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Council postpones employee contract signing to hold public hearings on pension contributions

Original post made on Jan 19, 2011

With only three council members at the meeting, the City Council last night postponed consideration of a new two-year contract with the Pleasanton City Employees Association (PCEA), a union that represents 227 members.


Read the full story here Web Link posted Wednesday, January 19, 2011, 8:00 AM

Comments (250)

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Posted by Concerned Californian
a resident of Val Vista
on Jan 19, 2011 at 8:44 am

It's a shame that we the people had to shame the council into doing the right thing. But at least they are doing the right thing--many other cities have city councils in California with outright contempt for the taxpayor.


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Posted by Resident
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 8:55 am

8% is still not enough. In the private sector, we do not get a "pension" subsidized by an employer. Yes, there are 401Ks and matching funds, but nowhere do you have an employee put in 8% of their salary and retire with a full pension from that!

Public employees should be no different than private employees: they want a pension upon retirement? Save it from their own salary, we the taxpayers should not have to finance it. Either that, or the public employees should also be required to finance all private sector employees at retirement!


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Posted by A
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 9:31 am

Actually, public sector employees aren't doing as well as private sector employees.

Some interesting studies/commentary regarding private sector compensation vs. public sector compensation can be found at the following links:

Web Link

Web Link

Web Link


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 9:33 am

It is never enough for some people. Public employees are different from private sector. They don't get bonus' or social security. They provide a service and when everything is going well the work appears seamless. I think Pleasanton is doing a great job, that's why I live here. Thanks to all the employees and the City councils, past and present for their sound fiscal leadership.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 9:35 am

Well done to everyone involved. The three council members who showed up to what they knew was an important meeting deserve our appreciation for listening.

I hope a fair resolution can be agreed for both sides. I personally think we need to consider meaningful reform, but also need to avoid going to far on either side. 2% seems too little, 8% all at once sounds too far too fast to me.

Both sides appear to be reasonable and have agreed to sit down and discuss this further, so let's let this process happen in a reasonable way.


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Posted by it is hopeless
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 10:19 am

To "anonymous", why are public employees different than the private sector? They are performing a service I agree. But so is everybody else in the work world. You complain that they don't have social security. That is a problem. We should remove the pension system and allow public employees to join social security. Thanks for acknowledging that.

As for bonuses, public employees do receive bonuses. Our city employees have received them in the past.

As a private sector employee I do not get:
- job security
- a defined-benefit pension system that allows me to retire at age 55 with 80%-100% of my highest salary.
- a retirement system that I do not have to pay for
- medical insurance when I retire, for life
- a 41% raise in the last 8 years
- medical insurance for me and my whole family, for no cost
- dental insurance for no cost
- vision insurance at no cost
- as many holidays and vacation days as public workers

If the private sector has to pay for all of these benefits for public workers then it seems fair that the public employees pay for all of these benefits for private sector workers.


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Posted by to A
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 10:57 am

"Posted by A, a resident of the Another Pleasanton neighborhood neighborhood, 1 hour ago

Actually, public sector employees aren't doing as well as private sector employees.

Some interesting studies/commentary regarding private sector compensation vs. public sector compensation can be found at the following links:"


Web Link - this uses national numbers. California public employees start at more than the national average.

Web Link - garbage. This is a union commissioned study that only uses select data that support a predetermined conclusion. For instance, they don't even compare like jobs because "some" jobs like police and fire don't have private sector counterparts. I get that but what about all the jobs that do have similar responsibilities - like accounting for instance? I'm guessing those positions don't support their conclusion. They also include teachers in the study which helps skew the educational level of public employees while also comparing teachers that work about 175 days to private sector employees that work a full year.

Web Link - an article? How about the thoasands of articles, and common sense, that say otherwise. California pays public employees extremely well.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 19, 2011 at 11:06 am

Stacey is a registered user.

to A wrote: "jobs like police and fire don't have private sector counterparts."

Which isn't entirely true. There *are* private companies that provide such services. They just aren't very widespread. As you would guess, the cost is considerably less.


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Posted by junebug
a resident of Amador Valley High School
on Jan 19, 2011 at 11:57 am

I agree public employees do valueable work. However, so do private sector employees. Is my husband who works in a lab manufacturing medical treatments any less valueable? We contribute out of our own pay check 4% towards SSI like everyone else who makes under 100K per year. Plus we contribute out of pocket toward our own 401K, medical/dental benefits. The time has come to have a consistent program whereas either public sector pays the same rate into their PERS as SSI counter-parts as well as contribute to med/dental expenses. And, we have not received pay raises - in fact we have been given a 20% cut. Times are tough and everyone has to pitch in.


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Posted by resident
a resident of Downtown
on Jan 19, 2011 at 12:18 pm

I still think the key to this is to reduce benefits significantly for every year of early retirement. SS has now determined that age 70 is when people can collect the largest benefit but I would even be willing to give these people age 65 as the cutoff.
Retire before age 65 and take a 7% per year hit on your pension and your medical benefits for the rest of your life. That's what the PBGC does when they take over a pension plan from a bankrupt company, it is no different that what the city employees should have to do.
Pleasanton employees have reaped the benefits of a 41% raise since the last contract, they are well beyond the due date to pay some of it back.
Don't like it? Then quit and watch 200 people line up for every job opening.
for two cents -- "Both sides appear to be reasonable". Reread the comment from the union business agent. "she expected it to be approved. An estimated 45 city employees, who were at the meeting and are members of Local 955 applauded her statement." That does not represent cooperation, it represents a threat.


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Posted by Melinda
a resident of Canyon Meadows
on Jan 19, 2011 at 1:01 pm

I do not recall city employees complaining about other professions that were booming in the past. Those who were in the careers of real estate, computer technology, and etc. were making major profit gains. Who was complaining? Now that the economy has busted, why are we attacking city employees citing they make too much money? Actors and professional athletes make too much money in my opinion.

How about focusing on what matters the most... yourself! Stop attacking city employees who could quit there jobs or refuse to provide services for the community. And stop being jealous of those who chose a different career path then yourselves and are doing okay. We all choose our own career paths, sorry yours did not turn out the way you wanted. Quit and go work for a city!


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Posted by j
a resident of Birdland
on Jan 19, 2011 at 1:19 pm

Let's be adults and agree to focus on real issues. Financial times are admittedly hard (and not of Pleasanton's doing) and a thorough re-examination of the city's financial health, short and long-term, may well be appropriate. I frankly don't see how "fish bowling" the process -- which would never happen in the private sector apparently so beloved by some -- can improve the process. It is a political concession, and in my opinion a needless one that will only encumber the process of good governance. Nonetheless the Council has decided.

However whether this warrants dishonoring a short 2 year contract commitment, entered into in good faith after serious, thoughtful negotiations by both parties, is questionable. If the employee pension contribution concession agreed to by union and city negotiators isn't felt to be enough, then I suggest clarifying an end goal and establishing a measured, and therefore fair, mechanism to achieve it.

Meanwhile those on the fringe --ranting at government, villifying public employees, employing slurs and dismissive, insulting language, refusing to acknowledge any possible alternative views but their own -- should be politely but firmly edged off the stage.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 1:22 pm

"Depending on whose accounting formula is used, these liabilities range from $121 million to $290 million."

Nothing like using "statistics" to prove your point, right? Or maybe the liability is actually $1.2 billion, or maybe it is a $120?

That's the problem. You're standing behind an aura of authority by citing "statistics," but let's be honest--everyone's just guessing, because no one knows what's going to happen next week, next year, or 40 years from now.

If you really want to be safe, fund the whole thing now. Then it doesn't matter what happens in the future. Magic! The future liability becomes $0.00, and you won't have to lose any more sleep.


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Posted by resident
a resident of Downtown
on Jan 19, 2011 at 1:58 pm

"Now that the economy has busted, why are we attacking city employees citing they make too much money? Actors and professional athletes make too much money in my opinion. "
The reason that we are attacking public employees is because WE PAY THEM. I don't pay realtors, actors or athletes unless I sell a home, see a movie or attend a ball game. I have the OPTION not to pay them at all and no one has that option when it comes to city workers.
These people make a fair or better wage now but will retire as early as age 50 and live off of the taxpayers for the rest of their lives. Many of them will pay nothing (yeah, 2% might as well be nothing) into their retirement but will get 100% of the benefits for the rest of their lives.
That is not reasonable or sustainable. As a taxpayer who pays their salaries and will be paying for their retirement, I am going to do whatever it takes to cut that expense.


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Posted by Jacob
a resident of Canyon Creek
on Jan 19, 2011 at 2:20 pm

Well resident of the Downtown neighborhood, no matter what city you live in you will pay taxes and pay for city employee saleries. This does not make you any better than them. So, you should move to another city where they do not impose such high taxes nor pay their city employees the same as Pleasanton's. I am sure you will have a much better life in those cities....

BTW, city employees also pay taxes so in essence the money goes around.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 3:07 pm

b please, please do yourself a favor and everyone else and spend some time investigating the issue yourself. Reach out to the city and ask for the October 2010 CalPERS reports and do the calculation yourself.

If you do, you'll be able to answer your own question and won't have to rely on my "distorted statistics". The funny thing is you'll find out that the city would need to write a check for $290M (minus the portion for Livermore's portion of the fire department) in order to have a zero balance.

The really ironic thing is it is CalPERS themselves who are distorting the truth with their smoothing assumptions. This is one of the reasons why they are currently being investigated by the SEC.

Please put some effort into understanding the severity of our situation - at least as much effort as you spend on these blogs ;-)


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Posted by to b
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 3:15 pm

"If you really want to be safe, fund the whole thing now. Then it doesn't matter what happens in the future. Magic! The future liability becomes $0.00, and you won't have to lose any more sleep."

What a fiscally ridiculous statement. The fact that you use the word "Magic" in relation to solving the pension issue seems appropriate coming from you; given that "Magic" is a form of deception.

I guess b stands for Benda, or is it Brenda?


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Posted by Way to go Bart
a resident of Vintage Hills Elementary School
on Jan 19, 2011 at 3:53 pm

Melinda,

City employees recieved a massive increase in pension benefits in 2002. That is why we are upset.

Dial your pensions back and we will turn down the heat.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 5:30 pm

This is what happens if you let it go to far . . .it's best for all of us to create a sustainable path forwards.

Vallejo Plan Would Give Unsecured Creditors 5 to 20 Cents on the Dollar

Web Link

"The city regrets that it cannot pay a higher percentage," Vallejo officials said in the court filings. "The city lacks the revenues to do so . . ."

"Vallejo's exit strategy includes restructuring the debt owed to unsecured creditors, many of which are employees and retirees, by creating a $6 million pool of cash that will be paid out over two years"


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 6:09 pm

I was being sarcastic. For good reason. These projections are 100% guesses. No matter how much you crunch the numbers or how authoritative the reports seem or how seriously you take your favorite pundit, you can't change the real facts: you can't predict the future.

If you're uncomfortable with taking risk, the only solution is to write a really big check. But neither the city or the workers can afford to do that, so you'd better get used to a little volatility.

Know what would happen if real estate and stock market values returned to the values they were at a few years ago? This problem would be history, and you'd look ridiculous for putting all your cards on one historical timeframe that is an artificially low outlier,, compared with most other historical timeframes.

Yes, completely plausible. Statistically (assuming you actually believe in past performance as a predictor of future results), far more plausible than your scenario. But sometimes it is hard to see the forest. Yes, the past couple years have been hard. But that's all your numbers are telling us.


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Posted by resident
a resident of Downtown
on Jan 19, 2011 at 6:37 pm

"Yes, the past couple years have been hard."
No, you miss the point entirely. The past few years have been a gift from the taxpayers for all of you city workers. 41% raises, fully paid retirement and medical benefits. Hard??? Not even close if you work for the city.
It is well past the time for the city employees to be brought down to the reality of their worth. Their pay increased far too much and their benefits are not even in the realm of possibility. Personally, I would rather see us go the way of Vallejo and pay all of you a few cents on the dollar. It would make you long for an opportunity to undo some of your greed.
I will say it again, let them all quit and watch the people line up by the thousands to fill the jobs. We are paying far too much in pay and future benefits for what we are getting.


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Posted by D
a resident of Pleasanton Village
on Jan 19, 2011 at 7:49 pm

I'm a city worker in another city in the Tri-Valley. I pay OVER $500/mo for medical coverage for myself and my family. I haven't had a raise in two years and don't expect to get one in the next two years. We struggle every day because of the economy. My husband was out of work for most of last year and I worked by butt off to keep us in our home in Pleasanton. The economy going into the toilet was not the fault of the city workers. I hope that some of you get your facts straight and not blame the city workers for the economy. Blame the banks and the people who sold the bad mortgages, not us.


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Posted by Hmmmm
a resident of Pleasanton Heights
on Jan 19, 2011 at 8:17 pm

"I hope that some of you get your facts straight and not blame the city workers for the economy. Blame the banks and the people who sold the bad mortgages, not us."

But the banks and people that sold mortgages didn't impact your pension because the taxpayers have to make your pensions whole. My retirement is being squeezed by both Wall Street and the public employee unions.

Why can't I blame both Wall Street and Public Employee union Greed?


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Posted by T.M.
a resident of Pleasanton Meadows
on Jan 19, 2011 at 8:18 pm

Someone needs to tell Bart and Kay that the citizens have no right to be in on the negotiations, its between the employees and the management . I kept hearing last night at the meeting why the citizens were not involved. It doesn't work that way anywhere.


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Posted by P
a resident of another community
on Jan 19, 2011 at 8:20 pm

Walter, very well said

Oh you poor "Tax-paying citizens of Pleasanton." Life is so rough that all those beautiful parks, gorgeous homes, clean streets, graffiti free walls, and low crime rates mean nothing. It appears many of you like to jump on the bandwagon and speak with little knowledge by blaming those who make your city so nice for the root of the financial crisis. The facts have been clear for the past several years, the housing bust, banks, and Stock Market are the reasons for a failing economy… not the city workers.

Let us think about it for a minute; the city employees are doing a job that many of you would not want. In fact, many of you can enjoy your life, house, and fancy cars because of the job you possess. Many of your city workers do their job not because they have to, but because they want to give back to their community. In fact, many of your city workers possess a college degree and still choose to work for YOUR city. Furthermore, it would be interesting to note how many of YOUR city workers actually live in YOUR community of Pleasantville. I am guessing not many.

In addition, I'm guessing the majority of Pleasanton's city workers live in other cities because they cannot afford the high cost of living you "tax-paying community members" can afford. How about this, if you are so concerned about the taxes you pay, why not move to another city that is failing like Oakland, Antioch, and so on. See how much of your quality of life changes and your taxes will be much lower too. Remember, your city workers also have homes and families to care for. And like so many other American's, their homes have lost values, spouses have lost jobs, and have had to foreclose or short sale to sustain a life.

Now, some of you also criticize the police and fire department. Are you serious? Let me ask you this, asking for city employees and public safety personnel to contribute 2-4% of their earnings that is like taking a 2-4% decrease in monthly pay. So in essence, you are asking public servants to be just that… slaves to you! As a citizen of Pleasanton, when you call for one of these services how long does it take them to respond? Do they (Police and Fire) do their jobs effectively? Are they professional? Now, reduce their monthly pay (Now putting them in financial difficulty) and see how those attitudes change. How can you look them in the eye when you call for help and ask them for help after you have just reduced their income? But I guess for you Pleasanton residents it really does not matter does it? When you take your vacations on holiday weekends and enjoy being at home with your families at night and on holidays, these are the people who look after you. Yes, they are not home with their families; instead they are watching your homes and keeping your city safe.

If you really want to save the city money here is an idea. Stop having all those happy "Community of Character" special events. Downtown street fairs, antique fairs, that stupid tree on Main Street lit up year round, and etc. Oh that's right, it's the city employees who do all the work so that you have your Mayberry life. As for your City Manager, "MR CM" (Really, who has such an ego) he boasts about paying his 8%, but how about his other perks like monthly allowance for a car. Did the other managers really agree to pay 4% or were they demanded? Hmmm?

And who is this Bart Hughes? A "Business man?" Why doesn't he stick with running his own business versus trying to attack the employees who dedicate their lives to a community he lives in. Stop trying to be hero Mr. Hughes!


Stop and think about it….


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Posted by Not enough pennies for own retirement
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 8:42 pm

Jacob and other anointed ones, BTW, your taxes don't quite get to my family. My son, after living on 10% pay CUT for 1 1/2 yr, cut so close to the bone, he stopped contributing to 401k during that cut.....even that sounds good today..... since he has now been without ANY job for 7 months !! Living up his retirement, what will he live on when he's 70 ???
The ""protected class"" doesn't ever have to suffer any torture of reality ! Your words are SO EMPTY, and demonstrates an arrogant ignorance that proves you don't grasp enough to even engage in the pension conversation....totally spoiled. Stop your empty lies.


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Posted by william
a resident of Laguna Oaks
on Jan 19, 2011 at 8:44 pm

I'm not a city employee but reading this is a good point

asking for city employees and public safety personnel to contribute 2-4% of their earnings that is like taking a 2-4% decrease in monthly pay. So in essence, you are asking public servants to be just that… slaves to you! As a citizen of Pleasanton, when you call for one of these services how long does it take them to respond? Do they (Police and Fire) do their jobs effectively? Are they professional? Now, reduce their monthly pay (Now putting them in financial difficulty) and see how those attitudes change. How can you look them in the eye when you call for help and ask them for help after you have just reduced their income?


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Posted by politico
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 8:47 pm

Who is this Bart guy and why is he being held up as an expert on anything? Just shows up and decides he is going to tell the city how to solve this problem. Where did he come from? What service is he providing? Why are his numbers being touted as the correct ones? What expertise does he have to analyze the data? And we should believe him, why? Oh yes, because he stands next to Kay by am ironing board at the Farmers Market.

Does this sound purely political to anyone else?


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Posted by No pennies for own retirement
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 8:54 pm

I am still repulsed that our Mayor used Pleasanton's ""stimulus"" $$$ NOT FOR Pleasanton residents..... Instead, poured those 100s of thousands of $$$$ into the bulging fat retirements of our 'esteemed' Pleasanton royalty....sort of like the Brits do to keep their royalty comfortable. ...they can't miss a beat !! Now my son, living in the real world, is unable to feed his fund for several years.....so his retirement will only support a very few senior years ! ! ! Awwww,tell me again how ROUGH you have it ! ! I would think 2 or 3 times before saying really stupid things....pity won't cut it this year ! ! Blatent greed is all you can try this year....pity surely will not do it for you.


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Posted by GX
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 9:09 pm

Take a look at who is at the top of Pleasanton's org chart - the citizens.

Look at what happens when city councils and management don't do what is best for their citizens on pension reform:

Menlo Park initiative L (plus many others across the Bay Area)

Get it through your heads that change is coming either the easy way or the hard way.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 9:25 pm

In 2002, we provide a 35% increase to public employee pensions. At the same time we provided eight straight years of raises resulting in a 41% increase in income. This means that the average employee's pension benefit rose by 76% during this period.

This is the issue pure and simple. It was a poor decision/plan based on faulty data (starting with the union dominated CalPERS board that has been so, so discredited). Pleasanton had this issue well before the financial meltdown. So while many would like to blame this on Wall Street (and by no means am I defending them), it just is not so. The source of the problem is with the pension program itself.

It is not something we can afford as a society. And there is not a day that goes by where a major publication doesn't points this out. Unions are the only groups that continue to argue against reality. Is it surprising that there is so much animosity towards public employee unions these days?

So here we are eight years later with a very large unfunded liability and pension/medical retirement costs that are squeezing out the rest of the general budget. The problem must get fixed and it is time for employees to start contributing to solve this problem. A problem they will benefit hugely from. Remember that every $50K of final salary for a retiring 55 year old represents $1.35M in benefit.

