The Fall of Pacific Grove – Conclusion: The "California Rule" Cannot Stand

In this series, relying on official records of CalPERS and the City of Pacific Grove, I have shown how those two agencies and the unions worked as one to destroy the ability of cities like Pacific Grove from providing minimal government services. But the Supreme Court of California is the great enabler and protector of pension rights for public employees; rights that contradict a democratic form of government.

If there is not a change in the so-called “California Rule,” created by the Supreme Court of California and followed by 12 other states, most California cities and counties will become insolvent, like Pacific Grove and Sonoma County. How soon it happens to other public agencies (with defined benefit programs) depends on the relative viability of their tax base. Carmel can last for decades as long as it can tax tourists without a material decline in tourism. The city of Monterey is less viable, and cities like Marina and Seaside less viable still. Pacific Grove and Sonoma county have no chance to lift themselves out of insolvency unless the California Rule is changed by something like the Reed Initiative or a reversal by the California Supreme Court (the Florida Supreme Court reversed the rule in 2011).

What is the California Rule?

I believe that most states hold that government employees have a “vested right” in the pensions that have already been earned (subject to various emergency powers). Private employees and social security members do not even have that degree of vesting, but in the 12 states that follow the California Rule, a public agency cannot reduce the size of pensions for future pension accruals (accruals for work not yet performed).

The California Supreme court summarized the California Rule in the case of Betts v. Bd. of Admin….(1978), decided by the infamous Bird court. Several scholars have soundly criticized the opinion as nothing more than improper legislation by the court, but it is important to understand why that is true.

The California Rule is based on the legal theory that a statute, like an ordinance or a city charter, that has set out a pension right in the statute or charter, did so with the intention to create a vested right, not only as to pensions earned, but also as to future accruals. That “contract” is then said to be protected by the “contract clauses” of the State and Federal constitution.

But in every case where a California court has enunciated the California Rule, it has omitted any factual inquiry into legislative intent. No scholar has found a single California opinion applying the rule, where there was a showing that the legislation from which the contract was derived was based on a legislative history confirming that a vested right to future accruals was intended. The court just made it up. The Court was and is a major beneficiary of the Betts decision and the California Rule.

In establishing the rule, there was no inquiry by the court into the state “debt limit” set forth in Art. XVI, Sec. 18 of the Constitution. Nor was State Govt. Code 7507 requiring the legislative body to analyze the actuarial impact of a pension increase on the future costs of the new benefit applied. That was because the court is not a legislative body. But if it is going to legislate, it should act like a legislature and not destroy public agencies like Pacific Grove, without the consent of its citizens and without an inquiry into the factual basis and the consequences of its decisions. Citizens can trump legislative acts by its right to a referendum, but the California Rule deprived the citizens of that right. A courageous court would analyze the California Rule, make the legal inquiry of whether it is legally possible to create a vested right to future pension accruals (in a democracy), and if so, was that intent set forth in the legislation at issue.

Legislation by Collusive Law Suits

Public Agency attorneys, like city and county attorneys, can indirectly legislate pension and medical benefits by collusive or thrown law suits. In my opinion, that happened to Pacific Grove just last year. Citizens qualified an initiative to limit pension contributions by the city to 10% of salaries. The city attorney and the unions opposed the initiative, but the city council adopted it as its own ordinance. The police unions sued claiming it possessed a “vested right” to future pension accruals. Pacific Grove is a charter city. It did not have a provision in its charter, or a statute that created a pension, so there was no way that the California Rule could apply. But in its so-called defense of the law suit, the city simply raised no defense to the claimed vested right, so it lost by default. In Pacific Grove, the only pension rights ever granted were by term contracts, called MOUs. All scholars of the California Rule agree that vested rights to future accruals cannot be created by short-term contracts. The process of inadequately defending pension law suits occurs over and over in California and coincides with the purchase by public agencies of “as requested” legal and expert opinions.

Recently, the California Supreme Court held that it was possible for union employees to claim an “implied” contractual right to retiree health benefits arising from a county statute like an ordinance. The court said that the existence of such an implied right would be very difficult to prove. But within days, retirees filed law suits claiming such rights. The law suits were defended by public agency attorneys appointed by employees of public agencies who would themselves be entitled to the claimed implied benefits so long as the public agency lost the suit. And, lo and behold, they lost and the union employees won. Billions of dollars of new deficits will flow from the Supreme Court decision.

Creating new benefits by the failure to properly defend claims of vested pension and health benefits is only possible because of the California Rule as applied to both pension and health benefits.

A Final Thought

Historically, only dictators–including royalty and religious leaders–held unlimited vested rights that destroyed the rights of the majority of citizens. Such rights are inconsistent with a democracy. Because of the California Rule, unions, CalPERS, city and county managers and attorneys have the unfettered power to destroy the public agencies that they represent and deprive citizens of the right to the form of government that they would choose. Government unions, city managers, city attorneys, and municipal legislative bodies, empowered by the dictatorial California Rule have destroyed the once-excellent school system, our roads, parks, water supply, services for the poor and aged, cultural services, and safety services, and imposed a burden of out-of-control debt on citizens who were not even of an age to vote (even the unborn) at the time that the debts were created.

In every election for pension reform in the past decade, about 75% of voters have voted for pension reform. In most instances the courts then held the reform invalid as a violation of the California Rule. Municipal services have been and will continue to be demolished at a rapid rate. Blogs etc. about how unfair it all is don’t seem effective. Action is required. Bi-partisan single-issue pension reform PACs must be formed throughout the state for the election of legislators who will sponsor an initiative that reverses the California Rule, no matter what. The remedy of recall and even impeachment should be on the table. A democracy is at stake. It must be restored.

