Almanac

Viewpoint - May 5, 2010

Letter: Local pension reform: misguided, mean-spirited

The so-called Menlo Park "pension reform" advanced by former City Council members Lee Duboc and Mickie Winkler is completely misguided and not real reform.

That's why only about 30 people have reportedly provided financial support for this flawed proposition.

It's time everyone gets the facts. For one, it will result in no immediate savings and will do nothing to resolve the current budget shortfall. Not to mention half of CalPERS retirees receive only about $1,300 a month or less. And the average CalPERS pension is approximately $25,000 a year.

Our state is in an economic crisis due to poor investments on Wall Street, not because of working families. City workers pay into their retirement plan and they don't receive Social Security benefits. Attempting to punish working families for a temporary recession they didn't create not only doesn't make sense, it's just plain punitive and mean-spirited.

Why would anyone want to support that?

Mary Jane Salinas-Cabildo, Laurel Street, Menlo Park

Comments

Posted by KC, a resident of Menlo Park: Central Menlo Park
on May 5, 2010 at 3:46 pm

This women is speaking utter gibberish.


Posted by POGO, a resident of Woodside: other
on May 5, 2010 at 4:41 pm

Who's being punished? NOTHING is changing for existing workers.

New hires will receive the 2% and 60 program. The private sector should be lucky enough to have a defined benefit plan that's so rich!


Posted by POGO, a resident of Woodside: other
on May 5, 2010 at 4:43 pm

Calling people "mean spirited" just because you disagree with them really isn't an affirmative defense of your position.

You're mean, too. So there.


Posted by Roy Thiele-Sardiña, a resident of Menlo Park: Central Menlo Park
on May 5, 2010 at 4:46 pm

Mary Jane blames Wall Street and says the pension reform is mean spirited.

1. Mary Jane forgot to mention that she is and Officer with SEIU Local 521. It is the Union that these pension reforms would affect.

2. These reforms do not affect her, let me repeat that: SHE IS NOT GOING TO BE AFFECTED! These changes lower the pension multiplier from 2.7% to 2.0% and retirement age from 55 to 60 ONLY FOR NEW EMPLOYEES.

3. The cost to Menlo Park (that is Menlo Parks contribution to CalPERS on it's employees behalf) has grown from $836,000 to $1,955,111 from 2004 to 2009. it will grow to $2,685,482 in 2014. Just so we all do the math correctly that means that Menlo Park had $1,118,929 FEWER dollars to spend onthe Roads, Library, Parks and Services for it's residents. ALL of that money went to pay EMPLOYEE PENSIONS. The CalPERS contribution from the city for employees pensions grew from 6.243% to 14.597% in 2009, it is expected to reach 20.05% in 2014.

4. There are 459,000 CalPERS retirees in the system. That the average is $25,000 is not a surprise. Statistically it is because there are so many older retirees that did not have the salaries we are seeing in places like Menlo Park today.

So while she contends it's mean spirited to try to make Menlo Park's finances more sustainable. I would contend it's mean spirited of the union to continue to demand ABOVE NORMAL pensions and expect taxpayers to cover it for them. I would ask the SEIU local chapter to return the EXTRA $1,118,929 it took last year to make them whole on their pension and we'll call it a day. It would go a long way to making us think they are on our side trying to help make Menlo Park a better place to live for it's residents rather than a more lucrative place for it's employees.......right?

Roy Thiele-Sardiña


Posted by Blue Collar Public Worker, a resident of another community
on May 5, 2010 at 5:21 pm

Roy,
I would like to challenge you to an open, public and televised debate? Of course I don't know if anyone would be interested in televising it but at least open and public. I am just a basic Blue Collar Public Worker who has been diligently working for the Menlo Park and Atherton taxpayers for some time. I am not a member of any union and my interest is transparency and fairness. I don't have any axe to grind and what I have to gain is protecting my retirement. I am not a goof ball or a nut but I would come forward to debate you openly and publicly. Would you be interested and are you up to the challenge?
Regards
BCPW


Posted by Menlo Voter, a resident of Menlo Park: other
on May 5, 2010 at 5:29 pm

Blue Collar:

you still don't get it. No one is coming after YOUR retirement. They can't if you're part of PERS. The only retirement that is changing is for new hires.


Posted by Roy Thiele-Sardina, a resident of Menlo Park: Central Menlo Park
on May 5, 2010 at 5:50 pm

Blue Collar

We have been having a debate....just not open.

In case you missed it, I'm the only one of us using my name. For it to be an open debate you'd have to reveal who you really are.

I'm the only one that has to stand up and account for EVERYTHING I say.

I'm the one that always has to point out the narrowness of the quotes you use from your CalPERS website....my favorite is "the average CalPERS pension is only $25,000" Well if you could get SEIU 521 to take that for its pensions I'd shut up and call it a day. But the reason that statistic is MEANINGLESS is that there are 459,000 people in that average, and most of them retired a LONG TIME AGO and earned LESS MONEY! All I care about is how much it is going to cost to cover the retirement of the 165 people currently employed. it ain't $25,000 a year in checks we are talking about.

So please enlighten us about how spending an extra $1.12 million on retirements from 2004-5 to 2008-9 helped Menlo Park in ANY WAY.

That money went to CalPERS for the SOLE BENEFIT of our Employees. The residents got ZERO for that money. That's roads, parks, libraries and services we can't have......Menlo Park spends over 70% of its revenues for employee costs. Too much. Too much.

Roy Thiele-Sardiña


Posted by Blue Collar Public Worker, a resident of another community
on May 5, 2010 at 6:49 pm

Roy,
I can address all of your questions and I am sure in an open forum I could whip you down to parade rest(figuratively). So what do you say lets get together have a conversation and do it?
Regards,
BCPW


Posted by POGO, a resident of Woodside: other
on May 5, 2010 at 7:44 pm

Now that's funny.

In demanding a public debate from Mr. Thiele-Sardina, BCPW says "my interest is transparency..." BCPW is posting ANONYMOUSLY (as am I, but I'm not the one demanding transparency) and Ms. Salinas-Cabildo pens a letter to the editor and conveniently fails to disclose she's an officer of the union! Transparency, huh?

And you expect us to take you seriously? Really? BCPW, this forum IS a public debate and judging by your support or, more accurately, lack of it, your side certainly isn't faring very well. And 3,100 signatures on the petition - 50% more than needed - is ample proof that taxpayers "get" the problem.

Perhaps that's because facts are stubborn things. In this case, BCPW, we know that there are massive layoffs and job losses in the private sector and no one is seeing salary increases. On the other hand, the growth of jobs, salary increases, benefits and pensions in the public sector continue unabated.

Couple that with DECREASING tax revenues and it's unsustainable. Don't believe me? How about a story from TODAY'S LA Times? Web Link I'll spare you the read, here's the takeaway story. Tax revenues for California in April, historically the biggest month of the year, fell $3 billion short of expectations and wiped out the small "surplus" we achieved in the first quarter. Quoting: "The retraction could mean even deeper cuts in government services — schools, healthcare for the poor and services for the elderly. Lawmakers may also be forced to consider more reductions in funds for public universities, as well as tax hikes." Where's the cutbacks for public employees, BCPW? Where's the cutback for pensions which, in California, are underfunded by $500 BILLION?