BTW, I started this effort on my own because I am concerned about the financial future of our great town. While Kay and I have like minds on this issue, I literally met her for the first time on Saturday. I am thankful that there are other concerned citizens that are willing to work along side me to address the issue.


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Posted by P
a resident of another community
on Jan 19, 2011 at 9:29 pm

GX, you wrote, "Get it through your heads that change is coming either the easy way or the hard way.

Well asking for city employees and public safety personnel to contribute 2-4% of their earnings that is like taking a 2-4% decrease in monthly pay. So in essence, you are asking public servants to be just that… slaves to you! As a citizen of Pleasanton, when you call for one of these services how long does it take them to respond? Do they (Police, Fire or public works) do their jobs effectively? Are they professional? Now, reduce their monthly pay (Now putting them in financial difficulty) and see how those attitudes change. How can you look them in the eye when you call for help and ask them for help after you have just reduced their income?


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Posted by GX
a resident of Another Pleasanton neighborhood
on Jan 19, 2011 at 9:42 pm

I can absolutely look them in the eye.

Per Bart's post, look how well we've treated our employees these past few years. They have been spared completely from the recession.

Everyone has made sacrifices. It is time for all Pleasanton's employees to do the same. And this includes policemen and firemen.

Again, if the Council doesn't do what is right on behalf of citizens, I suspect that an initiative will force the issue and pass handily just like it did in Menlo Park, Palo Alto, San Jose, etc., etc.

Get it? People are fed up with public union controlled politicians and are taking matters into their own hands. Change is coming ...


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Posted by Joe
a resident of Harvest Park Middle School
on Jan 19, 2011 at 10:12 pm

I have to laugh at everyone who thinks Nelson Fialo is truthfully demonstrating true leadership in this public employee pension issue. People at last night's council meeting thanked him for surrendering his 8% contribution to PERS, and the city department managers "Giving" back 4% from their salaries. Managers in the city had 4% ripped from them by Nelson, they did not have a say in the matter. And do not think for one minute that Nelson is giving up any of his salary. The 8% he alleges he is giving up will be made up in the form of bonuses in the near future at tax payers expense. This is a political play on his part, don't be fooled by this.

Mr. Hughes I challenge you to prove this assertion inaccurate.


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Posted by John
a resident of Valley Trails
on Jan 20, 2011 at 4:49 am

Love this post "I will say it again, let them all quit and watch the people line up by the thousands to fill the jobs. We are paying far too much in pay and future benefits for what we are getting" If this were to happen this forum will be filled with posts complaining about how the wonderful services we take for granted are not happening. I have watched wonderful Pleasantonians come unglued when their designer Latte was 45 seconds late or a tad cold. One could only imagine what would break lose if the Police were 2 minutes late, or a recreation program did not happen, or a water bill problem was not resolved in 37.5 seconds. The wonderful people who work hard to make Pleasanton what it is are being treated in a fashion that is alarming. Let's look at the issue without maligning both the character and intention of our neighbors and people who are providing us the lifestyle that we so take for granted.


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Posted by twoat60
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 6:25 am

PITTSBURG -- The City Council voted to change pensions for new, non-police employees from 2 percent at 55 to 2 percent at 60.

The change applies to employees hired after July 9, 2011.

These employees will receive 2 percent of their final salaries for every year they have worked at age 60 rather than at 55. In addition, final salaries for new employees will be based on average pay for the final three years of employment, rather than the final year of pay.

Web Link


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Posted by two cents
a resident of Apperson Ridge
on Jan 20, 2011 at 8:33 am

"I have watched wonderful Pleasantonians come unglued when their designer Latte was 45 seconds late or a tad cold . . . Let's look at the issue without maligning both the character and intention of our neighbors"

Ummmmm . . . do you not see the irony? Similar to many comments I've seen here.

So far I've seen the union side make snide comments about the "rich" people in Pleasanton or threats about what they are going to do to our services if they don't get their way, but no arguement at all to rebut the very clear facts that Bart has presented. Public employees have done very well over the last 8 years, but it is not sustainable, it was caused by a mistake made a long time ago and this very mistake is bankrupting communities around us. Let's not let it happen here.


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Posted by Lugnut
a resident of Bordeaux Estates
on Jan 20, 2011 at 8:44 am

A Retirees Pension is funded approximately 75% Calpers investments, 25% by agencies--city,county,state. Pleasanton was Super Funded for several years, meaning they never paid a dime into CalPERS. Give the city credit because they continued to pay as though they had to for this "Rainey Day". Change is coming but most people in this thread want Blood. Your shit flows downhill, your streets are kept repaired, police protect you and your property and firefighters provide medical, hax mat, fire proection, disaster services, your parks are pristine, the city is not broke---far from it. The city has negotiated no pay raises, have not hired new people, and the work is left for fewer to do. Yet you all bitch without all the facts. You sign petitions hearing only one side from politically motivated individuals standing on a Farmer's Market Corner. The Council hears you malcontents loud and clear and "change" will come. Unions are "bad" but they brought you weekends and holidays to go to your cabins in the mountains, vacation time, healthcare etc. These were called benefits by your parents at one time and now you call them entitlements because the Private Sector is getting shafted by big business and the Insurance industries. Small business is being screwed by Bankers, Wall Street and big business. The American Worker is being raped as CEO's get fatter bank accounts. And it is all the Public Emloyee's fault. Everybody has someone to blame, don't they. I happen to blame Wall Street bankers, companies who have moved their manufacturing overseas, the oil producers and manufacturers who squeeze us for every dime they can as they hate us. People, our wallet has been attacked and all you do is bitch. I wonder why only a Tea Party has emerged and not full scaled riots in the streets to get politicians in Washington's attention. I know the answer--we have big mouths for bitching and that is it. I have said before you get what you pay for and the Public Employees negotiated and gave up things to get other things. That story has not published, even ignored by the Weekly, so that all of you can falssely believe that Public Employee were "given" everything. That is BS.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 8:52 am

"These were called benefits by your parents at one time and now you call them entitlements"

Lugnut - the pay raises and "benefits" public employees get now are very different to what they were when my parents were my age. That's why we and our kids have a future that is a potential nightmare, somehow trying to cobble together enough money as we work until 67 to pay for a bunch of people to retire on almost full final year pay (or in some cases more than full pay) 12 to 17 YEARS earlier than we do.


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Posted by GX
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 8:55 am

Please do tell us what employees gave up in 2002 to get the deal they got. Please do.

And please do answer the question of who picks up the difference if the stock market does not deliver 75% of the benefit. Please do.

And why do you continue to avoid the basic 2002 problem that Bart Hughes as so clearly laid out?

Everyone knows we have a problem including the city. The only ones who won't acknowledge the problem are those who are benefiting from the mistake and their union.


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Posted by OWkrender
a resident of another community
on Jan 20, 2011 at 9:15 am

If an employer is paying for the employees' share of pension, that was negotiated in lieu of pay, with tax advantages for the employer. Absent evidence that the total compensation of employees is too high, a forced 2% hit on employees is nothing more than a narrowly focused tax, no doubt supported by the same crowd who recently did not support restoring the tax rate of billionaires.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 20, 2011 at 9:15 am

Stacey is a registered user.

Just wondering, what was given up in exchange for receiving the employee retirement contribution fully paid for by the City? What was the fair exchange between the employee and the employer? If anyone recalls, PUSD gave very large raises to employees about 10 years ago and the exchange was that the employee gave up getting their health care paid for. They wanted that because the higher salary amount meant a larger pension. The district didn't have to deal with rising health care costs.

Let's not attack public employees. Pension reform can be perceived as an attack, but it is not and linking it to such is a disservice to the issue. Pension reform is about society trying to preserve the ability to have public jobs in the first place, to offer stable retirements to those who won't earn enough over the lifetime of their public career for such, etc. There's a reason we haven't been hiring. There's a reason that sales tax revenue is down. Let's recognize that such posts are reflections of the frustration felt by many on both sides of the issue.

Let's recognize that early retirement means that the City loses the benefit of the experience provided by senior employees. How many new fire chiefs has LPFD had this past 10 years?

Let's recognize that rules that allow pension spiking hurt the prospects for stable retirements for current and future employees. Such avenues to pension abuse need to be closed to protect the viability of the pension fund.


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Posted by resident
a resident of Downtown
on Jan 20, 2011 at 9:38 am

"If an employer is paying for the employees' share of pension, that was negotiated in lieu of pay, with tax advantages for the employer. Absent evidence that the total compensation of employees is too high, a forced 2% hit on employees is nothing more than a narrowly focused tax"
Oh please. It was NOT in lieu of pay, they got raises totalling 41% over 8 years.
Tax advatages? Better look over that Turbotax info again. The city gets the same tax benefit for payment of wages as they do for payment into pensions. And if the city did not have to actually fund the PERS portion (as it has been suggested) then they had a tax DISadvantage for those years.
The city employees have benefited for 8 years with 41% raises and huge pensions. The rest of the world has suffered from the recession. Many of us are making less than we did in 2002 yet you will not see the city workers taken back down to that level. 2% contributions are not even a drop in the bucket. They need to pay the full 8% and take a percentage reduction for every year of early retirement. Early retirement being defined as before age 65.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 20, 2011 at 9:47 am

Stacey is a registered user.

It is good that the city was funding during times of CalPERS "holidays". Those holidays are one of the reasons other cities are having a worse time at this. The UC pension had a holiday for many many many years and they are really hurting now.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 9:55 am

Dudes,

The problem isn't too much pension and salary for public workers. The problem is not enough for everyone else. Let's get new laws that say private companies have to put provide pensions. Let's require them to be mobile so when you change jobs, your pension goes with you. It should be the same way for health insurance. If the company fails, the federal government will take over the pensions. That is the same thing that happens when a bank fails. You don't lose your deposits; The FDIC comes in and makes you whole. Banks pay money in to the FDIC and follow the regulations. Everyone benefits! We need the same for private pensions and health care. If you say that US will be less competitive because of the increased regulatory and tax burden, I say the answer to that is higher tariffs on companies selling goods in the United States. The US is the biggest consumer of goods in the world! Foreign companies will have not choice but to comply.

I praise people like Bart who point out the inequities in public/private benefits. Sadly, he has the wrong the solution. Instead of tearing down one group just to make them as bad off as the rest, let's build everyone up! The solution is more government, not less. Together we can solve this problem. If we can bail out AIG, Goldman Sachs and a bunch of rich bankers, it is time we bailed out the rest of us.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 20, 2011 at 9:58 am

Stacey is a registered user.

Jerry Brown's website sums up well the major issues that pension reform needs to address:

"5. Prohibit Pension "Holidays"



In recent years, with high investment returns ensuring well funded pension plans, employers (State or Local Governments) decided to reduce or temporarily cease (take a "holiday" from) contributions into pension plans.



We must require consistent contributions to public pension funds over time - no more "contribution holidays" by employers or employees.



This will ensure that we maintain funds adequate to pay promised benefits and that the state's annual pension obligations are steady, adequate and predictable.

"

Here's another pretty major one. I don't know if we've ever done this in Pleasanton. It is particularly unfair to say that benefits can be increased on past earned years but not decreased on future yet-to-be-earned years.

"3. Stop Retroactive Application of Benefit Enhancements

To date, when new retirement benefits have been approved/negotiated, those new benefits have applied retroactively to years already worked. That practice should be ended."


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Posted by it is hopeless
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 10:41 am

"Let's get new laws that say private companies have to put provide pensions"

Sounds like you are talking about Social Security. We have this now.

If you are looking for a private pension system, the auto industry tried this and see what happened.

The reason there are all these "attacks" on public workers are because the workers are not acknowledging the system we currently have is not sustainable or fair.


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Posted by truth
a resident of Birdland
on Jan 20, 2011 at 12:07 pm

i truly hope all of you who want the public sector to reduce their established benifits packages are ready to deal with the lack of morale and other factors if the pensions are changed. Its one thing to change new employees funding but for those who have put in years of service already that is just not fair. It will be interesting to see unhappy Police and Fire personel responding to the calls for service. Sure the honorable employees we have will do their duty but we will all see a differnce in quality of services.

Also if we are trying to balance these budgets on the backs of the city employees...first shouldn't we look at immediate cost savings? How about the full time employees at the Alviso Adobe? Why do we need that 6 million dollar park in the first place and why is it staffed? Bart...you need to focus on all the aspects of the budget problems not just the established pensions...shame on you!


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 20, 2011 at 12:23 pm

Stacey is a registered user.

Bart Hughes stood and spoke at the last Council meeting and one of his points was the omission of a two-tier system in the tentative contract.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 20, 2011 at 12:35 pm

Stacey is a registered user.

truth wrote: "Also if we are trying to balance these budgets on the backs of the city employees...first shouldn't we look at immediate cost savings? How about the full time employees at the Alviso Adobe? Why do we need that 6 million dollar park in the first place and why is it staffed?"

Well precisely. This kind of statement illustrates why pension reform is just as important to employees as it is to the rest of us. Don't you think perhaps the reason those kinds of cuts are not being looked at is because this community is not interested in throwing current employees into the unemployment line? What kind of sense does that make to raise unemployment like that? Without pension reform, those kinds of cuts will become very real.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 1:01 pm

Since 2002, pension/retirement medical costs have grown from $3m to $15m. And with the current proposed contract, the city projects that this cost will grow to nearly $20m over the next couple of years.

This is one of the largest if not largest budget line items and it is moving in the exact opposite direction of the overall budget. Please help me understand other areas that are more pressing.

Shame on me for focusing on an issue that has the potential to undermine our city? Shame on you for being willing to sacrifice city services and other current/future employees to protect your pension that was expanded by mistake in 2002.

If there is that much heartburn with increasing employee contributions to help fix this mistake, then give back some of the pension formula - either extend out your retirement for a couple of years or decrease your percentage. Either of these moves would help solve the issue in a major way. I won't hold my breadth on this one.

I urge everyone to track www.pensiontsunami.com for a while. You will see that Pleasanton is not alone with this issue and that it must get fixed. The only ones pushing back at this point, are the ones who have and will continue to benefit the most from the mistake. Remember SB400 wasn't supposed to cost taxpayers any extra ...now the CA taxpayer tab is up to $4B/year. The same has happened with Pleasanton on a smaller scale.


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Posted by Minimum wage taxpayer
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 1:25 pm

Truth said:

"Its one thing to change new employees funding but for those who have put in years of service already that is just not fair. It will be interesting to see unhappy Police and Fire personel responding to the calls for service. Sure the honorable employees we have will do their duty but we will all see a differnce in quality of services. "

I really appreciate all our public employees from the street cleaners to the building department and teachers. I realize they have fought for benefits they have now, and what they have choosen by working for the public rather than private sector.

Fairness has nothing to do with it. I'm sure everyone would rather be in a position to continue funding pensions, school programs, and bonuses for both public and private sector jobs. The issue is THE MONEY ISN'T THERE. It is like using credit cards to pay your mortgage bill, to forstall foreclosure....there is a point you have to pay the credit card off too. My grandfather worked for Ford's in the hayday of the Unions starting, and retired in the 60's with the full pension. I know, in general, how little those pensions were and what happened when the car companies could no longer pay for the pensions. It was one of the reasons GM closed plants in Flint and Detroit and moved them to Korea, to cut overhead to pay for the pensions. Are the current public employees ready to be unemployed because city, county, and state governments are going to have to trim overhead to pay for those who retired 20 years ago? The issue is not villifying the public unions or public workers, the issue is the cost of funding the pensions. What is happening in Vallejo can and will happen in other places. What good would be the "pensions" if the city is bankrupt? Those who post how unfair it is to require a change in pensions need to realize what is the bottom line, rather than what is fair.

We need to all cooperate to find a solution that everyone can live with (not like our federal and state politicians). We all may need to give up some things....maybe close parks earlier for the public and public employees contribute more to their pension. It doesn't have to be an all or none. But what all unions need to realize, is that they will have to give consessions on items that they were able to get during good times, to get through the bad times. While many may post on here about the "rich Pleasantonians", I'm guessing there aren't as many as you might think. We moved here 20 years ago, and still could not afford to move here now with the prices. There are many who are lower-middle-class, who are even more frugal today with their home budgets. People have lost jobs, 401K (pension) investment, have to work well into their 70's because they can't afford to retire, etc. There are many senior citizen's on fixed incomes and many families living on low income, no benefit, working class salaries. We all are hurting, and we all need to work together to make sure budgets work for the future generations.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 3:29 pm

So, the question is: is the city REALLY in danger of going bankrupt anytime soon? Is Pleasanton anywhere near becoming Vallejo?

Has anyone investigated the numbers themselves? Or is everyone just taking what Bart Hughes says and believing he is the one and only authoritative source on this issue?

And is Mr. Hughes an actuary with experience and expertise with the complicated nature of public pensions?

It will be very interesting to see what the conclusions of the February 1 workshop will be. And what the reactions from the opposing sides are to those conclusions.


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Posted by to anon
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 5:10 pm

"So, the question is: is the city REALLY in danger of going bankrupt anytime soon? Is Pleasanton anywhere near becoming Vallejo?"

No, but if they continue down the current path their will be plenty of hurt to go araound. Are the pension plans finacially distressed? Yes they are.

"Has anyone investigated the numbers themselves? Or is everyone just taking what Bart Hughes says and believing he is the one and only authoritative source on this issue?"

I have and I can tell you that if the city fired every employee today, or every employee quit, Pleasanton would still owe a couple hundred million dollars to employees that they no longer work for the city. Pleasanton has 25 million in reserves but that doesn't come close to covering this budget busting pension debt. I know that won't happen but I'm trying to make a point.

If the city wanted to opt out of CalPERS they would have to pay a lump sum to do so. Pleasanton can't afford to that.

"And is Mr. Hughes an actuary with experience and expertise with the complicated nature of public pensions?"

I guess it is only complicated in your mind.

"It will be very interesting to see what the conclusions of the February 1 workshop will be. And what the reactions from the opposing sides are to those conclusions."

Hopefully you will be there. It will be a great opportunity for everyone to learn.

BTW, did you see the last Pleasanton salary survey?

Here is something you can do to help:

- provide a pension contribution of 4% of salary
- change "final years salary" to "average salary over three years" for pension calculations
- eliminate specialty pay and education pay from the pension calculation

-


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Posted by To ANON
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 5:23 pm

-2@62 for new hires
-eliminate the three floating holidays. Ive never even heard of a holiday called "floating holiday", and even if that were an official holiday I'm pretty sure there aren't three of them.


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Posted by Mark
a resident of Birdland
on Jan 20, 2011 at 7:38 pm

That's a brilliant idea, 2@62, and by brilliant I mean truly stupid. I really want to see a 62 year old fire fighter dragging hundreds of pounds of fire hose or running into a burning building. I also want to see a 62 year old fireman climbing the side of a steep hill fighting a wild grass fire.

Even better, how about a 62 year old cop rolling on the ground fighting a 20 year old high on drugs, or a 62 year old cop with slow reactions have to draw and shoot his weapon when timeliness is of the essence.

I've seen many lame brain ideas in this forum but you take the cake.


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Posted by Ummm
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 7:46 pm

What do police and fire have to do with the PCEA contract?


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Posted by Anonymous
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 7:53 pm

*Is* Mr. Hughes an actuary?


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Posted by GX
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 8:02 pm

Unions - step up and be reasonable or this is what is potentially in store for you:

Path Is Sought for States to Escape Debt Burdens

Web Link


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 20, 2011 at 8:02 pm

Stacey is a registered user.

Solicit some opinions from actual actuaries.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 20, 2011 at 8:05 pm

Stacey is a registered user.

