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Original post made
on Nov 4, 2010
I really enjoy the new metric when it comes to campaign spending, "cost per vote"
$30 per no vote for this one.
I sincerely wish to thank those involved in getting L on the ballot.
The people (the employers and salary and benefit payers) have spoken. Unions, please accept it and move on.
This initiative made national news. My parents in Pennsylvania knew about it, and now I am happy to say we the people made it law.
The union leaders should read this thread to better appreciate the strength of public opinion on public employee pay and benefits and then reconsider their legal strategy:
-That the unions would take this stance is disgusting.
-That they spent $69,000 of their constituents union dues fighting this measure is disgusting.
-That the unions believe that the residents of Menlo Park will not fight this is naive and disgusting.
-That the councilwoman who opposed this doesn't step down in shame, is disgusting.
The SEIU and AFSCME need to wake up and understand that we are DISGUSTED with them.....enough already!
CORRECTION TO THE STORY:
I want to give credit where it is due. Henry Riggs, Roy Thiele-Sardinia, Ned Moritz and many others (including former council members Lee Duboc and Mickie Winkler) started this whole movement.
I came into it in February, after it was already in motion, and agreed to help Mary Gillis organize the signature gathering. Calling me a "spearhead" of the movement is not correct. I am proud to have been a helper and I intend to continue to assist.
444 Oak Court, MP
Peter (et al.)
We have reached an important decision point for the public unions in Menlo Park. They can become collaborators with the city council to improve the city and balance the budget, or become obstructionists and see their support wane.
Another lawsuit would add insult to injury. To start legal action after 72% of the residents voted for the initiative would be "biting the hand the hand that feeds them". While many would question their decision to spend $69,000 of Union Dues on suing us the first time, using more Union dues to sue us again is suicide. Both the residents and employees of Menlo Park should be concerned about the leadership and decisions made by any Union that would d go against such a tide of support.
As we reach this critical fork in the road, we hope that the Union leadership chooses the path to collaborate with our elected leaders.
Co-Chairman - Citizens for Responsible Pension Reform
What part or NO don't the unions get? Wake up and smell the coffee. While the public may value the work labor groups do, the public doesn't intend to support a cradle to grave philosophy; this includes costly retirement plans.
My thanks to the people who started this initiative. Hopefully, it will affect what's going on in the local fire departments -- Menlo Park and Palo Alto. Management should feel validated in holding the line because of the response from the electorate.
What I always thought was the issue in Measure L that the unions would most dislike is the fact that it gives the VOTERS/TAXPAYERS a say in the labor negotiation process. The unions have worked hard to achieve the status quo and the exception to the Brown Act (open government regulations) that lets labor negotiations go on behind closed door.
As other reporters have noted, decades ago the public employee unions decided that they would not pursue public outreach and/or approval, but decided to go the "control through donation" route of elected officials. When this happened, the unions didn't need to gain public approval and/or support. All they needed was a closed door process where everyone that is actively negotiating labor agreements and making the decisions has a vested interest in always increasing the pension benefits for public employees.
The bottom line is what we have today -- fiscal non-sustainablity, and mounting generational debt.
It's time to give the people a say in this process. After all, it's our kids and kids'-kids who will be paying for it. And, right now we are "paying" for it through decreased services and infrastructure maintenance/construction today.
Lee Duboc states:"the exception to the Brown Act (open government regulations) that lets labor negotiations go on behind closed door."
The Brown Act permits, but does NOT require, that labor negotiations be done behind closed doors. Public pressure can force elected officials to open up that process, particularly when negotiations are in their final stages.
The Fire District has a binding resolution which requires that any proposed labor agreement must be made public for at least fifteen days before the Board can vote to accept or reject that agreement. Other local agencies should adopt the same rule.
It's ironic that you wrote: "As we reach this critical fork in the road, we hope that the Union leadership chooses the path to collaborate with our elected leaders."
The irony: your initiative just circumvented this standard of collaboration between the union and the Council by removing the power of the Council to decide on any pension increase. According to your initiative, the Council would have to call a special election and defer to the outcome, rather than to the best judgment of our fairly elected representatives. This flies in the face not only of common precedent throughout the country but of state law which places responsibility for negotiating conditions of public employment with the local governing body (ie. the City Council).
No wonder the union is choosing to fight this initiative. The effects of having it upheld are much broader than the borders of Menlo Park or even the state.
I've attached the pertinent government code regarding negotiations with public employees. Seems pretty clear to me that Council is identified as the governing body with responsibility for negotiating such things as pensions. There is no mention of special elections or of broader community input.
Those of us who opposed Measure L warned that legal action was sure to follow so don't express surprise or outrage now that it's happened. This lawsuit was completely predictable and, based on my reading of the law, is totally justified.
Section 3505. The governing body of a public agency, or such boards,
commissions, administrative officers or other representatives as may
be properly designated by law or by such governing body, shall meet
and confer in good faith regarding wages, hours, and other terms and
conditions of employment with representatives of such recognized
employee organizations, as defined in subdivision (b) of Section
3501, and shall consider fully such presentations as are made by the
employee organization on behalf of its members prior to arriving at a
determination of policy or course of action.
There is NOTHING ironic about my statement, that would imply I was being sarcastic. The union and council weren't collaborating they were cohabitating. There financial support of the council candidates through donations, made this necessary.
The public is smarter than you give them credit for. Menlo Park's residents SHOULD be deciding electorally when to issue a 60 year bond for a new employee pension. Because that is effectively what they are doing when an employee that works for thirty years then lives thirty years after retiring requires a 60 year financial commitment. We take bonds to the voters for a reason, they are long-term obligations, so are pension increases.
So we have no regrets about what we did, and we believe that the courts will show our mission to be just and legal.
The point is the current system is broken and leading to unstainable and unfair spending. It will not fix itself. While Initiatives are not panaceas they are tools used by voters to guide elected officials who ultimately have to finalize the details. No power has been removed, the guidelines have been tightened. And doing nothing, ie status quo, has obviously failed to deal with this most serious problem.
And because a lawsuit was predictable doesn't make it right. I do not see the law covering this as being so iron clad either but even if it is do you suggest that citizens shouldn't try to change bad laws? How is the lawsuit justified? Is it because you think the law is unassailable and must be protected at all costs by unions?
The reporter's calculation that the unions spent about $30 per 'no' voter is interesting, but if we're keeping score, I offer this - the pension bonus awarded by this past council is estimated to be about $6.4 million in present value. that works out to $214 per MENLO PARK resident! I think the unions are still way ahead. Measure L is a good start, but until we get rid of people like the folks on the current council, the unions will still find ways to take it out of the hide of taxpayers.
You say the current system is broken. I don't see how you can say that since the Council has already reduced the pension formula for new employees in one of the contracts that was up for renewal. I expect that the others contracts will also be similarly modified when they come up for renewal - especially with the new Council members and especially in light of the success of Measure L.
This is how representative government is supposed to work.
This initiative subverts the system and, like many well-intended initiatives, will have other unintended consequences.
Remember: Council's "mistake" happened in 2007, a time when the economy was doing quite well, the markets were booming, and CALPERS was covering much of the City's contributions to the pension plan. If we had do-overs, I expect a lot of us would have made different decisions back in 2007, knowing what we know now. Council is no exception and they seem intent on correcting their mistake. This initiative really doesn't help in any meaningful way.
Here is the Fire District's Resolution:
RESOLUTION OF THE BOARD OF DIRECTORS OF THE MENLO PARK FIRE PROTECTION DISTRICT ADOPTING A POLICY REGARDING DISTRIBUTION
OF PROPOSED COLLECTIVE BARGAINING AGREEMENTS
WHEREAS, in accordance with the policy of promoting prompt public access to government records, the California Public Records Act broadly defines public records (Gov. Code Section 6252, subdivision (3)) and the exceptions to disclosing public records under the California Public Records Act are narrow; and
WHEREAS, the Ralph M. Brown Act, Government Code Sections 54950 through 54963, enacted into law in 1953, requires open meetings of local agencies "to curb misuse of the democratic process by secret legislation of public bodies"; and
WHEREAS, the Ralph M. Brown Act "…reflects a legislative determination that 'public agencies in this State exist to aid in the conduct of the people's business,' and an intent 'that their actions be taken openly and that their deliberations be conducted openly' (Gov. Code Section 54950); and
WHEREAS, the Ralph M. Brown Act and the California Public Records Act require the District to conduct its business in a transparent manner; and
WHEREAS, the Board, as duly elected representatives of the citizens within the District, in conformance with the Ralph M. Brown Act and the California Public Records Act, is committed to providing the District's citizens with information considered by the Board in making its decisions; and
WHEREAS, the Board believes due to the importance of proposed collective bargaining agreements with the District employee labor representatives, that these proposed agreements should be made available to the citizens of the District in sufficient time prior to the Board's adoption of the proposed agreements so as to allow for adequate review and comment by the public prior to final Board action.
NOW, THEREFORE, BE IT RESOLVED that the Board of Directors of the Menlo Park Fire Protection District does hereby move that any proposed collectively bargained labor agreement between the District and designated District employee representatives shall be made publicly available at least fifteen (15) calendar days before the meeting at which the agreement will be acted on by the Board.
Measure L was just a baby step in the right direction towards reform of our public sector spending in Menlo Park. If the unions don't like it and make the city spend more money on another legal challenge, the next step should be what is done in private industry: FREEZING the defined benefit pension plan and henceforth providing ALL employees a defined contribution pension plan.
You wrote: "Menlo Park's residents SHOULD be deciding electorally when to issue a 60 year bond for a new employee pension. Because that is effectively what they are doing when an employee that works for thirty years then lives thirty years after retiring requires a 60 year financial commitment. We take bonds to the voters for a reason, they are long-term obligations, so are pension increases."
I don't believe that what you wrote is true. While an employee works for the city, both the employee and the city contribute to the employee's retirement fund that is managed by CALPERS. When the employee retires, contributions from both employee and city stop and CALPERS takes over paying monthly pension payments from their investment fund. Correct me if I'm wrong about this but there is no continuing payments by the city into the pension fund for retired employees. If I'm right in my understanding, your claim of a 60 year commitment for a 30-year employee is off by 30 years.
Steve you are technically correct - once an employee retires the city no longer makes a contribution to that specific employee's retirement account. However, CALPERS cannot print money and if the payments made into that employees retirement account plus the interest earned on those payments are insufficient to cover that employee's retirement then CALPERS will simply raise have to raise the contribution rates for the city's current employees. Any CALPERS shortfall must be covered by the participating agencies - there is no other source of revenue for CALPERS and no limit to what CALPERS can demand from its participating agencies.
It's funny how unions work.
