Retiree costs in state could hit $100 billion

Public agencies must tell liabilities for workers

http://www.venturacountystar.com/vcs/county_news/article/0,1375,VCS_226_5249827,00.html

By Timm Herdt, therdt@VenturaCountyStar.com
January 1, 2007

When Charles Weis took over as superintendent of the Ventura County Office of Education in 1993, he took a look at the agency's employee benefits package and envisioned a potential train wreck far into the future.

The agency was promising to pay the health insurance costs for employees after they retired, but it was putting no money aside each year to cover those distant financial liabilities and had no real idea of what those future costs might be.


"I ordered the business office staff to buy out those in the program," Weis said. "You can't allow employers to give away something they don't have to pay for 30 years."

Across California, however, government agencies have been doing precisely that for decades: promising their workers several years, or even a lifetime, of free or subsidized health insurance after they retire, but putting not a penny aside each year to pay those costs when the bills inevitably come due.

The practice remains commonplace in the public sector, even as large private employers have scrambled in recent years to pare down or scrap their retiree healthcare benefits.

A day of reckoning approaches, hastened by a new accounting regulation that takes effect in 2007.

When large government agencies close their books on the budgets they adopt in the coming year, they will have to tell the world how large the financial liabilities they have accrued after decades of, as Weis describes it, giving away a benefit that relied on future generations for payment.

Unlike pension benefits, which are funded over a worker's lifetime through annual contributions from employers and workers, retiree health insurance is typically financed on the pay-as-you-go plan, with all costs for current workers put off well into the future.

Today, the image of that looming train wreck that Weis envisioned years ago has become increasingly clear to auditors, government officials and taxpayer groups.

The state, its university systems, counties, cities, school districts, special districts, nearly all have obligated themselves to pay at least some level of health insurance premiums for a swelling pool of retirees, racking up unfunded liabilities that the nonpartisan Legislative Analyst's Office estimates could total in excess of $100 billion.

Estimates of future costs

A new regulation adopted by the Government Accounting Standards Board will require all large government agencies to close out next fiscal year's books with financial notes estimating the future costs of paying for retiree health benefits.

Phased in over three years, the regulation will eventually apply to every government entity in the nation.

The numbers are expected to be sobering in all cases, horrifying in some.

An actuarial study completed for the Los Angeles Unified School District, which pays full lifetime healthcare benefits to 32,000 retirees and 18,000 of their family members, estimated the district's unfunded liability at $5 billion. It now spends up to 4 percent of its general fund to pay retiree health benefits; if the district were to begin putting enough money aside each year to eliminate the unfunded liability over 30 years, the cost of retiree health benefits would soar to as much as 20 percent of the district's annual budget.

It works out to about $2,000 per student, says former Assemblyman Keith Richman, who recently formed a nonprofit group that will be dedicated to educating the public about the costs of paying benefits to retired government workers.

"The issue can't be ignored," Richman said. "It's an extraordinary liability. ... We all ought to be concerned. It's the biggest fiscal issue facing California."

The Government Accounting Standards Board regulation has caught the attention of government officials at all levels.

The most dramatic reaction came last month when the San Diego County Board of Supervisors voted to stop paying $30 million a year for retiree health benefits.

County officials said the new accounting rule would force them to start prepaying future liabilities, a change that would cost the county an estimated $1.8 billion over the next 20 years.

After the new accounting rule was drafted two years ago, the California School Boards Association sent a survey to 1,000 school districts asking about their retiree health benefit policies. It received more than 600 responses.

"We saw that districts were worried about it," said Suzi Rader, director of the organization's district financial services division. "We saw that it was going to be a concern."

A 2003 survey conducted by the State Teachers' Retirement System found that districts covering 57 percent of retired teachers in California pay all or a portion of their retirees' health insurance.

Dwight Stenbakken of the League of California Cities said a survey went out last month to cities across the state as the association seeks ways to assist cities with an issue "that has been coming to the forefront."

The survey, he said, will allow cities to get "a statewide handle" on the size of cities' liabilities. "I suspect it's going to be tremendously substantial," he said.

As with every issue concerning healthcare, the severity of the problem is being driven by runaway costs. When the state first began offering group health insurance to employees in 1961, the premiums were $5 per employee per month. At that price, giving the benefit to retirees didn't seem an extraordinary burden.

In recent years, however, the cost of insurance premiums has soared. Since 2000, annual increases have averaged 17 percent, and the cost of providing health benefits to retired state workers has tripled in just the last nine years, topping $1 billion this year.

Number of retirees on rise

The state pays 100 percent of the premiums for a basic HMO plan for retirees and 90 percent of the premiums for their spouses, or $738 per month for each couple. Those who choose a more expansive health plan must pay the difference between that plan's higher cost and the base price of the HMO plan.

At the same time costs are rising, the pool of retirees is climbing by about 4 percent per year and could grow even faster, as an estimated 40 percent of the state's active work force is expected to retire within the next 10 years.

Calculating those two growth trends, the legislative analyst predicts that the state's annual cost for retiree healthcare will hit $1.6 billion in the 2010-11 fiscal year.

Financial analysts suggest a variety of strategies for dealing with the growing liabilities.

One approach many agencies have already adopted is to establish a multi-tier retiree benefit plan, keeping existing rules intact for current employees and creating less generous benefits for those hired after a certain date.

A report from the Ventura County Office of Education, for example, shows that the Pleasant Valley School District provides full lifetime benefits for teachers who worked for at least 10 years and retired at age 55 by June 30, 1984. The district policy provides gradually less generous benefits for those who retired after that date. The existing policy, which applies to all teachers hired after June 30, 1986, allows retirement at age 60, requires at least 15 years of service, caps benefits at $2,400 a year and stops the benefit entirely when retirees become eligible for Medicare at age 65.

Another approach that agencies can take is to prepay retiree benefits, in part by requiring monthly contributions from workers. The legislative analyst has recommended that the Legislature adopt this approach for state workers.

Stenbakken of the League of California Cities said the "state of the art" among cities is to pay as they go — paying each year's costs out of that year's budget. "Only a handful — and I mean two or three — are doing something to fund their costs up front."

