Almanac

Viewpoint - February 10, 2010

Editorial: Initiative not real pension reform

The well-intentioned local residents who are launching a drive to reduce pensions of yet-to-be hired city workers are on the right track, but their effort will not make much of a dent in the city's pension obligations for years, and it very likely will put the city at a disadvantage when competing for top-quality employees with other Peninsula cities that have not reduced pension benefits.

The initiative drive sponsored by Citizens for Fair and Responsible Pension Reform carefully avoids two key components of runaway pension costs:

• Public safety benefits would not be covered by the initiative;

• There would not be a change in the defined-benefit design of current pension payouts, which means the city would continue to help fund lifetime pensions at a specific amount no matter what economic hardships come along.

Until CalPERS and all the agencies it serves adopt a defined-contribution plan, there is little hope of reducing the rapidly escalating cost of pension benefits in Menlo Park or in any other public agency that buys into the CalPERS plan. In today's world, few private employers offer costly defined-benefit pensions. Instead, they often match an employee's contribution to a 401(k) plan, and may or may not play a role in managing the funds.

The proposed initiative would reduce pension benefits for new rank and file employees by:

• Raising the retirement age from 55 to 60;

• Returning to the 2007 formula that calculates retirement pay at 2 percent of pay times years of service; that means that after 30 years, a 60-year-old worker could retire at 60 percent of his or her pay averaged over the last three years;

• Prohibiting the city from retroactively applying an increase in pension benefits for any current or new employee receiving benefits.

How much the city would save using the new 2 percent at 60 versus the current 2.7 percent at 55 is not clear. Public safety pensions, now 3 percent at 50 after 30 years — and a major factor in the city's pension costs — would not be affected.

Given the minimal impact of this initiative, it is difficult to say if the council will simply enact the proposal itself or force it to a November vote, where it would almost certainly win, unless the city's unions mount a full-scale attack.

But regardless of what is said during what we expect will be a contentious campaign, the only real way to solve the state's pension crisis is to put pressure on the governor and legislators to get the job done in Sacramento. This is not an issue that can be solved piecemeal, one city at a time.

Comments

Posted by Henry Riggs, a resident of Menlo Park: Suburban Park/Lorelei Manor/Flood Park Triangle
on Sep 24, 2010 at 1:03 pm

When we first offered a pension reform initiative last Winter, Council members Heyward Robinson and Kelly Fergusson fretted that we mustn't be the only city that offers "only" 60% of a workers highest year salary as a lifelong pension starting at age 60. Since then, five Bay Area cities have enacted that formula; other cities are simply laying off their employees.

When we first offered the initiative, no-one wanted to challenge police benefits. Since then Councilman Heyward Robinson has repeatedly suggested that the police are the "problem", although Council had significantly boosted police pay less than 24 months prior; perhaps he will address that with a reform proposal of his own.

Isn't the idea that "Sacramento" will fix the pension problem just a bit optimistic? Meanwhile, we have to stop digging ourselves into holes, and this is the first solution the voters have. And it will prevent a future council w less conviction than our fiscally "born-again" current council from reversing the reform, without proving the case to the citizens. That may not be the final answer to reform, but it is very real, and very much needed.


Posted by The point is to SAVE money..., a resident of Menlo Park: other
on Sep 24, 2010 at 2:31 pm

I think you are missing the point Henry. (and, btw, why did you wait until September to post on something that was a March 2010 editorial?)

If our City is the guinnea pig by passing L, we will pay all the defense of lawsuits and we may not even qualify any more for CALPERS given some unfortunate wording in L. At the same time we have more trouble hiring when we go up against Cities who can look at the whole compensation package.

Our Citizens spend a lot to love here and they expect good services. Budgeting and governance by ballot box has created unintended consequences before, and seems poised to do so here too - where something well intended with stated "fiscal" purposes -- ends up being a money puit into which the Measure L folks end up causing the CIty to throw perfectly good tax dollars for a net LOSS in the short term in exchange for savings 14 years from now. Not a good deal.

We elect the Council to negotiate, based on current information, what is best for the City considering the full range of information and needs. It is complex and involves matters that the voters don't each have time to fully appreciate. Plus we'd have to spend money to put something to a vote of the people under L too.

