action Fund has found that of the 5.4 million people working for federal service contractors in 2008, an estimated 80 percent earned below the living wage for their city or region. For-profit corporations are three times more likely than the public sector to employ workers at poverty-threshold wages; and two million private sector employees working for federal contractors earn less than $12 an hour - too little to support a family. That is more low wage workers than are employed by McDonald’s and WalMart combined; and WHEREAS, Outsourcing means that taxpayers often no longer know how their tax dollars are being spent. Meetings and records that used to be open to the public can become proprietary information when corporations take over; and WHEREAS, The Taxpayer Empowerment Agenda is one model that may help ensure transparency, accountability, shared prosperity, and competition in the operation of public services and assets; and WHEREAS, Planks in the Taxpayer Empowerment Agenda would require governments to post information about their contracts online and require contractors to open their books to the public, ensure that governments have the capacity to adequately oversee contracts, to cancel contracts that fail to deliver on their promises, prohibit law breaking companies from getting government contracts, require contractors to pay their employees living wages and benefits, require competitive bidding on contracts that guarantee company profits at the expense of taxpayers; and WHEREAS, Recent polling shows that taxpayers oppose the outsourcing of public services and assets to for-profit companies and support these common sense controls to ensure that their interests are protected; now, therefore, be it Resolved by the Assembly of the State of California, That the Assembly opposes outsourcing of public services and assets, which harms transparency, accountability, shared prosperity, and competition, and supports processes that give public service workers the opportunity to develop their own plan on how to deliver cost-effective, high-quality services; and be it further Resolved, That the Assembly urges local officials to become familiar with the provisions of the Taxpayer Empowerment Agenda; and be it further Resolved, That the Assembly intends to introduce and advocate for responsible outsourcing legislation; and be it further Resolved, That the Chief Clerk of the Assembly transmit copies of this resolution to the author for appropriate distribution.

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

September 3, 2010

State Controller's revised Local Government Compensation Report (LGCR) due Oct. 2010

On the heels of LAAG's PRA (public information request) to the city of Lakewood regarding salaries of all top Lakewood city employees in each city department, the State Controller's office just released its Local Government Compensation Report (LGCR) for Calendar Year 2009. This report is intended to collect salary, compensation, and benefit information for all elected, appointed, and employed personnel but not independent contractors. It includes staff for all dependent special districts, redevelopment agencies, or other component units that are supported by city or county staff or any staff for which the city or county issues a W-2. This report is required to be submitted to the State Controller on or before October 1, 2010. It will be quite enlightening to see all the cities in the state comply and how user friendly the State Controllers web site is in detailing all the results so that cities can be compared head to head by taxpayers. This is a step in the right direction with more to come. LAAG will stay on top of these developments. Thank you City of Bell for making all this possible.

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

July 7, 2009

LASD contract cities have nowhere to turn

This was an issue we brought up with the city of Lakewood over two years ago. Namely that without competitive bidding contract cities like Lakewood may be getting ripped off. In the sectors where there is real private competition (like street sweeping, tree trimming, trash collection etc.) the city is arguably well served by at least appearing to have used some competitive bidding. But given the length of time some private contractors have been "serving" Lakewood one really starts to wonder just how much these budget increases are due to lack of competitive bidding.

In the law enforcement arena this is doubly so. The problem of course is that the LASD services are offered on a take it or leave it basis. Surely Baca laughs off any complaints by Lakewood as we just built his deputies a $20 million new locker room. So its not like we can drop the LASD at the drop of a hat and get other law enforcement. Thats a real problem and its starts to breed the problems set forth in the story below. The first was total lack of accountability and oversight as to how the "liability trust fund" money was being spent. This issue has been brewing for years and there is still no resolution. Clearly the current situation with the trust fund was brought about due to pressure (in secret) by the deputies labor union.

The other problem is an unclear chain of command and lack of real accountability. The city council only has moderate control over the LASD as a contract city. This is unlike the control cities have over their own city police departments.

The other problem (as exemplified by the trust fund issue) is that cities that have few deputy "problems" (i.e. lawsuits) end up paying a larger share of the "rogue deputy cases" involving "shootings gone bad" etc. that occur in cities that have more crime problems or police clashes with citizens. Again this does not work in Lakewood's favor.

Finally this lack of real bargaining position by the small contract cities is resulting in costs just being passed on to the cities with no real way to control or curtail them, again because the city really does not "run" the LASD and has little ability to control costs other than when at the yearly "bargaining" table.

This lack of real bargaining power due to a lack of alternatives is fostering runaway costs. In FY 2007-2008 the Lakewood LASD contract was $8,862,113.00 (or approx. $216 per year for each registered voter in the city...such a deal!) The FY 2009-2010 the Lakewood LASD contract was $10,423,367.00 (or approx. $254 per year for each registered voter in the city). That is a 17.6% increase! How is this possible with no inflation and almost flat cost of living increases (how many of you in the private sector got a 17% raise in 2009-10?)