In Menlo Park, the unions want to stop citizens from having the final word on changes to their pension benefits.
But in nearby Palo Alto, the unions demanded citizens be given the final word when it comes to shutting down fire stations.
So which is it, unions? Do you trust citizens or not?
By the way, on Tuesday, the unions were on the losing side of BOTH measures by wide margins.
Strident Union opposition to this completely reasonable action by the citizens of Menlo Park is both predictable and sad. Even more disappointing is how our past elected officials allowed this to happen. Some of them so obtuse, that even in the face of overwhelming support, they continued to oppose these modifications! It's hard for me to fathom exactly how any elected official could come out against this proposition, in defiance of the electorate they are sworn to serve. Hopefully the next election will purge our council and city of these corrupt shills.
I suspect "Steve" is either one of those shills or a union thug himself. His arguements make no sense at all and strike me as shrill over-defensiveness. As for me, I will continue to support Measure L in every manner possible and make my friends and neighbors aware of the sinister forces (and corrupt local politicians) actively working against their best interests.
Public Sector Unionists and Slocumites got a well deserved shellacking.
GWBushy laissez faire Wall Street of Shame excesses replaced by taxpayer funded local giveaways to Unionists and "We The People" "Change for the sake of Change" demagogue democrats are now getting their reckoning on local, state and national levels.
Sorry, working class folks get the picture.
Don't trust retread professional politicians.
Next to go, Fergusson, Cohen's on the bubble as he seems to aspire to career politician stature. Time will tell.
Thank you, Steve, for supporting much of your arguments with evidence. It's unfortunate that the "Yes on L" campaigners overstated the issues with pensions in order to push their cause.
I found out that Menlo Park city workers are tax exempt public workers. This means that they are ineligible for social security when they retire unlike the rest of us.
Also, the website for the Citizens for Responsible Pension Reform seeks out to mislead the public on what the average Menlo Park city worker salaries actually look like. The site uses an example of a worker making over $80,000/yr to break down how much their pension would look like. They claim that the worker's pension would exceed $70,000 annually based on a 2.7 formula. Wow. Is this what the average Menlo Park city worker makes and can expect from their pension??? I spoke to numerous public workers in the surrounding area and they report an average of $1500/month pension with no social security. Perhaps the sample of people I've spoken to is small, but I would be surprised if city worker salaries and pensions are really the overstated figures the "Yes on L" people would have us believe.
$69,000 is a lot of money, but that's not the whole story.
Remember the same unions (AFSCME AND SEIU) each paid their lawyers to file suit against Pension Reform in June. That's at least $30.
And then in the last week of September they paid two marketing firms to perform a "Push Poll" to a large number of voters in Menlo Park. the poll questions focused on Measure "L". That was probably $50,000.
Then there was the web domain name that was purchased on August 12th (way before the first official form was filed by anyone announcing their group and expenditures).
Add those costs to the union expenditures and the cost per vote more than doubles from the $30 estimate in the "Almanac" report.
you really need to check your facts. The city workers are NOT "tax exempt" and are not "ineligible." In fact, they choose to opt out of Social Security in lieu of paying into their retirement plan. A retirement plan which is MUCH better than social security. Social Security would be happy to take their money if they chose not to opt out. I'm an ex-civil servant so you can take that information to the bank. No civil servant in his right mind, given the opportunity to participate in the civil service retirement plan, would choose to stay with social security.
You said "I spoke to numerous public workers in the surrounding area and they report an average of $1500/month pension with no social security."
You make it sound like $1500 a month is actually a small pension and most make more. But guess what, Candice, $1500 a month is the national average for Social Security benefits. That meager amount you cite is what we in the private sector routinely receive!
So I'd gladly trade paying 15% of my current salary to receive what is a speculative Social Security benefits of $20 to $30 thousand a year (which the Congress can reduce or eliminate cost of living increases at their whim) in exchange for getting a whopping 60 to 90% of my highest salary for the rest of my life - with health care, with cost of living increases - guaranteed.
You've got to be kidding...
Fortunately, about two-thirds of Menlo Park's voters saw the sheer idiocy of this pension arrangement. It would have been nice if Ms. Fergusson could have seen that too, but I'm sure she'll backpedal and make it seem like she was on the winning side all along.
Of course they should challenge this. After all, as they said in their No on L signs, "Menlo Park can do better!".
The measure L formula appears to be working:
"Palo Alto also became one of the first cities in the area to institute a two-tiered pension system, with new employees getting "2 percent at 60" pensions (their pension payments will equal 2 percent of the highest salary earned, times the number of years of service, with retirement at age 60). Existing workers remained under the existing "2.7 percent at 55" pension formula. Keene also froze salaries for all non-public safety employees; eliminated the bonus program for managers, professionals and department heads; and changed department heads' employment to "at will" status.
These moves have significantly improved what was once a bleak financial outlook. On Oct. 5, when the council's Finance Committee discussed the city's long-term financial forecast, council members were astounded by the new projections, which incorporate the recent changes to pensions and health care contributions. The city's previous forecast, which did not include these measures, projected years of steep budget deficits in the city's General Fund, ranging from $9 million in fiscal year 2012 to $16 million in 2017. The new forecast, which contains more modest salary increases, projects a $1.4 million deficit in 2014 and a surplus of $400,000 in 2017."
You wrote: "I suspect "Steve" is either one of those shills or a union thug himself. His arguements make no sense at all and strike me as shrill over-defensiveness."
You are wrong. I have no connections to the unions, nor am I a member of any union. Further, I have nothing to be defensive about since I'm not affected directly by this initiative in any way. I merely disagree with you and other supporters of Measure L that it was necessary or beneficial to the city.
If my arguments make no sense to you, it may be because your mind is closed to rational argument, having perhaps been swayed by the anti-union hysteria that seems to be prevalent in many parts of the country. I don't see how making the unions the scapegoats for our problems is really going to solve anything. If anything, it makes the economic situation worse as unions are one of the last instruments the middle class has to represent its interests. But that's an argument for another thread.
My argument in a nutshell is that Measure L violates state law in that it inserts the citizens of Menlo Park directly into negotiations with public employees over pay and benefits.
We live in a representative democracy, not a pure democracy, and our laws are drawn up to reflect that. The law stipulates that the interests of the public should be represented by the elected members of the City Council and the interests of the public employees should be represented by their elected union representatives. Measure L takes the final decision away from our representatives when it comes to increasing retirement benefits and instead calls for a referendum, in violation of both precedent and state law.
The unions recognize that Measure L upsets this balance in the negotiating process - with repercussions far beyond bounds of our fair city - and they are well within the bounds of decency to challenge it in court.
This lawsuit is the first of what I expect will be many unintended consequences coming out of this initiative. I predict Measure L will cause problems for Menlo Park for years to come unless it is overturned by the courts. Hopefully it will be.
Jim Long -
So much of what you wrote is wrong or based on wishful thinking.
1) "The point is the current system is broken and leading to unstainable and unfair spending."
The system is not broken. The Council recognizes that the economic situation that existed when they boosted pensions in 2007 no longer exists and that the agreements with unions need to be changed to reflect the new economic reality. They have already renegotiated with with one union and created a 2-tier retirement system along the lines of what Measure L calls for. I fully expect they will do the same for the remaining contracts as they come up for renewal.
And as for unsustainable spending, it will be unsustainable only if the stock market never recovers. Remember that CALPERS covered much of the city's contributions to these pension plans when they were earning 10%, 15% and even 25% returns. Once the economy stabilizes and the markets return, I fully expect CALPERS to once again take the load off city in this regard. Of course CALPERS never offset the employee contributions which will continue to be 7% to 8% or their pay.
2) "While Initiatives are not panaceas they are tools used by voters to guide elected officials who ultimately have to finalize the details."
Actually, initiatives have the force of law. They are rigid and inflexible and can't be easily undone when situations change. They can only be "fixed" by another initiative or if a court finds them to be illegal or unconstitutional.
3) "No power has been removed, the guidelines have been tightened."
Actually, the initiative removes the power of the Council to increase pensions and gives that power directly to the citizens, thus undercutting a fundamental tenant of our representative democracy.
This is a fundamental change in how things are done and deserves to be litigated in the courts. We can't have cities willy-nilly rewriting state law whenever they get a be in their bonnet. I expect there is a very good chance that the unions will win this lawsuit. And in either case, it will be at some expense to the city, which will be forced to defend this ill-advised initiative.
Have you no confidence that the markets will some day recover? I mean haven't they already recovered nearly half the value lost in the 2008 crash?
I'm no fan of Wall Street but even I believe that eventually the economy will improve, the markets will get back to a decent rate of return, and owners of 401K plans can get some sleep. And when this happens, CALPERS will once again return to covering the pension contributions from state and local agencies - including those from the city of Menlo Park - as they did for much of the past 20 years.
At that point the hysteria about unsustainable payments will recede and we'll be wondering why we have to call a special election to give our hard working, but 2nd-tier, city employees a slight boost in their retirements.
I hope you or Roy will be willing to write the editorial in the Almanac explaining it all.
Thanks for your thoughtful replys but you need to look closer at the process. The recent pension change by the council is half hearted and may or may not be enacted and 3 (maybe 4?) of the members think the 2007 vote was fine. Actually it was irresponsible at the time but they were looking at the wrong data, i.e. in hindsight it was irresponsible even if the economy did not tank.
It seems your real problem is the initiative process. I respect your position but my 35 years voting in CA have shown me it has much merit, albeit abused and sometimes problematic. And while they have the force of law (thats the point) they CAN be tuned/modified by elective officials.
IMHO, your view of the economy, stock market and Calpers is wishful thinking but I hope you are right. But if right the numbers still do not work and the city and state are headed for insolvency unless we make changes now. If that happens there will be a lot fewer city/state employees, i.e., no matter what happens 'status quo' will wreck our governments. Change is not an option it is a must.
The harder the Unions fight the bigger the fall for them will be that is why I hope they get some common sense and think about the whole system not just their special interests.
Jim Long -
Half-hearted? I don't know how to judge the intent of the Council except by their actions. Their negotiating with the one union tells me they "get it" and are serious about fixing the pension increase they passed in 2007. I've actually talked to Council members about this and am convinced that they intend to do the same with the other contracts as well.
As for the initiative process, I readily admit that you've got me pegged to being an opponent. As a long-time Progressive it truly pains me to that this Progressive bit of legislation from one hundred years ago has turned out to be a very dangerous addition to the state constitution. I've been voting in California for 28 years and am appalled at the damage the various initiatives have done to state government in that time. In fact, I attribute most of the financial mess and political dis-function in Sacramento in recent years to the accumulation of unintended consequences from the various initiatives passed since Prop 13 opened the floodgates in 1978. These initiatives have so fouled up our state government that there's real talk of rewriting the state constitution so that we can chuck them all and start over.