Read the entire series:

The Fall of Pacific Grove – How it Began, and How City Officials Fought Reform
 – Part 1, January 7, 2014

The Fall of Pacific Grove – How City Thwarted Reform, and CalPERS Squandered Surpluses
 – Part 2, January 14, 2014

The Fall of Pacific Grove – CalPERS Begins Calling Deficits “Side Funds,” Raises Annual Contributions
 – Part 3, January 21, 2014

The Fall of Pacific Grove – Outsourcing of Safety Services Causes Increased Pension Deficits
 – Part 4, January 28, 2014

The Fall of Pacific Grove – Anti-Pension Reform Mayor Claims to Favor Reed Pension Reform
 – Part 5, February 3, 2014

The Fall of Pacific Grove – Privately Owned Real Property are the Only Assets to Pay for Pensions
 – Part 6, February 11, 2014

The Fall of Pacific Grove – The Cover-Up by the City After the Hidden Actuarial Report Surfaced in 2009
 – Part 7, February 18, 2014

The Fall of Pacific Grove – Conclusion: The “California Rule” Cannot Stand
 – Conclusion, February 24, 2014

About the Author:  John M. Moore is a resident of Pacific Grove, Ca. He is a licensed member of the California State Bar (#34734) 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 he 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. He is an admirer of Judge Klein, for his ability and accuracy on the law. As managing partner, he understood the goals of bankruptcy filings and its benefits and limitations.

46 replies
  1. Wayne Waisanen says:

    The public employees did not destroy California. Anti tax advocates undercut funding by restricting available revenue to levels that were sure to cause a crisis. They used Proposition 13 in Cali. and Prop 2 1/2 in Massachusetts to accomplish this. The anti tax people did this because they truly believed they lived in a Stalinist hellhole because of taxes. The public servants I interact with all say they are just waiting for voters to finally send the bus off a cliff with another large tax cut ballot initiative.

  2. Tough Love says:

    Sending the bus “off-the-cliff” is certainly worth it if it ends Public Sector Union control in CA.

    Under Public Sector Union control all but these Union’s members (and the Private Sector’s 1%) are doomed anyway.

  3. howard beale says:

    Mr. Moore thank you so very much for your excellent series. It perfectly describes what happened in so many, many cities throughout California. You are correct that something needs to be done about the California Rule before it brings ruination to our state.

    As for Wayne W’s comment above, Wayne you could not be more wrong. Apparently you do not understand that there is not enough money, no matter high the taxes, to pay for government services that are extravagantly expensive because of the compensation and benefits paid to government workers. If taxes were higher, government worker unions would only be pressing for even higher pay and even better benefits (e.g. more time off).

    In case you doubt me, Wayne, let me provide you with a little primer on California government worker pay and benefits. Back in the day (up through the 1980s) when government worker pay was decent, but not great, in order to compensate for that state and local government agencies provided very generous time off for its workers. This came in the form of vacation accrual rates that greatly exceeded private sector accrual rates so that if you stated around long enough a government worker could ultimately reach 5 or 6 weeks of vacation per year. In addition, government worker would get in the neighborhood of 12-18 sick leave days per year that could be accumulated without limit (and in many instances receive a pay out upon retirement). Add on the 12-18 paid holidays per year, entitlement to personal necessity leave (which would either be in addition to sick leave time or if not, would permit the government worker to use sick leave time for non-sick time days off), generous bereavement leave, and in the case of administrators and managers, executive leave time.

    To further sweeten the pot, the health insurance benefits provided were of the ZERO deductible, low co-pay type. Now up until the 90s health insurance premiums for such platinum plans were not that expensive, so it was a nice affordable benefit to provide government workers.

    Then of course, there were the guaranteed defined benefit pension plans, which were reasonably affordable because the overall salaries were not that high and the computation figure was usually 2% per year, and the salary used to calculate the pension was the average over 3 years (the 3 years was to help prevent spiking).

    Well, starting in the 90s, the compensation for government workers started to increase dramatically. The economy was strong, housing prices were continuing to rise and the stock market continued its long bull run that had started in 1982. Apparently, flush with cash, in 1999 CalPERS backed a little bill known as SB 400. When then Governor Davis signed that bill into law in September 1999, he was increasing the defined (read guaranteed) retirement plans for the 30,000 member California Correctional Officers bargaining unit by 50% with one fell swoop. How did he do that you ask, well by increasing the 2% calculation per year to 3%, and because that was not enough SB 400 dropped their retirement age from 55 to 50.

    Because that still was not enough, SB 400 made the 50% pension enhancement RETROACTIVE. This meant that if you were a prison guard for 29 years at that point and had wanted to retire after 30 years (in other words the very next year), you were granted the 3% computation as of your very first day on the job. Was the money set aside to cover all that retroactive enhancement? Why no, because CalPERS’s real estate and stock market investments would take care of that.

    By the time of SB 400 government worker defined benefit plans had also changed the requirement of averaging an employee’s last 3 years of income to just the last year of income.

    So now, every local police and firefighter union went to their respective city council or county board of supervisors and said, “We want some of that SB 400 action.” Rather than respond, “Well we don’t compete with prison guards, so if you want 3% at 50 you need to become a prison guard”, each and every publicly elected board approached said “Okay, you got it.” (After all the elected officials were not forgetting who contributed to their elections and who went door-to-door campaigning for them.) Oh yes, and of course when the enhancement occurred, not to be outdone by SB 400, the publicly elected governing bodies also made it RETROACTIVE, and like SB 400 did not put the money aside to cover the enhancement.

    What followed, inevitably, was that the miscellaneous employees of each city, county, special district (these are all the non-public safety types) wanted RETROACTIVE retirement enhancements also, so their unions (SEIU, AFSME, local government attorney union, etc.) wanted a piece of that action. So while they were not able to get 3% at 50, they were able to increase the 2% to 2.5 or 2.7% and have there retirement age dropped to 55. And of course, it was done RETROACTIVELY.

    Now where were the city managers, city attorney, finance and human resource directors when this money grab was taking place? Knowing that if the bargaining units all received this RETROACTIVE retirement plan enhancement that they would also receive it, they all backed the bargaining units’ requests for the RETROACTIVE retirement enhancement.

