Pensions Before The Poor!

FEB. 28, 2011


For years, officials in California have used accounting gimmicks, stimulus funds and the state credit card to keep the safety net intact.

But experts say the state may have run out of tricks.

Facing a $25 billion state budget shortfall, Gov. Jerry Brown has proposed to cut hundreds of thousands of parents and their children from the welfare rolls on July 1. Additionally, law enforcement officials say the governor’s proposal to transfer thousands of convicted felons and parolees to county jails and oversight will “wreak havoc” on the criminal justice system.

“I don’t think there is any question the day of reckoning has arrived,” said Paul McIntosh, executive director of the California State Association of Counties, which has devoted a special section of its Web site — “Counties in Fiscal Crisis” — to educate officials about the situation.

“We have known this date was coming for quite some time,” McIntosh added. “As Gov. Schwarzenegger liked to say, ‘We’ve been kicking the can down the road.’ We’ve been doing that for the last several years as opposed to making the very difficult decisions to balance the state budget.”

Under the budget proposed by Gov. Brown, 115,000 families with 230,000 children are slated to be cut from the CalWORKS program on July 1.

Although Schwarzenegger made similar proposals to make significant cuts in the CalWORKS program, Frank Mecca, executive director of the County Welfare Directors Association of California, said officials are taking the threat more seriously this year.

“Hundreds of thousands of children who are already poor would be seriously affected under this cut,” Mecca said. “In particular, we are greatly concerned children will become homeless — and we don’t believe that’s an exaggeration.”

However, Adam Summers, a policy analyst at the Reason Foundation in Los Angeles, said the government often makes exaggerated claims to protect their budgets.

“I think they may be forced to make some cuts, but they tend to exaggerate those cuts,” Summers said. “It’s kind of like the Washington Monument Syndrome. They threaten to cut services to the poor and the services the public values the most to scare the public rather than address the lower-priority programs that really should be the first to go.”

Brown Proposals

Gov. Brown has proposed a $1.5 billion cut in the CalWORKS program. The proposal calls for a  48-month time limit on benefits and a 13 percent cut in the monthly checks. In Los Angeles County, Department of Public Social Services officials estimate 59,000 to 62,000 children in 34,500 families would lose their CalWORKS benefits effective July 1 because the 48-month time limit would be retroactive to 1998.

The proposal comes as the number of people seeking welfare benefits in Los Angeles County has soared since the recession began. The number of indigents collecting $221 monthly General Relief checks has nearly doubled from 61,406 in 2007 to 107,452 last year. Likewise, those receiving Food Stamps shot up from 641,215 to 978,920. The number of homeless families getting CalWORKS benefits increased from 6,341 in November 2007 to 9,294 in November 2010.

“If half the families the governor proposes to terminate from the CalWORKS program became homeless, the total number of homeless families in Los Angeles County would triple from the current level, which is already at a record unconscionable level,” said Phil Ansell, director of program and policy at DPSS. “The county of Los Angeles has no ability to absorb the fiscal impact of such a curtailment and no ability to address the resulting human suffering.”

Worse Than the Great Depression

Andy Bales, president of the Union Rescue Mission on skid row in Los Angeles, said the number of homeless people – especially single mothers with children – is growing by “leaps and bounds” and much of the burden is falling on nonprofits and the faith community.

“Without a real economic turnaround, we are already in a situation that compares to the Great Depression from everything we can see here,” Bales said. “In 1933, we provided 133,000 meals and fed 42 percent of the hungry in L.A. There were 1.2 million people in L.A. then. Now, there are 3.6 million people. That’s three times the size we were in the Great Depression. But the URM provided 1.4 million meals last year, or 10 times more than the number of people we fed during the worst year of the Great Depression.”

In Sacramento County, the grand jury noted recent budget cuts alone have put government operations under “great duress” and that the “safety net is in tatters.”

Chandra Walker, the chief executive officer in Santa Barbara County, says the combination of the state deficit, stagnant sales and property tax revenues and rising pension and salary and benefit costs have created “the perfect storm of a crisis in Santa Barbara County.”  At a time when the county has exhausted its reserves attempting to maintain service levels, Walker says the governor’s proposed cuts couldn’t come at a worst time.

“This year, given the fact we’re not seeing any increases on the revenue side, we are seeing retirement costs increase, which is exacerbating the crunch we find ourselves in and the need for really severe reductions,” Walker said.

Marin County Administrator Matthew Hymel agreed that rising pension costs are eating up a bigger portion of the county’s budget.

“Our board has agreed current pension levels aren’t sustainable and so we have negotiated a new pension tier for all of our miscellaneous employees, which are nonsworn police or fire, and we are in discussion with our sworn employees as well,” he said.

Marcia Fritz, president of the California Foundation for Fiscal Responsibility, said it’s too bad elected officials didn’t agree to pension reforms several years ago when there was still time to head off the “complete meltdown” the state is now facing. But Fritz said the CFFR is working on a new pension reform ballot measure that is designed to reduce existing pension costs and withstand potential legal challenges.