Web Link

"The CalPERS chief actuary says pension costs are "unsustainable," and the giant public employee pension system plans to meet with stakeholders to discuss the issue."

And

""I think it's incumbent upon labor and management to get together and solve this problem before it gets on the ballot," he said."


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Posted by P
a resident of another community
on Jan 20, 2011 at 8:10 pm

As a city worker I have to agree with Joshua on what he said:

It is clear that California's state and local PERS pension contracts must be reviewed and amended, but NOT at the expense of currrent employees who bargained in good faith... and more importantly, provided services in full trust the State or individual municipalities would hold their end of the bargain.

I was all for a 2 tier system but it was never an option to vote on.

Why isn't anyone addressing the fact that the employees are starting to pay for their retirement? Ya it's only 2% but you can't expect it to be all 8% at one time. It could be worse, we could still be asking for us to pay nothing but we did agree to start paying. Small steps at a time, this contract it's 2%, the next contract it could be 4%.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 8:10 pm

b - it would be great to yet your take on the Cal pensions article that Stacey points to. Are they (CalPERS spokesperson) being too pesimistic and alarmist with the data?


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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 8:12 pm

I have know idea what Mr. Hughes profession is but I do know you don't have to be an actuary to understand a financial report, or a CalPERS report.

I think people need a little time out heading into the Public workshop that is to be held on 2/1. Hopefully the forum will be well attended an educational. I will say this, there is a big problem in regards to the pensions and it needs to be addressed appropriately. I'll be at the Forum and I hope to see you/everyone there.


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Posted by it is hopeless
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 8:20 pm

Bart is using the numbers that come straight from the city. I saw the reports the city issues on the liabilities and costs and they are the same numbers that Bart talks about.

Ummm is right. We are not talking about police and fire now. We need to tackle the contract that is currently up for renewal; miscellaneous employees. So Mark, do you think that an office worker, an accountant, park maintenance worker is over the hill at 62 years old?

On police and fire, the issue that Stacey brought up is correct. There is no incentive for workers to stay on the force on those departments after a certain point because they make more in retirement than in working. We will have police chiefs and fire chiefs turning over every couple of years with the current system. I personally think it takes until you are around 50 and seen a lot before you are qualified to be a fire or police chief. But now that is when they retire. So be prepared for chiefs with much less experience taking over and staying in the job for less time like we have seen since the pension change. With the current system you will find experienced chiefs being 47 or so and only staying in their jobs for a few years or very young chiefs without as much experience staying in the jobs for a longer period of time. I am not sure I want to be in a city where the chiefs are in their 30's. They might be good people but do not have the experience to run departments as important as the fire and police departments are.

I feel that police and fire working past 50 is fine and it worked prior to 2002. At a certain level, these people are more in management and detective work and not on the street. There are enough jobs for experienced police and fire that don't require chasing after a crook or carrying a fire hose. Some might want to stay in that job but the opportunities are there. We seemed to have manage just fine prior to the new pensions being put in by Gray Davis. So this whole scare tactics by the unions is false. We had a great city prior to the last contract raising all the benefits and will will be a great city if we restore the benefits; probably better as we will be able to pay for more people. We have to lay off people now in order to pay for the retired city work force. Every dollar going to pay for retired benefits is a dollar that is not going for current services. Will it be painful? Yes for a bit. But not changing we will be digging our hole deeper and deeper until we have to file for bankruptcy. Then all the current employees can loose everything. You can't keep charging the credit card like we are doing now.


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Posted by it is hopeless
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 8:37 pm

"Why isn't anyone addressing the fact that the employees are starting to pay for their retirement? Ya it's only 2% but you can't expect it to be all 8% at one time."

But there is no plan in place to increase this over time with the proposed contract. It is up to 2% starting in July and then staying that way for the rest for the contract.

Don't forget you received 41% in salary increases in the last 8 years that the public did not have the luxury of seeing in their paychecks, if they still have a paycheck. Plus your retirement benefits went up 35% in the last contract (significantly more because these were retroactive to the day you started at the city). You should expect that if you get a whole lot more quickly that you can loose a whole lot quickly.

This whole "bargaining in good faith" is a crock. You might have bargained in good faith but the other side did not. The public never had a chance to weigh-in on what they wanted to see until this time. The public taxpayer, who is paying the bill, was never even allowed to chime in during the negotiations. You can blame the city council but you cannot blame the public. This is the first chance we have in giving any input in what we want to see.

Maybe you would be happier with an initiative that says the council cannot start bargaining until they have received input from the public? That might have helped in this situation. But all the "good faith" bargaining happened in closed doors without any input from the taxpayer. The last contract was the same way. It is not that the public is finally starting to understand the process and the implications. The public always thought that the council was being fiscally conservative and would never agree to benefits that we could not pay for. But now we have a huge unfunded liability plus we have a hiring freeze. Look at the amount of money we pay in benefits and it is WAY outside the norm of what the private industry sees.

The longer it takes to fix the situation, the more it costs. We could just say that the employees cannot receive a pay increase until the liability is paid off. Since we keep digging the hole deeper and deeper, you might see a pay increase in about 30 or 40 years. So the sooner the employees help with the situation, the sooner it will pay off the debt, and the sooner we can afford to pay more. I would be completely supportive in an initiative that says that we cannot issue raises until the debt is paid off. It is actually the right thing to do. Any credit counselor will tell you that you need to pay down your debt before you increase spending.

Am am glad that there are public employees engaging in the conversation with the community here. It is good for you to see where the public is at. Maybe you will do something to help the situation as "the natives will be getting more upset if we do not address the issues".


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 8:50 pm

Really? No one in the private sector has received a raise in the past 8 years?

There's so much baloney in this thread, I'm not even going to bother to try to respond to it all. I went away for a day and returned to find that the level of misleading/false statistics and Tea Party hype just continues to decline in quality.


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Posted by Anonymous
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 8:58 pm

So, was the CalPers actuary addressing Pleasanton's situation specifically?


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Posted by P
a resident of another community
on Jan 20, 2011 at 9:02 pm

To hopeless, I'm glad you appreciate that some of us city employees are engaging in conversation. Not all of us were for the contract. Like i said, I would have liked to have seen the 2 tier system. Also everyone is saying we can retire at 55 and that is true, but for me and a lot of others, we'll be here way past 55. I know for me and quite a few others, it's close to 62 - 65. I would love to live in this city that I help take care of every day, but will never be able to on what I get paid. Even with all those increases we recieved over that past 8 years didn't make a big difference and I'm for sure not going to retire a millionaire like everyone else claims we will. Mid $20's an hour is nothing anymore, especially if you wanna live in Pleasanton. It's 85 miles round trip for me to come here everyday to work. I still do all of this because I enjoy working for this city that much.


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Posted by Anonymous
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 9:09 pm

In the article Stacey posted it quotes an an actuary, John Bartel,
who says two tier pensions really don't save much money. Yet, Mr. Hughes is calling for a two tier system.


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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 9:25 pm

"So, was the CalPers actuary addressing Pleasanton's situation specifically?"

The average funding level for all of CalPERS state, county, city, special districts is 61%. That isn't bad - it is considered critical! The PCEA pension plan is funded at 52.2%. That is junk status. It would be nice if the people that are expecting to receive their benefits would at least share the same level of concern as the people they expect to pay for those benefits. The fact that the employees aren't concerned about their own pensions is beyond troubling. If it is all about sticking the taxpayers with the additional burden of paying for these pensions, beyond what is already being paid, then maybe we should just skip the forum on 2/1 and begin preparing to place a measure on the ballot.

Somebody mentioned the PCEA salary survey earlier. Hopefully the city will produce that document.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 9:28 pm

From Stacey's link, Ron Seeling, the CalPERS chief actuary said:

""I don't want to sugarcoat anything," Seeling said as he neared the end of his comments. "We are facing decades without significant turnarounds in assets, decades of — what I, my personal words, nobody else's — unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan (police and firefighters) … unsustainable pension costs. We've got to find some other solutions.""


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 9:34 pm

The job market isn't going to create new jobs just because people want, need, or are forced to work 7-10 years longer. Not retiring those people from the workforce prevents someone who is unemployed (or new to the workplace) from taking that job.

- with all due respect to our elders, there's some savings to be had from replacing a 60-year-old with a 24-year-old.
- there's a societal cost (and a tax cost) to having unemployed 24-year-olds who can't find jobs because older workers arent leaving the workforce
- workers coming into the workforce, while the available jobs are stable, but workers are not retiring, artificially inflates the unemployment rate.

Just making conversation, like I always do.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 20, 2011 at 9:41 pm

Stacey is a registered user.

Anonymous,

That is true. The two-tier trick is favorable simply because it tends to be more politically feasible. There would probably be more significant savings by raising the retirement age for full benefit amounts so employees still had the option to retire at the younger age, just at a lower amount. Maybe that isn't so bad if workers think they need to retire later anyway.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 20, 2011 at 9:43 pm

Stacey is a registered user.

b,

Perhaps women should be banned from the job market then like they used to be.</sarcasm>


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Posted by C.W.
a resident of another community
on Jan 20, 2011 at 9:54 pm

WOW!!! I see that there are some people that are very sour that they do not have or did not have good jobs, However for the people that call themselves " Patriots " and think that reopening negotiations is the way to go I think your wrong... Food for thought two-tier retirement wont help for atleast 20+ years and if you think that the 955 members are going to agree to opening up for negotiations all over you are mistakin. I am proud to say that we work hard for the CITY and its RESIDENTS and that will never change.So "patriots" as for you it must be nice to sit on the computer all day in your million doller plus homes and say all this stuff and try to bring everyone down but all you people are is tree huging right wing democrats that want more money for yourselves and to call yourselves "patriots" makes me sick cause your in it for you and only you!!!


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 9:56 pm

CalPERS is playing this brilliantly--the old "give them the bad news all at once" strategy favored by politicians and CEOs. They are setting expectations VERY low for the future. They have MASSIVELY written down assets over the past could years. They are building up their base of capital via increasing municipal contributions and getting the Tea Partiers all lathered up over employer contributions.

When the economy turns positive (it always has before, and leading indicators show that it will again soon), CalPERS assets are going to SOAR. CalPERS will look brilliant, the Tea Parties will look ridiciulous for using questionable data, and the funds will be close to whole again.


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Posted by Robert Byrd
a resident of Downtown
on Jan 20, 2011 at 9:58 pm

The proposed contract has PCEA employees paying 1/4 (or 2%) of the "Employee's" share of 8% of their salary.

The City is still paying the full amount of the "Employer" share, which varies depending on CalPERS return on investment in any year, the retirement package selected, etc.

So, this 2% of salary proposed to be paid by employees is NOT actually 25% of the total retirement costs. If the City as Employer has a 10% (variable) of salary share, plus tha 6% of salary Employee share [as the Employees are only proposing to pay 2%), plus retiree medical for all these 50 year old retirees who get full medical benefits for themselves and spouse for more than 15 years, beyond age 65 .... then the City's annual "retirement benefit" contribution per employee sound more like 15% to 25% of annual salary.

Need to have this workshop address all of these costs, not just the 8% of salary "Employee" share.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 9:59 pm

Exactly, Stacey. I'm sure we can find all sorts of people
To offend. Thank for volunteering for the first group!


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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 10:09 pm

"CalPERS is playing this brilliantly"

- CalPERS is a big part of the problem. Only a nonsensical PCEA business agent would give CalPERS credit where it isn't due.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 10:09 pm

Bart and others,

I encourage you to spend your energy on organizing your own co-workers into unions so you can enjoy better benefits for yourselves. Then push our representatives in Sacramento and Washington to pass laws and regulations to require pensions and health care for workers. There is a whole lot of other stuff we need to do before we worry about taking away benefits from the people who bargained for them in good faith. We need higher taxes to pay for these benefits. I know some bailed out investment bankers who would be good candidates to pay those taxes!


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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 20, 2011 at 10:15 pm

"So, this 2% of salary proposed to be paid by employees is NOT actually 25% of the total retirement costs. If the City as Employer has a 10% (variable) of salary share, plus tha 6% of salary Employee share [as the Employees are only proposing to pay 2%), plus retiree medical for all these 50 year old retirees who get full medical benefits for themselves and spouse for more than 15 years, beyond age 65 .... then the City's annual "retirement benefit" contribution per employee sound more like 15% to 25% of annual salary."

Robert, you need to double the 15-25% numbers.


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Posted by resident
a resident of Downtown
on Jan 21, 2011 at 8:01 am

All of you city employees keep throwing out your "we bargained in good faith now you gotta give it to us" mantra. Then you threaten to stop doing your jobs well if we, those who pay you, try to take anything back.
Do you think that the airline employees who have lost wages, pensions and jobs bargained in BAD faith and that is why management forced the bankruptcies onto them? Bankruptcy wipes out everything, including pensions for people who are long retired. And those things are not reinstated when the airline magically emerges from bankruptcy. So I guess you would expect the pilots to be careless in the way they fly the planes now, just as a way to get even with those who stole their salaries and pensions. Get over yourselves. It's all about being the professional you are paid to be in whatever your job is. Or get the hell out if you don't want to do that.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 8:26 am

"CalPERS is a big part of the problem"

Why? Because they invested in equity and real estate markets like most every other retirement fund, and their returns therefore mirrored the lousy short-term results of those markets? Investment funds fluctuate in value. Get used to it.

I happen to think they're brilliant for taking advantage of the natural fluctuations of the market, in order to play you like this.

Unless your "citizens initiatives" force them to put 100% of their investments in deteriorating t-bills or old mattresses, their assets are going to soar in the next 2-3 years, and we'll be laughing about the good ol' days of the 08-09 dip.


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Posted by C.W.
a resident of another community
on Jan 21, 2011 at 8:26 am

It feels good to read this blog and see support for city workers!!!


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 9:29 am

Stacey is a registered user.

For a little more levity on the situation: Web Link

Phil,
Private unions tend to focus more on job protection or obtaining jobs for members. Public unions have focused more on increasing benefits. The difference is due to private unions being tied more directly to the company's bottom line (private unions have historically been through bankruptcies) to being unable to influence who sits on the other side of the negotiation table. So while it may sound nice to say we need more unions in the private sector, there are some practical differences that won't translate into higher benefits for private workers.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 9:42 am

"Bankruptcy wipes out everything, including pensions for people who are long retired."

Not if the government backs them, just like the FDIC backs your savings accounts if the bank fails. We need to spend our time organizing stronger private sector unions, pushing for higher tariffs, and pushing for more laws protecting workers. If we're going to bail out rich investment bankers, than we owe it to ourselves to help the ones who truly need it.

"It feels good to read this blog and see support for city workers!!!

I support the city workers and all workers. The are a few well to do people here calling for "reforms", but it is really nothing more than naked greed. The bottom line is that they don't want to be taxed. They feel that they "deserve" their money, but unionized workers don't. But the minute their investment bank or insurance company falls on hard times, they run to the middle class taxpayer to bail them out and preserve their bonuses. Well the truth is out there. We need to raise taxes on these people. It is never enough for them. We can't keep bailing them out and paying for their mistakes.

I ask that these people cease and desist. Put their time and energy into pushing for stronger private sector unions, stronger worker protections, and strong tariffs on foreign goods and services. Taxes also need to be increased on those who enjoyed the windfall of the government bailouts that saved the banking, insurance, financial services industry. This needs to happen at the local, state, and federal level. Together we can do this. I'll be happy to take constructive questions on this and hope that Bart and Kay join us in this noble effort.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 9:45 am

" So while it may sound nice to say we need more unions in the private sector, there are some practical differences that won't translate into higher benefits for private workers."

Unless we pass strong protections at local, state, and federal level, that is true. We need the whole package. Unions, regulations, and tariffs.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 10:27 am

Stacey is a registered user.

High tariffs, riiiight. That makes about as much sense as corporate welfare does.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 10:39 am

Stacey is a registered user.

You can't always raise revenue for this sort of thing. Take Illinois for example. Last year they passed a bond to pay for pension costs. They're *still* dealing with the hole getting bigger.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 10:45 am

Stacey is a registered user.

Web Link

"Just last week, Chicago Mayor Richard M. Daley -- usually no proponent of fiscal austerity -- was begging Illinois Gov. Pat Quinn to veto a deal that would raise property taxes in the Windy City by $550 million to fund public pensions.

"This is the highest real estate tax increase in the history of Chicago and that's only for fire and police. If you put the other unions in there, it's about $1.2 billion in one year. ... This will really hit the people. How are you gonna sell your home even if you're retired? Who would want to buy your home? Buyer beware," Daley told the Chicago Sun-Times. "


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 10:45 am

Stacey is a registered user.

"In Chicago, the unions claim they are making concessions. Police and fire fighters agreed to reduced cost-of-living increases, salary caps and raising the retirement age from 50 to 55. The legislature further offered a meaningless pledge to make sure their pension fund was 90 percent funded by 2041.

Is that supposed to be a fair trade-off? Taxpayers get sharp tax increases and can't sell their houses, but still pay for firefighters and police to retire with 80 percent of their salary and full benefits a decade or more before most Americans can even dream quitting their jobs? And pensions still won't be fully funded 30 years from now?"


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 10:54 am

"High tariffs, riiiight. That makes about as much sense as corporate welfare does."

Care to explain yourself? I can just as easily say that it sure seems to be working for the Chinese. Do you know how much we pay for every item we sell in China?

High tariffs also protect American workers from suffering the same horrible conditions many foreign workers endure. Of course high tariffs are out of fashion on Wall Street and their sympathetic think tanks. Anything that hurts their profits is out of fashion.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 10:59 am

" Taxpayers get sharp tax increases and can't sell their houses, but still pay for "

Taxes should be heavily targeted at the wealthiest individuals _and_ corporations. Specifically those financial institutions that benefited from the bailouts and are now reporting record "profits" should be targeted. Much of this money could be raised at the federal level and sent to state and local governments. Also, the middle class will benefit from their new guaranteed pensions and protections due to new regulations. Everyone wins except for bailed out derivatives traders.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 10:59 am

Stacey is a registered user.

Here's another article that talks about the differing ideas for discount rate and what could be considered a fair share for employee to contribute and employer to contribute. This is written by a guy who doesn't agree with the idea of using a risk-free discount rate (like the recent Stanford grad student did with the CalPERS fund). Web Link

"Public employees in pension plans and defined benefit OPEB plans enjoy a guaranteed benefit that is risk-free to them. The price that we ascribe to them for their fair share of these costs is too cheap. We use the expected investment returns of the risky portfolio that trustees approve in their efforts to optimize long-term returns on public capital. That's a mistake — it's heads, they win; tails, taxpayers lose. There is a better approach."

"Needless to say, this will increase required employee contributions. Employees and unions won't like this, but their choice should be clear: If they want stock market returns on their contributions, they should invest instead in a defined contribution plan where they take the investment risks that go along with those higher investment performance expectations. No longer should employees be able to have their cake and eat it too, which is what the traditional public pension plans have unwittingly and naively allowed them to enjoy."


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 11:22 am

Stacey is a registered user.

Phil,

As California's highly progressive income tax revenue stream has shown, relying upon the wealthy for the majority of the revenue means large exposure to market fluctuations. Don't get me wrong, I think we should have progressive taxes (one reason I'm not a fan of the flat-rate parcel tax which is regressive). They just should not be skewed too far progressive in order to limit that exposure. Moreover, the wealthy (not sure how you're defining them) tend to be more mobile in terms of having the ability to move around. If someplace gets too expensive, there is little to stop them from leaving and there goes the revenue.

About China, who said the tariffs are working for them? They've only set up a bubble. They're struggling with high inflationary pressure due to their monetary policy and the flooding their own markets with over-supply in an attempt to reduce that pressure. Investors are going to start pulling back if China doesn't change directions.