And regardless of what you say, an initiative really can't be "tuned/modified" by elected officials. They've tried in the past but watchdog groups like Gann Taxpayer Organization is there to bring suit to stop them (it's not just the unions who bring legal action). Initiatives are prescriptive, rigid, and eternal, barring court action or a new initiative. And now that true special interests (think Valero oil and Prop 26) have learned how to use them, we can expect initiatives to continue to foul our state government for the foreseeable future. Or until the constitution is rewritten to get rid of or better control them
Finally: your comment about the unions struck me wrong. The role of the union is only to represent the best interests of their members. That's why they exist. By definition, they represent a special interest. There's nothing wrong with that. The City Council exists to represent the interests of the citizens of Menlo Park. This is the essence of any negotiation, with each side representing it's own interests.
However, in this case I have to think that the unions actually are considering the larger system, including the legal system which prescribes negotiations between unions and City Councils. Measure L threatens to blow this process up, which is why the unions pretty much have to fight it in court. For the unions, the issue is far broader than the pensions for workers in Menlo Park - it's the legal framework in which they negotiate in every venue in California and perhaps beyond the borders of California as well.
As I pointed out, this is just one of the unintended - but very predictable - consequences of this initiative.
I thought I might give you the exact numbers for salary, so you can stop making up facts/information and actually have the data at hand.
Here are the numbers for Menlo Park full-time employees:
Average Salary w/out Police $73,423
Average Salary w/ Police $85,622
Average Salary Female w/ Police $73,455
Average Salary Female w/out Police $68,966
Average Salary Male w/Police $96,232
Average Salary Male w/out Police $81,482
Employee Headcount (full year & full-time):
Total Employees 232
Male Employees 124
Female Employee 108
Male Police 37
Female Police 7
Male Non-Police 87
Female Non-Police 101
And as you mentioned Menlo Park employees do not receive Social Security (at there Unions request) so the $73,423 average (non safety) employee would receive (if they were 55) $59,472 per year in retirement. If they were 62 and retired on Social Security they would get $20,616 (and worked 7 years longer to get it) If they worked until 65 they would get $25,524 per year on Social Security. For the record under the Measure L plan they would receive $44,054. So if they'd like to receive Social Security (i.e. work longer and get less) then please, let's make sure we make that the main bargaining point of the next contract negotiation!! Please?
So Candice. Are you clear on the facts now? Can you see how high these numbers are compared to the private sector for similar work? Do you understand why we HAD to do Measure L? If not, I can walk you through the employer contribution side of this equation which will truly make you sick to your stomach.
Steve: That is the unsustainable part of this, the employer number is going up over the next 5 years, not down as you suggest. And the recent articles about CalPERS lowering it's investment return objective from 8% (which it was gotten or averaged in the last 10 years) to a mere 7.5% (that is what NY State and IL are at) or %7.75 (NC & PA) then every city will see their contribution going up, and these pensions will cost even more. That's unsustainable!
Co-Chairman Citizens for Responsible Pension reform
You relate all the standard Union arguments like a disciple, so excuse others for thinking you are a member of the Local shop.
The bottom line is that believing that the 2007 economy is "normal" is what allowed the unions to bargain us into this mess to begin with. It would be great to see that again, or win the lottery or see world peace, but grown ups have to deal with reality. (And even with 2007 numbers, pensions of 81% would still not work without taking still more out of other programs.)
As for throwing around the statement that City retirees get $1,500 a month, well not if they worked a "full" 30 years and retired in 2009! Try an average of $4,950 per month at CURRENT pay and retirement rates for non-safety Menlo employees.
Most of us will work much longer than 30 years to retire so we can pay our taxes that support commitments to city worker pensions. When employee costs are 74% of our city's general fund, picking away at the other costs is not going to restore a workable budget, no way.
We didn't take on this challenge lightly, or without doing our homework. What the unions feed you Steve is PR - all the real numbers are public record.
I get no information from the unions, PR or otherwise. I belong to no union. I have no union affiliation. I wouldn't know a union representative if I saw her on the street. So please stop trying to dismiss my arguments with these veiled ad hominem attacks.
I agree that employee costs need to brought under control, given the reduced income the city is experiencing during this recession. The Council is obviously aware of the problem and is considering reducing up to 8 staff positions to deal with it.
I also agree that the 2007 pension increase was too generous, as does the Council, which has negotiated a 2-tier retirement plan with one of the unions and which plans to do so with the other contracts as they come up for renewal.
This is how city government is supposed to work as it responds to changes in its financial situation. We're actually in a better position than many other cities because previous Councils (in addition to this one) have seen fit to squirrel away budget surpluses into a $25M reserve fund.
Where I disagree with you is that Measure L was necessary in any way to affect these changes. To my mind it was a blunt instrument intended more to punish council members that you disagreed with than to solve the actual problem. And it tramples all over precedent and state law in doing so.
You admit yourself that "L" does nothing in the short term to affect the budget imbalance and will take 10 to 15 years to achieve any meaningful reduction in employee costs. In that time, normal Council actions will have long since handled the problem. Heck, in that time, the economy will probably have gone through a complete boom & bust cycle again.
Instead you've introduced the initiative process to local politics, a procedure that has been, at best, problematic at the state level. At worst, state initiatives have been a disaster.
As an unintended consequence, the city is now facing the costs of a law suit to defend the initiative, which clearly has serious legal problems. How long this suit will go on and how much it will cost the city remains a big unknown.
Another unintended consequence that hasn't been talked about much is the animosity towards our city staff that this initiative has generated. It may not be overt but, reading some of the posts above, it's clearly there. How long it takes for that to heal also remains an unknown.
Is Menlo Park better off because Measure L passed? I for one don't think so.
So, in fact, "Steve" is getting his information from the same union flyers in the mail as I have and is therefore no more informed than I am. It's not hard to infer that the $1500 per month is probably all CURRENT retirees, perhaps throughout the entire state. As most of these people retired years ago, at much lower payscales and in areas (rural) with much lower cost of living and earnings, $1500 is a plausible number. it is no doubt a USEFUL number for the unions to bandy about today. it is however, absolutely USELESS as a basis for comparison to the employees today. in fact, just double the number to $3000 and see how many of today's employees would be happy to take it. I suspect very few because they KNOW they have much more to look forward to at a MUCH earlier age.
If you reread my posts, you'll notice that I haven't been talking about how much or how little city employees get in retirement. That's not my argument.
If you want to respond to me, please respond to my arguments.
yes, the initiative process sucks, but when the unions are running the city council (and county and state legislature) we don't have much other alternative.
Another day, another greedy public union sticking its hand in taxpayers' pockets for unearned profits. Thankfully, at long last, the taxpayers are rising from their slumber.
Mickie, Good going guys we at least got something out of all that work and time
I'm following you.
Steve said "And as for unsustainable spending, it will be unsustainable only if the stock market never recovers."
I'm not going to repeat all of the citations that have been previously provided that show that is simply untrue. Even CALPERS recognizes this and continues to revise their investment expectations downward - by my count three downgrades in just the last year.
The bigger issue is that these are defined benefits and we, the taxpayers, are always expected to make up losses. If there is another downturn in the stock market, as many expect, the subsidies that will be required from our cities and towns to keep paying these pensions will truly be horrific.
Unfortunately, I fear that it will probably take a financial earthquake like that for our citizens, legislators and even union members to understand the current system is unworkable.
Why is a system that has worked just fine for 80 years suddenly unsustainable?
What is the fundamental change that would justify abandoning a retirement system that has an overall stellar investment record and, more importantly, has provided secure retirements to hundreds of thousands of teachers and state and local employees? And replacing it with what may I ask? What is the superior retirement system that you have in mind?
Yes, the city contributions to the retirement fund go up when earnings on the fund go down. But the city contributions also go down during years when when earnings are positive. And the fact is that for every year the city is asked to contribute more, there are two years when the city has had it's contributions reduced.
A simple solution that doesn't require throwing out a perfectly fine retirement system would be to require the city to take the savings it realizes during good years and bank them against the years when the markets are down. That would eliminate the fluctuations in the retirement costs to the city, which is the real source of the current "crisis".
Now there's an initiative I could get behind
Good question. There were a three fundamental changes.
The first fundamental change has been escalating public employee salaries and benefits that our elected officials continue to grant. Unions provide financial and in-kind support during elections for those who support them and fierce opposition to candidates who oppose them. At a time when private sector employees were experiencing layoffs and finding themselves lucky just to keep their jobs, our public employees were getting 3, 4 and 5% annual salary increases and not having to contribute to their health and pension benefits.
The second fundamental change was the stock market performance that the geniuses at CALPERS seemed to think would never end. Their financial models assumed on-going annual investment returns that exceeded reason. Those assumption returns have had to double and triple to make up for the bad years, which compounded the error.
But the lethal blow occurred three years ago when our elected officials changed the pension benefit formulas - RETROACTIVELY - and opened the pension piggy bank to all public employees. This irresponsibility led directly to the recent overwhelming passage of Measure L where, under our democratic republic, citizens reclaimed the responsibility for making these changes... as is the electorate's right.
This combination of events is well documented and the current system is unsustainable. We ignore them at our own peril.
I believe a superior system already exists - a defined contribution plan. Full disclosure: I favor that over Social Security for all workers.
I first discovered the benefit of this when I ran a small production facility in The Netherlands and saw how it worked. Every worker should be required to put 15% of their earnings into a retirement account. The investment choices can easily be limited (as is already done 401k plans) so workers can invest in certain qualified vehicles like mutual and index funds which becomes more conservative as an employee approaches retirement age. Such a system would pour literally billions of dollars into the economy and fuel private sector expansion and investment. With the influx of money, the stock market would literally take off like a rocket. Imagine 15% of every paycheck being invested in the stocks or bonds every Friday.
Under such a system, even middle income workers would retire with several hundred thousand dollars (more likely a million dollars or more). The investment income from that kind of portfolio would far exceed the $18,000 that is currently provided by Social Security and people could spend as much or as little as they like. It would be THEIR money. This would represent a huge asset that, unlike Social Security and pensions, would be OWNED by employee. And unlike other plans, it would be part of an employee's estate and passed on to heirs or charities.
But most important, this would get the government out of the retirement benefits business for once and for all. Because that entitlement spending represents such a large percentage of government spending, government could reduce taxes or devote that spending to more worthwhile projects... or both.
Is it correct that city employees do not contribute to their retirement fund? I understood that most public employees contributed between 5% and 7% of salary into retirement. That is a sweet deal if MP employees had that covered by the city. Can you cite a reference that shows that to be the case?