    Also, along the way (starting in the late 90s) the compensation of government workers started to increase faster than the rate of inflation. After all the economy appeared to be very strong and other cities, counties and special districts were increasing salaries so each and every local agency felt the pressure to also increase salaries to more competitive levels.

    Enter the 21st Century, the once okay salaries of government workers (top to bottom) had become very competitive with the private sector. So let us guess what did not decrease as the salaries were increasing. You guessed it, all that super generous time off and those now very, very expensive ZERO deductible low co-pay health plans. Combined with the fact that firing government workers is extremely difficult and not a whole lot of productivity is expected of them, government workers had it all heading into the momentous year 2008.

    Well we all know what happened. On Monday morning, September 15, 2008, a group of lawyers marched into the federal bankruptcy court in downtown Manhattan and filed a three quarter of a trillion dollar bankruptcy on behalf of Lehman Bros. and set off the “Panic of ’08”, that the national, state and local economies are still struggling with how to cope with the aftermath of the Great Recession.

    Now that the press has brought to the attention of the poor saps who work in the private sector that the public sector has sucker punched them, they want changes to the compensation and benefit structures and levels of government workers. Predictably, all participants in the public sector money grab are responding in unison:

    “Don’t blame us, it is not our fault that we are all in the mess we are in, it is all the fault of those Wall Streeters.”

    “Don’t take away from us, we are getting what everyone should be getting, so figure out how to give it to everyone.”

    “We are just part of the ever strinking middle class, so an attack on us is an attack on the middle class”. (Never mind that the middle class has nowhere near the pay, benefits and job security they have.)

    So Wayne W., there you have some of the reasons that you are totally and completely wrong, wrong, wrong about your sentiments.

  4. Tough Love says:

    John, my congratulation for an accurate and thorough expose. I hope you win a journalism award for this series.

    To assist readers in easily locating ALL of the 8 parts, I suggest that you post in the comments to THIS part, eight links, one to each of the 8 parts of this series. I tried to do so, but it wouldn’t accept my comment, thinking it was SPAM.

  5. Paul G says:

    John:

    One of the best articles I’ve read about the pensions mess
    we’re in. Kudos for the work you did on this.

    I hope it makes a difference but I’m skeptical. I think it will
    take more bankruptcies before anything is done. When Vallejo files their next BK, hopefully that will get us on the path to fixing things.

  6. Wayne Waisanen says:

    Howard: I have worked at a public water facility for 35 years and know exactly what I am talking about. I have served on various committees over a fair number of years. I have read the pension, health insurance and compensated time documents until I know them cold. In your response of the 19 paragraphs only 8 were factual and not distorted for a purpose. Your points about spiking of pensions and awarding retroactive and unfunded pension enhancements are good. The other 11 are spit and smoke, kind of like Marilyn Manson. My Facebook page is Waino Waisanen if you have any questions about pensions, health care, union contracts. If you are a agitator and polemicist like Tough Love do not bother.

  7. Tough Love says:

    Ouch, that hurt. I’m very well versed in pension design and funding, and because of that I understood WELL BEFORE 99% of today’s bloggers that HUGE HUGE costs were associated with these extraordinarily generous Public Sector promises, with it VERY unlikely that investment returns would cover enough of the total cost to leave only a reasonable, appropriate, and manageable share for the Taxpayer to cover.

    Well, we all know how that turned out …..

    Sorry, but strongly advocating to change this is both the necessary and right thing to do. I’m sure you would agree if you or a family member were not personally benefiting from participation in these Plans.

  8. Tough Love says:

    Howard, I re-read your long comment. While I believe there may be some details you either didn’t get completely right or omitted, certainly the gist if your comment is correct.

    Public Sector workers live in a well insulated bubble unfamiliar with the “REAL WORLD” outside their realm, an example being that (in their minds) a “fair” pay, pension , or benefit comparison is only to other PUBLIC Sector entities, and then to the richest ones (when they can get away with it).

    Shouldn’t the PROPER comparison be with the total compensation (cash pay, pension, and benefits) of a comparable PRIVATE Sector worker ? After all, ALL of the funds to pay Public Sector workers ultimately trace back to PRIVATE Sector sources. Nah, doing so wouldn’t support their insatiable desire for better and MORE.

    And when it comes to pensions & benefits, it AGAIN is to what another generous PUBLIC SECTOR entity offers and to the magnitude of a change vs what THEY got before the change. A few year back I recall a Public Sector Union HOWLING about a 66% increase in prescription co-pays ….. can you imagine, the NERVE of the Taxpayers !

    Yup, it went up 66% …… from $3 to $5.

    They’re oblivious.

  9. SeeSaw says:

    I have been a CA resident for 58 years, TL. I live in the same 50’s era tract house that we bought in 1964. I would bet you that my world and the worlds of most of my public sector colleagues is far more “real” than your world up there in New Jersey.

    Howard: SB400 did not “make” the pension enhancements retroactive. Pension upgrades had always been granted retroactively, as a matter of course, by the California Legislature during the 100-yr. history of DB plans in CA. Many public sector entities elected not to adopt the 3% formula plan. To my knowledge, it never was adopted for the miscellaneous state workers. Since the adoption of the 3% formula, many public entities throughout the state have reformed their pension plans. My former municipal employer went back to the original 2% at 60 plan, for new miscellaneous hires, and with the Public Employees’ Pension Reform Act of 2013, that formula is less generous than the original. The original 2% at 60 and 2% at 55 plans culminated with a formula of 2.418% at age 63, which translated into a 24% increase for those affected employees–not 50%.

