San Jose Mayor Reed folds on pension initiative

San Jose Mayor Reed folds on pension initiative

chuck.reedIn a disappointing indicator of the challenges facing public pension reform, outgoing San Jose Mayor Chuck Reed has shelved his statewide ballot initiative designed to address the problem.

The mayor blames a time crunch and unappealing language used in Attorney General Kamala Harris’ ballot summary, according to The San Jose Mercury News. Reed now hopes supporters will target 2016 for the proposed amendment, which would enable city officials across California to renegotiate pension contracts with public workers and retirees.

But opposition to Reed’s plan runs deep. In addition to a full-court press from organized labor, pension reform faces stubborn opposition from California’s courts. Unions argue that an economic recovery will make the state’s often preposterously exorbitant pension packages affordable again. Santa Clara Superior Court, however, has ruled that elected officials cannot alter contracts even on the narrow basis of future years of employment.

That’s not just bad news for California. The Brookings Institution, hardly a Republican bastion, recently hosted Reed, a Democrat, for an inside-the-beltway keynote presentation on the dire public pensions situation faced by municipalities across the country. Opening the event, Brookings’ Matt Chingos underscored what’s at stake: a $3 trillion public pensions shortfall nationwide.

As the Brookings presentation made clear, a hole that big cannot be plugged simply by shifting costs or restricting reform to new employees. Nor can cities bridge the gap by hacking away at budgetary line items that benefit all.

Vallejo, which went bankrupt in 2008, has owed that a return to bankruptcy isn’t an option. Yet that city’s attempt to meet budgetary requirements without touching pensions — thanks to CalPERS threats of costly legal action — led to a fiscal dead end. As CNN reported:

“Vallejo’s police and firefighters can retire at age 50 with as much as 90% of their salary — for life. Public safety workers who retired in the last five years have average annual pensions of more than $101,000. And the pension costs are expected to continue to rise, with a projected increase of up to 42% over the next five years.”

The result? Not only ballooning costs, but drastic cuts in city services, putting citizens at risk. Crime is up, roads are deteriorating, and residents are voting with their feet.

Plus, on the heels of these daunting details comes news that Moody’s expects San Bernardino and Stockton, both of which declared bankruptcy in 2012, to face the same dark future as Vallejo.

Momentum

As bad as the situation may seem, however, there’s some reason to expect a shift in momentum. The pensions debacle is sharply dividing Democrats.

That’s good news in a non-partisan sense because, if you need change on a major statewide issue, you need more support than the minority Republican Party alone can deliver.  And Democrats tend to support the status quo because it’s largely the result of their extended dominance of California politics.

On prison reform and other issues, Gov. Jerry Brown has risked the ire of some of his fellow Democrats. Despite the powerful influence of the union lobby, it’s now politically acceptable for members of any major California party to support contract renegotiations as the best path to pension reform.

All it would take now for dramatic change in that direction is a critical mass of support among officials. Once that support — even tacit support — outweighs the risk of union opposition, get ready for swift movement.

On a more bracing note, the continued collapse of cities’ fortunes will hasten change along. No degree of economic recovery can outpace and compensate for the harm coming to municipalities forced by cuts to basic services, multiple bankruptcies, and the flight of productive, law-abiding citizens from their jurisdictions. All it takes is a few shocking news stories — the kind that attract national media and political attention — to cast union arguments for luxurious pensions in a deeply unflattering light.

It’s sad to imagine that kind of pain is the price Californians have to pay for a brighter future. But if that’s what opponents of pension reform demand, that’s what they’ll get — along with the responsibility for such a misguided agenda.

57 comments

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  1. Ulysses Uhaul
    Ulysses Uhaul 19 March, 2014, 21:28

    Doomers…….

    Time to shave your pensions to save the world!

    Reply this comment
  2. SeeSaw
    SeeSaw 19 March, 2014, 22:48

    Two percent of CalPERS retirees earn $100,000 or more. Ninety-eight percent of CalPERS retirees earn less than $100,000. I don’t know what the individual facts about each, respective, pension are, but I expect that they were earned according to the rules put forth during their respective courses of employment. If not, then I expect the administrators of the plan to take action to set things straight. The anti-public sector pundits should just butt out! The people that spend every night in their cars and spend their days looking for food banks are the people you should be writing about. The pensioners are doing fine and will be doing fine until the day you are no longer here.

    Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 20 March, 2014, 11:44

      And that 2% accounts for over 20% of expenses…so when that 2% gets to 10% CalTURDS entire budget will go to them. Nice try. FAIL. Now go watch a movie and leave this to the big bos.

      Reply this comment
      • SeeSaw
        SeeSaw 20 March, 2014, 12:35

        Is that 20% of payroll or 20% of total budget, Rex? There is a difference you know. The bulk of CalPERS annuitantsare State retirees, Rex–the State’s line item for CalPERS is 3% of the State’s total budget. Get real, and stop the “spinning”.

        Reply this comment
        • Rex the Wonder Dog!
          Rex the Wonder Dog! 20 March, 2014, 19:13

          And CalTURDS is not the ONLY retirement system in the state.

          READ for once, that 2% accounts for 20% of the CalTURDS annual out going pensions. I know math is hard for you, but times both numbers by 5 and see what happens.

          Reply this comment
          • S Moderation Douglas
            S Moderation Douglas 20 March, 2014, 20:24

            Scratch twice for “two”.

            You just flunked a fifth grade math “word problem”.

          • SeeSaw
            SeeSaw 20 March, 2014, 21:34

            I use CalPERS as the example of all pensions, because it is the largest pension system in the U.S. I haven’t studied any chart that shows how much total outgo is from the 2% vs. how much total goes to the 98%. Perhaps you would like to look that up and let me know. My bet is on the 98%.

          • Rex the Wonder Dog!
            Rex the Wonder Dog! 21 March, 2014, 10:02

            Trough feeders, you can lead them to the water, but can’t make them drink 😉

  3. Logic
    Logic 19 March, 2014, 23:04

    “The anti-public sector pundits should just butt out!”

    Really? Public sector costs are paid with our tax dollars, so by no means should we “butt out”. Do your homework, try looking into the percentage of our city’s budget that goes towards these costs and how that % has changed and will continue to unless something is done. Please open your mind to both logic and basic math. Oh, and never tell any taxpayer to “butt out” of the public sector!

    Reply this comment
  4. SeeSaw
    SeeSaw 20 March, 2014, 01:04

    Taxes are the price we pay to live in this society. If you don’t like it, you can move.

    Reply this comment
    • Logic
      Logic 20 March, 2014, 11:02

      Again, you miss the point. They are taxes I and others have paid, so we are most definitely interested (and should be) in how they are used. When a pension system is created that is completely unsustainable in the future, there is a problem. If you cannot agree with the simple concepts above, then you are beyond reasoning with.

      Enjoy your Utopia…until it’s gone.

      Reply this comment
      • Rex the Wonder Dog!
        Rex the Wonder Dog! 20 March, 2014, 11:46

        seesaw doesn’t care about YOU or YOUR taxes, all she cares about are public employee pension scams.

        Reply this comment
        • SeeSaw
          SeeSaw 20 March, 2014, 12:12

          No so, Rex. I mean no disrespect, and got a litte more loose than my usual on this one–I am just getting so sick of the people like you who whine about everything public sector and are so resistant to just stopping sometime to appreciate the fact that your destiny was to have been brought into this world, or relocated to, our country. Don’t you ever take time to, “Smell the roses”, for gods sake!!!!!!!!!!!!!

          What is a public employee pension scam? I participated according to the rules and the laws as set up by the Legislature. When I started in the public sector, there was no SS and no CalPERS at my municipality, so you can’t accuse me of going to work in the public sector because of a pension. There are certain individuals who might try to scam the system, but the system is fine–CalPERS is sitting on $285 billion right now. I don’t think you need to be concerned about CalPERS. There are plenty of people on our streets right now who need your attention.

          Reply this comment
          • Logic
            Logic 20 March, 2014, 13:55

            My issue would certainly be with the Legislature that approved such a pension system and not with the typical worker who will receive it (scammers being the exception).