The reason tariffs make about much sense as corporate welfare is because both things distort the true cost and price of goods and services. Such distortions lead to these extreme bubbles and busts. In other words, the fixes can actually exacerbate the problems.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 11:25 am

"Here's another article that talks about the differing ideas for discount rate and what could be considered a fair share for employee to contribute and employer to contribute. This is written by a guy who doesn't agree with the idea of using a risk-free discount rate (like the recent Stanford grad student did with the CalPERS fund). "

And that's a big part of the problem; Couching all of these reform arguments in Wall Street terms. There shouldn't even be a "CALPERS fund" at all. We should have never invested retirement funds on Wall Street. We should define benefits and levy taxes at whatever level is necessary to pay those benefits. That is a kind of reform I would support, but that will have to be done later. There are far more pressing matters to attend to in the mean time.

Stacey,

I'm still waiting for the explanation as to why high tariffs harm middle and lower class American workers. Please spare me the Wall Street nonsense about all regulations being bad.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 11:34 am

Stacey is a registered user.

Phil wrote: "We should have never invested retirement funds on Wall Street. We should define benefits and levy taxes at whatever level is necessary to pay those benefits."

That's roughly how it used to work. CalPERS used to be limited in the amount of high risk stocks it could invest in. Web Link


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 11:36 am

Stacey is a registered user.

Phil,

I never said anything about regulations being bad. I only said what the problem is with tariffs and subsidies, the distortion of the true cost of goods and services.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 11:39 am

Stacey is a registered user.

Phil,

Did you see this news? GE closes defined-benefit plan for new hires. Web Link


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Posted by GX
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 11:54 am

Phil - Study your history. It is widely acknowledged that the Smoot Hawley tariff act in the 30's severly worsened the Great Depression and prolonged it.

Thank goodness uninformed people like you don't set our economic policies.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 1:01 pm

GX,

That is the University of Chicago/Wall Street perspective on the depression. There are plenty of economists who disagree with that. A big part of the problem at that time was that Roosevelt didn't go far enough with social programs and protections for workers. To his credit he made a lot of progress and actually fed people who would have otherwise starved (hard to imagine people were dying of starvation in the US when my father was a child). He also put in place Social Security, the FDIC, and banking regulation that has served us well. Also remember that tariffs have been with us since the county's founding. If managed properly, they can be of great benefit to a country and its citizens.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 1:02 pm

Stacey,

Yes I saw that and it is bad news. We need to be going the other way, toward defined benefits, but it will take a push from government to get us there.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 1:07 pm

It is truly sad the way Obama is governing with the appointments of Sperling, , Daley, Jeffry Immelt, and the wholly inadequate financial regulation package. If you're worried about economic bubbles, these are the guys who will give us one. We need a real liberal in Washington.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 1:13 pm

I think Obama is as liberal as you're going to get. I voted for him, but will not again because I didn't realise how liberal he was and it's too much for me and there are many like me. I liked him because he said he'd go throught he budget line by line and cut out waste - what a joke. I'll probably go republican to get some fiscal sense into DC, (though not if Palin is the choice!).


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 1:15 pm

"I never said anything about regulations being bad. I only said what the problem is with tariffs and subsidies"

I think we posted at about the same time. I hadn't yet read your post about tariffs. I know you didn't say that.

I agree that parcel taxes are regressive, but I wouldn't call them flat-rate, it would be more like flat-value.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 1:17 pm

"I think Obama is as liberal as you're going to get."

I would have thought we would have taken steps to prevent the too big to fail problem. Aren't you disappointed that he didn't? I also don't see where bailed out financial services and executives ever paid much of a price. Their salaries are still astronomical, and our taxes help pay them.


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Posted by to phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 1:18 pm

Phil, we have social security which is a defined benefit system. Maybe you want a larger payout in it. If that is the case then we all have to pay more into it. You can't get blood from a turnip (unless you are a public employee).


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 1:23 pm

"I would have thought we would have taken steps to prevent the too big to fail problem. Aren't you disappointed that he didn't? I also don't see where bailed out financial services and executives ever paid much of a price. Their salaries are still astronomical, and our taxes help pay them."

I absolutely agree with you on all these points and would happily back a campaign to make this right too. I agree banker bonuses are revolting and there should be more in the press about this. I also believe that the bonuses should be taxed more.

Doesn't change my views on the public sector pension issues though. They go hand in hand in my views. Both wrong and unsustainable and crushing the private sector middle class.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 3:09 pm

"To Phil",

I addition to Social Security, I want mandated pensions. You can call it more Social Security if you want, that works for me. I understand that we will have to pay more in taxes to make it happen. I think those taxes should be progressive and targeted at the financial services industries that took so much in bailouts and gave so little in return. Companies that trade credit default swaps where the buyer has no stake in the underlying assets create no jobs (except for themselves) and wreak havoc on the community. They should be taxed heavily and there is plenty to get at there.


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Posted by GX
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 3:37 pm

So Phil - I'd love to see you get out of this one. Your hero FDR, even he was wary of public employee unions for good reason. Now we are paying the price for this mistake. I think Venezuela would be a good home for you these days. They are subscribing to many of the principals you espouse. ;-)


*********

In a letter to a public employee union, Roosevelt explains that, yes, they do have a right to organize, but there are some restrictions:

All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service. It has its distinct and insurmountable limitations when applied to public personnel management. The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations. The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 3:53 pm

Stacey is a registered user.

BTW, I hope others are considering also taking the extra money they are now receiving in their paychecks from the 2% cut in FICA taxes and putting that money into their IRAs or other retirement accounts... What a disastrous way destabilize Social Security even more.


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Posted by Tom
a resident of Birdland
on Jan 21, 2011 at 8:17 pm

Two Cents,

I would vote for the devil before I vote for Obama again.......actually he is the devil so I already voted for the anti christ once!!!!!!


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Posted by to phil
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 9:39 pm

Phil, I wish you understood the way the economy works. You want a higher pension paid for by somebody else. Don't we all! You are addicted to OPM (Other people's money). A tax in the financial services industry would either (1) put those businesses out of business which means all those workers there will loose their jobs, or (2) be passed along to the consumer which will end up being a regressive tax as it will affect those who have the least amount of money.

I am not happy with the way we were robbed by some players in the financial services industry. The public employees are robbing me just as much now and instead of bankrupting groups of people, the public employees will be bankrupting cities. The interesting thing is if the financial services industry was not doing what they were doing, the market would not have been as hot in the late 1990's and early 2000's, and the public employees unions would not have got their massive increases in salary and pension benefits (that would not cost us anything since the market will make so much money for CalPERS). Everybody was greedy which includes CalPERS and the employees.


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Posted by Resident
a resident of Another Pleasanton neighborhood
on Jan 21, 2011 at 10:32 pm

Only police (sworn) and firefighters get retirement benefits of 3% per year of service at age 50 and would have to work 30 years to get 90% of their pay for pension. Other city/county workers get 2% per year of service at age 60 or 2% at age 55 and top out around 2.4% at 65, so they would have to work close to 40 years for the government to come close to the 90% of pay that many posters refer to.

I work for another county and we contribute 8% of our employee rate to CALPERS and the full employee social security contribution on top of that. We have no choice but to contribute to both plans. Most of my co-workers will only have 10-15 years of service by the time they retire -- so that would put them at 20-35% depending on what age they actually retire (55-65). Meanwhile they've been paying in about 16% combined CALPERS and Social Security contibution for every year of service. Most government employees never hit the FICA max so it is truly a full 7%+ contribution of their annual income.

So you can't make the assumption that government employees retire with 90% of their highest salary...


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 21, 2011 at 11:31 pm

Stacey is a registered user.

b,

This made me think of you: Web Link

"Pensions and retiree health promises for state workers are an unfunded pension liability (i.e., the amount by which pension promises exceed pension assets) of $96 billion as of June 2009.

However, that figure assumes that those pension funds will increase their assets faster than U.S. investment assets grew in the past century. So, if they earned at the past century's rate, (which itself was very high historically), the unfunded liability is $256 billion."


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 8:59 am

I've been reading all these comments and trying to figure out exactly what to believe.

I'm willing to be swayed, but I, too, would like to know the qualifications of certain people to be making certain statements.

I looked at what an actuary is and while someone made the comment, "it's only complicated in your mind," what actuaries do sounds pretty complicated to me, as well.

As far as I can tell, certain people are arguing that the City can't afford this two year contract. Some numbers have been investigated and some math has been done.

I want to know the qualifications of the people doing that math. Personally, I don't want someone doing surgery on me after they've just done some "research" online and at the library. I want a surgeon who's been to medical school and had some previous surgeries under his belt.

Is anyone on this thread an actuary? Is there anyone here who is truly qualified to explain this to me?

Is the City truly at risk??

I found these articles: Web Link

Web Link

and I have to say, I'm becoming more and more suspicious of the people out there that are getting so lathered up about this.

As far as I can tell, the PCEA contract calls for some concessions, the City says it can afford it, and until someone with the proper qualifications tells me there's a true crisis looming in Pleasanton, I'm not going to be convinced this is so bad.

Does anyone know if there will there be an actuary (ie someone with expertise and experience) at the workshop on Feb. 1??


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 9:09 am

"To phil",

"(1) put those businesses out of business which means all those workers there will loose their jobs"

Good, that is a very small amount of workers, and would not make any difference in overall unemployment. I'm talking about over-the-counter derivatives traders who trade credit default swaps where there is no ownership of the underlying security by buyer or seller (side bets). These workers will be free to do other things more productive and useful to society. They shouldn't be engaging in this activity in the first place. Many states had laws banning this kind of activity until Phil Gramm, Bill Clinton, and company invalidated the laws 2000.

(2) be passed along to the consumer which will end up being a regressive tax as it will affect those who have the least amount of money."

The only consumers of these things are other wealthy investors and institutions. When was the last time you bought something from Goldman Sachs? It will not be a regressive tax.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 22, 2011 at 9:21 am

Stacey is a registered user.

Anyone here own an IRA, mutual fund, etc.? Then you're buying... Go look up a past year prospectus.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 22, 2011 at 9:31 am

Stacey is a registered user.

anonymous's article talks about economic recovery. Here's one that should be read since an employed private sector is a major source of government revenue. It is somewhat of a long read, but well worth it. It sums up a lot of the conversation that has occurred amongst my family members and I. The lack of a realistic job policy by both parties for the past decade is the biggest joke on us citizens who allow ourselves to get too distracted over partisan nitpicking. Everyone talks about the housing bubble as if it were so great. It was a naval-gazing bubble because it was all created from debt. The real bust was in 2000, which we've never really recovered from.

Web Link

"The Great Recession wiped out what amounts to every U.S. job created in the 21st century. But even if the recession had never happened, if the economy had simply treaded water, the United States would have entered 2010 with 15 million fewer jobs than economists say it should have."


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 22, 2011 at 9:35 am

Stacey is a registered user.

Here's the other article on the subject: Web Link

"Between January 2001 and January 2008 — a full economic cycle — the economy created just five million new jobs, which was not enough to cover the growth of the labor force in that period and certainly not enough demand to generate much earnings growth. Even when we recover from the Great Recession, which might take five or more years, we might return to a labor market just as sluggish as the one from the previous decade. And that requires other policies to help people advance — like improving the quality of jobs and creating more workers with the education and skills to compete for any good jobs we are creating."


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 10:47 am

Anonymous - Pleasanton is not going bankrupt and is not close to that. But this is not the issue. In 2002, the City Council voted for an employee contract that substantially increased their retirement benefits (just like the state did in 1999). It was based on faulty assumptions. Since then, employee benefits have grown from $4-5M to $15M and now the city is projecting it will grow to $20M.

This is all happening as the city budget has declined over the past couple of years. You don't need to be an actuary to determine this. I urge you to contact the city yourself to investigate. Don't take my word or anyone else's word. Prove it to yourself.

The key question is if it is right and fair for Pleasanton citizens to continue to support a retirement plan that was passed in error. The longer this goes on, the more Pleasanton citizens will suffer. And the more untenable our unfunded liability will become.

Again, don't take my word for this. Investigate it yourself with the city.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 11:00 am

Hmmm, the quote I took away from this article was the last:

"Business owners are simply capturing a larger fraction of the revenue being earned from private-sector businesses; workers are capturing less of it," said Gary Burtless, an economist at the Brookings Institution, a Washington think tank.

"The main reason I think is that workers are in a very weak bargaining position. Ten percent unemployment tends to do that, you know," he said. "Now is a nice time to be a business owner. For your average worker, not so much."

Now is a nice time to be a business owner. For the average worker, not so much.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 12:35 pm

Really good article Stacey! The concerns over educational standards falling in the US, the realities of outsourcing + your comment "The real bust was in 2000, which we've never really recovered from" is spot on.

Also, Peterson Institute's Kirkegaard comment "There is a significant risk that we wander aimlessly into a situation where U.S. labor markets … end up becoming much more European than they were before," less dynamic, less innovative, with persistently higher unemployment. "That's not a description that I use lightly," he says, "because that's a very, very bad outcome.""


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Posted by it is hopeless
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 1:29 pm

Most cities do not go bankrupt on these costs; they just lower services. Government can get away with this since there is no competition. In the private sector, doing so would put you out of business.

As for needing an actuary person, what you need to really know is how much the cost of benefits has increased, as a percentage of taxable income, how much our unfunded liabilities are (that is, items we have put on the charge card), and are we increasing or decreasing the unfunded liabilities (are you continuing to add to the credit card or are you starting to pay down the credit card).

To actuarially project future costs for pensions, you need to know how early somebody retires, how long they live for (essentially figuring out how long they will be collecting pension payments), what is the rate of return on your investments, and what is the cost of living increases in the future. You need to know how much money to put into the system now, that with the return on the investments, will be enough to pay the defined-benefit payout for the retirement life of that person, factoring in cost of living adjustments.

For figuring health insurance for retiree medical you have all the same variables as pension except instead of cost of living increases you have cost of insurance increases. If you had a cap on payout, which we do not, you can predict the worst case but without having a cap, the worst case can be really bad. If you pay for your own insurance, like I do, you will see how much your health insurance premiums have gone up in the last 8 or so years. It is staggering. With new health care legislation, it is hard to tell if premiums will continue to go up or not. If insurance companies have to insure everybody, you should expect health premiums to go up as somebody with a higher risk that they would not cover before is not getting insurance and the additional risk is spread out among all people paying for health insurance. If the government does something real that affects the cost of health care (new technology, malpractice insurance costs, etc.) then health insurance rates would go down. It is safe to say it will take years before we know what is going to happen with respect to health insurance costs.

With the issues we are seeing for public employee benefits, there are really two issues. Can we afford it is number one. Is it fair is number two. Fairness has a lot of variables; are the public employees receiving significantly higher benefits than the taxpayers, are the public employees involved equally in the cost of the plan, are the public employees involved equally in the risk of the plan.

IF CalPERS could really give out retirement packages at the cost they said it would be in 1999-2002, then Californians should have been allowed to join this retirement system instead of Social Security, just like public employees.

Why is only a special class of people in the state allowed a benefit that is being paid for by the complete state? Last I checked, government is, "We the people". So I should be able to participate in any government program because I am part of "we the people".


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 1:31 pm

Bart:

What was the error with the previous contract?

Also, if I've understood you correctly, your remedy for the retirement portion of the contract is a two tier system, which someone mentioned earlier doesn't really save money (I've been told the City has a hiring freeze, as well). So why are you suggesting that?

And I did investigate with the City, and as far as I can tell, no one can figure out how you did the math to get to $290 million. Which is why it seems reasonable to me to question your qualifications. Which you still haven't answered.

It's for these reasons that I'm suspicious of your characterization of the situation as "untenable."





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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 1:39 pm

"Rancho Santa Margarita has become one of the first cities in Orange County to embrace a two-tiered pension plan intended to head off financial Armageddon."

Web Link


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 1:44 pm

To anonymous: If you really want to learn more about the pension situation check out Web Link.


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Posted by resident
a resident of Downtown
on Jan 22, 2011 at 1:46 pm

Just think about this abstract estimate, which is very much just a theoretical guess . . . .
A firefighter hires on at age 21, retires at age 51 after 30 yrs of service and is eligible to collect 90% of THE LAST YEAR salary for life. If they live until only 81 and collect the pension for the same amount of time they worked they will likely collect about 4 or 5 times as much money as they ever earned because the pension is paid based on the last and highest single year.
How is that fair? or sustainable? Pensions cannot be based on one high year of pay, and they cannot begin at what is 20 years before "normal" retirement age as defined under the new SS standards.
Any worker who retires before 65 needs to reduce the pension allowed by a percentage per year and that reduction needs to remain in effect for life. The public safety pensions need to revert to 2% at 55 rather than 3% at 50. In past years retired firefighters did not live so long after retirement. Of course you can find a time when the "average" lifespan of ANY person was 40 years or less. In the last decade fire prevention has become so good that fire suppression is no longer their main job. The rant about "I run into burning buildings all night every night" is just wrong. Check the stats and you will find far more medical calls than fire calls.

Health care costs should be handled like COBRA. The retiree pays the current actual cost for the benefit and the benefit ends at age 65. It is time for excess pensions and benefits to end.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 1:46 pm

Just came across this paper from a UCSB economist who suggests that fully funding public pensions may NOT be sound practice.

Web Link

Pleasanton is not near bankruptcy or any other crisis. And now I'm learning that having pensions unfunded (to a degree) is not necessarily bad (according to some economists, so there's not a clear consensus, at least.)

So, there's been concessions in the PCEA contract and, until a qualified person tells me otherwise, it can be argued that it's also pretty sustainable.

You're losing me...


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 1:50 pm

"Anyone here own an IRA, mutual fund, etc.? Then you're buying... Go look up a past year prospectus."

What are you talking about? Shareholders? The poster was talking about products. They would pass the cost along to buyers of their products. A shareholder would _want_ a higher price for his stock holdings. Company stock isn't a product.

The whole point it Goldman Sachs shouldn't be trading credit default swaps where the parties don't own the underlying security. If they lose that business altogether, it will be good for all the rest of us.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 1:53 pm

Anonymous, in 2002 we were paying a much, much lower % of our general fund on public sector pensions and benefits than we are today and that % cost keeps getting bigger - you can check these numbers out with the council yourself. As a taxpayer I am not OK with this, especially with people retiring at a very low age in the public sector. It does not matter that we are not going into bankruptcy and it is not sustainable.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 2:12 pm

The new pension plan has ended up costing the city four times what it orginally estimated. In my book this constitutes a mistake.

$290M comes directly from Pleasanton's CalPERS reports plus Pleasanton's 2009 CAFR (for medical). You can go to the city and look this up yourself. Please keep in mind, one needs to eliminate the Livermore fire department portions which will make the number a bit lower.

The difference between me and the city is that they are continuing to use AVA numbers and I am using MVA numbers. Both set of numbers are included in the CalPERS report. MVA is usually larger than AVA, but becausing of the smoothing games CalPERS is playing, the numbers are reversed. Keep in mind CalPERS is being investigated by the SEC for misrepresentation, so it is a serious issue.

The city has and will acknowledge the $290M number but uses various approaches to lower the obligation. All estimates of the unfunded liability are large. We have gone from being fully funded to being very underfunded these past few years. Part of it is due to the recession, but most of it is due to the significant increase in benefits that were granted in 2002.

2-tier is just to help stabilize the situation. What really needs to happen is a give-back by current employees - either through significantly increased contribution rates or a relaxation of the retirement formula.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 2:13 pm

To anonymous: From the same site you got your info from:
Web Link

This is about States, but you have to understand what we are facing.