Tally it up -- L just isn't the fiscally conservative thing to do at all.

I am voting NO ON L! Gibboney had it right.

Let the Council's unanimous imposition package from last Spring proceed - it really saves money in the short term through cost sharing that starts in the near term, not 14 years from now.


Posted by Save money - are you kdding?, a resident of Menlo Park: Central Menlo Park
on Sep 24, 2010 at 4:55 pm

If the point was to save money on lawsuits do you think it was a great idea to sue the High SPeed Rail Authority like Hayward nad the Council did (good money down a bad hole)? The fac that the people suing menlo park are it's VERY OWN EMPLOYEES should be warning as to how little regard they have for their employer. They want it ALL and we can';t afford it any more!

If the issue was saving money then why did this council spend MILLIONS on healthcare and pension costs (by raising the pension multiplier) and tell us they did it to save $500K in salaries 2007? They saved $500K to spend 8,000K$

This council has shown that it will give the unions anything. To call themselves fiscal conservatives now is an insult, they have spent our city's money like drunk sailors on shore leave for 4 years and NOW they want to be fiscally sound. In an election year!? too Late.

THis is NOT ballot box budgeting. You make it sound like we are the only city in the state asking voters to approve pension increases. San Francisco has required it since the 1890's. THis is about the citiens of menlo park controling a 60 year pension commitment (yes 60 years, 30 of employment and 30 in retirement) kust like we control 30 year bonds.

Vote yes on L


Posted by E. Moritz, a resident of Menlo Park: Central Menlo Park
on Sep 24, 2010 at 5:38 pm

Ah, how the "anonymous" are able to moan!

Dear Mr. or Ms. "point",

Have you seen Haywood Robinson's reelection web page? He's the one who has resurrected the reference to this old editorial. Since it suited his purpose, he thought it appropriate to drag it out. Perhaps you are helping him with his campaign and wrote this portion of his campaign material? A lot has happened since then.

Incidentally "point", you seemed to have missed the Council meetings when:
1. The City Attorney stated that defense costs would be modest ($25K to max $75K)
2. Council member Robinson said the citizens could not be trusted with making decisions on issues such as pensions.

It's all on tape. the City houses them on their web site. Watch Robinson and Ferguson become befuddled trying to protect their past decisions and their union friends. Watch Cline waffle and be unwilling to take a stand. Watch the City Attorney tell the Council the financial risk of a defense was minimal and any problems related to the language of Measure "L" and CalPers requirements could be easily fixed before a court after passage.

Want more waffles??? Look at how Cline and Robinson have now become "fiscal conservatives" as they roll out their web site statements and do interviews with the press. They don't remind us they were the ones who voted for the increase in pension benefits (35% or higher) in 2007 and a supplemental pay increase for the SEIU in January 2009, just as the economy was in melt down. Selective memory? Or just politicians being politicians. Got to love those video records that show what they DID, not what they are SAYING.

This is about very simple math. The current Council members voted for an increase in pensions that imposed an obligation on the citizens of Menlo Park of an ADDITIONAL $6 + million. So you're now concerned about those stuck with that bill taking some action to change the direction of such poor decision making? And you think $25K to $75K is not as bad as continuing a $6 million folly?

Finally, from the very beginning of the effort by Mr. Riggs, Mr. Theiele-Sardina, myself and many others, we have said this new law would not solve all our fiscal problems. The rules of government limit what the citizens can accomplish. What we have proposed is the MOST we can do by initiative. The City Council is the palce where effective and short-term action to reduce pay and pensions can be taken. But we need a City Council that will take that action and represent the citizens. There is a legal case moving in Minnesota that we should all watch closely. That state has moved to reduce CURRENT pension levels, not just future levels. If that passes, then I'd hope you'd take the lead in starting an effort like that right here in Menlo Park.

This little discourse will probably not change your vote, but taking "some" action is better than sitting on the sideline watching stupid prevail and continue.


