Cover Story - April 14, 2010

Pounding the pavement for pension reform

Menlo Park volunteers collect signatures for initiative drive

by Sean Howell

5:06 p.m., April 7, Sharon Heights

Introducing yourself to a stranger, especially a stranger you want something from, can be uncomfortable. But Lenny Ayyangar does it with poise as she canvasses Menlo Park's Sharon Heights neighborhood on this breezy, dust-mote-flecked day, locating the front doors (harder than it sounds) of house after house, marching up the steps and ringing the bell.

Usually, Ms. Ayyangar gathers signatures with a friend, but her friend's husband fell ill today, so it's just her out here with a photographer and a reporter — whose presence probably makes it harder, not easier, to ring these doorbells, flanked by unaccountable figures with a long-lensed camera and a reporter's notebook.

"It's something other than feeding the homeless," she says in good humor as we walk up a steep block, explaining why she decided to volunteer with a Menlo Park group working to put a "pension reform" initiative on the November ballot. She's followed the issue for a while, and it seemed like a good cause. She gathers signatures whenever she can, going door to door in her neighborhood or posting up at the Sharon Heights Safeway; she's squeezing today's session in before an open house at M-A High, where her son is a senior.

On the whole, people are more receptive and less suspicious than you might expect. Ms. Ayyangar says that's pretty much been her experience so far. She's gathered 65 signatures, and only one person has turned her down.

There's a kindly man who signs, then says that it's a bad idea to ask whether he's a registered voter: "I tell people I was in the Navy during the war, but I don't tell them which Navy I was in," he says by way of explanation. A man in a wheelchair signs, though it takes Ms. Ayyangar and the man's caretaker several minutes to explain what the petition is for. "I'm all for reform," he says finally. One woman sitting on her front porch with a yippy dog signs the petition, though it's unclear whether she's just trying to get us off her porch so the dog will settle down.

Ms. Ayyangar wears a kind of laminated badge on a string around her neck, with her photo and big lettering that says "MENLO PARK RESIDENT." She starts her spiel by introducing herself, giving the name of a neighbor the homeowner might recognize, and reminding the homeowner that she's only asking whether they want to see the initiative on the ballot, not whether they will vote for it. When pressed, she says that the city is in a fiscal crisis, and services are being cut as a result of high public pensions. If pressed further, she says something along the lines of, "Public employees shouldn't be able to retire at 55; they should retire at 65, like the rest of us."

Roy and Henry

Roy Thiele-Sardina is outraged at the pensions public employees receive, and he thinks you should be, too. The group he has formed with longtime Planning Commissioner Henry Riggs to lead the initiative drive calls itself "Menlo Park Residents for Fair and Responsible Pension Reform." Talking to Mr. Thiele-Sardina, you get the sense that, on the group's stationery, the word "fair" should be capitalized, bolded and underlined twice.

"I have guaranteed not one of my employees $1.5 million in their 401K," the barrel-chested, cleft-chinned venture capitalist ("I have supervised organizations with hundreds of employees") says while eating soup on the patio outside Cafe Borrone, explaining that that's what a Menlo Park employee who makes $75,000 per year will receive if she retires as early as possible and lives until age 80. "It's absurd, that they think they deserve both that, and their pay."

The "coolest thing" he saw in a newspaper recently was a full list of city employees and the salaries they made in 2008.

"Eighty thousand dollars to a park worker? To a park worker? (audible scoff)?" he says, leaning forward with a how-are-you-not-stunned expression. "I don't have an admin paid anywhere near what this city pays, and all my admins have college degrees. Apparently it's really hard to work four-and-a-half days a week, and not have to answer the phones.

"Am I going to make this much in Social Security? I don't think so," he continues. "That's what's unfair: Who retires at 55, but a public employee? With Social Security, you have to be 67, 70 years old before you start collecting the full benefit."

With the state pension fund shrinking and the city's commitment to its retirees rising, the city is bound for financial trouble, Mr. Riggs says, despite its $26 million general fund reserve: "As the iceberg starts to surface, or we start to sink and see what's underneath us, there's no way to roll it back. We've already made the commitment."

Mr. Thiele-Sardina and Mr. Riggs think this initiative will be a very big deal indeed: the first step on the road to fixing a broken pension system on pace to bankrupt the state, and a possible catalyst for other cities in the region to change their own pension rules. The initiative would increase the retirement age for new non-police city employees from 55 to 60, and would decrease the annual pension payment to a 30-year worker from four-fifths of the worker's annual salary to three-fifths.

It would also force the City Council to send any future pension plan amendments to voters, a measure that Mr. Riggs and Mr. Thiele-Sardina say would ease the pressure on council members, from city management and politically powerful unions, to approve higher benefits. The current situation, with council members voting in closed session at the recommendation of managers who stand to indirectly benefit from the pension increases, is a "circular conversation, it's insidious," says Mr. Thiele-Sardina, who over the course of an hour-plus interview gives numerous examples of important, hard-working people who aren't paid as well as city employees and mentions that he has an MBA in data analysis, drives an early-model Prius, has started eight companies, and knows a thing or two about pension reform, having worked for GM when it was going through its own reorganization.

Mr. Riggs finds himself especially perplexed by the claims of union representatives who assert, despite much evidence to the contrary, that the state pension fund is not in fact headed for bankruptcy. A recent study by graduate students in the Stanford Institute for Economic Policy Research estimated that the fund has an unfunded liability of $425 billion.

"We're saying, 'If you find yourself in a hole, stop digging,'" Mr. Riggs says. "(Union representatives) are saying, 'no, no, the Earth is actually rising. ...

"It's very much the American way," he said in a later interview. "The problem doesn't exist when the train is coming toward you at 100 miles per hour, only when the tracks are shaking and the first human bowling pin gets knocked over."

Different appeals

There are really two distinct issues involved when you're talking about changing public pensions: whether the city and state funds can support them, and whether employees deserve them.

While many people support "pension reform" on both grounds, they entail two fundamentally different forms of appeals. The first is a logical one: The city can't afford pensions at the current rate, and therefore we should change them. The second is an emotional appeal: City employees get better benefits than you, and that's not fair.

Recall Ms. Ayyangar's strategy. She begins her pitch with the logical appeal: The city will have to cut services if pensions aren't scaled back. Then, shifts to the emotional appeal that public employees should retire at 65, "like the rest of us."

The same shift is often apparent in the comments of speakers at City Council meetings, in the writings of people who support "pension reform," even in this reporter's conversation with Mr. Thiele-Sardina and Mr. Riggs. It all tends to get muddled; it can be easy to forget why you support the cause, or to be unclear on why you championed it from the beginning.

"What I talk about is that it's unsustainable," Mr. Riggs says. "If someone then says, 'They deserve it, so we'll have to raise more money,' I say, 'Well, let's talk about what your priorities are. Here's a short list of things the city can't do (because of pension commitments) that you wish it was doing."

Mr. Riggs acknowledges that the signature-gathering process would probably be easier, were he to simply lay out the city's pension plan, and ask people whether they're upset that they don't receive the same benefits.

Exploring the crawl spaces in municipal budgets and explaining the intricacies of annuity calculations are more daunting, and perhaps less effective, ways to get people to sign on. A signature is a signature, but the topic of whether the city can sustain the current system is "a much harder thing to explain and talk about," Mr. Riggs said. "I hope we will have the time from July to October to make that a more familiar subject," prior to the November election, when the group plans to put the initiative on the ballot.


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