Among them is the city of Simi Valley, which offers lifetime health benefits to police officers but deducts a portion of each officer's paycheck to put into a trust fund that will pay benefits after he or she retires.

Caryn Moore, an administrator in the state Department of Education's financial services division, said school districts are awakening to the need to put money aside each year to cover future retiree healthcare costs.

"To the extent that you delay annual funding, you make the problem worse," she said. "You really need to start funding this."

Weis said school districts in Ventura County might be a little ahead of the statewide curve on setting aside funds for these future liabilities.

"In our county, it's probably the rule rather than the exception," he said. "They may not be setting aside enough, but they're putting aside something."

Prefunding future benefits

Legislation enacted this year allows a number of counties, including Ventura, to start setting up accounts to prefund retiree health benefits.

Chief Executive Officer Johnny Johnston said the county already pays "a blended premium" that covers costs for both active and retired workers. An actuary has been retained to determine a precise figure, but Johnson estimated that Ventura County's unfunded liability for retiree health costs at between $15 million and $20 million, a significant, but manageable, amount.

The legislative analyst notes that prefunding future benefits will save agencies money in the long run as earnings on money deposited in trust accounts will offset direct contributions to the account.

Finally, agencies can consider eliminating retiree health benefits, although the legality of taking away a promised benefit is uncertain.

Courts have long established that retirement pensions, once promised, become a vested right that cannot be taken away from a retiree or employee. Whether retiree health benefits are a vested right is an unsettled legal question.

"You'll hear people argue everything from it's a vested right to districts can take it away whenever they want," said Rader of the School Boards Association. "That is a question that will end up in the courts, and we haven't seen any public ruling yet."

She notes that one state court outside California has ruled agencies cannot rescind promised health insurance benefits to those who have already retired, but can rescind the promise for those who have not yet retired.

Richman, who unsuccessfully crusaded for reform of retiree benefits in his six years in the Assembly, said he does not believe that the Legislature will be able to confront the issue because of the political influence of public employee unions, which do not want to see retiree benefits reduced.

Noting the strong negative reaction in 2005 when Gov. Arnold Schwarzenegger talked of reforming public employee pensions, Richman said it will be a challenge to propose reforms that won't be interpreted by the public as an attack on teachers, firefighters, police officers and other valued public employees.

He hopes that the nonprofit advocacy group he has formed will be able to able to lay the groundwork for a possible ballot initiative designed to limit taxpayers' future liabilities for paying for retiree pension and healthcare benefits.

Richman advocates an approach he says will not reduce benefits and not be punitive: raise the retirement age for public workers.

"Private sector workers are working to age 65 or 68 paying taxes so that miscellaneous government employees can retire at 55," he said.

Richman believes that there are legitimate reasons to allow police officers and firefighters to retire at 55, but if all other government workers had to wait until age 65 to start collecting benefits, the system could be made financially sound.

Workers would pay into their pension funds for 10 more years and draw 10 fewer years of benefits. In addition, current assets invested in pension funds would double over that 10-year period.

Medicare eligibility

The pension savings, Richman believes, could be enough to cover unfunded liabilities for retiree health insurance. Future costs would be substantially lower, because 65-year-old retirees would immediately be eligible for Medicare.

"I don't have any issue with offering some benefit for retiree healthcare that's a supplement to Medicare," he said.

Richman and others who have sought to shine light on the financial implications of unfunded retiree benefit expenses believe that the

Government Accounting Standards Board rule will focus the attention of policymakers and the public.

Weis, whose office is legally responsible for reviewing the finances of all school districts in Ventura County, said the new regulation will provide his auditors with important new information.

"My folks who read over the district budgets will be looking at this closely," he said. "That's the issue we'll be looking at for fiscal solvency."

governor puts off into future any serious consideration of pension, health-care debt

Wednesday, January 3, 2007
He'll be retired before reforms are made
The governor puts off into future any serious consideration of pension, health-care debt

http://www.ocregister.com/ocregister/opinion/homepage/article_1404696.php

When politicians face a major problem but lack the courage to propose a plan to actually fix it, they typically adopt the standard dodge: create a "blue ribbon" commission to study the problem. Often some of the appointees to such panels are part of the problem, which only assures that nothing of any substance ultimately will be adopted.

That's exactly the approach Gov. Arnold Schwarzenegger took with the state's unfunded retirement liability problem – the long-term debt faced by taxpayers to make good on the pension and health-care promises made to the state's large class of government workers. The governor last week signed an executive order that established the Public Employee Post-Employment Benefits Commission, charged with making recommendations after a year of study.

Some observers have praised him for at least recognizing a true problem, but this commission will do nothing more than delay by a year any real-world solution to such debt.

"Promised pensions and health benefits are vitally important to state workers and their families, especially public safety officers who put their lives on the line every day," the governor said in a statement. "And they are obligations that must – and will – be paid by government. Soaring obligations of this type, however, also remain one of the biggest problems facing governments everywhere for the simple reason that rising pension and retiree health care costs mean less money for other government programs such as education, public safety, environmental protection and health care."

The governor at least got it right about how big a problem these retirement promises represent. As his office pointed out, unfunded pension liabilities for the state's two main government pension systems amount to $49 billion and will go much higher after a federally mandated change in accounting practices forces governments to deal honestly with the full liability. The health care debt is estimated at $40 billion to $70 billion. In 2001, the governor's office explained, the direct annual cost to the state budget for pensions was $160 million. It's now $2.6 billion.

At this rate, if something is not done to control these benefits, taxpayers will have to pay far more in taxes or in new debt.

The governor did not really deal with the reason for the run-up in liabilities: Employee unions, especially those in public safety, have secured enormous increases in already generous benefits in recent years. Police and firefighters can retire with 100 percent of their final pay, and full health care benefits, guaranteed forever. Other government employees can retire with more than 80 percent of their final year's pay, such as Orange County employees, who received a retroactive pension spike a few years ago.

Compare those benefits with the 401-k-style plans and Social Security that most private sector workers will depend upon.

