Some Numbers

It’s almost April. Our wise and courageous city council is already wading through wage negotiations with the city employee unions for the upcoming budget year. How did we get this far without adding up Fullerton’s total unfunded pension obligation? Oh well, here it goes…

Pension Plan
Total Liability
Market Value of Assets
Unfunded Liability
Fullerton Public Safety
$324,288,070
$197,444,920
$126,843,150
Fullerton Miscellaneous
$202,257,209
$136,167,010
$66,090,199

That’s a grand total of $192 million in what is essentially “pension debt” for which we have no foreseeable plan to pay, even when we include all of our future contributions and expected market gains.

The pension plans are already paying out $9 million more per year to retirees than they are taking in via contributions, so there’s no help there. But our required contributions are increasing significantly, starting this year.

With no perceivable way out of this hole, maybe it’s time to hit the road and put it all on black.

I think I'm getting the fear.

All of these numbers came from the 2010 CalPERS reports for Fullerton’s Public Safety and Miscellaneous pension plans.

Fullerton City Council Union Goons Watch Your Wallet

68 thoughts on “Some Numbers

  1. Let’s jack up water rates to help put a little more $$$ into the general fund via the franchise tax on water.

  2. How about the employees pay 1/2 of their pension costs? That would still leave both sides paying too much but at least it would be a fair division right?

  3. Pension reform won’t change those numbers, only stop them from getting worse. For those who like history, until the mid seventies the police, and fire retirement plan was the same as the other employees–2% @ 60.

  4. I fail to understand why we allow city employees to unionize in the first place. Essentially they are unionized against us. They make double, force us to pay for platinum healthcare, full pay at retirement and when I need something from the city they are just plain rude and unwilling to help.

    I say we make like Coasta Mesa and outsource. It will say us tons of money, give us a system with real accountability and the ability to stop stupid redevelopment projects!

    Are we paying for all the renovations to the baseball field across from city hall so the minor league Oc flyers can play there? I really hope not.

    1. Sorry, I have wrongly maligned Jerry Brown, he just gave collective bargaining rights to state employees. It was the “Great Communicator”, Governor, and former Screen Actors Guild President (read:union) Ronald Reagan who signed the legislation giving local government workers the right to unionize. I think he figured out this was the wrong thing to do when he broke the Air Traffic Controllers union, and fired all the ATC’s.

    2. There’s the problem. Accountability. No one is double checking anything!! I’m convinced the City just writes checks because they have them.

  5. Fullerton Watcher – State law was enacted in 1978 by the State Legislatrue and signed by then Governor Brown. The Legislation, known as the Ralph M. Dills Act, gave State employees the right to organize and engage in collective bargaining. But, before you jump all over Brown, recognize that legislation applied to State employees. The legislation that gave city, special district and county employees the right to organize and engage in collective bargaining is the Myers-Millias-Brown Act signed into law in 1968 by Governor Ronald Reagan. So, both parties had a hand in the unionization of governent workers in California. With regard to Fullerton, I would hope that the City is, like many other cities and counties, demanding concessions from their unions from pay cuts to furlough days to increased employee contributions for retirement and health care. Is there any chance of that happening in Fullerton?

    1. I don’t understand why furlough days are an option. When my pay got by 20% I didn’t get days off. I have to work 45-50 hours a week and I get paid 20% less than I did 3 years ago. It’s life and that’s where we are at because of the people who are incharge. I say the city needs to go back to 5 days a week and be happy they have jobs!

      I like TFW’s idea let’s outsource!

  6. I like the idea of Joe Felz withdrawing all of the funds from CalPERS, trucking over to Vegas and dropping it on the table. It really is our only hope.

  7. In defense of Jerry Brown and Ronald Reagan, they did not forsee that Fullerton officials would screw this up so badly in the course of 30 years.

    Just kidding. There is no defending any of these pension boosters, past or present, local or state.

  8. Just to make all of us even more upset, the numbers above do not include the unfunded retiree health care liability for all of our city employees.