I've got to run to the store but first I want to respond to one thing you said that I think is a fundamental flaw in Measure L.
You wrote: "This irresponsibility led directly to the recent overwhelming passage of Measure L where, under our democratic republic, citizens reclaimed the responsibility for making these changes... as is the electorate's right."
As you point out we live in a democratic republic. However, the form of government is representative democracy where the power to govern (and in this case to negotiate employee contracts) resides exclusively in our elected representatives. This was James Madison's definition, which was ratified by the founding fathers in the constituion and further elaborated at the state level by the legal code I quoted above.
And even though representational government allows for some direct popular measures, such as the initiative, referendum, and recall elections, legal power usually remains firmly with the representatives. So your last phrase is probably wrong and is the basis for the lawsuit being brought by the union.
Sorry, but the ultimate power is ALWAYS in the hands of voters, not their elected officials, who always serve at their pleasure.
Nowhere in our Constitution does it say that the power "to negotiate employee contracts resides exclusively in our elected representatives. This was James Madison's definition..." That's pure hyperbole; there are NO exclusive rights granted to any elected city official. And there's a big difference in negotiating and approving agreements, which voters in our state do all the time (ie, every single bond issue in our state).
As our state knows only too well, voters can change virtually anything if there are a sufficient number of them.
You wrote: "our public employees were getting 3, 4 and 5% annual salary increases and not having to contribute to their health and pension benefits."
You are wrong about employees not contributing to the pension fund. The recent Menlo Park newsletter states that city employees pay 8% of their salaries toward their retirement, except for the police officers who pay 9%. Moreover, the city's contributions to the fund is capped at a certain point, above which employees split the additional costs to CALPERS. Funny this information wasn't mentioned among the "unsustainable" hysteria provided in the Measure L information packets.
Regarding CALPERS, you still haven't acknowledged that for several years the city made no contributions to the pension fund because CALPERS' returns were so exceptional that they were able to waive employer contributions. Now that earnings by the fund are down and the city is having to contribute again, you claim it to be unfair and unsustainable. Actually CALPERS earnings are up $20Billion so far this year but charges to the city are based on performance 3 years ago. Which means that charges to the city should go back down in 3 years.
You also fail to mention the years when employees got their 3,4 and 5% raises, presumably because you're including budget years prior to the present council or excluding recent years because they don't fit your argument. The fact is that, except for the police, no employees got any raises or cost of living increases in the past 2 years, nor are any budgeted for the coming year. The only reason the police received a raise in 2009 was because salaries were apparently too low to retain officers as nearly 80% had quit during the previous 2 years. In other words, Council has taken meaningful steps to control employee costs since the recession struck. Why can't you acknowledge that? Because it doesn't fit your argument that the system is broken and requires citizen intervention through the initiative to save it?
Why am I not convinced?
Again, my source of information is the City newsletter. Is it incorrect or are you?
Thank you for stating the facts, at the end of the day I'm not sure why the founders of the pension inisitive have made this such a priority. Some how it is to their benefit or will be at some point, but they will not admit to it. Clearly if you read the facts the truth comes out.
You always hear how public employee unions are UNFAIRLY blamed for bidget defecits and how the unions are always willing to negotiate.
That's pure BS!
In terms of legal issues, I do not care!
Social security is a contract between the American worked and the government. If the government can change social security, then we the taxpayers can pay pensions.
In my opinion, the unions better be careful.
Americans are generous.
But if public employee unions continue their selfish campaign against some reasonable kind of compensation control, the backlash from the public will be even harsher.
I suggest they count their blessings, be thankful they have a job that pays good salaries and wonderful benefits - benfits NOT available to the people who pay taxes for the pubic employees get benefits.
Again total BS!
The rip off of the taxpyaer is ending. Tuesday night was just a start!
BCPW and Steve can cherry pick their data all they want be her are the facts in an excellent article from the Sac Bee:
Dan Walters: Another big mess left for Jerry Brown
Posted at 12:00 AM on Monday, Nov. 08, 2010
By Dan Walters - email@example.com
Much has been made and rightly so of the massive state employee pension giveaway that the Legislature and then-Gov. Gray Davis enacted 11 years ago.
Politicians of both parties justified the immense boost in pensions, one largely emulated by local governments, with a statement from the union-controlled California Public Employees' Retirement System that the trust fund could easily absorb the cost.
We know now that the CalPERS board had received several alternative cost scenarios from its actuaries but chose to send only the most optimistic to Davis and legislators, who accepted it as political cover without any independent analysis of its validity.
Pension costs have soared in the years since, putting a huge strain on an already deficit-ridden state budget and only this year did Davis' successor, Arnold Schwarzenegger, bulldoze the Legislature into a rollback for future employees.
The 1999 pension bill, however, was merely one in a series of abjectly irresponsible decisions by Davis and legislators during his recall-shortened governorship.
An even worse dereliction of fiscal responsibility was squandering what they knew to be a one-time revenue windfall on permanent tax cuts and spending commitments that were unsustainable, leading to the chronic state budget deficits ever since.
The least heralded of the big blunders but very much in keeping with the era's spendthrift ethos had to do with unemployment insurance. In 2001, Davis and lawmakers increased jobless benefits in stages from a maximum of $230 a week to $450 nearly twice as much with a rationale very much like the disastrous pension hike.
"Under current economic conditions, the UI Trust Fund should be able to absorb the cost without a rate increase over the next decade," said the state Senate analysis of the jobless- benefits bill. But it also added that "a severe economic recession" could exhaust the fund and lead to a payroll tax increase on employers.
The fund was hard-pressed to keep up with payments to the unemployed even when the economy was humming. And when a very severe recession hit the state a few years ago, it quickly ran into the red.
By the end of 2009, it was $6.2 billion underwater. The deficit is expected to top $10 billion by the end of this year and $13 billion a year later. Meanwhile, unemployment insurance payroll taxes have dropped with the recession. The state has borrowed billions of dollars from the federal government to keep payments flowing.
Schwarzenegger proposed increasing the taxable wage base from $7,000 to $10,500 and the tax rate by a third, but employers balked and it went nowhere. Thus, the jobless-benefits mess will be dumped on the desk of successor Jerry Brown, just like the budget mess and the pension mess, for that matter.
It's another example as if we need one of our dysfunctional government.
The topic of this thread is Measure L, which concerns pensions for city employees. It does not concern state employee pensions. Please stick to the topic or start a new thread.
As for me cherry picking information to suit my argument, if the impression created by Measure L supporters is that city employees have overly generous retirements and raises, factual information on those subjects seems not only germane but critical to this discussion. In this case, I was merely correcting the misinformation provided by POGO:
POGO claimed city employees paid nothing toward their own retirements; in fact they pay 8% to 9% of their salaries toward their retirement fund. Further, when the city is asked to pay more than normal contributions during market downturns, employees may have to pay even more to match the city contributions.
POGO also claimed city employees have gotten regular raises in recent years; in fact the Council has given them no raises or cost of living increases in 2009 and 2010 and the 2011 budget includes no raises or increases. The exception to this is city police officers who received a substantial raise in 2009 to stop the 80% attrition the force had experienced in 2008 & 2009.
POGO and Measure L supporters also ignore the fact that for many of the past 20 years, the city made little or no contribution to the employee pension fund because CALPERS earnings were so exceptional. Employees of course continued to contribute. So during those years, city funds that should have gone into the employee retirement fund instead went to support city services. Now that fund has experienced 2 years of negative earnings during the worst recession in 70 yers, the city has to contribute again. Instead of recognizing that an improving economy is already returning the pension fund to profitability ($20 Billion so far this year) the Chicken Littles of the community use this situation scare everyone into passing Measure L, more to punish their political enemies than to provide any real solution to the problem.
You may have read the weekend Palo Alto Weekly article that discussed how the Palo Alto City Council made the same mistake and also increased pensions for city workers back in 2007. Yet they seem to have begun to correct the resulting budget imbalance without all this hysteria we've seen in Menlo Park and without their citizens resorting to the initiative process to take power from the Council through action of dubious legal legitimacy.
So please respond to my arguments instead of trying to brush them away through spurious charges of cherry picking the data.
Nice rhetoric Steve. He said, she said, etc. HOWEVER, the entry above Peter and yours, "Joe" is absolutely dead on correct. There is a common sense rule to all of this, and your arguments are just not cutting it. As a tax payer, I want limited government, and good services at a common sense price. The police are next, and hopefully the fire district will be after that. I mean no harm to anyone, I don't want to get personal, I just want a fair and decent price, with continued cost controls. I don't care what the private sector makes, the union argues the 401K charge, the profit sharing charge, the stock ownership charge etc., the difference here is that about 20% of the private sector get this, not 100% of the employees. AND, what's missing from this argument is that the public sector operates with OUR money. We have every right to question it, to argue against paying for it, and then allow us to be held accountable if we cut too close to the bone. Unfortunately, for the public worker, the tax payer sees no bone, and all fat right now, and has for several years. Common sense Steve, common sense.
Peter and others -- For copyright purposes, it's better to post a brief outtake and a link to an article from another publication, rather than the entire text.
I'll address two of your points.
My direct quote was "at a time when private sector employees were experiencing layoffs and finding themselves lucky just to keep their jobs, our public employees were getting 3, 4 and 5% annual salary increases and not having to contribute to their health and pension benefits." Please delete "and pension" at the end of the quote - that was my mistake. I stand on all other points. When private employment was plummeting, our federal, state and local governments were not only adding jobs, they were getting raises. Nice touch.
You say that, except for police, Menlo Park's public workers didn't receive salary increases. Steve - police ARE public workers and the police payroll comprises a huge segment of Menlo Park salaries.
And unlike Calpers and unions, we aren't ignoring anything. I'm guessing they won't be happy until their pension checks look like those of auto workers. So I'll stand proudly with the two-thirds of voters who supported Measure L. It's small but it's a start.
I appreciate your acknowledging that you miss-spoke when you said city employees don't contribute to their own retirements. It takes class to admit that you've made a mistake and I've always taken you to be a classy guy (or gal - not too sure which sex a POGO is).
However, on your comments about raises I don't agree. You say that "When private employment was plummeting, our federal, state and local governments were not only adding jobs, they were getting raises." Well, to keep the focus on Measure L, I'll only address what local government did. If you look, unemployment in the valley didn't reach 5% until the first quarter of 2008 so planned raises for that year for city employees probably went ahead, so strictly speaking you're right. However, by 2009, as unemployment zoomed past 7%, the Council understood the situation and eliminated raises and COL increases for the following 3 years. The exception being raises that were targeted solely at solving a serious turnover problem in our police force. Officers were coming onto the force, going through a quite expensive training program, and then departing for other forces on the peninsula that paid better. At the time I don't remember reading too many letters arguing that this was the wrong thing for our Council to do. And it clearly did solve the problem of turnover. As for the other employees: no high turnover, no raises.