  10. Wayne Waisanen says:

    TL The reason unions win in superior court is our complaints are based on very accurate comparable units. That means medium sized cities within a hours drive of Boston run by a municipality or regional board. The case is done to a evidentiary standard and the judge finds it easy to accept our position as a finding of fact. For example we accepted a large increase in health premiums and alterations in plan design along with extensive upgrades in the water plant and external pumping systems. After two years of bad faith negotiations an arbitrator was assigned the case. At the end of the third year we reached an arbitrated agreement whereby the arbitrator found for the employees and was shocked by the Mayors behavior. In exchange for a highly automated system and large reduction in personnel the employees received a 1.5% cola in the middle of third year and a one dollar step raise at starting in the middle of the following year. In addition the health insurance changes were also enacted by the city. Six months later we were told to sue the City because the one dollar increase was going to be ignored by the Mayor’s office. Nine months after we filed a breach of contract case the Superior Court Judge ruled for the employees. The judge told the mayor if he did not implement the contract he was going to jail him for contempt of court. This crazy story is the kind of case a union lawyer can expect to win. In addition the City never brought in a contractor to maintain the complex electronic control system that was supposed to allow a large personnel reduction. The place is run with huge amounts of footwork and eyeball judgments. We have four employees out of 25 with overuse injuries to hips, knees and feet. The four new hires hate the scrimpy health plan, lowered compensated time and place no value in the pension plan. They are going out the door to private engineering firms at the first opportunity. TL, how about talking to a number of human resource people and ask them about the quality of top level new hires and retention of the rank and file new hires? Apply for your current position with a state agency or municipality and determine if you would accept it? Ask a seasoned postal person about the $12 per hour contingent positions and declining working conditions and benefits. This would put you in the know instead of guessing.

  11. howard beale says:

    Well See Saw, the California state legislature’s past practice of always making pension enhancements retroactive has been a great state policy, hasn’t it? Great for government workers, that is. The government worker complaint that government employers were not putting the proper amount of money into the appropriate pension funds is bogus, especially after the round of enhancements since 1999, because those entities did not have sufficient funds to be able to do so. Those enhancements cost too much and were unafforable from the beginning.

    In 2010, this is what Gray Davis had to say about SB 400:

    “The evidence seemed to suggest the state was wealthy enough to afford it. It was part ideology and part math, and the point is the math was wrong, big-time. Pension reform is essential. You just can’t afford the benefits that have been promised because all actuarial studies turned out to be wildly optimistic.”

    While SB 400 only applied to a limited number of state workers, its passage has had a profound and lasting impact on local public agencies and their budgets throughout the state.

    The point being, that your lament about, “I live in the same 50’s era tract house that we bought in 1964. I would bet you that my world and the world of most of my public sector colleagues is far more ‘real’ than….” TL’s, is pathetic and pitiful. The reason being that while almost all private sector baby boomers either retired or nearing retirement have to sweat out whether they have enough money to be retired for the next 30 years and to be able to keep their 50’s, 60’s or 70’s era tract homes, you and other California retired government workers are seemingly set. In fact you are probably so seemingly set because of your government pension, that you’ve enough had enough money to probably remodel and improve that quaint 50’s era tract home of yours.

    But unfortunately for you and other recipients of retroactice pension enhancements, as Gray Davis stated back in 2010, “the math was wrong, big time.”

    So, dear SeeSaw, I suggest that you save as much of that ill-gotten retroactive pension enhancement that you can, this may mean putting off any future remodels on that 50’s era tract home of yours, because in the years ahead this entire California public employee ponzi pension system is going to implode. Then, SeeSaw you will see what it’s really like to live in the “real” world.

  12. SeeSaw says:

    What would you rather hear, Howard? That I live in a modern, new home with all the amenities possible? You and your cohorts are the ones who are pathetic and pitiful– continually whining about something that you did not have the opportunity to partake in. Gray Davis admits that he bit off a little more than he could chew with SB400. So, what now? Pension reform has been an ongoing process since the adoption of that bill and will continue into the foreseeable future. Only, it won’t be done your way. The lawful, collective bargaining process is the only way–the right way. You might want to find yourself a good right-to-work state where you will consider yourself in the real world. I am already in the real world here in CA, to stay, for the rest of my days. You and TL would make a good pair–lovely human beings, apparently.

  13. howard beale says:

    SeeSaw, I consider it an honor to have you link me with TL. So, thank you very much for that.

    Now back to the real issue. Frankly, I neither expect nor want any significant pension reform. I like things just the way they are now. That way, the days of reckoning will arrive that much quicker.

    My whole intent on writing things like this and in spending countless hours speaking to newspaper reporters throughout the entire State of California for the past several years is to get the facts out to them (how the public sector has sucker punched the private sector) so the press can continue hammering away about current and future plight and blight of our cities because of the pay and benefits paid to government worker across the state.

    Seems like my approach is working extremely well, because every single day brings a whole host of new articles on the subject.

    For example, just in yesterday’s Washington Post, in an article entitled,”In San Jose, generous pensions for city workers at expense of nearly all else”, the reporter wrote:

    “In San Jose and across the nation, state and local officials are increasingly confronting a vision of startling injustice:
    Poor and middle-class taxpayers-who often have no retirement savings– are paying higher taxes so public emmployees can retire in relative comfort.”

    You name it, Merced Bee, Monterey Herald, SLO Tribune, Santa Rosa Press-Democrat, Riverside Press-Enterprise, as well as stalwart liberal newspapers such as the LA Times, SJ Mercury, SF Chronicle have written comprehensive articles about public employee pay and benefits thereby educating the reading populace on the subject.

    I guess you can view me as someone inciting revolt. As more people learn the facts of what government workers get paid, the more angry and upset they become. So, I just don’t want you retired government workers to think there is a free lunch out there for you. You will continue to be the subject of scorn and ridicule in the years ahead. So enjoy your status. You view what I do as “whining”, I view it as taking decisive action.

    As for your comment about me not having the opportunity to partake in the government employment money grab. I did not have to, I made it on my own. And for that I will be eternally grateful to the almightly powers that be.