This is not only unsustainable, but unfair. As government employees retire at earlier ages with nearly full pay and Cadillac-style health benefits, many private-sector employees delay retirement and depend on benefits from the federal government's creaky retirement systems.

The Schwarzenegger executive order was lauded by some union officials. That should offer a hint that the commission will propose nothing that will fix the above-mentioned problem. In 2005, the governor had proposed pension reform, but did not push forward with it after he ran into political problems. Since then, he has abandoned any effort to reform the current system.

The technical solutions are fairly straightforward, albeit politically difficult to accomplish. Current government workers by law must receive their promised benefits, but new workers should be shifted from a defined-benefit plan with guaranteed benefits to a defined-contribution plan similar to those in the private sector. Health benefits, which can legally be changed, need to be trimmed back to real-world levels. Furthermore, the state government needs to slow spending, trim the size of government and start shutting down unnecessary departments.

Instead of doing any of that, the governor wants to spend a year gabbing about the problem in a commission that will be dominated by union members and Democrats who will resist any serious reform. What else would one expect from a governor who seems more interested in being liked than in fixing the state's serious problems?

Let's See if we can dupe the Taxpayers

http://www.latimes.com/news/local/la-me-pensions30dec30,0,2127262,full.story?coll=la-home-local

This article is scary as it shows the politicians (whores for votes) have no back bone to stand up to either the taxpaying voters OR the public employee unions so they will let the unions take their campaign to the the voters to see if they can get the poor private sector voters to approve pension plans worth two to three times what their own private sector pensions are worth! And knowing how stupid voters are in approving bonds (they don't cost taxpayers right?!) they will give billions away to very un-deserving public employees. Are Californians as smart as taxpayers in New Jersey that have already caught onto this scam and are fighting for their lives (or their own future retirements) against the greedy union employees retiring at 50?

S.F. is seen as a model of -- restraint?
The city has controlled employee pension costs by putting plans to hike benefits to public votes.

By Evan Halper
LA Times Staff Writer

December 30, 2006

SACRAMENTO — San Diego flirted with bankruptcy. Orange County, still emerging from its mid-'90s cash crisis, moved back toward the brink. And in Fresno County, the grand jury recently declared that public employee retirement costs have that government "facing insurmountable debt in the near future."

Statewide, governments are rattled by the soaring price of public pensions expanded by politicians at the bargaining table and gobbling up an increasing share of taxpayer dollars. But a rare exception has emerged in an unexpected place: San Francisco.

Even as a bulwark of organized labor, the city has kept its pension costs in check while many others are digging deep into their general funds to pay for benefits that taxpayers were assured would cost nothing.

Why is San Francisco different? Politicians there can't give much away; a century-old provision in the City Charter prohibits it. The only group empowered to enhance government benefits is the public, which must sign off on changes in the municipal pension plans at the ballot box.

The provision was unique to San Francisco until last month, when San Diego voters overwhelmingly decided that they too would like a say in such matters. Now the gospel of voter oversight is spreading.

"There is no question that it has been a sobering force for any aggressive or ambitious union seeking to improve benefits," said former San Francisco Mayor Art Agnos. "They know they can't rely on the politicians who are anxious to please them. Any proposal ultimately goes to the voters. They are the ultimate bankers."

The city's officials say the rule has helped save San Francisco from itself in recent years. When other governments kept constituents in the dark about their actuarial assumptions — such as an unending stock market boom — as they raised pension benefits in the late 1990s, San Francisco officials had to explain exactly where the money for benefits would come from, and then get voters' permission.

In the last decade, residents there have approved at least four benefit increases — moderate ones.

"If you need to win a majority of voters, you are more careful what you ask for," said Claire Murphy, executive director of the city's retirement fund.

The only proposal voters rejected in that period was a 1996 initiative championed by former Mayor Willie Brown to give him the authority to cut deals with public employee unions on his own — without having to go to the ballot.

Not everyone is a fan of San Francisco's policy.

"Our preference would be to amend the charter so we wouldn't have to have voters involved," said Maria Guillen, regional vice president of Service Employees International Union Local 790 in San Francisco.

Guillen said that, although the public may be sympathetic to police officers and firefighters, getting voters to sign off on retirement benefits for other government workers is another matter. People aren't as eager to rush to the polls to support street sweepers and custodians, she said, and their benefits are falling far behind.

"We don't have the same public relations," she said. "We have a harder route. And these are the workers that do so much to make the city run."

Many pension fund managers also are skeptical.

"I don't think employee compensation issues should be subjected to the politics inevitably injected into any debate that includes a vote of the people," said Keith Brainard, research director for the National Assn. of State Retirement Administrators, "just as you wouldn't want people voting on how much water should be let out of a dam, or what neighborhoods police should patrol at night."

But he also acknowledged that the San Francisco model "looks like it's working."

The city's fund is on target to have more than enough money to pay all of the cash retirement benefits promised to its employees. Orange County and San Diego are short about 30%. That translates into billions of dollars, and residents could be forced to make it up by sacrificing services or enduring tax hikes. Scores of other local government funds also are struggling.

And the state's giant public employee pension plans are short tens of billions of dollars, despite impressive returns for pension funds from the stock market, real estate, venture capital and hedge fund investments in recent years.

Many experts blame politics. Elected officials, they say, want to reward government employees — and endear themselves to the politically powerful unions behind them — but don't want to confront taxpayers about the true cost of increasing benefits.

So they mask the price tag with overly optimistic investment projections and other maneuvers. It isn't until years later, when the higher benefits kick in or the stock market dips, that voters get the picture.

"No one is minding the store," said J. Fred Giertz, a professor of economics at the University of Illinois at Urbana-Champaign. "Politicians give out the benefit increases to keep the employees happy, and they also keep taxpayers happy because they can do it without raising taxes at that moment. But the burden gets passed on to the future."

Brainard, of the retirement administrators group, says the solution to runaway pension costs is not bringing every contract to the ballot, but bringing more transparency and oversight to the bargaining process.

He points to Georgia, which has strict rules in place to ensure that politicians cannot increase benefits without having the funds to cover the cost. Georgia is one of the few states not facing a large shortfall in its pension funds.

