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Sac Bee Columnist Dan Walters article in today’s Register is a red flag that we all acknowledge. “Big spending cities facing music.” He cites Vallejo, which filed for bankruptcy protection a few year ago, and has added the city of Stockton, which “borrowed to build a new baseball park, a new sports arena and a marina, none of which came close to breaking even.” Huell Howser. I will not focus on that redevelopment failure in this report. According to Dan’s report the city of Stockton “faces a $37 million budget deficit.”
Last year I posted a report detailing compensation of a dozen senior Mission Viejo city staffers. Today, thanks to State Controller John Chiang, as a result of abuses by elected officials in the city of Bell, we now have detailed reporting of Local Government Salaries and Compensation. Thank you Mr. Chiang.
Around this time of year city council members are being asked to review their city budgets for the next one or two year cycles. City managers have a habit of comparing themselves to other cities to justify giving raises to their employees which also includes themselves. What is often overlooked in these deliberations is that there is more to the cost than the basic wages. In my Part 2 of 2 post on May 15th I detailed every one of the benefits that Mission Viejo offers to all of our employees. At this time my focus will be on the ticking time bomb faced by every city in the state. I refer to costly PERS pension obligations According to the Controllers office report 17 of our 34 O.C. cities offer 2%@55 pension programs for their employees. The most conservative city employee pension is found in our neighboring city of Laguna Hills whose employees receive 2%@60.
Eight cities offer 2.5%@55. They are Buena Park, Costa Mesa, Fountain Valley, Garden Grove, Huntington Beach, Newport Beach, RSM and Westminster.
The big spenders, offering 2.7%@55, are Anaheim, Irvine, La Habra, Los Alamitos, Mission Viejo, Orange, San Juan Capistrano and Santa Ana.
Offering 2%@55 are: Aliso Viejo, Brea, Cypruss, Dana Point, Fullerton, La Habra, Laguna Beach, Laguna Niguel, Laguna Woods, Lake Forest, Placentia, San Clements, Seal Breach, Stanton, Tustin, Villa Park and Yorba Linda.
As you scan this list there is no benchmark to their pension offerings. .i.e. Check out their date of incorporation, population, contract vs non-contract city, etc.
For every city employee who retires at 55 to 60 with a 25 year lifespan to follow, we must hire their replacement which will also be entitled to some form of pension benefit. Therefore city council members must consider the ongoing cost of funding current, future and retired employees as they consider what level of compensation can be justified in this recession that led to a 280 point drop in the Dow yesterday “erasing more than a quarter of the stock market’s gains for the year.” OC Register.
Looking outside of Orange County I did a random check of a few large cities. San Francisco offers their employees a 2.3%@62 pension benefit. LA offers 2.16%@55 with 30 years of service. Sacramento offers 2%@55 and San Diego provides 2.5%@55.
While you visit the Controllers site take a few minutes to see what every one of your city employees earned including their total 2009 wages subject to Medicare (Box 5 of W-2.
i.e. The Mission Viejo city manager earned $245,699. The report also lists $10,120 in health, dental and vision coverage.
Following is the link to the controllers report which is my data source of the above information.
http://lgcr.sco.ca.gov/EntityList.aspx?entity=City&load=ByDefault
Aside from my confusion (and perhaps geographic and topographic ignorance) as to why Stockton would need a marina, great story Larry. I can’t wait for Vern and the lefties to tell you that you’re manipulating data, telling only part of the story, the real public employee benefits aren’t as bad as you’re making them out to be, etc. etc. Thank you for continuing to stay out in front of stories like this. It is the crushing unfunded liabilities of the public employee pension system, along with other future debt-laden monstrosities like HSR that are driving our state in Obama’s proverbial ditch (I guess that means the Democrats in the State House and Governor Moonbeam are the ones holding the Slurpees).
Newbie,
The port of Stockton is crucial to California.
It is one of the largest BULK PORTS on the west coast (not to be confused with the container ports like in San Pedro).
The Daily shipping log to and from POS is impressive. Daily outbound shipments include Rice and grain, this has especially increased after the Japan earthquake, where domestic rice is scarce (before the EQ we were still the #1 importer of rice to Japan).
But other bulk goods like fertalizer and grains, even timber and coal are transported from the port in HUGE quantities.
It is worth noting that the California Delta boasts over 1200 miles of waterways and many are deep water channels, this also plays a vital role in our national defense.
So with that being said, maybe everybody won’t think I am such an asshole……..but, I doubt it!
I don’t think you’re an asshole, klnd!
For those who do not drive I-5 to SF (or SAC) the city of Stockton is just above Manteca and the split where you either head to SAC on I-5 or take the 580 fork toward SF and Oakland.
KLND. Without re-reading Newbie’s opening remarks he simply was not familiar with the city and its geographic location.
If you wish to see some of our mothball WWII Navy fleet, on the same waterway referenced by KLND, let me suggest taking 680 north above the 580 and Walnut Creek to the 780 bridge to Vallejo or Fairfield and I- 80. If they are still there the ships will be on your right.
