Saturday, December 12, 2015

CalPERS/GASB Debt Numbers and Facts: Sierra Madre, Arcadia and Pasadena

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We've been writing on and off this week about the big news that cities such as Sierra Madre, Arcadia and Pasadena will soon have to put their unfunded pension obligations and debt data on all of their official yearly accounting paperwork. Some real and very significant transparency for a change, and on an extremely controversial and costly topic.

Cities will no longer be able to hide their financial mischief and unfunded pension obligations in the basement anymore. Those days are now forever gone. To put it in other more official sounding terms, under Governmental Accounting Standards Board No. 68 (GASB), government agencies will soon be required to record a “net pension liability” on all of their balance sheets. Right out there in the open where everybody who cares to can check it out.

These amounts must be disclosed on financial statements issued on or after June 30, 2015. Many local governments have a June 30 year end. Those financials are typically issued in December or January. So by next month the rapidly approaching insolvencies caused by the stupidity of politicians and the greed of public employees will be there for all to see.

Below is a sampling of the sorts of information we can expect to see soon. Californians will then begin to awaken to the fact that they are being ripped off at historic levels. All on the behalf of people who were supposed to be working for them.

Obviously somewhere along the line those tables got turned. Today I have something for each of the three cities this blog covers. Sierra Madre, Arcadia and Pasadena. In their own way each are something to behold.

Sierra Madre

Yesterday we speculated about what the differences in unfunded pension debt would be for full service cities versus those that outsourced such things as safety services.

Here are a few numbers that show Sierra Madre’s net pension liability is almost 6 times higher on a per capita basis than the liabilities for cities that use the L.A. Sheriff's Department.

Sierra Madre (SMPD): $9,000,000 divided by 11,056 = $814 of city employee pension liability per person.

La Canada Flintridge (LASD): $2,600,000 divided by 20,553 people = $126 of pension liability per person.

Santa Clarita (LASD - never had its own police department and somehow survived): $28,000,000 divided by 179,590 people = $155 of pension and post-employment benefits liability per person.

Arcadia

Here's the big news about Arcadia's pension liabilities. Particularly the unfunded kind, which is the point here. Arcadia’s GASB 68 adjusment may be more than $104 million. Their net position as of June 30, 2014 was $92,167,401Arcadia may already be insolvent.

So you know, Bankruptcy is when you cannot pay your debts as they come due. Your assets can be larger than your liabilities and still be bankrupt if the assets can’t be used to pay bills. Insolvency, on the other hand, is when your liabilities exceed your assets. If the liabilities are long-term you may be able to continue to operate but the fact is you have been grossly mismanaged.

The unfunded numbers were disclosed in the notes to Arcadia’s financial statements last year (see below). In 2016 they actually have to be booked as liabilities, and can no longer be discreetly tucked away where nobody can see them. Previously, these liabilities have been unbooked and buried in notes to financial statements. Places few living souls ever go.

Now they actually have to be booked as real liabilities. Arcadia only had $92 million in their government fund, with most of that being land, buildings, etc. None of that can ever be spent to pay this liability.

Here are the numbers as unearthed from the dark depths of Arcadia's website.


Pasadena

Pasadena’s GASB 68
adjustment may be as high as $261 to $300 million. Pasadena has a total net position of $450 million in its governmental funds and another $716 million in its business-type funds.

Pasadena: $300 million divided by 139,731 = $2,147 (!) of per person pension and post-employment benefits liability.

What a mess. Remember, La Canada Flintridge had $126 of pension liability per person. Some difference, right? And where would you rather live?

Here is the documentation:


The moral of this story? Outsource everything. As quickly as you can.

sierramadretattler.blogspot.com

72 comments:

  1. The sheriff's 20/20 proposal will not only free up $800k annually to fund immediate improvements to our little league/softball facilities, senior services, and the library, it will also stop the Pension bleeding. The council needs to act on this before April.

    Ps: the sheriff will provide 20% more patrol hours for 20% less money

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    1. Mr baseball forget that money going to little league, it needs to go to fix our pipes

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    2. Most residents use no city services at all. Heasley Field for is the only thing the city has that is useful for people with kids.