But in San Diego, where lack of disclosure about a multibillion-dollar tab for enhanced public pension benefits led to federal sanctions for securities fraud, voters decided that they wanted to go a step further. Last month, nearly 70% of them cast ballots in favor of putting the San Francisco model in place in their city. All future benefit increases must go through them.

Unions bitterly fought the proposal, saying it would cripple the city's ability to attract quality police officers and firefighters.

"San Diego already has one of the lowest ratios of police officers and firefighters per population in the state," said the ballot argument opposing the measure. "Proposition B will only make that problem worse."

Former San Francisco Mayor Agnos calls such arguments "purely special-interest rhetoric." He said his city has had no problem attracting job applicants.

Now activists hope Orange County will follow suit. One is George Passantino, a senior fellow at the libertarian Reason Foundation.

Passantino sees the irony of looking for solutions in the liberal city that activists such as him love to hate. But there is no denying it, he said: "San Francisco is way ahead of the curve."

evan.halper@latimes.com

*

(INFOBOX BELOW)

Public pension funding

Most of California's large public retirement funds lack enough money to cover benefits promised to government workers. But San Francisco's fund has a surplus.

Retirement plan Surplus/ Percent Value of
shortfall funded assets
(in billions) (in billions)
San Francisco +$0.42 103.8% $11.3
City of San Diego -1.4 68.0 3.6
City of Los Angeles -2.1 77.2 7.2
Orange County -2.3 71.5 5.8
Los Angeles County -5.6 82.8 27.0
California State Tchrs -20.3 87.0 157.0


Sources: National Assn. of State Retirement Administrators, Los Angeles City Employees Retirement System, Orange County Employees Retirement System, San Diego City Employees Retirement System.

Governor creates pension task force

California Gov. Arnold Schwarzenegger signs an order creating the Public Employee Post-Employment Benefits Commission in his hospital room in Santa Monica on Thursday.

Keith Matheny
The Desert Sun
December 29, 2006
http://www.thedesertsun.com/apps/pbcs.dll/article?Date=20061229

As President Bush did with the Iraq Study Group, Gov. Arnold Schwarzenegger is turning to a new assembly of minds for new ideas to address a worsening problem.

The new group's task: find solutions for California's fast-growing, budget-sapping public employee retirement benefit costs.

The new commission Schwarzenegger created will have six members appointed by the governor; three by the Assembly speaker and three by the president pro tem of the state Senate. The Democrats control both the Assembly and Senate. State Sen. Jim Battin, R-La Quinta, applauded the governor's move.

"You've got to sit down and have a realistic conversation," he said. "We cannot continue to operate the way we are. It will eventually bankrupt the state."

The group is to provide to the governor and Legislature by Jan. 1, 2008, a report that:

Identifies the full amount of unfunded post-retirement health care and dental benefits for which California governments are liable. It's estimated at $40 billion to $70 billion;

Evaluate and compare various approaches to address governments' unfunded retiree health care and pension obligations;

Propose a plan for addressing the unfunded obligations.

State Sen. Denise Moreno Ducheny, D-San Diego, the incoming chairwoman of the Senate Budget Committee, is cautiously optimistic about what may come from the new commission.

"I always get a little nervous when we're forming another commission," she said.

But employee pensions and retiree health care, she said, "is an issue we really need to look at.

"If we get good people and they hear good information, hopefully they will come up with something that they can present to us in the Legislature that we can use intelligently."

Costs dramatically rise
California state employees' pensions went from costing $160 million annually in 2001 to $2.6 billion this year. Unfunded pension liabilities for the California Public Employee Retirement Service, or CalPERS, and the California State Teachers Retirement Service, or CalSTRS, are at $49 billion.

A new accounting rule going into effect next year will require governments to more fully disclose their long-term retiree health care obligations. A state Legislative Analyst's Office report from February estimates that will reveal an unfunded liability of between $40 billion and $70 billion for state workers and their dependants.

The report recommends that the state set aside $6 billion a year, in addition to the $1 billion it currently spends on such costs.

Schwarzenegger, in his January 2005 State of the State address, touted as a cost-saving measure a state constitutional amendment to transition state employee pensions away from traditional, defined benefit plans to defined contribution plans such as 401(k)'s.

That effort was shouted down within a half-year, with critics including public employee unions arguing the reforms would wipe out orphan and widow death benefits for firefighters and police officers, an assertion Schwarzenegger and proponents denied.

Striking a more moderate tone since defeat of his special election measures in 2005, Schwarzenegger is now re-engaging the issue of public employee retirement costs with Democrats and union officials at the table.

"The governor wanted to continue looking at this issue very seriously, and wanted to do it in a bipartisan way," said Adam Mendelsohn, Schwarzenegger's deputy chief of staff for communications.

Union officials Thursday expressed willingness to work toward solutions.

Joe Kerr, president of the Orange County Professional Firefighters Association, noted that to address his department's retiree health care debt, the county contributed an additional $7 million; the union contributed $1 million; and employees agreed to forgo an annual 3 percent cost of living adjustment.

"It comes down to assisting your employer in being around, because if your employer isn't going to be around, it doesn't help employees any," Kerr said.

Though the commission is tasked with considering all options in dealing with the escalating benefits cost, one won't be supported by Schwarzenegger, Mendelsohn said - tax increases.

There's only two paths to take to reduce retiree health care liabilities: contribute more money or reduce the costs by reducing the benefits provided, said Jason Dickerson, the principal fiscal and policy analyst for the state Legislative Analyst's Office.

Both approaches are difficult and have political ramifications, he said.

"There are no easy answers here," he said. "These are difficult changes with a lot of dollars involved both for governments and public employees' families."

The Palm Springs City Council just last week agreed to use about $20 million in bonds to pay for its city's unfunded liabilities.

Riverside County borrowed $400 million through bonds to help pay off its retirement costs.