But you won't listen, BCPW. You just want to march on and pretend everything's A-OKAY when all of the rest of us know it isn't. The truth is that WE are doing YOU a favor, BCPW. People like Mr. Thiele-Sardina are willing to do the fiscally responsible thing. You are your fellow workers aren't.

And most amazing of all, this change will have no impact on you - it only impacts new hires who will know full well what their new pension rate is. At 2% and 60, the new benefits will still be multiples of anything in the private sector.

BCPW, the only thing that's truly transparent here is your motive.


Posted by POGO, a resident of Woodside: other
on May 5, 2010 at 7:58 pm

I forgot to include this link, also from the LA Times, about unfunded pension liabilities. Web Link

This is serious and it sure sounds like you are whistling past the graveyard, BCPW.


Posted by Roy Thiele-Sardina, a resident of Menlo Park: Central Menlo Park
on May 5, 2010 at 9:01 pm

Pogo (et al.)

One of the reasons I loath BCPW is that he is (to use a term from their union leader Mary Jane Cabildo) "Mean-Spirited". the other day he wrote this on the paloaltoonline community forum:

"Here they are Roy Sardina and Henry Riggs. The first is one of the wealthiest venture cap guys around, he is one of the founders of Sun. I have asked him to post various web links to the PERS plan which shows the system is in good shape. Asked them what they had to gain and they will not answer and yes this is just the stepping stone, they will go after everything."

My reposnse later in that thread was:

"BCPW: it's nice to know you use the same "low brow" vitriol towards me here as you do on the Almanac. FYI we noticed your requests asking to put CalPERS links on our website and simply ignored them. Your request for transparency is laughable considering you hide with cowardice behind an anonymous login, while slinging personal insults and innuendo about me and the other members of the citizen group in this community forum. Your comments are inaccurate and grossly misleading. Grow up and learn to respect others before you ask to be taken seriously……RT-S"

________________________________________________________________

So now he wants to be nicey-nicey and debate me. Why would I do that? He perpetuates lies on this forum and others, he clearly has authority issues, lacks integrity.

So NO, I will not debate you and I will repeat myself: Grow up and learn to respect others, and THEN and only THEN will we as a community consider taking you seriously.

Roy


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 5, 2010 at 9:28 pm

Mary Jane Salinas-Cabildo states that "the average CalPERS pension is approximately $25,000 a year."

That average includes a lot of workers who retired decades ago. New retirees are getting much, much more. Last night, Channel 13 in Sacramento broadcast an in-depth report by reporter Mike Luery on the 50% growth of the CalPERS $100,000 Pension Club in just one year.


Posted by Blue Collar Public Worker, a resident of another community
on May 6, 2010 at 6:03 am

Roy,
You need to understand I may be just a Blue Collar Public Worker however I am well aware how someone like myself can be ostracized by people with power. I will be exposing myself but would take the risk in the daylight! So come on let's have a debate what do you have to loose?
BCPW


Posted by Ole Abe, a resident of Menlo Park: Felton Gables
on May 6, 2010 at 7:49 am

Better to remain silent and be thought a fool than to speak out and remove all doubt.


Posted by Paul Collacchi, a resident of another community
on May 6, 2010 at 10:48 am

Let me just get the debate back on track. Don't get baited into debates designed to portray proponents as anti-union or anti-working people. This is not a debate over whether or not public employees deserve living-wage retirement benefits -- they do.

This is a debate about how cities can continue to make fair contributions to public employment retirement plans while being able to control and predict future costs and limit future financial liabilities.

Right now worker pensions are "defined benefit" pensions, managed by a 3rd party, CalPers. Taxpayers not only help fund the plan, but also act as the sole insurer against mis-management or under-performance of the CalPers retirement fund to guarantee the defined benefits promised by the plan. This means you and I, not CalPers, not the employee, are responsible for CalPers performance.

Cities and taxpayers need to be out of the insurance business. If Calpers wants to purchase exotic investment vehicles, that is between it and BCPW.

The city needs to move from defined benefit plans to defined contribution plans (e.g. 401(k)-like), whereafter the public employee bears the risk of CaLpers' investment choices. This would allow the city to make fair but fixed, contributions to retirement plans, without being on the hook to finance future underfunding of the plan.

Roy and others need to explain why the Initiative is a first step in that direction.


Posted by Dukman, a resident of Menlo Park: other
on May 6, 2010 at 10:58 am

[Post removed. Stick to the topic and refrain from personal attacks.]


Posted by Roy Thiele-Sardina, a resident of Menlo Park: Central Menlo Park
on May 6, 2010 at 3:19 pm

[Post removed due to removal of prior post.]


Posted by Blue Collar Public Worker, a resident of another community
on May 6, 2010 at 5:45 pm

Roy,
Have you had time to do a little more thinking about my offer? At the end of the day it's like this, you think your right and I think I'm right. It appears from the last post and then your post that have been removed others think your wrong too (did not get to read yours). So lets bring this out into the daylight and battle it out in the open like a couple of men? Or is there something you are trying to hide other than your name?
BCPW


Posted by Roy Thiele-Sardina, a resident of Menlo Park: Central Menlo Park
on May 6, 2010 at 5:58 pm

BCPW

I thought I was pretty clear. When you become more polite and civil. I will consider dealing with you.

Your innuendos and insults are not appropriate behavior, and you were admonished here, after which you went and said worse things (without substantiation) on the Palo Alto Online site.

So, no I am not interested in having a dialogue with you right now. As I said earlier. Grow up, respect others more, earn BACK the respect we've lost in you, then I'll think about engaging with you.

Thanks

Roy Thiele-Sardiña


Posted by dukman, a resident of Menlo Park: other
on May 7, 2010 at 9:05 am

Roy: The real facts are that the employees do not set the statrdards for their retirement....they at set and controlled by the city counsel who are elected...that said, I've never seen a person wanting to be elected not come to the employee groups for support and promise to help them.(Think Gray Davis) So for you to loath BCW's is really quite unfair. As for you request for respect I go back to my original comment...respect is earned not granted...and you did work with a group that bought a company, gutted all the assets, fired the employees and claimed most their retirement funds were assets of the company and moved on to your next deal. Now that's mean spirited and doesn't cause one to give you any respect. As for your 3100 signatures, well I'm pretty sure most didn't have anything to consider but your side of the story prior to siging.



Posted by Ole Abe, a resident of Menlo Park: Downtown
on May 7, 2010 at 9:22 am

Dukman, too bad you weren't working alongside the petition volunteers. If residents had heard the side of the story you presented on this thread yesterday, they would have been extra motivated to sign.

"I've never seen a person wanting to be elected not come to the employee groups for support and promise to help them."

There have indeed been candidates who did not seek your support. You have in turn spent large sums of money to smear those candidates and ensure that they not be elected. You want a council (correct spelling, by the way) that owes you and will vote accordingly. So much for fairness, eh? Democracy can be bought. What a joke.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 7, 2010 at 9:34 am

From Real Clear Markets:
Pension reform is now on the table in a number of states. Illinois, which by some measures is suffering from the largest unfunded pension liabilities of any state, passed legislation earlier this year which rolls back the retirement age for state workers from 62 to 67, though it only applies to those entering the system as new hires.