Good story and good work Larry. Please use a larger font.
Geoff. Thanks for the heads up and the positive comment. Someone else called with the same suggestion.
I have gone back and made the necessary font size changes so that you will no longer need a 50 power loop to read it.
E-mail from Arkansas friend.
“These pensions are incredible! What were they thinking????”
I assume all these compensation packages were approved by locally elected officials, the “represenatives of the people”, and done so publicly and therefore legally. Perhaps it is time to go after those officials, I assume many of whom are out of office, to test whether there can be some kind of personal liablity on their part. Of course, there is liability on the part of the various city taxpayers left holding the bag, so why not the former electeds? Fair is fair. Otherwise the taxpayers are left with the on-going fall out of the stupid decisions made by the people they elected.
FMO.
You are correct in that city pension rates were set by elected city council members. Many of these elected officials are no longer serving but their pension plan votes remain as fixed debt obligations for future generations.
I would suggest that in the next election do your homework and see if currently serving members approved these generous plans and vote them out of office.
Unless you can find them violating the law, such as approval of these plans without public participation in open session, there is nothing that can be done legally. Reminds me of Lethal Weapon 2 where the bad guys claim “diplomatic immunity.”
I won’t even engage in the debate of who provides the most generous pension plans, the private or public sector.
There is a price to be paid when you have General Law cities with part time council members, many of whom have no business experience, making less than $1,000 per month, and are led by the hand of their city managers who convince them that the agreement is based on sound revenue projections.
This is no different than the national debt obligations that our grandkids will be left holding the bag as China cashes in their trillion dollars of US paper.
If we can kick them out of Congress, as confirmed by last November’s election, we surely can remove them from local office at the ballot box.
We control Term Limits every two to four years. Don’t reward incumbents who have put us behind the 8 ball.
“I assume all these compensation packages were approved by locally elected officials, the “representatives of the people”, and done so publicly and therefore legally” Fool me once
We will have to wait for the trial of the City of Bell, criminals to see if those pay and benefits were “Legal” or just part of a system of corruption. Once the pattern of criminal corruption is proved, then that template of legal doctrine will be available to all citizens to pursue the responsible ones in each and every city and county who thought they could “Get Away With It”.
Some see the proof as the increasing number of top management in local governments who are retiring or leaving their jobs.
Want to know the ecxcessive sost of these pensions and who really pays for tthem? Read on:
So let’s cut to the chase …….
Private sector employers typically contribute 3%-8% of an employee’s cash pay towards retirement, yet the total cost (expressed as a level annual % of cash pay throughout one’s career) of Public Sector Defined Benefit pensions (for a 30-year employee retiring at age 55) ranges from 29% to 58% depending on the richness of the benefit formula (with safety workers generally at the highest end).
More specifically, for the noted formulas, the level annual %s of cash pay are as follows:
2% per year of service w/o COLA – 29%
2% per year of service with COLA – 39%
3% per year of service w/o COLA – 44%
3% per year of service with COLA – 58%
Even after deducting the typical employee contribution of about 5% of pay, that still leaves the employer (meaning TAXPAYERS) contributing 24% to 53% of pay. The middle of these %s is 38.5% vs 5.5% (the middle of the range of what Private Sector employers contribute) or SEVEN (yes SEVEN) times greater.
This is completely absurd, and the very modest “tweaking” at the edges by practically begging employees for a few more percent of pay contributions will NOT even begin solve the HUGE financial problem.
TOTAL COMPENSATION (Cash Pay plus Pensions plus Benefits) should be comparable in the Public and Private Sectors for similar jobs, and with Cash Pay in the Public Sector now AT LEAST equal to (if not greater) than that in the Private Sector, there is ZERO justification for greater Public Sector Pensions and Benefits .
Not for PAST service, but for FUTURE service, Public Sector pension accruals must immediately be brought FULLY down to the level of their Private Sector counterparts. Due to the huge reduction needed, the ONLY way to do this is to freeze the current defined benefit plans for CURRENT (yes CURRENT) workers, and switch everyone into a 401K-style Defined Contribution Plan with an employer contribution in the same 3%-8% range granted Private Sector workers.
Additionally, since Private Sector retirees rarely get any retiree healthcare subsidy before eligibility for Medicare at age 65, similar restrictions should apply to Public Sector retirees.
It’s TAXPAYERS’ money and Civil Servants are NOT more worthy of bigger pensions and better benefits.
I’ve been the Stockton Baseball field. It’s amazing!!! Beautiful. Other than the parents of the high school kids we were playing in a tournament, there was nobody else in the stands. The restaurant on the far end of right field, with the really cool Cantina motif was empty and I wanted to go hang out there and down a brusky, but no one would join me. I wondered how in the hell did Stockton ever raise the money to pay for this fantastic ball park in the outskirts of Stockton? Ha! Thanks Larry for confirming my suspicions that it was probably the result of political hacks with grandiose ideas and too much power over other people’s money and their community’s fiscal solvency.
You have been the field, Martha?