Re. unfunded state pension liabilities: " . . . the baseline level of unfunded liabilities is therefore around $3 trillion under Treasury rates . . . Even relatively dramatic policy changes, such as the elimination of COLAs or the implementation of Social Security retirement age parameters, would leave liabilities around $1.5 trillion more than plan assets under Treasury discounting. This suggests that taxpayers will bear the lion's share of the costs associated with the legacy liabilities of state DB pension plans"


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 2:25 pm

Two Cents:

I posted an article that calls into question the $3 trillion number

Web Link

"CBPP, though, says that longer-term pension costs are frequently forecast at too large an amount and "such mistakes can lead to inappropriate policy prescriptions."

Specifically, the group questions the oft-cited estimate that states' pension obligations are underfunded by $3 trillion, putting the unfunded liability closer to $700 billion."

It looks like this is all coming down to: you should believe my numbers and not their numbers.

The idea that it's OBVIOUS that the City is in trouble is looking not so obvious to me. It looks like to me that it's all a guessing game about the future.

Once I understand WHO you are and what your qualifications are (which I STILL don't know) then maybe I'll believe your guesses are correct. Until then, I want someone who's been doing the guessing for years and has a track record I can trust.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 3:17 pm

Two Cents:

The California Public Policy Center looks like an anti union organization.

How about citing a more independent, non partisan source?

Also, as discussed above: "In the article Stacey posted it quotes an an actuary, John Bartel, who says two tier pensions really don't save much money."

It goes on to say: "Bartel said his clients tell him that the main motivation for switching to a two-tier plan tends to be 'political in nature,' rather than an expectation of significant savings."








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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 3:37 pm

The mistake was in allowing the unions and CalPERS to distribute the excess funding (CalPERS was 128.4% funded in 1999) to its members. The unions considered the excess money in the plan theirs and they wanted it distributed. They used their influence, as well as the influence of the union controlled CalPERS board, to push forward the legislation known as SB400, which allowed for the distribution of assets in the form of increased pension formulas. If the funding had not been distributed to union members through increased benefits, and instead had been saved for a rainy day, this thread would not be on the PW website. Pleasanton adopted the increased pension formulas in 2002. Problems with SB400 below:

From an article in Calpensions.com:

At a Senate committee hearing this week, David Crane, the governor's pension advisor (now former), read from what he said was a 17-page CalPERS proposal urging passage of SB 400.

Crane said the CalPERS document said "no increase over current employer contributions is needed for these benefit improvements" and that CalPERS could "remain fully funded" despite benefit increases that would not cost taxpayers "a dime."

He said the document failed to disclose that the state would have to pay for investment shortfalls, the Dow Jones market index would have to hit 25,000 by 2009, and the potential state costs were uncapped.

In addition, he said, the document did not disclose that CalPERS employees would benefit from the pension increases, and that CalPERS board members received campaign contributions from pension beneficiaries."

It's nothing short of astonishing that the CalPERS proposal, which promoted the largest non-voter approved debt issuance in the state's history, was not accompanied by disclosures of risks or conflicts of interest," Crane said.

"Frankly, I've never seen a document like this," he said. "And even what Goldman Sachs is alleged to have done looks like child's play in comparison."

Also from the article, "Although critics blame SB 400 for soaring state pension costs, CalPERS says state payroll growth has caused 51 percent of the increase, the SB 400 benefit increase 27 percent, other benefit changes 8 percent, and miscellaneous factors 14 percent."

Sounds like CalPERS is passing on part of the blame to the state but the same issues apply to the counties and cities. While CalPERS actuaries expect salaries to grow by 3.25% (COLA's), many counties, cities, and special districts have been more generous than the assumption. Other perks like "Service Credits", "One-Year Final Compensation", and increased "Survivor Benefits" are also contributors to the growth in unfunded liabilities.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 4:26 pm

Very interesting Arnold - thanks for posting. I suspect new employment wouldn't have counted for 51% if we had been using the old formula.

But I'm sure there are many beneficiaries out there that will continue to justify to themselves and others that they deserved what they are getting regardless what it costs taxpayers.

Heck, just tax the rich more. The top 10% in this state are only paying 67% of all income tax. They can afford to pay some more to ensure state/county/city employees continue to get their ill begotten generous pensions. ;-)


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 4:53 pm

Oh anonymous, so you're in a union . . . I never would have guessed!

And here I thought you were a citizen interested in finding out more information about the subject, which as Bart has said, you can get from the city council if you like. That is where he got his information.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 4:58 pm

Nope, not in a union.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 5:02 pm

A FAIR WAY TO RESOLVE PUBLIC PENSION CRISIS

Web Link

"To build these very rich benefits over time, state and local government agencies pay between 10-50% of employee salary into pension funds each year. The Bureau of Labor Statistics says the average private sector employer contribution to retirement benefits is 3.6%. Is it fair to have taxpayers pay as much as 10 times more for retirement benefits than they receive at their own job?"


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 7:34 pm

PUBLIC SECTOR WORKERS EARN LESS

Web Link

"In addition, it is frequently noted that public employees earn more in benefits such as health care and pensions: therefore, a simple wage comparison will not accurately capture difference in total compensation. Nonetheless, after controlling for multiple factors including level of education, hours worked and non-cash compensation, Keefe found that, on average, full-time state and local employees are undercompensated compared to "otherwise similar private-sector workers."

"Keefe found that private sector workers earned average annual wages of $55,132, $6,061 greater than the $49,072 earned by public sector workers. When looking at total compensation including employer-provided benefits, this gap narrowed but the private sector workers still earned $2,001 more per year than public sector workers ($71,109 in total compensation, versus $69,108). This gap was especially large among more educated workers. College-educated workers on averages earned $22,966 less in total compensation."


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Posted by it is hopeless
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 8:24 pm

Anonymous, right, you are not a union member. I have a bridge to sell also. Or maybe you are not a union member but you work for the union.

Our city was instructed to do a private-public salary comparison 4 or 5 years ago. This report was never released. I would assume that if the salaries in the public sector were low that the unions would have been all over the city to get the survey report released. Since they have not, it is safe to assume that the salary comparisons were unfavorable to the public sector.

I believe we should pay the employees fairly. We should do a salary comparison and figure out what the salary and benefits should be for the jobs we have in the city. Then we should pay that. We should also pay them now for services rendered, not paying them in the future with pensions and retiree medical; a cost that has risk to the taxpayers and puts any debt on future generations. With the last contract the raises given out were 41% and pension increases of 35%. I cannot believe that every job was underpaid by that amount. This was also done without a salary and benefit survey so nobody was saying that jobs were underpaid. I even remember the Council meeting where this was approved. Speakers did come to the podium and said the increases were outragious and risky based on market conditions. Tom Pico's response was that the pension increase will not cost us anything and we can afford the salary increases so we should give it to the employees. Interesting that Pico now lives in Oregon; where he will not have to pay any of the debt that he is responsible for.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 9:33 pm

Not sure why it would make a difference, but I'm not a union member. I'm a student.


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Posted by it is hopeless
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 9:44 pm

I guess that explains it. You have never had a real job or had a career to see what is reasonable in pay and benefits and you have not been contributing to social security and seeing your statement of how much you will receive when you retire, or put money into a 401(k) and take some responsibility for your retirement. You still live in a utopia that society will take care of you forever, and it will not cost you anything. Oh, the gold old days...

Since you are a student, I hope you don't mind that you will be paying for the debt that this generation has charged and left for you.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 10:31 pm

I didn't say I was a child. And, unfortunately, I am far, far from childhood. But, nevertheless, I am a student and not a union member.

And also unfotunately, these suppositions cannot deflect from the questions I pose. The fact that the conversation has turned this way, leads me to believe your arguments have run dry.

I am still ready to be convinced otherwise, but still no one has stated their qualifications that enables them to authoritatively state that, based on their expert experience, if this two year contract passes Pleasanton will suffer irreversibly.

Amateur calculations, projections, and pronouncements have been made. Articles have been quoted. But for every article someone directed me to, I can find one that argues differently.

Bart points to a "mistake" that was made, as if someone set out to purposely deceive, when, in fact, after you explained it, it sounded more like to me that someone's projection didn't pan out. And all these articles that everyone is quoting are full of projections. So, it looks like to me this is just a game of believe MY projections.

Unfortunately (again) you're all so sure you're right. And I'm not so sure you are.




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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 10:44 pm

If you are really a student, and not b, then you should look into why the cost of your education is skyrocketing. Once you understand how these two issues are related you will have a better understanding of why people are concerned about this issue, and I expect you will share their concern.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 10:55 pm

Anon - Now you are just being silly. I'm responding less to you hear but all others who read these blogs and in fact do have open minds on the issue. Get a hold of Nelson's/Emily's presentation to the Chamber of Commerce that shows that pension costs have risen from $4-5M to $15M and are projected to increase to nearly $20M in the next couple of years. These are their numbers not mine.

Most everyone, except those who continue to benefit from the mistake, will see this as an issue.

You keep expecting people to justify their backgrounds to you, in a back-handed way of trying to discredit those who are bringing up these issues. But it doesn't take much to be able to read CalPERS reports and Pleasanton's financial statements. It is irelevant that I happen to have a graduate business degree from one of the top business schools in the nation. It doesn't take that education level to understand the numbers.

Oh and BTW, I don't expect to get paid extra because I happen to have that degree (as so many government employees initmate and as suggested by the biased union-backed study you reference above). I expect to get paid according to the value I provide to my organization. I am not entitled to anything.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 11:17 pm

That's okay if you don't want to respond to me here (or hear), but calling me "silly" seems a little petty and not very polite.

I have seen the numbers. My question is do those numbers represent a significant hardship? You yourself say the city is not in danger of a financial crisis, correct? And a UCSB economist argues that leaving these pensions unfunded to a point might actually make financial sense.

It's your OPINION that the current contract is untenable. Others with as much knowledge of the situation as you feel differently. Your big college education couldn't help you spell "here" correctly, so forgive me if I'm suspicious of your qualifications to make that conclusion.

Tell me you are an actuary who has been doing this for years and I'll believe your opinion of what the numbers mean and might possibly mean in the future.

If asking for that makes me silly, I'm okay with that.

Tell me you are


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Posted by FEB 1
a resident of Another Pleasanton neighborhood
on Jan 22, 2011 at 11:55 pm

"Tell me you are an actuary who has been doing this for years and I'll believe your opinion of what the numbers mean and might possibly mean in the future."

I think the fact that you are continuing your education will be of great benefit to you. You should also try to attend the community workshop on 2/1, and I'm sure we can all get our questions answered. In the meantime you can review agenda item 7 from Tuesday's council meeting. If you review the city's plan for containing employee compensation, and also review EXHIBIT E, some of your questions will most likely be answered. If I remember correctly Exhibit E talks about the unsustainably of the pension plan and the efforts of Contra Costa and Alameda county leaders to identify pension reforms. I believe the group had an ACTUARY at their disposal during these meetings in which they, CITY LEADERS, refer to the current level of pension benefits as unsustainable, unfair, and not necessary to retain employees.

It's been a few weeks since I've reviewed these documents but I think my comments are accurate. I hope you spend the time to do your own review, list your questions and concerns, and bring that list to the workshop. The more people that are informed about this issue, on both sides of the argument, the better. I hope to see you there.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 23, 2011 at 7:11 am

I believe you are referring to the white paper Nelson co authored as part of the Association of City Managers. I have read this paper and my understanding is that it is academic in nature and does not specifically address Pleasanton.


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Posted by s
a resident of Birdland
on Jan 23, 2011 at 10:07 am

Now why would a city manager write a paper and do a presentation about the problems that Pleasanton has in pensions and other retirement liabilities if it were not a real issue. The city manager receives the pension and health care benefits so he has no incentive to say there is a problem if there is none.

It is obvious that there is a pension and unfunded liability problem not just in Pleasanton but every city, school district, county, and the state. The only people who think otherwise are those receiving the benefits and don't want them reduced, and anonymous people who say they are not part of the union but really are.

Every dollar spent on pensions and retiree medical is a dollar less that can be spend on city services, education, social services. etc. Unless you tax the people even more. The general population is being taxed to benefit a portion of the population; the public employees. I guess you might call it a type of welfare. Some have stated that the public workers get paid less than the private sector. If that is the case then those people should apply for jobs in the private sector. When we get to the point where we have job openings and we do not get qualified people applying, then we can address the salary issue. Many people took jobs in our city and the state before we gave out the 41% pay increase and 35% increase in pensions. Those people took the jobs willingly. They were not forced to take the jobs then. If they were underpaid then that indicates those workers could not get a job in the private sector so they settled upon a job in the private sector. I don't think that was the case so we must be paying well.

I think the public workers who are complaining now about being underpaid are doing themselves a disservice and making themselves look bad. They are saying they took underpaid public sector jobs before we had the great increases in salary and benefits. Why would anybody take a job that underpays them? Unless they just could not get a job in the private sector. Or possibly they were not motivated and wanted to work in a job that had a union that protected them so they could do the minimal amount of work and not get fired but still receive raises and step increases in their salary for showing up.

We have a free market. If you do not like your job or do not think you are paid enough, you are free to look for a job that meets your objectives. Just the fact that people are retiring from the city after working there for 20 and 30 years indicates it was lucrative for them. I do not know of anybody, except a public employee, who has worked in the same job for that long.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 23, 2011 at 11:47 am

I would imagine that Nelson's opinions as City Manager of Pleasanton are sometimes different than his opinions as the chair of a professional group.

The paper that was cited does not address Pleasanton specifically. The fact that public pensions as a whole are in crisis is not being debated here (and if they were, I would immediately concede).

What is being debated is: if Pleasanton accepts the current two year contract, will Pleasanton suffer? That has NOT been proven in this thread. Bart even concedes Pleasanton is far from any fiscal crisis.

People have voiced their fiscally conservative opinions here, but no one can say with any certainty that this contract is, without any doubt, harmful. For every opinion that it will be, there is as much authoritative opinion that it is sustainable.

It is your choice to believe Bart's assessment. As he has not established his credentials to make these claims, for now, I choose not to. I will wait for the workshop when, hopefully someone who is qualified to make these claims, does or does not.

So, no, it is NOT obvious that "there is a pension and unfunded liability problem not just in Pleasanton but every city, school district, county, and the state." For instance, Nebraska is also doing just fine:

Web Link

And, no, I'm still not in a union. :-)

Looking forward to Feb. 1.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 23, 2011 at 11:56 am

PS - Generally speaking, public sector employees are ones supplying those services. In exchange for that service, it's customary to pay those people. So, no, it's not really welfare.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 23, 2011 at 12:38 pm

"What is being debated is: if Pleasanton accepts the current two year contract, will Pleasanton suffer? That has NOT been proven in this thread. Bart even concedes Pleasanton is far from any fiscal crisis."

No, what is being debated is: do we choose to spend an ever increasing percentage of our general fund on public sector pensions that the recipients are not contributing to. My choice is no.

"It is your choice to believe Bart's assessment."

That is absolutely yes, my choice. He has made a very strong position and the people in the public sector who said that pension contributions were increased "in lieu of salary increases" have been proved very, very wrong. I have not seen any arguments that factually counter anything that has been presented.

"Generally speaking, public sector employees are ones supplying those services. In exchange for that service, it's customary to pay those people. So, no, it's not really welfare."

When we're paying 41% increases over eight years and providing about 10x the retirement of the private sector at a retirement age of 55 years of age, I think we can safely say we are paying people for the work they are doing. The question is whether we're being asked to pay too much. Why don't the people receiving these generous regtirements contribute to them given they know what we all know now? They did in the past when things worked better, Pleasanton was still a nice place to live and future generations were not being asked to pay for the dumb decisions made less than 10 years ago.

This must be resolved. I for one, would prefer for the retirement age to go up now to 65, but I support Bart fully in his efforts to get employees to contribute more to their own early retirement.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 23, 2011 at 1:26 pm

Stacey is a registered user.

It seems that the conversation above is suffering from some lack of clarity regarding what is meant by underfunding and contributions into the pension fund. To be sure, the two are related, but not necessarily the same thing.

Contributions need to be continuously made by the employee and the employer during an employee's working career in order to fund that employee's pension. There are several practices that upset that and can lead to underfunding that individual employee's pension without needing to consider market returns.

Take for example the practice of retroactively applying increased benefits and for simplicity's sake we'll assume the same market returns. Let's say an employee has so far worked for 10 years and was promised 2% @ 60. During those ten years, the contributions made by the employer and employee to the pension fund was assuming 2% @ 60. Then the employee's contract gets changed to 2.7% @ 55 retroactively. The current contribution from employer and employee now must increase due to the new higher pension formula. Well that's ok going forward, but what about those past 10 years? We haven't been saving for the higher benefits for the past 10 years but we're obligated to pay for them. How are we going to do it? Well, because we don't have the money now to pay for the past 10 years' worth of contributions with the higher pension formula, we're going to rely upon wishes that the market will continue to provide higher returns! Wooo! (Really, they should pay forward instead of relying on the market.)

Same thing happens when we take "contribution holidays" or when we offer "service credits" and other manner of pension spiking loopholes. Anytime we increase benefits without having paid for it, we get instant underfunding.

Now throw into that mix the underfunding/superfunding that can occur due to higher or lower market returns. That kind of underfunding is due to how much you've exposed yourself to market risk. Employees and employers do not have control over the market, but they do have control over the level of exposure. When we're causing underfunding because of our benefits increases without increasing contributions, we're exposing ourselves to more market risk (This is basically what CalPERS has been doing). The employer can still protect employees from such underfunding, but there's a certain level at which it cannot without needing to cut into services.

Anonymous wrote: "What is being debated is: if Pleasanton accepts the current two year contract, will Pleasanton suffer?"

There was a Mr. Venkatesan who spoke at the last Council meeting and basically criticized the lack of information presented on this subject. The documents presented only showed how much will be saved from the current contract. Any time there is a public contract, we citizens must demand a full analysis of how much that contract will cost. How much do the costs rise over the two years?


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Posted by s
a resident of Another Pleasanton neighborhood
on Jan 23, 2011 at 1:36 pm

All you have to do is look at our financials and see how much employee benefits cost in 2002 and how much they cost today. Nelson has presented that. Then you have to look at how much unfunded our employee future benefits were in 2002 and how much they are today. In both cases there is a significant increase.

Our democrat governor who has been supported by the unions says that pension and retiree benefits are unsustainable as well as Gray Davis who enacted the new pension system who now says that the data he was given when he was governor was incorrect and we have to undo things.

If you contend this is just a blip now, then the employees should just revert the extra benefits until the blip is over. No problem with me on this.

Another reason why Pleasanton has more problems now is because of the 8 year contract. It was obvious in year 1 that the assumptions for the costs of the additional benefits were incorrect. Instead of fixing things when they first came up, the unions said they had an eight year contract and they had no intention on opening anything up. Now 8 years later we are in much worse shape than if we addressed the issues 6 years ago. Six years ago we would have started to have the employees pay for a percentage of the pension and it would have been ramped up until today where they would have paid the full employee share. Now that they refused to open the contract back them, I see no problem in making a bigger jump in paying the employee share. They could have done it before when it was cheaper but they refused. That is the price they pay.


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 23, 2011 at 4:49 pm

"You still live in a utopia that society will take care of you forever"

We certainly need to get back to those days.

What I'm saying is that I am for wealth re-distribution. I'm saying that I would like to spread around some of Joe the investment banker's wealth to people who really need it. If that means investment bankers have to do with less, so much the better. Maybe the rest of us can't make as much money or have as comfortable retirement as state and local government workers, but we can improve our lot with mandated health care and retirement benefits. Only then should we address perceived excesses.


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Posted by checking math
a resident of Another Pleasanton neighborhood
on Jan 23, 2011 at 6:07 pm

Hi Bart, I think you have understated what the last contract did for the employees pension. You mention the 41% increase in salary and 35% increase in pension but actually those should be multiplied together to get the real enhancement to the employee's pension. Here is an example:

Assumption: An employee who is 47 years old and with the city for 22 years in 2002 and a salary of $100,000 in 2002.

