Posts

Were Pensions Benefits Retroactively Enhanced Without Notifying the Public?

In the Last 25 Years, Sonoma County’s Pension Liability Rose ELEVEN TIMES Faster Than Tax Revenues

In August of last year retired attorney George Luke sued the Sonoma County Employees Retirement Association (SCERA) and the Board of Supervisors (BOS) because according to County records they did not follow the law when pensions were increased in 2002 and 2003. According to the law, before increasing pension benefits the supervisors are required to (1) hire an actuary to determine the future annual cost of the increase, (2) enact by majority vote a board resolution adopting the new formulas and (3) present the cost to the citizens at a regular BOS meeting so they would have the ability to know how their tax dollars are being spent. None of these requirements were even minimally met and that is why Luke sued.

Growth of Sonoma County Pension Liability vs Other Indicators

What is really appalling is documents obtained by my organization, New Sonoma, just 2 years ago proved it was not the BOS that enacted these increases at all, but a closed door settlement of a lawsuit between the employee unions and SCERA over what pay items should be considered pensionable. Here is how it happened.

In 1998 to settle another lawsuit brought by the unions (they have sued the county many times) SCERA added 45 additional pay items to pensionable pay, but the unions sued again over 2 items the unions thought should also have also been considered pensionable, the employer pickup of the employees’ pension contribution and their health insurance premiums. As part of the settlement somehow new formulas, which SCERA cannot legally change, became part of the settlement.

There’s more. The agreement struck between the employee unions and the supervisors required the Safety employees to pay half the cost of the increase and the non-safety employees to pay 100% of the cost. But because costs were underestimated by SCERA’s actuary, the additional employee contributions have fallen well short of the amount needed to avoid shifting the cost to taxpayers. This has been admitted by the supervisors and even former assembly member and current SEIU negotiator Michael Allen who said instead of the increased employee contribution being 5% it should have been 20% of salary. His estimate is exactly what mine is and if true, the county would have $70 million more each year to spend on basic services like road and infrastructure maintenance, which has about a $1 billion backlog to go along with the $1.1 billion unfunded pension and retiree healthcare liability.

Unfortunately, George lost the first round of his suit because Sonoma County judge Rene Chouteau ruled that even if the County did not follow the law it did not matter because the 3-year statute of limitations had been exceeded, which some might think is a strange ruling when the violation was failure to notify citizens of the increase and there is no resolution adopting the increase (so it never really happened). The plan now is to appeal the ruling because case law indicates every time a new check is written for an illegal pension amount, the statute of limitations starts all over again.

Why should county employees and retirees be worried? As the chart indicates, these illegal increases caused pension liabilities to grow 772 percent from 1993 to 2017 — a rise that was eleven times more than the 66 percent increase in Government Fund revenues during the same period.

The bottom line is that what can’t continue won’t and the longer the supervisors and unions wait to reform the system, the more drastic cuts to pensions will eventually be.

Ken Churchill is the Director of New Sonoma, and organization of financial experts and citizens concerned with the finances and governance of Sonoma County. More information can be found at www.newsonoma.org.

REFERENCES

Here is a link to the full text of the amended complaint:
George Luke Vs. Sonoma County

Here is a link to the exhibits for the lawsuit:
George Luke Vs. Sonoma County Exhibits for Original Complaint

Here is a link to the exhibits for amended complaint:
George Luke Vs. Sonoma County Exhibits for Amended Complaint

Here is the article that appeared in the Press Democrat:
http://www.pressdemocrat.com/news/7471405-181/lawsuit-targets-enhanced-pension-benefits?artslide=0

Sabotaged: North Bay Business Journal On-Line Poll on Project Labor Agreement

On January 22, 2014, the North Bay Business Journal (covering Sonoma, Marin, and Napa counties in California) began an on-line “Pulse Poll” asking readers to vote on whether they supported a proposed government mandate for construction contractors to sign a Project Labor Agreement with unions as a condition of working on Sonoma County projects over $10 million. The Sonoma County Board of Supervisors had scheduled a vote on the policy for its January 28 meeting.

The number of votes accelerated rapidly as word of the poll spread throughout the country. Tweets were sent from union organizations as far away as Philadelphia and New Hampshire urging people to vote.

By January 26, there were 10,068 Yes votes and 8,620 No votes, with a small number of people voting “I Don’t Know.”

Over the weekend, the number of Yes votes surged. Then on January 27 the North Bay Business Journal suspended the poll and posted this message:

To our readers,

Our online reader poll on project labor agreements, an issue that is now before the Sonoma County Board of Supervisors, drew an approximately 26,000 votes since launched Wednesday, Jan. 22. Thank you to all of you who participated with your vote on this important issue.

However, based on a review of the voting traffic patterns of the poll, we have concluded that the system in place to ensure a single vote from a single browser was compromised. Thus, the poll results — and any conclusions one tries to draw from them for or against — are invalid.

Again, thank you to our readers who took the time to vote.

Brad Bollinger, Publisher
Jan. 27, 2014

It was only an unscientific on-line poll conducted by a suburban weekly business newspaper with circulation between 6,000 and 8,000. But based on this incident, would you be in favor of an “Employee Free Choice Act” that would allow “card check” union organizing to replace a secret ballot election for unionization overseen by the National Labor Relations Board?

The board approved the Project Labor Agreement policy on a 4-0 vote.


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.

Election Gains for California Unions in 2012 Drive Push for Project Labor Agreements

The explosion of Project Labor Agreements on government projects in California since the November 6 elections is not surprising to long-time observers of labor union initiatives at local governments.

In the six months after the November 2008 Presidential Election, emboldened and confident construction trade unions won Project Labor Agreements at eleven local governments in California. It was a dramatic upsurge from the usual handful of Project Labor Agreements that California local governments had considered each year.