  14. SeeSaw says:

    Well, you do know that you are logging into an anti-public sector website, don’t you, Howard! What else do you expect to find, but the articles you cite! Scorn and ridicule works both ways. Keep showing your true colors and we the voters will keep putting you down.

  15. Tough Love says:

    Quoting …. ” The reason unions win in superior court is our complaints are based on very accurate comparable units.”

    No Wayne, you win in Court for 2 reasons:

    (1) For decades (especially in California) the Legislature, the Unions, and the Judges have been more than amenable (and collusive in many instances) to create an impenetrable and undemocratic system of Constitutional guarantees, Statutes, Contract Law, Case Law, and judicial interpretations that have resulted in protections for PUBLIC Sector workers FAR FAR greater than those afforded the PRIVATE Sector, and

    (2) because the Judges making the decisions are in the same or comparable Plans with similar provision and don’t want THEIR pensions/benefits reduced
    —————————————
    I see you put forth lots of details of how the city supposedly screwed you. Well, I’d bet that if your Total Compensation (cash pay, pensions, and benefits) were lined up with a Private Sector worker comparable in education, knowledge, skill sets, and experience … albeit, likely in a different position, yours would be considerably greater (via the pension and benefit components) and for absolutely no justifiable reason. That excess comes about from the collusion between your Union and those that determine your compensation (be they the elected officials directly or their “management representatives”), specifically the horse trading of campaign contributions and election support for favorable votes on pay, pensions, and benefits.
    ——————————————-
    The changes you describe towards the end of your comment appear to apply to only NEW workers. With respect to pension accruals, to have any material financial impact those changes should be applied to the FUTURE service of all CURRENT workers … just as they ROUTINELY are in PRIVATE Sector Pension Plan changes.
    ——————————–
    Lastly I noted your statement …”We have four employees out of 25 with overuse injuries to hips, knees and feet. ”

    Sounds like preparation is ongoing for a few more of the notorious (mostly unjustified) “disability retirements”.

  16. Tough Love says:

    Quoting … “My former municipal employer went back to the original 2% at 60 plan, for new miscellaneous hires, and with the Public Employees’ Pension Reform Act of 2013, that formula is less generous than the original.”

    The 4 material words in that quote are …”for new miscellaneous hires” …. rendering the pension changes so often touted, as financially sterile for the next 20+ years until these “NEW” workers begin to retire.

  17. SeeSaw says:

    TL, you obviously do not believe in taking, “baby steps”. I do. Such is the only way that things get accomplished. You cannot change the pensions of current workers–there is too much case law protecting them. Why not turn your attention to improving the status of private sector workers–my spouse and I could have used some outcry from you and your minions in the 80’s when he lost his pension going forward, due to the illegals. Now we can’t pay his medical insurance premium with his private sector-defined benefit pension. Is that what you want for the people of America? Shame…………………

  18. howard beale says:

    SeeSaw, not sure what you mean by,”…we the voters will keep putting you down.” Could it be that by that you mean the public employee unions will continue to fund the democratic or republican candidates running for office and the electorate will vote for these union backed candidates to ensure that the public sector collective bargaining process always works in favor of all government workers (from the city manager all the way to maintenance worker)? That way nothing will ever change.

    But you see, SeeSaw, it does not make any difference if there is any significant changes or not, because the ultimate truth lies in the hard cold numbers. Even if you are fortunate enough to make it to your personal end of days never having your pension and retiree health insurance benefits changed, what you and others like you took from the system will certainly affect the world that your children, grandchildren nieces and nephews and their children live in and have to pay for.

    In fact, if you have any children and/or nieces and nephews I am confident that not all of them are employed by government agencies, so you are already getting a glimpse at how difficult it is for these young non-government worker crowd to secure employment with all he salary, benefits and time off that the government worker crowd have. Sadly, everyone is paying the price for a pubic sector collective bargaining system run amok– this includes current and retired government workers will children not employed by governmental agencies.

  19. Wayne Waisanen says:

    p-3 The vacation time, sick time and pension plans came into their present shape in 1948, they were derived from a prior plan. The government units needed to be competitive with quality employers like Western Electric(Lucent), Raytheon and Wang Labs. The plans were unchanged until 1977 for the most part. This is not a scandal, Barney Fife was more than a character from 1950’s Mayberry, he was what low bidders got for help. Allowing accumulation of sick time is no scandal. We receive no short or medium term disability policies. It is a substitute that works well for both sides. Except for some public safety units, some elected officials and some high level officials payment for unused sick time upon retirement ended in 1977.

    P-4 The reason for low copay-no deductible plans being offered is they had a much lower actuarial value than the older indemnity plans. Somehow saving money on a lower cost plan is undesirable?

    p-5 During the 1960’s state officials became unhappy with the quality of public employees. Your term of “not that high” salary is not correct for that time. The cash part of compensation was too low even with the benefits. At this era the DB plans were run as PayGo and funding ratio was around 32 percent. For some reason the plans functioned well with PayGo financing and low funding ratios. There was no push for Chapter 9 bankruptcy as a means for pension impairment.

    P-12 The cost for desirable public safety employees and teachers did go up but so did the cost of living, especially housing. We did get colas during the internet boom but the best one was only 3%. Private industry had the best years for many decades but the rank and file got 2% colas mostly.

    p-13 The last cola was in 1999. Three years of zero colas and one year of 1.5% but it came with changes in plan design, lay offs and much higher premiums on health insurance.

    p14-19 We were paying considerably more for lower plans for redesigned plans of lower value. There were layoffs so the city did not ever have to ask for a property tax override even as state aid declined.

    The class warfare tactic of public employees as the enemy is absurd, I will not go there but..let me state a few points.

    The most expensive means of providing education, health care, public safety and governance is a corporation. Quality is good but affordability for low and moderate income people limits accessibility.
    Public employees, non profit or co-op are the best means of providing services to low and moderate income people.

