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The Pleasanton City Council will hold a special meeting at 6 p.m. tonight to discuss publicly a proposed contract with the Pleasanton Police Officers’ Association that continues to freeze wages while raising pension contributions for those now on the force and reduces future benefits for new-hires.
A highlight of the new contract would require police officers covered by the measure to start paying directly into their CalPERS pension. For the last 10 years, the city has been paying the full 9% contribution based on an agreement in lieu of the police receiving salary adjustments.
Starting with the signing of the new contract, police would pay 3% of their salaries into the pension fund, followed by 6% on July 1, and then the full 9% starting July 1, 2013.
For new employees hired after the date of the new contract, the formula that allows police to retire at age 50 with 3% of their salary based on years of service would be moved to age 55. Based on the current formula, officers who have 30 years of service in law enforcement in California are eligible to receive 90% of their salary, based on their three highest years of earnings. Now eligible for this benefit at age 50, new employees would have to wait until age 55 for it to become effective.
Medical benefits for unionized police department employees will also be reduced for officers hired after the new contract takes effect.
Currently, police personnel who retire receive medical plan benefits for themselves and their spouse calculated on a percentage based on years of service with the city.
The new agreement modifies that benefit from two parties to the employee only, and terminates when the employee becomes eligible for Medicare.
Julie Yuan-Miu, Pleasanton’s assistant city manager and Director of Administrative Services, who worked with City Manager Nelson Fialho in negotiating the new contract with police union representatives, said the tentative agreement will result in a savings to the city of approximately $2.4 million through the fiscal year 2013/2014 budget.
Tonight’s meeting is being held to report publicly on the details of the proposed contract and to gain public comments on the measure. The proposal then will go back to the City Council for a decision at its next regularly scheduled meeting next Tuesday, Feb. 7.
City Council meetings are held in the Pleasanton Civic Center, 200 Old Bernal Ave.
“A highlight of the new contract would require police officers covered by the measure to start paying directly into their CalPERS pension. For the last 10 years, the city has been paying the full 9% contribution based on an agreement in lieu of the police receiving salary adjustments.
Starting with the signing of the new contract, police would pay 3% of their salaries into the pension fund, followed by 6% on July 1, and then the full 9% starting July 1, 2013.”
While I commend the city and the PPOA for their efforts, I can’t help but wonder if this contract goes far enough. The PPOA agreeing to contribute 9% toward “their” own pension is certainly a step in the right direction. Where it falls short, IMO, is that it ignores the reality the PPOA has received 4% raises during the great recession (’08, ’09, and 2010, for a compounded 12.5% salary increase) while revenues have decreased during that time frame. Just as importantly, the increased pension costs in the past three years has increased from 26% to an adjusted 34% of payroll (accounting for the 7.8 million moved from the retiree medical account to help fund the severely under funded PD pension plan – which decreases the funding level of retiree health care). So, for employees paying their own 9% of an unsustainable pension plan they are really only covering the increased burden of pension costs over the past three years, while receiving a 12.5% raise during the same time period – during the great recession.
Artificially reduced pension costs will continue to rise over the next several years further burdening the tax payers. Health care costs have risen by an average of 8% per year over the past decade. PD employees have seen their retirement age reduced and their pension benefits made, unbelievably, retroactive. That is the macro reason for thinking this contract doesn’t go far enough. I understand the 9% contribution will impact current employees, even though they have received substantial wage increases during the recession which offset their entire contribution plus some – and the 12.5% increase in wages, when their impact on OPEB are considered, increases employee cost by over 18% of payroll. So far even the considerations for yet to be hired employees doesn’t go far enough.
Why are new employees receiving retirement health care when we can’t afford to pay the current promises? Is a 90% pension not sufficient?
New GASB rules, if the unions and CalPERS aren’t successful in getting them squashed, will show that actual pension costs are substantially more than what is currently being charged. Is city management considering what costs would be given a standard five year smoothing policy as opposed to the current 15 – 30 year (nonsense) payment terms that is unique to CalPERS?
On the MICRO level this contract has much room for improvement. Why is there almost 9% in educational bonus pay (POST certificate pay plus college pay), and why does the formula for “holiday pay” amount to 2 ½ times pay as opposed to time and one half or even double time? Why is Uniform Allowance as high as it is? Why are all three of these items included in the pension calculation?
Does this mean we are paying retired people holiday pay (?), paying for their clothing (?), and paying for their knowledge both during working years and also during retirement? Why does the contract for new employees provide 90+ percent of these inflated numbers toward pension payouts when experts claim you need 65-75% of employment income during retirement? The governors plan goes further.