            Now, if you believe that CalPERS is solvent and we have nothing to worry about with regards to unfunded liabilities, then our discussion is done. Since we disagree on the primary issue, then of course we will disagree on what needs (or doesn’t need) to be done.

          • Rex the Wonder Dog!
            Rex the Wonder Dog! 20 March, 2014, 19:08

            CalTURDS is a scam, for losers like seesaw o try to rip off others.

          • Mr. Bubble
            Mr. Bubble 21 March, 2014, 15:13

            If the public pension system is fine, then so are our roads, bridges, schools, and other public services. Reports that our schools are crumbling must just be a mirage and I’m glad that it’s very easy to cut the education budget if the state needs some extra cash. BTW I assume you will be happy to pay $4500 a quarter for your kid’s tuition at UCLA if you want to send him to college. UC has a very big pension problem too.

          • Rex the Wonder Dog!
            Rex the Wonder Dog! 21 March, 2014, 18:20

            Is UC really $4500 a QUARTER????? OMG, tell me that is a typo!

            When I went to Cal State it was $150 a semester when I started, and community colleges were free.

        • Mr. Bubble
          Mr. Bubble 22 March, 2014, 00:15

          Rex, it now costs $1400 for the tuition for ONE class at CalStateLA. When I took accounting classes at CSULA during the 90’s the tuition was about $300 for one 4-unit class. Read this letter from Mark Yudof about the need for pension reform at UC. (His position was recently filled by Janet Napolitano).

          http://www.today.ucla.edu/portal/ut/yudof-letter-uc-employment-benefits-168517.aspx

          Reply this comment
      • SeeSaw
        SeeSaw 20 March, 2014, 12:38

        I am among your group. I pay taxes–perhaps that is a surprise to you. I am not on this earth to solve pension problems–we have actuaries and investment officers to do that for us. Yes, we do live in Utopia, don’t we–America is the only place to be.

        Reply this comment
      • SeeSaw
        SeeSaw 20 March, 2014, 21:40

        I don’t work on these concepts every day like the professional actuaries and investment officers do. Perhaps if you were trying to convince those people instead of me, they might assure you that you are stressing yourself, needlessly, over something they are charged to handle.

        Reply this comment
        • Mr. Bubble
          Mr. Bubble 21 March, 2014, 16:40

          Those people don’t need convincing. Investment people know that the stock market is not going to grow fast enough to pay all those big pensions. Buffett warned of the pension “tapeworm” and the coming pension battles ahead. And I’m not stressing too much–pensions will be cut like they were in Detroit and Central Falls, RI. CalSTRS’ insolvency will mean BIG cuts to the education sector and not higher taxes. Prop. 13 is still basically untouchable in Calif.

          Reply this comment
          • SeeSaw
            SeeSaw 21 March, 2014, 17:33

            Investment people knew all about those scam mortgages that they pushed too. I am fully aware about the tuition costs of going to college in CA. I have a grandson graduating from UCLA in June–his baby boomer parents have sacrificed a lot for him.

      • Mr. Bubble
        Mr. Bubble 21 March, 2014, 15:07

        Most public employees simply can’t grasp the fact the pensions are similar to 401K plans in that they involve risk, since both pensions and 401K’s are invested in the same stock market. There was a story in cnnfn.com about a fireman whose pension was reduced from $4000 a month to $3600 a month and he also lost his health insurance, so now he’s trying to get a part time job, even at Wal-Mart–he learned about stock market risk the hard way.

        Reply this comment
  5. billybs
    billybs 20 March, 2014, 04:35

    “Butt out” typical Leninist rant. SeeSaw, How is the Kessler?

    Reply this comment
  6. Ted Steele, CEO
    Ted Steele, CEO 20 March, 2014, 06:49

    Isn’t it funny that when the truth gets printed on a ballot statement the author scurries away like a cockroach in the light?

    Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 20 March, 2014, 11:46

      Teddy, your “truth” is that pigs can fly 🙂

      Reply this comment
      • Mr. Bubble
        Mr. Bubble 21 March, 2014, 16:43

        Actually pigs can fly with a little CGI. (See the you-tube docu “Life After Pi” if you want to learn about a group of workers under some real financial pressures). Karen Lewis of the Chicago Teachers’ Union has some strange ideas about the truth, like when she says that pensions are affordable and the city really has the money stashed somewhere.