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    3. Quoting ... "Ps: the sheriff will provide 20% more patrol hours for 20% less money"

      What are the SPECIFICS of the proposal to accomplish THAT ?

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    4. You didn't read the Sheriff's proposals? Lazy daisy. Look them up. They're on the city website.

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  2. If the council does not act on the 20/20 proposal by April the "repeal the uut proposal" will pass.

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  3. $814.00 per PERSON in Sierra Madre is $3256.00 per family of four. That's a lot of lattes!

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    1. The Josh Moran Latte' Tax Scale (JoMLaTS) has made it so easy for me to understand tax issues.

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  4. No amount of UUT tax money will ever cover this debt. time to outsource and time for City Hall to sharpen its pencils to reduce spending.

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    Replies
    1. Thank you Crawford and Tattler for promoting outsourcing. Implied in that wisdom is BK. Why? Because that is the only quick way to get from being a full service insolvent City to being a solvent,basic-service City.
      Sorry about the haircut to the Platinum Pensions for City employees but my property value will also take a hit !

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  5. I think the Sheriffs are a done deal. The City Council is doing herd management now, but once all the numbers come out most people will understand that keeping the SMPD is an unsustainable impossibility.

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  6. These amounts must be disclosed on financial statements issued on or after June 30, 2015. Many local governments have a June 30 year end. Those financial are typically issued in December or January. So by next month the insolvency and rapidly approaching insolvency caused by the stupidity of politicians and the greed of public employees will be there for all to see. you've been robbed while you slept and the thieves are still in the house.

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  7. Today is a great day to sign the "No on UUT" petition.

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    Replies
    1. If you ain't angry, you ain't breathing.

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    2. Is there anybody here who does not believe that the UUT hike to 10% as proposed by the City Council will mostly go to CalPERS? Anybody?

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    3. No. It's a done deal..unless we fight

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    4. Who would vote for a CalPERS tax?

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  8. The city founded by some grumpy old lady economist. They outsourced everything. They have zero long term debt.

    http://youtu.be/f8qFvo2qJOU

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    Replies
    1. Government purchased on the free market. A nice way to end the city hall monopoly.

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    2. CalPERS has turned small city governments into something parasitic.

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  9. Why is it that no one even mentions farming out our water utility. We are paying 2-3 times what our neighbors are paying. For crying out loud, just the connection charge is near $150 every two months. All in, my water bill is north of $450 every two months and I don't use much water. (30 units for a family of 5). In Arcadia I never paid more than $60 a month. Why are we ok with this? The uut by comparison is insignificant.

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    1. i have less than 20 for 4 people and can make it

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    2. Our family of 4 includes 2 teenagers and our bill is $150 every two months. Turn off your sprinklers?

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  10. 5:59A why keep bringing up the Little League Field for repair? It is the least of our worries! Don't they pay a fee to belong to a team? Don't they have dad's and mom's that could volunteer some of the fix up? I think I'd rather have decent water and infrastructure. And let's not forget that we can't even cut down trees anymore because the hydraulic lift truck is no longer repairable! But the Chief can request a new car and get it! This CC will drag it's feet and we'll be more in debt by the time they get around to doing anything. As for the info finally being out there, the general public in Sierra Madre could care less. I doubt whether they will care.

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    Replies
    1. Good post! That hydraulic lift truck will win lots of votes. Way more than the thousands available at the little league and softball fields.

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    2. Okay Lee, I think you missed my point!

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  11. Enjoyed the comparison for other local cities used in this informative article but where can a more expanded list of SGV cities be found for "pension Liabilities" as to further bring the articles topic to other local SGV citizens who are being saddled with huge liabilities also?

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    Replies
    1. Perhaps you would like to research that for us? Lotta work.

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    2. The PUSD is already insolvent in its unrestricted fund. PUSD refused to disclose their unfunded pension liability last year. The state teachers pension isn't as forthcoming with information as CALPERS is. The PUSD's unfunded liability is at least $35 million and perhaps much much more. That entry has now been booked and its likely thePUSD (along with many others) are waiting to issue financial statements over the holidays when no one is paying attention. Those financials will show the PUSD is tens of millions upside down in its unrestricted fund.