    We must continue to put pressure on the council. McKinley is the potential swing vote on pension reform if we can convince Sharon Quirk-Silva to join Bruce Whitaker in supporting penison cost reductions. We must remind McKinley that he promised pension reform as a major part of his campaign for city council. He must be held accountable!

    Travis and Tony, keep up the good fight. In the end, this is a fight that as taxpayers we can not afford to loose!

  9. There is a valid point to made by the employee unions in all of this.

    That is: Municipal Governments (as well as county and state) fell short of thier responsibility in negociating with the employee groups. In the case of San Francisco County employees, the city repeatedly cried poor and denied raises to cops, firemen, jailers ect… for most of the 1990’s. Instead, the promised on the back end.

    When you hear terms like “kicking the can down the road”, this is a prime example of a lack of leadership. This same practice was adopted here in OC and elsewhere.

    While I personally believe that the Cops and Firefighters (and teachers) pensions are both overly generous and unfair to taxpayers, for what we get in return (mediocre, poorly trained unprofessionals) a part of me says thats what you get when you vote for a Real Estate agent for city council (or in todays case President of the State Senate).

    Scrutiny, like that practiced by the fine people of this blog is our civic responsiblity. FFFF just does a better job of it than most.

    1. That is: Municipal Governments (as well as county and state) fell short of thier responsibility in negociating with the employee groups. In the case of San Francisco County employees, the city repeatedly cried poor and denied raises to cops, firemen, jailers ect… for most of the 1990′s. Instead, the promised on the back end.

      ===================
      Tony- tha whopper lie that cops and ff’s and the rest of the trough feeders gave up raises is as bogus as a $3 bill, all false. Public safety salary has gone up on average 97% in just the last decade, they NEVER went without raises, in fatc their raises were many times double and triple the acual CPI increases-like when SF cops got a WHOPPING 8% raise last year in a friggen depression.

      Stop the spin.

  10. Barry, great point about the retiree health care liability. Have you looked into it? It should be in one of the city’s FASB statements, although I forget which one.

  11. I realize I will never have to worry about booking any trips to Stockholm to watch any of the losers here in loserville pick up any prizes.

    I know it is a difficult concept to grasp, but you do know that unfunded liabilities are estimates that change after each actuarial study. Studies done by a group that known for being overly conservative. That those same liabilities aren’t due tomorrow but more than likely over at least 30 years.

    It’s fun to watch the whining being done on these pages.

    Especially given how they believe folks are getting “rich” working for the government.

          1. Did the focus of this blog shift to the federal government? That’s what I assumed when the question was asked.

            Congratulate yourself on a gotcha moment.

            If you want to discuss federal issues, I can cite a whole slew of conservative hypocrisy.

            Bring it On!

  12. 4sd, your assessment is so unbelievably wrong that I don’t know where to begin…

    First the “overly conservative” CalPERS lost $50 Billion just a few years ago, and they are telling us they don’t have a way to get that money back.

    Second, the liabilities are based on future gains and payments, but the system must increase payments NOW in order to meet future obligations. The other option is default. That’s not my assessment. It is from Calpers’ own actuaries.

    Your attempt to trivialize the financial future of our city is ignorant and just sad.

        1. Aw, Hell, don’t even pay any attention to that idiot. He/she believes Pam Keller’s a “fiscal conservative.”

        2. Really? You believe the current actuarial study is the same as the last one and the next one will be the same as this one?

          It’s why you’re an inhabitant of loserville.

      1. 4SD Observer you are dumber than a bag or rocks.

        If you have $5 in your pocket and a $500 bill is due tomorrow you can’t cover it, even though the bill is ot yet due. Easy concept Einstein Jr., but you failt o grasp it.

        Try to refill the air between your ears, it is low.

        1. Bad analogy try again.

          Are you new to loserville? You sound like you’ll fit right in.

          Let me guess. You’re one of the fellow losers that believes teachers, cops, and firemen are getting rich because they make a lot of money.

          1. “You’re one of the fellow losers that believes teachers, cops, and firemen are getting rich because they make a lot of money.”

            Yes, right. You finally said it.

