Tuesday, June 16, 2009

Pension Savings or Screw Job?

Did you all catch the latest out of city hall today? To forewarn you, the "Little Rube" is at it again. At 12:38 PM the Union Tribune/Sign on San Diego posted a story titled; "Report studies pension savings" which sounds innocuous. Naturally I read the article and instinctively began gnashing my teeth. The story begins by explaining how the City could save millions of dollars a year if it were to suspend the 2% Cost of Living increase (COLA) for retirees.

So as the story goes; the "Little Rube" aka Carl DeMaio, and one of the mayor's minions, Jay Goldstone asked Cheiron (A Consulting Firm) to study this part of the SDCERS benefit for retirees. Cheiron said a one year suspension of the COLA would reduce the City's unfunded pension liability by $58 million. Cheiron said if this reduction was taken the City's annual required pension contribution would be reduced by $4.5 million. Cheiron said if the City were to eliminate the 2% COLA permanently the City would cut their unfunded pension liability by $920 million. This would then lead to a reduction, according to Cheiron, of $74 million in pension contribution by the City in 2010.

So I ask myself as I read the last paragraph of the article; "When will the mayor and the "Little Rube", stop the attacks of employees and their VESTED benefits?" I am glad today my doctor saw fit to put me on blood pressure medication over my objections last year. The "Little Rube" wants an opinion from the City Attorney (I actually laughed at this part of the article) to see if the City could "legally suspend the annual increase." I am like you; waiting with bated breath for this next "Memorandum of Law" from our NEW City Attorney. So while we all wait for this new revelation I thought I would break out the calculator and do some math.

I began to look at the numbers Cheiron opined on related to the 2% COLA. I am not a math major but I think I understand the concepts of what is necessary to understand these numbers. How on earth can you make the leap from the first statement of reducing the unfunded liability by $58 million and a reduction of $4.5 million in pension contribution for a one year suspension of the COLA to a reduction of $920 million pension liability with a permanent elimination of this same 2% COLA? I'm sorry; I'm not buying these numbers or analysis. I tried every math equation I could remember from my days of school and math classes, statistics, economics and public finance. I pulled out the latest numbers from SDCERS and the pension liabilities they have reported to the City. The numbers in the article do not jibe in any way when compared to the analysis of Cheiron. Seems reminiscent of the information in the City's court filings they cannot seem to justify or explain.

What do we know about the mayor and "Little Rube"? We know BOTH of them are HELL BENT on eliminating DROP. We know BOTH of them are HELL BENT on eliminating the Defined Benefit Retirement from employees and replacing it with the less acceptable, more expensive and politically motivated Defined Contribution Retirement for new hires. We know BOTH of them are HELL BENT on reducing the work force of the City and outsourcing as many job functions as humanly possible and as quickly as possible. We know BOTH of them have NO ETHICS or understanding of HONESTY when putting information out to the taxpayer when seeking to meet their goals. We know BOTH of them are HELL BENT on doing whatever it takes to make ALL of this reality.

This is just another poke, jab, slap and kick of the dedicated city employee who had NOTHING to do with the City knowingly, willingly and unlawfully underfunding the City's Employee Retirement System. Think the lines are long for those seeking to join the workforce for this City? If you do; I have some land I am seeking to sell at a much reduced rate. I have some pictures if you would be interested in seeing them. Please; no checks or credit cards…. CASH ONLY!!!!


6 comments:

Anonymous said...

Even if the City somehow suspended the COLA (which is very unlikely) every retired city employee has been been earning an INDIVIDUAL retirement COLA bank. This bank is designed to "save" inflation percentage points above the the 2% annual cap for years when the CPI is below 2% annually. 2008 or 2009 could be one of those years depending on the 12 month period selected.

Here's how it works. The Charter lays out UP TO A 2% annual COLA. The COLA depends on the CPI or consumer price index, if the CPI is 4% annually then each retiree "banks" 2% individually. If the following year the CPI is 1%, another unlikely circumstance, then the City is liable for a 1% COLA and the employee can get the other 1% from their inflation savings bank to reach the maximum 2%.

All of this is designed to hedge against inflation, without it, and assuming an annual inflation rate of 3%, in 11 years you'd lose one-third of the value of your pension dollars. If you lived 30 years, your pension would be nearly worthless.

The program, suggested by the Little Rube and Sanders merry men is insidious. Before you realize it you'll be trying to live on retirement monies worth well below the POVERTY line with no recourse and NO VOICE to change it.

Anonymous said...

Come on now....

They need that extra money for the new downtown Library and Convention Center expansion projects.

Raise taxes and fees for expansion projects but not for the needs and necessities of the citizens. Who needs public safety and good roads when you have a great Convention Center and Library.......

Anonymous said...

Hey I hate to be negative .... but all of these take-aways are screw jobs by the current crop of politicians out for themselves and only themselves.

Is it time to bring back that POA television commercial where the 11-99 call goes out and no one answers???

Anonymous said...

Here is the link:
http://www.youtube.com/watch?v=KxXcCwSOh74

sparky.sandiego said...

This first comment is absolutely correct. Thank you for putting out the facts and explaining the intricate workings of the COLA. Many people do not understand how it works (I could not explain it as elloquently as done by Anonymous #1). This is the type of articulate post we need to refute the lies and misinformation constantly showing up in the press. Thank you!!

Anonymous said...

By the way, this is why the government tries so hard to keep inflation at or need 3% ANNUALLY. If inflation is too low, or heads toward "deflation" then the economy tanks and good and services stop.... this in turn could lead to depression or what we just experience a near depression. If inflation goes to high, then older folks, the ones on pension suffer greatly along with others too. At 3% pensioners rarely outlive the useful portion of their pensions, i.e. 20 years eats up 60 % of the value if you don't get a COLA. But, here's the rub.... folks are living much longer and retiring earlier... all the models must change to make the new paradigm functional for the following generation.