Posts Tagged Pensions
Fullerton’s Real Unfunded Pension Liability: At Least $60 Million
Posted by Travis Kiger in Union Goons, Watch Your Wallet on September 2, 2010
Last year CalPERS reported that the city of Fullerton is facing an unfunded pension liability of $37,531,831 on our public safety employees’ retirement plan. That’s the amount that we currently owe our public servants above and beyond all future budgeted payments.
Of course, many professional actuarials believe that CalPERS’ figures are purposefully understated. They’re just being nice. What we’ve learned over the last few years is that CalPERS and the unions have been feeding our politicians a big fat load of lies, which were used to pump up their pensions. The figures are derived from proven unrealistic investment returns that can never be achieved. Studies conducted by Stanford grads and the NCPA agree.
So we asked an industry insider to recalculate Fullerton’s unfunded pension liability using a realistic rate of return for a government pension system. While he could not do a detailed actuarial report for our city, he stated that using a more realistic 5% long-term rate of return “would raise the unfunded liability by somewhere between 60% to 120% in most pension systems.”
Based on those figures, it’s safe to say that Fullerton’s real unfunded pension liability is somewhere between $60,000,000 and $83,000,000. That’s just for the police and fire unions, which has about 250 currently employed members.
Wrap your head around that. Sixty million dollars of unfunded, unplanned debt just for our little city of Fullerton. That money will not be spent on roads, parks, infrastructure, libraries or public safety. It will be given away to retired public employees, long after they’ve stopped serving our city.
If we don’t do something about it now, it’s going to get worse.
Dissecting McKinley’s Phony Pension Reform
Posted by Travis Kiger in Fullerton 2010, Fullerton City Council Candidates, Union Goons, Watch Your Wallet on September 1, 2010
The other day we challenged retired police chief and $215,000 public pensioner Pat McKinley to put some real meat behind his dubious claim that he will “work to reform public employee pensions.”
Over the weekend we discovered a letter posted to McKinley’s website purporting to declare his position on pension reform. Exciting… until we read it. The letter actually commits to nothing and woefully understates the changes necessary to even begin correcting this problem.
Just say anything
Let’s run through Pat’s suggestions one by one. It’s important to note that McKinley’s letter says pension reform must contain ONLY ONE of the following:
Increase the amount contributed to the plan by Employee Contributions – Necessary, but wholly insufficient. While giving taxpayers some breathing room, demanding employees pay a little bit more does nothing to address the core issue, which is the unsustainable nature of pension guarantees when combined with the power of public employee union lobby. By itself, this change only slightly delays the pain.
Increase the amount contributed to the plan by Employer Contributions – Unbelievable. Increasing employer contributions is another way of saying we should raising taxes to pay for pensions. So now it would be safe to say that Pat McKinley wants to raise your taxes, but it’s really hard to believe he would write anything this dumb. For now, we’ll just assume that he has no idea what he’s talking about.
Slow the accrual of pension benefits by returning the formula to its previous level - Legally a change like this change can only be made for new employees, which would do nothing to address the massive unfunded liability that we have already accrued. Furthermore, it leaves the door wide open for future abuse when the unions become more powerful.
Slow the accrual of pension benefits by increasing the normal retirement age to reflect the longer life expectancies of our City employees – Same problem as above. The commitments we’ve made to current employees cannot be changed without a bankruptcy. The only lever we really have left salary and to a lesser extent, contributions. Cut salaries, raise employee contributions… or go broke.
Slow the payout of retirement benefits by lowering the Cost of Living Adjustment in retirement – The cost of living adjustment is about 2% a year. Reducing that, if it’s even legal in California, is hardly enough to sustain hundreds of public safety employee’s earning 90% of their final year’s pay for the next 30 years. And once again, there’s nothing to prevent another band of RINO’s from reinstating this benefit the next time CalPERS overstates its assets.
So what have we learned? McKinley has thrown out a bunch of half baked ideas to fool you into thinking that he wants pension reform, but it really boils down to almost nothing useful. And of course, even after writing this letter, McKinley has not committed to any pension reform.
Woefully inadequate
We’ll say it again: Taxpayer-funded defined benefit plans must come to an end. The private sector learned long ago that they are completely unsustainable and also unnecessary. All new employees should be given defined contribution plans, while current employees should be made to pay as much as possible towards their own retirement, in order to mitigate the damage caused by their own unions and CalPERS through deception and poor planning.
Noob Accidentally Highlights Pension Reform Failure
Posted by Travis Kiger in Orange County Government, Shawn Nelson on August 13, 2010
By taking the more generous retirement plan that was presented to him as a County employee, Supervisor Shawn Nelson has created an onslaught of Internet outrage from the Blue and Red blogs.
