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How Would You Solve the Huge Unfunded Debt from Pensions in CoCo County?

Original post made by East County Watch, another community, on Mar 22, 2012

Pensions have gotten so far of hand that emergency services and normal services have and are being affected. The debt needs a logical realistic cure to been controlled. From Districts such as Mt. Diablo Health Care unfunded liability to Con Fire unfunded debt, a solution to get back control of runaway costs are critical to our future public services. Does anyone have suggestions from removing negotiates for union talks to a private panel, taxing everyone more, to eliminating certain departments for their funding, or finally reforming the pension costs?




Comments (22)

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Posted by Say what?
a resident of another community
on Mar 22, 2012 at 9:42 am

The biggest cost inflationary is runaway health care costs. Unless you address that you are not going to solve any long term debt problem on any level of government.

Is your solution to simply put the rising costs on the backs of employees? In that case what you are saying is going forward the middle class is locked into become poorer and they eventually disappear altogether. True 2 class society will exist.

Talking about pension reform in a vacuum serves no real purpose other than a therapy exercise for the poster. Because as the unions go, so does the middle class as a whole. History tells us this. It's the reason many have 40 hour work weeks, weekends, vacations and yes, pensions. Throw away the unions and eventually you will lose all of that, along with safer working conditions and a cleaner environment.

There is a proposal on the table for being taxed more on Confire for 2 primary reasons: 1) flaws in the funding mechanisms from Prop 13 that were never addressed and 2) a collapse in the revenue stream from the housing bubble. Mt. Diablo pulls from the exiting tax rate area, so I'm not understanding the implication you are being taxed more for them.


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Posted by East County Watch
a resident of another community
on Mar 22, 2012 at 1:59 pm

@SW

Do you think that all public employees should be covered by the same care as Obama's health care plan for the nation? This supposid low cost health insurance could save big dollars.


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Posted by Mick L
a resident of San Ramon
on Mar 22, 2012 at 3:08 pm

Our country is the strongest nation and economic engine in the history of Mankind .
I credit the American spirit and work ethic tat promotes individual responsibility and independence. We have many different levels of socio-economic development and success including rich, educated, poor, and uneducated.

Some yearn for socio-economic equality and fully funded medical and pension benefits for all. I do not. Instead I hope for equality of opportunity and lowering the level of assured societal benefits. We should pay, with our own money, for all but the lowest level of medical services. Work hard, save money, invest wisely and spend our OWN money as we see fit. As the government takes our money to redistribute it to those who have less we lower the productivity bar for everyone.

So as we look at solving the the huge municipal and public indebtedness we should strongly consider lessening the taxpayers contribution to benefit packages until they are down to the levels of non-public employees .

We do need to put much more emphasis on "opportunity" for all, which starts (and nearly ends) with education. Our schools are excellent, but over in Oaklland we see school distrtcs that simply do not provide a fair start for thousands of young, poor children. That has to change, and school choice is a proven solution. We need vouchers to allow parents to make these choices and support competition with state and union controlled schools .

Step 1...reduce benefits for ALL new hires at all public levels to the average of the public sector employees. We're talking 401(k) with employer matching up to 3% of salary and $400 contribution to medical/dental plan. Reduce existing staff benefits to these levels as much as legally possible. Harsh treatment, no doubt...
Step 2...evaluate for labor shortages caused by diminution of benefit levels and respond with outreach first, increase salaries only if necessary to solve actual (not anticipated) labor shortages.
Step 3...offer vouchers for all school age children and allow parents to select the schools of their choice.
Step 4...prohibit elected officials from discussions and votes on any labor agreement affecting any employee or group of employees and unions who contributed to their political campaign or office holder funds,

I welcome feedback...


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Posted by Say what?
a resident of another community
on Mar 22, 2012 at 7:02 pm

Mick, you offer a couple of worthy points, but they get lost in the rightwing talking points. Such as:

Equal outcome society. Who are the mysterious people advocating for anything of the sort? Or is that a bit too much embellishment on your part?

Some county employees contribute as much as 25% of their compensation to their pension plan. I don't know of too many places in the private sector where that is going on. Do you?

But first, what is this constant desire to compare a not-for-profit public sector to a for profit private sector? In the private sector, it's bottom line at any cost. To include outsourcing your job overseas if that's what the Board of Directors decides they need to do to maximize profits. That leads to higher unemployment. Leads to putting more people into situations where they need public assistance. Look at the explosion in the food stamp programs as outsourcing of jobs has gone up. At the same time lowering the tax revenue base. When you do that all that nice infrastructure still has to be maintained, but it now has to be done by a dwindling base of contributors. Lower revenues from corporate who shelter offshore coupled with lower aggregate contributions from individuals leads to the predicament we are in today. Revenues at 14% of GDP is no way to run a superpower country because you will soon stop being one.

