Comparing Pension Reform in Pacific Grove vs. Bakersfield

Editor’s note: Several times this year we have published in-depth investigative reports written by John Moore, a citizen activist living in Pacific Grove. This recent letter from Moore was addressed to the local newspapers serving Pacific Grove. Moore is unhappy with the coverage these newspapers have given the city of Pacific Grove’s pension crisis. The Monterey County Herald is a daily. The Cedar Street Times is a weekly, printed each Friday and is the only Pacific Grove newspaper. The editors of these newspapers have a journalistic obligation to provide accurate and balanced reporting on the pension crisis in Pacific Grove. Given the magnitude of the financial challenges facing Pacific Grove because of pensions, it is also their journalistic obligation to investigate serious allegations of financial misconduct relating to Pacific Grove’s pension obligations.

An open letter to the editors of the Monterey County Herald and the Cedar Street Times from John Moore, a Pacific Grove resident:

I continue to list your papers as the primary recipients of my pension reform circulars, because your reporting indicates more than a reluctance to factually describe the recent pension history of Pacific Grove. So you need to know what is going on. Whether you consider my research and opinions news is for you to decide.

In 2002, both Pacific Grove and Bakersfield adopted 3%@%50 for Police and Fire. It was a 50% pension increase negotiated by the fire and police unions. At that time, both cities already had significant pension deficits. Until 2001, both cities had generous surpluses in their pension plans. Until 2002, both cities had a 2%@50 pension plan for the safety unions (2% x number of years service x final salary at retirement).

By 2006, Pacific Grove had an unfunded pension deficit of about $19,000,000 and Bakersfield had a pension deficit of about $93,000,000. Of course Bakersfield is much larger than PG, but, based on population, Pacific Grove had a larger deficit per resident.

In 2010, Pacific Grove adopted a citizen’s initiative that capped the city’s annual pension contribution going forward, at 10% of salary. In 2010, Bakersfield voters adopted Measure D which, for new public safety hires, reduced the pension back to the 2%@50 level.

In both cities, the safety unions sued. In Bakersfield, the case was thrown out of court and the reform is in place. By now about half of the police and fire are new hires receiving the lower pension. In Pacific Grove, as I have documented several times, the City council allowed a seriously conflicted city attorney to supervise the reform law suit to defeat, by assuring that key evidence was not put before the judge.

The Cort-Colangelo city council simply allowed city manager Jim Colangelo (city manager 2006-2009) and city attorney David Laredo to multiply the pension deficit via borrowings, raises, a costly fire dept. merger etc. etc.

The current council majority basically takes the position that nothing can be done at the local level. The Bakersfield example proves otherwise.

Please understand, that I do not believe that any of the council members are criminals (like in the Bell, Ca. case). But the council majorities simply do not want to “confront” the likes of former city manager Jim Colangelo, current city manager Thomas Frutchy and city attorney David Laredo. Instead of demanding reform, the council majorities have allowed the city managers and city attorney Laredo to bury Pacific Grove in debt that is at least ten times more than a small town like Pacific Grove could possibly handle.

Pacific Grove has lost its fire dept. and Museum. The police dept. is in a constant state of disgrace. Recently it was learned that a tenured Commander and his wife were in effect, running a criminal gambit out of the Pacific Grove police dept. for at least a couple of years. Former police Commander Nyunt has pled guilty to several felonies in both state and federal court and is now in federal prison. His ex-wife is in jail awaiting trial on charges of identity theft of victims she identified via her husbands access to police computer programs. These facts were printed several times in the Monterey County Herald. And all this happened right under the noses of the responsible supervisors; the Chief and the city manager. The city manager even placed a letter on the city web site that defended the now incarcerated criminal Commander – before the commander pled guilty.

In San Jose, Salinas, Stockton and several other cities, the police and fire depts. claim that without the 3%@50 pension benefit, recruiting will be affected. Most citizens feel that 2%@50 (60% of final salary) at age 50, is ample. But what are the facts?

In Bakersfield, in 2011, the first year of the reduced pension benefits, Bakersfield recruited a few dozen “new hires” who would receive the reduced pension. It had just over 1,000 qualified applicants.

I believe that the current Pacific Grove unfunded pension deficit is about $45,000,000. There are still 15 payments of about $1,500,000 per year due on the 2006 pension bonds, or, about $22,500,000. Three council seats are up for election in November, including mayor. The 2014 election is the defining moment for Pacific Grove. Pacific Grove needs and deserves three strong new council members who will defend this once great town. The decisions going forward are daunting, but must be made. It will be hard work.If Bakersfield could do something, so can Pacific Grove.

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Click here to read more posts by John Moore

About the Author:  John M. Moore is a resident of Pacific Grove, Ca. He is a licensed member of the California State Bar (#34749) and a member of the “Public Law” section of the State Bar. He is retired and no longer practices law, but has Lexis/Nexis for research. John graduated from San Jose State College with majors in Political Science and Economics (summa cum laude). He then received a JD from The Stanford School of Law and practiced business and trial law for 40 years before retiring. In 1987, he was the founding partner of a Sacramento law firm that he formed in 1987 to take advantage of the increased bankruptcies brought about by the Tax Act of 1986. Although Moore did not file and manage bankruptcy cases, he represented clients in numerous litigation matters before the bankruptcy court, including several cases before judge Klein, the current judge of the Stockton bankruptcy case. Moore is an admirer of Judge Klein, for his ability and accuracy on the law. As managing partner at his law firm, Moore understood the goals of bankruptcy filings and its benefits and limitations.

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