If the contract in 2002 did not take place, in 2010 the employee would have worked for 30 years, highest salary $100,000. Pension payoff 2.0%:

$100,000 * .02 * 30 = $60,000

With that contract we paid 7% of the employee's 8% employee portion of retirement and that ends up being 7% "special compensation" added to the calculation:
$60,000 * 1.07 = $64,200

Without the increase in salary and pension that employee would have received $64,200 per year in pension plus cost of living adjustments.

With the contract in 2002, the 2010 employee would have worked for 30 years, highest salary $141,000 ($100,000 * .41). Pension payoff 2.7%:

$100,000 * 1.41 * .027 * 30 = $114,210

We then give the employee another 8% because the city pays the employee portion of the pension which is 8% but it is added to the final salary as "special compensation"

$114,210 * 1.08 = $123,346.80

With the increase in salary and pension that employee receives $123,347 per year in pension plus cost of living adjustments.

That is quite a bit more in retirement. ($123,347 vs $64,200 per year)

Assuming the employee lives to age 80 (25 years of retirement), before the contract the payout would have been $1,605,000.

After the contract: $3,083,675.

The additional payout to the pension is $1,478,675 (assuming cost of living adjustments the same (0 in this assumption)).

Bart, is this calculation true or am I missing something here? It seems to me the last contract actually increased the pension by 92% not 25% for a worker with 30 years.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 23, 2011 at 9:27 pm

The previous post is a bit more complex than the summary one I created, but it seems directionally correct. What is irrefutable is that city employee benefits have gone up substantially since 2002 which has created the unsustainable pension situation we currently have. City management acknoledges this. It seems as though only a couple of folks on this blog refuse to acknowledge reality.

I thought folks would appreciate the following information sourced from the BLS and USA today. Please note these figures do not include entitlement benefits which are substantially higher than private and are quite a bit different than the highly suspect union-sponsored studies other have posted. I recognize this is for Federal employees, but there are some interesting perspectives one could draw from this.

Web Link


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 6:58 am

Stacey, thanks for the link. Not sure if it ISA good thing that it made you "think of me". LOL. I may not agree with you on everything, but I appreciate your intelligent contributions to this forum.

The article doesn't really cite specific investment performance numbers, so it is hard to evaluate. However it seems to make the most common and mistaken assumption--that returns are tidy and linear.

The reality is that portfolio returns are lumpy. If we grow 3% from here, we probably are in deep trouble. But if we continue to have a sharp recovery (as is typical after most recessions, and appears to be happening now), we'll see big returns for a short period (returning us to previous asset valuations) and then grow at more modest rates.

In that scenario, which is typical of all historical recoveries (take a look at any multi-decade stock chart), and taking into account the higher contribution levels now in place, a crisis is highly improbable. It just might be a little uncomfortable getting there, since we can't write giant checks to smooth the curve.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 7:06 am

Bart, I ran some calculations over the weekend. It appears that most of the increase in Pleasanton's pension costs was due to the state increasing employer contribution rates 2.5x since 2002, not the Pleasanton employment agreement passed at that time.

Isn't it therefore unfair to characterize this as a "mistake" by the city council and to demonize them? Are you doing this for your own political gain, or was it simply an "mistake" on your part?


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Posted by domorehomework
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 8:21 am

"I ran some calculations over the weekend. It appears that most of the increase in Pleasanton's pension costs was due to the state increasing employer contribution rates 2.5x since 2002"

Unbelievable! Just why do you think the contribution rate/costs are increasing,b?


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 8:36 am

To reiterate an obvious point, Pleasanton's contribution rates went up because they raised their formula by 35% and instituted a series of raises that ultimately raised income by 41%.

Are you sure you are trying to be unbiased here? It seems as though your underlying intent to understate the issue is causing you to loose your common sense and overlook obvious facts/connections.

So I guess you are acknowledging that the costs went up significantly, but you are trying to deflect the blame away from Pleasanton's pension increase mistake?

And others give me a hard time about misspelling one word in the hope of undermining me and my position. LOL


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 8:38 am

Before anyone else points it out - it should be "lose" not "loose" - spelling was never my strong suit and this teaches me not to be doing two things at once.


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Posted by s
a resident of Birdland
on Jan 24, 2011 at 8:51 am

"The reality is that portfolio returns are lumpy. If we grow 3% from here, we probably are in deep trouble."

Ok "b", since you seem to be the self-proclaimed expert here, please do the calcs and let us know what the portfolio growth must be for us to not be in trouble. That would be the growth to recover our previous losses and the growth to sustain the future.

It will take us a real long time to get out of this mess even if we go to growth that we saw in the late 1990's. The reason is since then CalPERS changed its method on agency funding. Since the correction of the market, CalPERS instituted a "smoothing" formula so agencies would not be hit as hart in their current obligations. This is why we have such a high unfunded liability. It will probably take 20-30 years of above-average growth just to pay down the debt because of the new smoothing put in.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:09 am

Make sure you read the Brown Pension article today in the Tri-Valley Herald:

"Public employee pensions are a very serious issue for 62% of those polled, with another 23% saying it's somewhat serious."

And this is coming from Brown's own pollster. That is 85% of people concerned about this issue.

If a Pleasanton initiative on this issue moves forward, it has a very high chance of passing like with other cities. Let's not get to this step. Let's hope our elected leaders, unions and employees read the situation correctly and step up and do what is right for citizens. Deal with the obvious issue now.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:13 am

The CalPERS employer contribution rates for the past 10 years are on their website. It took me all of 10 seconds to Google them. One look at the year-by-year numbers, and it was very obvious what had caused the pension costs to skyrocket since 2002. It has nothing to do with Pleasanton's employee contract. Looks like Bart has some backpedalling to do and some apologies to make.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:35 am

Come on b ... this is getting a bit ridiculous.

Do yourself a favor and actually look up Pleasanton's own contribution rates. I'll make it easy for you and give them to you:

- Pleasanton's 03/04 police rate was 2.9% and has since grown to 33.4%.

- Misc. was 10.3% and will be 21.1% this year.

- Fire was 9.1% growing to 31.9%

But I'm sure you don't trust anything I state, so you'll want to verify with the city. You can get the current rates from their Oct 2010 CalPERS reports and the historical from their CAFRs or contact the finance department.

For the sake of continued healthy dialogue, I'll stay focused on the facts. But I do find it interesting how the messengers in this debate continue to get attacked and undermined by those who oppose. Hopefully, those with open minds can look past this and focus on the facts and issues.


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Posted by s
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:39 am

s, others have already done the calc, so I'm not going to waste more time with that. Everyone's heard the "if it goes down 50%, it has to go back up 100%" rhetoric. That sounds really difficult, and it is the kind of dangerous manipulation of statistics that cause people to bail out of the stock market at the bottom.

However, the reality is that it happens all the time. Look at the dip and recovery related to any recession. All the scary looking numbers being thrown around by the tea Partiers are all based on recovery off the bottom. But recoveries off the bottom are almost always sharp, and then round out over time. That doesn't show up in your 10 year numbers, as they smooth out recessions.

Last year, CalPERS returned over 11%, despite MASSIVE writedowns in their real estate portfolio. That's better than your 3-4% return assumptions, right? What's more likely to happen in the next few years? Another crash that continues to require massive writedowns like this? Or a recovery? Given that CalPERS has already massively written down the book value of assets, plus the fact that they're taking in higher contributions to invest into this recovery, 11% will be easy for awhile. We could easily see some 20-30% years for awhile. Really.


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Posted by ignore them
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:46 am

Bart, we should just ignore "b" and "anonymous". They sound like kids arguing and their only argument is "did not". They have no comeback to the data that you present so they are just trying to confuse the readers. Good thing the polls out there are not on their side. I actually these spokespeople for the employee union continue their nonsense. That will get even more people to vote for reform because they are so irrational.

Every time I see a posting by "b" and "anonymous" it makes me want to work harder for pension reform. Those two have such contempt for the taxpayer.

I expect we will see "a" and "anonymous" at the pension workshops. I will look for them wearing the union shirts; just like the last meeting.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:52 am

s - CalPERS hasn't actually written down all its assets. That is why you see AVA numbers higher than MVA numbers (actual market value) today.

In order for CalPERS to get back to an 80% valuation level, it needs to achieve about 12.5% per year, every year for the next 15 years. And this assumes there will be no market downturns. Highly, highly unlikely.

And oh BTW, CalPERS is lowering their investment return assumption this year from 7.75% to somewhere between 7.375%.

And who picks up the difference, if your optomistic assumptions don't come true? The taxpayers. The good news is that the majority of taxpayers have woken up to this game (posting above) and don't want anymore of it. This includes all sorts of political perspectives including tea party and non-tea party concerned citizens like me.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 24, 2011 at 9:55 am

Stacey is a registered user.

The increased contributions are needed to cover both the liability due to poor market performance _and_ the promise of increased benefits that were NEVER funded (see my post above).


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 24, 2011 at 9:57 am

Stacey is a registered user.

Pensions are in this mess due to the willingness of both employee and employer to expose their retirement to greater market risk. Taxpayers are saying that if you want to take that kind of market risk, take it on your own dime.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:57 am

I tend to agree. I am only responding now when I can interject facts/information and to counter any obvious "undermine the messenger" statements b or anon are making.

It amazes me how much those two are fighting to maintain status quo. A status quo that even City Management and the Council state as unsustainable. I am looking forward to the worshop and hopefully look forward to meeting b and anon in person.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 24, 2011 at 10:02 am

Stacey is a registered user.

Web Link

"What's disappointed California municipal employers is that CalPERS has been so dodgy about its data, and waited this long before 'fessing up to the inevitable prospect of ever-rising pension costs. Numerous employers have entered into collective bargaining sessions and even signed labor agreements with one hand tied behind their backs — while unions continued to deny that there is a pension problem given that CalPERS was withholding vital strategic information from its constituents and masking true costs.

How high will this flood crest? Local employers are now skeptical that they have been told the full truth about how high their pension costs will ultimately surge. Unlike the vast majority of public pension funds, CalPERS uses a 15-year actuarial smoothing process that camouflages the genuine economic impact of market fluctuations. I have no issue with normal industry-standard actuarial smoothing periods of 5 years, in light of the average length of a business cycle — which is 6 years based on 14 recession cycles in the past 84 years. But the CalPERS process is opaque and flunks the transparency test that taxpayers, public managers and municipal bond investors are entitled to expect. As I have explained before, such extraordinary "smoothing" practices deserve SEC investigation as an "artifice and device" to conceal relevant financial information from the investment community — as well as the employers who must now bear the financial brunt of unsustainable pension benefits."


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 10:14 am

Bart, I'm not disputing those numbers. What I'm disputing is your assertion that they were caused by a 2002 contract between the City of Pleasanton and the employees of the city. That is simply not true. It is merely a coincidence that the contract was passed in 2002, about the same time that CalPERS began sharply increasing contribution requirements.

Quit playing the poor victim. Just because you're spewing numbers doesn't mean you're interpreting them accurately or drawing meaningful or accurate conclusions from them.

In this case, your numbers are probably correct (I haven't verified them, but am not going to dispute them) but your theory about the cause is wrong. I just led you to the actual cause. Now go dig deeper. And perhaps apologize to the Council for demonizing them incorrectly


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 10:15 am

Stacey - great article that all should read.

All the more reason why the PCEA was not negotiated in good faith on behalf of Pleasanton citizens and needs to be renegotiated to strike a better balance of sacrifices.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 10:29 am

mmm ... the Council approves a 2002 contract that increases pension benefits on the spot by 35% and a series of 8 straight raises for a total increase of 41%. And you say that the subsequent dramatic increase in contribution rates is coincidental? Dramatic increases that started well before the recession? LOL

"Public employee pensions are a very serious issue for 62% of those polled, with another 23% saying it's somewhat serious."

We elected our Mayor and City Council represent our needs. I do hope they are listening and will act accordingly.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 10:33 am

I have NEVER advocated for status quo. On the contrary, I have said here numerous times that changes are needed. I believe employees should be paying 100% of their contribution. That's why it is called an employee contribution. I also believe we should continue the shif away from pension plans and toward 401(k)-style plans.

I disagree with you on the following:
- change should be gradual. Sharp decreases in employee compensation can cause lots of problems in my experience. To that end, the proposed 2% employee contribution (25%) is a good first step in the right direction, and one the city can afford.
- investment assets and returns are artificially deflated due to the recent recession, and will show substantial improvement in the coming years, due to the recovery that is clearly underway.
-the rise in Pleasanton's costs were largely due to CalPERS investment performance and contribution requirements, not poor negotiation by the City of Pleasanton in 2002.
- citizens initiatives/propositions are ultimately bad for us. They limit the ability of our elected representatives to properly balance all issues/needs, and have unintended (and usually costly) consequences. See:California budget and Kay Ayala's Hills fiascos.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 10:41 am

They did act accordingly. They listened to the complaints of you and others. They negotiated a contract that is better for you and worse for the employees, balanced against all of the needs of the city. They did everything they are supposed to do. And you won. You're just getting greedy now.


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Posted by Concerned
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 10:43 am

I admire Bart for his patience in responding to the ridiculous arguments presented by the union surrogates. Frankly I have lost faith in the negotiating process. Looks like no one is representing the taxpayer. The city management has a vested interest in overpaying as they are part of the same group indirectly. The mayor and councilmen are primarily interested in getting reelected or moving on to bigger political things. With California politics being controlled by unions at all levels they just go along with the unions to get funding and electoral support. The only way this will be solved is by a revolt of the taxpayers and/ or bankruptcy both of which are coming very close. The fat lady has finished clearing her throat and is singing the opening aria.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 10:55 am

I too don't want an initiative, but it is something I will support and fight for if the Council does not solve this issue in a manner that is equitable for all stakeholders. The reason why we have so many successful pension reform initiatives is many believe elected representatives are placing the wants of special interests over the needs of average citizens.

I too agree that the change should be gradual. But I do have an issue with a 2% increase when CalPERS cost are rising by a minimum of 3.8%. If employees don't want the subseqent pay cut, they could relax on the pension formula either in terms of retirement age or percentage. But it is wrong to expect the taxpayers to continue to pick up the deficit.

We will continue to disagree on what caused the dramatic increase of contributions and unfunded liability. Yes, of course, the recession had something to do with it. But the dramatic increase of benefits in 2002 (based on effectively fraudulent CalPERS representation) had more to do with it. Most people including Gray Davis, Willie Brown, etc. agree with this point. Only a few people like yourself don't.

Let's see if the union is willing to compromise more and whether city management and the council can facilitate this. This would co-opt an initiatives process. Otherwise we are potentially in for a fight that neither of us want. But people like me will no longer stand idly but and let this broken political process continue. Only the u


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 11:01 am

They absolutely did not according to our best interest. The PCEA agreement was struck 11/6/10 well before the public dialogue started and before the new CalPERS information was published.

And taking credit for the 2% contribution that fire is making is disingenuous. This compromise came from Livermore not Pleasanton.

There has been no compromise with regards the the pushback that is coming from me and other citizens.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 11:47 am

Mr. Hughes, I've been meaning to ask you about this comment you posted earlier: "...as suggested by the biased union-backed study you reference above..."

I was curious if you have any evidence that the study was union backed. And if so, could you please present it here?

And, yes, I'm still trying to decide if I should belive you.


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Posted by Hmmmm
a resident of Pleasanton Heights
on Jan 24, 2011 at 11:50 am

I was watching the community channel about a month ago when a discussion about the Livermore (pretty sure it was Livermore) Unified School District/Teachers contract was being discussed. The speaker said that both the district and the teachers would present a proposal, which would be made public, and then negotiations would be conducted in close session. I think this is something Pleasanton should adopt for all contracts. It would at least allow the public some input and help taxpayers determine who is/isn't being reasonable. Not perfect but it beats the heck out of the current system where the people that pay for it all are the last to know, and don't find out until the contract is essentially approved.

I've also been told that there is nothing that says contract negotiations are required to be held in closed session (Brown Act is often cited). So why is it that way? And just whom is being protected?


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 12:37 pm

Concerned, why does Bart get a free pass? "Patience?". The guy's standing on street corners kissing babies with Kay Ayala. He's running for office, and you better believe I'm going to second guess his agenda. He's being pretty loose with his statistics, and you're a sucker I you're not doing your own due diligence on his interpretations.

I am not associated with a union, nor will I ever be. Not a big fan of them, really. I work in the technology industry, and have provided more details in the past.

The "best interest" of the taxpayers is to make sure well-qualified people show up when you dial 911 and the streets you drive on are well maintained and the parks are in good shape before your child's ball game. I chose to live here because I saw that this city takes pride in those things--I paid a premium price for premium benefits. My best interest is to ensure that the city retains the ability to attract premium employees.

Of course, long-term sustainability is a piece of that puzzle. Which is why I have repeatedly supported gradual fiscal reforms. But given the fiscal health of the city in the midst of a recession, I see no need for massive emergency reforms. The greater threat to my quality of life in Pleasanton is mass attrition of the best City employees as the result of drastic and unnecessary pay cuts and/or more muli-million dollar lawsuits over "citizens initiatives."


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 12:47 pm

anon - Who else would present a "study" based on a survey rather than hard facts from the BLS? Who else would try to defend the current situation when the majority of Americans believe government employees are over-compensated?

Let's turn this around. Can you please provide evidence that this is not union backed? Please show me that this is an independent concerned citizen effort that is trying to protect the position of public employees. Please provide the funding source for this "study".

You will never believe me because I threaten your position. But I suspect you will continue to try to undermine my credibility with the hope of deflecting attention from the issue.


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Posted by Hmmmm
a resident of Pleasanton Heights
on Jan 24, 2011 at 12:50 pm

"I am not associated with a union, nor will I ever be. Not a big fan of them, really"

BS! The least you could do is be honest with yourself.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 1:00 pm

b - It is interesting you you and anon continue to accuse me and others of indiscretions and yet you are free to make one unsubstantiated accusation after another:

"He's running for office, and you better believe I'm going to second guess his agenda."

Trust me, I'm not running for office. I'm just trying to effect the necessary change required for our financial future viability.

Let's turn the table on you. Please do provide proof that I am running for office. Please do provide your evidence. Please to show that it is me misrepresenting the truth and not you. Please do show that is not you who is playing fast and loose with statements. Please do. We are all waiting ...


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 1:07 pm

b,

Don't you agree that CalPERS is being reckless with pension money by putting it in all those shaky investments and then expecting such a high rate of return. Isn't that part of what's worrying Bart? Maybe this is off the subject.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 1:14 pm

I'm still waiting b and anon ...

At least I have the courage to use my real name in this debate. I have nothing to hide.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 1:37 pm

Bart, too early to file campaign papers, but not too early to campaign. Someone needs to hold you accountable for your "facts" with all the Tea Partiers hovering around here.

Yes, there are problems with CalPERS. But that's not what Bart's initiative is all about. He's blaming this problem on a 2002 employment agreement between the City and workers, and that's just plain false.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 1:47 pm

CalPERS employer contribution rates for 2002-Present are here: Web Link .

Blame it on the recession/depression. Blame it on the Grand Progressive Conspiracy. Blame it on Fraud. Blame it on The Devil. (I believe all were blamed in this thread already). But increasing employer contributions 2.5x from 2002-Present was the primary cause of this problem, not the 2002 Pleasanton employment contract.

Yes, it is a huge problem. You're just barking up the wrong tree by attacking Pleasanton's Council and employees.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 1:53 pm

Just so you know, the union didn't compromise, they gave it all away. They got nothing in this negotiations but cutbacks.

