“Pension spiking”: Is fox guarding the hen house?

imagesPension spiking is the proverbial *golden* spike.

It refers to cases where public sector workers get big raises in the years immediately before retirement to get larger pensions than otherwise.

“This inflates the pension payments to the retirees and, upon retirement of the ‘spikee,’ transfers the burden of making payments from the employee’s employer to a public pension fund,” as Wikipedia points out. “This practice is considered a significant contributor to the high cost of public sector pensions.”

Though some states have passed laws to make it more difficult, pension spiking still is commonplace.

Does it happen in our neck of the woods? You bet it does. In our case, a shrinking, small population — and tax base — make our share of the burden worse.

I worry about abuses of pension spiking because of the conflicts of interest inherent in a small town: People who are the “watchdogs” of other people also are their friends. Too often, arm’s length relationships are back slapping ones.

Unlike double dipping — drawing a government pension for one job while also working in the government at another — we can better control pension spiking without passing new laws.

This is all the more reason to have a citizen financial oversight group, such as the one that Nevada City is proposing to disband. With a lot of retired business people and CPAs around, the expertise can’t hurt.

It also could help City Hall continue to recoup from its reputation for being “asleep at the wheel,” which it was. All the meetings are public, and the council has the final word.

We need to work collectively to wring out the excesses of government. We can’t afford it.

Today’s The Union is an issue-oriented gem

 

Whiskey fetching NYT
Whiskey fetching

My routine is to get up early, light up the red wood-burning stove in the kitchen and read several newspapers online, except the New York Times, which Whiskey fetches from the walkway.

Today’s The Union is a gem — stories about complex but relevant *issues* to our community — not “filler,” “fluff” or “advertorial.” Kudos to Dave Moller and David Mirhadi, who wrote the best ones, and to the editors and copy editors, always unsung heroes:

“Are economic woes leading to rise in local suicides?” An issue-oriented centerpiece. Here’s my write up on the issue last month: “Recession leads to more suicides.” You can’t sweep this one under the rug. 

•”Nevada City’s financial oversight group to disband.” KNCO first wrote the story two days ago, but this version provides much more depth, questioning the wisdom of disbanding the group but presenting both sides. Too bad Mayor Barbara Coffman wasn’t available for comment.

I received an email of concern Friday from a blog reader: “This doesn’t look like good government to me,” he said.

•”State questions mine report.” This shows that the draft environmental report to reopen the mine has some real flaws. It’s not at all a black-and-white issue to go forward without some substantive changes.

All I missed was a story on the Obama stimulus “shovel projects” from county executive officer Rick Haffey’s Friday memo. It’s the first complete list for the county, Grass Valley, Nevada City and Truckee.

On the production side, a major glitch: I like to read the print version of the paper online. But this morning, the Page 1A was “Real Estate Showcase,” not the front page of the paper. A Freudian slip, I’m sure.

The remnant Web advertising “Leading Hotels of the World” is getting a little tiresome as well. I doubt too many locals want to go to Hôtel Plaza Athénée in New York for a expensive getaway in a deepening recession. How about providing more local, relevant Web advertising with coupons?

Would you pay to get your news on the Web?

 

Idaho Falls paper: charges for Web content
Idaho Falls paper: charges for Web content

Hearst Corp., owner of the San Francisco Chronicle, plans to begin charging for some of its Web content. It’s about time! I predict others will follow suit later this year.

I’ve advocated this for a long time, for papers ranging from The Chronicle to The Union.

In a small local market such as ours, it’s a “no brainer” to charge for some local content, because it’s more “unique” and less “commodity” news — but make it free for a print subscriber.

So what if your Web traffic falls? You’re not selling enough Web ads anyway — and I doubt you will anytime soon.

Yubanet and KNCO compete with The Union on the Web, but they’d have to ramp up the effort to pose any threat.

Yubanet mostly republishes press releases, and KNCO still is shallow and sometimes way late (reporting the closing of the Holbrooke, for example), with some egregious typos to boot (it’s/its is a common one). Nevada County Mall has little useful editorial content.

The Union has a huge lead in Web traffic as well — by 3 1/2 – 1. (Compare the traffic at compete.com to see for yourself; just type in the URLs for each).

Still, charging online will be a challenge for any newspaper: The Wall Street Journal has been the most successful, while papers such as The New York Times have failed. One hurdle is a secure payment system, which requires time and money.

Of the small papers, the Idaho Falls newspaper has been successful in charging for some content.

It’s $6 a month to read the paper online, including a digital edition of the print paper. Online is free to print subscribers. Some snippets of breaking news are free to all, as well as classifieds and TV listings.

Glad to see a media giant such as Hearst pulling the trigger, too. Most managements are afraid — though I’ll bet you’ll see them flocking to the plan, too.

When your industry makes the cover of Time magazine, you can’t sit around flat footed.

Here’s the memo from Hearst President Steven Swartz on the proposed changes, as reported by the Wall Street Journal.