            Goddam, do you have any idea how stupid you are? Of course not.

  13. Cal PERS investments have recouped a little more than half of what it lost in 2008 after the private sector criminals running Wall Street ponzi schemes nearly destroyed this country and wiped out many people’s retirement funds. $240 billion in assets and rising, plenty of money to go around. Wipe those tears away, ladies….I’ll still get mine.

    1. I take it that math isn’t your strong suit. For every year it takes CalPERS to get back to 2008 levels, they fall another 7.75% behind what they are supposed to be at today.

      CalPERS cannot invest it’s way out of this mess. They have already admitted it. In fact, a few weeks ago their head actuary recommended they lower their long term investment expectations to match reality. Of course that triggered even more panic.

  14. Joe Sipowicz :
    Aw, Hell, don’t even pay any attention to that idiot. He/she believes Pam Keller’s a “fiscal conservative.”

    Hey JoeSippy. Where did I ever say any such thing?

    Did you write this while you were at happy hour?

  15. 4SD Observer :

    Joe Sipowicz :
    Aw, Hell, don’t even pay any attention to that idiot. He/she believes Pam Keller’s a “fiscal conservative.”

    Hey JoeSippy. Where did I ever say any such thing?
    Did you write this while you were at happy hour?

    Sippy, be honest with yourself. You’re not very bright. If no one’s told you, consider what I’m doing a public service.

  16. Please stop using such big words around Observer and Mango. Do you really think they’re smart enough to read those reports?

    1. Yes. Are you?

      Do you not understand that unfunded liabilities are only estimates that are subject to change?

      Is that concept beyond your grasp?

      Ahhh….who am I kidding?

      Of course it is.

      1. 4SD, It is true the unfunded liabilities are estimates. It is also true they can go up as well as down. We still have to deal with it or are you suggesting since the number is constantly moving (mostly upward for the last 8 years) we should just ignore it?

        1. No. But I believe it should be put in perspective. Remember that the reporting of unfunded liablities is required by a GASB regulation. There is nothing binding about it. A municipality has every right to receive and file the report and move on.

          1. Sure, a city can ignore its unfunded liability. But they can’t ignore the rising bill from CalPERS. And pretty soon the bondholders will say “no more.” What then?

  17. We need to outsource or we will be paying for ears to come!

    P.S. Why did Bruce Whitaker agree to give away Ameriage Field to the O.C. Flyers? In addition to using redevelopment funds to build a new stadium? Is this another attempt of Bankhead to show how redevelopment saved Fullerton from being a ghost town?

  18. Fullerton WAtcher – have watched outsourcing on a national scale for some time. It isnot a panacea. In fact it is frequently a path to poor service, corruption and eventually termination of the outsourcing contract for failures of the contractor. Little things like – we going to requre contractors to do a criminal record check and not hire felons like ciiies do? – will we require contractor employees to be literate in English? – make this far from a simple issue. One of the biggest messes is when a municipality outsources a function, dismantles its in house capability as a result, and then the contractor goes belly up or fails to perform. The States of Texas and Indianna have run into this big time. The municipality is left with no resource to immediately step in and assure that services continue. And, if privatization is the answer, how does one explain Enron, Merril-Lynch, Lehman Brothers, Arthur Anderson, General Motors, Washington Mutual, Downey Savings, Mervyns and now Blockbuster. to name but a few scandals and failures? The private sector model is far from trouble free efficiency and effectiveness. Bottom line, there is no magic bullet.

  19. Been around a while :
    Fullerton WAtcher – have watched outsourcing on a national scale for some time. It isnot a panacea. In fact it is frequently a path to poor service, corruption and eventually termination of the outsourcing contract for failures of the contractor. Little things like – we going to requre contractors to do a criminal record check and not hire felons like ciiies do? – will we require contractor employees to be literate in English? – make this far from a simple issue. One of the biggest messes is when a municipality outsources a function, dismantles its in house capability as a result, and then the contractor goes belly up or fails to perform. The States of Texas and Indianna have run into this big time. The municipality is left with no resource to immediately step in and assure that services continue. And, if privatization is the answer, how does one explain Enron, Merril-Lynch, Lehman Brothers, Arthur Anderson, General Motors, Washington Mutual, Downey Savings, Mervyns and now Blockbuster. to name but a few scandals and failures? The private sector model is far from trouble free efficiency and effectiveness. Bottom line, there is no magic bullet.