The new law also bases pensions on the last eight years of earnings, rather than the current four years, and prohibits public employees from drawing pensions from more than one source. The measure followed an investigative series in the Chicago Sun-Times last year which found the pension bill for state, Cook County and the city of Chicago pensions were upwards of $800 million a month.

Pension costs are a central part of campaigns in states with the worst fiscal outlooks. Meg Whitman has made reform of California's system a key part of her campaign to be governor in a state where a recent study estimated the three major public employee pension funds to be a half trillion dollars underfunded. Whitman is touting a plan to move employees to a defined contribution plan. Her likely Democratic opponent, Jerry Brown, has slammed the plan an effort "to put everyone into the loving embrace of Wall Street." That clearly sets out the turf between the two.

Staggering pension costs have even sparked calls for reform from public union allies. Los Angeles Mayor Antonio Villaraigosa used his job as a union organizer for teachers as a jumping off point for his political career, but with his city under budget pressures so severe he's worried about running out of cash, he's calling for scaling back public pensions. No wonder. Pension contributions will consume nearly a fifth of L.A.'s general fund this year.

Although pension costs are a long-term problem, public sector pay increases, including automatic gains locked in by contracts, have helped drive budget deficits and are now a target for cuts to help balance budgets. When Christie announced an $833 million cut in state aid to local school districts, he pointed out that if teachers took a one-year pay freeze and agreed to contribute a small amount to their health plans, districts could make up the entire lost state subsidy. But only a handful of the state's 591 school districts won such concessions from their teachers, which sparked anger in Jersey, where private sector pay declined 1.8 percent last year. That prompted a school budget revolt where voters in 60 percent of towns rejected school budgets.

In Chicago, meanwhile, school officials are trying to leverage the fact that private wages declined 1.2 percent last year to get teachers to accept a one-year wage freeze, which the system estimates would save $169 million. In New York, Gov. Paterson used emergency powers of his office to delay a 4 percent wage hike for state workers under the rationale that the state was in danger of running out of money (in fact, the state has delayed sending out tax refunds for the same reason). Paterson is lobbying to make the freeze permanent, but the legislature is balking. In Louisiana Gov. Bobby Jindal has already signed off on pay freezes for 90,000 executive and rank and file workers to deal with a $1 billion budget shortfall in a $25 billion budget.


Posted by POGO, a resident of Woodside: other
on May 7, 2010 at 9:41 am

Dukman -

You said, "The real facts are that the employees do not set the statrdards (sic) for their retirement....they at (sic) set and controlled by the city counsel who are elected." Your comment implies that these salary, pension and benefits packages are determined SOLELY by Council Members.

Untrue.

The benefits enjoyed by city workers are NEGOTIATED by the employee unions and the Council Members. Those employees that you state "do not set the standards," are a party to those negotiations through their union officials. You can't now disclaim those union officials who demanded these pensions and say "the Council Members made me do it." They didn't, Duck Man.

As I've said before, it takes two to tango and the elected officials who allowed these unsustainable benefit packages are as guilty as the unions that demanded them. In fact, ironically I hold them even MORE accountable, because demanding higher wages and benefits is what workers are supposed to do. It's kind of like a kid asking for more candy. The elected officials are supposed to be the adults.


Posted by Blue Collar Public Worker, a resident of another community
on May 7, 2010 at 11:21 am

In many respects Dukman is correct and so are we all. Someone else on another string said it well also, the comment was it is the bottom line. In other words there is only so much money and if you spend too much you go broke. It all makes sense and at the end of the day, are the pension plans sustainable, who will you believe. Some grad students from the Stanford study who use different math to come up with the $500,000 billion underfund number for the plans. Or 80 years of experience from the actuaries and administration who have performed at a much higher level (almost double) than the Stanford study predicts. One last item that I have failed to bring up in the past in 2007 the State passed legislation that said PERS/STERS had to provide the taxpayers with the least expense possible for these plans. One last item these plans made it thru the great depression and I'm sure they will make it thru the great rescission. Years ago they were only 50% funded and now they are more than 80% They even cost the taxpayers more 20 years ago. What more info go here. Web Link
Web Link
BCPW


Posted by POGO, a resident of Woodside: other
on May 7, 2010 at 11:38 am

After yesterday's stock market ride - that at one point wiped out all of the gains made in the last year before it modestly recovered - you're still willing to accept the word of those "pros" at Calpers who use a 7.75% predicted rate of return on their investments?

Calpers and pensioners make taxpayers put up the money when there is a shortfall. If you truly believe in Calpers, than you should certainly be willing to trade in your defined benefit for one that floats with Calpers' investments. Put YOUR money where your mouth is, not taxpayers.


Posted by Roy Thiele-Sardiña, a resident of Menlo Park: Central Menlo Park
on May 7, 2010 at 12:23 pm

Dukman

To say "you worked with a group and did this and that" is like me saying that "you worked with a group that illegally stole drugs, and murdered innocent people to cover it up" because you worked as a Safety Officer. Yes a safety officer did that and No YOU DID NOT do that. I would expect the same courtesy from you. Quite frankly I don't even know what you are talking about with regard to buying a company and laying off its employees at Christmas. So to lump me in that group is unfair, and damaging to my reputation.

I have a LONG career of starting companies that provided jobs to hundreds of people. Of the more than 26 companies I've started or invested in only 3 ever failed, and I found jobs for many of the people involved in those entities. So to characterize me with ANYTHING other than helping many people be successful is a LIE and UNTRUTHFULL. I would expect you to have facts before you use innuendos that in any way sully my reputation. You only get to do this because I use my real name, which I am always in the habit of pointing out. Your utter cowardice of insulting me while using an anonymous login shows little respect or manners. So please, grow up, get some manners, and engage in the question/subject at hand.

Roy Thiele-Sardiña


Posted by Ole Abe, a resident of Menlo Park: Downtown
on May 7, 2010 at 12:34 pm

I'm surprised no one has mentioned the latest CalPERS scandal:

Web Link

If the unions want to place their faith in this organization, go for it, but we taxpayers should not be underwriting the misuse and corruption.


Posted by Observer, a resident of Menlo Park: Downtown
on May 7, 2010 at 1:08 pm

I find it interesting that the "drastic benefit cuts" that are being referred to only take us back to a retirement formula that is richer than what was in place when most city employees were hired.

In fact the latest formula did not come into effect until 3 years ago when council members Fergusson and Robinson came to power with union backing and then tipped the balance on the council in favor of the new benefits. The new formula was applied retroactively so that all current employees got a huge windfall of new benefits inducing many to retire and start second careers.

The pension reform initiative as I understand it only effects incoming employees and more importantly reduces the pressure on city council members to pander to the SEIU in order to get elected.


Posted by Roy Thiele-Sardina, a resident of Menlo Park: Central Menlo Park
on May 7, 2010 at 1:43 pm

Observer

I want to be clear about the changes we propose. The "multiplier" is one aspect of pension reform. And while we are proposing taking the multiplier from 2.7% per year of employment, back to 2007's 2% per year of employment. We are also taking the Minimum retirement age to 6o years old from the current 55. Menlo Park decreased the age from 60 to 55 in 1997.

Both of these numbers together 2.7%/55 to 2%/60 decrease Menlo Park's portion of the pension payment significantly for new hires. The employer rate (from Menlo Park Staff report 09-129) goes from 16.196% to 9.139%. While this 7% differential is small, it will add up over an extended time.