How does Pleasanton City Management justify these things?
“Julie Yuan-Miu, Pleasanton’s assistant city manager and Director of Administrative Services, who worked with City Manager Nelson Fialho in negotiating the new contract with police union representatives, said the tentative agreement will result in a savings to the city of approximately $2.4 million through the fiscal year 2013/2014 budget.”
During the PCEA contract the stated savings given by the city ended up ONLY being cost reductions to the contract, ignoring the increased cost of health care, pensions, etc…is the 2.4 million actually net savings?
“Pension earnings dip amid gloomy forecasts
The nation’s two largest public pension funds last week reported slim annual investment earnings, CalPERS 1.1 percent and CalSTRS 2.3 percent, as experts continue to say hitting their long-term earnings target, 7.75 percent, will be difficult.
While CalPERS reported weak earnings in 2011, a prominent private-sector investment manager, Robert Arnott of Research Affiliates, told the board last week he thinks the most they can expect from stocks and bonds next decade is 4 percent.
Another major investor, Laurence Fink of BlackRock, told the CalPERS board during a similar educational session in 2009 that during the next 15 years: “You’ll be lucky to get 6 percent on your portfolios, maybe 5 percent.”
A Wall Street Journal columnist, Jason Zweig, said last week Warren Buffet’s Berkshire Hathaway pension fund projects a return of 7.1 percent. He said William Bernstein of Efficient Frontier Advisors expects roughly 6.5 percent from stocks.
Consultant Girard Miller said in Governing magazine this month, while discussing 12 basic public pension issues, that earnings “closer to 7 percent” are more realistic until global debt is reduced.”
CalPERS CIO seems to be promoting a reduction in their expected rate of return from 7.75%, to 7.5%. It is long over-due. The impact to the Pleasanton safety plans will be an increase of 4% of payroll (every 1/4 percent reduction in the expected rate of return equals a 4% increase, as a percentage of salary, in the cost per employee), or an additional cost of 4K per 100K of salary to help cover the increased pension costs that result from a more honest, but not honest, accounting of true pension costs. If CalPERS were using industry standard accounting practices the true cost, as a percentage of payroll, would probably be close to 60%.
Link to the article regarding quoted text: http://calpensions.com/2012/01/30/pension-earnings-dip-amid-gloomy-forecasts/
Arnold,
Although you make some good points you are truly miss guided. Your numbers are not based in reality and you need to thank the PPOA for taking the steps they have already taken. Perhaps you should also remember police officers do not get social security benefits as well.
If we pay a little more to protect this great city than so be it. We cannot continue to ask these brave men and women to continue to give back when we expect top notch service…there is a breaking point. As far as raises perhaps you should dig a little deeper and see when their last pay increase took affect prior to the last contract.. You may be surprised.
And finally…if you want to live in a town with less services there is always Livermore.
“If we pay a little more to protect this great city than so be it.”
Where have I heard this before? Oh ya, the teachers and their unions. We shouldn’t be paying any more than any other community around here and they are already paying too much. We need to get these pensions under control. Arnold is right.
“Perhaps you should also remember police officers do not get social security benefits as well.”
Who needs social security when you get a 100K plus pension in your early fifties with medical benefits included? I guess your argument is that we need to pay people 120k in retirement, plus medical, in their fifties, so they don’t have to work until their 65 like the rest of us. What is wrong with allowing PD to retire at 55 with 75% of their income? Social security can’t touch that (they don’t pay at 55 for starters). Let the PD employees work for the DA, a PI firm, or anywhere else they choose if they need to supplement their retirement income. Nobody pays what California pays, and few in California pay what Pleasanton pays. And any department that has received retroactive pension benefits and reduced retirement years has NOTHING to complain about, IMHO.
I reject your argument.
“Posted by Truth, a resident of the Another Pleasanton neighborhood neighborhood, 47 minutes ago
Arnold,
Although you make some good points you are truly miss guided. Your numbers are not based in reality and you need to thank the PPOA for taking the steps they have already taken. Perhaps you should also remember police officers do not get social security benefits as well.
If we pay a little more to protect this great city than so be it. We cannot continue to ask these brave men and women to continue to give back when we expect top notch service…there is a breaking point. As far as raises perhaps you should dig a little deeper and see when their last pay increase took affect prior to the last contract.. You may be surprised.
And finally…if you want to live in a town with less services there is always Livermore.”