Posted by Michael Taylor, a resident of Menlo Park: other
on Sep 30, 2010 at 10:23 am

Don't be Fooled by Measure L

By Michael Taylor
Menlo Park resident and former City Employee
In the spirit of full disclosure, I am eligible for a California Public Employees Retirement (CalPERS) pension. I have worked in municipal government for long time, but am not asking for more than I think I deserve. I have contributed to the system since I began working for the City of Menlo Park in 1991.
I agree that California's pension system needs reform. Unfortunately, Measure L does not achieve its stated goals and could cause irreparable harm; "the only real way to solve the state's pension crisis is to put pressure on the governor and legislators to get the job done in Sacramento. This is not an issue that can be solved piecemeal, one city at a time." (tiny.cc/7nyeg).
Read the impartial analysis in your Sample Ballot booklet: Menlo Park could be dropped by the CalPERS retirement plan, and thus incur lower investment returns and higher administrative costs.
City employees receive no Social Security, only CalPERS benefits. The average employee who has retired in the last 5 years gets $16,750 a year in benefits. Hardly the huge benefits depicted by the proponents of Measure L.
The State legislature has decided that for general law cities such as Menlo Park, only a city council may make the final decision about employee compensation, including retirement benefits. The measure is non-binding! This initiative is illegal. The City should expect to be sued for violating state law that allows only city councils to set compensation if this measure passes. Legal costs will be borne by Menlo Park taxpayers.
Measure L does nothing to reduce current expenditures since it would only apply to future hires. Savings would not begin to accrue for fourteen years; the full benefit would take thirty or more to be realized. (tiny.cc/190cs). In contrast, Menlo Park City Council's solution to require all non-safety employees to share health care costs and, if contribution levels rise, pension cost increases, created immediate budget savings.
Measure L does not address public safety (police) salaries and benefits which is the single greatest escalation problem in the budget.

Don't be fooled. Measure L is not the solution.
Vote NO on Measure L.


Posted by POGO, a resident of Woodside: other
on Sep 30, 2010 at 11:50 am

Measure L is not supposed to be the ultimate solution...

but setting sustainable pension benefits for new hires is an excellent start.

YES ON L.


Posted by Carol, a resident of Menlo Park: Downtown
on Sep 30, 2010 at 12:25 pm

Dear Mr. Taylor,
1. Measure L address New employees only, why is it so unacceptable to you as the Director of Recreation of Menlo Park?
2. The average number you gave above is very confusing to regular voters - every employee is different, their position and pay rate are different and their years of service are different too. You Can Not average a person's pension package whom only work for our city for 3 years with yours and then present it to voters how Under-compensate you are. Please post your own pension package here on the forum, so we can discuss. Don't be fool!


Posted by henry fox, a resident of Menlo Park: The Willows
on Sep 30, 2010 at 3:49 pm

Mr. Taylor,

According to my calculations you are eligible to receive $43,000 a year in retirement benefits year at age 55 for your 19 years of service. You probably have, full healthcare, 4 weeks off (including sick leave)and total job security.

If you were unlucky enough to receive social security at the very highest amount your social security would be capped $28,152 a year--which you could collect at age 66 or 67.

Henry Fox


Posted by Michael A. Taylor, a resident of Menlo Park: other
on Oct 2, 2010 at 8:11 pm

Fellow citizens -

First of all, I no longer work for the City of Menlo Park, but I am the Director of Recreation and Facilities and Risk Manager for the City of Saratoga. I worked for Menlo Park for 17 years and have been in Saratoga for the last three.

The issue at hand is pension reform. Virtually everyone agrees that changes must occur and occur soon. My point is to avoid a lawsuit (sorry, I like Bill McClure a lot, but don't consider $25k to $75k to be a modest expense). If this initiative (Measure L) passes, SEIU and AFSCME will sue our City. The law states that only a city council may make the final decision about employee compensation, including retirement benefits. We live in a representative democracy so let our representatives negotiate employee contracts! Stop with the referrendum mentality for public policy. Vote NO on Measure L.

I don't have full health care, I earn 11 days of vacation, and am an at-will employee with no job security beyond my own performance. I am not a fool. I have lots of ideas to help Menlo Park solve the budget problems, but Measure L is not a good idea.


