"This is probably the hardest decision this council woman will ever have to make in this chair,' said Councilwoman Wendy McCammack.
"Philosophically, I'm against bankruptcy, but if this is the only way to save the city from long-term debt from which it might never recover ... it's the best choice."
Penman also said at the meeting that for 13 of the last 16 years, the council had been given falsified budget documents. Those documents said the city was in the black when, in fact, it had been deficit spending, he said.”
- This is an interesting statement. It’s hard to imagine 13 - 16 years of audited financial statements not detecting a problem as large as the difference between being in the black, or the red. While I suspect there is much more to the story, it is probably also true that most cities ARE deficit spending, and that includes Pleasanton and the PUSD, and every school district in the state for that matter.
“In an earlier report to the council, Travis-Miller said the city has faced declining revenues and escalating retirement costs, with employee compensation accounting for about 75 percent of the city's general fund spending.”
- Now we are getting somewhere. Employee costs are 75% of the budget but the budget doesn’t recognize all of the employee costs. The true cost is higher. Retiree medical benefits are “pay as you Go” which only treats the current cost as expense while ignoring the true cost which is 3-4 times the dollar amount expensed. The true pension costs are also significantly higher then what’s reported by ALL cities. CalPERS allows cities to only partial fund actual costs by extending payment terms, for past service, by as much as 30 years. Many employees will have worked, retired, and died before the cost of their pension has been paid for. New GASB rules regarding pensions attempt to address this issue but they don’t go far enough. Actually, the GASB exposure draft rules addressed the issue but special interest groups, like CalPERS, lobbied hard to mitigate their impact.
Another article puts San Bernardino’s cash balance at 155K - or ZILCH! Many more cities on the verge…
Read more: Web Link
Pleasanton doesn't suffer from many of the issues that drove SB to bankruptcy, but there are many issues the two cities have in common.