One could say that they have no power.

One could say they saw the situation and acted in a cooperative manner because they saw the city working in other ways so the cuts would not be so deep and no one would loose their job.

I prefer to think it is the latter.

I am just wondering what Bart thinks the union got out of all of this. Gradual increase in pension contribution, cut back in medical, no raise for two years.

If he had really done his homework or really wanted to present all the facts, he would tell you that CALPERS factors in a 3% increase in payroll which in this case won't happen because there is no raise and less employees.


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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 2:31 pm

"Yes, there are problems with CalPERS."

That's an understatement.

"But that's not what Bart's initiative is all about. He's blaming this problem on a 2002 employment agreement between the City and workers, and that's just plain false."

No, it is not. You can look at the contract from 1996 that reduced the employees retirement age from 60 to 55, while increasing the number of years that the city has to cover full medical, as a contributing factor. But it is really the 2002 contract, and the combination of increased pension benefits and wages escalating faster than the actuarial assumptions, that have driven the costs. The fact that CalPERS has mismanaged their portfolio while leaking their own oil, along with the great recession which came years after the problem was known, are also contributing factors. The fact that CalPERS and the Unions are still in denial that a problem even exists increases the unfunded liability every minute - of every day - that this issue goes unaddressed.

Make no mistake, CalPERS is part of the problem, the Unions are part of the problem, and you are just interesting. The 2002 contract was a mistake. The fact that it is barely being addressed, in 2011, is a travesty. I'm guessing you would share my concern if it weren't for the fact the taxpayers have guaranteed your benefit. If your pension weren't guaranteed by the taxpayers there is no question you would be singing a different tune. You would be screeching about why your pension fund only has enough dollars to pay for half of your retirement years.

I'm guessing the city would have approached the unions, as far back as 2007, about eliminating raises going forward or at least contributing toward THEIR own pension. Neither of those things happened and the employees kept getting 4%+ raises while city revenues were decreasing, and the unfunded pension liability and health care costs were increasing. I hope Pleasanton protects taxpayers in the future by including contract re-opener clauses in all future contracts.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 3:18 pm

"They did act accordingly. They listened to the complaints of you and others. They negotiated a contract that is better for you and worse for the employees, balanced against all of the needs of the city. They did everything they are supposed to do. And you won. You're just getting greedy now."

b. Please prove that any of this statement you made is true please.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 3:21 pm

Is everyone noticing the same cyle over and over again here?

- Bart presents facts that can be confirmed
- b or anon challenge the facts and/or conclusion
- Bart responses with backup confirmation
- b or anon challenge Bart's motivations or integrity, or something else
- Bart responds back with a challenge
- b, anon or sometimes Phil tries to change the subject
- neither b nor anon will disclose their true identity but claim they are not associated with a union


Let me ask you what did Pleasanton citizens get from the 2002 contract that was a huge give-away to employees/unions? What were the positives? We the taxpayers paid a huge price for this contract.

Contributing 2% when CalPERS costs for the city are increasing 3.8% just this year is not magnanimous. If the union was so giving, why didn't they give up the 2-tier pension point? It is not going to cost current employees any extra. And don't the medical cutbacks only affect future employees? Lastly, it is Pleasanton who sets the contract terms not CalPERS.

BTW anon - it is "lose" not "loose" in the context you are using the word. ;-) How does the saying go? People who live in glass houses shouldn't throw stones ...

I'm still waiting for the two of you to find the courage to disclose who you are.


 +   Like this comment
Posted by To Stacey
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 3:28 pm

"The increased contributions are needed to cover both the liability due to poor market performance _and_ the promise of increased benefits that were NEVER funded"

Since Market Performance is an issue and out of reach returns are built into the current model, and justified by CalPERS, would you agree that CalPERS is a large part of the problem? And if the increased benefits aren't properly funded isn't that also an issue related to CalPERS management since they are the agency that sets the rates?

I've heard the argument that the benefits aren't the problem; it is the funding. The problem with that argument is, if we had received realistic projections about the true cost of these benefits, it would have been determined that we couldn't afford the increased benefits in the first place. The other issue is that there is no justification, IMO, to provide pensions above what most experts consider the amount of income to maintain one's current standard of living during retirement years (65-75%). Considering the retiree's medical is also paid, and they get cost of living increases of 2% per year, I'm inclined to use the 65% number. It is easy to argue that we are enriching our public employees in their retirement years and that is not the intent/purpose of providing pensions.

What are your thoughts?



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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 3:31 pm

"Is everyone noticing the same cyle over and over again here?

- Bart presents facts that can be confirmed
- b or anon challenge the facts and/or conclusion
- Bart responses with backup confirmation
- b or anon challenge Bart's motivations or integrity, or something else
- Bart responds back with a challenge
- b, anon or sometimes Phil tries to change the subject
- neither b nor anon will disclose their true identity but claim they are not associated with a union"

Yes, I've noticed! Getting more than a bit annoying.


 +   Like this comment
Posted by voice of the unions
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 3:39 pm

Disclaimer:

* 'b' and 'anonymous' are union members.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 3:55 pm

Mr. Hughes:

My friend emailed Mr. Keefe and received the following response:

"No, the study was not commissioned by a union or anyone else. Sylvia and I are labor economists who are familiar with public sector compensation. We responded to the wild claims being made about public employees because we knew they were wrong. No one supported this research -- we did not earn one cent for doing this research."

Professor Jeffrey Keefe
Labor and Employment Relations
School of Management and Labor Relations
Rutgers University
50 Labor Center Way
New Brunswick, NJ 08901

Tel. 732-932-1749
Fax 732-932 -8677
jkeefe3@cs.com

So, in other words, Mr. Hughes, you made this claim that it was union backed without actually knowing that. You made a patently false claim to support your argument.

And I am supposed to believe anything you say? I'm supposed to accept your projections? Interesting.


 +   Like this comment
Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 4:07 pm

LOL - Professor of Employment and Labor Relations not being pro union??? Tell me another one. Mr. Keefe has been referenced before with pro-union positions.

Again, I will side with BLS government statistics any day before I side with a Professor of Employment and Labor Relations that uses a survey to prove his point. He even admits with his statements above that he went into is survey with a bias thereby undermining his work.

Thanks though. I will save this information for future reference so I can demonstrate with Mr. Keefe's own words how biased he is.

If you look hard enough, there are many sites out there that discredit Mr. Keefe's work. As a small example of his distortions, he doesn't even adjust for teacher salaries (who work a portion of the year) and have advanced degrees.

Good one though ...


 +   Like this comment
Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 4:09 pm

Oh, and I'm not sure what you're talking about with the loose and lose? Please clarify.


 +   Like this comment
Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 4:11 pm

And the world is flat, too, huh?


 +   Like this comment
Posted by voice of the unions
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 4:18 pm

At least anonymous is also admitting that he, and the unions, feel the world is flat.

Disclaimer:

* 'b' and 'anonymous' are union members.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 24, 2011 at 4:26 pm

Stacey is a registered user.

To Stacey wrote: "would you agree that CalPERS is a large part of the problem?"

First of all, I agree with all of what you wrote. To answer your question: yes and no. My understanding is that CalPERS has little control over the level of benefits offered by a county or municipality (except where they helped push SB400, increased benefits for state employees). They supposedly do some sort of review of some contracts only. For example in the case of Bell, they knew about the exorbitant city manager salary and resultant pension obligation, but could not reject it (some would say that they had an obligation to throw a red flag and didn't). At some point CalPERS went to the Legislature to seek the power to set the contribution rate. That gives them some control over ensuring that the increased benefits get funded when the market returns do not appear. I think these things are reciprocal in nature. CalPERS was allowed to increase market risk exposure back in the 80s or 90s, the returns were real good, the discount rate was made high, there was a push for increased state benefits (SB400 in 1999), which in turn lead to counties and municipalities also increasing benefits (along with the lack of adequate cost information), which meant then that contributions needed to be raised, so on and so on. In a lot of ways this pension problem began much earlier and is just coming to a head due to the 2008 market crash showing everyone finally how dependent CalPERS has become on the higher risk exposure.

CalSTRS does not have the power to set the contribution rate. They would love to have it.

You have a valid point regarding the need for realistic projections. You'll be interested in this from the LAO: Web Link It plays into the reciprocity I described above.

The concepts of saving a little bit frequently over time and compounding interest are some of the first lessons one learns about personal finance. I think people may have an easier time understanding the pension problem when framed like this. If you wait until tax time to stick a lump sum of money into an IRA, you've lost out on the interest that money could have been collecting all year with smaller monthly contributions. Small monthly contributions plus the compounding interest would result in a much larger IRA sum than the one-time tax-time lump sum contribution. That's why it is difficult to go back in time and fund increased benefits retroactively or via service credits, etc. One has to make up for that lost interest with a higher contribution.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 24, 2011 at 4:35 pm

Stacey is a registered user.

Wanted to add that while we can't really control what CalPERS does, we have within our local power the ability to lessen our impact, so to speak, on destabilizing CalPERS, on pushing them to the riskier investments, etc.


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Posted by LOL
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 4:41 pm

The State of NJ Labor. Tracy F.H. Chang and Jeffrey H. Keefe

Not much about Keefe but here is something from his co-author, F.H.Chang: Globalizing Union Organizing for the 21st Century

"rallying a community around a campaign involving picketing and demonstrations - is no longer sufficient. Negotiations with managers who's superiors may well command from across an ocean requires new tools. It requires galvanizing sypathatic workers from across borders, confronting company brass and making sure bad press follows corporate recalcitrance"

Web Link Brief 6

Too funny! Maybe he didn't get paid by the unions because they make the check out to the University.


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Posted by anonlymous
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 4:58 pm

His co-author is Sylvia A. Allegretto.


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Posted by Bart Hughes
a resident of Amberwood/Wood Meadows
on Jan 24, 2011 at 5:07 pm

Anon - I don't really care that much about spelling as long as the ideas are cogent and I can understand them. I understand that this is a blog and we all don't proof read out comments. It is you who continues to bring this point up so here you go. Take a look at your last sentence below and think about the lose/loose point ...

Your continued attempts to undermine me as a messenger is humorous. I only hope that people look past what we both are saying and investigate the facts themselves. Better yet, show up next week and ask the questions yourself.

******

Posted by anonymous, a resident of the Another Pleasanton neighborhood neighborhood, 3 hours ago

Just so you know, the union didn't compromise, they gave it all away. They got nothing in this negotiations but cutbacks.

One could say that they have no power.

One could say they saw the situation and acted in a cooperative manner because they saw the city working in other ways so the cuts would not be so deep and no one would loose their job.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 5:09 pm

I keep responding because you keep posting the same "facts" with the same Tea Party spin, misinterpretation, misconstrual, and refusal to acknowledge that there are likely substantial negative repercussions to implementing your proposals. That's annoying to me, too.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 5:36 pm

Right, please tell me what the negative repercussions are to a 2-tier pension approach? Something, the state is doing. Something many cities have already done and something that won't cost current employees a dime.

I'd be curious to get your justification/rationale why is was appropriate for the union to hold back on this point.

This is just one example of how one-sided the labor negotiations have been in this town. And why we are in the hole we are and how the new proposed PCEA contract will dig the hole deeper.


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Posted by voice of the unions
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 5:41 pm

So when Bart uses data by the city and by CalPERS those are not "facts"? I am sure you also disagree with Jerry Brown, Gray Davis, and Willie Brown when they say there is a problem.

You are the one who refuses to acknowledge that there are likely substantial negative repercussions to staying the course.

But at least it is good to hear where your employee union stands on these issues and how your union will fight any information from the city and CalPERS as unreliable. I have to admire your consistency and your ability to keep parroting the part line.


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Posted by anonymous
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 6:15 pm

Bart, that is a different anonymous. This anonymous didn't write that. I'm the student. And I don't agree that the union got nothing in this contract.


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Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 6:24 pm

Asked and answered, many times. It is a "fact" that pension costs have risen X amount. It is his "opinion" that this increase spells doom for the city. It is his "opinion" that this was caused by a prior Council. It is his "opinion" that the city's employees are overcompensated.

I am here to help you separate "fact" from "opinion". I am pleased to provide you with this helpful service.

Want to stop this cycle? Take MY concerns seriously. I've outlined them above for your reading pleasure.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 6:33 pm

b - I would greatly appreciate if you wouldn't put words in my mouth. I don't have a perspective on whether/not employees are overcompensated. I don't have enough information to determine that. I suspect that some are over-compensated and some under just like any organization.

I do believe the pension situation has been extremely one-sided to the benefit of employees and that has put financial pressure on the city. And I do believe that if we don't address this now and adequately that pressure will continue to the detriment of average citizens.

You continue to accuse me of all sorts of inaccurate/dishonest statements and yet you continue to put alarmist words in my mouth, claim that I am running for office, am part of the tea party movement, etc. I hope one day you can see the extreme hypocrisy in your statements/actions.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 6:36 pm

Once again b refuses to address the 2-tier question/issue I posted above and once again tries to deflect.

I really would value your perspective on the point seem to appreciate the union/employee perspective more than I do. Please help us all understand.


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Posted by voice of the unions
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 6:59 pm

"b" will not answer it because his union does not want 2-tier. If they allow for 2-tier then they are admitting what they currently get is excessive.

You should expect b and his union to keep saying the party line: "we are underpaid, our benefits don't cost much, Dow will be at 25,000 before long so forget about the debt, the tea party people don't like us, the democrat governor does not like us, Gray Davis does not like us anymore, anything written that does not support our cause is based on flawed data or an opinion, we bargained in good faith ..."


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Posted by Concerned
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 8:21 pm

There is a great article in today's Wall Street Journal about how the public sector unions took the taxpayers hostage.
Web Link

Finally the taxpayers are fighting back. It is almost too late and we have to fight the politicians and the unions.


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Posted by to checking math
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 8:24 pm

"Posted by checking math, a resident of the Another Pleasanton neighborhood neighborhood, on Jan 23, 2011 at 6:07 pm

Hi Bart, I think you have understated what the last contract did for the employees pension. You mention the 41% increase in salary and 35% increase in pension but actually those should be multiplied together to get the real enhancement to the employee's pension. Here is an example:

Assumption: An employee who is 47 years old and with the city for 22 years in 2002 and a salary of $100,000 in 2002.

If the contract in 2002 did not take place, in 2010 the employee would have worked for 30 years, highest salary $100,000. Pension payoff 2.0%:

$100,000 * .02 * 30 = $60,000

With that contract we paid 7% of the employee's 8% employee portion of retirement and that ends up being 7% "special compensation" added to the calculation:

$60,000 * 1.07 = $64,200

Without the increase in salary and pension that employee would have received $64,200 per year in pension plus cost of living adjustments.

With the contract in 2002, the 2010 employee would have worked for 30 years, highest salary $141,000 ($100,000 * .41). Pension payoff 2.7%:

$100,000 * 1.41 * .027 * 30 = $114,210

We then give the employee another 8% because the city pays the employee portion of the pension which is 8% but it is added to the final salary as "special compensation"

$114,210 * 1.08 = $123,346.80

With the increase in salary and pension that employee receives $123,347 per year in pension plus cost of living adjustments.

That is quite a bit more in retirement. ($123,347 vs $64,200 per year)

Assuming the employee lives to age 80 (25 years of retirement), before the contract the payout would have been $1,605,000.

After the contract: $3,083,675.

The additional payout to the pension is $1,478,675 (assuming cost of living adjustments the same (0 in this assumption))."


Math Checker, assuming that the employees actually received a retroactive pension increase your numbers are only slightly understated. However, I don't believe the PCEA received this retroactive increase. The only groups I'm aware of that were granted this "gift of taxpayer funds", as Orange County is calling it in their lawsuit against their unions, is public safety. That is also one of the issues that have driven Vallejo's unfunded pension liability but I like to think Pleasanton has managed things better than the bankrupt city by the bay. I'm skeptical that Pleasanton would have allowed for retroactive pension benefits for the PCEA, but I will acknowledge that nothing surprises me anymore. If true it would be very disappointing and also a huge cost/issue.


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Posted by Chris
a resident of Castlewood Heights
on Jan 24, 2011 at 8:36 pm

Bart as a concerned citizen of this city i say thank you for ALL of your efforts and i hope that you continue! Your facts speak for themselves. Great work.

Thanks!!!


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 8:55 pm

You are welcome. It has been an interesting process and experience. I didn't think such an obvious need for change would be so prolonged and problematic. Silly me - as many can tell I am quite new to the political scene and dynamics. I do hope I can affect the necessary change to protect the financial future of this great town.

On a separate point, I did confirm (unfortunately) with the city that the 2002 pension increase for PCEA was retroactive for the time employees have been on the job for Pleasanton. That was one heck of a contract they received. It would be interesting to have the principles come back and explain their logic for the huge give-away.

This makes the union's short-term memory all the more perplexing. We gave them so much back then but they are now they are very reluctantly giving back now and are extremely unhappy with what little they have given back. Most of the give-backs affecting future employees, not the current.


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Posted by PTownFan
a resident of Amberwood/Wood Meadows
on Jan 24, 2011 at 9:07 pm

I'm worried that the City Council will go forward with an unsustainable contract and 'kick the can down the road' - leaving it to the next mayor and council to deal with it. Then when the day of reckoning comes, the then council will be able to say "we did not create this problem' - and they will be right! There's a problem looming now and the CURRENT council should deal with it.

Please let's keep pressure on the council to explain where the money is going to come from if they agree to this generous contract. We should insist that they identify now what would have to be cut to afford this - don't let them off 'kicking the can' to the next city administration.


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Posted by ?
a resident of Pleasanton Meadows
on Jan 24, 2011 at 9:31 pm

Wait a freakin minute here. Are you saying that the employees got extra compensation retroactively. As in paid more for work they were already paid for, how do you do that? Why would you do that? Is that legal?


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Posted by Phil
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:32 pm

I wonder how much the investment banking industry is trying to put up this smoke screen to try to divert public opinion from the real problem. Or are they both problems? Wall Street shenanigans and out of control pensions for state and local government workers. Maybe Bart is on to something.

As far as I know, Bart isn't in any way associated with Wall Street, so I don't think he is doing their bidding. He seems to be concerned about what seems to me to be a real problem. B, what you're saying reminds me very much of what a bunch of people kept saying during the housing boom 6 or 7 years back. They would see a person with a $70,000 income and no money down buying a $900,000 home and not see a problem. To say that that loan would cause lead to trouble was an opinion, sure, but it was pretty obvious. Seems the same with these pensions.


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Posted by checking math
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:47 pm

To "to checking math", Bart is correct. These changes in pensions were done retroactive to the day they started in Pleasanton. I was around when they did that and I could not believe they would be allowed to do that. And CalPERS let the city do this without having to come current. The people at CalPERS should be put in jail for what they did back then. If you are going to let people change their plan significantly higher that is one things since you can calculate the actuary costs based on some assumptions in the market (which they completely screwed up) but how can you let people get into the higher plan and make it retroactive without having the agency or the employee pay in for the difference in the cost of the plans for the retroactive period. You are exactly correct, this was a gift of public funds and it should be challenged in the courts. I think CalPERS has proven that they know nothing about accounting and financial risk. The public funds that we are giving CalPERS for this mistakes makes the wall street bailouts look like peanuts. For the wall street bailouts, we are actually getting some of that money back now. We will be paying for CalPERS lies and mistakes for decades. This is probably costing the taxpayer more than all of the bonds we have ever voted on and this happened without a vote of the people. Criminal.