You want to encourage more of that?

Personally not a fan of a voucher program. It invites for profit entities to pollute and corrupt public education. Eventually you'll have the same problems we have in higher education for profit schools where massive debt is put on the students, but with no measurable improvement in skills. The only people winning in that game are the corporations who own the schools. Why invite that all the way down to K-12 levels?

As for your suggestion that vouchers are a proven solution, there's a Stanford study done a couple of years ago that says you are wrong. Test results are well within the margin of error and on absolutes charter schools actually came in slightly lower.

Not to mention, you'll get drift and eventual discrimination in available schools. Those with the means will get the best and those without will be left with the seconds. That's no way for the US to compete in the global market in the 21st century. We're already getting our butts kicked in math and sciences. Why make it worse for the sake of private sector profit?

Finally, why would you treat public employees as second class citizens and deny them rights or representation? What about the groups in this very forum who have attempted to draft Supervisor candidates to carry their agenda? Are you saying that if those folks were to be successful in electing a person of their choosing that they should then be cut off from access to that person?

How is it any different than what you proposed for the public employees, union or otherwise?


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Posted by East County Watch
a resident of another community
on Mar 23, 2012 at 8:34 am

@SayWhat
"Some county employees contribute as much as 25% of their compensation to their pension plan. I don't know of too many places in the private sector where that is going on. Do you?"

All private sector employees pay their pension including public employees. This is money earned by each one of them. The shortfall comes when the public municipalities are allowed to underfund the program. This is where we get into the problem we are in. As far as the medical, sick days, personal time, etc. benefits are concerned, that is a different subject.

This is where you are missing the boat SW. It's not about the employee. This problem is about municipalities being allowed to mortgage money earned in the form of short pension payments.

There should be an annual or every second year realistic adjustment required by the pension board to the municipalities. If the municipalities knew they had to pay realistic figures up front then the negotiations with public employee unions would also be more realistic. We all know 7.5 % return is so unrealistic. It should be about 3.5-4.5% and that's even pretty high. This correction will not happen now because it will bankrupt half of the local governments and districts. That is not to say that they can be more aggressive in correcting the problem before it's too late.




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Posted by Mick L
a resident of San Ramon
on Mar 23, 2012 at 9:24 am

Komrade What understand the importance of State sponsored services.

It has worked in Russia, China and other wonderful places.

The greatest threat to our People is a State that will not exert total control.

Thank you Brother What ,


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Posted by Say what?
a resident of another community
on Mar 23, 2012 at 10:51 am

ECW, what figures are you looking at to come to the conclusion the CALPERS return estimates are too aggressive?

In the most recent posted report for 2010, the return was 13.3%

So what brought you to the conclusions and/or assumptions you repeatedly make with regard to that pension fund? Are you singling out the years from the real estate crash? Is that the sort of selective fact citation you use? Care to look at a 5 or 10 or 20 year average to keep it honest?

As for your statement that corrections will not happen now, you are wrong. In the news this very week are adjustments to CALPERS targets. Pension reform has been a focal point for Gov. Brown for several months now. The County's 2/3 reduction of OPEB in 6 short years and during trying times is well documented here. This last one is nothing short of remarkable.

I'm surprised in the face of all these facts you try to insist nothing has been done.

Mick, I had you wrong. You couldn't keep it adult past the first post.


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Posted by [removed]
a resident of another community
on Mar 23, 2012 at 11:21 am

Meanwhile, Editor, as we complete annexation of Martinez to Stockton as part of the Great State of Hawaii, we likely need to form a palm tree brigade to better suit a tired village to the resulting surroundings expected in such a state. Little else seems to matter as we move forward in humorous review of this exchange.

Mahalo!

Ralph, simply smiling


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Posted by Informed Resident
a resident of another community
on Mar 23, 2012 at 2:26 pm

ECW, you never cease to amaze me.

I've been reading your posts which are nothing more than the same recycled innuendo, when in fact you don't really want to face reality or accept facts. Hard to believe that you continue to expose yourself in the way that you do. After reading your latest work, Narcissistic comes to mind.

"How Would You Solve the Huge Unfunded Debt from Pensions in CoCo County?