        Reply this comment
  7. Ulysses Uhaul
    Ulysses Uhaul 20 March, 2014, 08:04

    Don’t you love the Bubbas who post vile against government workers who put in upwards of 40 years of honorable public service.

    These sick snippets are a disgrace.

    Saw……..your a true defender of those virtues true Americans cherish. Keep up the good work.

    Teddy…..The Sage of CWD and always on target.

    Reply this comment
    • Logic
      Logic 20 March, 2014, 11:04

      Your comment must be meant for a different string, as I have read no such posts.

      My sense is you don’t care what these costs are and how they impact both future tax rates and the ability to spend $’s on other things. As long as I get mine, right?

      Reply this comment
      • S Moderation Douglas
        S Moderation Douglas 20 March, 2014, 11:49

        Illogical. Your sense may be biased.

        We all care about tax rates and how government monies are allocated.

        Uhaul is talking about vilifying government workers. Public sector workers are not the cause of tax increases nor responsible for the greatest recession since the great depression.

        “I got mine”?

        Public sector workers have voluntarily negotiated literally hundreds of concessions in the last five years in wages AND pension benefits and costs. And there will be more.

        Studies have shown consistently that the compensation of public sector workers…INCLUDING the cost of pensions is *roughly equal* to equivalent private sector workers.

        It’s not just a question of fairness or envy. Adequate compensation is necessary in order to attract and retain qualified employees.

        Reply this comment
        • Logic
          Logic 20 March, 2014, 14:04

          “Studies have shown consistently that the compensation of public sector workers…INCLUDING the cost of pensions is *roughly equal* to equivalent private sector workers.”

          Really? If you can find such a study, I would be interested to see if it includes other intangibles, such as job security and # of hours worked.

          As far as voluntarily negotiating concessions…in the private sector, that’s called not getting raises, reduced benefits, rising share of health care cost, etc. There is no negotiating, but rather the supply/demand mechanism at work. How many applicants are there on average for a typical public sector job?

          Reply this comment
          • S Moderation Douglas
            S Moderation Douglas 20 March, 2014, 16:42

            ” How many applicants are there on average for a typical public sector job? ”

            Not sure what a typical public sector job is. Or why it matters, but: in 2011, McDonalds had a nationwide recruitment. They hired 62,000, out of more than a million applicants.

            In 1975, IBEW Contra Costa County had one apprentice opening and wanted to put two more on a waiting list. Out of over six hundred applicants, more than half were eliminated by a math and reading comprehension test that was roughly fifth grade level.

            So the question is, how many *qualified* applicants? Not as many as you think. And, how many qualified applicants pass the written tests and oral evaluations, then, at the hiring interview, turn down the job? More than you know. When I retired, the man who replaced me decided after less than six months to go back to the private sector.
            ……………………..
            ” not getting raises, reduced benefits, rising share of health care cost, etc. ”

            In case you weren’t paying attention, that’s what most state employees and many local employees have experienced since 2007. “Furloughs” ring a bell? They were first imposed, THEN negotiated extensions.

            “Powerful Public Employee Unions” is an oxymoron. We would all like to have raises, at least enough to keep up with inflation, but the unions knew during the Great recession that just wasn’t feasible.
            …………………
            There are four or more studies that show “roughly equal” compensation. They all include the cost of pension and health benefits AND the value of sick leave and vacation time.

            There is one study, as you suggest, which claims that when properly accounting for the value of pensions and retiree health care, government workers “may be” overcompensated by “as much as” 30%. There is a follow up study, of course, which debunks this. Take your pick.

            And my personal favorite, Capitol Matrix, which also calculated a 30% advantage for public workers. Previously, when it’s author was questioned about his OWN state salary and $100,000 plus pension, stated: “We could have made a lot more money in the private sector.”

            Both these studies indicated about 15% of the public advantage was for job security. They tend to invoke Adam Smith and they have graphs AND algorithms. But, among other flaws, they make the fatal error of comparing the proverbial apples and oranges.