SOARING COSTS: PAYING FOR PUBLIC RETIREMENTS
The complete story

Alarming numbers
# The skyrocketing costs of retirement benefits for public employees will be a yearlong topic of discussion for a new commission formed by Gov. Arnold Schwarzenegger. Among the issues causing concern - including some first reported in a Desert Sun investigation published earlier this month:
# State retirement systems for government workers and teachers, CalPERS and CalSTRS, have a combined unfunded pension liability of $49 billion.
# California may owe between $40 billion and $70 billion in promised but currently unfunded long-term retiree health care for state workers. New accounting standards will soon require a full accounting for the long-term debt.
# Coachella Valley cities' pension savings were wiped out when the stock market crashed around 2000. Now they face a collective $51 million unfunded liability.
Cathedral City's population has increased almost 70 percent since 1990. Its emergency fire calls tripled in that time. The cost to run the city fire department jumped almost $1.7 million in the past five years alone.
# Yet the city's number of firefighters has remained virtually unchanged for nearly two decades because the costs of benefits prohibits them from hiring more staff.
# Palm Springs and Cathedral City fire departments often run engines with only two firefighters, instead of the recommended four or five. It can cause delays in responding to emergencies.
Coachella Valley's three school districts have a combined $114.5 million retiree health care liability.

JON COUPAL: Public retirees feast as others pay piper

Article reposted from LA Daily News opinion section 12/26/06
http://www.dailynews.com/theiropinion/ci_4904477

'TIS the season, and the ghosts of Christmas past, present and future are about to visit themselves on local governments as retribution for their wastrel ways.

Cities, counties and school districts have provided public employees a perpetual Christmas gift - consisting of lavish pensions and health care benefits - for years. But beginning soon, new guidelines by the Governmental Accounting Standards Board will require full disclosure of these unfunded government liabilities.

Since most California agencies operate on a fiscal year that begins in July, and they are not required to fully report until the end of the fiscal year, sticker shock will not actually hit the fan until 2008. But the tension in some administrative offices already is palpable. When taxpayers see what has been wrought by their elected representatives - and face higher taxes or service reductions to pay for retirement benefits that are often vastly superior to their own - the backlash will be severe.

According to Steve Frates of the Center for Government Analysis, annual health care costs in California for state and local government retirees are expected to total at least $4.5 billion this year. This figure could swell to $31.5 billion by 2019. In January, Frates will release results of a study of the other major unfunded government liability, pensions.

San Diego is the poster child for local elected officials' eagerness to give public-employee unions everything they want - even if they have to bend the law - to advance their own political security. Unrealistic promises to San Diego employees have put the city, known to many as "Enron by the Sea," on the verge of financial collapse.

In Orange County, John Moorlach, newly elected supervisor and former county treasurer, warns that recent generous pension agreements are pushing the county toward its second bankruptcy in a dozen years.

How did governments get themselves and taxpayers into this bind? Public employee unions go all out to elect "their" candidates to office. When it comes time to negotiate pay - the U.S. Census Bureau says California has the highest-paid public employees in the nation - and benefits, the unions have representatives on both sides of the table.

One of the few drawbacks to term limits is that elected officials who make these sweetheart deals will not be around long enough to face the consequences. They can approve these irresponsible deals and lock in union gratitude as they attempt to prolong their careers by seeking higher office.

And the expense to taxpayers will be more than just the cost of benefits. Just wait until government entities try peddling bonds and the rating agencies ask for their Governmental Accounting Standards Board number - or estimated liability. With these mammoth unpaid liabilities, the interest rate to lure bond buyers will be usurious, costing governments - and ultimately taxpayers - billions more.

Things are going to get much worse before they get better, but at least the new accounting rules will force our spendthrift representatives to confront fiscal reality and start working on solutions. Either that, or they will be tossed from office.

Jon Coupal is president of the Howard Jarvis Taxpayers Association. Contact him through the organization's Web site, www.hjta.org.

New Federal requirements may be 'wake-up call'

Warning bells tolling for rising health care costs
New Federal requirements may be 'wake-up call'

Keith Matheny and Erica Solvig
The Desert Sun
http://www.thedesertsun.com/apps/pbcs.dll/article?AID=/20061218/NEWS01/612180327

It's the biggest fiscal calamity almost no one saw coming and few are talking about.

It's left Coachella Valley cities and schools owing more than $174 million and wondering how they're ever going to pay it.

It's simply the cost of governments' promises to provide workers and their families with health-care coverage in retirement.

"There is going to be a collective jaw-drop when those numbers are revealed," said George Passantino, senior fellow for The Reason Foundation, a Los Angeles-based think tank .

The issue is coming to the forefront now as the federal Government Accounting Standards Board requires local governments across the country to fully examine what retiree health care will cost them for past, current and future employees.

Until now, governments - including those in the Coachella Valley - merely paid whatever was owed in a given year, paying no heed to potentially staggering expenses just over the horizon.

The new accounting standards are "really going to bring to our attention the problem of paying for these benefits is worse than we thought," said John Graham, director of health care studies for the Pacific Research Institute, a San Francisco-based think tank.

It will be a wake-up call, predicted Kevin McCarthy, finance director for the city of Indian Wells: "(It's) kind of the first slap in the face to cities."

Why costs are soaring
This impending dilemma has been years in the making, the result of several factors:

# Skyrocketing health care costs. State spending for retiree health care increased an average of 17 percent a year for the past five years.

# People living longer. U.S. life expectancy is at an all-time high of 77.6 years.

Because public-sector employees are allowed to retire in their 50s with full benefits, local governments are forced to pay increasing costs for more years per employee than ever before.

# Baby boomers retiring in droves. Several city officials say many of their employees are within a few years of retirement.

# Unbreakable labor contracts. Cities and schools have to make good on what they've promised in contracts with their workers or negotiate a way out. That's a difficult task with employee unions reluctant to give back what they've worked years to achieve.

# Lack of savings. Unlike pre-funded pension plans that use returns on investments to cover long-term costs, cities and schools pay health care bills every year when they come due. This pay-as-you-go method means no money is set aside for the millions of dollars in future costs.

"The public-sector unions, lax oversight and these loosey-goosey accounting rules allowed them to get away with it," Graham said.

"Thank goodness the Government Accounting Standards Board has finally put a stop to it. But it's many years too late."

