Pension problems: Does the public need to know?

Anyone with Internet access can watch an unusual meeting of officials in Santa Barbara County, where rising public employee pension costs have already forced a 5 percent budget cut.

Now the stock market crash could force much deeper budget cuts, if the county has to make a big increase in pension contributions to meet its projected retirement obligations in the future.

The Santa Barbara County supervisors held a rare joint meeting last week with the board of the county employees retirement system.  Each side brought their own actuaries, the crucial forecasters of future pension needs.

There were minor theatrical moments.  A well-spoken fiduciary counsel, perhaps droning on a little too officiously, seemed to get on the nerves of Supervisor Salud Carbajal at one point.

But the county’s pension predicament was plainly presented. Its annual pension contribution, already 10 percent of general fund spending, could double or more in the next few years.

An assistant county executive, Jason Stilwell, told the meeting that the pension contribution in the current fiscal year that began last July is an 18 percent increase from the previous year.

As a result, said Stilwell, the current county budget cut spending 5 percent or nearly $14 million, an across-the-board reduction for all departments and the elimination of 83 full-time jobs.

“Nearly all of the reductions in services in this year’s budget are related to the increased cost of pensions,” Stilwell said.

The budget for the new fiscal year beginning in July contains a 10 percent cut, mainly due to tax revenue lost in the recession. The impact of the stock market crash will not hit until next year, when pension contributions could nearly double.

“It’s almost double the cuts we had to take for the last two years, and we would have all of those in the one year,” Stillwell said of the spending shift from public services to pensions projected for July 2010.

The chairwoman of the retirement board, Shawn Terris, told the supervisors the projection was probably a “worst-case scenario.” She said the board may be able to “adjust” the rate while observing its constitutional duty to protect benefit payments.

The joint meeting of the two boards was televised on two cable systems, Comcast and Cox, the usual airing for Santa Barbara supervisors.  But it’s the Internet webcast that allows continuing access to the meeting on April 7.

The meetings of the Santa Barbara supervisors are archived. Anyone with Internet access, and some time on their hands, can view the video of the meeting. It’s a primer on the problem facing many California public employee retirement systems.

The dueling actuaries explain their complicated forecasting methods. The supervisors are told that 70 percent of future pension payments are expected to be paid by investment earnings, not employer and employee contributions.

The joint meeting, billed as an educational session, is a good look at what some say is a slow-motion crisis, now accelerated by the stock market crash:  Overly generous public employee retirement benefits are straining government budgets.

An obvious omission in the discussion of the pension problems surfaces in the public comment session. Why did the supervisors approve pension benefits that are eating up the county budget?

A man who sounds like a regular at the supervisors meetings, Andy Caldwell of the Coalition of Labor, Agriculture and Business, calculates that a $100 million increase in retirement benefits was approved over a four-year period.

It’s all there on the Internet. But so is that old question: If a tree falls in the forest and there is no one around to hear it, does it make a sound?

The joint board meeting, lasting about four hours, is sandwiched in the middle of a marathon supervisors meeting of more than nine hours. Internet viewers can click on a slide button and move quickly about in the meeting, using a time readout as a marker.

But would viewers know what they are looking for and where to find it? The joint board meeting starts at about 2 hours and 7 minutes into the meeting. Stilwell begins his presentation at about 5 hours and 33 minutes.

The Santa Barbara County cable TV manager, Sylvio Motta, said the county began streaming its television coverage of supervisors meetings over the Internet two years ago, hiring one of several firms that provide the service.

He said webcast viewership “fluctuates.” Some of the viewers are county employees and others with business before the board, waiting to see when their item comes up.

“It’s not just Santa Barbara County,” Motta said. “There are many government agencies doing that. It’s definitely a service to the public, especially the people who can’t attend the meeting or don’t have cable (TV).”

Not among the webcasting government agencies are the two statewide public employee pension systems headquartered in Sacramento, the California Public Employees Retirement system and the California State Teachers Retirement System.

CalSTRS spends about $4,900 to make video recordings of its multi-day board meetings, which are available to the public on DVD discs. There have only been two requests for the recordings since 2006.

Later this year CalSTRS plans to move into a new building (see Calpensions 5  Jan 09: “CalSTRS moving on up”) that will webcast video of board meetings to desktop computers inside the sleek tower alongside the Sacramento River.

The CalSTRS board voted 8-to-3 in February to reject video webcasts to the public and other options, choosing instead to stream only the audio of board meetings to the public via the Internet.

Some CalSTRS board members seemed concerned that live video might inhibit board discussions.

CalPERS has an in-house staff that produces educational videos streamed to members on the Internet. A spokeswoman, Pat Macht, said CalPERS is concerned about the cost of a video webcast of board meetings and is analyzing an audiocast.

When it comes to putting oneself forward to the public, CalSTRS is clearly the branding leader. In recent weeks a “CalSTRS” sign was placed atop the new building, visible from southbound I-5.

The main entrance to the massive four-block  CalPERS complex, two of the most expensive buildings ever erected in Sacramento, only says “Lincoln Plaza,” as if no introduction is needed.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Posted 12 Apr 09

New CalSTRS building

New CalSTRS building

Main CalPERS entrance

Main CalPERS entrance

6 Responses to “Pension problems: Does the public need to know?”

  1. OC Progressive Says:

    Thank you very much for this post, and more broadly, for taking the time to write and publish this invaluable information.

    Even when meetings are available, via video or audio, (and I find video preferable, because you can see the Powerpoints), the question really comes down to who has the time to watch these things and report on them. The small corps of reporters who cover the state is shrinking by the day.

    Very directly, the performance of every government entity is going to be affected by higher pension contributions, just as plummeting revenue and increasing demand for services squeeze the lifeblood out of these organizations.

    Following this closely, I think that elected officials and the public are underestimating the severity of the current downturn, and its impact on revenue, and the ensuing choices that will be made.

    It’s going to get ugly.

  2. Bull Says:

    Public Pensions (and lets not forget Retiree healthcare !) are outrageously generous EVERYWHERE. They should be reduced or frozen for CURRENT (not just new) employees.

    As a group, Civil Servants, emboldened by their unions, and enabled by self-serving politicians are an awful GREEDY bunch !

  3. upthecreek Says:

    the public pensions have killed this State….

  4. Chad Says:

    Ed Mendel (a.k.a. Helen Keller), needs to take a look across the street from the picture of the Lincoln Plaza sign he posted in this blog. There is a big sign that says “California Public Employee’s Retirement System”. Maybe we should call you Huck Finn…

  5. Drew Says:

    Are the same people who bash middle class government workers for their “greed” making similar postings in reaction to AIG executives receiving $4 Million bonuses while their failed company is completely bailed out with our taxpayer dollars ? Or is it because public employees are more visible and vulnerable ?

  6. Ed bohrer Says:

    Public employees are an easy soft target to these arrogant tea party types who would rather see other people lose their benefits than get them for themselves! They have drunken the Kool Aid of Limbaugh, Hannity, and Fox!

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