You still haven't provided the years that your "3, 4 and 5% annual salary increases" occurred.
My impression is that city employees and their unions are quite aware of the budget problems the city faces. Hence the successful negotiations by our Council to dial back pension benefits for new employees under one union contract, with the other contracts facing a similar 2-tier system when they come up for renewal. Seems to be working that way in Palo Alto as well, without the need for scare-mongering or a mean-spirited initiative like Measure L.
Sounds like you won't be happy until the city makes no contribution to city employee retirement funds (as is the case when CALPERS enjoys above normal returns, as it's done most of the past 20 years). I am intrigued by the defined contribution system you observed in the Netherlands but that isn't the system we're currently operating under in this country. Employers still contribute to employee retirements, whether defined benefit or defined contribution. Seems to me that's a fair system and one we should be supporting, not trying to kill.
If you are trying to solve a local problem it is wise to learn from others. Rejecting data from the State level makes no sense in that Menlo Park has chosen to participate in a State-wide pool called CalPers.
There are no reasonably achievable levels of interest income for CalPers for which can support the current level of retirement benefits without requiring significant new contributions by the participating agencies. Defined benefits pensions for public employees are neither economically or politically sustainable.
Steve... While I do not agree with your conclusions, I admire your arguments.
Peter. Your post above could be construed to imply that Menlo Park is involved with a pool with the State of California, allow me to clarify that Menlo Park's CalPers Pool is "Statewide", but is NOT a "State Employee" pool.
Thank you for your reply.
You said "I am intrigued by the defined contribution system you observed in the Netherlands but that isn't the system we're currently operating under in this country." Actually, we are. A 401(k) plan is pretty close to the plan I described.
The difference is that employees MUST contribute 15% of their wages into the plan - they are automatically deducted from every paycheck. This isn't so different from our current SSI and Medicare deductions which add up to 15% (when you add employee and employer contributions). I would just like to see that same amount go into a sequestered investment account.
As I said previously, even modest income earners will have several hundred thousand dollars which they can use for their retirement. The asset can be passed on to children or charities and influx of money into the investment community would fuel expansion.
I have no idea why we wouldn't do this for everyone under, say, 35 years old. It'll be far better for them than Social Security!
PS - This POGO has a stick.
Tax Payer -
Thanks for the compliment about my rhetoric but I think if you read what I said that it's mostly factual information about pension contributions and pay raises (or lack thereof). The rhetoric mostly comes from the Measure L supporters who rail about "unsustainability", "taxpayer ripoff" and "selfish unions".
You write: "As a tax payer, I want limited government, and good services at a common sense price." As do we all. As do we all.
The trouble is that saying you want "limited government and good services" is like saying I want to eat at a fancy restaurant but I want to pay MacDonald's prices. There's a degree of incompatibility in what you're asking for.
In fact, it's a balancing act between what we want and what we're willing (or able) to pay for. During flush times, we're willing to pay more for better services. During bad times, we dial back to save money. In the case of the city, we rely on our Council to handle this balancing act between income and services. And because services comprise almost 80% of the city's budget, this means balancing employee pay & benefits against revenues.
Was the Council too generous when they boosted pensions in 2007, albeit to save money by resisting a pay increase the union was pushing? Almost certainly. But this was happening in other cities as well. Palo Alto also raised employee pensions at the time, presumably to remain competitive with what other cities, including Menlo Park, were also doing.
Which brings up your third point about "common sense price". What is a "common sense price"? In our economy it's basically what the market will bear. Why do Wall Street execs earn $Millions when the average worker makes less than $50K? Because, we're told, that's what the market for execs will bear. Same with City workers. In 2007, the economy was doing quite well and hiring public workers was challenging because salaries in the valley were generally far better. To compete, cities like Menlo Park & Palo Alto had to make the jobs attractive to potential employees by boosting salaries or benefits.
Hindsight is always 20/20 so we can see the mistake now that we're in the middle of a severe recession. But why do we dump on our Council for their "irrational exuberance" at the time when they were far from the only ones behaving that way?
POGO.....Interestingly Government Employees have Defined Contribution programs. They are 403B's
I, for one, am not looking for McDonald prices at a fancy restaurant. I don't want my government to be a "fancy restaurant."
I take a very libertarian view - I want government to protect life, liberty and property. I don't want them doing things that can or are being done by private business (flood insurance, building stadiums for billionaire football owners, guaranteeing mortgages, and high speed rail, to name just four).
You want to cut spending? I'll bet you can find a few agencies from this list: Web Link And that's just California.
Harry Browne was the Libertarian candidate for President in 1996 and 2000. I recall listening to him being interviewed on the radio.
Mr. Browne asked, "Would you trade in your favorite government program if you could keep every dollar to earn to spend, save, or give away as you see fit?"
Stop and think about that question for a minute before you read on. You may have the same answer that I did... and, I suspect many people have.
"I don't have a favorite government program."
Precisely the point.
I'll tell you what I don't want. I don't want to be beholden to the stock market -- a casino in all but the word itself. Once we're all invested there, the corporations hold the whip. Mess with our profit mechanisms, they can then say, and you mess with your own financial security.
Of course, as we all know, corporations already hold the whip.
Social security is a vital, vital haven away from those animals on Wall Street.
And for that matter, the county investment pool should not have been using taxpayer money meant for school districts and other purposes for investments in commercial paper. (If commercial paper is an accurate description of the investment in Lehman Brothers.)
Since this thread is focused on Measure L and the issue of city services by city employees I'll keep my response limited to that arena.
I value our city libraries and the staff who maintain them.
I value our city police services that keep crime to a minimum.
I value our city firefighters for obvious reasons.
I value our city building department that makes sure buildings are up to code.
I value our city Rec center for the athletic & recreational services it offers our kids and adults.
I value our city utility & roads services that keep our sewer lines clean and our streets and sidewalks safe and in good repair.
Thanks POGO for giving me the opportunity to reflect on all the things about this city that I have to be thankful for - totally appropriate with Thanksgiving coming up in two weeks.
I suppose all of these services could be contracted out but I'm not sure we'd be seeing any savings if we introduce a profit factor for the middleman, not to mention the additional contract managers and inspectors we'd have to hire to make sure they were doing their job right.
If you'll recall, contracting out federal jobs was a big goal of the BushII administration that really didn't work out that well. Congress more or less let it die a natural death since it wasn't really saving the govt. much money but certainly was increasing the opportunity for corruption from contractors and their lobbyists.
You do you remember "Blackwater" don't you?
What you "value" and what your fellow citizens are willing and able to pay for are two very different things.
And if one of the things that you value is defined benefit public employee pensions then you need to be prepared to write a blank check to fund those benefits.
What I and my fellow citizens value and are willing to pay for is expressed at the ballot box every two years.
Did you realize that prior to the recent recession that for every four dollars CALPERS paid out in retirement benefits, three dollars came from their investment earnings and only one dollar came from employer & employee contributions?
I think you vastly overestimate the cost of a defined benefit program to the employers and vastly underestimated the potential of the investment markets to create wealth.
Have a little confidence in your country man!
Steve states:"Have a little confidence in your country man!"
I have a great deal of confidence in my country but that is very different than having any confidence in either the stock market or CalPers investment returns. Writing blank checks in order to guarantee a fixed benefit plus cost of living increases for retired public servants is not an act of faith but an act of insanity.
And yet the California Public Employee Retirement System has been "guaranteeing a fixed benefit plus cost of living increases for retired public servants" successfully for almost 80 years. And they still have the largest public pension fund in the country with assets of over $200 Billion.
Somehow this doesn't seem insane to me.
Past success in the stock market does not guarantee future performance.
And the record of 80 years of successfully funding past low payout retirements pales in comparison to the challenge of successfully funding the dramatically more expensive retirements which will occur under the current benefit schedules.
One more thing for you to consider, though I admit it's outside the scope of this thread. On the other hand, you're the one who steered the discussion toward state workers so perhaps you'll appreciate it.
The current issue of Newsweek magazine has a small story about a report out of UC-Berkeley that finds California state workers "make about 7 percent less than their peers in the private sector. The gap is widest for jobs in law, finance, and engineering. But it's apparent across the board even though public employees are, on average, more experienced and better educated."
It does go on to say that benefit packages bring the compensation to about even but that "there's no need for targeting public employees; they're neither overpaid nor overcompensated".
Full story at Web Link
I'm glad you appreciate all of those things provided to you by your government tax dollars. As I said, I take no issue with government's role in protecting life, liberty and property. That's what government SHOULD do.
But some of those things you cited are nice to have, not need to have. Libraries are quickly transforming into computer work stations and you can access the entire world's library from the convenience of your laptop at home. In a few years, there won't be libraries. It's already happening - sad, but true. And some of the functions you noted are already outsourced, like plan checking at building and zoning departments.
But let's get back to what I consider to be the most basic functions of our current government. Our roads are falling apart and there doesn't seem to be any money or effort to fix or maintain them. Our educational performance continues to decline - we pay more and more and get less and less. Our state prisons have a 75% rate of recidivism. It's been 20 years since Loma Prieta and they still haven't replaced the Oakland Bay Bridge. Almost 10 years after 9/11, Homeland Security still doesn't screen cargo and baggage in airplane bellies.
Where are our priorities?
Our government ignores its trillions of dollars of debt, uncontrolled spending, and unsustainable public employee growth, compensation and pensions, but still has time to outlaw toys in McDonald's Happy Meals and ask BevMo not to sell liquor singles at their door. (And yes, I know I mixed federal, state and local issues. It was intentional.)
Again, where are our priorities?
Do you think we could find just a few of the more than 500 California commissions that we might consider eliminating? Web Link
How about starting with the bipartisan panel's recommendations that just came out this morning? Web Link
Among many items:
1) eliminate mortgage deductions to allow income taxes rates to drop to 8% for the low bracket up to 23% for the highest bracket
2) double the gas tax from 15cents currently and devote all income to fixing & maintaining highways, etc. w/o dipping into general revenues as now happens
3) reduce the corporate tax rate from 35% to 26%
These and other recommendations are estimated to shave $4Trillion off the national debt by 2020.
The Deficit Panel's recommendations are all great ideas - and worthy of a new topic.
I'll answer your question. I agree with all of the recommendations. In fact, I'm for eliminating the home mortgage tax deduction completely. Why discriminate against people who rent? You left out some of the most important recommendations which involved raising the retirement age and several reforms to SSI. I support all.
Now answer mine. What California commissions would you eliminate? I gave you a list of more than 500. Must be one or two that we could erase.