Now what?
Now that they know what they owe, officials at many valley school districts and cities are only starting to figure out how to pay off the debt.

The new accounting standards don't kick in for many until 2008. And they only require putting the costs on the books; not necessarily funding them.

But bond-raters are expected to penalize governments carrying large debts. That could impact how much a city or school pays to borrow money for infrastructure projects - or their ability to borrow at all.

The 28,000-student Desert Sands Unified School District is already taking action to rein in the cost. They've negotiated with employee unions to reduce expenses, including having teachers work another five years, to age 60, before they get retirement health care.

Assistant Superintendent Charlene Whitlinger told school board members this fall they should begin setting aside $1 million starting this year, and more in subsequent years, to meet the district's 30-year obligation. Borrowing money through bonds remains a possibility.

Palm Springs Unified has banked about $3 million to "start chipping away at this," assistant superintendent Jim Novak said.

It will allow the district to buy some time and see how lenders react to other school districts deep in the red because of healthcare costs.

"This doesn't seem like a lot, but it's probably $3 million more than most other school districts have set aside," he said.

And it's not just the district officials who are trying to curb the costs.

The California Teachers Association has made an effort to help limit the rising costs without having to reduce the benefits to teachers and other school employees.

The union is among the many groups that have teamed up for the California Health Care Coalition, a group of private and public sector employers and workers that are addressing the issue by pooling together to reduce overall health care costs.

"The biggest thing is we want to reduce costs for all," said Tomás Martínez, the association's Rancho Mirage-based regional representative.

"The association, along with employers and school districts, are in this together. It's not one against the other. We're in this together."

Desert Sands board member Amy Ammons, who works as an accountant, said she sees the new requirements to put long-term retiree benefit costs on the books as a good thing.

"The business practice of government used to be, 'We'll push it forward to the future; it will be somebody else's problem; maybe the laws will change and it will go away,'" she said.

"A positive thing about this is it forces government entities to say, 'We have a liability here; we've made a promise.'"

Municipalities now have to fully examine what retiree health care will cost them for past, current and future employees. Indian Wells finance director Kevin McCarthy calls the new federal standards "kind of the first slap in the face to cities." Several factors have led to the $260 million tab Coachella Valley cities and school districts owe.

Did you know?
Most cities pay retirees' health care costs until Medicare kicks in at age 65. After that, most just pay a small, secondary stipend.

Double for the feds
Data released this year by the U.S. Bureau of Economic Analysis shows that for the first time, federal employees' total compensation doubles that of private-sector workers.

Federal workers earned an average of $106,579 in 2005 including benefits, or about twice the average private-sector compensation of $53,289 with benefits included.

The soaring cost of public retirements affects every city and school district in the Coachella Valley. And that means taxpayers like you will be affected, too. Tell us your thoughts or ask our reporters your questions and they'll answer.
Tell us what you think at thedesertsun.com/soaringcosts

PENSION CALCULATOR
How much would your pension be if you worked for one of the Coachella Valley cities?
Check with thedesertsun.com's pension calculator.

Multimedia
How the benefits stack up (PDF 618KB)
Rapid growth strains police, fire departments (PDF 1.4MB)
Video: Pricey promises: Who will pay?

Public Retirements
The complete story

California Noise Laws

California Health and Safety Code

DIVISION 28. NOISE CONTROL ACT

CHAPTER 1. FINDINGS, DECLARATIONS, AND INTENT

46000. The Legislature hereby finds and declares that:

(a) Excessive noise is a serious hazard to the public health and welfare.

(b) Exposure to certain levels of noise can result in physiological, psychological, and economic damage.

(c) There is a continuous and increasing bombardment of noise in the urban, suburban, and rural areas.

(d) Government has not taken the steps necessary to provide for the control, abatement, and prevention of unwanted and hazardous noise.

(e) The State of California has a responsibility to protect the health and welfare of its citizens by the control, prevention, and abatement of noise.

(f) All Californians are entitled to a peaceful and quiet environment without the intrusion of noise which may be hazardous to their health or welfare.

(g) It is the policy of the state to provide an environment for all Californians free from noise that jeopardizes their health or welfare. To that end it is the purpose of this division to establish a means for effective coordination of state activities in noise control and to take such action as will be necessary to achieve the purposes of this section.

46001. No provision of this division or ruling of the Office of Noise Control is a limitation or expansion:

(a) On the power of a city, county, or city and county to adopt and enforce additional regulations, not in conflict therewith, imposing further conditions, restrictions, or limitations.

(b) On the power of any city, county, or city and county to declare, prohibit, and abate nuisances.

(c) On the power of the Attorney General, at the request of the office, the state department, or upon his own motion to bring an action in the name of the people of the State of California to enjoin any pollution or nuisance or to protect the natural resources of the state.

(d) On the power of a state agency in the enforcement or administration of any provision of law which it is specifically permitted or required to enforce or administer.

(e) On the right of any person to maintain at any time any appropriate action for relief against any private nuisance as defined in the Civil Code or for relief against any noise pollution.

46002. Nothing in this division shall be construed as giving the Office of Noise Control authority or responsibility for adopting or enforcing noise-emission standards for any product for which a regulation has been, or could be, prescribed or promulgated by the Environmental Protection Agency under the Noise Control Act of 1972.

CHAPTER 2. SHORT TITLE

46010. This division shall be known and may be cited as the California Noise Control Act of 1973.

CHAPTER 3. DEFINITIONS

46020. Unless the context otherwise requires, the definitions set forth in this chapter govern the construction of the words used in this division.

46021. "Local agency" means and includes every local agency, including a county, city, whether general law or chartered, city and county, school district, municipal corporation, district, political subdivision, or any board, commission or agency thereof, or other local public agency.

46022. "Noise" means and includes excessive undesirable sound, including that produced by persons, pets and livestock, industrial equipment, construction, motor vehicles, boats, aircraft, home appliances, electric motors, combustion engines, and any other noise-producing objects.

46023. "Office" means the Office of Noise Control.

46024. "Public agency" means and includes every state agency and every local agency.