So what to do. Well surely we cant continue to deal with LASD the same way as in years past. We need to look at their services and cost of delivery like we would with any other contractor...more critically, especially in light of the budget probles we are sure to have over the next 5 years. One of the problems is that certain people on this city council are probably not very objective when looking at the LASD negotiations or service efficiency.

The other problem is where to turn for a competitive bid. Long Beach PD is an obvious choice but they have their own problems, mostly budgetary. But the real issue is would adding Lakewood to their patrol area and a large chuck of cash to their budget improve not only Lakewood bargaining position with LASD but also raise up the LBPD situation? The other option is looking at starting a city police force but pooling common resources with other small contract cities. Drawbacks include bringing in the same "bad apple" officers that are problems now at LASD. LASD also touts that we get "bonus" services like SWAT and the LASD crime lab etc. included in the deal. However that is not a free "add on". Also when was the last time we needed SWAT in Lakewood? And given the new crime lab's reputation its clearly no bargain.

We think given the way the state and country are headed budget wise that Lakewood is going to have a very tough budgetary road for the next 5 years (Lakewood admits that). The sales tax declines are also going to hurt badly and we dont see that improving any time soon. And we dont see LASD helping Lakewood financially in the future.

We think its time for some real competitive bidding.

http://www.whittierdailynews.com/news/ci_12765178
La Habra Heights to consider ousting sheriff's; look elsewhere for police contract
By Mike Sprague Staff Writer
Posted: 07/06/2009 11:00:00 PM PDT

LA HABRA HEIGHTS - The tiny rural community of La Habra Heights is at the vanguard of group of cities considering dumping the Sheriff's Department.

La Habra Heights City Manager Shauna Clark will ask the City Council at its 7:30 p.m. meeting Thursday to give her permission to consider contracting for police services with another agency and consider leaving the Los Angeles County Sheriff's Department.

La Habra Heights is among 40 cities that contract with the Sheriff's Department refusing to renew. They are upset that Los Angeles County is forcing them to pay for legal liability in criminal misconduct cases against deputies.

Calls Monday to La Ca ada Flintridge, Duarte and the California Contract Cities Association were not returned. Officials in La Ca ada Flintridge and Duarte have criticized the new contract language.

The cities have threatened to sue the county after it took $5 million from the liability trust fund to settle a case against a Compton deputy who raped three women while on duty.

The cities pay for the fund, which currently has $52 million.

"We don't get to choose our deputies," Clark said. "We don't get to train them. For a small city like us, a large lawsuit in a case like that could break us."

It could mean that La Habra Heights, population 5,712, must purchase additional general liability insurance and establish a liability reserve, she said.

David Sommers, spokesman for Los Angeles County Supervisor Don Knabe, said the liability issue may be on its way to being solved.

"We're pretty close to a final resolution," he said. "The talks are still ongoing and the supervisor is hopeful that it will be resolved shortly."

Sommers said he believes the issue between the cities and the county could be smoothed out.

"For more than 50 years, the contract city relationship has worked well," he said.

"Contract cities are the number one customer of the county," he said. "There are more residents in contract cities than in unincorporated areas. They are our No. 1 customer and we have a responsibility to provide excellent customer service."

Los Angeles County Supervisor Gloria Molina has said that if the issue isn't resolved by Aug. 31, the contracts with cities won't be renewed.

The contracts were due to expire July 1, but the county extended them until Aug. 31.

In La Habra Heights, liability isn't the only issue.

Clark also is concerned about the rising costs of sheriff's services.

The cost for patrols rose a combined 47 percent over the last five years. In contrast, property tax - the city's main revenue source - increased by only 21 percent during that time.

One possible provider of police services could be Whittier.

Whittier City Manager Steve Helvey said patrolling La Habra Heights might not make financial sense for his city due to its small size and distance from Whittier.

The Sheriff's Department typically only keeps one car in the community.

"We'd still have to be prepared to send in other units," he said. "It's probably not the most convenient situation."

He needs to talk it over with the Whittier City Council, he said.

Should the issue remain unresolved, La Mirada could be another city that would look elsewhere for services, said Councilman Hal Malkin.

One of the last area cities to leave the Sheriff's Department was Santa Fe Springs, which contracted with Whittier for police services in 1995.

mike.sprague@sgvn.com

(562) 698-0955, Ext. 3022

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™

click here to receive LAAG posts by email

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™

click here to receive LAAG posts by email

September 16, 2008

California headed over a cliff

People used to joke about California falling into the ocean after the "big" earthquake. Well given what has happened on Wall St. this last week and given our unprecedented late budget, California may fall into the ocean all right. An ocean of debt. Tom McClintock, who is termed out this year and is running for congress sadly summed up California's predicament at the conclusion of the budget process on September 15-16 (11 weeks beyond the Constitutional deadline of July 1...but hey that's just the state constitution...its meaningless). We felt this needed to be aired as surely the mainstream press will not cover this as it needs to be covered:

Sen. McClintock: "I believe we've now also passed the point where conventional budget reductions can restore our state's finances. I believe we've reached a terminal stage of a bureaucratic state where our bureaucracies have become so large and so tangled that they can no longer perform basic functions. This fiscal crisis will now only get worse until we are willing to tell the Prison Guards Union, sorry but we're putting our wardens back in charge of our prisons. It can only get worse until we're willing to tell the Teachers Union, sorry but we're putting our teachers back in charge of their classrooms and we're putting our principals back in charge of our teachers. The bureaucratization, and the centralization and the unionization of our service delivery systems have simply priced our government beyond our economy's ability to support...