Nelson says it was an accident. Was it? County policy requires that all new employees sign up for one of two plans: the old 2.7 @ 55 or the new 1.62 @ 65 that so far, almost nobody has signed up for at all. If you don’t choose, they will choose for you – 1.62 @ 65. Every single new hire in the County government is presented with this scenario.
Oops. That's gonna hurt tomorrow morning.
In any case, Nelson’s decision highlights the dismal failure of Orange County’s alleged pension reform. When presented with two disparate retirement choices, what rational human being would pick the lesser?
If a guy like Shawn Nelson won’t do it, why would ANY public employee go for the option that is ultimately less generous – except, most likely, long-time employee pension abusers?
When union leaders originally hatched this goofy alternative plan, pension experts warned that new employees would not select a 401(k) style plan when offered alongside a traditional, elaborate government pension. Boy, were they right. But the unions and the supervisors went along with it anyway, just so they could notch pension reform in their pathetic pistol grips.
The bottom line: nobody wants a lesser benefit when they can choose a better one. Orange County’s much ballyhooed pension reform has completely failed because employees can simply avoid it altogether. What a joke.
But back to Nelson. He was presumably elected to represent taxpayers in union negotiations. I do not recall Nelson making any promises regarding his own pension. That would have been nothing more than a distraction from the real issue, as evidenced by Supervisor Pat Bates. Bates promised to not take a pension and followed through with it, but subsequently has done nothing to stop the real problem: runaway entitlements for every employee in the county! All 20,000 of them.
C-Span Features Fullerton’s Friend & Fighter Jack Dean in Washington
Posted by admin in About Us, Home Town Hero, Orange County Government, Statewide Stuff, Watch Your Wallet on August 1, 2010
Click on Jack and watch him go!
Dear Friends: The issue of Pension Abuse continues to dominate the National, State and local scene. If you haven’t already heard Jack Dean with Pension Tsunami speak on this important topic, hopefully today is a great relaxing day to do just that. Happy August 1st, 2010!
The $215,000 Man
Posted by The Desert Rat in Fullerton 2010, Repuglicanism, Setting The Bar Low on July 5, 2010
What valuable piece of manpower is worth paying over $200,000 per annum not to do anything?
I'm your man...
If you guessed former Fullerton Police Chief Patrick McKinley you’d be right on the money. If there was ever a poster boy for out of control police pensions it would be Chief McKinley. See, the big guy pulls down a cool $96K a year from his old job at the LAPD that he’s been collecting since he left 17 years ago; then there’s the $118,000 he now rakes in from CalPERS, presumably from his time as Fullerton’s top cop.
Yipes! $215,000 a year in pension receipts; or about $18,000 a month; or $4100 every single week. More than he ever earned actually working. For the rest of his freaking life. If he lives another 20 years that’ll add up to $4,300,000 on top of what he’s already got, not counting cost of living increases.
Why is this important, apart from the obvious illustration of public safety pensions run amok? Because the word on Commonwealth Avenue is that Mr. McKinley is being promoted for City Council appointment to replace Shawn Nelson by Don Bankhead and Dick Jones – two other public pensioneers, one of whom is also a former cop.
In the RINO world of Bankhead and Jones this sort of thing is just hunky-dory. But for a lot of people – liberals and conservatives alike, the thought of this massive double dipper making pension decisions that affect Fullerton taxpayers is reminiscent of the fox guarding the hen house.
And of course we also remember McKinley as the police vest carney and vocal backer of the hideous Linda Ackerwoman creature.
Sorry guys. No sale.
Jack Dean on the Growing Wave of Public Pension Debt
Posted by Travis Kiger in Union Goons, Watch Your Wallet on July 1, 2010
Here’s a clip that might be helpful to those who are still unaware of just how much public employee entitlements are costing us. Fullerton resident Jack Dean discusses bounteous union pensions and the careless drive towards financial ruin.
Fullerton’s Pension Watchdog Endorses Shawn Nelson
Posted by Travis Kiger in Shawn Nelson, Watch Your Wallet on June 7, 2010
The Fullerton Association of Concerned Taxpayers (FACT) just sent us the following endorsement of Shawn Nelson for County Supervisor in Orange County’s Fourth District:
“During his 8 years on the Fullerton City Council, Shawn has demonstrated that he is a true friend of the taxpayer,” said Jack Dean, president of FACT. “He’ll make an outstanding County Supervisor.”
Dean noted that FACT was especially impressed with Nelson’s willingness to blow the whistle on a secretive attempt to boost the pensions of Fullerton’s city employees by 25% in 2008.
“Had Shawn not let us know that such a deal was in the works, I doubt that we could have stopped it,” said Dean. “And in light of the subsequent economic meltdown and huge market losses experienced by CalPERS, Fullerton would be in much worse financial shape today.”