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Posted by checking math
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:47 pm

To "to checking math", Bart is correct. These changes in pensions were done retroactive to the day they started in Pleasanton. I was around when they did that and I could not believe they would be allowed to do that. And CalPERS let the city do this without having to come current. The people at CalPERS should be put in jail for what they did back then. If you are going to let people change their plan significantly higher that is one things since you can calculate the actuary costs based on some assumptions in the market (which they completely screwed up) but how can you let people get into the higher plan and make it retroactive without having the agency or the employee pay in for the difference in the cost of the plans for the retroactive period. You are exactly correct, this was a gift of public funds and it should be challenged in the courts. I think CalPERS has proven that they know nothing about accounting and financial risk. The public funds that we are giving CalPERS for this mistakes makes the wall street bailouts look like peanuts. For the wall street bailouts, we are actually getting some of that money back now. We will be paying for CalPERS lies and mistakes for decades. This is probably costing the taxpayer more than all of the bonds we have ever voted on and this happened without a vote of the people. Criminal.


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Posted by checking math
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 9:51 pm

Sorry about the double post. Not sure what happened there.\


 +   Like this comment
Posted by b
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 10:05 pm

I'm bored with this conversation. Time to get back to business.


 +   Like this comment
Posted by voice of the unions
a resident of Another Pleasanton neighborhood
on Jan 24, 2011 at 10:12 pm

So glad.

Time for you to get back to other union business...


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 24, 2011 at 10:27 pm

Stacey is a registered user.

Phil,

They are both problems IMHO (in my humble opinion). Web Link Oh Glass-Steagall when we need it!


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Posted by resident
a resident of Downtown
on Jan 25, 2011 at 6:51 am

The only good thing that I can see coming from the behavior of this council in refusing to demand take-backs is that Hosterman's run for future political office will be DOA after the way she has financially strangled Pleasanton.
These employees got retroactive and future benefits, they enjoyed more than 40% in raises while the rest of of suffered cuts or worse, they will enjoy a lifetime of benefits that they contributed nothing to and they still demand that we take back nothing.
I say put them back to the 2002 contract and start negotiating from there. They will still have received far more in those years than they deserve (of course they have saved all of that blood money, right?) and it would be an appropriate place to start talking. When they all stampede to quit (yeah, I'll hold my breath for that in this economy) we can fill their jobs with people who will have a better work ethic and less greed. They will be able to see how the demands of their union caught up with them.
Oh yeah, I have been a union member for more than 30 years. In my industry it is an issue of safety, not greed. I don't know any business agents for the city worker's union but I do know a former very high up agent for the CTA. I remember him sitting around and bragging about how he didn't have to do squat to collect his $400K+ salary as long as the public was dumb enough to think the teachers would all quit if their wages and benefits were cut. Think on that for a while as the PUSD tries to push throough another parcel tax to fund more teacher raises.


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Posted by 411
a resident of Another Pleasanton neighborhood
on Jan 25, 2011 at 11:42 am

For once, good news on pension front

City Attorney Jan Goldsmith¡¯s opinion this week holding that a highly promising pension reform is legal is great news for San Diego¡¯s besieged taxpayers.

Goldsmith concluded that the city is not required to count pay sweeteners providing extra compensation when calculating pension formulas. If coupled with a freeze on base salaries, this means city employee pensions could be effectively capped. Councilman Carl DeMaio deserves credit for coming up with this proposal, which he estimates could save nearly $300 million over the next five years if it is fully implemented.

Web Link



Can California Local Government Employers Reduce Benefits Plan Costs? There May Be More Latitude Than You Think...

Excerpts from the article:

¡°In California Association Of Professional Scientists v. Schwarzenegger, the Court of Appeal determined that "future employees do not have a vested right in any particular pension plan" (citing Claypool v. Wilson) and that it generally would not interpret a collective bargaining agreement to prohibit changes in pension benefits as to new employees. Therefore, so long as the government employer's pension system can accommodate multiple classifications or tiers of benefits, the employer should be able to control future benefit costs by placing new hires in a less expensive benefit structure.¡±


¡°Hope For The Best But Plan For The Worst
In an ideal world, a local government would be able to discuss with its employees and their bargaining representatives the critical and real need to reduce various compensation and benefit costs, and reach some reasonable compromise through the collective bargaining process. Fortunately, there are now a number of judicial precedents for making reductions in the terms and conditions of employment even when the reductions cannot be agreed upon as part of the collective bargaining process (see San Bernardino Public Employees Association and San Diego Police Officers' Association). This should be a back-up option in the event a government employer is unable to negotiate sufficient concessions directly. Along these lines, it would make sense to include language in any new MOUs, if possible, that clarify that such benefits last only as long as the MOU and that any pension or benefits commitments in the MOU do not necessarily prevent the employer from making changes that would apply to new hires.¡±

Web Link


(Orange County and retroactive pension benefits)
The County of Orange sued the association in 2008, trying to pull back the so-called ¡°3% at 50¡å benefit, which allows deputies who have worked for 30 years to retire at age 50 with 90 percent of their salaries. County supervisors signed off on the benefit in 2001, despite warnings that the good economic times would not last forever.
Seven years later, the Board of Supervisors ¨C- with some new members ¡ª concluded that granting retroactive benefits violated state law, because retired public safety employees were paid extra compensation for work they had already performed. The county also argues it was illegal, because it spent money without voter approval¡­.

The county has spent $2.26 million as of July 2010 pursuing the lawsuit, according to documents provided in response to a California Public Records Act request. But winning the lawsuit could save the county as much as $500 million, Moorlach has said.

Web Link


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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 25, 2011 at 12:50 pm


This is an entertainingly agonizing article that sums up my frustration very succinctly. While the authors style entertains his frustration and sarcasm jump from the page. He is talking about Chicago, whose funding ratio is worse than California - although we have more unfunded liability, but this article could have been written about the not so Golden State. It is a must read with the correct conclusion.

Pensions Myths and Vampires: They Both Refuse To Die
Both are impervious to logic and facts: Perhaps garlic would work?

"An unending cascade of misinformation continues to come out of Springfield, union headquarters and the media so let me say it loud and clear: We Taxpayers Have OVERPAID Into Pensions Not UNDERPAID.

Let's keep it simple:
Is $19 billion greater than $13 billion?……"

Web Link


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Posted by it is hopeless
a resident of Another Pleasanton neighborhood
on Jan 25, 2011 at 2:29 pm

"Along these lines, it would make sense to include language in any new MOUs, if possible, that clarify that such benefits last only as long as the MOU "

We have this already in the 2002 MOU but the City is not doing anything.

The 2002 MOU says "As of December 7, 2002, and for the remainder of the term of this contract, the City shall replace the PERS 2% at 55 retirement formula with the PERS 2.7% at 55 retirement formula."

It does say only for the reminder of the term of the contract. Yet the city is pretending that language is not there.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 25, 2011 at 2:39 pm

"As of December 7, 2002, and for the remainder of the term of this contract, the City shall replace the PERS 2% at 55 retirement formula with the PERS 2.7% at 55 retirement formula."

Easy fix then council, go back to 2% at 55 for a start. Just don't extend the mistake made back in 2002.


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 25, 2011 at 2:55 pm

Stacey is a registered user.

411,

I've seen that one opinion before about how current employees only have a right to what they have already earned. (Can California Local Government Employers Reduce Benefits Plan Costs? There May Be More Latitude Than You Think...) The problem is that it hasn't really been tested in court. The way I look at it is that if it is ok to add increased benefits to years already earned, why is it suddenly not ok to reduce benefits on years not yet earned?

Web Link

"The conventional view is that the courts have ruled that once an employee is vested in a public pension, the benefits are a contract that cannot be cut. So pension cuts are usually limited to new hires not yet vested in the plan.

But a law firm in Folsom that specializes in employee benefits argues, after taking a close look at court rulings, that governments may be able to make reasonable reductions in pension benefits not yet earned, particularly if needed to preserve the pension system.

The pension benefits (based on years of service and final pay) already earned by time on the job would not be touched. But the theory is that pension benefits that the employee continues to earn in the future could be cut.

Jeffrey Chang made the argument in a paper presented last March 4 to the Northern California Chapter of the International Public Management Association, "Employer Benefits: Identifying Solutions in Difficult Economic Times."

Another version on the website of his law firm, Chang Rothenberg & Long, makes a similar point:

"A close reading of the pertinent cases suggests that a public employee's right to a pension benefit is not inviolate, but may be changed or even eliminated under appropriate circumstances." "


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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 25, 2011 at 3:30 pm

"Posted by it is hopeless
We have this already in the 2002 MOU but the City is not doing anything.

The 2002 MOU says "As of December 7, 2002, and for the remainder of the term of this contract, the City shall replace the PERS 2% at 55 retirement formula with the PERS 2.7% at 55 retirement formula."

You are absolutely correct. The contract clearly defines the benefit as only extending through the duration of the contract. It would follow that the language provides the city with some latitude on this issue.

I just read the contract, which is very comprehensive, yet there isn't a single mention of "retroactive" pension benefits (section 16 - page 23 covers pensions) anywhere in the contract. While I'm still trying to process how our elected representatives allowed for a flawed contract of this magnitude, I'm perplexed that there's no mention of this very expensive tax-dollar giveaway. I'm wondering if it is even legal given it isn't in the contract.

Also the unions haven't conceded a new benefit formula for future workers. According to a link above the city doesn't need the union's permission to enact such a provision.

I guess I wasn't paying attention to contract issues in 2002. Did the city cover the retroactive pension benefits openly, in 2002? Did city officials provide a cost analysis of this contract prior to its approval?


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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 25, 2011 at 5:02 pm

Stacey wrote: "I've seen that one opinion before about how current employees only have a right to what they have already earned. (Can California Local Government Employers Reduce Benefits Plan Costs? There May Be More Latitude Than You Think...) The problem is that it hasn't really been tested in court. The way I look at it is that if it is ok to add increased benefits to years already earned, why is it suddenly not ok to reduce benefits on years not yet earned?"


IMO, it is like an old wives tale that gets repeated so often it becomes accepted as fact. First of all, it doesn't pass the smell test and no common sense reasoning would support the argument. Unions have been repeating this nonsense for so long, based on faulty assumptions regarding court decisions that have more to do with bad arguments/cases than the application of sound law (as mentioned in a previous link). Democratic politicians that are supported by the unions have added validity to these arguments by repeating them, often. I don't buy it!

I, for one, have never accepted the hypocritical notion that benefits are sacrosanct from day one of an employees employment and that those benefits can only be increased - and never decreased. I do believe that the 2.7@55 benefits can be reduced for current employees, and they should be. If I could direct my tax dollars they would be spent proving these assumptions invalid in a court of law, once and for all. If that didn't work, and I think it would, I'd want to direct my tax dollars toward changing the part of the State Constitution that protects this minority class of public sector union employees at the expense of all other California taxpayers.

I think the legal obstacle has less to do with the the flawed union argument and more to do with the lack of political will of the controlling party, which is greatly influenced by their union donors.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 25, 2011 at 9:21 pm

Arnold - great article you referenced. Just amazing and even more amazing that unions continue to push back and try to confuse the issue.

I sure wish someone would write the equivalent for CA. We already know the story for Pleasanton.


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Posted by frustrated
a resident of Another Pleasanton neighborhood
on Jan 26, 2011 at 9:52 am

I am trying to get a handle on what is going on. Our state and local government, as well as school districts, now seem to be controlled by the public employee unions. We did not vote for or elect the unions but they seem to have been given more power than the elected officials that we did vote for. As a taxpayer I pay taxes to provide services. Budgets can be changed, based on taxes collected, to determine how much goes to the individual programs. The only thing that seems to be immune to taxes collected are public employee salaries and benefits. Services will continue to be cut until no services are rendered because the public employees are collecting retirement and other benefits that are out of control. As long as cities cut services, they will say that they are not in a fiscal emergency. It is time we do something about the privileged class of public employees. I would love to see a state initiative to change the state constitution to say that all public employees work "at will". California is an "at will" state EXCEPT for public workers. Employees that we hire to do the governmental duties should not have vested rights in the State assets. The public workers who feel that they are doing us a service by working should be fired. They are being paid to do a job, they are not doing community service.


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Posted by two cents
a resident of Another Pleasanton neighborhood
on Jan 26, 2011 at 8:06 pm

State workers union loses pension ruling in court

Read more: Web Link
Web Link

Re. retroactive agreements . . .


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Posted by Stacey
a resident of Amberwood/Wood Meadows
on Jan 26, 2011 at 9:40 pm

Stacey is a registered user.

What you guys wrote above has me concerned. Bart said he confirmed with the City that the pension benefits increase was retroactive. Arnold said he couldn't find anything in the contract specifying that they are retroactive. So did the City give out retroactive pension benefits increases without a contract specifying that benefits would be retroactive? This would be terrible.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 27, 2011 at 8:51 am

I spoke directly with the city. The pension increases were retroactive, but only for the accumulated time when employed by Pleasanton.


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Posted by frustrated
a resident of Another Pleasanton neighborhood
on Jan 27, 2011 at 9:27 am

Bart, where in the contract did it state that the increase was retroactive? I could not find it there either. Sort of looks like there were some people on the city council then who were giving "gifts" to the friends who were employees of the city. I bet that gift cost more than what has been done in the city of Bell. Soon after the raises and pension increases went into affect, the City Manager, City Clerk, City Attorney, and other people who had many years of service retired. My understanding is it was the City Manager, City Attorney, and other upper management that were negotiating the contract on behalf of the residents. It appears to me that for employee contract negotiations we need to find a way to have the taxpayers represented. Right now it is the unions vs. management and since management ends up receiving what the unions receive, there is a conflict of interest there.


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Posted by Bart Hughes
a resident of Another Pleasanton neighborhood
on Jan 27, 2011 at 10:09 am

I have not investigated contract language to determine whether/not the language is included. Keep in mind one item that may complicate understanding of this contract language question. There are actually two contracts that dictate aspects of employment benefits. There is first the MOU which is generally considered the main contract for employee groups. And then there is the CalPERS contract which dictates aspects of retirement benefits.

I'm not sure where one would find language on the retroactive element. All I know at this point is that the retirement bump portion was retroactive for time served on behalf of Pleasanton. And yes, it was a very generous gift for those who retired soon after. We are all paying the price for this now with elevated annual costs and balooning unfunded liabilities.


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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 27, 2011 at 12:17 pm

There were two separate appellate court rulings on "retroactive" pensions that were filed yesterday (1/26/211).

In the case County of Orange v. Association of Orange County Deputy Sherriff's, in The Second District Court of Appeal, The County was arguing the retroactive pension benefits were a gift of public funds and therefore illegal under the State Constitution. In the judges ruling, which follows the article that is linked below, the lower court ruling was affirmed, meaning the county lost the appeal. In the ruling it states:

"On December 4,2001, the County Board of Supervisors unanimously approved the amended contract AOCDS contract (Association of Orange County Deputy Sherriff's) contract. … authorizing 3@50.… The Accompanying memorandum of understanding between the County and AOCDS provided that the increased retirement formula would apply to "all years of service," including those served before the date of the resolution." (page 4)

"The County had secured an actuarial reporting November 2000, which analyzed (among other things) the financial impact of adopting the 3@50 for all years of service, both past and present. The analysis estimated that the increase in the County's "actuarial accrued liability was between 99 and100 million."

It also mentions that for this additional 100 million dollar liability heaped upon the taxpayers the AOCDS members agreed to contribute 1.78% of salary for 15 months. O.C. now estimates the unfunded liability, or at least the cost savings that would be achieved if the retroactive benefits were reversed, at 500,00 million dollars. That is one heck of a deal for employees.

Two of the items that were cited in this decision had to do with the inclusion of the "retroactivity" clause in the contract, and that the actuarial analysis of the increased cost was completed. So I guess, in regards to the PCEA contract, the question is where is the contract language regarding the benefits being retroactive, and was the actuarial analysis of the increased benefits cost completed?

Maybe someone from the city can chime in on the subject?

The decision: Web Link


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Posted by Arnold
a resident of Another Pleasanton neighborhood
on Jan 27, 2011 at 12:41 pm

The second ruling from yesterday:

"Court: Better pension benefits can't be retroactive
Enhanced retirement benefits can't be applied retroactively for state workers represented by the California Statewide Law Enforcement Association, a state appeals court has ruled.

The decision by three justices in Sacramento's 3rd District Court involves a dispute over the terms of a 2002 contract between the union and the state Department of Personnel Administration that raised the retirement formula for about half of the union's 7,400 or so members from 2 percent at age 55 (the so-called "miscellaneous" employee formula) to the state "safety" employee pension plan that allows 2.5 percent at age 55.

The union maintained that the contract called for the safety formula's retroactive application to former miscellaneous employees' first day of service. The administration countered that the upgraded benefit should apply only for service on July 1, 2004, and later.

An arbitrator in 2008 sided with the union and a Sacramento Superior Court judge confirmed the arbitration award.

But the appellate court decision by Justices George Nicholson, Kathleen Butz and Arthur Scotland agreed with the administration's contention that the contract couldn't be retroactively enforced because the impact of that policy wasn't sufficiently analyzed:

The MOU presented to the Legislature did not contain language that the change to safety member status would apply retroactively to convert prior miscellaneous member status to safety member status; (the legislation) was "silent" as to whether the benefit would apply retroactively to prior service; and the Legislature was not provided with a fiscal analysis of retroactive application of the agreement."

So, because the contract didn't contain language about retroactive benefits, the retroactive benefits are not enforceable because they weren't in the contract.

Link to the article and the the court decision: Web Link


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Posted by anon
a resident of Another Pleasanton neighborhood
on Jan 28, 2011 at 12:54 pm

It's time for actuaries to stand up and be counted

"By FRANK KEEGAN – If he could ask state and local officials one question they absolutely had to answer truthfully, David K. Sandberg, president-elect of the American Academy of Actuaries this week said it would be: "Do you understand your risk exposure?"

Frank Todisco, who just started as chief actuary at the Government Accountability Office after serving as a senior pension fellow at AAA, independently gave the same answer: "Pay attention to risk."

Good luck on that. Public officials don't have to pay attention because none of the risk is theirs. All risk falls upon the dwindling number of private-sector workers forced to pay for politicians' public misfeasance and malfeasance.

Politicians don't lose their homes when they mess up. They seize taxpayers' homes.

So they don't have to think about risk, especially long-term.
Actuaries do think about it, precisely. That is their calling, and they are good at it. What they are not good at is forcing politicians to listen and the public to understand.

....Too bad, because state and local officials along with the public workers, taxpayers and bond investors they betrayed need to get it. They need to get it fast because time is running out before many fall into a fiscal abyss from which there is no return.

If officials do not take decisive action this year — even as tax revenues are rising to pre-recession levels — no rate of economic growth, increased taxes and expense cuts will save many states, counties, cities and towns from eternal debt.
The Great Recession did not cause this fiscal catastrophe but merely revealed it.

As the task force clearly says:

".... Our findings regarding public pension systems, however, are independent of the financial crisis and encompass risks unlikely to go away with economic recovery."

One of those risks is what actuaries refer to as "moral hazard." That's when those who benefit immediately from making promises know they won't have to honor them and can hide the true cost until it is too late.
State and local leaders have done just that for more than a decade on everything from public works projects and self-insurance premiums to social programs, education and, the biggest of all, false retirement promises.

Anybody who doubts the day of reckoning is here should take a look at the latest Census data on state finances. For the first time in history, states paid more for "Insurance Trust Expenditures" than for "Exhibit Salaries and Wages."

Basically that means citizens are paying more — in 2009 $5.4 billion more — for those who provide no government services than for those who do. The trend can only get worse as state governments cut jobs to balance operating budgets ravaged by rising debt service and retirement costs.

...Politicians try to blame the recession's tax revenue impact for this fiscal crisis, but while total revenue fell almost 31 percent, tax revenue fell only 8.5 percent. States are in trouble because leaders failed to understand risk exposure."


Web Link


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