Posted by POGO, a resident of Woodside: other
on Oct 2, 2010 at 9:53 pm

Mr. Taylor -

No one is proposing changes to your pension or the pensions of existing city employees. The proposal applies to new employees.

Unless this change is made, all public pensions - including yours - is at serious risk. I'm sure you don't want that to happen, do you?

But Mr. Fox made an excellent point - you are already in like to receive $43,000 or so in your annual pensions, guaranteed, with cost of living increases, for the rest of your life. That's TWICE what any of us could ever expect to receive from Social Security and I pay 15% of my income into SSI.

So what's your complaint again? Oh yes, passing the referendum will probably result in a law suit. OMG. You would think that saving our cities millions of dollars a year in pension liabilities would be worth spending $75,000 to defend the SEIU lawsuit. And besides, the transparent purpose of any lawsuit would be to deny voters a say in pensions. How noble of our service employees union.

You noted that you are an "at will" employee and have no real job security. That would be like ALL of us in the private sector, Mr. Taylor.


Posted by Blue Collar Public Worker, a resident of another community
on Oct 4, 2010 at 12:31 pm

Mr. Taylor is correct " don't be fooled by measure L" Riggs has said it, Roy has said it and POGO too. "Measure L is not supposed to be the ultimate solution...but setting sustainable pension benefits for new hires is an excellent start". This is just the beginning and the plan is to go after the low hanging fruit. They are sharp enough to know they can't take on the Police and Fire and win. So they start with the little guys.
The fact is the PERS system is sustainable and has performed for 80 years. Don't be fooled by the hype.
BCPW


Posted by Michael Taylor, a resident of Menlo Park: other
on Oct 5, 2010 at 9:53 am

So much to be said about this misguided initiative, I don't know where to start. I left Menlo Park (2.7% @ 55) for a lower pension in Saratoga (2.0% at 55). The argument that the best qualified candidates won't be interested in Menlo Park is crazy. A lot more goes into a public employees decision to work for a particular City than retirement benefits...

Public Service in an Age of Cynicism by Ventura City Manager Rick Cole

Fifty years ago, John F. Kennedy called upon a new generation to "Ask not what your country can do for you—ask what you can do for your country."
Kennedy's assassination and a series of wars, political scandals and now a fiscal meltdown have disillusioned Americans about their government. We live in a far more cynical age. The recent pay scandal in tiny Bell, Calif., feeds the worst perceptions of those who claim that public service is all about self service.
Of course, there was no "golden age" when leaders were all statesmen and government was free of corruption. In fact, there've been far worse times. A century ago, in Licoln Steffans exposed corruption in his book, Shame of the Cities, that was far more pervasive than our recent scandals.
American history runs in cycles. Periods of cynicism always give rise to movements for reform. Out of the "shame of the cities," the city manager system was born, which aimed to professionalize local administration.
Today's public-sector professionals are naturally defensive about the rising tide of anger and distrust we encounter from citizens. To restore public trust, the strength we need to draw on is not our professionalism, but our idealism. Now is the time to refocus on the values that make public service truly worthwhile and rewarding. What public service today needs is "leadership at the core of better communities"—the motto of the International City/County Managers Association (ICMA).
That doesn't change just because times are tough. In fact, difficult times demand more of us.
Let's face it. Bell City Manager Robert Rizzo's $1.5 million pay package is a grotesque outlier, but some of our fellow public servants enjoy pay and perks that are out of place in the "new normal." Generous compensation may have been appropriate when times were better and councils sought to lure the best and brightest. But not when more than half of the workers in America have lost their job or had their pay or hours reduced. Yes, some private-sector executives continue to defend top-heavy compensation. But they're a poor example to emulate.
At a time when the Bell city manager has become a poster child for mercenary greed in the public sector, we can lead in the other direction.
California city managers, for example, have embraced transparency. Cities have scrambled to post compensation information on our websites and assembled a statewide database listing pay for nearly every city manager. We've crafted a set of guiding principles for setting executive salaries—that if adhered to can prevent scandals like the one in Bell.
Yet I'd argue we should go further.
Let's start with retirement security. Guaranteed annual pensions of half a million or even a quarter of a million dollars aren't justified in the public sector. Nor should pension costs be borne entirely by taxpayers—an equal sharing would be more equitable.
Excessive leave time is indefensible. Vacation and leave time accruals that become backdoor pay days undercut the very work ethic we expect of our entire workforce.
Bonuses awarded without criteria for objectively measuring performance fail the test of accountability and look like rewards for pleasing our elected employers.
Minor perks and special privileges grate on both citizens and our employees. Reserved parking slots, city-paid club memberships, free sporting or entertainment tickets and "business lunches" on city credit cards are not venal—but are out of sync with the new normal.
Public-sector executives needn't take a vow of poverty. But the right standard isn't "What could I make in the private sector?" or "What could I make in the next town over?" It should be Tenet Three of the ICMA Code of Ethics: "The highest ideals of honor and integrity in all public and personal relationships in order that the member may merit the respect and confidence of the elected officials, of other officials and employees, and of the public."
Today's unrelenting attacks on government and public servants are misguided. We need not bow to those who have nothing constructive to contribute except to castigate everyone in public service.
What we do owe ourselves and those we serve is our best work and highest commitment to the ideals of public service.


