I don’t think The Union’s editor/publisher reads his newspaper anymore – or cares. Or he wouldn’t let columns like the one by George Rebane run without more scrutiny.
Being an ideologue, George never lets facts get in the way of his “analysis.” This morning, on “On the sorry road to Stockton,” George puts too much blame on CALPERS for Stockton’s woes. Stockton ran into trouble, largely because the real estate bubble burst, damping needed tax receipts. Its excessive building binge is well documented.
Then George makes an unsubstantiated, snide swipe at our local county and city jurisdictions, suggesting our problems relating to public sector issues are being underestimated. It is needlessly alarmist and oversimplified.
To be sure, CALPERS and the costs of public sector worker contracts need to be addressed – and are. This includes our Governor. George’s column is incomplete. One example: there’s also an added cost that local governments will have to bear at an inopportune time.
Here’s some context that’s missing, provided by CALPERS:
The California Public Employees’ Retirement System (CalPERS) Board of Administration just voted to reduce the discount rate to 7.5 percent, affirming the recommendation made by its Pension and Health Benefits Committee.
CalPERS Board also directed its Chief Actuary to analyze and bring back an option for consideration to phase in the increased pension costs to employers over a 2-year period.
The discount rate for the Public Employees’ Retirement Fund was last changed 10 years ago when it was lowered to 7.75 percent from 8.25 percent. One year ago, the Board voted to keep the discount rate at 7.75 percent with the condition of another review in 2012.
“This was a difficult, but important, decision for the Board to make. We understand the impact this will have on our employers in meeting contribution requirements,” said Rob Feckner, Board President. “However, current economic conditions impelled us to make this change now, and our actuaries will continue to evaluate the discount rate in the coming years.”
The discount rate will impact members and employers as follows:
•State and schools employer contributions will increase by 1.2 to 1.6 percent for Miscellaneous plans and 2.2 to 2.4 percent for Safety plans beginning Fiscal Year 2012-13. According to staff estimates, the change in the discount rate is expected to cost the State $303 million, of which approximately $167 million would come from the State’s general fund. The school increase would be approximately $137 million.
•Public Agency contributions will increase by 1 to 2 percent for Miscellaneous plans and 2 to 3 percent for Safety plans beginning Fiscal Year 2013-14.
•The new discount rate will apply to new service credit purchase requests postmarked, faxed or delivered on or after March 15, 2012. Costs will increase between 5 and 13 percent depending on the individual circumstances of members. Members who have submitted a request prior to March 15 will be honored with the factors in effect as of the request date.
•Retirement applications with a retirement date on or after March 15, 2012 will have the amount of their benefits under any optional form be calculated with the new discount rate. Members who choose optional benefits – leaving some part of their benefit to a spouse or beneficiary after their death – will experience approximately a 2 percent increase in cost.
And as for blaming CALPERS for Stockton’s woes:
Anne Stausboll, Chief Executive Officer for the California Public Employees’ Retirement System (CalPERS), today issued the following statement on the City of Stockton’s mediation efforts: “As the City of Stockton announced, CalPERS is one of many interested parties participating in the mediation process. While we recognize the fiscal challenges that many cities and counties face, it is important to also recognize that employee pensions and benefits are just one of many factors that are involved in these tough budgetary and legal decisions.”
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I find it interesting (and mildly entertaining) to look at Rebane’s twisted, singular, blinkered view of California’s broken cities and counties. If one looks intently at identifying features of these places and their governments one thing becomes glaringly apparent: most are run by far right republicans and are red cities and districts in the blue state that is California. Stockton, Kern, San Diego, Contra Costa, Vallejo, Bakersfield. Why just take a look for yourself the list goes on and on. Like the red states squeezing the most money from the federal government, the red cities and counties (following the Ahnold’slead) made the sack of Rome by the Visagoths look almost friendly. Gov. Brown, like Obama, is stuck with the smoking ruins of the wholesale looting…including Schwarzenegger’s pillaging of the hired help. I’m not forgetting any of this any time soon and I hope the rest of California doesn’t either–especially those who vote. Otherwise, Vernon or Vallejo…any
one?
Kate
Good post. Even 5000 miles or so from home today, the Union Column/Rant smells like exactly what it is: SAME OLD TIRED RIGHT WING KILL GOVERNMENT AND THROW STICKY STUFF AT PUBLIC EMPLOYEES. The only “pensions” the far right care about is their own. I got mine, screw you RAND crap.
Same ol’ same ol’. As Jeff reports those with pensions have been compromising and reducing for decades but liars like George never talk about when collective bargaining goes against workers. I think George is a smart man but he sure is stupid in love with an ideology that is completely destructive towards everyone.