Four years later, the November 2012 Presidential Election once again expanded and solidified gains for union-backed candidates at local governments in California. And again, the result is a flurry of new government requirements that construction companies sign Project Labor Agreements with unions as a condition of contract work. Here’s a timeline of Project Labor Agreement activity in California since November 6.

November 6: voter approval of Proposition Z means that the San Diego Unified School District extends an existing Project Labor Agreement with the San Diego County Building and Construction Trades Council to construction funded by an additional $2.8 billion in bond sales, as directed by a resolution passed by the board of directors on July 24, 2012.

November 8: union officials and representatives of the outgoing Mayor of San Diego triumphantly announce a “deal” that ends union environmental objections to the planned San Diego Convention Center Phase 3 Expansion. A November 15 press release from the San Diego County Building and Construction Trades Council confirms that contractors will now be required to sign a Project Labor Agreement as a condition of working on the expansion. The City of San Diego refuses to provide the Project Labor Agreement to the public.

December 11: the board of trustees for Milpitas Unified School District approves a Project Labor Agreement with the Santa Clara and San Benito Building and Construction Trades Council.

December 26: a Project Labor Agreement is finalized and then added as Addendum 8 to the bid specifications for the first construction segment of California High-Speed Rail, without discussion or a vote by the High-Speed Rail Authority Board of Directors.

January 24: the board of trustees of Coast Community College District in Orange County discusses a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council.

February 6: the board of trustees of the Solano Community College District hears a scheduled staff presentation about a Project Labor Agreement with the Napa-Solano Building and Construction Trades Council.

February 6: the board of trustees of Coast Community College District hears a scheduled staff presentation about a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council. The board appoints a task force to study the issue and return with a report.

February 12: the board of trustees for Lynwood Unified School District approves a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council.

February 13: the board of trustees for Ohlone Community College District in Fremont approves a Project Labor Agreement with the Alameda County Building and Construction Trades Council.

March 6: the board of trustees of Solano Community College District hears formal scheduled presentations from groups supporting and opposing a Project Labor Agreement.

March 6: the board of trustees for El Monte Union High School District votes 3-2 to table consideration of a Project Labor Agreement negotiated with the Los Angeles and Orange Counties Building and Construction Trade Council.

March 6: multiple speakers tell the board of trustees of Coast Community College District during general public comment that they oppose a proposed Project Labor Agreement with the Los Angeles and Orange Counties Building and Construction Trade Council.

March 12: the board of trustees for San Francisco Unified School District directs staff to develop a local contracting and hiring policy to include in a planned Project Labor Agreement with the San Francisco Building and Construction Trades Council.

March 19: the board of trustees for Hartnell Community College District in Salinas discusses a Project Labor Agreement with the Monterey/Santa Cruz Building and Construction Trades Council.

March 19: the El Monte City Council approves a Project Labor Agreement with the Los Angeles and Orange County Building Trades Council.

April 1: the board of trustees for Rancho Santiago Community College District votes 5-2 to begin negotiations for a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council.

April 3: the board of trustees of Coast Community College District again discusses a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council. On a 3-2 vote, the board rejects a proposal to begin negotiating a Project Labor Agreement with union representatives and again instructs the task force to study the issue and return with a report.

April 8: the Pasadena City Council approves negotiations for a Project Labor Agreement on the Glenarm Power Plant Repowering Project with the State Building and Construction Trades Council and the Los Angeles-Orange County Building and Construction Trades Council.

April 9: the Sonoma County Board of Supervisors establishes a Project Labor Agreement Ad-hoc Committee based on a priority set by the board at its February 8 strategic planning session to consider a Project Labor Agreement policy with the Sonoma, Lake & Mendocino Counties Building and Construction Trades Council.

April 10: the board of trustees for El Monte Union High School District pulls from their meeting agenda a scheduled vote on a Project Labor Agreement negotiated with the Los Angeles and Orange Counties Building and Construction Trade Council.

April 16: the American Canyon City Council holds a “study session” on a Project Labor Agreement with the Napa-Solano Building and Construction Trades Council.

April 16: the board of trustees for the College of Marin approves the expansion of its existing Project Labor Agreement with the Marin Building and Construction Trades Council to include the New Academic Center. The board also holds a “study session” on Project Labor Agreements.

April 23: in response to a lawsuit, the City of San Diego provides the public with a copy of the Project Labor Agreement announced in November 2012 for the San Diego Convention Center Phase 3 Expansion.

April 23: the board of trustees for the San Francisco Unified School District approves a local contracting and hiring policy to include in a planned Project Labor Agreement with the San Francisco Building and Construction Trades Council.

April 29: the public obtains records indicating that the Mayor of the City of Fresno asked the U.S. Secretary of Transportation to approve a targeted hiring policy for California High-Speed Rail included in the context of a Project Labor Agreement.

April 30: a task force at Coast Community College District votes to recommend to the full board of trustees that it not require contractors to sign a Project Labor Agreement with the Los Angeles-Orange County Building and Construction Trades Council.

May 7: the board of trustees for Hartnell Community College District in Salinas votes 4-3 to negotiate a Project Labor Agreement with the Monterey/Santa Cruz Building and Construction Trades Council.

Union officials supporting a Project Labor Agreement get ready for the May 7, 2013 meeting of the Hartnell Community College District board of trustees. "P.L.A. Yes!"

Union officials supporting a Project Labor Agreement get ready for the May 7, 2013 meeting of the Hartnell Community College District board of trustees. “P.L.A. Yes!”


Kevin Dayton is the President & CEO of Labor Issues Solutions, LLC, and is the author of frequent postings about generally unreported California state and local policy issues at www.laborissuessolutions.com. Follow him on Twitter at @DaytonPubPolicy.