    The main thrust of the New Deal was to prevent booms and busts that leave countries in shambles that lead to predatory wars. Boom time equity evaporates like dry ice but debt lingers until it is discharged. That is why the SEC and Glass Steagall came along with Freddie, Fanny and Sally. The new political- economic movement of Neoliberalism is a glossy update of Hoovernomics. The country will totally fail again with anti tax deregulators influence.

  20. Wayne Waisanen says:

    TL My suggestion to you is to talk with human resource people. They really know what the true story is. Next apply for your job with a state or city to see how it stacks up to your current compensation. Lastly, find a seasoned postal worker and have a conversation with him or her about the contingent workers and other changes. I have never seen one anti tax, anti public employee ever lift a finger to confirm their beliefs.

  21. SeeSaw says:

    I did not mean “exterminate”–I would never cause physical harm to another human being. I meant that the voters will inform themselves in a manner that will translate into their voting to do the right things for all workers. The collective bargaining process is the only way to go, and I am confident that such will continue in CA, for the public sector, for the janitor, all the way up the ranks. The CM’s and their close-circles of management do not use CB because they don’t need it.

    I have a spouse, children, and grandchildren who are all benefitting now from my retirement, so your machination that I am causing negatives things to happen to them now or in the future, by having a pension, is laughable.

    I benefitted from the economic environment that existed when I came to CA. I have worked in both the private and the public sectors. I don’t live in a vacuum now, and I understand how hard things are now for those, young and old, who are trying to subsist. The public sector is one that still holds out a glimmer of hope. It doesn’t look like we can expect much from the private, corporate sector. It is too satisfied with paying those “slave” wages to the workers off-shore, so that they can keep funding the golden parachutes for their own CEO’s. Your philosophy is skewed.

  22. Howard Beale says:

    Speaking of laughable: “The public sector is one that still holds out a glimmer of hope.” Aw yes, the old, “Don’t take it away from us, give it to everyone” line.

    The only problem with your approach is that if companies are going to be profitable (after all this is a capitalistic and free enterprise economic system), they can’t afford to match, public employers who can guarantee $60,000 pensions for career admins and maintenance workers and deep six figure pensions for career professional employees such as administrators and attorneys, along with ZERO deductible, low co-pay health insurance, combined with the following types of leaves typically found in your holy grail government worker collective bargaining agreement:

    bereavement;
    jury duty;
    personal business day;
    sick leave;
    differential leave;
    personal necessity leave (yes, it’s different than personal business day);
    paid family leave;
    personal leave of absence;
    catastrophic leave;
    personal emergency unpaid leave;
    and of course generous vacation leave accrual.

    Add on a grievance procedure ending in binding arbitration for complaining about an almost infinite number of workplace issues, as well as an arbitration procedure for discipline matters heard before employee oriented arbitrators and you have quite a wonderful employment package.

    Problem is, the public sector is the only employer that can even afford to have such benefits.

    Tough Love on February 26, 2014, at 7:11 pm said it best when describing a situation where a public sector union was howling about a 66% increase in prescription co-pays that took the co-pay from $3 to $5,”There oblivious.”

    Compensating the less than hard working, mediocre public sector class as well as they are compensated– well, SeeSaw, let’s just say, “Your philosophy is skewed.”

  23. SeeSaw says:

    Your comments are just dripping with envy, Howard. There’s not much else that can be said to someone with such an outlook toward others, according to what they did for a living, aside from the fact that what you spew is propaganda, spinned by your own design.

  24. SeeSaw says:

    I do not have zero co-pay health insurance as a retiree, Howard. The monthly premium for my Anthem Blue Cross which serves as only secondary to Medicare is $1,000/mo. My employer pays a capped stipend of $532/mo. I pay the difference plus the full premium of $1,000/mo. for my spouse, in addition to my full Medicare, part B premiums. State and Federal income taxes and medical insurance premiums take 70% of my gross pension check. Oh, the high life………………

  25. Howard Beale says:

    Well SeeSaw, I would have responded to your last missive sooner, but I still do work for a living– and am actually still loving it.

    Anyway, like you, I have worked in both the public and private employment sectors; however, while you started in private and ended up public, for me it was the reverse. As a young professional out of college my first job was with the Federal Government, then my next two were with California cities, one in southern California and the other in northern California.

    The reason I left public sector employment after about 7 years, was that I did not want to turn into one of those lifers who seemed to have the life sucked out of them (I noticed this trend in all three agencies). I noticed that after the initial rush of joy and enthusiasm for each job that after a while I started to fall into the lazy habits of the other public employees. In all 3 of the jobs I observed a lot of whining (I know you like that word) and complaining about the governmental agency employer not paying well enough, asking for too much productivity and general grousing because they seemed to have a lot of time to complain (everyone loved their morning and afternoon work breaks). I also saw the quality of my work dropping– what need did I have to put out outstanding work when just passable work would suffice?

    I started to feel crummy about my attitude because before long, I too starting complaining about the public employer(s) I was working for. SeeSaw, I am certain you saw a lot of this too during your public sector working years. I believe a major reason for this attitude is that after passing a one year probationary period, everyone knew it was just about impossible to get fired. So, the strategy was to behave for a year then don’t worry about things.

    Bottom line, I saw the only way to save my working soul was to grow up, stop sucking off the public breast and see how good I could be in the “at-will employment” of the private sector. Well, I am proud to say, I did more than just fine. I have managed to put out a consistently superior work product because I knew I was on a permanent probationary period.

    Looking back at my long career, I can honestly say that I am proud of my numerous accomplishments and successes and not once did I ever think or say to myself, “Wow, I should have stayed in the public sector.” Doing so would have deprived me of so much joy (achievement of considerable wealth certainly contributed to the sense of joy).

    So, I guess, SeeSaw, I really do not have any envy for the government worker life. So sorry to disappoint you.

  26. Howard Beale says:

    By the way SeeSaw, not even government workers or retirees have zero co-pay health plans. They usually have zero deductible, low co-pay plans. So do you have a health plan with a deductible, and if you how much is the deductible?