...I close my 22 years in this legislature tonight with this final warning. California's budget crisis will only worsen until the public elects a legislature and a Governor willing to restore the governing principles and practices under which this state once flourished, or until the credit market finally stops lending the state money..."

When McClintock concluded his statement there was utter silence from the Legislature. Not one democrat or republican said anything in opposition.

So is California headed the way of Vallejo and Lehman Brothers? I guess we will know next time this year.

For the remainder of McClintock's budget statement read below:

http://republican.sen.ca.gov/web/mcclintock/article_detail.asp?PID=346
Debate on the State Budget
Senator Tom McClintock
Date: August 29, 2008
Publication Type: Press Release

Mr. President:

Last year, when some in this chamber assured us that the budget was not only balanced, but included the biggest budget reserve in the state’s history, others of us issued an urgent warning that the budget was dangerously unbalanced and that we were fast running out of the time needed to implement reforms.

The State Controller reports that during last year we received $96 billion in revenues – a new record -- but spent $107 billion. And now we’re running out of money.

I am concerned that conventional budget reductions alone will no longer bridge the fiscal gap without severely impacting delivery of vital services.

We have centralized and unionized and bureaucratized our service delivery systems to the point they can no longer adequately perform the basic tasks for which they were designed.

Simply stated, we have created a bureaucracy we cannot afford.

We cannot afford spending 1/3 of a million dollars per classroom when only a fraction of that actually trickles into the classroom to educate our kids.

We cannot afford spending $42,000 to house a prisoner when Florida does it for $18,000 and the federal government for $26,000.

We are going to have to clear away the massive bureaucracy in our public schools that does nothing to educate our children and instead put teachers back in charge of their classrooms, put principals back in charge of their teachers – including the authority to hire and fire -- and put parents back in charge of their principals through their local school boards.

We are going to have to rescind the sweetheart labor contracts in our prisons, restoring management authority to the wardens and contracting out at least 50,000 prison beds.

We are going to have to replace the massive bureaucracy in our health system with a simple prepaid refundable tax credit to bring within the reach of every family a basic health plan of their selection.

This is the only way we are going to be able to maintain vital services without bankrupting the state. But if the consensus does not exist to enact conventional budget reductions, it certainly doesn’t exist to enact a fundamental restructuring.

During my 22 years in this legislature, I and others have laid out all these proposals, but they have fallen on deaf ears. There is some bitter irony in the fact that those who have voted against these proposals year after year accuse Republicans of not offering alternatives when that is all we have done year after year. But at some point very soon, these reforms, or others like them, will have to be enacted.

Senator Ducheny tells us that the budget before us is a baseline budget; that it merely continues business as usual. The problem is that business as usual produced $11 billion of red ink and we cannot afford to do so again.

Nor can I agree that the path to fiscal recovery is through taking the highest sales tax in the nation and raising it still higher with the second biggest tax increase in the state’s history. In that respect, I agree with Barak Obama who last night said: “In an economy like this, the last thing we should do is raise taxes on the middle-class.” And yet that’s the first thing this budget does.

I was here in 1991, and I warn you that raising the sales tax did not improve our finances – it made them worse.

The census bureau reports that in the last two years, a half million more people have moved out of California than have moved in. The historic migration FROM Oklahoma and Arkansas TO California in the 1930’s has now reversed itself in an historic outmigration of Californians TO those states with lower taxes and vastly less burdensome regulations (including Oklahoma and Arkansas). The difference is that the dust-bowl migration was caused by an act of God – the new migration is caused by acts of government – OUR government.

Those acts are fully within our power to reverse – but that will mean reversing the policies that have wrecked the once Golden State of California.

I would conclude with an observation on process. It is good that for the first time since the budget deadline we finally have a formal budget proposal on the Senate floor to begin deliberations. But it is unfortunate that this did not arrive on our floor in May. And it should have stayed on this floor day after day until it cleared the 27 votes needed to send it to a conference committee.

So I would ask those of you who voted to send an empty budget bill directly to the conference committee earlier this year to contemplate the damage that was done by bypassing the entire legislative process. And I would express the hope that the next session of the Senate finally return to the traditions and procedures that served this state so well for many, many decades and that produced relatively balanced and relatively punctual state budgets.


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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