I just want to make sure we asre accurate in what this change entails and when the original decision were made.

Roy Thiele-Sardina


Posted by Curious, a resident of Menlo Park: Felton Gables
on May 7, 2010 at 2:06 pm

Roy,
What do we think the 7% will add up to over time, I know it can't be exact because we don't know what employees will retire or be hired or how many will be added, but it would be nice to have an idea what could be saved?


Posted by a concerned taxpayer, a resident of Menlo Park: other
on May 7, 2010 at 5:11 pm

This has to do with an attempt at a power grab by the former city council members. They couldn't get re-elected so now they are trying to have some control over the current city council.


Posted by Blue Collar Public Worker, a resident of another community
on May 7, 2010 at 5:29 pm

Abe,
Here are steps CalPars was taking even before this latest issue appeared. It looks like they were aware there could have been some people acting inappropriately and they began taking action some time ago. I guess they could of done more sooner or it could have been worse, you decide.
BCPW


Posted by Joseph E. Davis, a resident of Woodside: Emerald Hills
on May 7, 2010 at 9:08 pm

The letter writer has an excellent point. This measure does not go nearly far enough. The appropriate measures are:

1. Cut the salaries and benefits of all government workers to a market level. I believe a 50% cut is appropriate. Fire any worker who refuses and hire a replacement from California's teeming masses of unemployed.

2. Make public sector unions illegal.


Posted by Paul Collacchi, a resident of another community
on May 8, 2010 at 7:08 am

As a taxpayer, when the CalPers fund managers get taken for a ride by Wall Street Bankers and hedge fund managers, do you want to be responsible to pay again to compensate for the losses to insure that all defined benefit plans pay off the defined benefit?

Or do you want to make a fixed, fair and negotiated, contribution to the worker's pension fund and let the worker be responsible thereafter to manage the fund over the life of the fund?

NYTIMES: "Public Pension Funds Are Adding Risk to Raise Returns"
Web Link

States and companies have started investing very differently when it comes to the billions of dollars they are safeguarding for workers' retirement.

Companies are quietly and gradually moving their pension funds out of stocks. They want to reduce their investment risk and are buying more long-term bonds.

But states and other bodies of government are seeking higher returns for their pension funds, to make up for ground lost in the last couple of years and to pay all the benefits promised to present and future retirees. Higher returns come with more risk.

"In effect, they're going to Las Vegas," said Frederick E. Rowe, a Dallas investor and the former chairman of the Texas Pension Review Board, which oversees public plans in that state. "Double up to catch up."

Though they generally say that their strategies are aimed at diversification and are not riskier, public pension funds are trying a wide range of investments: commodity futures, junk bonds, foreign stocks, deeply discounted mortgage-backed securities and margin investing. And some states that previously shunned hedge funds are trying them now.

....

"The big California pension fund, known as Calpers, was already under fire for losing billions of dollars on private equities and real estate in the last few years. So far it has stayed with those asset classes, while negotiating lower fees and writing off some of the most troubled real estate investments."


Posted by Blue Collar Public Worker, a resident of another community
on May 8, 2010 at 10:00 am

Paul,
I agree with you on many points however the term "Going to Las Vegas" does not fit here. Yes they are investing in the vehicles you describe however the one thing PERS/STERS have and always had is power. That power has enabled them in many cases to closely manage and sometimes even dictate to the investments managers what they expect on return, what mix of risk they want to see etc. There has been no other fund if you want to call that, that has out performed them for this long in history.
BCPW


Posted by dukman, a resident of Menlo Park: other
on May 9, 2010 at 12:15 pm

At the end of the day there would be more than enough funds to pay bills if in fact more than 53% of the people in this country paid taxes and we were not in the busines off giving everything away via entitlement programs....between that and stupid law suits I truly believe is the answer....As for comments directed to my comments, I wasn't any union guy....and it was illegal where I worked to go on strike.


Posted by BLue Collar Public Worker, a resident of another community
on May 9, 2010 at 1:18 pm

Hey Dukman,
I see you made the 100K list, good for you I'm sure you earned every dime! Isn't this whole conversation interesting I mean people like Curious are asking good questions like how much will this initiative save? No one has answered here yet but they have on the other string about Two Tier Pension systems. This is from Menlo Voter: "the savings from this initiative won't suffice. It needs to be state wide for it to truly do any good. It will, however help with our underfunded portion of future employees future pensions. It's a start". In my mind the key words here are "it's a start"
I see from your previous post you were a Enforcement Officer for 32 years, sounds like you have been around the block a few times. Tell me what you believe is the focus here, just what they say, only new workers or is this just a start?
BCPW


Posted by Menlo Voter, a resident of Menlo Park: other
on May 9, 2010 at 6:29 pm

what I meant by "it's a start" is that this initiative needs to be taken state wide, NOT that we should come after current employees pensions. A deals a deal. No matter how bad a deal it is.


Posted by Blue Collar Public Worker, a resident of another community
on May 9, 2010 at 7:50 pm

MV
OK we will see, somehow while you may believe that is true, I do not I think the goal is much bigger. Don't be a pawn.
BCPW


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 9, 2010 at 9:25 pm

For those who think that CalPers will be able to produce its projected 7-8% yield, just look at one more huge CalPers loss:

CalPERS hit hard by Mountain House investment
By Dale Kasler
Sacramento Bee
Posted: 05/08/2010 12:00:00 AM PDT

MOUNTAIN HOUSE — Advertised as "The Town of Tomorrow," this new bedroom community near the Altamont Pass windmills once seemed like an ideal investment for the California Public Employees' Retirement System.

Then the real estate bubble burst. Mountain House became the most "underwater" community in America — and much of CalPERS' money sank along with it.

The pension fund's $1.12 billion investment in Mountain House shrank to just under $200 million in five years, CalPERS records show. That's a loss of more than $920 million, making it one of the biggest headaches in CalPERS' troubled real estate portfolio.

For now the loss is just on paper, like a share of stock that has dropped, and CalPERS has said it is not bailing out.

"We have made a decision to retain the asset in the long-term for the recovery of California's housing market," fund spokesman Brad Pacheco said in an e-mail.

The question is how long CalPERS will have to wait. Jim Lamb, a Mountain House homeowner who manages rental houses here and elsewhere, said market values are near bottom but not quite there yet. It could be years before prices return to 2006 levels.

In the meantime, Mountain House and other depressed real estate developments remain a dead weight on CalPERS' $209 billion portfolio, administered on behalf of California's state and local employees. Although its stocks and other investments have partially recovered from the crash, its real
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estate holdings lost half their value, a drop of $13 billion, in the 12 months that ended Sept. 30.

With an estimated population of 10,000 and its own ZIP code, Mountain House is the Central Valley housing phenomenon in miniature — a newer town near Tracy for Bay Area commuters, fueled in large part by subprime mortgages and other dubious lending instruments. Home prices topped $800,000 at the market peak.

In late 2008, researcher First American CoreLogic released data showing that nearly 89 percent of Mountain House's home mortgages were underwater, a higher percentage than any other community in America. "Underwater" means homeowners owe more than their properties are worth.

The study briefly put Mountain House in the national spotlight — unfairly, some residents say. First American based its study on ZIP codes, and a ZIP code containing all new homes naturally would look bad in a market crash.