46025. "State agency" means and includes every state office, officer, department, division, bureau, board, council, commission, or other state agency.

CHAPTER 4. ESTABLISHMENT OF OFFICE

46040. There is within the state department an Office of Noise Control.

CHAPTER 5. DUTIES OF THE OFFICE

46050. The office shall, in order to protect health and well-being establish and maintain a program on noise control, including but not limited to:

(a) Determining the psychological and physical health effects of noise.

(b) Determining the physiological effects of noise upon plant and animal life.

(c) Monitoring noise.

(d) Collecting and disseminating authoritative information on adverse effects of noise and of means for its control.

(e) Developing, in cooperation with local governments, model ordinances for urban, suburban, and rural environments.

(f) Providing assistance to local governmental entities engaged in developing and implementing noise abatement procedures.

(g) Developing criteria and guidelines for use in setting standards for human exposure to noise.

(h) Developing standards for the use of noise-producing objects in California.

(i) Developing criteria for submission to the Legislature so that state agencies may require noise control in equipment purchased for state use.

46050.1. Notwithstanding Section 65040.2 of the Government Code, the office shall adopt, in coordination with the Office of Planning and Research and each state department and agency as it deems appropriate, guidelines for the preparation and content of noise elements as required by Section 65302 of the Government Code.

In adding Section 39850.1 to the Health and Safety Code, which was the predecessor to this section, and amending Section 65302 of the Government Code by Chapter 1124 of the Statutes of 1975, it was the intent of the Legislature to ensure, insofar as possible, that new and periodically revised noise elements in local governments' general plans be more standardized, comprehensive, and utilitarian than they had been previously.

However, the Legislature also recognized that some cities and counties had already adopted noise elements pursuant to the existing Section 65302 of the Government Code and that others had received extensions on the due date of their noise element until September 20, 1975. Those cities and counties were not required to resubmit new noise elements consistent with Section 65302 of the Government Code, or to recognize guidelines adopted pursuant to this section, but are required, upon initial and periodic revision of the noise element, to comply with Section 65302 of the Government Code and to recognize those guidelines.

The requirement that the office adopt guidelines for the preparation and content of noise elements shall be inoperative during the 1993-94 fiscal year.

CHAPTER 6. ASSISTANCE TO LOCAL AGENCIES

46060. It is the purpose of this chapter to encourage the enactment and enforcement of local ordinances in those areas which are most properly the responsibility of local government. It is further the purpose to insure that the state is of maximum assistance to local agencies in the discharge of those responsibilities, furnishing technical and legal expertise to assist local agencies in the enactment and enforcement of meaningful and technically sufficient noise abatement measures.

46061. The office shall provide technical assistance to local agencies in combating noise pollution. Such assistance shall include but not be limited to:

(a) Advice concerning methods of noise abatement and control.

(b) Advice on training of noise control personnel.

(c) Advice on selection and operation of noise abatement equipment.

46062. The office shall provide assistance to local agencies in the preparation of model ordinances to control and abate noise. Such ordinances shall be developed in consultation with the Attorney General and with representatives of local agencies, including the County Supervisors Association of California and the League of California Cities. Any local agency which adopts any noise control ordinance shall promptly furnish a copy to the office.

CHAPTER 7. COORDINATION OF STATE AND FEDERAL ACTIVITIES

46070. The director shall promote coordination of the programs of all state agencies relating to noise research, abatement, prevention, and control. Each state agency shall, upon request, furnish to the director such information as he may reasonably require to determine the nature, scope, and results of the noise research and noise control programs of the agency.

46071. On the basis of regular consultation with appropriate state agencies, the director shall compile and publish, from time to time, a report on the status and progress of state activities relating to noise research and noise control. This report shall describe the noise programs of each state agency and assess the contributions of those programs to the state's overall efforts to control noise.

46072. In any case where any state agency is carrying out or sponsoring any activity resulting in noise which the director determines amounts to a public nuisance or is otherwise objectionable, such agency shall consult with the director to determine possible means of abating such noise. This section does not apply to any action of a private person for which a license, permit, or other entitlement for use is required to be issued by a state agency.

46073. The Legislature authorizes and directs that all state agencies shall, to the fullest extent consistent with existing authority, administer the programs within their control in such a manner as to further the policy declared in Section 46000. This section shall not be construed to limit or expand the authority of any state agency to issue or deny a license, permit, or other entitlement for use.

46074. Each state agency authorized to adopt regulations in the area of noise control shall in the manner specified in subdivision (c) of Section 11423 of the Government Code give notice to and invite the comments of the office concerning any proposed adoption, amendment, or repeal of a regulation in the area of noise control.

46075. In accordance with the provisions of Section 11426 of the Government Code or other applicable law, the office may petition any public agency for the adoption of regulations or other measures otherwise within the authority of that public agency in the area of noise control.

46076. The Office of Noise Control shall maintain a program to insure that all state agencies are advised of available federal assistance and funds for noise control programs. The office may, at the request of individual agencies, act for them for the following purposes:

(a) Applying for federal funds which may be made available to the states for noise control programs or related research as a result of the Noise Control Act of 1972 (P.L. 92-574) or any other federal program or law.

(b) Receiving technical assistance from the Environmental Protection Agency to facilitate the development and enforcement of state noise standards and model noise legislation.

46077. The office shall maintain a program to ensure coordinated state and federal noise control programs including, but not limited to, the following:

(a) The study of federal noise regulations proposed for adoption pursuant to the Noise Control Act of 1972.

(b) The preparation of comments, evaluations, objections or the use of any other means to ensure that the federal government considers existing California noise control statutes and regulations prior to the adoption of regulations in order to prevent the adoption of federal noise regulations weaker than existing state standards.

CHAPTER 8. RESEARCH AND PUBLIC INFORMATION

46080. In furtherance of his responsibilities under this division and to complement, as necessary, the noise research programs of federal agencies and of other state agencies, the director is authorized to:

(a) Conduct research, and finance research by contract with other public and private bodies, on the effects, measurement, and control of noise, including but not limited to:

(1) Investigation of the psychological and physiological effects of noise on humans and the effects of noise on domestic animals, wildlife, and property, and determination of acceptable levels of noise on the basis of such effects.