I agree that out of 500 commissions there are very likely some (many?) that could be retired. I just don't know enough about what any of them do to say which should go, which should stay.
Perhaps the incoming governor, who was known a Governor tightwad back in the early 80's, will want to ask for a zero-based budget for all of them and then decide based on what justifications they come up with. It might not be a bad idea for most state agencies to go through that exercise as well to assure that their programs are actually producing useful and necessary results for state citizens. I don't think there would be vast savings since the legislature's already been cutting near the bone for several years. However, an internal review could still turn up some inefficiencies or duplications that could be trimmed.
Here is what our incoming governor faces:
"California faces a $25 billion deficit through the next fiscal year, its budget watchdog said on Wednesday, just weeks after leaders of the most populous U.S. state closed a $19 billion gap and days ahead of a planned sale of some $10 billion of state debt."
This is an operational definition of "unsustainable."
Like cutting your family budget, there's rarely a single item that is going to make a big impact. That doesn't mean you don't cut back where you can. You stop going out to eat, stop going to movies and it adds up. It also sets a tone of frugality.
As Everett Dirksen said, a billion here and a billion there, and pretty soon you're talking about real money. California has to find $20 billion in cuts (and that doesn't even begin to impact the pension liability).
We can no longer afford the luxury of having all of these employees at state agencies duplicating other services or doing things that may be nice to have, but not need to have. You have to start somewhere.
I don't share your confidence that Mr. Brown will make the hard cuts. I hope I'm wrong.
I don't know about Brown. He could surprise us because he's viewed by many to be a standard liberal, big spending Democrat. Like Nixon was able to go to China because no one thought he was soft on Communism, Brown could take a hard line on fiscal matters because no one questions his liberal pedigree.
The question is, will he be able to lead the Dems in the legislature any better than Schwartzenegger was able to lead the Repubs? Like the bipartisan commission showed in their draft yesterday, the national deficit can't be solved with budgets cuts alone - some tax increases will be necessary - Brown can't pull California out of a $25B annual deficit by cutting programs alone. He too will have to figure out how to raise taxes. And in a state (one of only 3 in the country) where a tax increase requires a 2/3 supermajority in the leg, that is going to be very difficult.
Not sure you read the Deficit Panel report very carefully. They cut $3 in spending for every $1 in raised taxes. I like that ratio. Under their proposal (still unofficial), the top tax rate will be reduced to just 23%. And as I said earlier, I have no problem with a simple system that eliminates most deductions, including the mortgage interest deduction.
From today's Washington Post:
The plan also calls for a major overhaul of both the individual income tax and the corporate tax systems with the idea of lowering overall tax rates, simplifying the tax code and broadening the taxpayer base.
For individuals and families, the proposal would eliminate a host of popular tax credits and deductions, including the child tax credit and the mortgage interest deduction. However, it would significantly reduce income tax rates. The top rate would drop from 35 percent to 23 percent.
The deduction that companies take for providing health insurance to their employees would be eliminated, but the corporate income tax rate would be reduced from 35 percent to 26 percent, and the government would stop taxing overseas profits of U.S.-based multinational corporations.
I bring to your attention the PowerPoint slides that were released on Wednesday by the "Deficit Commission."
If you scroll to slide 38 (there are about 50 in all) and note that the co-chairs are proposing that federal workers be made to contribute 1/2 of their pension expenses instead of the current 1/14 of the cost.
That comment alone should tell you a lot about the state of our public worker benefits programs.
First, the tax increase I was referring to was actually Bush's tax cuts. The commission outlined 2 scenarios: one where the cuts are allowed to lapse and one where they are extended indefinitely. If they are allowed to lapse, the deficit is reduced by $4Trillion. If they are extended, the deficit will increase by $4Trillion. I got the distinct impression that the commission wants the tax cuts to expire, if not at the end of this year, at least by 2012 when they expect (hope?) that the economy has revived.
Second, has to do with the PowerPoint slide you referred to regarding Civil Service pension contributions. I have no idea where they get the "1/14 of the cost" value. I do know that employees under the old defined benefit system pay 7% of salary into the fund. Newer employees (since 1984) pay 0.8% into a smaller defined benefit fund and 6.2% into Social Security. So as far as I can tell, all feds are contributing 7% of salary to their retirement. If this is only 1/14 of the total and they want to increase it to match, then feds are going to be contributing 49% of salary to retirement, which is nonsense. I have to wonder what the real numbers are.
In digging up more info on where the 1/14 of pension cost value came from I came upon the following section from a recent report to Congress called "Federal Employees' Retirement System: Benefits and Financing" Web Link
"Financing Pension Benefits for Federal Employees
As of September 30, 2008, the CSRDF had net assets of $734 billion available for benefit payments under both CSRS (the old Civil Service Retirement System) and FERS (the newer Federal Employee Retirement System). At the same time, the accrued actuarial liability under the CSRS and FERS plans was $1,408 billion. In other words, on October 1, 2009, the civil service trust fund had an unfunded actuarial liability of $674 billion. All but $1 billion this unfunded liability is attributable to CSRS.
Federal law has never required that employee and agency contributions must equal the present value of benefits that employees accrue under the CSRS. In contrast, the FERS Act requires that the benefits accrued each year by employees must be fully funded by contributions from employees and their employing agencies.
Although the CSRDF has an unfunded liability, it is not in danger of becoming insolvent. According to the projections of the actuaries at OPM, the assets of the CSRDF will continue to grow over the next 70 years. The fund's assets will reach $1.1 trillion in 2020, $2.4 trillion in 2040, $6.5 trillion in 2060, and $15.3 trillion in 2080. Actuarial projections indicate that the CSRDF will be able to meet its financial obligations in perpetuity. According to OPM, "the total
assets of the CSRDF, including both CSRS and FERS, continue to grow throughout the term of the projection, and ultimately reach a level of about 4.1 times payroll, or about 19 times the level of annual benefit outlays."
One reason that the CSRDF will not exhaust its resources is that all
federal employees hired since 1984 are enrolled in FERS. By law, the benefits that employees earn under FERS must be fully funded by the sum of employer and employee contributions and interest earnings.
Thanks for you replies, Steve.
With regard to your analysis of FERS and CSRS, I'll defer to the Deficit Commission and its team of economists. I seem to recall that federal employees contribute something like 0.5% of their income to fund pension costs and that the commission is asking them to fund at a 7% rate (which represents half of the true cost). Seems reasonable to me.
With regard to your comment that allowing the "Bush Tax Cuts" to expire is appropriate, I would only point out that the current tax rates have been the status quo for ten years. Ten years is the LONGEST period of time in our country's history that we have had the same tax rates (we also did that in 1954-1963 and 1971-1980). For that reason, I don't view the current rates as temporary at all.
Anyone who has taken Economics 101 knows you don't raise tax rates during a recession or recovering economy. Apparently I have bipartisan support for preserving the current tax rates for the immediate future. Even the Deficit Commission we've been discussing agrees and thinks we should LOWER rates even more and eliminate deductions. I concur.
Temporary or not, the Bush tax cuts have been the single largest cause of the structural deficit in this country and will have added $2.3 Trillion to the federal debt by the end of next year. If you are serious about reducing the debt, you can't be serious about retaining these tax cuts. OK, maybe for a year or two until the economy recovers. But long term? Only if you don't mind increasing the long term debt by $300 Billion per year.
As for the commission's comment that federal employees, only contribute 1/14 of the cost of their retirement, they must be talking about those in the newer FERS system, created back in 1984. Feds in the older Civil Service Retirement system definitely contribute 7% to 8% of salary to a pension plan that pays about 2% per year of service after 30 years. They pay nothing to Social Security since they don't qualify for it.
Feds in the newer Federal Employee Retirement system pay 0.8% toward a reduced pension that pays about 1% per year of service after 30 years. They also pay 6.2% of salary into Social Security, which they qualify for.
Retirement deductions for both CSR and FERS add up to 7%.
If FERS employees are required to increase contributions to match that of the government they'll end of contributing 5.6% toward the pension fund. Add their SS contributions and they'll end up paying almost 12% of salary toward retirement.
The FERS system is already considered by employees to be inferior to the older CSRS. This will end any debate.
Steve said, "If you are serious about reducing the debt, you can't be serious about retaining these tax cuts." Actually, I'm not saying that, Steve, Republicans and Democrats alike are now saying that... especially those 23 Democratic Senators who will stand for re-election in two years. In fact, except for Paul Krugman, I'm not aware of anyone who ISN'T saying that.
Steve also said, "As for the commission's comment that federal employees, only contribute 1/14 of the cost of their retirement, they must be talking about those in the newer FERS system, created back in 1984." So, yes, technically they are only talking about those federal employees who have 0 to 27 years of service. I don't know the precise statistics, but many federal workers retire at 30 years, so you are correct, they aren't including that very small percentage of federal workers with 28 to 30 years of service.
It's bit disingenuous to suggest that the commission's reform is only "talking about those in the newer FERS system." You know perfectly well that qualification encompasses the vast majority of federal workers - probably 95% of them! In my book, that's meaningful reform.
You also say that "...add their SS contributions and they'll end up paying almost 12% of salary toward retirement." Welcome to the club. So they get TWO pension programs - Social Security AND FERS for their "almost 12%" contribution. Are you aware that in the private sector, we (employer and employee combined) contribute MORE than 12% (12.4% to be precise) for just Social Security? And self-employed people pay the full 12.4% themselves.
I don't feel the least bit troubled asking public employees to pay just half of their pension benefits. Apparently, I'm not alone...
Sadly you're right that most politicians in Washington are pushing to increase the debt by either $2Trillion or $4Trillion but letting the Bush tax cuts expire.
The Republicans want to make the tax cuts permanents for all, which will add $4 Trillion in debt by 2020.
The Dems want to make them permanent for families earning less the $250,000, which will add "only" $2 Trillion in debt by 2020.
Official and independent budget estimates show that letting tax rates spring back to pre-Bush levels for all taxpayers would bring the country within striking distance of meeting President Obama's goal of balancing the budget, excluding interest payments on the debt, by 2015. Seems that that would be the most straightforward way to quickly get our fiscal house in order.
Can you start another thread on this taxation subject. This is about Measure L.
You're right, Roy... apologies.
It happens sometimes!
After chastising Peter for drifting off-topic, I'm a bit embarrassed to be caught doing the same. Thanks for being a good referee and making the call.
To get back on-topic, I want to quote from a letter Heyward Robinson sent out to his supporters that, among other things, gave his view as to why he lost in the recent election. One factor he identified was Measure L, and he wrote:
"I was the only candidate to oppose Measure L. I do not believe setting pension rates, or similar complex decisions, should be made at the ballot box. Given Measure L's popularity, the politically smart position would have been to stay neutral or support it, but I was not willing to compromise on this principle."
