Last week we presented this hilarious dialog between a distraught taxpayer and a union firefighter, which became an instant hit across the country. While the clip had no problem making it onto the workstations of public agencies far and wide, we also had many requests for a G-Rated version.
Despite our concern that self-censorship may inhibit the fine directorial talents of our anonymous Oliver Stone, he was happy to oblige:
Of course, most will probably prefer the original profanity-laced version here: Stop the Madness Now!
That’s what members of Fullerton’s police and fire unions get from us.
Almost all of the candidates are talking about pension reform now, but they don’t quite have their figures right. According to the city’s HR Director, public safety employees currently pay 2.557% of thier salaries towards their multi-million dollar retirements, while taxpayers pick up the rest. This year, we’re paying an additional 29.752% of their salaries towards their retirements, and it’s set to shoot much higher.
In private-sector terms, that’s equivalent to an employer 401(k) match of 1200%. That’s twenty-four times the average out here in the real world.
Author Steven Greenhut delivers a dismal report for those looking for pension reform to come out of the state legislature: It ain’t gonna happen. Cities and schools must save themselves.
But we are still the masters of our fate. If we move quickly, there are things that can be done to prevent this financial disaster from passing on to our children, although they will require unconventional courage, wisdom and action. So who’s going to step up to the plate and rescue Fullerton?
What happens when you run up a credit card but only make the minimum payment? It never works out very well. But that’s how Fullerton is handling $30,000,000 in retiree health care commitments.
Jack Dean passed along this unfortunate piece from the OC Register which exposes over $1 billion in unfunded retiree health commitments for Orange County and its cities. Fullerton’s spending problem is summarized here:
City
Fullerton
Population
138,610
Unfunded costs
$29,986,735
Unfunded cost per capita
$216
Maximum benefit (per year)
$9,744
Paid in 2009
$1,927,528
Does the agency pay only the minimum cost?
Yes
Is a lifetime benefit offered?
Fire employees
Source: Retiree health costs and other retiree data from local cities and the county; population statistics from the California Department of Finance
Retiree health benefits are negotiated between our city council and the public employee unions during contract renewals. Supervisor John Moorlach says they are an easy squeeze for unions because boosting benefits for employees requires no up-front cost to the city.
Much like exorbitant pensions, these benefits are a long-term commitment where the future costs are impossible to calculate at the time the entitlements are given. Ultimately, taxpayers are responsible if costs “unexpectedly” spiral out of control. And of course, they always do.
Now that only the worst repugs still support his torpedoed campaign for 4th District supervisor (a district in which he doesn’t live), Hide and Seek Harry Sidhu seems to have decided that chumming it up with Democrats is his only prayer. Seems he even went so far as to attended the big Democrat Labor Day bash at the Santa Ana Zoo.
While Harry Sidhu was at Zoo, whooping it up for California’s #1 union stooge Jerry Brown, as reported by the Orange Juice blog here, he also happened to run across Pam Keller. Poor Harry selling his soul again just to get elected. Jeeze, this guy would do just about anything to be a political somebody. Will he re-register as a Democrat? Why not?
Well I hate to pop your bubble, Hide and Seek, but people can see right through your transparent BS, fake residences and all. All they can see is Sidhu the assclown.
Last week this blog criticized school board candidate Janny Meyer for announcing her acceptance of the endorsement of the Fullerton teachers’ union while simultaneously claiming to be a fiscal conservative. Shortly thereafter we had learned that Bev Berryman and Aaruni Thakur had also accepted union support, albeit much more quietly.
Aaruni Thakur
For Aaruni, the endorsement was a given. Being a union tool is practically a requirement for the modern Democrat politician. Who can fault a guy for latching onto the massive union political machine which has helped put so many Democrats into office? Well, I suppose Republicans could find that to be a cause for concern.
Beverly Berryman
Berryman’s acceptance, on the other hand, is much more disappointing. She won her first school board campaign without any union support, so she certainly didn’t need it now that she is an incumbent. Saying “no” to this powerful special interest would have been the best way for her to preserve her independence. She certainly has opened herself up to closer scrutiny on future votes.
On the bright side, Bev does have a history of taking stands on important issues that put her at odds with the union. She led the charge against the most recent attempt to launch a parcel tax on Fullerton voters. Bev also was the only school boarder who has repeatedly said no to imposing the expensive Apple laptop fees on parents throughout the entire One-to-One laptop fiasco. And she has never been on the receiving end of union’s negotiating power as a government employee.
So that begs the question: Why did the union endorse her anyway?
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’sreal 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.
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.
The other day Fullerton school board candidate and self-described “fiscal conservative” Janny Meyer joyfully announced her acceptance of the Fullerton teachers’ union endorsement.
Well, it's kind of a gray area.
This registered Republican must not be interested in GOP support, since that party has forbidden candidates from taking any union money.
But more importantly, Janny’s campaign is now backed by the very same teachers’ union that has repeatedly sacrificed your child’s education at the alter of paycheck protection. The result? Furlough days and increased class sizes, not good education.
It’s also the same union leadership that fights to protect bad teachers at all costs while refusing to allow schools to reward good teachers. They will boycott anyone who attempts to help parents evaluate teacher performance. They’ve instituted a system which puts young, energetic teachers up on the chopping block while coddling tenured teachers without any regard for job performance.
It makes my head hurt.
Of course, the union would love to pass a new property tax in Fullerton next year so they can keep shoveling money into this flawed system. Any idea how that conflict would churn in the head of a self-styled conservative who is also beholden to the union?
The other day we had a look at Pat McKinley’s ballot statement and something surprising popped up. Well, not really. Squeezed into the middle of his I-riddled statement was the curt phrase “I will work to reform public employee pensions.”
That's what they told me to say.
That’s a vague assertion, and frankly it’s hard to believe when it’s coming out of the mouth of one of the pension system’s most noted abusers – a double-dipping bureaucrat who pulls down well over two hundred grand per year in retirement thanks to a ridiculous 3-at-50 pension system that’s now bringing the city to its’ knees.
So what does McKinley mean by “pension reform” anyway?
It’s hard to tell at this point. That’s good for Pat; bad for the rest of us. You see, as long as he can keep all this pension reform talk clouded in empty platitudes, he can pretend to be a reformer and maybe nobody will notice that he hasn’t promised to really change anything.
So Pat, here’s the gauntlet: You need to commit 100% to serious pension reform. That means two things:
A mandatory 401(k)-style plan to replace the defined benefit for all new hires
Current safety employees must pay the full 9% towards their own retirement, as required by state law.
Take a look at our city’s unfunded pension liability and do the math. Any lesser reform will amount to nothing more than a laughable gesture to taxpayers, ensuring that even more pain awaits us down the road.
