Current accounting rules allow cities like Pleasanton to keep public employee pension and retirement medical debt "off balance sheet" and out of sight from the general public. Only those willing to expend significant effort are able to discover the complete debt obligation picture of the city. Pleasanton had zero pension debt in 2003 before the significant contract give-aways to city employees. We now have a $180 million (Market Value of Assets) debt bill that is likely to grow and with no credible plan to bring it under control.
This situation is similar to a family who makes the claim that all is well and they are living within their means while charging all expenses in excess of income to a secret no-limit credit card that is hidden away. GASB, the accounting standards board, is so concerned about this misrepresentation by government agencies that it is changing accounting rules next year to force greater disclosure.
This lack of complete and open disclosure can lead to poor decisions and outcomes. It fools people into believing that things aren't that bad and so they can put off difficult decisions -- essentially "kicking the can down the road." Unfortunately, this mindset was on display Tuesday night at Pleasanton's City Council meeting during the discussion of the next police contract. It was quite disconcerting to see several City Council members equivocate and ask questions with the hope of minimizing the problem. However, there was no way around the simple and direct point that John Bartel, an actuarial expert, made. Pleasanton's unfunded liability and therefore its pension expenses are likely to increase regardless of CalPERS' likely investment returns.
Many continue to try to blame this predicament on the Great Recession. Yes, the recession has aggravated things but is really only a receding tide that has more quickly exposed underlying issues (as acknowledged recently by the League of California Cities). It was a mayor/City Council in 2003, wanting to get elected to higher office and/or re-elected, who voted in an unaffordable employee contract. It was subsequent councils and city management who supported and voted in additional unaffordable employee contracts and ignored the mounting unfunded liability and personnel costs. The current City Council was set to approve another unaffordable employee contract late last year until there was significant push-back from the community.
With all the compelling data that proves the unsustainability of the current situation, it is disappointing and a bit amazing to realize that the reluctance of some council members may cause the City Council to not ask for full concessions from our labor groups as many other cities are already doing. If this happens, Pleasanton's unfunded pension liability will grow more quickly and personnel costs will continue to crowd out other city services. Keep this in mind when you wonder why an expanded library, additional much-need sports fields and other city amenities continue to get pushed off into the future.
I do hope that this council can find the courage to do what is right for the citizens of Pleasanton.