            GIGO

  8. billyBS
    billyBS 20 March, 2014, 12:37

    Vladimir Lenin is someone Seesaw she should read. She will find a great ally. She represents an America that does not exist yet, but has been a dream of the followers of Lenin for almost a century. He believes the worker governed state is sacred and all other viewpoints are are inferior. Private capital should not exist. It breeds the robber barons so eloquently described by some posters. Private capital can be confiscated by the state to reward those most deserving like Seesaw. I am sure Lenin would love the power of the Cal gov t unions and most definitely have their support, in his pursuit of utopia. He would agree that those with 40 years of govt service are workers to be held in esteem, and derive special benefits from the state.

    Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 20 March, 2014, 13:16

      BS

      You’re attacking a straw man.

      I’ve never seen anything in any of SeeSaw’s post suggesting any such thing.

      She is not claiming any special privilege or power. She usually just says that she, and others of US are performing meaningful and necessary jobs and deserve to be fairly compensated.

      A public sector clerk or mechanic or electrician or tree trimmer is just as much a “productive” member of society as a private sector clerk, mechanic, electrician, or tree trimmer, AND just as much a *taxpayer*.

      She did her job, earned her pension, and is neither responsible for the financial meltdown, nor guilty of “stealing” from the next generation.

      Reply this comment
      • Mr. Bubble
        Mr. Bubble 21 March, 2014, 15:24

        Good luck to some of those public sector workers when they try to collect on those pensions–in Chicago they are only 25% funded. In Calif they are only 60% funded. And why do K-12 teachers complain about budget cuts? The money to pay pensions has to come from somewhere. That piece on Meredith Whitney warning about municipal bond defaults on “60 Minutes” has a lot of relevance now.

        Reply this comment
  9. billyBS
    billyBS 20 March, 2014, 14:29

    S&M Dougie,
    Hee is a fact for you. Stockton is offering Franklin Templeton $95000 on $34000000 in bonds. My 401k is invested with the Franklin bond fund: so I am supposed to take a haircut in my 401k, and smile when I get a tax increase shoved you know where, while the pension benefits stay the same for the sacred govt worker. Screw ’em.

    Reply this comment
  10. S Moderation Douglas
    S Moderation Douglas 20 March, 2014, 15:26

    Government workers are no more sacred than anyone else. In this case, they are a commodity. If the city needs to buy a car or a hundred yards of asphalted concrete, the price is the same whether the city is flush with money or flat broke.

    If the city needs to hire an electrician, it’s thirty bucks an hour, plus benefits. And pensions are part of the benefits. It’s not personal, it’s business. Nobody is trying to rip off you or your grandkids. If the city can’t, or won’t, pay the going rate, the electrician goes elsewhere. Just like if the city doesn’t want to pay full price for a car. Nothing personal, you don’t want to pay, you don’t get the car. City contributions to CalPERS are part of the contract. They can’t decide “we won’t pay CalPERS because we want to spend our money elsewhere” anymore than they can refuse to contribute the required percentage to Social Security or Medicare.

    Courts in the San Jose case have decided. You can’t unilaterally reduce pensions, but you CAN reduce salaries to compensate for the higher pension costs. In this case, tell the electrician we will pay ALL the normal benefits, but only twenty five bucks an hour instead of thirty.

    What does the electrician say?

    Screw ’em

    Reply this comment
  11. Ted Steele, Manager
    Ted Steele, Manager 20 March, 2014, 15:47

    Well said Douglas—- and frankly given that other courts have made the same ruling exactly I do not understand why the cities don’t bargain to cut salaries and accept the fallout, job actions etc. It’s not like this is a good time for a public employee jiob action or anything—- I always wonder why cities don’t go that route instead of all of these feeble initiatives and OBVIUOSLY bad lawsuits that NEVER win???

    Discuss-

    Reply this comment
    • S Moderation Douglas
      S Moderation Douglas 20 March, 2014, 16:50

      As I recall, Stockton, and probably other cities, did just the opposite. When PEPRA passed, they hurried to fill police vacancies BEFORE the new pension rules took effect, because they could not compete for qualified officers without competitive pension benefits.