George and all the right wing bloggers who read this blog daily. Pensions are agreements between worker and employee that give said benefits in place of today’s wages. It is theft when employees do not receive their back wages (benefits) that they paid into and planned their life around.
Defined Benefit Pension
http://www.newyorklife.com/nyl/v/index.jsp?contentId=11545&vgnextoid=9cd02f5a919d2210a2b3019d221024301cacRCRD
All the more reason why George et al should be supporting Governor Brown’s pension reform plan as a first step toward getting this issue under control over the next decade. But they won’t do that because it deprives them of a partisan issue they think they can use to beat up what they call the “left”. If these guys spent a little more time actually trying to find solutions and a little less time writing tripe we might be able to get something done.
Let’s be clear, George Rebane is an not interested in facts or solutions. I spent many years negotiating union contracts that included pension benefits. Those benefits were achieved by providing a total compensation package that included wages, health care, vacation time, holidays, clothing allowances, and yes, pension. In most cases employers willingly agreed to contract provisions that stabilized the workforce and offered an opportunity to forecast their expenses. Most employers recognize the importance of providing a stable environment for their workers and their customers; be they public or private.
Jim Firth
Jeff,
your entering this topic is welcomed. When GASB-35 arrives you will get some real excitement.
.
PERS announced, Sept 2011, that any agency wishing to withdraw would have the liability calculated at 3.9%, not 7.75%.
George R is on target with a very complex (intentionally so) system.
gf
George,
I’ve been on this topic, including that detail, since long before the local ideologues tried to make political hay out of it. I also hope that someone as wise as you is getting better than a 7.5 percent return on your investments! Try Google, post split.
Here’s a good example of George Rebane’s reasoning “skills,” jumping from Stockton to here:
“Ignoring all this, and with straight and stern faces in place, local elected officials and their staffs still maintain to their constituencies that things are well in hand – just keep us in our jobs. Meanwhile the line at the Chapter 9 bankruptcy window is growing longer with cities and counties preparing to face the music as years of political gaming gets trumped by the real world.”
Where’s his proof that we’re the next Stockton? Ignoring it?
What “real world” does George reside in? Why does The Union let this stuff run without some “real” facts. It’s irresponsible.
This is such unmitigated, fear mongering nonsense by George, et al. The California jurisdictions that are in desperate financial straights are there because of the collapse of the economy, the demise of the construction industry, and the associated reduction in sales and property tax revenue. There is no doubt that pension debt is a problem that needs to be addressed. When the economy collapsed the CalPERS, CalSTERS and UCRS systems lost significant value, growing to approximately $500 billion in unfunded debt. Pensions are funded by three primary mechanisms; contributions by the employees themselves, contributions by the government, and investment returns. As the economy recovers, and the value of real estate and other investments stabilize and grow the level of unfunded debt will decrease, but will still be significant.
There are ways to address these problems. Governor Brown has proposed a pension reform plan to do so. The plan includes the following key measures:
1) Stop pension spiking
2) Create a two tiered system that re-negotiates pension benefits for new employees
3) Stop retroactive application of benefits
4) Increase employee contributions
5) Prohibit pension holidays, or local governments not funding pensions when times are good
6) Establish independent oversight of pension funds
7) Increase pension board standards to reduce conflicts of interest
8 ) Prohibit placement agents
Republicans in the California legislature have supported this plan, and introduced a series of bills mirroring the Governor’s proposal.
So, with Republicans in the legislature supporting this plan, a bi-partisan coalition in place to advance it evident, and a Governor anxious to sign it, why aren’t our local conservatives touting this plan to fix the pension problem?
http://articles.latimes.com/2012/feb/23/local/la-me-pensions-20120223
The answer is clear.
The very same local conservative critics, George Rebane and Michael McDaniel, published a paper, which they have been trotting around for the last five years, claiming that Nevada County is at serious risk of bankruptcy due to pension debt.
http://sierrastudiesfoundation.files.wordpress.com/2011/10/tr0712-1_ul071228b.pdf
The county has countered that the findings in their report are inaccurate, but acknowledge that something must be done to address pension liabilities. Ironically, Governor Brown’s republican supported plan adopts many of the the same reforms of the pension system that Mssrs. McDaniel and Rebane did.
But they are incapable of supporting a pension reform plan that is advanced by a Democratic Governor–even if it is the right thing to do–because they are so captured by their need to have an issue to beat local government over the head with. They would prefer to whip us fear, attack local representatives, and threaten them with the approbation of the local contingent of the Tea Party, in order cow them into submission.