The memo also mentions digital reading hardware such as Amazon’s Kindle, the need for more insightful blogs, advertising reps who are “consultants” rather than “order takers,” and an end to cookie-cutter Web sites for the newspaper chains. Amen to all of this!

Dear Colleague:

We are at the halfway point in our “100 Days of Change” program and I want to share with you the progress that we’ve made on ideas that fundamentally change the way we do business. Many of you have taken the time to write to me or to the various task force leaders with your thoughts and suggestions, and I’m extremely pleased by the level of energy and cooperation I’ve seen across our newspaper company.

One inescapable conclusion of our study is that our cost base is significantly out of line with the revenue available in our business today. It is equally inescapable that during good times our industry developed business practices that were at best inefficient. For example, all newspapers look pretty much alike, and yet they are not similar enough to allow for efficient production or common content sharing. This must and will change. Another example is that while we have a tremendous opportunity to continue growing our advertising business with small customers, we cannot afford to do so by calling on every advertiser in person every other week and then having a team of artists build and rebuild their ads. We must and will learn to use outbound telemarketing and self-service ad platforms more effectively. I’m confident we can move to rationalize our costs without impairing our ability to give our readers and advertisers the best news and information products in our markets. Even with the cost reductions we are making we have far more resources devoted to reporting local news and information than any other local media outlet. Thus, each of our management teams is at work to complete a fundamental restructuring so we can turn our full attention to product innovation and revenue growth.

Next, we have a revenue and business model problem as opposed to an audience problem. Yes, it is true that fewer people read a newspaper on any given day today than they did in the past, but with the proliferation of media options, consumption of individual media types isn’t what it once was and probably never will be again. Our audience is still the largest of any local news and information media outlet. And when combined with newspapers’ Internet audience, our audience has actually been growing in recent years while our revenue has been declining. So it is our business model that must change in several ways.

We believe we must begin to provide greater differentiation between the content of our free Web sites and the content of our paid product, be that paid product read in print, on a digital device like Amazon’s Kindle, or online. This doesn’t mean we wall off our Web sites behind a paid barrier. Our sites must continue to be the superior and dominant free Web sites in their markets. This means they must offer the best in breaking news, staff and reader blogs, community databases and photo galleries. In fact, we need to expand the number of reporters, editors and photographers who are running a truly great blog, creating a rich dialogue of opinion and data sharing. We must do a far better job of reaching out to prominent citizens in our communities, those who already have a blog and those who don’t, and providing them a prominent platform to state their views. We must develop a rich network of correspondents to help us grow the deepest hyper-local community microsites in our markets. We must do a better job of linking to other great sources of content in our communities. And we must put staff resources behind building those channels of interest that have the greatest potential: those built around pro sports teams, moms and high school sports, to name a few. Exactly how much paid content to hold back from our free sites will be a judgment call made daily by our management, whose mission should be to run the best free Web sites in our markets without compromising our ability to get a fair price from consumers for the expensive, unique reporting and writing that we produce each day.

We must continue to ask readers to pay more for their subscriptions. Our print subscribers don’t pay us enough today that we can say they are actually paying for content. Rather, we only ask readers to pay for a portion of the cost of printing the paper on newsprint and delivering it to the reader’s doorstep. We must gradually, but persistently, change this practice. We ask our readers to pay for their subscriptions on the Kindle today, and we must begin doing the same thing on the iPhone and other advanced smart phones and reading devices that allow us to create a user experience worth paying for. We also need to make our paid product available through the Internet for those who prefer to read it that way. And we must innovate to constantly enhance the reading and advertising experience on these platforms.

Our sales forces must make a transformation similar in scope to the one that IBM underwent in the 90s when it went from a mainframe selling culture to a strategy of being true IT consultants to their clients, even selling them non-IBM products when warranted. In our case, we must fully make the leap from simply selling pages to selling audiences, and in doing so be able to sell packages of products, some of which won’t be our own. The best of our Hearst Newspapers colleagues are already doing this, combining our offerings with those of Yahoo!, Google, MSN, AOL, Ask.com Yahoo! HotJobs and Zillow and networks of local Web sites that we have assembled. All of these products are in our portfolio today. Our advertising task force has created a three-month course of transformational instruction built around a massive sales contest that each of your markets either has launched or is launching. I’m confident that most of our reps will emerge from this process set on a path to become topflight, consultative sellers of audience.

One final overarching thought emerges from our look at advertising sales: we must use third-party printers in all of our markets in order to significantly add more color to our products, not so much for our readers’ needs, but to be more competitive in the battle for advertising dollars in a high-definition world.

Finally, while our savviest advertising customers know that our products still work well for them, as do our most passionate readers, we have done a poor job of telling our story. This becomes even more important as we change our business model. Our communications task force has developed a wonderful new campaign that begins to put us back where we should be—on the offensive about the vital role we play in the politics, social lives and commerce of our communities. We’ll have samples of the campaign available next week on 100DaysofChange.com.

