VALLEJO — Bankrupt Vallejo’s city council approved a firefighter contract this week some city officials said may start a new trend: smaller pensions for new hires and a bigger bite from paychecks to pay for pensions.
The firefighter union agreed to cut pensions for new hires to 2 percent of final pay for each year served at age 50, down from the current 3 percent at 50, a previous trend advanced by state legislation a decade ago that critics contend is “unsustainable.”
A new two-year contract with no pay raise, narrowly approved by a 4-to-3 vote of the city council, also increases the pension contribution from current firefighters to 13.4 percent of their pay, up from 9 percent.
The widely watched municipal bankruptcy filed in May 2008 produced a landmark ruling from U.S. Bankruptcy Judge Michael McManus in Sacramento, who overturned a Vallejo contract with an electrical workers union last September.
Public employee unions, concerned that bankruptcy might become a way for deficit-ridden cities to overturn labor contracts, backed unsuccessful legislation requiring cities to get approval from a state commission before declaring bankruptcy.
But so far, the bankruptcy mainly has produced a complex court battle that already may have cost the city $7 million in legal bills and a bitter split on a city council that unanimously voted 7-to-0 for bankruptcy two years ago.
Among the complications: city revenue has plunged during a deep economic recession, dropping 30 percent since the bankruptcy to a projected $54 million. And the city charter requires binding arbitration when labor talks fail, limiting the ability to impose new contract terms.
“There is no bankruptcy law that talks about negotiating new agreements,” Marc Levinson, the city’s bankruptcy, told the council Tuesday (March 23). “You default to applicable non-bankruptcy law, and that’s the city charter and binding arbitration.”
The city negotiated new contracts early last year with managers and the police union, which included a pay raise for the officers. The electrical workers union contract was overturned by McManus after mediation failed.
The electrical workers appealed the decision on their contract. Arguments were heard earlier this month by U.S. District Judge John Mendez in Sacramento, who is not expected to issue a ruling until May.
At the city council meeting this week, supporters said the new contract with firefighters is a step toward helping the city recover and avoids the risk that binding arbitration would produce less savings.
“I think that leaving it up to an arbitrator … for me, given the strides that occurred here, the ‘two at 50,’ that’s monumental,” said Councilwoman Erin Hannigan. “That isn’t something that’s happening in other communities just yet. But I think it will be from here on forward.”
As Mayor Osby Davis congratulated the firefighters, he made an apparent reference to labor negotiations that often make comparisons with benefits for other unions and public employees in other cities.
“I think you made some major ‘gives’ that probably won’t be liked by your fellow unions and other people,” Davis said. “But I think you did a Herculean job, at least to my viewpoint, in trying to help us come up with a solution.”
Among the savings in the firefighter contract are health costs, limited to 75 percent of Kaiser health plan rates. The total compensation for a firefighter/paramedic with 10 years of service is $178,000, down 23 percent from $230,000 in the old contract.
Opponents, pushing for more cost savings, said the firefighter contract seems to assume that revenue will plunge no farther, the police union will make cost-saving concessions, and voters will approve a sales tax increase this fall.
“The fact is consultants are running this city,” said Vice Mayor Stephanie Gomes. She said the four persons sitting at the table in front of the council as the contract was presented by negotiator Sandy Salerno were all consultants, not staff members.
“I agree with you in a sense, Vice Mayor Gomes, that consultants are running the city,” said Davis. “But we have to make the final decisions. We have to tell them ‘no’ or ‘yes.’”
Gomes and the other opponents, Councilwomen Marti Brown and Joanne Schivley, said the city has been trying to erase its deficit by cutting services rather than using bankruptcy to restructure government.
“We have squandered the opportunity and a lot of the money that bankruptcy provided and used,” said Schivley.
A report to the city council last December said police staff dropped from a high of 155 to 104, nine fire companies were cut to six, and staff paid by the general fund was down 31 percent to 340.
“We also need major pension reform,” Said Schivley. “Every time you pick up the paper you are reading that anymore. Municipalities, counties, the state acknowledge that these pension benefits are not sustainable.”
Vallejo’s current long-term obligation to the California Public Employees Retirement System is $195 million, Rob Stout, city finance director, told the council. He said $100 million of the obligation is from investment losses in the stock market crash.
To avoid a rate shock, CalPERS has adopted a three-year phase in of higher pension contributions. Stout said the Vallejo plan is to make an early payment of $4 million more than CalPERS requires.
He said the early payment avoids making other budget cuts “year after year” to cover the higher pension cost. He said delaying the payment would be “borrowing” with about $350,000 in interest payments.
A chart in a tentative city workout plan last December showed a payment of 18.7 percent of payroll next fiscal year under the CalPERS plan. The city proposal is 32.6 percent of payroll.
Vallejo had been paying nearly all of the cost of health care insurance for retirees and their families. The city plan last December was to make cuts reducing the long-term retiree health care debt from $135 million to $34 million.
Some retiree health care cuts have been negotiated with the unions, such as a $300 a month cap on insurance payments for some firefighter retirees. The city imposed other retiree health care cuts earlier this year without union agreement.
A group representing at least 464 retirees and 53 surviving spouses filed a suit this month challenging all of the retiree health care cuts. The suit said some retirees paying little or nothing now must pay $873 to $1,219 a month for health coverage.
“Many will have to spend large portions of their monthly income on medical premiums and others will have to choose between medical care and other necessities,” said the suit.
Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at https://calpensions.com/ Posted 26 Mar 10
Calpensions 
March 26, 2010 at 2:13 pm
The city should have insisted that the 2% apply to CURRENT (not just new) Firemen and with a REDUCED retirement at 50 (Full not before 55) …… or the nuclear option ….OUTSOURCE the entire Fire Department.
March 26, 2010 at 4:31 pm
Dear Mr. Mandel
I am curious. When the economy picks up, will this adjustment in Valljo at least be partially reversed?
171 workers for Caltrans have died in the line of duty. I doubt if their widows and children care if they were shot or were run over. I worked 40 years+ with 70 mile an hour traffic a few feet from me. Police and Firefighters live about the same number of years after they retire. Check the Calpers statistics. Pretty much equal.
I retired on 90% Of course I was 59 and had 40 years of time in. When I walked in the door I was almost 19. And I bacame a Civil Engineer, which took a lot of years and effort.
Unsustainable? I am not an accountant. But if you were to take all the monies I have paid into Social Security plus my employer’s matching funds and all the money I have paid into my retirement plus the employer’s matching funds and all the money Calpers has made on my and my employeer’s money I would easily be a millionaire many times over.
So who is ripping off whom?
Charles R. Sainte Claire P. E.