    Don’t put too many facts into the heads of these simpletons. You cause something like

    this.

    1. Navy ribbon clerk opines again.

      Did you remember to order enough suppositories for the second mate?

  20. Travis :
    Sure, a city can ignore its unfunded liability. But they can’t ignore the rising bill from CalPERS. And pretty soon the bondholders will say “no more.” What then?

    Then it would behoove the city to renegotiate those obligations with the affected groups.

    Collective bargaining allows this.

    1. The “effected group” is retired… Pretty tough getting retirees to to do much of anything, just look at me and Doc.

  21. There is no magic bullet–an unfortunate but true conclusion. Whether the unfunded liability is a $100M or $200M, plus $35M or so unfunded retiree medical liability the result will be less services, lower levels of maintenance, and no more public facility improvements. The cost of benefits will continue to rise to close the gap on the unfunded liabilities, and medical insurance costs, unless the current council slams the door on benefits and makes the employees pay any increases.

  22. Fullerton Rudy :
    “You’re one of the fellow losers that believes teachers, cops, and firemen are getting rich because they make a lot of money.”
    Yes, right. You finally said it.
    Goddam, do you have any idea how stupid you are? Of course not.

    You also believe those groups are getting rich?

    And you ask if I know if I’m stupid? You really are a loser if you believe that. Not that you didn’t know already.

  23. The ROOT CAUSE, Excessive pension & Benefits must be addressed (funding is secondary):

    So let’s cut to the chase …….

    Private sector employers typically contribute 3%-8% of an employee’s cash pay towards retirement, yet the total cost (expressed as a level annual % of cash pay throughout one’s career) of Public Sector Defined Benefit pensions (for a 30-year employee retiring at age 55) ranges from 29% to 58% depending on the richness of the benefit formula (with safety workers generally at the highest end).

    More specifically, for the noted formulas, the level annual %s of cash pay are as follows:
    2% per year of service w/o COLA – 29%
    2% per year of service with COLA – 39%
    3% per year of service w/o COLA – 44%
    3% per year of service with COLA – 58%

    Even after deducting the typical employee contribution of about 5% of pay, that still leaves the employer (meaning TAXPAYERS) contributing 24% to 53% of pay. The middle of these %s is 38.5% vs 5.5% (the middle of the range of what Private Sector employers contribute) or SEVEN (yes SEVEN) times greater.

    This is completely absurd, and the very modest “tweaking” at the edges by practically begging employees for a few more percent of pay contributions will NOT even begin solve the HUGE financial problem.

    TOTAL COMPENSATION (Cash Pay plus Pensions plus Benefits) should be comparable in the Public and Private Sectors for similar jobs, and with Cash Pay in the Public Sector now AT LEAST equal to (if not greater) than that in the Private Sector, there is ZERO justification for greater Public Sector Pensions and Benefits .

    Not for PAST service, but for FUTURE service, Public Sector pension accruals must immediately be brought FULLY down to the level of their Private Sector counterparts. Due to the huge reduction needed, the ONLY way to do this is to freeze the current defined benefit plans for CURRENT (yes CURRENT) workers, and switch everyone into a 401K-style Defined Contribution Plan with an employer contribution in the same 3%-8% range granted Private Sector workers.

    Additionally, since Private Sector retirees rarely get any retiree healthcare subsidy before eligibility for Medicare at age 65, similar restrictions should apply to Public Sector retirees.

    It’s TAXPAYERS’ money and Civil Servants are NOT more worthy of bigger pensions and better benefits.