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  12. The moral of the story is, La Canada Flintridge-smart, Sierra Madre-not!

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    Replies
    1. Yes. Rather than sinking millions into CalPERS they invested the money in things like their first rate school district.

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    2. And that is what happens when you hire unqualified City Management with an agenda to keep funding City Employee pensions and benefits first. And in the midst of this crisis Elaine is still hiring more staff!
      And Inman wasted $50k on a useless Water Consultant and is now buying drinking water to spread on the ponds to replenish the Arcadia aquifer.
      And the band played on while the Titanic slipped beneath the waves.....

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  13. When is the city council and city manager get the boot, they have clearly shown they can not manage our money! It would be cheaper to buy each a $5.00 Josh Moran latti and asl them to leave peacefully!

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  14. Notice how Bogaard, who voted for at least 8 pension increases in the 16 years he was Mayor decided to leave office just two months before GASB 68 went into effect. Also notice how Michael Beck's last day as city manager will be just weeks after the City of Pasadena releases it's financials showing a $300 million unfunded pension liability and an insolvency in the City of Pasadena's unrestricted fund. Understand this, many of the financial statements for these cities are complete and are being withheld from the public. Pasadena's financial statement for June 30, 2014 was issued to the public on November 14, 2014. It's December 12. Why haven't they issued the financials for the year ending June 30, 2015 yet?

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    Replies
    1. This is all so incomprehensible. How did this happen?

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    2. Sierra Madre will release their Financial Statements right after the UUT vote.

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  15. Accountants are required to fairly present financial information and to DISCLOSE relevant information. They have now finally done their job my forcing these disclosures. Now it's up to you to take action. But you won't. You'll let it all burn because that's human nature.

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  16. And Pasadena City Councilmember Victor Gordo is an officer of one of the City of Pasadena unions. He is on the payroll of the union and he spends all his time advocating for higher wages and higher pensions for Pasadena's union members.

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  17. I can promise you one thing. Harabedian and Capoccia will answer for their gross mismanagement of city finances and their refusal to face the reality that Sierra Madre simply cannot afford its own boutique Cadillac police department. The reason Santa Clarita and La Canada don't have these huge unfunded pension liabilities? Republicans outnumber Democrats in those cities and the unions don't hold sway. In Sierra Madre and Pasadena the Democrats rule therefore unions rule. There are more Reps than Dems in Arcadia. Arcadia's problem is just straight out political corruption and police and fire worship (and retired cop Roger Chandler).

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    1. This explains the rumors about Harabedian not running again.

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    2. sorry as of the 2012 election Sierra Madre had 8172 registered voters of those 3113 are registered democrat

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    3. no. the latest voter registration results show that sierra madre has 3,056 democrats, 2,880 Republicans and 1,687 with no party preference.

      http://elections.cdn.sos.ca.gov/ror/ror-pages/ror-odd-year-2015/political-sub.pdf

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    4. latest numbers from LA county for Sierra Madre
      TOTAL 7,940 4,325 save
      NOT MOVED DEAD 7,409 4,129 save
      DEMPLUS 3,298 2,267 save
      REPPLUS 3,021 2,006 save
      OTHERPLUS 1,621 1,327 save
      DEMOCRAT 3,006 2,104 save
      REPUBLICAN 2,794 1,869 save
      ALL OTHER 2,140 1,679

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    5. I guess that makes Sierra Madre purple.

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  18. Bradbury outsources everything and their property values are hit fine.

    We do not have to reinvent the wheel. Just do what Bradbury and other cities have successfully done.

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    Replies
    1. Except hire Michelle Keith as City Mgr. like Bradbury did. Don't do that.

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  19. and former LASD member Roger Chandler was the "consultant" who helped create the Hawaiian Gardens police department in 1994 which closed a few years after Jolly Roger got involved and Hawaiian Gardens had to go back to the LASD...what a coincidence. And of course the largest operation in the city is the Hawaiian Gardens Casino which employs 1,000 people in a city with an adult population of 10,000. The owner of the casino (who also owned one-third of the commercial property in the city) was paying the city $200,000 a month which they were using in part to pay good ol Jolly Roger. So Roger has been feeding off of government and gambling and real estate interests for a long, long time.