March 26, 2010 at 5:30 pm
Dear Charles Sainte Claire ….. you said …”But if you were to take all the monies I have paid into Social Security plus my employer’s matching funds and all the money I have paid into my retirement plus the employer’s matching funds and all the money Calpers has made on my and my employeer’s money I would easily be a millionaire many times over.
So who is ripping off whom?”
Lets see who’s ripping who off:
(1) you included the money you paid into SS. This has NOTHING to do with your (90%) Taxpayer-funded pension. SS will pay you formula benefits for this.
(2) You included “your employer’s matching SS funds” … Dah … you mean the TAXPAYERS money (not yours) right ?
(3) You included employer’s matching funds to your pension …. Dah (again) … you mean the TAXPAYERS money (not yours) right ?
(4) You included “all the money Calpers has made on my employeer’s money”. Don’t you mean all the investment earnings that would have remained in the TAXPAYERS’ pocket if THEY didn’t have to pay so much towards your excessive pension & benefits?
If you accumulated ALL your contributions (at a reasonable interest rate) to the date of retirement, it would likely be no greater than 10-20% of the cost of purchasing (on that same date) the present value of your retirement package (pension + retiree healthcare).
CONCLUSION: YES, you have ripped off the taxpayers BIGTIME !
March 26, 2010 at 6:46 pm
In answer to the first poster, it’s illegal to go back on promises for current employees, but these systems are going to have to creat new tiers….for new employees.
March 26, 2010 at 7:26 pm
Those opining as to the illegality of such reductions, are THEMSELVES (as legislators, judges, AG staff, etc.) participants in these same plans and would be negatively impacted by opining otherwise.
Hardly, “unbiased” opinions, and clearly a conflict of interest.
When the financial sh** its the fan (and its so close we can all smell it), we’ll get past this obstacle.
Reductions WILL come for CURRENT workers as there are no alternatives.
March 26, 2010 at 7:44 pm
Touch Love you are just factually and legally incorrect. Obsessing on attacking current hires will only waste precious time, money and resources on a losing battle, not to mention it is morally indefensible to promise something, have someone rely on it for 20+ years until they are literally too old and sick to work ANYWHERE and then renig on the promise. Current hires get their current package, even union-hating Arnold understands and accepts that. You’d be better off focusing your irrational, factually-incorrect, ravenous hatred of govt workers on new hires. Who knows, maybe you can even get slavery re-legalized since that’s what you seem to want. Do you even grasp that most of these folks are just regualar honest hard-working people who took a job and show up and do their work. It’s not their fault that politicians created an unsustainable system. Do you feel the same about bailing out Wall Street after they ruined their own industry and the nation and then ask for a bailout to give 6-figure raises to themselves as a reward – talk about welfare bums? Where is your rage for that waste of taxpayer money? I support changing the system just not blantant hatred and prejudice.
March 26, 2010 at 9:17 pm
Dear ReilleyFam,
Wow, lots of adjectives in your comment … sounds like you have anger-management issues.
Lets address some of your points:
(1)Quoting …”Obsessing on attacking current hires will only waste precious time, money and resources on a losing battle, not to mention it is morally indefensible to promise something, have someone rely on it for 20+ years until they are literally too old and sick to work ANYWHERE and then renig on the promise. ”
I am proposing reductions in the pension ONLY for FUTURE years of service of CURRENT employees, because I believe there is no alternative that will save money NOW, not in 20-30 years when new employees retire. In case you are not aware, such reductions are ROUTINE in Private Sector plans. So it seems you are accusing (not just me), but the entire corporate world of all these bad deeds. Have you ever stopped to consider that corporations HAD to do this to avoid bankruptcy, because they have come to realize that they plans are simply TOO GENEROUS and unaffordable. In your Civil Servant world, the thought process entirely discounts affordability … the taxpayer be damned.
(2) Quoting …”Current hires get their current package, even union-hating Arnold understands and accepts that.”
Perhaps you are unaware, but Meg Whitman (likely California’s next Governor) is proposing an increase in the retirement age from 55 to 65 for most CURRENT employees. So, she agrees with me …. I call her good company.
(3) Quoting …”you’d be better off focusing your irrational, factually-incorrect, ravenous hatred of govt workers on new hires. ”
On the contrary, I respect all hard-working employees in both the private & public sector. It’s just that I understand (way better than most) the enormity of the costs associated with these very generous pensions & benefits that politicians have granted you to curry favor during the election process.
Civil Servant “cash” pay now exceeds that of comparable private sector jobs (per the US Gov’t BLS) and the taxpayer-funded share of your pension & benefits is 2-4 more valuable than those given in the Private Sector. There is simply no justification for this….. at taxpayer expense.
YOU feel Civil Servants (in comparable jobs) are entitled to MORE . I do not ….they should get EQUAL, but not more. Now, (with pensions & Benefits included) you get a GREAT deal more. I doing my best to educate Taxpayers of this fact, so that changes can be put in place …. and those changes need to impact CURRENT employees.
(4) Quoting …”It’s not their fault that politicians created an unsustainable system.”
You are absolutely correct, and I do not blame any Civil Servant for trying to get as much as they can. That’s human nature.
The politicians are clearly the ones at fault for structuring a system that has allowed such excessive/unsustainable/unfair Pensions & benefits to exist. That being said, as the payees of 80-90% this disaster, the taxpayers must do something to fix it … including reductions (only for FUTURE years of service) for CURRENT employees.
(5) Quoting …”Do you feel the same about bailing out Wall Street after they ruined their own industry and the nation and then ask for a bailout to give 6-figure raises to themselves as a reward ”
Agreed, many should be jailed … as well as some gov’t regulators whose gross incompetence is beyond pale. Its a shame 99.9% will escape unscathed.
March 27, 2010 at 12:17 am
Touch,
There’s not a snowball’s chance in hell that promised future retirement benefits to current employees for future service credit can be reduced. Show me of once public sector court case anywhere where that’s happenned in the USA. It hasn’t, so dont’ bother looking. You obviously haven’t a clue about the details or actuarial assumptions and methodologies that goes into constructing and implementng a pension system. I do. I’m a professional in the field and deal with it on a daily basis. You probably have no idea of the basic concepts, let alone the more advanced concepts that Sr. Actuaries deal with on a daily basis.
While I completely agree that the funding levels of some of the public sector systems are too low, there are many things that can be done to bring these levels back to professionally accepted levels including creating new tiers as been done many times before in the public sector. Perhaps you should read up on the concept of “smoothing” related to actuarial assumptions as well as a host of other technical areas that even a non-expert such as yourself can grasp.
Have a nice weekend.
March 27, 2010 at 12:26 am
You are absolutely correct that retiree health costs is a much larger problem that the pension isssue. Much, much larger…and it has to be reigned in or it will break counties, cities and other local governments.