I’m going to take another stab at your post. I would almost completely agree with you if we were only talking about the level of compensation vs. revenue. But we aren’t, or at least I’m not. We are also talking about health care costs that are increasing at 2-3 times the rate of inflation and pension costs that are escalating – or exploding, out of control. There is absolutely no justification for ignoring either, while expecting taxpayers to cover the increased cost of benefits that are niether sustainable or justifiable. The ONLY reason, and I mean THE ONLY REASON these costs have been allowed to continue unchecked is because they are both political and defered.
“Arnold, Although you make some good points…” I give, what do you cvonsider the good points?
“As far as raises perhaps you should dig a little deeper and see when their last pay increase took affect prior to the last contract”
… Didn’t I already mention they received raises every single year during the great recession? Just what are you talking about?
“And finally…if you want to live in a town with less services there is always Livermore.”
I guess you don’t think much of the Livermore Police Department. Why is that?
Arnold, something you conveniently forget to mention are the pay freezes the police department took in the 90’s, and while you were making your money during the Dot Com boom, the police department received small raises that barely kept up with the cost of living.
Additionally, do you really want a 55 year old police officer wrestling around trying to arrest an 18 year old young man. Police have a finite career, and most can not simply work inside and avoid suspect contact when they get older. Contacting suspects is part of the job and the risk of getting injured increases with age. Yes, police officers get hurt in Pleasanton just as they do in big cities.
The problem with many in this town is they want the best services from police, fire, city workers and teachers but they do not want to pay for the it.
I reject your argument.
Peter Malloy, your hi-lite of the Dot Com boom to enhance an effective way to discredit Arnold’s sharing of information is weak… very weak.
Of course you do not want a 55 year street beat police officer have to wrestle down an 18 year old. That is why he has stun gun.
Lastly… we are paying for those services Peter.
I reject your argument.
and my family does appreciate Arnold’s sharing
and my family does appreciate our Community services
just not “your” argument
3% at 50 is a crime — simple as that. No one, no matter what they do, deserves to retire at age 50 with 90% of their spiked earnings for the rest of their life. Along with free medical for them and their spouse, for life.
2% at 65 is realistic. And that is far more than most of us will ever see. Not that it is relevant, but most of us did not benefit from the dot com earnings. We have worked hard only to see wages and benefits decrease while the cost of living goes relentlessly up. Public safety employees killed the goose who laid the golden egg. They got their 3% at 50, the allowed spiking of pay, and they abused the taxpayers who have funded their retirements. 2% at 65 with no paid health benefits is a fair retirement. And it is 100% more than most in the private sector will ever see.
Since the PW closed the previous to registered users I’ll post my comments to Sam here.
Sam says: “The PD pension plan may be relatively attractive, but the overall compensation isn’t that attractive. Otherwise, all those “Silicon Valley employees” would be rushing over to Pleasanton police officers, wouldn’t they?”
Your argument assumes everyone wants to be a police officer. That is no more true than saying everyone wants to work for a tech company. My argument is simply that the level of compensation for PD employees, along with the overly stressed and excessive pension compensation that is adding tens of thousands of dollars to the per employee cost, is unaffordable and unsustainable. I’m not knocking the occupation; I’m saying the system is so screwed up that calling it broken understates the reality.
On a side note, some cities unions are suggesting that their city sell property to fund their pensions. State employees are suggesting that state parks should be sold to honor pension obligations. Ridiculous! Maybe Pleasanton can eventually sell the sports park, the yet to be completed Bernal Park (which will probably continue to languish “as is” because the city is diverting funding from capital projects toward the unfunded pension liability that is 100’s of millions of dollars – which means good luck completing the project), and the Fire House Arts Center.
The unions that are owed (?) these hundreds of billions in pension promises – plus hundreds of billions more in retiree healthcare obligations, have little concern for the assets that taxpayers have helped to build over decades. Tax Payer assets, like Yosemite National Park for instance, can be sold or acquired to cover unfunded pension debt obligations. I’m not kidding. It is possible that when we go to Yosemite National Park, 10 years from now, it will be renamed the “XYZ Union National Park at Yosemite”. And, of course, the cost will triple. Or maybe we just deed City Hall to the unions and allow them to lease the property back to the city. These issues are are NOT fantasy.
I’d rather we sold Yosemite and then LOWER MY TAXES. I never use Yosemite. Like Martin Luther King, I have had a dream all of my life, which is to make a lot of money. I can’t get over the hump into the upper echelon of one percenters when I’m expected to pay for a bunch of fatty police officers who do unsustainable jobs that no one else wants. Free market should prevail, as Arnold so convincingly calculates with his complex mathematical formulae. If no one wants the job, it shouldn’t pay 133 grand, because that commits us to liabilities that must be paid for some other way than citizens’ taxes. I vote parks.
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