"No community is exempt from what we're going through," said resident Celeste Farron, who estimates that her $825,000 home has lost half its value. "We're just getting hit harder because we're so new."

She and others say the community is holding up. Neighborhoods are tidy. There's a sense of community. On a recent weekday, the playgrounds were busy and signs advertised the Mountain House youth flag football league.

Still, the crash has left Mountain House unfinished, like many developments conceived during the boom. Landscaped lawns face fields of weeds. Sheep graze on the future golf course. While two schools have been built and a third is under way, there's just one retail business, a convenience store. The closest supermarket is five miles away.

A multimillion-dollar bridge — designed to link the southern and northern halves of town — has been fenced off.

"It's our bridge to nowhere," Lamb said.

CalPERS got into Mountain House in 2005. It partnered with residential builder Shea Homes to purchase 2,500 acres — enough land for about 9,000 lots — from Mountain House's original developer, Trimark Communities. Trimark retained some land for commercial development.

Three years later, with the market in ruins, CalPERS restructured its investment. The pension fund became 100 percent owner. Shea gave up its 15 percent share but stayed on to manage the project.

Pacheco declined to offer details of the restructuring. Officials with Shea did not return phone calls for this story.

Now the market appears to be stabilizing. Mountain House median sale prices have actually risen almost 3 percent in the past year, to $325,000, according to MDA DataQuick.

"At one point, I had six homes on my street that were vacant; now there are two," Lamb said.

Mountain House faces a long road back. Prices are about half of what they were in 2006. DataQuick says foreclosures are occurring at a rate four times the state average.

The latest study on underwater mortgages from First American, using different methodology, shows 86 percent of Mountain House homes remain in negative territory — well above the California average of 35 percent and the U.S. average of 24 percent.

Still, Mountain House leaders remain confident that CalPERS will stay the course. With so much money on the table already, the fund has little choice, Lamb said.

"I think they're solid," said Dale Hansen, superintendent of the local school district. "They've stuck with the community."


Posted by Blue Collar Public Worker, a resident of another community
on May 10, 2010 at 7:38 am

Peter
Please stay up with the rest of us the Mountain House investment lost is at least 2 quarters old and since then Cal Pers has recovered by 46 Billion dollars, that's right with a B


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 10, 2010 at 7:53 am

BCPW as usual you don't bother with the facts. The recorded loss on Mountain Home was two quarters old, as that is the latest available financial report, BUT the latest data now shows 86 percent of Mountain House homes remain in negative territory — well above the California average of 35 percent and the U.S. average of 24 percent and CalPers is now owns 100% of these mortgages.

The key to investment management is to pay attention to the details.


Posted by POGO, a resident of Woodside: other
on May 10, 2010 at 9:10 am

Peter, Roy and others -

The principal antagonist in this thread has been revealed to be disingenuous. I can't advise anyone on whether or not they should respond to these antagonist posts, but you should at least be aware that they have no interest in having an honest debate on the merits. This is provocation for provocation's sake and a transparent last gasp of those on a sinking ship.

It is ironic that this thread originated with the charge that this reform initiative was "mean spirited." There is nothing more mean spirited than a duplicitious poster. Even more unfortunately, these posts color our opinions about public workers and cause us to dismiss what may be valid countering points from them.

I honestly believe the best course of action is for concerned taxpayers to continue to influence their elected officials. Fortunately, it now appears that even Council Members have come to the conclusion that the pension increases of 2007 were a mistake and unsustainable. We do need to keep their feet to the fire because I can assure you that public employee organizations will spare no effort to preserve these overly generous pensions. They have a lot at stake.

I urge all concerned taxpayers to call or email their Council Members and let them know how you feel. They DO respond to citizen input and we need to show that we stand behind them. Taking five minutes to email your Council may save you thousands of dollars in the future. Web Link


Posted by Menlo Voter, a resident of Menlo Park: other
on May 10, 2010 at 11:23 am

BCPW states: "Don't be a pawn."

You should heed your own advice.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 10, 2010 at 3:22 pm

BCPW and his friends should read the following carefully and recognize that there IS an alternative to revising current retirement programs and labor agreements:

3 Easy Steps to Rejecting Collective Bargaining Agreements
Home » Topics » Employee Benefits in Bankruptcy
Published by timfox on May 3rd, 2010 in Employee Benefits in Bankruptcy
By: Lauren E. Stulmaker
St. John's Law Student
American Bankruptcy Institute Law Review Staff

In a decision with important implications for public sector bankruptcies, the United States Bankruptcy Court for the Eastern District of California held that the rejection of collective bargaining agreements ("CBAs") in chapter 9 cases is governed by § 365, rather than the enhanced standards of § 1113. [1] However, rather than the relaxed business judgment standard normally applicable to contract rejections under § 365, the court applied the three part test established by the Supreme Court in NLRB v. Bildisco & Bildisco, before letting the City of Vallejo out of its collective bargaining agreements ("CBAs").[2] The court in In re City of Vallejo, addressed the issue of whether chapter 9 of the Bankruptcy Code would allow a municipal debtor to reject the CBAs in place for its public sector unions.[3] After the City filed for bankruptcy under chapter 9 and sought to escape the CBAs at issue, the municipal employees sought protection under California's state labor laws. Because the federal labor laws only govern private sector employment, the city employees attempted to rely on the state labor laws yet the court held that the state laws were entirely preempted by the Bankruptcy Code.[4]

The court found that not only do federal laws preempt conflicting state laws, but also, that chapter 9 filings are unique in that the state approves the city's decision to declare bankruptcy. Thus, the court reasoned that the State of California, by allowing the City of Vallejo to declare chapter 9 bankruptcy, essentially conceded that the benefits of bankruptcy outweighed the protections of its state laws. The court continued that once the City declared chapter 9 bankruptcy, with the state's approval, federal bankruptcy law should govern any analysis of the City's plan. As such, the City was able to reject executory contracts, including CBAs, under the authority granted in 11 U.S.C. § 365.[5] Nevertheless, the court noted that, while section 365 permits a chapter 9 debtor to reject executory contracts, the Supreme Court has mandated certain requirements that must be met before a court will allow complete rejection of those contracts.

Following the Supreme Court's decision in NLRB v. Bildisco & Bildisco[6], the court in In re City of Vallejo required the City to meet a three-part test in order to dissolve the CBAs. In Bildisco, the Supreme Court, guided by the policies of the National Labor Relations Act ("NLRA") which governs private sector labor law, found that before the CBAs in that case could be rejected, the debtor had to demonstrate that, "(1) the collective bargaining agreement burdens the estate; (2) after careful scrutiny, the equities balance in favor of contract rejection; and (3) 'reasonable efforts to negotiate a voluntary modification have been made, and are not likely to produce a prompt and satisfactory solution.'"[7] This test, the Supreme Court stated, upholds the policies of the NLRA by ensuring that parties undergo a reasonable attempt to negotiate and reach an agreement before a Bankruptcy Court will be permitted to step in and terminate executory contracts.[8] Noting that there was no estate in a chapter 9 bankruptcy, the court in In re City of Vallejo amended the first prong of the Bildisco test slightly and required the City to show that the CBAs would burden its ability to reorganize.[9]

The chapter 9 bankruptcy facing the City of Vallejo represents a very complicated scenario, where the debtor is not only the city, but also the employer of many individuals. The court in In re City of Vallejo has provided some protections to city employees by requiring the municipality satisfy the Bildisco test, and thus allow the unions to exhaust their negotiation options before their CBAs are rejected.