However, that is a separate issue.
March 27, 2010 at 12:31 am
I’m so sick and tired of the public employees ripping off the private sector. Time to fire every one of them and privatize the cops, firemen, teachers, ect. No more stealing from our kids and grand kids, pay for your own HC and retirements, you people make me sick.
You say they can’t go back on promises, lol. Your corrupt unions vote in their buddies so they can give public employees ridiculous pay, HC, pensions and many other benefits that rip off the tax payer. Your all nothing but crooks along with those morons voting a 2% at 50. Idiots don’t realize we are going down hard from here, we don’t produce anything anymore. Idiots
March 27, 2010 at 12:35 am
Tamworth, Prichard Alabama! Those gov workers haven’t got paid since Sept. If the city doesn’t have enough to pay you, you will lose, one way or another it gets worse from here bank on it. Time to get rid of corrupt unions, nothing but thieves!
March 27, 2010 at 12:37 am
175K FOR FIREMEN are they out of their minds, we have a volunteer fd that will do just as good a job. Get rid of all paid firemen. Crooks
March 27, 2010 at 2:56 am
Hey Tamworth …. you’re a wanna be …
Here’s something I put together a while back demonstrating some of the math details… go ahead (expert) critique it.
” If you “do the math” ….
The total “value” of benefits at retirement is the present value of all future payments, be they pensions benefits, healthcare premium subsidies, or anything else. Some of these future cash flows are definitively known at the time of retirement (e.g., fixed monthly pensions), and others need to be estimated (e.g., healthcare premiums, the incremental value of future COLA pension increases, etc.). However, all of these future payments can be reasonably estimated (sometimes with several options such as the low, medium, and high liability estimates routinely provided by the Social Security Administration). Once all known and estimated future payments have been determined, they can be discounted to the point of retirement at an assumed interest rate and an assumed mortality rate (for those payments that cease upon death). The interest rate used in this calculation is very important, but actuaries routinely do calculations of this sort and the range of reasonable interest assumptions for this purpose is fairly narrow.
The present value of all retirement pension and benefit payments can be looked at as the answer to the question ….. How much would an insurance company charge in a single payment at the time of retirement to take on the guaranteed responsibility to make all future payments in lieu of the former employer.
If we examine two 30-year service, age 55 workers (one Private Sector & one a Policeman or Fireman) making $100,000 in base pay + $20,000 in overtime at retirement, what would these present values be?
Being somewhat versed in the subject of employee benefits I’ll describe the “likely” pensions & retirement benefits afforded each and then estimate their present values.
Let’s assume the Private Sector worker is one of the few lucky enough to still have the older traditional-style defined benefit pension plan, and does NOT contribute towards its cost (common practice in Private Sector plans). With 30 years of service and with a typical formula that takes into account wages above and below Social Security “covered compensation”, this worker would likely receive about 40% of final 3-year average pay at normal retirement age, and overtime would NOT be included in benefits-bearing compensation.
Here’s how the Present value would be calculated …
Assume $95,000 is the AVERAGE of the last 3 year’s base salary, so 40% x 95,000 = $38,000. But this would be payable only if the employee waited until his plan’s “normal retirement age”. Let’s assume that his plan’s normal retirement age is 60. Since he will start collecting his pension 5 years early, there would be an “actuarial reduction” of 4 to 6% per year (just like Social Security applies when someone starts collecting early at age 62). Let’s assume the yearly reduction is 5%. So … we now have an annual pension of $38,000 x .75 = 28,500.
Now, to convert this to a “present value” we need to apply a life annuity factor (which incorporates the interest and mortality discounts discussed earlier). For someone retiring at age 55 this “factor” would be a multiplier of about 15. So … the present value of this worker’s pension is $28,500 x 15 = $427,500.
We will also assume there are no post-retirement healthcare benefits, as such benefits are VERY rare in the Private Sector.
Now let’s calculate the present value of the Policeman’s pension & benefits.
The pension formula for the policeman is often 3% of the last year’s salary (including overtime) per year of service and with no “actuarial reduction” for collecting benefits at age 55 (unlike for the private Sector worker). So … we have ($100,000+$20,000)x.03×30 =$108,000. But, we’re not done …
The policeman’s pension includes a provision for post-retirement COLA increases (while essentially NO Private Sector plans do so). Although this may surprise the reader, the “value” of this added benefit is VERY significant. Even with a modest long-term inflation assumption of 3%/yr, the addition of a COLA benefit for life increases the value of the pension by at least 50%. Hence, the levelized annual pension (with the COLA) is now $108,000×1.5=$162,000.
Using the same annuity factor of 15 (as used in the Private Sector workup above), we have a present value of 15x$162,000=$2,430,000.
But wait, we’re still not done (2 more items to adjust for) …
First, in fairness, the policeman contributes a percentage of his pay toward his pension (unlike the Private Sector worker), and the accumulated value (at interest) of these payments at retirement should be subtracted from the above $2,430,000 for a fair comparison. For this policeman whose final total pay was $120,000, I have calculated the accumulated value at retirement date of his contributions to be roughly $400,000. Hence the present value of this officer’s pension (offset by the accumulated vale of his contributions) is $2,430,000-$400,000=$2,030,000
Second, this officer gets free or heavily subsidized retiree healthcare for himself AND his family. Since he is not eligible for Medicare until age 65, his healthcare premiums are very expensive and are expected to increase annually at 8-12%, triple the rate of regular (non-medical care) inflation. The present value of this benefit and the post Medicare age healthcare subsidy is roughly $500,000.
Hence, the present value of this officer’s pension AND retiree healthcare benefit is $2,030,000+$500,000=$2,530,000.
Now, let compare the present value for these 2 workers making the SAME pay, working for the SAME number of years, and retiring at the SAME age.
The Private Sector worker’s EMPLOYER-PROVIDED retirement benefits are worth (as a present value on the date of retirement) $427,500.
The Policeman’s TAXPAYER-PROVIDED retirement benefits are worth (as a present value on the date of retirement) $2,530,000.
The crisis associated with funding Civil Servant Pensions and benefits is NOT a revenue shortfall issue. It is CLEARLY one of EXCESSIVELY GENEROUS pensions and benefits as the above calculations demonstrate.
For 2 similarly situated workers (in pay, years of service, and retirement age) the Policeman’s package of retirement benefits costs the TAXPAYERS almost SIX TIMES what the typical Private Sector employer is willing to pay.
Clearly, if the Private Sector employer provided the same benefits to his workers that the policeman receives, his company would likely go bankrupt in short order.