  27. SeeSaw says:

    Why would I be disappointed? You have the right to work wherever you want. However, you are really off-base to go around judging others on how they organized and conducted their own working lives when you have never met me or many others like me and are probably nowhere near the locations of those workplaces. I worked part-time for 11 years before I got a full-time job. I was at the same municipality for 40 years and I saw many people get fired. So, your statement that it is impossible to get fired in the public sector is not true. I never set out to have a career–I went to work to help support my family. I never had to get on a freeway and drive all day besides working all day like my spouse did. He is the one who got screwed–not me. You should be worrying about the private sector–they are the ones who need help. The public sector is doing as fine as is possible–with the current economic problems and the Governor taking away Redevelopment funds, I have seen many of my former colleagues laid off before they got to finish their, respective, careers. I have no knowledge of what you did and how you interacted with others in your chosen work. I would have no right to judge whatever happened in your respective workplace any more than you to do judge mine. I probably bought some service or product you or your employer was selling. You need the public sector, because they use those DB pensions to shore up the economy.

  28. howard beale says:

    Let me begin by responding to your statement, “…you have never met me or many others like me and are probably nowhere near the locations of those workplaces.”

    The counsultant companies that I have either owned or worked for have provided HR related services to both private and public employers throughout the State of California. Let me give you a sampling of the cities and/or school districts my firms and I have visited and provided such expertise to: Calexico, El Centro, San Ysidro, San Diego, San Bernardino, Riverside, Coachella, Duarte, Ventura, Alhambra, Compton, Bakersfield, Fresno, Salinas, San Jose, Mountain View, Sunnyvale, Santa Clara, Redwood City, Hayward, Oakland, San Pablo, Sacramento, Redding and Red Bluff.

    I have covered a lot of territory over the past umpteen years and I have seen much. And one consistent thing that I have seen over the years in all the public agencies that my partners and I have dealt with is a profound sense of entitlement from government workers not found in their counterpart workers in the private sector. Public workers seem to have this attitude of, “Well we came to work to for the city, county, school district, college district, fire/water/park/sewer/mosquito abatement/whatever district because we wanted to spend more time with our families (in other words they didn’t want to work as hard as people do in private industry), plus we wanted the employment stability (in other words they didn’t want to have to worry about being fired).” On top of all that they want the very, very best benefits, the most time off, extra pay for doing this and that, and all the time complaining at the bargaining table about how underpaid and overworked they are. Man, I have seen and heard it all.

    This includes working the city council/county board of supervisors/school and college board publicly elected officials with, “remember how much we gave to your campaign and how many of our members we sent canvassing and phone banking for you.” If the behind the scenes conversations with elected officials didn’t work, then the government workers would show up in force at the city council/county board/school district public meetings to line up for their 3 minutes of fame before the publicly elected body to moan, groan, cajole and sometimes even threaten with job actions.

    This would repeat itself until the city manager/countyexecutive/superintendent/chancellor and their negotiating team with the dept. head, finance and HR directors finally say to the board, all right all ready let’s just give in and be done with these never ending negotiations, and the publicly elected body tired of being called and nagged, finally succumbed.

    In other words, this fabulous system of public employment collective bargaining that you believe in so much–PROBABLY BECAUSE YOU YOURSELF WERE A UNION OFFICER/MEMBER OF THE UNION’S BARGAINING TEAM– is rigged. Who wouldn’t think that the solution to all problems to be continued participation in a system rigged in your favor? Only a fool would have such an advantage and give it up. And I will grant you this, while you government workers are whiny and always want mo mo mo mo, you are not fools, so of course to you the solution is this rigged collective bargaining process.

    To bring it back full circle, this is what John Moore’s brilliantly researched and written multi-chapter opus on PG is all about.

    Finally, in response to your not so brilliant statement, “You need the public sector, because they use those DB pensions to shore up the economy”, yes that really worked well for Detroit didn’t it. In case you don’t know it, SeeSaw, without a strong private sector there can be no public employee DB pensions, zero deductible, low co-pay health plans. This is what Detroit found out, once the private sector was decimated, who was left to pay the hefty taxes for those DB pensions? The government workers?

    I believe I have achieved the goal I set out to complete several years ago, which was to convince the press about what the problem was-is and to let them go hog wild with their stories on the subject, thereby educating more and more of the poor saps in the private sector about how they are going to have to pay more and get less in order to continue to feed the beast of government employment (i.e. pay more in taxes, and get less in services).

    That Csaw, is what you and your public sector compadres have wrought upon us all(including yourselves).

  29. Tough Love says:

    Qouting “I believe I have achieved the goal I set out to complete several years ago, which was to convince the press about what the problem was-is and to let them go hog wild with their stories on the subject, thereby educating more and more of the poor saps in the private sector about how they are going to have to pay more and get less in order to continue to feed the beast of government employment (i.e. pay more in taxes, and get less in services).”

    Howard, THAT has been my purpose in my many years of commenting as well.

  30. howard beale says:

    Well, TL, I’ve been admiring your work for sometime now and I believe people like Ms. SeeSaw, who I am certain intially blew us off as crackpots, have found out that we are forces of nature to be reckoned with.

    It’s interesting that before the Lehman Bros. bankruptcy filing of 9/15/08, I was talking to so many reporters until I was blue in the face about the impending disaster of public employee compensation and benefits on our society (adverse effects on city and county parks and rec and library departments, delayed worked on the maintenance of our infrastructure, etc.), but to no avail.