[1] See In re City of Vallejo, 403 B.R. 72 (Bankr. E.D. Cal. 2009).
[2] See id.
[3] Id. at 75.
[4] Id.at 76.
[5] Id. (citing 11 U.S.C. § 365 (2006) which allows the rejection of contracts, and § 901 which fully adopts § 365 into chapter 9 cases).
[6] 465 U.S. 513 (1984).
[7] 403 B.R. at 78 (quoting Bildisco, 465 U.S. at 526 (footnote omitted)).
[8] 465 U.S. at 526.
[9] 403 B.R. at 78 n.2 (citing Bildisco, 465 U.S. at 525–26).


Posted by Blue Collar Public Worker, a resident of another community
on May 10, 2010 at 5:03 pm

Peter,
Point taken and a question for you, who gets paid first whenever a company or for this matter a City goes bankrupt?
BCPW


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 10, 2010 at 5:19 pm

In a bankruptcy the court decides the priority of all the claimants. The shareholders come last. And then the court decides how to share the available resources amongst the claimant since the total claims exceed the total resources - which is why the entity declared bankruptcy. In some case the lower ranked claimants get nothing and the more 'senior' claimants get a percentage of what is owed to them.

And then the entity is freed from these obligations - paid or not - and may, if it wishes attempt to restart its business. In some case there is simply a liquidation of assets and the entity ceases to exist.

As noted above, it has been determined in California that bankrupt cities may walk away from their existing obligations under their CBAs (collective bargaining agreements).


Posted by Blue Collar Public Worker, a resident of another community
on May 10, 2010 at 5:21 pm

POGO
I think Steve from another string posted this, it seems like such a fitting reply to your slur of me.
As Amy Traub points out in the Huff Post it's "part of a mounting conservative effort to direct populist rage against public sector workers and build political will to slash public services, prevent tax increases on the wealthy, and deflect attention from the real causes of our economic decline. After all, why regulate risk-taking bankers when you can stick it to the guy who picks up the trash? Sound about right? And by the way everything I have posted is the truth as I know it, what I bring up is research from official web sites or officials I talk to in the Public System. I am willing to have an open debate and show the web sights to the public for them to see both sides. And by the way I am the one who started showing the other side of the story with real information from Cal Pers/STERS which others have used over again, which is good the public needs to see the other side. Not some slanted article from some newspaper in Podunk Arkansas. Ah but I digress now you have me reacting. There are two sides right?
BCPW


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 10, 2010 at 6:04 pm

BCPW - stay on the high road and this thread and discussion will profit from your perspective.


Posted by Blue Collar Public Worker, a resident of another community
on May 10, 2010 at 6:12 pm

Peter
Thanks and thanks for the info
BCPW


Posted by POGO, a resident of Woodside: other
on May 11, 2010 at 9:16 am

Just a bit more about the coming disaster.

From TODAY's Sacramento Bee...

Twelve of Sacramento County's 13 school districts don't have enough money in their coffers to pay the health benefits promised future retirees and are not setting aside money to pay for them, according to a grand jury report released Monday. Collectively, the county's school districts have a staggering $1 billion in unfunded retiree health benefits, according to the report. Web Link

12 of 13 districts. $1 billion in unfunded benefits. Sacramento County alone.

Then, again, maybe all of this stuff about unfunded benefits is just a lot of hype by Conservatives.


Posted by Enjoy, a resident of another community
on May 11, 2010 at 3:00 pm

This clip says it all!
Enjoy

Web Link


Posted by Blue Collar Public Worker, a resident of another community
on May 11, 2010 at 5:40 pm

Enjoy
While I find the humor in your SNL 2010 Public Employee of the Year spoof I think the topic heading of this string says it all Mean-Spirited. I will go on to say it was very disrespectful and on the edge of racism.
BCPW


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 12, 2010 at 8:47 am

When Saturday Night Live goes to the trouble of doing a parody, particularly one over 7 minutes long, the target of that parody needs to realize that 1) the issue is one about which a lot of people are concerned and 2) where there is enough good material for such a parody there is something to be very worried about.

By their very nature parodies are disrespectful - just ask any of SNL's other targets like Hilary Clinton and Sarah Palin.


Posted by Joanna, a resident of Menlo Park: Downtown
on May 12, 2010 at 9:03 am

Enjoy,

Thanks for posting that clip. It is very accurate in its message. I get sick to my stomach thinking about how much our public employees make.


Posted by Enough, a resident of Menlo Park: Sharon Heights
on May 12, 2010 at 11:12 am


Pension reform will not accomplish the cost saving goal we seek.

Does the City really need all these expensive services and employees?

The obvious way to avoid the costs is to eliminate them. Seriously. We cannot afford to support services with a perpetually infinite escalating cost.

Even if we reduce pensions, the fund liability continues.

We have become like the large 18th and 19th century European and American manor estates, existing for the benefit of their staff, not their masters. And those manors no longer exist.

As long as the City has classified employees, there will be unions and pensions. There is no half-way fix. We need to consider eliminating those City services using the most expensive employees our money can buy.

We get it. Your opinion is important. So much so, you attack your neighbors with it. Dialog has to be about solutions, not personal attacks. We are proving the dysfunction is on all levels. We get it. Menlo Park residents want to keep their money.

So, let's start talking about what we really NEED versus what we WANT from the City and what we can live WITHOUT.

What services is the City offering that we can do some other less costly way? Ask yourself: What City services do you really use? Keep those, the rest can go. Make the hard decisions.

Close the Recreation Department and Child Care Center and layoff those workers.

In tough times, it's fluff. Cancel those programs. Why does the City have to babysit people's kids? At $55k+/ year, per unionized babysitter? Parents can hire an $8/hr babysitter to watch their own kids. No Unions. No Benefits. No Pensions. The private sector will find a place to offer local classes and better child care. Many empty buildings in town.

Close the Planning and Building Departments. Layoff those workers.
The town is built out already. Only place left to go is up or into the Bay. Do you want that? Really? Constantly reshuffling existing land damages quality of life. Homeowners will build whatever they want anyway, no matter what limits or "approvals". We do not need a City government structure with unionized planners to dance around the future and do study after study to justify their jobs. The city can contract with city planners for good ideas and use private plan and building inspectors. Neighbors can sue each other for relief, as they do now. The fire district (non-city) can make sure houses have sprinklers.

Close Public Works and layoff those workers.

Contract it all out. Fewer city programs mean fewer buildings and spaces to maintain. We can get lots of people to cut grass or trees, fix sidewalks, paint and cleanup when we need them. There are dozens of men waiting at 5th Ave. and El Camino everyday. They are not going away and we cannot ask them how they got there. Contractors can pickup as many men as they need when they are needed. Cash only. No unions. No benefits. No pensions.

Close the libraries and sell the books and media. Layoff those workers.

Contract with a library service. Fewer people use the libraries now with the reduced cost-saving hours. Plus, all the chairs smell like homeless people. Maybe a private employer can add more hours and clean the furniture. (Why has every library become a homeless drop-in center? Did we intend our bond to be that? My kids refuse to go back there.)