His second sentence explains why I too opposed Measure L and why I supported Heyward. I too believe complex labor negotiations should not be decided at the ballot box. The voters in general do not have the time or interest to understand all the issues involved. If they're given the responsibility, they tend to vote based on perception or emotion, rather than taking the time to learn both sides of the issue. Even in a community as well educated as Menlo Park that is what happens. That's why we elect our fellow citizens to City Council to represent our interests in the complex and tedious discussions of issues that face our community. Why we think the citizens are better positioned to decide on labor negotiations that they don't participate in is beyond my understanding. Yanking this power from the Council flies in the face of precedent and probably of state law. It also strikes me as unAmerican in it's disavowal of representative democracy.
Heyward may have lost but I salute his integrity for standing up for his beliefs, even though it probably cost him the election.
While I would love to thing Measure L cost Heyward the election, it did not. His self imagined air of superiority, arrogance and demeanor with the public did WAY more damage, and I believe cost him the election. Quite frankly, if not for the costly public smear campaign against Chuck B., I think Heyward would have come in 5th in a six man race.
And while I respect your right to an opinion on what you don't like about Measure L. Greater than 72% of the voters disagreed with you and voted to make it the "Law of the Land" in Menlo Park.
Complex Labor Law is NOT being decided at the ballot box, we expect our elected officials to negotiate with our employees. We simply require voter approval prior to giving out a 60 year payment annuity increase to an employee. The thirty years of employment plus retirement period is a long term debt (longer than any bonds currently in the city) and that is NOT something that should be decided on in the middle of the night by 5 people [we don't let them do that with bonds]. Many cities in the USA and CA have laws like this on the books already. You saw how San Francisco voters rejected their pension change, we as taxpayers and residents should have that right too.
the problem with your opinion that the city council should be negotiating for us and we should not be directly involved, is that one, they are in many cases, beholden to the unions and therefor not inclined to negotiate truly on our behalf. On the second hand, they are at a severe disadvantage. The unions employ professional negotiators that do nothing but negotiate union contracts. The people they are negotiating against are basically a bunch of amatures. When you combine those two things you have someone that is not capable of truly representing the voters. Hence, in this case, the voters stepped up and INSISTED we have a seat at the table.
Menlo Voter -
I know that it is a common perception that Council members are "beholden to the unions" but I have yet to see any real proof of this. If you have evidence, please present it but until I see something factual, I'll treat this statement as innuendo, rather than fact.
I know 3 of our current Council people personally and they are all fairly independent thinkers that don't even get along that well with each other much of the time. To think that they would blindly vote to support whatever the union wanted just doesn't jibe with what I know about them.
I think that it is a simplistic and unsubstantiated charge that is all too easily bandied about to try to discredit these hardworking and dedicated people who, for reasons I can't fathom, chose to run for city office.
You chide the council for being amateurs but then go on to say: "the voters stepped up and INSISTED we have a seat at the table." So people who have NOT been involved in negotiations and who AREN'T AWARE of the pros & cons of the argument get to make the final decision.
Talk about amateurs!
yes, we want a seat at the table. we're tired of our elected representatives pissing our money down a rat hole. If you want proof that some of our council members are beholden to the unions "just follow the money."
You still haven't provided any evidence that the Council members are beholden to the unions . "Follow the money" proves nothing. It's a trite phrase that doesn't demonstrate anything except - perhaps - your own cynicism.
Spare me Steve. You know there are council members that have taken money or assistance from the public employees unions. do you honestly think those unions give that money or aid with no quid pro quo expected?
Menlo Voter -
Call me naive but yes I believe our representatives have more integrity than to sell their votes for a few thousand dollars of campaign contributions. I believe that elective positions like this attract the sort of civic-minded individuals who volunteer their time & energy because they think they can make a contribution to their community - not because they're out to make a few sleazy bucks.
That you're so willing to think the worst of your neighbors - without a scintilla of proof - says much more about you than it does about them.
its not just that they might vote a certain way for the support the unions have provided it is also fear of the unions turning on them and putting up large sums of money to unseat them. You can think these people are just being civic minded all you like, but they are human and have egos. If you don't believe that, go to a few council meetings and you'll get the idea.
You used the word "naive." I don't think it's naive because that word implies some level of innocence. I actually think it's delusional to even suggest union money does not influence politicians. Using your logic, I suppose corporate money (ie, Citizens United v. Federal Election Commission) doesn't influence politics either.
On a national and state scale, the single largest contributor to political campaigns are our public employee unions. Web Link and Web Link And what do you think they want, Steve?
On a local scale, the mere threat that the firefighters or police union will actively work against a candidate is palpably real. We've seen it before and it works. And if you think that kind of threat doesn't get the attention of a candidate, perhaps I should take back what I said about you being naive.
Surprisingly, I don't object to unions pursuing their selfish interests. But I do object to our elected politicians failing to represent the interests of citizens and taxpayers.
Menlo Voter -
Let's be clear. SEIU Local 715 made no direct contributions to either Rick Cline's or Heyward Robinson's campaigns in 2006. Nor as far as I can tell from the Almanac archives, did they contribute to Andy Cohen's or Kelly Fergusson's campaigns in 2004 and 2008. So there were no union dollars directly supporting the campaigns of any of these four council members.
The union did endorse all of the above and did independently campaign for their election. Seems to me that the Union's expression of their preference is well within the bounds of acceptable behavior in our democracy - especially in light of the Citizens United ruling as POGO points out.
So a question: does the independent endorsement of the Union automatically mean that the supported council person is in the Union's pocket? I think that's a ridiculous assertion. Does it get the attention of the Council person? Probably.
It gets back to the question of integrity and, as I said above, I believe our representatives have more integrity than to sell their votes for a few thousand dollars of campaign contributions. Or - now that we know there were no direct contributions to their campaigns - a few thousand dollars of independent campaigning.
I guess we'll just have to agree to disagree. It is clear to me and most people that the unions have influence with politicians. Otherwise why spend the huge resources that they do campaigning for different candidates, or more importantly against some candidates? Why do many industries have PACs? Because they can garner influence with politicians. Seriously, if you don't think the unions have influence with those they endorse and spend money campaigning for then I guess you are as you said, "naive."
I think there's something we both agree on!
"I do object to our elected politicians failing to represent the interests of citizens and taxpayers."
I absolutely agree with this statement. If I felt council members were not doing so, I wouldn't vote for their reelection.
Where I think we disagree is that in 2007union negotiations you believe that the council was acting in the Union's interest, not in the city's interest, in agreeing to the pension increase. I look at that decision in the context of the times and am convinced that they were working in the city's best interest by making it easier for the city to hire/retain city employees.
Hard to believe but in 2007 the unemployment rate in San Mateo County was only 3.8%! The problem local governments were facing was finding people willing to work at the salaries being offered - you'll recall that there was an 80% (no typo!) turnover in the Menlo Park police department in 2006/2007. Cities up and down the peninsula were boosting employee benefits to try to attract and retain employees. In fact Menlo Park was late to the game and was offering employees pensions of only 2%@55 while Palo Alto, MountainView, and Redwood City, among others, had already enacted 2.7%@55 pensions for their employees.
In reviewing the Feb 2007 MOU that came out of those labor negotiations Web Link it's clear that our council members considered themselves to be working in the taxpayers' interest. The MOU shows they were able to negotiate an increase in pension benefits that would make them competitive with neighboring cities. It also shows that they planned to offset the the increased employer contribution by certain employee concessions that included delaying pension enhancements for 30 months and reducing cost of living increases to offset salary increases. The agreement was calculated to be cost neutral to the city.
Moreover, with CALPERS experiencing nearly a 20% return on it's investment funds that year, they had every expectation that CALPERS would waive much of the increase, as they did from 1999 to 2004 when the city made absolutely no employer contributions to the pension fund at all.
What neither they nor anyone else could predict was the worst market crash in 80 years just 18 months later. This near-depression caused a drop in both city revenues and CALPERS investment returns just as the delayed costs for the increased employee benefits were beginning to hit. And the "you know what" hit the fan.
Given the changed financial situation, the new benefit structure looked unsustainable (I'll leave that argument for another thread). The council recognized this dramatic change in the city's financial position and, along with other councils up & down the peninsula, renegotiated a 2-tier pension plan when the SEIU contract came up for renewal in 2010. In both sets of negotiations it seems obvious to me that the council was acting in the best interests of the city, given the different situations that existed in 2007 and 2010.
You and Roy and Menlo Voter can rail against the unions and charge the council members with being "in their pocket" but I don't believe that the facts bear this out. I further believe that if Measure L had been in place in 2007, the voters of Menlo Park would have approved the pension increase, based on what surrounding city councils were doing to secure a stable workforce.
Why you continue to argue that Measure L was necessary in any way eludes me. Certainly few, if any, of our neighboring cities have felt the need to pass such an initiative. Instead, they're dealing with the new fiscal realities as our Council has already done - by renegotiating 2-tier pension plans that revert to the 2%@55 for new employees.
I continue to believe that Measure L was not only completely unnecessary but that it may well have unintended consequences in the future - unintended consequences in addition to those of defending against a lawsuit and increased animosity toward city employees that that it has already caused.
Thank you Steve. I do not agree with all of your points, particularly the idea that Measure L was unnecessary, it did after all send a very needed message, but I really appreciate your thinking and writing.
Menlo Voter -
You ask "why spend the huge resources that they do campaigning for different candidates, or more importantly against some candidates?"
My answer? For the same reason that I contribute to and campaign for one candidate over another: because I believe they are more likely to represent my interests.
I don't think, just because I contributed to Heyard's campaign and distributed his literature, that I can tell him how to vote. I can let him know how I feel and hope that he will take that into account when he considers all the issues involved. But whether he does or not is beyond my control. And that's just how I want it. I have my own parochial interests while he has the larger interests of the city to consider. However, given my knowledge of Heyward I feel more confident that his interests will align with mine than I would if Lee Duboc had been elected, which is why I supported him & not her.
The same with the unions. They can tell which candidates are most likely to support the interests of city employees. They'd be nuts not to "invest" in getting those candidates elected, even though if they succeed, they'll have no more control in how they vote as Council members than I do.
We don't have to invoke bribery or soft corruption to explain what's going on with Council elections. It's merely voters & businesses & unions, etc. supporting with money, time, and votes the candidates they think will be most likely to support their particular interests.
As long as we can attract public-spirited citizens with intelligence, character, and integrity we shouldn't have to be unduly concerned about such corruption, especially since we don't pay council members all that well.
What concerns me is that unsubstantiated charges like this will discourage just such citizens from considering running for these offices. And we'll all be worse off as a result.