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  20. Did you know that some City of Pasadena firefighters don't even live in the State of California? They commute here from places like Utah and Nevada. If we have a major earthquake disaster these "first responders" can't even get here. The money Pasadena pays is so good we have people commuting by plane from other states to work for the fire department.

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    Replies
    1. Paid firefighters: the biggest racket ever. They get paid to work out, watch TV, eat, and even sleep.

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    2. "First responders." What a heroic term.

      Actually, the 1st responders are those who are already at the scene, who immediately aid those in need; 2nd responders are those who are nearby and rush to the scene; 3rd responders are police, who should be patrolling nearby anyway and thus can get there quickly; 4th responders are/should be EMTs, who can roll pretty quickly once they get the call; 5th responders are fire fighters, who have to wake up and put on all that fancy gear even if its a fender bender or a kitten stuck in a tree.

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  21. According to his official bio Roger Chandler was a sheriffs deputy. According to Transparent California Jolly Roger has been collecting more than $66,000 in annual disability from the LASD since 1990. And yet according to his bio he left the LASD and became chief of the LA housing authority for which (according to transparent california) he is collecting a yearly pension of $42,000 a year. If Jolly Roger was "disabled" in 1990 and has been collecting disability payments ever since how is it he was able to be chief of police of the LA housing authority and get a pension from them. Has Jolly Roger been getting payments for 25 years that he doesn't deserve?

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  22. "Insolvency, on the other hand, is when your liabilities exceed your assets. If the liabilities are long-term you may be able to continue to operate but the fact is you have been grossly mismanaged."

    So you're saying that everyone who borrows, say 80%, to buy a house (liabilities exceed assets) is insolvent and has grossly mismanaged their finances?

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    1. So the city being broke is ok?

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    2. If the mortgage is 80% of the value of the house then by definition the asset value of the house exceeds the debt. The difference (20%) is the equity in the house. If you borrow $700,000 to buy a house worth only $500,000 then you are insolvent because they debt on the house exceeds its value. Many of these cities have now incurred such gigantic pension liabilities that their debts now exceed (or shortly will) their assets.

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    3. Of course not. Neither is giving crack to an addict. Things need to be brought under control. They gave away the store.

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  23. Judas Harabedian will run because the police union to which he sold his soul will tell him to. Hope he enjoyed the endorsement and the flier.

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  24. I didn't mean to imply that those liability numbers were just at the tip of anyone's tongue rather where would be the best place to start if one was trying to find this information out for any city on the SGV area?

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    1. You would need to go the each city's website. Most are still protecting this information and will not reveal it up until the last legally permissible moment.

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  25. 11:07 is obvious not informed and has never needed emergency help. Come on JC and fans, look at what happened to the pension fund, oh, and while your at it look where all the social security money has gone over the years. It's the management who need to be replaced. The pensions and the savings have been mismanaged, it's time for some educated changes.

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  26. if you retire at age 62 in 2015, your maximum social security benefit would be $2,025 a month or $24,300 a year even if you paid the maximum into Social Security your entire life. Angela Loop worked for the City of Pasadena for 3 years and she gets an annual pension of $31,235.16. She has been receiving a pension for 23 years.

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  27. Social Security was never meant to be a Pension

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    Replies
    1. It's more like mad money.

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  28. Mad Money, your mad when you see how little money you get when you've been paying in a lot over 45 years.

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    Replies
    1. It covers the mortgage. For the rest I go to work.

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  29. 5:47 that is our pension money because they took so much you couldn't save any for retirement. I'm voting NO on the UUT.

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  30. I went on quest for the numbers and factrs associated with CalPERS golden parachute retirement programs for Glendora, California and this is what I got: http://www.ci.glendora.ca.us/departments-services/finance/finance-reports the phrase Pile It Higher and Deeper is just what I got.. There is so much Manure in these report that I would need a de saltationn plant to remove all the bill Manure the city packs in to a simple report.

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  31. This is an example of why the next crash will probably destroy the entire economy. Another market crash and the vast pensions funds all go bankrupt because there's no way in hell the cities/states can plug the holes with their budgets.

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