Close the police department and layoff all those employees.

Do it before we become San Carlos or Vallejo and are forced to bid outside. San Carlos is laying off all their police and several other local cities are considering the same or merging. Contract outside for the best terms now to avoid a bidding fight.

The police budget represents 90 of the 220 city employees. Plus, ending that program eliminates two of the City's four union contracts (!!) and weakens SEIU's strength by many members. There is surely an enormous savings by cutting the most expensive pensions and managers on the city payroll. You have seen the published $100k+ salaries these pensions are based on. Work just 15 years to get a 50 percent pension!

How often have you used the police? Do we really know how effective our police are now? Their departure may not really be felt by the vast majority of citizens. Menlo Park residents seem to have a lot of fight in them (gauging by these forums). They'll be fine. Sell off the assets, the police cars and weapons. A few available officers from the Sheriff can easily do the job when called in for big crimes. Most police reports can be done online or by mail. 9-1-1 will get answered somewhere by someone. Keep the downtown ticket writing 'shepherds', or that parking will become a log jam.

Most of the other Peninsula cities are going broke too. Maybe San Mateo County will see the wisdom in a County-wide Police force, as exists in most East Coast states, to relieve this huge cost burden from each small city.

Contract the parks to the San Mateo County Parks Division. They contract the major repairs and use prisoner and court ordered labor for maintenance.

Once most of these City employees and programs are gone, the city won't need as many City buildings or a Finance Department, or Human Resources, or Support services, or City building maintenance or even an expensive Civic Center. Not to mention reduced liability and payouts from lawsuits incurred by City employee activity. The potential savings are huge.

All that should remain is a lower cost 'at-will' non-union City Administration (maybe 10 FTEs max) with 401k's and a City Council using reduced space. The council's biggest task then is to decide how to pay for past employee pensions and then how to re-distribute the multi-million reserve fund and give the cost savings back to the residents. We can use our money to enjoy our own retirements.

Current City employees with over 5 years are not left in the cold. Most should get a very reasonable pension of 30 percent or better for their Menlo Park service when they turn 50 or 60. Employees with less time are not vested and will find work eventually; Most with modest cities closer to their homes. They will steer clear of ever again serving the arrogance of ego and wealth.

A revised Council purpose will not be an appealing elected office, if all a future Council does is approve small contracts with no big projects or employees to direct. This may eliminate the desires of any self-important and self-aggrandizing future Council prospects and their friends. We all need a break from the egomaniacs.

Menlo Park residents want services; we just do not want to pay this much for employees to provide such services. I am sure the employees are tired of all this banter of ungrateful self-serving citizens. They would be happy if none of this came to light.

Most city employees commute big distances to work here. I have overheard them complain about their commutes. Ask them why they do it. They say, "For the benefits and pension." Let's help them out of a bad situation and that dead-end goal.

After all, why was Menlo Park formed in the first place? To collect taxes for roads in 1874, then promptly unincorporated. It had a Council and two employees when it quit.

The local wealthy property owners and taxpayers of that saw trouble in keeping a new city and did not want their tradesmen and political middle class deciding where the tax money went, so it folded by a local vote. It took about 42 years to decide to form a City again in 1923. Eighty six years later, it looks like we've come full cycle.

So, let's start over before it gets worse. Why are we waiting for the impending pension Bankruptcy? Stop spending now. Eliminate most future debt. We can talk about re-hiring a few employees at-will when the State's finances and pensions improve.

A pension control initiative is lip service. Let's be the first "Non Union" and "All contract services" city in California.

Or, the petition you need to circulate is one to de-incorporate.


Posted by Jack Hickey, a resident of Woodside: Emerald Hills
on May 14, 2010 at 7:39 am

Mary Jane says: "Attempting to punish working families for a temporary recession they didn't create not only doesn't make sense, it's just plain punitive and mean-spirited."

Reversing a reward they got for an economic bubble that they didn't create is not punishment, it's common sense.

Jack Hickey


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 14, 2010 at 9:44 am

by causeofgreaterworth:
"In order to learn from the situation in Greece, it would be prudent to explore the root causes of the problem. The simplest answer of course is that the government spent more money than it had. If that sounds vaguely familiar then you have been paying attention for the last seven or eight years. This is essentially the same tactic that was used by President Bush and is currently being used by President Obama. That's right, both Presidents.

What else can we say about Greece? One of the root causes of the Greek problem is not simply that they were paying more money than they brought in, but that they were forced by law to keep paying almost no matter what. If that also sounds familiar, then again I say you've been paying attention. Such non-discretionary spending is accounted for by promises for workers' pensions, early retirement policies, and other social programs. Does federal employee pensions or Social Security ring any bells? Ok, so we've explored two problems in Greece and established that we have similar problems.

How do pensions and salaries get out of control to the point where a government cannot keep up? Who is it that fights tooth and nail for more money, more benefits, more "job security?" In my opinion, the culprit in this case is the unionization of government employees. With nobody on the other side of the negotiation table who is legitimately concerned with saving money, unions can squeeze unrealistic concessions out of the government. Once again, Greece is not unique in this regard. Enter my favorite organization, the SEIU or Service Employees International Union. Because of unions like the SEIU, the average government employee makes more than the average private sector worker, not counting the ridiculously good government benefit programs. In case you're not aware, this is a fairly new precedent in our country. It used to be that government employees accepted lower wages for job security and benefits. Those days are over. And now what are we seeing in Greece? Who is livid, who is throwing molotov cocktails at police?
Well, that sounds like 3 for 3 to me.

1. Massive deficit Spending - check
2. Huge non-discretionary spending - check
3. Strong union influence over government employee salaries, benefits, and pensions – check

Does anyone see a pattern emerging? If this isn't enough to convince you, keep a close eye on Iceland, Spain, Ireland, and Portugal. What unites all of this? The big government European model. We're not as dissimilar as we used to be, and the gap is shrinking every day."


Posted by Concerned Parent, a resident of Menlo Park: The Willows
on May 14, 2010 at 9:56 am

Peter,

I agree with your parallels between Greece and the US. The challenge is that it is much easier for politicians to make promises and kick the can down the road and we continue to elect them for such behavior. I'm watching New Jersey with interest where the new governor appears to be taking on the publuic unions and trying to rein in spending and is getting blasted. I hope he is able to succeed because if he can't, it does not bode well for us in California as well where the gov has even less ability to make bold changes.


Posted by POGO, a resident of Woodside: other
on May 14, 2010 at 12:17 pm

Concerned Parent -

Unfortunately, I have little faith in our elected officials for all of the reasons you have stated.

Until those public services and public employee layoffs begin hitting home, until federal, state and local governments start paying with IOUs, until schools start reducing their school year and have teach layoffs, until pensions are in default, and until taxpayers revolt in response to unconscionable tax increases, nothing significant will happen. For that reason, I believe the only way this will ever be solved is for this runaway spending train that we call government, to crash into the wall as hard as possible. It won't be pretty and a lot of people will be hurt.

It's sad and unfortunate, but it appears that no elected official has the integrity to make these difficult decisions.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 14, 2010 at 12:44 pm

Pogo states:"It's sad and unfortunate, but it appears that no elected official has the integrity to make these difficult decisions."