Posted by Roy Thiele-Sardiņa, a resident of Menlo Park: Central Menlo Park
on Oct 5, 2010 at 11:42 am

Roy Thiele-Sardiņa is a registered user.

Mr. Taylor

Your post could have been accomplished by simply linking to the article.

As to why city employees choose their professions, I agree that many other factors go into job choices for EVERYONE. Teachers, Doctors, Engineers, etc. all make life choices about their professional lives.

What sets the current public servants apart from everyone else is their generous pensions and the cost of providing them. That is the only issue at hand. The long-term cost to the city is unsustainable. At some point the citizens will demand that the costs match private sector retirement benefits, then the employees will have the choice to put their own money into the funds (i.e. the city's part will be capped and the employee contribution will vary with the economy) or we will move to a defined contribution rather than a defined benefit system.

Either way the cost to Menlo Park must be reduced, as the employee portion of our budget grows, we provide fewer and fewer services to the residents.

Your employer Saratoga is a model city in that they have a similar population to menlo park and provide the services to those residence with a FRACTION of the employees (and associated costs). they have expertly used contract employees to provide the services on an on demand basis when needed. Their budget to provide those services is significantly less than ours. Nicely done Saratoga.


Posted by Menlo Voter, a resident of Menlo Park: other
on Oct 5, 2010 at 6:18 pm

Mr Taylor:

from your own posting:

Let's start with retirement security. Guaranteed annual pensions of half a million or even a quarter of a million dollars aren't justified in the public sector. Nor should pension costs be borne entirely by taxpayers—an equal sharing would be more equitable.


Excessive leave time is indefensible. Vacation and leave time accruals that become backdoor pay days undercut the very work ethic we expect of our entire workforce.


Bonuses awarded without criteria for objectively measuring performance fail the test of accountability and look like rewards for pleasing our elected employers.


Minor perks and special privileges grate on both citizens and our employees. Reserved parking slots, city-paid club memberships, free sporting or entertainment tickets and "business lunches" on city credit cards are not venal—but are out of sync with the new normal.

Public-sector executives needn't take a vow of poverty. But the right standard isn't "What could I make in the private sector?" or "What could I make in the next town over?" It should be Tenet Three of the ICMA Code of Ethics: "The highest ideals of honor and integrity in all public and personal relationships in order that the member may merit the respect and confidence of the elected officials, of other officials and employees, and of the public."

Even "your" person thinks this stuff is excessive. Do you wonder why the public supports Prop L?


Posted by POGO, a resident of Woodside: other
on Oct 5, 2010 at 9:15 pm

BC -

Just because something isn't perfect, doesn't mean we shouldn't do it. I fully support Measure L. Stopping the existing pension liability madness - at least for newly hired city employees - is an excellent start.

As I've said previously, I'd like to see EVERYONE on defined contribution plans, both public and private. Unlike Social Security, contributions can be part of someone's estate and transferred to their children, especially if they die before they qualify for benefit payments.

And not only am I willing to put my money where my mouth is, I've actually done that.


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