These unreasonable benefits have been provided due to a political structure that rewards politicians for “giving-away-the-store” of not their own, but TAXPAYERS’ money, for personal gain. This “gain” may simply be to feed their ego, garner the union support needed to get re-elected, or perhaps worse … for current or future personal financial gain.
In any event, the current situation is without doubt unsustainable and without MAJOR REDUCTIONS to the benefits provided CURRENT (not just NEW) public employees, towns, cities, and states will be filing bankruptcy with increasing frequency.
Unfortunately, since difficult change is delayed and delayed and delayed to avoid the confrontation (with very aggressive unions), important public services will suffer tremendously until action is FINALLY taken.
I’m sure there will be Civil Servants (with vested interest in the status quo) that will say my figures are wrong. Estimates are necessary, and small variations in assumptions will change the figures to a minor degree, but the final relationship is quite accurate …. TAXPAYERS are forced (via their taxes) to pay almost SIX times as much as the Private Sector employer is willing to pay.
By-the-way … any qualified actuary can verify the reasonableness of my figures and conclusions, …. and I would welcome the actuary who offers to do so ……
Bye-the-way ……… I didn’t mention it above, but it’s worth a comment …… Civil Servants often take advantage of what’s commonly called “spiking” to unfairly boost one’s pension just before retirement. This takes many forms: large last minute promotions and/or raises, excessive/unusual overtime, cashout of sick and/or vacation days with the payout included in “compensation” for pension calculation purposes, or inclusion in “compensation” of miscellaneous “allowances” (housing, vehicle, parking, uniform, etc.).
None of this is EVER allowed in Private Sector employer-sponsored plans (employers are spending THEIR OWN money, not TAXPAYER’S, and would never be so foolish). For every $10,000 of “spiking” that works its way into the above Policeman’s “compensation”, it costs the TAXPAYERS an additional $10,000x.03×30×1.5×15=$202,500 !
March 27, 2010 at 3:51 am
Thanks for the informative post, Touch. $175,000 after only 10 years. Incredibly this is with the reduction. No wonder Vallejo went belly up.
March 27, 2010 at 5:33 am
You are right, the cops and firefighters benfits are too generous. However, the agency I am referring to requires it’s employees to contribute 8% of it’s salary toward’s the contribution rate. In addition, there’s no pension spking whatsover and terminal compensation doesn’t include such pays as overtime, etc…just monthly salary. I’ve been administering public sector pensions for quite some time now.
By the way , you don’t have to explain such elemental concepts to me such as Normal Retirement age and Present Value…lol….would you like to explain the most popular smoothing concepts or perhaps the various ways to calculate unfunded liabilities using the most popular methods or perhaps something so elemental as “normal cost?” When using smoothing, what weight do you assign to which years? That’s about a third grade softball question, by the way. Perhaps when you become a Fellow and have 35 years experience, you will have som credibility.
As a reporter, you have none.
March 27, 2010 at 5:54 am
Tamworth, I believe you called yourself a “Sr. actuary” somewhere above. Sounds like a Gov’t title, and few Gov’t actuaries (with titles as such) are credentialed actuaries. What Professional actuarial credential(s) do you have? (be specific) …. I’m guessing NONE.
By the way, recent proposals to smooth asset values over 30 vs 5-10 years are a joke (and you know it). Just an attempt to hide from the impact of reality … the currently depressed true market values. None of this nonsense is allowed under ERISA for Corporate Plans.
March 27, 2010 at 6:14 am
Touch Love
Do the math. If you only consider my contributions, and the States money is really paid in lieu of more salary, think again. Do you really think the employer’s share of Social Security is paid by them? Guess again. It is part and parcel of the cost of business. The employee pays both halves. Your employer could give you a raise if he didn’t have to pay SS. Check his profit and loss spreadsheet.
I have been enrolled in Social Security since I was 15 with an average salary of about $4000 per month times 44 years equals about 528 months at around 7.5% equals about $158,000. Also, I paid in 5% for my retirement which is another $96,000 equaling $254,000. Take half of that and increase it by say 5% per year for 44 years and you get over $1,000,000. Put that in a sinking fund and you will receive about $90,000 per year for 20+ years, which is what I am getting.
By the way, we haven’t touched the 22.5 percent the State of California supposedly puts in. That is another $1,800.000.
Again I say, who is getting ripped off here? The State is making 180%. Do the math. Do the math. It’s easy with a computer. Just open up your calculator.
I
March 27, 2010 at 6:39 am
Charles, You are making this more complicated than need be. First, lets get SS out of the picture… not relavant to this discussion. Both Public & Private have this and it has nothing to do with your LOCALLY provided pension which you and LOCAL taxpayers fund.
The ONLY item I see you contributing is the 5%/yr. FYI, 5% of $48K/yr =$2,400, accumulated for 44 years gives approx $363K.
So it seems the accumulated value of your pension contributions is $363K, but is buying you an annual pension of $90K/yr.
Unless you have contributed something else, you got one heck of a deal….which means Taxpayers who funded the balance got quite a lousy deal.
All that matters is what YOU put in and what YOU get back ….the other stuff is irrelavant.
March 27, 2010 at 8:19 am
Touch Love
That $363,000 didn’t sit in a tin can in my back yard for 44 years.
Taking a conservative estimate of 5% investment makes that 8.56 times half MY personal contributed amount (since on average the money is only invested for 22 years or half the money for 44 years, take your pick). That is $1,553,640 Divide that by $90,000 per year and I can live for 17 years disregarding the fact that MY money will continue growing after I retire due to investments.
Calpers is considering dropping their projected rate of return from 7.75% to 6.5% At that rate MY investment will increase by 12.986 times making MY money $2,356,864. So I can live for 25.8 years ignoring the fact the remaining principle is still earning money. So if I live to be 85 I will only get back MY money and Calpers will pocket the investment interest for the next (hopefully) 26 years.
By the way it’s irrelevant.
March 27, 2010 at 12:43 pm
Charles, that 363k is with interest, for gosh sakes you think calpers will make 6.5% over the next 10 years you are dreaming, those days are over. There is no way in hell you would have 1,553,864 dollars made from your money. The first 30 years of your pay you wouldn’t have put in squat, but you want the interest like you did, typical gov worker. Stop listening to the crooked Union people, they are liars. Your figures are so far off it isn’t funny.
What you should get is what you put in, the tax payer shouldn’t have to pay for your retirement. If what you are saying is even close to being true every state in the country would not be going broke trying to pay their public employees, pensions and hc, you are full of it.
http://www.pensiontsunami.com/
http://globaleconomicanalysis.blogspot.com/2010/03/4-day-school-weeks-coming-to-illinois.html
Two great site where you can follow how the public sector and their unions are ripping off the private sector. It won’t last forever, the private sector is starting to wake up now. Time to stop the corrupt unions and the buddies that pay billions to get into office so they can pad their pay, pensions, hc and a bunch of other even more corrupt payments. Time to shut down the corrupt unions, no more stealing from our kids and grand kids.