“CalSTRS needs another $4 billion a year to remain solvent, U.C. needs another $1 billion and the state isn’t setting aside the money required to fund retiree health ($5 billion),” Fritz said. “The governor appears to be putting pensions before poor people. Reform of pension benefits for current workers can reduce these costs.”

Currently, the annual taxpayer tab for California public employees’ pensions and retiree health care is $17 billion and increasing by several billion dollars each year, according to the Legislative Analyst’s Office.  As public pension costs eat up 25 to 50 percent of the payrolls of an increasing number of government agencies throughout the state, Summers said that means less money is available for public services like health, welfare and public safety.

Spending More Wisely

“One thing that strikes me in this debate over the budget is all you ever hear about are two options: You have significant tax increases and significant spending cuts,” Summers said. “What’s missing from the debate is how to do more with the money the government already has.”

Of the governor’s proposed “solutions” to the state’s $25 billion budget deficit, nearly $12 billion would have a direct impact on counties, including $6 billion in major cuts in health and human services programs and $6 billion from the complex realignment proposal, which would shift to the counties state program and financing responsibilities for various public safety, child welfare and adult protective services and mental health programs.

At a recent California Assembly Budget Committee meeting in downtown Los Angeles, county Supervisor Zev Yaroslavsky testified that Los Angeles County and other counties are “extremely concerned” about the realignment proposal.

“If we are not careful, realignment will be less a swap of services and revenues to pay for them, and more a dumping of costly criminal justice and human services from the state’s books to the county’s books, the end result of which will be only to shift the huge deficits that the state has been incurring to counties which can afford them even less,” Yaroslavsky testified.

Likewise, Los Angeles County Supervisor Michael D. Antonovich testified that the state’s budget mess is a result of mismanagement and to address the deficit the governor needs to eliminate excessive spending, reduce the “bloated bureaucracy,” adopt pension reforms and attack the costs and growth of the state workforce, which has grown from 213,794 in 1976 to 348,212 now.

He noted that nearly 19,000 state employees earn more than $100,000 a year. More than 5,000 employees collect more than $200,000 annually. And more than 1,000 employees are paid more than $300,000 a year. Antonovich also recommended the governor adopt the $32 billion in savings outlined in the California Performance Review and across-the-board regulatory relief to stimulate the economy and create jobs.

“Shifting unfunded state mandates to local government is a Trojan Horse that will bankrupt local governments and continue the exodus of jobs,” Antonovich testified. “Californians want a competitive state – not a bankrupt state.”

Risky Felon Transfers

Yaroslavsky, Antonovich and Los Angeles County District Attorney Steve Cooley also expressed concerns about the governor’s proposal to transfer thousands of convicted felons and parolees to the counties. CSAC President John Tavaglione has also expressed concern about the governor’s realignment proposal, saying it is “fraught with significant risks for counties.”

“The realignment proposal is a public safety nightmare,” Cooley testified. “Tens of thousands of convicted felons will be on the streets with minimal supervision, threatening all Californians.”

The county already faces a severe jail overcrowding problem. Of the county’s 18,000 inmates, about 90 percent are pre-trial detainees, leaving only 1,800 beds for post-conviction sentencing. Under the governor’s proposal, Cooley estimated up to 9,000 convicted felons would be required to serve their sentences in the county.

“There is no room in the jails for them,” Cooley testified. “Nor is there room for an estimated 6,500 Los Angeles County parole violators who would receive jail terms in lieu of prison under the proposal.”

During the hearing, Yaroslavsky testified the county would have to increase staffing by 600 to supervise these parolees.

“Is the state prepared to pay us dollar for dollar what it will cost us to take over this job?” Yaroslavsky asked. “Keep in mind that your parole officers are public safety officers who are entitled to a public safety pension. Our probation officers are not. Even worse, in its infinite wisdom, the state gave its parole officers the 3 percent at 50 pension benefit, which is breaking the back of many pension systems around the state. We did not. Are we expected to hire the state’s parole officers to handle this new responsibility at salaries and pensions that we don’t currently provide our own employees?”

The Sacramento grand jury also expressed concerns about the realignment proposal, noting the Sacramento police chief recently announced that serious violent crime was up 20 percent and that he believed this was the product of the poor economy and the early release of prisoners.

Curtis Hill, the legislative representative for the California State Sheriffs Association, said jails are full throughout the state and 34 counties have court-ordered caps on the number of inmates they can house.

“This is a dramatic and historic shift in the approach to criminal offenders,” Hill said. “So, if it’s handled in an appropriate manner, it will be a great success story and we’ll get the necessary savings along with the success story everybody wants to see from the state prison system. If it’s not handled appropriately with the funding going to the jail systems, then we are going to see a failure.”

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