While this comes across initially as a sincere question, your historical posting suggest you are not really looking for answers. Simply put, you are only looking for more opportunities to whine about how unfair and unjust the world is. I humbly suggest you get over it, before it consumes you any further. You see, the world isn't fair and expecting things to change by blogging all day isn't helping your case. Try getting involved or actually paying attention to what is going on, (this is not achieved by limiting your knowledge by reading Borenstein's commentary). Consider contacting the responsible agencies; call your Mayor or County Supervisor… That is unless you are afraid of finding the real answers, which don't align with your mindset.

I find it rather telling that you post continuously about your lack of understanding of financial issues within County, Cities and Special districts but conveniently do not have time or inclination to contact the responsible parties (aka; elected officials) themselves.

This "response" is not really meant for you though. It is for the many other readers that have been following along, drawing similar conclusions. You see ECW, the answer to your question is it is already being accomplished and has been documented and put before you numerous times. You just chose not to understand. It must be really frustrating for you to continue this cycle.

Insanity: doing the same thing over and over again and expecting different results. -Albert Einstein.
In your case asking the same question over and over again will never yield a different answer-or one to your liking. You are just frustrated….we get it.


p.s. @ "Mick L", aka; REAL, aka; "are u kidding", Sneaky, et al., If you haven't figured it out you are not fooling anyone with the use of your latest pseudonym-least of all me. I have already pointed out that putting a space between your final word and punctuation is unnecessary and a dead giveaway of you trying to look like multiple people.
It isn't working because you keep giving yourself up! Check it out, fellow readers (always an extra space between the last word and punctuation (! ? or . )
Hint; The space bar is not your friend!
Web Link

Posted by Mick L, a resident of the San Ramon neighborhood, 23 hours ago-…… Our country is the strongest nation and economic engine in the history of Mankind .
So as we look at solving the the huge municipal and public indebtedness we should strongly consider lessening the taxpayers contribution to benefit packages until they are down to the levels of non-public employees .

Posted by "Real", a resident of another community, on Mar 19, 2012 at 9:02 pm-……. Keep it real ! ….That may explain a lot ?

Posted by "are u kidding", a resident of another community, on Mar 19, 2012 at 6:50 pm-…… Say are you Kidding ?

Posted by "Sneaky", a resident of another community, on Mar 20, 2012 at 9:13 am- ………It seems that you disagree. Shocker !


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Posted by East County Watch
a resident of another community
on Mar 24, 2012 at 10:15 am

@SayWhat and Domestic partner Miss Informed;
I do not know what you boys are smoking but pull the tin foil off as you say. Say What's comment below must have been put out by a public employee because it's so far off.
"In the most recent posted report for 2010, the return was 13.3%"So what brought you to the conclusions and/or assumptions you repeatedly make with regard to that pension fund? Are you singling out the years from the real estate crash? Is that the sort of selective fact citation you use? Care to look at a 5 or 10 or 20 year average to keep it honest?
These types of comments you and miss make show that you fail to see the train wreck coming. I went to the Cal Pers website and cut n pasted these numbers;
TOTAL RETURNS1
Fiscal year to date ended 12/31/2011 4.5%
3 years for period ended 12/31/2011 8.3%
5 years for period ended 12/31/2011 0.4%
10 years for period ended 12/31/2011 5.1%
CALIFORNIA
So much for your 13% dream.
Missinformed, can you please refrain from your paranoid comments about others or seek help. Your constant speculative jabbers does nothing for the subject.


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Posted by Informed Resident
a resident of another community
on Mar 24, 2012 at 12:30 pm

ECW,

You appear to have a chronic case of denial and deflection topped off with a propensity for anger. (You really should have that checked out, by a qualified individual in such matters).
Every time one of us points to fact and documentation, you seem to ferret out a selective piece of information that by itself is inconclusive. You are a master of the snapshot instead of viewing the whole film. I have now personally witnessed you doing this time and time again in an awkward attempt to show that you are right and all of the financial experts are wrong. How is that working out for you?

As far as your assertions about me making paranoid comments, I think you basically just pointed the finger at yourself. Was it the fact that I merely pointed out the obvious flaws of what you and others had posted? I am sorry for you that your own postings and words made you look bad, but only you are responsible for what you post.
I think it is pretty plain to see that you are caught making false claims and that your supporter (or you) is posting under several pseudonyms in an attempt to make it look like more people are agreeing with you. That is pretty pathetic in my book which is only overshadowed by your denial of it occurring.
Let's not forget that it was YOU that created the bogus subject in the first place. Posing a "loaded question" as a topic to a situation that has obviously been addressed is ridiculous. One might easily draw the conclusion that you were never seeking an answer, but simply trying to exercise your agenda. YOU have been shown the specific documents several times, which completely debunk what you post. …and yet you continue to ram your head into the wall. Now you tell me, who is demonstrating unhealthy behavior?