Thanks for your kind words. I use these blogs to help me sort out my own thinking about these issues so I'm pleased that you and others are also continuing to consider Measure L and may be interested in what I'm thinking too.
For some reason Measure L struck me as the wrong solution to the mistake (in retrospect) that the Council made back in 2007. To my mind Measure L was a sledge hammer solution when a ball pein hammer would have sufficed. I think this for two reasons:
First, I have an aversion to the initiative process given the havoc it's wreaked at the state level with Props 13, 1a, 98, 3-strikes, term limits, etc.. I'm distressed to see it introduced now to local politics where it may well have similar unintended results. The problem with an initiative is that, unless it's declared unconstitutional by the courts, it's almost impossible to kill. If the Council makes a mistake, they can correct it at any time. If they're belligerent and refuse to, they can be voted out and the mistake corrected by their replacements. A bad initiative can only be corrected by a new initiative that is passed to kill the first. And how many such initiatives have you seen in your life?
Second, if this initiative was so absolutely necessary here in Menlo Park, why was it not necessary for the dozens of other communities in the Bay Area and throughout the state that had also raised their pension benefits to 2.7%@55? They seemed to respond effectively to the new fiscal reality without the need of such a heavy-handed response. Almost alone among communities in this state Menlo Park decided that a stronger remedy was required.
Why would individuals in the city go to all the trouble of gathering signatures to get an initiative on the ballot, especially after the Council had begun to fix the problem when they negotiated a 2-tier pension plan with SEIU way last spring? It makes me think there was more going on here than a genuine desire to fix the problem. Political retribution as some have suggested? I don't know the answer but I do believe that this initiative does not reflect well on Menlo Park.
"Why would individuals in the city go to all the trouble of gathering signatures to get an initiative on the ballot, especially after the Council had begun to fix the problem when they negotiated a 2-tier pension plan with SEIU way last spring?"
Because it could be renegotiated later with no voter input. We want input into the process and not just after the fact. AFTER the council votes to jack up retirements to unsustainable levels we can get rid of them, but the damage is done. We want input BEFORE they can put us in that position again.
Menlo Voter -
Of course the last time the Council did this was in 2007 when it wasn't clear to anyone that increasing the pensions was unsustainable, as evidenced by the fact that Councils up and down the peninsula and throughout the state were doing the same thing.
As I pointed out above, the documents from those meetings indicate the Council was acting in a very responsible manner in terms of taxpayers' best interest . Had Measure L been in place at the time I have no doubt the voters would have approved the Council's decision. It wasn't until the market crash 18 months later that it became clear that that it hadn't been such a good idea.
The point is, even with Measure L the city would very likely be in exactly the same position it is today. Measure L would not have changed anything.
Just because everyone does something doesn't make it right, Steve. W
hen Congress authorized the use of force after September 11th, the vote was 420 to 1. Did that make it right?
Not every employer opened their piggy bank to employees during the boom days. And even if they did, salaries and benefits (and rates of unemployment) have certainly rationalized since then... at least in the private sector. The reason? Sustainability. Apparently a word that the SEIU and our elected officials do not comprehend.
You are correct that if voters trusted their elected officials, they wouldn't need Measure L. With regard to the pay and benefits that council members continue to dole out to public employees, apparently voters apparently have had enough.
The fact that you don't seem to want to acknowledge is that times were different 4 years ago and judging Council's actions then by circumstances today is patently unfair.
The sustainability problem back then was sustaining a workforce with unemployment less than 4% in the county. Public workers were leaving because they could get better jobs in the Valley or in neighboring city governments. The Council acted responsibly and did what other communities were doing to attract and retain employees.
At the time, the boost in pension didn't appear unsustainable with the Council deferring benefits 30 months and CALPERS looking like it would continue to pick up much of the tab for the city. Few if any voters at the time objected to what the Council had done. In fact, if Measure L had been in place at the time, I'm quite confident voters would have approved the Council actions. Measure L would have changed nothing.
It wasn't until 18 months later with the market crash that the assumptions underlying the pension increase were found wanting. But when almost no one in the country, from Ben Bernanke to Larry Summers to the gurus of Wall Street, predicted this crash, it seems more than a bit unfair that you should blame our Council for not anticipating it.
But then hindsight is always 20/20.
I'm not sure why you say "Sustainability. Apparently a word that the SEIU and our elected officials do not comprehend."
Didn't SEIU and Council just renew a contract in August reviving the 2%@55 pension benefit for new employees? Seems to me that both sides clearly get it. You may not want to believe it but it was in all the papers.
And as for your statement about "the pay and benefits that council members continue to dole out to public employees" you know very well that no raises or cost of living increases have been granted to any city employees since the police officers received a hefty raise in 2009, specifically to halt the 80% turnover of the previous two years. Other employees got nothing in the past 2 years, nor are there any increases in the FY2011 budget.
Facts are useful things POGO. You should pay more attention to them.
"The point is, even with Measure L the city would very likely be in exactly the same position it is today. Measure L would not have changed anything."
Then what is your objection? If it wouldn't have made any difference then it wouldn't matter if it was in place. If it would have made no difference then you should have no objection to it.
Steve said "no raises or cost of living increases have been granted to any city employees since the police officers received a hefty raise in 2009." Giving a "hefty" (your word) salary increase to a very large portion of your employees would seem to qualify as giving out raises in my book. And it happened just last year, well into the financial crisis. That's like saying except for their losses, the 49ers are having a pretty good year.
And that contract renewal you reference came only after unbelievable resistance and posturing from the SEIU. No, I don't think they get it, Steve. I think they are incredibly greedy and will keep soaking taxpayers for more and more until the turnip runs out of blood.
This thread is about the union challenging the recent initiative that only applies to new employees. If they are so concerned about sustainability and gladly acquiesce to new hires, why are they doing that, Steve? Why didn't Measure L enjoy their support?
Finally, you know perfectly well that union and public employees frequently post on this site telling us there is nothing for us to worry about because CALPERS has such an excellent record. They could be clairvoyant for the next two years and still not dig out of the hole they are in.
Yes, I think unsustainable is a perfect word to describe the status quo. Unfortunately for both us and every other Californian, we'll see the results of this little experiment soon enough as our state drives off a cliff at maximum speed.
Yes, facts are stubborn things, Steve.
I believe you're wrong about a several things.
First, you're wrong about the role of the SEIU in the police contract. SEIU represents employees other than police officers. They're the union that accepted the 2-tier pension system in renewing their contract last August, demonstrating they're not as greedy as you make them out to be. But SEIU didn't have anything to do with negotiating the police contract.
Menlo Park Police are represented by their own union (MPPOA)in negotiations with the city. It's a union comprised of "full-time police patrol officers, detectives and other non-management police professionals serving the citizens and businesses in the City of Menlo Park."
The 3-year contract the MPPOA negotiated was approved in April of 2008, well before the market crash in October of that year. However, rather than give police officers the raise all at once, the contract called for the pay increase to be phased in over 3 years. So the 2009 raise that you're complaining about was not something approved after the recession hit but something that was called for in a contract signed when the economy was still in pretty good shape. So you're wrong in what you implied about that too.
I should remind you that the raise for police officers was done in response to a very high, very expensive turnover among police officers the previous 2 years. The amount of the raise was intended to make Menlo Park's benefit package competitive with 12 surrounding communities, moving us from 10th place up to 3rd or 4th, still not the highest paid police among the group of our peers. It worked and solved the 80% turnover problem.
There was nothing greedy about what the MPPOA was asking and nothing unreasonable about the Council agreeing, given the circumstances at the time. You are wrong about that.
But it gets better.
To quote from the MPPOA press release of June 10, 2009: Web Link
"The City requested a contract adjustment to assist in balancing Menlo Park's fiscal year 2009-2010 budget and ease anticipated 2010-2011 budget issues."
"The majority of police officers will see a reduction in contracted pay of approximately 4% of salary each year for the remaining two years of the contract. This is an approximate $8,000 reduction of currently contracted income for each patrol officer. The change takes effect in July, 2009."
So during the year that you complain the greedy union was squeezing the last drop of blood from the city turnip, they were actually agreeing to a 8% cut in their benefits that they'd just achieved the previous year.
Seems to me you owe somebody an apology.
With all due respect, you're dissembling my post. Not cool...
I never said the police contract was the SEIU contract. With reference to the SEIU's role, I made specific reference that the SEIU doesn't get it from YOUR statement "...Didn't SEIU and Council just renew a contract in August reviving the 2%@55 pension benefit for new employees? Seems to me that both sides clearly get it. You may not want to believe it but it was in all the papers."
The SEIU has hardly been an honest or compliant player in this drama. They have consistently sought pay and benefit increases at well above market rates (and, unfortunately, received them from our elected officials), misrepresented the impending disaster of CALPERS recent investment performance, opposed every effort to reel in their unsustainable compensation, the most recent of which is their opposition to voters overwhelming approval of Measure L.
Don't believe me, check the title of this thread, Steve.
We have only to wait a few weeks and we can see how well our new Governor fares. As I said, he's taking the wheel just as we are about to experience lift off.
I'm reminded of a report who once interviewed an experienced train engineer. The reporter asked the engineer what he would do if he found himself driving a train at full speed and saw another train on his same track, also at full speed, coming right at him. After thinking a few moments, he said, "I'd call my brother, Lester."
"Why would you call your brother, Lester?" asked the reporter.
"Lester ain't never seen a train wreck like this one."
You and I don't have long to wait for the denouement. I predict our pension liability will be the next major economic issue facing our state and it will be FAR greater than anyone ever imagined. We'll see who was crying wolf.
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- Menlo Park: The Willows
- Menlo Park: University Heights
- Portola Valley: Brookside Park
- Portola Valley: Central Portola Valley
- Portola Valley: Ladera
- Portola Valley: Los Trancos Woods/Vista Verde
- Portola Valley: other
- Portola Valley: Portola Valley Ranch
- Portola Valley: Westridge
- Portola Valley: Woodside Highlands
- Woodside: Emerald Hills
- Woodside: Family Farm/Hidden Valley
- Woodside: Kings Mountain/Skyline
- Woodside: Mountain Home Road
- Woodside: other
- Woodside: Skywood/Skylonda
- Woodside: Woodside Glens
- Woodside: Woodside Heights
- Woodside: Woodside Hills
- Belle Haven Elementary
- Corte Madera School
- Encinal School
- Hillview Middle School
- James Flood Magnet School
- La Entrada School
- Las Lomitas School
- Laurel School
- Menlo-Atherton High School
- Oak Knoll School
- Ormondale School
- Willow Oaks Elementary
- Woodside High School
- Woodside School
- another community
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