A nice example: “We are assured that our city and county jurisdictions are well managed, that the electeds never play hide-and-seek games with the books, and things are well in hand for our fiscal future. Any concerns to the contrary, like those reported problems that waft up from the flatlands, quickly dissipate with the sunrise as if they were some rural myths shrouded in the morning’s mountain mist.”–George Rebane
Any search of the local web sites will find many more inflammatory statements about the problem–I will not repeat them all.
Kudos to our local government representatives for thoroughly researching the issue, reporting to the public on the size and scope of the problem, and ignoring the fear mongering of our local bloggers.
If Mr. Rebane, Mr. Steel and Mr. McDaniel were serious about trying to solve the problem they would announce their support for Governor Brown’s pension reform plan. Anything short of that merely proves that they are grandstanding bags of hot air.
Have been meaning to comment on this topic, too. Not much to add, as you all have covered it nicely. But I did re-read Rebane’s column from yesterday, and still found it to be merely a sermon to his choir. I am surprised though, that he doesn’t understand that if wants credibility with the “Middle”, cite unbiased sources for back-up, not such institutes as the Cato Institute. And his graph looks more like a Rorschach test, adding nothing helpful to illustrate his thesis.
Steve has covered the economic points that have been stashed away in my brain. I’ll only say that all the right wing pundits seem to think that the policies of their group, politicians and Presidents over the last few decades weren’t contributors, if not the main cause of our current problems. Rebane points no fingers at unregulated Wall St. and derivitives, then collapse of an industry. The slow but steady shift of jobs over seas, undercutting economic bases all across the USA; opposition to new, sustainable energy sources–only ridicule, as if the steam engine was a success on the first attempt. We all know this story.
But now that the effects of years of these actions–throw in a couple of wars for seasoning–and the middle class isn’t so middle any more and is having trouble paying their bills, so are the towns and cities they live in.
I’m against pension spiking. When I retired from teaching, not knowing any better, my first four years of subbing and short term contracts were outside of CalStrs. I paid into Social Security. Only when I was put on contract with the Orange Co. Dept. Educ., did I enter CalStrs. Only 101/2 years later, while on medical leave undergoing R-CHOP chemo for B-Cell lymphoma, OCDE happened to offer an early retirement package to certificated employees, 55 or older, with at least five years of service. I was back to work, when a routine check of my cholesterol showed alarming changes in my blood work. Surffice it to say, I was aware some people could respond to the Rituximab in a fatal way, so immediately set in motion steps necessary to get mme seen at the VA hospital. My condition deteriorated rapidly, and rescue therapy was initiated. Fortunately, after a couple of weeks, it began to take hold and soon blood work was normal again. But, aha, then the Dr. whom had diagnosed the neoplasm of B-Cell, now told me, I had cancer across the back of my tongue, which was confirmed by an MRI. A biopsy was performed of tongue and throat and when I went for the results, while sitting in the little room waiting for the doctor, not really believing I could have possibly dodged yet another bullet, I sat meditating and rubbing the belly of the Buddha hanging from my neck. The doctor appears, and, miraculously, the biopsies are all negative. The VA insists on doing their own bx’s and they too, are all negative. It is then I say Screw it, I’m taking the early retirement. Sold my house near the beach in two weeks, headed this way–had been in touch with friends from high school, in N.C., Dave and Pat Caldwell–and bought at the top of the market here.
Strs pension is a whopping $1,100 per month and as a teacher, all the quarters I worked under S.S. prior to entering CalStrs is penalized at 60%, I believe. And Rebane and allies don’t ever factor in, all the extra education needed, especially for older ones like me, who go back to school, many years after they graduated.
Nor has Georgie boy, I’m sure; (while in Santa Ana with the gang kids) taken a glancing blow to the head–I saw it coming and turned; blocked a kick to the groin–saw that coming and blocked it with my thigh–and both from a girl gangster; faced off with a big Samoan on PCP while the entire school watched as he called me out to fight. I backed up as the crowd grew, placing my glasses on a table. At that moment the Mexican kid whom his problem had begun with, walks around the corner and the Samoan runs over, landing squarely a round house to the kid’s head. As soon as he started for the Mexican kid, I charged the Samoan, reaching him after the punch landed, but wrapping him in a bear hug and bring him to the floor, not feeling about five shoots to the head drom the Mexican meant for the Samoan. There’s more, much more, including gunfire, brass knuckles, dead students, bullet holes in our building and threats to my life by a particularly nasty gang guy named Evil.
So, once again, George, as an English statesman said: “There are lies; damn lies; and statistics.