      Like San Jose, Stockton officers were leaving in droves. (because U-Hauls were not available, I guess)

      Reply this comment
    • SeeSaw
      SeeSaw 22 March, 2014, 20:25

      Some cities have done more than cut salaries. They have eliminated the jobs of several employees–20+ years of service, for some, now nothing more than a piece of paper!

      Reply this comment
  12. NTHEOC
    NTHEOC 20 March, 2014, 16:20

    LOS ANGELES – Departing Time Warner Cable Inc. executives are in line to receive “golden parachute” compensation totaling around $135 million as part of Comcast Corp.’s $45 billion acquisition of the cable
    Time Warner Cable Chief Executive Rob Marcus is in line to receive $79.9 million, Chief Financial Officer Arthur Minson Jr. is set to get $27.1 million, Chief Technology Officer Michael LaJoie would get $16.3 million and Chief Operating Officer Philip Meeks is to receive $11.7 million.
    ——————-
    Private sector corporate pigs making out like bandits again! Yet these pig capitalists corporations continue to rape the private sector workers of their pay and benefits.

    Reply this comment
    • Mr. Bubble
      Mr. Bubble 21 March, 2014, 15:26

      I thought we were discussing exorbitant public pensions. BTW CalSTRS is a big supporter of Wall Street. 15% of its pension fund is invested in hedge funds.

      Reply this comment
  13. NTHEOC
    NTHEOC 20 March, 2014, 16:26

    It’s sad to imagine that kind of pain is the price Californians have to pay for a brighter future. But if that’s what opponents of pension reform demand, that’s what they’ll get.
    —————–
    What a crock! That is one of the most absurd comments i have read lately. Can you get anymore dramatic with your lying misguided comments? You lost again so take your medicine and move on.

    Reply this comment
  14. NTHEOC
    NTHEOC 20 March, 2014, 16:30

    No logic says,
    Oh, and never tell any taxpayer to “butt out” of the public sector!
    ——————-
    “BUTT OUT” And as a taxpayer myself i will tell you that!!!!

    Reply this comment
  15. S Moderation Douglas
    S Moderation Douglas 20 March, 2014, 17:58

    “The pensions debacle is sharply dividing Democrats.”

    Dividing Republicans, also. The most dire problems are at the local level, mostly because of police and fire salaries and pensions.

    Employee compensation is typically sixty to eighty percent of local budgets, so if tax receipts fall drastically, or pension costs increase, or both, there will be big problems.

    The most “egregious” examples usually given are public safety pensions, as if they were typical of all public sector employees. BUT, there are still a lot of (primarily) Republicans who advocate eliminating pensions and going to a 401(k) program…….

    EXCEPT …….

    for police and fire.

    How much is a police officer worth? Many state and local safety workers got raises of 25% or more ABOVE inflation in the period 2002 to 2007. Are they overpaid now, or were they underpaid before?

    I tend to think a police officer is worth at least as much as an electrician or plumber.

    Reply this comment
    • Donkey
      Donkey 20 March, 2014, 18:09

      When your toilet is clogged I bet your first thought is to call the overpaid costume clad cop to clean up your s_it!! 🙂

      Reply this comment
  16. billybs
    billybs 20 March, 2014, 18:34

    Note, Seesaw is absorbed with Lenin and this Vladimir is hotter than Clooney.

    Reply this comment
  17. SeeSaw
    SeeSaw 20 March, 2014, 21:46

    Speak for yoursef billy. Those are your cohorts–not mine.

    Reply this comment
  18. billybs
    billybs 21 March, 2014, 03:51

    How is the Kessler?

    Reply this comment
  19. Ted Steele, CEO
    Ted Steele, CEO 21 March, 2014, 07:08

    Childlike comments.

    Reply this comment
  20. SeeSaw
    SeeSaw 22 March, 2014, 09:15

    The village idiot thinks he got the last word…”Pit, meet kettle”–Ha-Ha!

    Reply this comment
    • Rex the Wonder Dog!
      Rex the Wonder Dog! 24 March, 2014, 00:31

      Pot, meet kettle…Village idiot?? Please, you trough feeding scoundrel!

      I know your hubby loves it when he sends you off to the movies, so he can have some peace and quiet and be free of your non-stop nagging…..

      Reply this comment

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