How true and even more sad and unfortunate is that the citizens do not yet understand that we are on the road to disaster and hence simply don't care that the politicians won't make the necessary tough decisions and don't hold the politicians accountable.

As Pogo says - it will have to get a lot worse before people wake up - and then it may well be too late for anything except a draconian response which will cause a lot of pain for a lot of people.


Posted by Concerned Parent, a resident of Menlo Park: The Willows
on May 14, 2010 at 4:01 pm

I think taxpayers are becoming more aware, hence the initiatives. One nice thing about the internet is that it becomes harder for things (e.g. cushy retirement packages) to be hidden.
The crash may come sooner than we think. If you look at what our governor is proposing in his budget, it will get a lot of attention. He is also pushing a lot back to local governments which will only worsen the service cuts and likely cause layoffs. Should we expect to see fires and bombings from our public employees? I would hope not, but there is definitely a disconnect between expectations and what is sustainable. The attitude I've seen expressed on this board from those purporting to represent unions appears to be: we were promised something and we want it forever, no matter the societal cost and future governement workers shouldn't have to get less either.


Posted by Hugh Betcha, a resident of Menlo Park: Downtown
on May 14, 2010 at 10:27 pm

I can see the reason for over 200 shrinks with offices in down town Menlo.


Posted by Peter Carpenter, a resident of Atherton: Lindenwood
on May 16, 2010 at 9:29 pm

Why local action is essential:

Home / News / Opinion / Columnists / Steven Greenhut
GREENHUT: No hope for legislative pension fix

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By STEVEN GREENHUT -- CalWatchdog.com | Posted: May 16, 2010 12:01 am | 1 Comment | Print

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"One cannot be both a progressive and be opposed to pension reform," argued Gov. Arnold Schwarzenegger's top pension advisor, David Crane, during a hearing Monday.

"The math is irrefutable that the losers from excessive and unfunded pensions are precisely the programs progressive Democrats tend to applaud. Those programs are being driven out of existence by rising pension costs."

Yet, it's clear that the progressive Democrats who run California's Legislature have no intention of doing anything to anger the state's public employee unions. Union leaders and activists filled the committee room to speak out against Senate Bill 919, which would increase retirement ages and decrease defined pension benefits for newly hired state employees. The new levels would still be far more generous than pension plans in the private sector, but the state's private-sector workers don't register on the Democratic radar screen ---- except when the party is looking for new targets from which to extract additional taxes.

Reality time: There is no chance California's Legislature will embrace even modest reforms to its public employee pension system, which has a liability estimated by Stanford University researchers to be as high as $500 billion. The committee didn't get a quorum to take a vote.

Republican Sen. Dave Cox, R-Fair Oaks, stated the obvious: This bill will never get out of committee and the only hope for reform is in the initiative process. Because unions have the ability to raise political funds from member dues and have armies of foot soldiers to engage in campaign warfare, statewide initiative reform is a tough road as well, but there are few other options.

Union officials insist that unfunded liabilities don't mean much because of natural market fluctuations. All will be well, they say, when the economy rebounds.

But Crane reminded listeners that the "state pension obligations are no different than state debt obligations, which also are promises to pay amounts in the future." These are fixed debt obligations ---- no different than any other debts incurred by the government, except that they are not capped and not subject to public approval. And, Crane warned, "Pension payments are senior obligations of the state to its employees and accordingly have priority over every other expenditure except Proposition 98 (i.e., K-14) expenditures and arguably even before debt service."

It's understandable that unions take the "don't worry, be happy" approach toward pension obligations. They get theirs no matter what. But any legislator who believes that such obligations don't harm programs or endanger the state's budget is not dealing with fiscal reality.

Anyone who trusts the scandal-plagued California Public Employees' Retirement System as an honest broker on pension matters is delusional. CalPERS testified against SB 919 and made new projections to soothe legislative worries.

In referring to CalPERS' 1999 plan to retroactively increase pensions, Crane argued, "It's nothing short of astonishing that the CalPERS proposal, which promoted the largest non-voter approved debt issuance in California history, was not accompanied by disclosures of risks or conflicts of interest. Frankly, I've never seen anything like the CalPERS sales document, which makes even Goldman Sachs' alleged non-disclosure look like child's play."

When CalPERS pitched that fiscally disastrous idea in '99, Crane added, it never revealed that the state would be responsible for any shortfall in investment returns, that its assumed investment returns required "the Dow Jones to reach roughly 25,000 by 2009 and 28 million by 2099," that the state had no cap on potential taxpayer liabilities, that its own employees would directly benefit from the pension increases, and that CalPERS' board members "had received campaign contributions from beneficiaries of the legislation."

But, if Monday's hearing is an indication, legislators are still listening to CalPERS' empty promises and ignoring the more reasonable warnings made by Crane and other pension town criers. Committee Democrats also seemed to accept the argument by union representatives, who insisted at the hearing that any pension matters should be handled at the negotiating table, even though such negotiations have resulted in the current fiscal train wreck. Unions are at their strongest at the bargaining table, especially when one considers that the government staff supposedly representing the taxpayers usually also benefit from any gains the unions achieve.

Even SB 919's attack on dubious pension-spiking schemes and its effort to remove certain categories of workers (i.e., milk inspectors and billboard inspectors) from receiving enhanced "public safety" formulas got no traction. Senate Democrats were looking for excuses to stop the bill. They weren't engaging serious debate.

For instance, Sen. Denise Ducheny, D-Chula Vista, mocked the bill because it won't do anything to fix current budget problems (it will take years before the new savings from the new hires are realized) and because it deals only with state workers ---- not the many local agencies that pay equally generous packages to public employees. That seems to argue for a tougher bill that took on current employee benefit packages, but Ducheny wasn't advocating for that approach, but for the do-nothing preferences of her union allies.

The bill's progressive foes never responded to Crane's point that "All the consequences of rising pension costs fall on the budgets for programs such as higher education, health and human services, parks and recreation and environmental protection that are junior in priority and therefore have their funding reduced whenever more money is needed to pay for pension costs." It's no wonder. There is no serious response to that dead-on argument.

That's why the loud and surly union crowd did what unions always do ---- engage in a show of force rather than forceful argumentation. In the union worldview, the system works fine ---- any problems are the result of "Wall Street." And, of course, if taxpayers would only pay more to the state, all would be well with the world.

As the Retired Public Employees Association argued in a letter to committee Chairman Lou Correa, D-Santa Ana, in opposition to SB 919:

"RPEA disagrees with the assertion that California's public employee pension system is broken.

"California's system of providing retirement security and healthcare for our hard working public employees has worked for years ---- and is working now. It is a well managed system that allows us to recruit and retain good public employees, while keeping the promise made to them for secure, fair and well earned retirement."

Well, there's no question the system does work well for its government retiree beneficiaries. It would be nice, however, if California's majority legislators occasionally thought about taxpayers or some other constituency.

Unless the economy comes roaring back, pension obligations will continue to sap the budget and create pressure for cuts and business-busting tax hikes.

This sets the stage for an eventual statewide initiative battle, which could rival the importance of 1978's property-tax-limiting Proposition 13. This could be the beginning of a wild ride.

STEVEN GREENHUT is director of the Pacific Research Institute's www.calwatchdog.com journalism center. Comment online at nctimes.com/opinion or sgreenhut@calwatchdog.com.


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