Please discuss these ideas with your colleagues, your managers, our customers and our readers, and let us know what you think. Our goal is to emerge from the “100 Days” with a cost structure we can build our future on and a business model that seeks, by 2011, to get more than 50 percent of our revenue from circulation revenue and digital advertising sales—two areas of our business that we know we can grow and grow consistently as this recession subsides.

I know these are difficult times for those in businesses like ours that are buffeted by so many forces. Yet I know that we have the wherewithal to emerge from this recession with a changed business, yes, but one that is back on a path of growth. Thank you again for your commitment to see us through this journey.

Best regards,

Steve

“Shovel project” list and $ for our county, cities

images1Nevada County has received word that almost $2.1 million is on its way for road improvements, including $1.4 million for the county, $341,000 for Truckee, $273,000 for Grass Valley and $65,000 for Nevada City as part of the Fed’s stimulus package, county executive officer Rick Haffey said in his Friday memo to the rank and file.

Anticipating further funding, Haffey also sent a letter to our U.S. Congressman Tom McClintock outlining a list of potential “shovel projects” for the county and cities of Grass Valley, Nevada City and Truckee. It is the first complete list for all the local governments.

The long-pursued Dorsey Drive interchange is included in the “wish list.” The total comes to $9.12 million.

“We believe that these projects are not only important as improvements to the community’s infrastructure but also would serve as an important economic stimulus for the region,” Haffey writes on behalf of the county and cities. “We look forward to your support and assistance.”

Here’s the complete list: Local “shovel projects”

Well-known Realtor also owns the Holbrooke

On the landmark Holbrooke Hotel in Grass Valley closing, the owners of the partnership also included a prominent local real-estate agent, Cheryl Rellstab, and longtimer Michael Nudelman, among others.

Rellstab et al. first listed the hotel for $4.4 million in October, according to Craigslist and Loopnet.com, and she was the listing agent. At first the group was reluctant to confirm the sale, despite the Internet listings.

It would be worthwhile to dig a little deeper into the financing and leveraging of the deal. Did any leveraging exacerbate the closing?

The National Hotel in Nevada City has been up for sale for years, and it also impacted by the deepening recession. But unlike the Holbrooke,  it is in no danger of closing.

Connecting the dots in local crime reporting

I read in The Union on Thursday where two residents of a local halfway house remain in county jail after one of them allegedly stole an ATM card to buy drugs.

Another day in Grass Valley. But if you dig deeper, you notice one of them was named Ian Seefelt, 26 — who’s been a “revolving door” offender. He was arrested on suspicion of grand theft, violating probation and using the personal information of another for unlawful purposes.

Does that name ring a bell? It does with law enforcement (who were shaking their heads at the Rood Center on Thursday) as well as a lot of residents.

Why? Seefelt was arrested in 2006 for allegedly stealing an elderly women’s purse in the Pine Creek Shopping Center, a case that drew considerable attention because it was so evil. The Union wrote about the incident.

“Seefelt has had brushes with the Grass Valley police. Five prior incidents were either theft- or drug-related,” the article said.

I have the same question that many people in law enforcement do: Why do we keep “catching and releasing” people such as Seefelt? Why aren’t we rehabilitating him? Where is the prosecution and judicial system breaking down?

These are still relevant questions. Tough questions can make the elected/appointed officials uncomfortable, but we have to keep asking and hold them accountable.

P.S.: I’m glad law enforcement and the DA’s office nabbed Thomas Hastert  in Santa Cruz. I still wonder why it didn’t happen last Friday, when the charges were filed.

Google leeches off the media when it’s down

Here’s audacity for you: On the same day the Rocky Mountain News closes just shy of its 150th anniversary, Google is adding advertisements to Google News searches.

Google doesn’t pay to create the content, mind you;  for-profit news organizations do. But Google will get money from the ads that go beside the stories.

“Trust me on this one, this one will kick up some dust,” writes longtime Google watcher John Battelle on his blog. He referred to a “***t storm,” in fact. 

It’s a real slap in the face to newspapers that pay for news gathering resources that Google is profiting from. In this recession, Google is hurting too, so it’s going to be an ugly scene.

Here’s some important background: Google was sued by Agence France-Press in 2005 for copyright infringement just after it launched Google News.

The Paris-based agency claimed the search giant was posting news stories and photographs without permission. The two entered into a licensing deal in 2007, ending the dispute.

This time around, news groups are likely to challenge Google on a wider scale — or risk losing money out of their own pocket. It comes just as many newspapers are up for sale or threatening to fold.

Newspapers have to share the blame: I never understood why they weren’t more aggressive with Google in the first place.

Meanwhile, it’s sad to see the Rocky Mountain News close. 

My family and I lived in Denver in the ’70s, and I remember the newspaper war between the two papers. For a while, their circulation was running neck in neck. Dallas had a similar newspaper war between two strong dailies.

The loser here is the public. I encourage you to read Ben Bagdikian’s book “Media Monopoly,” more relevant now than ever. (He was a professor of mine at Cal and later an acquaintance).

Here’s the silver lining in this dark cloud: When this shakeout is complete, more competition than ever will exist. Online ventures, with professional, not arm-chair talent, will fill the void.