    However, as the Panic of ’08 and its aftermath endured (aka “The Great Recession”), and the impact on reporters themselves meant layoffs, reduced pay and benefits, the press became more open to reporting about the excesses of public employment compensation and benefits. Of course, this whole thing was helped along in July of 2010, when the LA Times’ front page headline asked, “Is a City Manager worth $800,000 a year?”, and so was launched the story of Robert “Ratso” Rizzo, Angela Spaccio, Police Chief Adams and the City of Bell. Then other stories surfaced such as the City of Indio, a city steeped in poverty, was paying its City Manager over $300,000 a year, and how the pay of all the City Managers in the OC were just as bad (of course now we have the story of the City of Santa Ana, who retired from Phoenix with a monster pension, and is now being paid several hunderds of thousands of dollars a year by that city).

    How will this all end? Well, I’m supposing that the taxpayers of California will finally get it, and if they can’t stop themselves from sending union backed politians to Sacramento they will at least know not to be voting for any further tax increases. With no further tax increases to cover all the pension and retiree health insurance shortfalls, the end will finally be in sight.

    The last thing I want to say is that SeeSaw and her pals seem to think that people like you and me are either TeaPartiers or anti-government. That is not the case at all. I believe that government should be there to help those truly in need such as the poor (both adult and children) and the disabled. I also believe that public employees should be fairly compensated for their services, but not to the point where its hurting us all, especially when needed services are reduced or eliminated to pay for overcompensated public employees, who are never satisfied, and never ever seem to stop asking for better pay and benefits– because after all their pay and benefits aren’t good enough.

    So, keep up the good fight, TL, and hopefully one day you and I will meet so we can plan our next revolution.

    Best Regards,

    Howard.

  31. SeeSaw says:

    I was never a union officer or bargaining rep in my public sector career. You certainly never provided any services to my municipality–no entity in its right mind would ever hire a consultant who took the view of public servants that you have. And, you are so right, about the need for a strong private sector–it cannot be strong without participation by the public sector–it is a mutual thing–not a divide and conquer thing.

  32. howard beale says:

    “In San Jose and across the nation, state and local officials are increasingly confronting a vision of STARTLING INJUSTICE (emphasis provided):

    Poor and middle class taxpayers-who often have no retirement savings-are paying higher taxes so public employees can retire in relative comfort.”

    I was raised to look out for the underdog, and quite frankly the public sector crowd is not the underdog. Tough Love and people like us will continue to fight for the real underdogs.

  33. Tough Love says:

    Howard, There are far worse than seesaw (supposedly, a retired very long-service lady in her 70s) out there.

    Anyway, on occasion I get into an extended take-no-prisoners back-and-forth with someone supporting the pension status quo usually with ridiculous “facts” and conclusions. I know a great deal about pension design and funding, and being a numbers-guy, I’m quite hard to fool.

    Not sure if you know, but I’m from NJ and often comment on John Bury’s blog (burypensions.wordpress.com). John started a post on 2/19/14 Titled …”SOS Christie on New Jersey Pensions” which can be found here:

    http://burypensions.wordpress.com/2014/02/19/sos-christie-on-new-jersey-pensions/#comments

    which resulted in just such an extended back-and-forth between myself and a commentator “joelfrank”.

    If you’ve got nothing to do for an hour, it’s interesting reading.

    Best wishes ……. and keep up the good work.

  34. howard beale says:

    Well, SeeSaw, after reading what Tough Love had to say about you, I owe you an apology. If you were a long time service public employee who started your retirement in your 60s then you certainly deserve credit for what you have accomplished. I still believe that DBs in the public sector hurt society because of their cost (DBs are just too difficult for employers to accurately estimate what their contributions need to be).

    SeeSaw, I hope you can see where I’m coming from. I feel I am a fair minded person who looks to protect the interests of those in need. I also hope you realize that the mistakes made by those who promised the world and are now finding out there is not enough money to pay for their unrealistic promises and for programs that benefit the most needy and vulnerable in our society. Something has to give, and so far it’s the low end of the economic totem pole who are getting the short end of the stick, and that just isn’t right.

    Again, please accept my apologies (especially considering you are not one of those leaches retiring in their 50s with 90% plus of their pay– factoring the 3% annual increases). My comments about the younger members of your family were intended to point out that excessive pay and benefits for public employees is also hurting them. There aren’t enough government jobs to employ all the children of public employees, and there shouldn’t be.

    And Tough Love, thanks for the nice message you sent me, I really appreciate it, and I will take an hour to enjoy reading your exchange with joelfrank.

    Well, TL and SS, it’s been a blast, hasta la vista.

    p.s. SS, the public agencies hire me because I’m an expert in my field, I work hard for them and I’m tenacious.

  35. Tough Love says:

    Howard, It’s the block of the LAST 20 comments between myself and joelfrank (in my above link) that are the most interesting exchange.

    And FYI, a “take-no-prisoners” attitude in deal with those who fight even the most minor of reforms at every step is NECESSARY. Pussyfooting around gets you $1 in givebacks for each $100 of what’s needed. It’s about time reform politicians realized that and began ACTING accordingly.

    What I love to see in CA is a standoff, where a city in dire straights simply tell CalPERS “no”, you will get no contributions this year because we ONLY have money available for ESSENTIAL Services, and funding pensions is NOT essential.

  36. SeeSaw says:

    Of course.

    I don’t know anyone who retired in their 50’s with 90%, but if they do exist, in other entities, I would not consider them leaches, if they followed the rules of their employment. Anyone retiring in their 50’s would obviously forfeit about 20% off the top of the unmodified amount if their beneficiary is about their same age. Really, almost nobody receives the unmodified amount of their, respective, calculated pension. And 3% automatic COLA’s–what is that? The majority of CalPERS recipients get a maximum of 2%, after two calendar years of retirement, depending on the CPI. I received 1.4% and 1.6%, in a couple of my recent COLA years. I was age 72 at the time of my retirement.

  37. howard beale says:

    Madame SeeSaw:

    If all government workers put in 40 years like you and retired at 72, there would be no crisis. Congratulations on your considerable accomplishment.

  38. counterfeit says:

    Robert/Nick: Very good comments. I might be interested to hear regarding just about any gains in your SEARCH ENGINE MARKETING activities once this is certainly applied.

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