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Posted by East County Watch
a resident of another community
on Mar 24, 2012 at 3:15 pm

@Miss in
What part of the government document do you not understand? I think the ridiculous 13.3% return that you pulled was more selective than the ten year span I provided.
It was either you or your partner SayWhat (maybe one in the same) that stated,
Care to look at a 5 or 10 or 20 year average to keep it honest?

So I posted from the Cal Pers website,
TOTAL RETURNS
Fiscal year to date ended 12/31/2011 4.5%
3 years for period ended 12/31/2011 8.3%
5 years for period ended 12/31/2011 0.4%
10 years for period ended 12/31/2011 5.1%
CALIFORNIA
It is obvious your pie in the sky attitude to save yourself just went into the gutter along with your credibility. By you and your partner or self posting 13.3% return was like shooting fish in a barrel. I'm not sorry I made you look like a complete fool with your return percentage by providing real information from the government source.
The average return is 5.1% and that is 25% below what is being contributed today. This does not take your Einstein mentality to figure a government shortfall leading to bankruptcy is dead on. This subject not only has merit, but also is one of the single most important issues of today. Again, Government needs to take from others to feed itself. Well, time to make the government go on a more healthier diet via voting NO to all taxes.

I welcome anyone else that has some realistic and adult suggestions on the subject to post. Posting that everything is just fine and we need more taxes is not adult nor realistic.


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Posted by Informed Resident
a resident of another community
on Mar 24, 2012 at 4:28 pm

ECW,

Sure hope you did not spend too much time on that re-post.

I did not post any numbers or percentages-you did. You can't even keep your accusations straight. That is what happens when you linger from the truth.


Yep, you are really going to punish the government by limiting the funding for services that are provided to you!

Go ahead-continue your ignorance, we all see the result.

You continue to make yourself look foolish and very angry-you need not my help.




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Posted by Say what?
a resident of another community
on Mar 25, 2012 at 9:50 am

ECW, your deep rooted anger is showing. It's clear your focus is not about information sharing or researching the facts. It's about one upping posters in some weird propaganda campaign.

Not very honest to selectively skip over my 13.3%, because that is an actual return for 2010. To your credit you did cite 5 and 10 year. But I was really hoping for that 20 year number, because the topic is long term investment. Is it not?

The 20 year is 8.4%

So why did you earlier insist expectations should be lowered to 3.5-4%? What do you know that the actuaries at CALPERS do not? Why are you here spouting sour grapes on a message board while they oversee the largest public pension fund in the country?

Do you not get the concept of perspective?

I really scratch my head on this little war you are waging to lower the number. You do know that as that goes down the taxpayers are on the hook to back fill more of the liability, right? It makes no sense that you say you do not want to pay more........while advocating for policies that will force you to pay more. Whether that's through an actual tax increase or assessment or through a reduction in existing services. You will pay more for a lower return standard because of historical pension contract obligations.

Perhaps you could explain that running contradiction you put on display?

Read some of Borenstein's double speak online today at the SJ Mercury. He says, "That means larger upfront contributions by employers and employees and less risk of future shortfalls"

Uhh, Dan, who do you think provides the money for the "employers" side of that public equation you're discussing? I guess Dan also suffers short attention span as he won't go near the 20 year return number either. As the closing comment of his piece makes clear, he wants to cherry pick the timeline which supports his agenda.

All this should be cast against the backdrop that the average CALPERS pension is about $2300/mo. We are not talking about minting millionaires here.


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Posted by Informed Resident
a resident of another community
on Mar 26, 2012 at 12:54 pm

Say What,

Great post! It is nice to read the whole truth which in turn gives us all a better picture. Hopefully that will end this debate and provide readers with a much better understanding.

Thanks.


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Posted by East County Watch
a resident of another community
on Mar 28, 2012 at 8:54 am

@SayWhat,

Where did you get 13.3% ???

It is clearly 4.5% return coming directly from the Cal Pers website.

"Fiscal year to date ended 12/31/2011 4.5%"

It seems you have cherry picked your 13.3% return rate to make the plan look good. That is the problem, people like you are blind to reality that the plan is critically underfunded and the burden will go to the taxpayers eventually.

The actual 4.5% return as posted on Cal Pers is 3% off meaning the return rate is 40% short of what is needed to remain solvent.

It is nice to post the real truth. Your continued misrepresentation of this critical problem falls on the taxpayers and their children's shoulders unless reform correction is done now.