(2) Development of improved methods and standards for measurement and monitoring of noise.

(3) Determination of the most effective and practicable means of controlling noise generation, transmission, and reception.

(b) Coordinate with and become knowledgeable concerning the noise research programs of other governmental entities including the federal government.

(c) Disseminate to the public information on the effects of noise, acceptable noise levels, and techniques for noise measurement and control.


CALIFORNIA CODES
VEHICLE CODE SECTION 27000-27007

27007. No driver of a vehicle shall operate, or permit the operation of, any sound amplification system which can be heard outside the vehicle from 50 or more feet when the vehicle is being operated upon a highway, unless that system is being operated to request assistance or warn of a hazardous situation.

This section does not apply to authorized emergency vehicles or vehicles operated by gas, electric, communications, or water utilities. This section does not apply to the sound systems of vehicles used for advertising, or in parades, political or other special events, except that the use of sound systems on those vehicles may be prohibited by a local authority by ordinance or resolution.

California Land Use Compatibility Noise Guidelines LAND USE CATEGORY -- Residential - Low Density, Single-Family, Duplex , Mobile Homes
Normally Acceptable	Conditionally Acceptable	Normally Unacceptable	Clearly Unacceptable
50-60 dBA	55-70 dBA	70-75 dBA	75-85 dBA
Source: California Land Use Compatibility Noise Guidelines - Community Noise Equivalent Level (CNEL*)

Ambient noise: background or existing noise level. The composite of noise from all sources near and far in a given environment, exclusive of occasional and transient intrusive noise.

CNEL (Community Noise Equivalent Level): a noise measurement scale applied over a 24-hour period to all noise events received at the measurement point. It is weighted more heavily for evening and night periods in order to account for the lower tolerance of individuals to noise during those periods.

EIR: environmental impact report, a requirement of CEQA.

EIS: environmental impact statement, a requirement of NEPA.

EPA: federal Environmental Protection Agency.

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

California public employees gain generous benefits while public sleeps

By JIM BOREN
The special interests usually have their way when the public doesn't pay attention to policy decisions on issues that seem arcane to most taxpayers. Quite simply, the ones paying the bills get ripped off because government bores them.

Then they wake up one day to find they've been funding political giveaways for years, and that's threatening their favorite programs. Elementary school music is being cut; a fire station is being closed; a program for seniors is being eliminated. Now they're mad, but often it's too late.

click here to read rest of article

what happens when cars block street sweepers

When Lakewood allows cars to park on the street on street sweeping day and ALL streets are not swept once a week in Lakewood this is what happens to our beaches. Photo from Long Beach Press Telegram.


Long Beach Press Telegram
The effluent society
Article Launched:12/11/2006

Vegetation hangs from a guy wire connected to a 700-foot trash boom in the mouth of the Los Angeles River in Long Beach on Monday. Approximately 150 tons of trash, including yard clippings, cans of motor oil, tires and a wide variety of refuse was collected from the river after heavy rains over the weekend flushed out the storm sewers of the Los Angeles Basin.

Darryl M. Sexton, Long Beach health officer, has issued a public health advisory for city beaches. Residents are urged not to swim in local waters for at least 72 hours after the last rainfall.

After rainfall of a tenth of an inch or more, storm drain runoff and rivers can contain bacteria from animal waste, litter, fertilizers and decomposing vegetation.

Exposure to contaminated water can lead to flu-like symptoms, gastrointestinal illnesses, skin rashes and eye infections.

More information about water quality in Long Beach is available at www.longbeach.gov/health or by calling (562) 570-4199.

Scott Smeltzer / Press-Telegram

minutes/agendas

Date: Mon, 11 Dec 2006 10:52:01 -0800
To: TSRR@msn.com (Todd Rogers, City Council), DHayward@lakewoodcity.org (Denise Hayward, City Clerk), BBrammer@lakewoodcity.org (Bob Brammer city webmaster)
From: "www.LAAG.us | Lakewood Accountability Action Group"
Subject: minutes/agendas


As of 12/11 the last meeting minutes are 10/24. The last agenda is 11/14? [http://www.lakewoodcity.org/news/displaynews.asp?NewsID=49] Whats up? Not posting this stuff timely is like not having it up at all. There should be an on line archive as well on line that is searchable by date or keyword [http://www.lakewoodcity.org/search/default.asp] and a date on the website as to the time period when one can expect agendas an minutes to be posted (i.e. "Agendas are posted 3 working days before the meeting" and "minutes are posted no later than 10 working days after the meeting"). When this material is delayed time limits and other issues pass without people knowing about them. For as much as Lakewood touts eGovernment I still dont see much transparency.



Date: Mon, 11 Dec 2006 11:48:16 -0800
To: "Denise Hayward" ,"Bob Brammer" ,
From: "www.LAAG.us | Lakewood Accountability Action Group"
Subject: Re: minutes/agendas
Cc: "Howard Chambers"

At 11:18 AM 12/11/2006, Denise Hayward wrote:
My apologies to you and others who depend on the website for agenda information. I was distracted last week with the closing of the nomination period for our March election and posted the agenda everywhere except on the website. I have just finished copying it there, so it is now available. Sorry for the inconvenience.

As a note, the minutes on the website are always the most recently approved set and currently, that was from the end of October. The City Council is scheduled to approve the November 14th minutes at their meeting on December 12. They will be up on the website later this week.

Denise Hayward, City Clerk

~~~~~~~~~~~~~~~~~~~
Thanks. Which brings me to my next point about searchability and archiving that I brought up. I'd like Bob to address that.

Also, as we have discussed I see no reason why all "public hearing or comment" materials, resolutions and proposed ordinances cannot be put up on the site as soon as they are proposed. All this stuff is in electronic format already and I am sure Civica software has push button posting for stuff like that. Also hosting is cheap. many of these hosts like godaddy.com are offering gigabites of storage for pennies a day. These materials would have to be archived, be searchable and have some page on the site where one could browse them by subject or date proposed or passed. Right now there is no one location for this info.