SacBEE Pension Fund Bombshell

The Governmental Accounting Standards Board has dropped a bombshell
with preliminary new rules that, if adopted, would force governments
to increase projections of pension liabilities by using tighter
"discount rates" – effectively, lower assumptions of pension fund
earnings.

The huge California Public Employees' Retirement System, the
California State Teachers' Retirement System, the University of
California Retirement System and dozens of locally managed pension
funds would no longer be able to minimize unfunded liabilities by
adopting rosy scenarios of future earnings.

Gov. Arnold Schwarzenegger, through his financial aide, David Crane,
has waged a war of words with the union-controlled Cal- PERS, alleging
that the nation's largest public pension fund has been lowballing its
long-term liabilities.

Schwarzenegger has said he won't sign a new state budget without
pension reforms of some kind. A few days ago, the administration
reached agreement with four state worker unions on some mild pension
changes mostly affecting new workers...

...

The governor and Crane have touted a Stanford University study
suggesting that, in calculating future pension obligations, the three
state retirement systems stop using a discount rate that's the same as
their assumed rates of annual earnings return, 7.5 percent or higher.

The EUSD has failed to respond to our questions sent over 9 days ago. Other members of the public have asked what the bond money will be used for. They have reported that the district doesn't know or is unwilling to say. We can't confirm, because the district has not responded.

From the survey the district recently conducted it appears that the district is looking for a use that the public will accept. As with previous pre-ballot surveys this one lacks a few key elements that could prove to render the survey a poor predictor of voter action.

Please read the survey here.

The ETA has both objected to and supported past school bonds measures.

BY PETER SCHEER—For public employee unions–those representing police, firefighters, teachers, prison guards and agency workers of all kinds at the state and local level–these are the worst of times.

Despite record high membership and dues, and years of unparalleled clout in state capitols, public sector unions find themselves on the defensive, desperately trying to hold on to past gains in the face of a skeptical press and angry voters. So far has the zeitgeist shifted against them that, on one recent weekend, government employees were the butt of a Saturday Night Live skit, followed, the next day, by a New York Times magazine cover article proclaiming the “Teachers’ Unions’ Last Stand.”

Public unions’ traditional strength–the ability to finance their members’ rising pay and benefits through tax increases–has become a liability. Although private sector unions always have had to worry that consumers will resist rising prices for their goods, public sector unions have benefited from the fact that taxpayers can’t choose–they are, in effect, “captive consumers.”

At some point, however, voters turn resentful as they sense that: (1) they are underwriting, through their taxes, a level of salary and benefits for government employment that is better than what they and their families have; and (2) government services, from schools to the DMV, are not good enough—not for the citizen individually nor the public generally—to justify the high and escalating cost.

We are at that point.

In California, government sector unions, once among the most entrenched and powerful labor groups in the country, mainly have themselves to blame. For most of the post-war period, they were a force for progressive change, prospering by winning over public support for their agenda.

In the 1970s and 80s they backed laws like the Public Records Act and Brown Act to make state and local government more transparent. Because unions enjoyed broad-based political support, efforts to enhance government accountability and responsiveness to voters were seen–correctly–as benefiting the unions and their members.The public interest and public employees’ interests were aligned.

But the unions switched strategies. Although the change was gradual, by the 1990s California’s government unions had decided that, rather than cultivate voter support for their objectives, they could exert more influence in the Legislature, and in the political process generally, by lavishing campaign contributions on lawmakers. Adopting the tactics of other special interest groups, government unions paid lip service to democratic principles while excelling at the fundamentally anti-democratic strategy of writing checks to legislators, their election committees and PACs.

While not illegal (in fact, such contributions are constitutionally protected), the unions’ aggressive spending on candidates puts them on the same moral low ground as casino-owning tribes, insurance companies and other special interests that have concluded that the best way to influence the legislative process is to, well, buy it.

Public unions in California turned distrustful of voters and ambivalent about government transparency. In the mid-1990s unions backed improvements to the Brown Act, California’s open meeting law, but also inserted a provision assuring that the public would have no access to collective bargaining agreements negotiated by cities and counties—often representing 70% or more of their total operating budgets—until after the agreements are signed.

What happens when voters and the press have no opportunity to question elected officials about how they propose to pay for a lower retirement age, healthcare for retirees’ dependents, richer pension formulas and the like? The officials make contractual promises that are unaffordable, unsustainable (and, in general, don’t come due until after those elected officials have left office). In the case of Vallejo, in northern California, this veil of secrecy, and the symbiotic relationship it fosters, has led to municipal bankruptcy.

The biggest blow to unions’ public support has come from revelations about jaw-dropping compensation and pension benefits. Police have received unwelcome attention for budget-busting overtime and the manipulation of eligibility rules for “disability pensions,” which provide higher benefits and tax advantages. Other government employees, particularly managers, have been called out for “pension-spiking:” Using vacation time, sick pay and the like to boost income in the last years of employment, which are the basis for calculating retirement benefits.

Such gaming of the system boosts starting pensions to levels that can approach, and even exceed, employees’ salaries. Some examples from the reporting of the Contra Costa Times’ Daniel Borenstein: A retired northern California fire chief whose $185,000 salary morphed into a $241,000 annual pension; a county administrator whose $240,000 starting pension was 98 per cent of final salary; and a sanitary district manager who qualified for a $217,000 pension on a salary of $234,000. At a time when most Californians anticipate an austere retirement (if they can afford to retire at all), government pensions are a source of real voter anger.

The harm to the credibility of public employee unions from these excesses is made far worse by the unions’ attempts to hide them. The revelations about pay and pension abuses have surfaced only as a result of lawsuits. (Disclosure: The First Amendment Coalition has been a plaintiff in several of these cases.) Public employee unions, rather than taking the lead to stop abusive compensation practices, have vigorously opposed disclosure of individual employees’ salaries and pension amounts.

Public employee unions need to reboot. The old strategy of cynically buying political influence and excluding the public from decision-making has run its course. Unions can rebuild public support by recommitting to an agenda of open government in the public interest. If they don’t, they will be further marginalized.

KPBS School Board Sup Candidates to be Public
The SD School District is including the public in an open process to select a new top administrator. The pool of candidates is narrowed down behind closed doors to three candidates and after that the public will get to interview and help vet these top candidates.

The City of Encinitas could benefit from doing something similar when hiring a new top administrator, who's job it is to serve the entire community.

NCT WATER: SD County Water Authority ponders subsidy for desal plant

The San Diego County Water Authority is considering a subsidy to help Poseidon Resources Corp. build its proposed desalination plant, water authority Chairman Bud Lewis said Friday.

The subsidy, which would flow to water districts that have agreed to buy from Poseidon, would replace a subsidy promised by Metropolitan Water District, Southern California's main wholesaler...

At this week's council meeting many public speakers came to warn the council against allowing Carltas development company to "defer" repayment of their tax advance.

After the public speakers, the council took a break and went into the backroom. They came out, discussed the issue, and all voted to not allow the payment to be deferred and enter into to negotiations with Carltas. Here is what Carltas had to say about the issue.

Here is what Bill Dean, the president of ERGA had to say about the issue.

Several weeks before, Mayor Dalager put this issue on the consent calendar for approval without public discussion. Former council member Cameron spoke to the issue and pointed out a large number of questions that were not addressed by the city and it was clear to many that her questions kept the City from approving the deferment. The consent calendar is for items that are considered housekeeping and no brainers.

For more on the misuse of the consent calendar.

Link to some of the related documents.