March 27, 2010 at 2:49 pm
Charles, you must be onw of those GED educated gov employees.
#1) your “average” contribution to your pension fund was NOT 5% of $48K. I doubt the first day you started 44 years ago you made even $5K per year.
#2) Please STOP playing your “hero” card-you’re no hero and neither are the PD and FF or any of you other fraudstirs. You’re scammers, nothing more, nothing less.
#3) Firewhiners and cops live just as long as everyone else does-another whopper opf a lie that you and your fraudstirs seem to always throw in. Please, stop the lies.
#4) If you think you would be a “millionaire” from money contributed to SS then you are a bigger fraudstir than I thought.
#5) If you received the 1.12% ROI that SS pays out you would have enough money to “retire” for 3-4 years. And NO, Calpers does NOT return 7.75% or anything even close to it-that is why they are going to LOWER that pie in the sky rate. T]Calpers ROI the LAST 10 years is a WHOPPING 2.4%, or about 1/4 of what thye projected. Yeah, that is some brilliant investing.
Will you please stop the lying, for once. Thanks “hero” who works by “cars driving 70 MPH”.
March 27, 2010 at 2:51 pm
Tamworth Says:
There’s not a snowball’s chance in hell that promised future retirement benefits to current employees for future service credit can be reduced
==============
Says who-you? A gov trough feeder?
Retroactive pension increases are per se illegal, and when Ornage County gets through with their deputy lawsuit even GED hires like you will be able to understand that.
March 27, 2010 at 3:21 pm
Charles, You misunderstood. The $363K I mentioned is the accumulated value (using 5% interest) of an annual contribution of $2,400 per year (5% of your stasted average annual pay of 12x$4,000).
Hence, it ALREADY includes the interest. (Actually its an overestimate because your “average” may be $48K, but it certainly was not level, and this simplistic method compounds interest for long periods on amounts not really contributed in the early years of your career).
This amount appears to be the value WITH interest of ALL you contributions. Did I miss anything else you put in ?
IF not, its clear your gonna get an outrageous payback on this contribution.
Just for completeness, I recalculated the #s, but used 40 (not 44 years) as the 40 is what you quote as work in your pensionable job (the 44 was related years of SS contributions). I also accumulated your average $2,400/yr at 5%, 6%, and 7%. Your accumulated contributions (over the 40 years) would be $290K, $371K, and $471K, at 5%, 6%, and 7% respectively.
The conclusion seems the same …. you made out quite well. Also to clarify your great deal, a $90k/yr annual pension (with payments beginning at age 59) and assuming a 3% annual COLA has a present value at retirement of just under $2 Million.
Not a bad deal, to pay (INCLUDING the interest earned on your contributions) say between $300K & $500K (depending on the rate assumed) and in return are getting something (ALSO Discounted for interest & mortality …. i.e., on an apples-to-apples basis with the contribution) worth $2 Million.
By the way, the conclusion is in line with what is typically found in Public Sector pensions …. (using a middle ground, that you contributions were worth say $400k), you paid for about 20% ($2Million/$400K) and the Taxpayers paid for the other 80% of your pension.
And, I assuming you paid ZERO towards whatever subsidy you are getting to pay for retiree healthcare. (worth hundreds of thousands)
Now WHO did you say is being rippped off …. you or the taxpayers?
March 27, 2010 at 4:52 pm
Calpers is still 87% funded and the State and Locals took a pension holiday, for several years they paid little or even nothing.
Calpers COLAs are capped at 2% and this year will be nothing.
Also the Calpers fund contributes about 75%, workers pay 5% and taxpayers pay the difference, which would be a lot less if they had not decided to not pay into the account for about three years running.
However, you are correct and I should have checked your math instead of assuming it did not include earnings.
March 27, 2010 at 5:08 pm
OCO
I am not a GED and have been a licensed Civil Engineer for 28 years.
Actually I started at almost exactly $5000 per year. My last twelve months was at $110,000 per year. I was being somewhat conservative.
I wasn’t playing the “hero” card. Simply saying work on the freeway is not easy. I have pointed out that police and firefighters live about the same lifespans as other employees. The figures come from Calpers.
Also, I have never depended on SS for anything. And it appears that was a wise decision.
By the way I bought my house with taxpayer money in 1974, do you want that too?
You could at least be as civil as Touch Love.
March 27, 2010 at 5:40 pm
Charles, Yes, an annual COLA cap of 2% would modestly lower the estimated cost by perhaps $1-$2 hundred K. Bringing the cost of you pension to perhaps $1.8-$1.9 Million.
I wasn’t addressing Calpers funding level, too many variables … only time will tell if it blows up. I was simply demonstrating that the typical Civil Servant funds roughly only about 20% of their pension.
Oh … and that often-repeated nonsense that “Calpers fund contributes about 75%”. No, there are ONLY two contributors (you and the taxpayers). That 75% is simply the earnings on the contributions.
Look at it this way. Of the 80% of contributions that originate from the taxpayers, well 80% of the “75%” is interest that would have stayed in the taxpayers’ pockets if they did not have to make the original contribution.
By the way…. many gov’t entities do not make their scheduled contribution, which exacerbates the underfunding, but underfunding and (excessively ??) generous pensions are independent issues.
These very generous (primarily taxpayer-funded) pensions are really making havoc on municipal budgets.
In a prior era (perhaps 20+ years ago) better pensions for Civil Servants may have been appropriate BECAUSE cash pay was lower. Today, Civil Servant “cash’ Pay is higher (peer the Us Gov’t BLS) so the much higher pensions are no longer justifiable.
March 27, 2010 at 6:19 pm
Charles your #’s are off so much it isn’t even funny. Your state would not be bankrupt if your fund contributed 75%. Stop listening to the corrupt union members. And what about that just about free hc that our kids and grand kids will be paying for year. Unions need to be shut down all over the country, in 5 years or so, this country will probably have a revolution because they will be taxed so much to pay for guys like you. Corruption at it’s best.
March 27, 2010 at 6:24 pm
“Actually I started at almost exactly $5000 per year”
So Charles, if you had to pay 5% years ago which i doubt, you put in 250 dollars. You didn’t average 48k at 5% not even close. Not sure what school you went to, but i’ll tell you, you are not good at math!
March 27, 2010 at 6:27 pm
“You could at least be as civil as Touch Love.”