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Posted by Say what?
a resident of another community
on Mar 28, 2012 at 11:34 am

ECW, do you have a reading problem? Serious question.

Do you not understand the difference between the years 2010 and 2011? I'll make it easy for you with a link:

Web Link

Third page, first paragraph of the Chief Investment Officer's statement:

"The CalPERS Fund earned a net 13.3 percent return this fiscal year, a strong rebound that saw the market value of our portfolio climb to
$200.5 billion."

Now would you care to address some of my assertions above? Or will this just be another instance of you dodging the questions and avoiding your ongoing contradictory commentary here?


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Posted by East County Watch
a resident of another community
on Mar 28, 2012 at 4:47 pm


@Say What,

So you are cherry picking good return years. Lets cherry pick into 2011 as shown below;

2010 12.6%
2011 1.1%

The fund received a 1.1% return in 2011 against your 12.6% in 2010
link ~ Web Link

This will provide facts for several years. Some years are as hi as 23% along with <LOSSES of 27.8% in 2008>. What is your point? The problem is the average of 5.1% is way to low. Basing contributions on 7.5% is suicide in todays economy. You are trying to sell an elephant to the public for your own selfish gain. You must be a politician or public employee.

You probably voted for Obama too, because it shows.


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Posted by Say what?
a resident of another community
on Mar 28, 2012 at 10:18 pm

ECW, you asked a question. I gave you a direct answer with a link to back it up and you're asking what's the point?

Pretty clear you are not here to discuss solutions. It's just a place to vent for you. You are completely dismissive of facts that don't support your agenda. Such as the 2/3 reduction of OPEB liability in 6 short years in most trying economic times.

Pensions are not funded in 10 year windows. The timelines are much longer. Like all investments, there are ups and downs. If 10 years is all you can wrap your head around, you probably shouldn't be weighing in on such a complex issue. Same goes for Borenstein.

Now are you going to address why you are waging a campaign that will result in you and I paying more out of pocket or settling for less in critical government services such as public safety? For the sake of this silly and obviously flawed logic over CALPERS returns?

It seems you struggle to verbalize your end point or goal in all this. If a 2/3 reduction in pension overhead doesn't work for you, there is probably nothing that ever will.


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Posted by Informed Resident
a resident of another community
on Mar 29, 2012 at 1:29 pm

@ Say what,

I wouldn't worry about East County Watch's perspectives. I doubt many people share them besides he and Borenstein. They are a result of several issue borne from a fundamental lack of understanding basic finance, to the an obvious Dunning-Kruger effect. Not helping matters is the narcissistic behavior which demonstrates he really doesn't want answers, he is just looking for opportunities to complain about what he doesn't comprehend.

Being as Cal PERS is going to be around for a while, historical averaging is another fundamental concept that ECW choses to reject. Even by cherry picking one of the worst years (1.1 percent) he missed the fact that the two year average still came out at 6.85 percent. But again, anticipated rates of return have many more factors inclusive of many more years of returns.

His latest post was hard to decipher. "7.5 percent is suicide in today's economy?" Really? I know I average about 10 percent a year on my investments and I certainly don't have the money (Billions) that CalPers has to invest! I gather from his posts that he just "thinks" he knows better than paid professionals that do investing for a living. I am glad I don't suffer his ignorance.

Remember it was ECW that simply glossed over the fact that Public Safety Employees actually contribute 25 percent of their income to get the retirement-which as we know allows them to retire at a safe age, and before they become prone to injuries which end in Workers Comp, (tax free) retirements. Let's not forget that it was East County Watch that stated on these forums that he has incurred debt-yet he doesn't get the fact that this is similar to how municipal debt is calculated and paid off.

Better yet, it was two weeks ago that ECW posted; "Please tell me why 7% or 7.5% is a reasonable and logical expectation for the rate of return on pension investments? If so, please direct me to any place with an ounce of security that I can invest and get that 7% return?"
…To which a simply reply was posted- that if he were to invest in the very secure S&P 500 he would have an average return of over 10 percent (10.8 to be exact). I guess he forgot that.


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Posted by Why Argue?
a resident of another community
on Mar 29, 2012 at 1:49 pm

Rick L's comments above avoid the arguments that ECW, IR and SW continue to have by bringing public and private sector employees into the same systems.

Reduce benefits for ALL new hires at all public levels to the average of the public sector employees, including 401(k) with employer matching levels and employer contributions to medical/dental plan, and also do the same for existing employees' benefits as much as legally possible.

If we are all in the same pool we don't have to argue about the temperature of the water!


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Posted by fix it
a resident of San Ramon
on Apr 2, 2012 at 8:05 pm

Web Link


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