Re: Pension reforms bode well for Pleasanton's future
Original post made by To: Jeb, City management, City Council, Another Pleasanton neighborhood, on Jun 4, 2013
Your comments couldn’t be further from the truth. There are/were no “Sweeping Reforms”. Most people paying attention consider the current pension reforms as nothing more than a baby step. They certainly have little if any impact on the current group of 220 workers. But I want to challenge your assertions and accuracy regarding your above comments, and also a comment you about this contract on a previous post.
* First of all reducing holiday pay from 14 days to 11 paid holidays doesn’t save 500,000 dollars, as you have claimed (in a previous article). It doesn’t save a nickel from an accounting perspective. The real question is why employees were receiving 14 PAID HOLIDAYS to begin with. This PAID LEAVE excess seems to be consistent with soooo many other provisions in the contract. Is there a benefit to the consumer/taxpayer, probably? The consumer receives an additional 24 of service per employee. Right? Well I’m not so sure but more on that later.
JB says: “The Pleasanton City Council is likely to ratify a new three-year agreement Tuesday with the union representing 220 regular city employees that will raise individual pension contributions”.
* Raising individual pension contributions by 4%, and then providing 7% in raises doesn’t save money. It costs money, and it costs more than the three percent difference.
JB says: “Additionally, for those employees hired after Jan 1, the city changed retirement medical benefits from two-party coverage to one-party coverage, with an additional sunset at age 65 when the employee becomes eligible for Medicare”.
* Sorry Mr. Bing, but that contract language was already included in the 2011 contract and, therefore, it isn‘t a concession as far as this contract is concerned.
JB says: “These changes move the city closer to long-term pension sustainability as "legacy" employees eligible for benefits under the pre-2013 plan retire from the system.”
* Not true. In FY 2011-12, CalPERS earned 0.1% which is a far cry from the 7.5% they claim they’ll earn. Those numbers are NOT yet reflected in any CalPERS actuarial report. The result is yet another increase in “employer contributions/taxpayer contributions” that will be reflected in the actuarial report the city will receive in November/December of the current year.
JB says: “It's not a perfect solution to the city's concern of unfunded liability for both the California Public Employees Retirement System (CalPERS) and retiree medical benefits that total $131 million or $162 million depending on the formula used.”
* The correct formula to use is always the Market Value of Assets. The Actuarial Values hide debt by only recognizing that debt in future years; in many cases thirty years out. That will change soon when the new pension accounting rules become a requirement. In the meantime even the Market Value numbers are suspect, and understated. When the new rules become a requirement both numbers will increase, but the MVA numbers are still king. For today’s numbers please use the 161 million dollar unfunded liability number, which is now much greater due to CalPERS pathetic returns of 0.1 percent in FY2011-12 (as explained above). Jeb, did you even attend the two presentations (or watch the video) when Pleasanton paid for a CalPERS expert/pension actuary to present on the topic of Pleasanton pensions? I’m just curious.
JB: says: “But with city employees contributing a full 8% of their wages starting Dec. 31”.
* Jeb, they do NOT start contributing 8% on January 1st. City employees haven’t contributed toward their pension since 1982 (except for the four percent that was phased into the most recent pcea contract). Until then they haven’t contributed toward their pension and they don’t pay anything into Social Security, but for some reason they get some very large pension checks that start as early as age 50, or 55, depending on the bargaining unit. The take home pay must be nice.
* According to Emily Wagner the average PCEA employee was earning 87K per year back in 2010. That number should have been adjusted to reflect the 8% the city/taxpayers were contributing on behalf the employees, which increases the average compensation to $94,000. But when I looked at the CalPERS data that claimed pensionable compensation of 25 million as of their last report dated June 30, 2011, and see where Jeb claims there are 220 employees, that averages out to about 113K per employee in salary, and that doesn‘t include pension costs and many other employee costs.
How is that this city can claim cost savings when the overall cost of this employee contract is escalating rapidly. Does city management think - for one second, that articulating cost savings while ignoring known cost increases makes for a "Fiscal Impact Statement"?
The Fiscal Impact Statement is both shameful and self serving.
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