You think you and your unions have been civil to us over the years. We should have fired guys like you when you struck and threatened us. Times have changed, you are robbing our kids and grand kids, unions have peaked, now it’s time to get rid of them.
March 27, 2010 at 6:49 pm
BrocktonBoxer, I think Charles … “be civil” comment was directed to OCO, not you.
That being said, I agree with your comments about Civil Servant Unions …. a REAL problem.
But remember without the complicity of the pension-benefit-granting politicians no of this (mess) could have happened. The politicians are clearly the worst offenders.
Personally, I feel much of the excessive pensions/benefits politicians approved (being clearly the result of a quid-pro-quo for election funds & support) is criminal behavior, and should be prosecuted as such.
That’s not very likely to take place. So our efforts need to focus on repairing the financial damage. And THAT, must focus on reducing pensions for FUTURE years of service for CURRENT employees (as well as subantantial reductions in retiree healthcare subsidies).
March 27, 2010 at 7:06 pm
I didn’t say I was a Sr. Actuary….do you have trouble reading? I am a Fellow. I doubt you are even aware of the various designations. Go do some research.
March 27, 2010 at 7:08 pm
You didn’t respond Fellow of which organization ? Be specific.
Which FSA, FCAS, FIOA, ASPA, etc. ??
March 27, 2010 at 7:14 pm
Currently, it’s illegal to reduce pension for FUTURE years of service for CURRENT emplyoyees, TL. The focus should be on creating new tiers with a lesser benefit for new employees. Might, I also say that yes..you people voted them in. That’s why this state sucks!! I’ll be taking mine and leaving in a few years along with a whole host of others! The Health Care bill is going to costs local governments a ton of money and the only alternative will be to raise the CA Income Tax more.
Good luck to you all. LOL.
March 27, 2010 at 7:15 pm
Currently, it’s illegal to reduce pension for FUTURE years of service for CURRENT emplyoyees, TL. These plans aren’t ERISA plans.
The focus should be on creating new tiers with a lesser benefit for new employees. Might, I also say that yes..you people voted them in. That’s why this state sucks!! I’ll be taking mine and leaving in a few years along with a whole host of others! The Health Care bill is going to costs local governments a ton of money and the only alternative will be to raise the CA Income Tax more.
Good luck to you all. LOL.
March 27, 2010 at 7:19 pm
It’s none of your damn business.
March 27, 2010 at 7:20 pm
Tamworth, I’m waiting …
I’ll make it easier for you … which, from all organizations …. FSA, FCA, FCIA, FCAS, FFA, FIA, FIAA, FSPA.
Hopefully you are at least an EA (enrolled actuary) if you are practicing in the pension field.
March 27, 2010 at 7:23 pm
Tamworth,
Ah, now we got it…. you’re a gov’t empolyee riding this gravy train, while also (supposedly an actuary … with credentials ???) serving his own interests (his pocket), and not his employer’s interests … the TAXPAYERS.
March 27, 2010 at 7:31 pm
The agency I work for and the pension the workers’ receive doesn’t come from the taxpayers, TL.
If you guys aren’t careful, you are going to turn me into “I don’t give a shit about you that dont’ get a pension” kind of person..which I’m not..so you might want to be careful as I do carry some influence and some clout. I will let you know that much.
The formula in my agency is not nearly as generous as many of the CALPERS formulas (yes, there’s more than one TL)…and I agree that particularly the SAFETY retirees’ formulas are way too high. In my agency, the employee contributes a lot to their own pension. So, in a way you are preaching to the choir…but if you continue to piss me off I’ll happily round up and solicit even more folks to jump on the “too bad for you private sector folks” bandwagon…and you’re pushing me that way, but that’s not where I am.
I’ll be happy to rile up the pension troop if you want, because I’m about ready to retire anyway.
What do you have to day now??
March 27, 2010 at 7:31 pm
I mean to “say” now….of course.
March 27, 2010 at 7:34 pm
I mean, hell, you couldn’t even get the Richmond and his buddy’s initiative on the ballot. You think you have a lot of support? LOL. I’ll make it even worse for you if you want. Or do you want me to be fair about it and agree like I have?
UP to you.
March 27, 2010 at 7:36 pm
Threats …. is that the characteristics of a “professional” ?
Go retire …. your EXACTLY the the of Civil Servant we need to get rid of.
March 27, 2010 at 7:54 pm
They aren’t threats. I’m just telling you that if you don’t want to have a decent discussion (and I agree with 80% of what you are saying) then f’ you.
That’s what I’m saying. Which do you want and I’ll base my decision on that. It’s easy to rile the troops,….they are already quite riled. Instread of pissing off those of us who are mostly on your side, you like to just lump everyone together and piss us all of…
If you want that, so be it…that’s what you will get…and you will not make any progress in your lifetime.
March 27, 2010 at 8:13 pm
Currently, it’s illegal to reduce pension for FUTURE years of service for CURRENT emplyoyees, TL.
=================
Actually it is done ALL the time int he private sector-you feeze the DB and pay for the PAST years of service to the DB while a DC is put in place going forward.
Please link to a law that says otherwise.
March 27, 2010 at 8:16 pm
That’s what I’m saying. Which do you want and I’ll base my decision on that. It’s easy to rile the troops,….they are already quite riled. Instread of pissing off those of us who are mostly on your side, you like to just lump everyone together and piss us all of…
===========
Ohhh..I am shaking in my boots…no…no, please don’t ……don’t “rile the troops”!!!
You sound just like those crybaby firewhiners with a million excuses about why they “Deserve” $5 million pensions at age 50 with just a GED.
Please.
March 27, 2010 at 8:23 pm
Uh, well, I happen to have a couple of advanced degrees as well as a few professional designations, so I guess you are talking about yourself. Fuck you guys. I try to be reasonable and all I get back is “whining.”
I’m tired of trying to talk with you whiners (I mean I agree wtih 80% of what Ed is saying) but you just lump everyone together. Well, fuck you. If you weren’t smart enough to either get a public sector job or save enough to retire, that’s too bad.
I’m not staying in California anyway, so you won’t even be getting the benefit of my huge pension and investment income and, in case you didnt’ know. there’s no “source” tax so you cant’ even levey a State tax on me once I leave. LOL.
Good luck to you.
March 27, 2010 at 9:38 pm
Tamworth, you are the biggest baby to ever post here.
Don’t let the door kick you in the butt on your way OUT!
BTW-there is nothing “smart” about getting a job in the public sector-just like there is nothing “smart” about robbing banks. They are the same-scams perpetrated by fraudstirs.
And have fun getting one of those high comped public sector jobs if you’re not on the family and friends list……..