    1. Thank you for that. The one thing the public employees don’t want their private sector slaves to know are the facts.

      1. Facts? I’ll give you some facts Joe:

        More Americans work for the government than work in construction, farming, fishing, forestry, manufacturing, mining and utilities combined. We have moved decisively from a nation of makers to a nation of takers. Nearly half of the $2.2 trillion cost of state and local governments is the $1 trillion-a-year tab for pay and benefits of state and local employees.

        http://online.wsj.com/article/SB10001424052748704050204576219073867182108.html?mod=googlenews_wsj

  24. Joe Sipowicz :
    You said they were making a lot of money. That’s what rich is. Idiot.

    You believe that’s a lot of money?

    It’s why you’re a charter member of loserville.

  25. For every example of a failed business there are twice as many successful. This is the land of the free market and we are letting communist principals lead us. Public employee Unions are nothing more than communist training grounds! It’s time to end the game. If we out source we will no longer have to worry about the inducted liabilities because we will eliminate over half of the jobs.

    P.S. It should already be mandatory in Fullerton to use e-verify! Heck the cops should use it when they arrest people!

    1. Your claim of this being the land of the free market is only proof that you’re a charter member of loserville.

      If it wasn’t for government, American capitalism wouldn’t exist.

      Want proof?

      I want to open a retail store selling cheap goods from China. Think I’ll call it Wal-Mart. What do yo think?

  26. TheFullertonWatcher :
    P.S. It should already be mandatory in Fullerton to use e-verify! Heck the cops should use it when they arrest people!

    So my employer should send all of my personal info to the government before I can mow his lawn? That sounds like something the communists would do.

  27. The cheapest way to go is to the same retirement plan as active duty military. 20 years service, 50% of ending base pay. from that SBP is deducted, State and federal income tax, COLA adjustments pegged at CPI less 1 point.

    I haven’t received a payment increase for the last 3 fiscal years. Federal year runs 1 Oct to 30 Sept, Pay changes take effect on 1 Jan

    Like I’m supposed to feel bad because i’m drawing a $14,000 per year ‘retirement’?

  28. Gov. Moonbeam just announced the drought is over. Fullerton announced that months ago when they announced the watering restrictions were over and for our reward we were getting increased taxes, I mean, water rates.

    Oh wait…I mean, we still had to follow their rules and inform on our neighbors to The Man “just in case” the drought might come back.

    The water rate increase is nothing but a tax increase so they won’t have to make any tough decisions.

    Remember, the first two letters of Fullerton are F U.

  29. The local & state goverments have a us against them mentality. Them being the tax payer. I just a had a dealing with the City of Santa Ana Water Dept. we had a new water meter put in at a construction project. The only time the City said they could do it was on a Saturday, when I questioned the extra cost of having our beloved city workers there on Saturday instead of during a week day? The genuis city supervisor explained that it was only regular over time not double time. Another example of a goverment worker soaking the system for their own good. What a [email protected]$%&* RIP OFF SYSTEM WE HAVE!

  30. Hey slow down here, I work for the city of fullerton, only make around 85 grand a year, sometimes putting in over 30 hours a week! My retirement wil only be around 70 grand a year, how am I going to travel and live like these cops and fireman that retire with over a hundred grand plus a year?

  31. Scott,

    Let me be direct, the BEST Private Sector pension, combined with your salary and service history would yield an annual pension of no greater than 40% of pay of $34,000 … with NO COLA.

    Your $70,00o pension with a 3% annual COLA is roughly equal to a non-COLA pension 1/3 higher, or roughly $93,000.

    With your cash pay likely roughly equal to your Private sector counterpart, tell me why taxpayers should be funding 80-90% (WHICH THEY DO) of your pension which, on an apples-to-apples basis is $93k/$34k= 274% of that of a comparable Private sector worker?

    By the way, the fact that incompetent elected official have approved even MORE ridiculous pensions for safety workers is irrelevant. Comparison of “TOTAL COMPENSATION” should be between reasonably similar Public and Private Sector jobs (because PRIVATE Sector taxes pay for Public Sector salaries , pensions, and benefits), not between various segments of overcompensated Public Sector employees trying to justify even FURTHER increases.

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