“We’re going to need him on the board of supervisors to help maintain the impressive momentum the county has been making on pension reform,” added Dean.
FACT has a special interest in the public pension issue. In 2005, the group successfully blocked an attempt by the Schwarzenegger administration to issue nearly $2 billion in bonds to make the state’s pension payments. The state appealed, and in 2007, FACT won an appellate court ruling that enforced the California Constitution’s ban on unapproved state debt. Article XVI, Section 1 of the California Constitution requires voter approval for long-term state debt exceeding $300,000; FACT won a decision from the Third District Court of Appeal that issuance of a pension bond should not be allowed because it had not been submitted to the electorate. FACT was represented in both cases by the Pacific Legal Foundation (PLF) in Sacramento.
Next month FACT — once again represented by PLF — will be filing an amicus brief in support of the County’s lawsuit on retroactive pensions (County of Orange v. Association of Orange County Deputy Sheriffs and Board of Retirement). The goal will be to protect the landmark legal decision that FACT and PLF secured in the pension obligation bonds victory (Pension Obligation Bond Committee v. All Persons Interested).
“FACT has a direct interest in protecting and enforcing the precedent it established,” said Dean, “that is, the constitutional principle that major government indebtedness must receive voter approval.”
Under the auspices of FACT, Dean publishes a website called PensionTsunami.com that tracks the growing public pension crisis on a daily basis. He is also vice president of the California Foundation for Fiscal Responsibility — a watchdog organization that plans to conduct a ballot initiative to reform the state’s pension system.
Nelson and Sidhu; Divergent Philosophies On Public Employee Unions
Posted by admin in Harry Sidhu, OC's Fourth District, Orange County Government, Shawn Nelson, Statewide Stuff, Union Goons, Watch Your Wallet on June 7, 2010
Watch this clip. First you’ll hear from 4th District Supervisor candidate Shawn Nelson and then Harry Sidhu. Both talk about public employee unions.
Remember that Sidhu actually lives in an elegant estate in the 3rd District and faked an address at the Calabria Apartments (2230 W. Lincoln Ave. West Anaheim). Even though he never lived there, Sidhu claimed he did under penalty of perjury (twice).
Sidhu has become the darling of the OCEA and OCSD unions, who poured in over 1.3 MILLION dollars into mailers, radio and TV ads telling us the opposite of what we have already seen for ourselves.
Judge Tells OCERS To Release Names and Pensions
Posted by Greg Sebourn in Behind Closed Doors, Orange County Government on June 4, 2010
Those interested in Orange County government accountability and pension reform won a legal battle Wednesday.
In a ruling over a petition filed by the California Foundation For Fiscal Responsibility vs. the Orange County Employees Retirement System (OCERS), the Superior Court of Orange County ordered the OCERS to disclose “…gross amount paid to the payee member, the name of the payee, and the identification of the prior public employer of the named payee and no other information contained in the records OCRES.”
The presiding judge, Hon. Luis Rodriguez, says in his ruling, “Individuals must have access to government files to hold governments accountable for their actions. Personal embarrassment is outweighed by the strong public policy supporting transparency in government and the strong public interest in knowing how it spends its money ‘to expose corruption, incompetence, inefficiency, prejudice and favoritism.’”
This ruling is consistent with the premise that government can only be held accountable when there is transparency. Without transparency, corruption, incompetence, inefficiency, prejudice and favoritism cannot be identified, much less routed out.
Firefighters Lose. How Much Do They Make, Anyway?
Posted by Travis Kiger in Behind Closed Doors, Fullerton City Council, Pam Keller on May 20, 2010
Pam Keller was the only city council member who did not have the guts to impose a %5 pay reduction on members of the Fullerton firefighter’s union after negotiations failed on Tuesday. The union refused to accept a deal similar to those offered to all other Fullerton employees.
The union says the pay cut is unfair. Is that true? Let’s see what firefighters actually took home last year:
View the 2009 Fullerton Fire Dept payroll
In addition to the gross pay numbers above, firefighters receive the following estimated benefits at the city’s expense:
Pension contribution: ~30% of base salary. Ranges from $15,000 to 28,000/yr, not including unfunded liabilities
Medical: $5,460 to $14,748/yr
Dental: $588 to $1,128/yr
Not a bad gig. It’s no wonder there are hundreds of applicants whenever a position opens up.
Does Keller really think that asking this highly compensated group of public employees to take the same pay cut as everyone else was “unfair?’
Us public employees gotta watch out for each other.
Or perhaps Pam is just sticking to what Pam does best: Helping folks suck as much as possible out of the public trough. By any means, at any cost.
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