March 27, 2010 at 11:43 pm
Mr. St. Claire, what is your information source for reporting that there will be no PERS COLA this year? I have read everything they have sent me and attended the CalPERS Retirement Dialogue, and I have not read or heard anything about a cancellation of this year’s COLA.
March 28, 2010 at 12:56 am
Actually, I have zero relatives in California nor friends who helped me get “my” job. I took a test..it was very difficult…it was a written test..very technical..I scored #1…but then I didn’t go to a University in this State…lol..I went to one that had a pedigree…..
I had no help whatsoever..I just thought getting a pension after 30 years or so was a pretty cool thing as opposed to trying to make it big in the private sector..
It’s kind of funny because most of my friends went for the big bucks where I was conente to take a smaller salary and get a pension…lol…
LOOKS LIKE IT TURNED OUT PRETTY GOOD FOR ME, HUH, OCO..SORRY YOU WEREN’T AS BRIGHT…
March 28, 2010 at 1:21 am
Touch Love: I’ll be honest, i don’t think there is a way out for our country in the near future. To many things wrong with this country, housing isn’t coming back, cities counties towns will go bankrupt trying to pay gov employees. Unions have forced many jobs over seas, trade deficit is out of control. We will be 20 trillion in debt before we know it, pensions states can’t pay for, we could go on and on.
IMO, we will be worse than Japan, their RE went down in price for 18 years in a row. Their stock market is worth 25% of what it used to be. The only difference, they were savers, we are not, the next time the stock market crashes, watch what happens to all those pensions we can’t pay for now.
This is going to be a nasty ride for quite some time, imo. You are right unions are a huge problem right now. Take a look at Pension Tsunami, if the union workers think they are home free, they have another thing coming. It will take time, but a collapse of the whole country is very much possible.
March 28, 2010 at 1:30 am
Tam, you might be laughing now, but in 5 years or so, you might be in a food line, wondering what happened to that pension you never earned.
March 28, 2010 at 2:09 am
i hope so…..
March 28, 2010 at 4:05 am
BrocktonBoxer your 1:21 am post hits the nail on the head.
This gov pension train is crashing, and the fact is the pension promises, the vast majority being retroactive and illegal, are simply not going to be paid b/c there will be NO money to pay them.
And if these gov employee whiners think they are going to live life at age 50 with $100K + pensions for the next 35 years while the poor and middle class scrape by on $20K-$40K per year .. well, they need to lay off the crack pipe-it is not going to happen.
March 28, 2010 at 5:02 am
BrocktonBoxer, Unfortunately there is a good chance you are correct as to where America is headed.
Very very sad …. particularly for the next few generations.
March 28, 2010 at 8:32 am
Well, you folks are wrong. Even if the pension systems are underfunded, there’s still lots and lots of money left in ’em. I should know….
OCO, I want to know which pensions you are referring to that are retroactive and illegal…I’ve am intimately familair with almost all the pension systems in California …..which ones? Give me some details…..the fact is you dont have a clue…your aren’t an actuary (Fellow..FSA….Eddie)…..and all you are doing is regurgiting what you hear from Eddie…and Eddie doesn’t know crap….he’s never done an actuarial study..couldn’t tell you the first thing about how to do it….and is clueless about the pension systems in California….except he THINKS HE KNOWS SOMETHING ABOUT THEM….HE’S PROBABLY GOT A B.A. FROM SOME California State University..which is equivalent to about my fourth grade class back in the Midwest….lol…..
There will be no action to change current Members’ pension, because that’s illegal…they should create lower tiers now, but most agenies aren’t even doing that…they should reduce health care, but most agencies aren’t doing that….
Even thought I”m a Republican and have always, always voted Republican, you are pissing me off and you are pissing a lot of folks off who took their jobs and were guaranteed pensions..
If you want to blame someone , blame the Retirement Boards who have fuduciary responsibility …
You will have to look up “fuduciary”, but that will be good for you…you might actually learn something…
March 28, 2010 at 2:18 pm
Quoting Tamworth …”Even thought I’m a Republican and have always, always voted Republican, you are pissing me off and you are pissing a lot of folks off who took their jobs and were guaranteed pensions.”
Tamworth, lets see if we can address a few issues calmly (w/o the pissing off comments please …):
CURRENT workers have already “accrued” a portion of their pension for PAST years of service. They will also accrue additional pension credits associated with FUTURE years of service. In the world outside of Civil Service, the former is the only portion considered as already “earned”, and in legal/contractual terms “vested” (assuming you have already reached the minimum # of years for vesting).
As I mentioned, earlier, it is quite routine in Corporate Plans for the pension plan provisions (design, formula, retirement age, etc.) to be reduced for FUTURE years of service for CURRENT employees. ERISA allows this but does not allow reductions associated with the PAST (already “earned”) years of service.
Often these Corporate Plan reductions are needed do to financial difficulties, but it certainly can be argued that (at least in a few of these reductions) Corporate greed may have been an element. Certainly the “risk” associated with DB (defined benefit) Plans (e.g., big asset declines) as well as the disruptive nature of unpredictable contribution levels on Corporate earnings has been a contributing factor.
These concerns have led to the huge decline in Corporate sector DB plans over the past decade. Many have converted to DC (Defined Contribution) Plans such as 401Ks or Cash Balance Plans which although technically a DB Plan, functions much more like a DC plan. Of the “traditional” DB Plans that remain in the Corporate sector, many have had pension formula reductions for CURRENT employees.
And yes, these Corporate employees too, were told what the formula was when hired …. never with a legal guarantee that it could not changed going forward, but certainly never hearing that that such future reductions might take place. Corporations cannot “tie their hands”, as their legal obligation is to their shareholders, and should financial distress necessitate such Plan reductions, the ability to do so must be an option.
20-30 years ago, DB Plans in BOTH the Corporate and Public (i.e., Civil Servant) sector were similar, often providing 50-60% of Final average salary for full career workers. “Full career” was typically a bit shorter and on average the pension formula was a bit richer in the Public Sector. This somewhat “richer” pension offset the somewhat lower cash pay in the Public sector, so on balance, “total compensation” (cash pay + Pensions & benefits) was very comparable for comparable occupations …. a worthy (and “fair”) goal.
Oh how that has changed ……
With the advent of Public sector Unions, cash wage increases have steadily outpaced such increases in the Corporate Sector. Today, the US Gov’t Bureau of Labor Statistics clearly shows that (with the exception of a few high-level professional occupations … e.g., doctors) cash pay alone is now higher in the Public sector. And, not only have Public Sector Pension formulas NOT been reduced (to keep “total compensation” in balance), but they have been enhanced in many many way.
The upshot of this is that Public Sector Cash Pay is higher, and Public Sector Pensions & Benefits are VASTLY greater (multiples higher), resulting in significantly higher “total compensation” in the Public sector in most occupations.
