Pacific Grove Reformer Alleges Pension Increases Passed Without Due Process
Editor’s Note: Pacific Grove may be one of the smallest cities in California, but it is on the front lines of the battle for pension reform. Facing financially devastating annual billings from CalPERS, citizen activists are uncovering evidence that the pension benefit enhancements passed by Pacific Grove’s city council may not have complied with the law, and even allege willful deceit on the part of some of the council members. John Moore, a retired attorney living in Pacific Grove, recently wrote a letter to the editors of the local newspapers serving the Monterey Peninsula which is posted here. This isn’t the first time Moore has provided explicit and well documented arguments for how citizens in Pacific Grove were hoodwinked by powerful public sector unions, financial special interests, and compliant elected officials who all worked together to further their common agenda. The contents of this letter deserve careful study by editors of the papers responsible for informing the public, not only for the sake of Pacific Grove and its residents, but because there is plenty of evidence to suggest that what allegedly happened in Pacific Grove, abuse of due process by elected officials when approving retroactive pension benefit increases, happened elsewhere in California starting around 1999 For a detailed account of the Pacific Grove pension debacle, read Moore’s eight part series on UnionWatch, “The Fall of Pacific Grove.”
To the editors of the Cedar Street Times and the Monterey Herald; Because you are so blind concerning the deception that was perpetrated on the 2002 Pacific Grove City Council and the people of Pacific Grove, here is a “primer’ on a critical piece of evidence. Make a copy of the one page attachment and then follow my simple instructions on this page as I take you through the attachment.
The attachment is a copy of the report of the actuary related to the proposed 2002 pension increase. The city manager had and hid the report from the council and the public in 2002. Its existence was not discovered until May of 2009.
Government code section 7507 mandated that the 2002 pension increase could not be legislated until, the council (not the city) had the full actuary report and the future annual (yearly) costs were made public at a noticed public meeting 10 days before the adoption of the increase. So, follow these numbers on the attachment.
1. Identifies that the actuary has provided cost figures for the years 2002-3 and for 2003-4;
2. Identifies that the city had chosen “Post-Amendment Alternative 3.”
3. Indicated that if the pension increase was adopted before July 1, 2002, the increased rate applied to total fire and police payroll would be 1.516%. That calculation came to a cost of $51,500;
4. Indicated that if the pension increase was adopted July 1 or thereafter, the increased rate would be 23.7%. That calculation came to a new cost of $805,000 per year;
5. Shows that the city manager had chosen the longest (most expensive, back loaded) amortization rate(for losses);
6. This paragraph is critical. It proves that the $51,500 cost was what the actuary called the “initial (not annual)” cost if the increase was adopted by June 30, 2002. The actuary then makes it clear that if the “initial” cost was chosen, the full year 2003-4 would cost $805,000 (an estimate of future yearly cost). the council and the public were not told the 2003-4 cost.
I have attached a second document that is further evidence of the intentional deceit practiced on the council and the citizens in the 2002 adoption process.
In line one the city manager said: “The cost to change to this new retirement is significant.” Think about that statement. He is about to inform the council that the cost is $51,500, but he indicates that in his opinion as their expert, that is a “significant” sum. He also knew that the council did not know about the actuary report, which he had analysed and that showed that the cost for the next year would be $805,000. Why would he tell such a massive lie? Answer: To keep the council from asking about the $51,500 quote. And it worked.
In the last line he said: “Each year, CaLPERS re-evaluates the cost to public employers based on current enrollment and standard actuarial assumptions.” Again, as set forth in number 4 of the first attachment, he had the rate for the next year He knew the cost for the next year would exceed $800,000. So his whole purpose of that line was to lead the council to believe that the rate for the next year was unavailable, although he had that cost right in his private work papers. A+ for deceit by the manager.
It is my hope that this information will help assure that your future reporting about the 2002 pension increase adoption is more accurate. This is just a sample of the conduct the current council is defending at all cost.
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.