Public Sector Unions clearly understand this, but understandably fight to keep what they have (this “advantage”). When persons (such as myself) argue that a correction is necessary (via reductions in the pension formula for FUTURE years of service for CURRENT workers) we often get the retort that this is wrong-headed … that this is “a race to the bottom” … and that instead of fighting to reduce Public sector pensions, we should fight to increase Corporate Pensions to the level the Public Sector now enjoys. Now, we all know that this is ivory tower dreaming and not going happen.
So what does us leave us with …..
Private sector taxpayers earning less in “cash” compensation (in comparable occupations), being forced (via their taxes) to fund much richer pensions & benefits for Civil Servants, AND being told that pension Plan reductions that are routine in the Corporate Sector are “off limits” in the Public Sector.
Now do you understand why we are (to be polite) extremely displeased with this situation?
Adding to the displeasure is the endless discovery of the scams employed in the Public sector to boost pensions (NONE of which are allowed in the Private sector …. as it’s the company’s money, not Taxpayer funds, and companies are not so foolish as to allow this).
While I understand the desire to keep what you have, deep down, I’m sure you understand that this has become VERY unfair to taxpayers.
My goal of reducing pensions for FUTURE years of service for CURRENT employees is not a race to the bottom, but an attempt to rightsize the ship. Most rational Civil Servants realize their pensions & benefits are CURRENTLY much better than their Private sector counterparts. To ague that higher & higher taxes should be required to fund incremental excessive accruals (associated with FUTURE years of service for CURRENT workers) is absurd.
From the Taxpayer perspective, we have few options other than pursuing the reductions I support. Even from your perspective, caution is very necessary, as a failing Plan may do WAY more harm (to you) than a dampening of future increases.
March 28, 2010 at 5:12 pm
Tamworth,
By the way, I an not Ed (the author of this article).
Sorry, Ed, I should have made that clear sooner. And thank you (Ed) for (as moderator) allowing this “spirited” discussion. Also, I appreciate your seemingly more receptive attitude towards the position of the Non-Civil-Servant commenters.
March 28, 2010 at 6:51 pm
TL, I hear what you are saying. I am not a Member of a Union and, in fact, have worked for more than one agency so my “older” pension years are at a lesser formula….where these pensions should have remained. Believe me, I understand totally what you are saying. I am in the field and do these studies, also. ….in a very sophisticated manner..which is neither here nor there…I just want you to know I understand every singel in and out of these plans…how to acturaially calculate them in in a myriad of ways and how to administer them….
That said, I agree these plans are too rich. However, the first step is to create lesser tiers for new employees. The Courts HAVE ruled it ilegal to change pension promises so I think you don’t have a chance on that one..and even if these funds are only 60-70% funded some of them….they still have plenty of money to pay folks indefinitely…sure maybe 40 or 50 years down the line they will be running out….but that’s still plenty of time to recover..given new tiers, a reigning back of heatlh plan costs and another secular bull market….those all can be controlled….
The problem is there’s too many liberal democrats in California because it’s a “give me” state. Unfortunately, this will probably only get worse as many of my friends who are highly educated and highly compensated (yes, some are in the public sector, but many are in the private sector…as I once was..by the way I work WAY, WAY, WAY, harder at my public sector job than I ever did at my private sector job….just so you know)…..that are planning on moving out of California upon retirment (including myself) and that will be a huge drain on this state, also…
There are many problems which need to be addressed….unfortunately, I’ve lost patience trying to address them….it’s going to just be easier for me to move…
March 28, 2010 at 9:02 pm
Tamworth, you said …”However, the first step is to create lesser tiers for new employees. The Courts HAVE ruled it ilegal to change pension promises so I think you don’t have a chance on that one..”
Of course, reduced pensions for new employees is a start, but certainly VERY minimal from a near term (or medium term) costs savings standpoint.
Also, I am aware of the California laws and case law making reductions for CURRENT employees (even ONLY for FUTURE years of service) very complicated (perhaps “illegal”). A point to consider is that those opining as to this “illegality” are legislators, & judges participating in these same plan and would be negatively impacted by such reductions. They come to the table with a conflict of interest.
A more appropriate forum for such challenges might be the Federal court system where disinterested parties would be the decision-makers. I would love to hear opinions (as to the legality of such reductions) from non-California/apolitical legal scholars ….. not beholden to any political or California interests.
What I see on the horizon is New tier changes in many locals in the next year or two, followed by challenges to reduce pension (in one way or another) for CURRENT employees 3-5 years hence.
I believe the latter will happen because (short of a Federal bailout, which I do not believe will happen) there will be no options. It’s just a shame that so many needed/worthwhile service (libraries, museums, elderly services, infrastructure maintenance, etc.) will erode to crisis levels before politicians FINALLY say “YES” we MUST do this.
March 28, 2010 at 9:46 pm
Tamworth, Just by coincidence, after my last comment I stumbled onto the following article (see link):
http://online.wsj.com/article/SB10001424052748704281204575003101210295246.html?mod=WSJ_hpp_sections_opinion
As articles such as this, outlining the large and growing disparity between Public & Private sector pay and (especially) pensions & benefits get published, …. and by wide dissemination via respected newspapers such as the NY Times, The Wall Street Journal, and the Washington Post …… it’s hard NOT to see significant pressure on politicians, the legislature, and the courts to allow the pensions reduction (for Current Workers) that I support.
In fact, as time goes on, conditions worsen, and MORE articles (such as that in the link above) get published, a decision NOT to make these reductions may lead to Public vs Private sector class warfare and perhaps civil disobedience.
March 28, 2010 at 9:48 pm
“Very very sad …. particularly for the next few generations.”
That is who i feel bad for, our generation let this happen. Our generation is letting the union gov workers rob the next generation blind.
March 28, 2010 at 10:38 pm
Touch Love: These are two good sites on the web.
http://www.pensiontsunami.com/
http://globaleconomicanalysis.blogspot.com/2010/03/teacher-writes-mish-wants-to-expel-kids.html
May 19, 2010 at 5:44 pm
Great discussion, esp. Touchlove. Also note that most LE/FF pensions are TAXFREE due to phony ‘disability’ status.
April 8, 2011 at 7:25 pm
Firefighters should be 120% of their pay at 52. There is nothing illegal about pay spiking. If people don’t like it they should change the law. The city can never stop paying full pensions plus cost of living increase plus health care to retirees. The firefighters and police unions gave kickbacks and bribes to the politicians. Now they should get what they paid for.
I say increase taxes to pay them. Everyone else can do without.
August 8, 2011 at 6:19 pm
“It’s none of your damn business.
“