Wednesday, June 29, 2016

Some Very Real Problems Facing Small City Governments

Mod: I missed last night's City Council meeting, so if anything stood out for you please share it here. But judging by the topics in the agenda the problems that were discussed had mostly to do with specific financial needs. The city has to raise more money to cover the ever increasing requirements of its employees. Sierra Madre is hardly unique in that. The budget problems of 2016 & 2017 are now mostly driven by retirement funding. And with any drops in the stock market cities will need to ask for additional increases. Here are two articles that explain the financial pressures almost all California cities are facing.

Manhattan Institute - California Crowd-Out: How Rising Retirement Benefit Costs Threaten Municipal Services: In recent years, California municipalities have seen retirement benefit costs grow at a rate above that of taxes, fees, and charges. “Crowd-out” is the term given to this condition by some public officials forced to deal with the resulting fiscal strain.

Balanced budget requirements mandate that when costs grow more rapidly than revenues, something must give. All too often, this has meant reductions in core government services, most of which—police, fire, libraries, parks, and street and sidewalk maintenance—are delivered at the local level in California.

Retirement benefit costs have caused California localities to underfund basic infrastructure maintenance needs, even in affluent areas such as Sonoma County. Teachers in Los Angeles are threatening to strike over stalemated contract negotiations, as the school district has found itself unable to satisfy union demands for increased personnel and salaries, as well as its long-term benefit commitments.

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Fox & Hounds - What Brexit Could Mean for Public Pensions: Since Britain’s stunning vote to leave the European Union, U.S. markets have already plummeted and markets around the world are in mayhem.  Economists warn that the vote will continue to have adverse consequences on financial institutions and markets around the globe, including the U.S., for an unforeseen amount of time.

So what does that mean for public pensions?

Most American public employee retirement systems are heavily invested in stocks because they are counting on high investment returns to cover huge gaps in funding, which were created by decades of over-promising benefits and underfunding annual contributions.

As a result, public employee retirement systems have become unsustainable and the problems have been compounded by continually increasing benefits based on unrealistic and risky market expectations. So when the stock market turns negative, as inevitably it will, pensioners will run the risk of losing their retirements or taxpayers will be left picking up the shortfall.  High risk investment practices are particularly dangerous in periods of market volatility because of the potential for big losses that cannot be recovered before the next recession.

If pension systems were set up with less risk (as they once were), more sharing of that risk and lower return expectations, then the real cost of retirement benefits would be more apparent to everyone and retirees could count on being paid what they have earned.

Today’s state and local public employee pension system is already in crisis with more than $1 trillion in unfunded liabilities. Brexit should be the wake-up call drastically needed for policymakers to turn the tide and make the systems sustainable. If they don’t get control of the public pension crisis now, events like a Brexit mean more and more plans will get further and further behind on their funding obligations. And the consequences for taxpayers and retirees are dire, as we have seen in Detroit and Puerto Rico. 

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And then there is this news



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sierramadretattler.blogspot.com

31 comments:

  1. Many articles have been written about the fate of CalPERS with so many factors changing that have direct bearing on this retirement institution surviving at all, life support is what one author used to describe the month to month solvency question it's true CalPERS has become a victim of it's own making politics, money and promises make strange bedfellows.

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  2. Please explain why a town as small as Sierraa Madre Needs an assistant manager? I would guess we need a more efficient city manager, not an assistant.

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    1. never used to have one. this position was created when the city did away with the community services director. the city shifted her to a different position with a big pay increase. that is the way the city cuts staff.

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    2. The idea was also to spread power around a little bit at city hall. This was seen as a way of keeping the city manager from being in control of everything. Elisa was the person who was given some of the things Elaine used to do. With Elisa leaving things might go back to the way they used to be.

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  3. Good luck to Lisa, she was a very capable civil servant. Now, this is what to watch for: if Elaine does not ask for a replacement and pretends that she can function without an assistant city manager, she is trying to hide her actions. Same thing happened years ago. Jim McRae did not want an assistant, never took a vacation, and finally when the city council insist that he hire an assistance city administrator, the sneaky stuff he way getting away with (creative budgeting, etc.,) rose to the surface like so much skim on boiled milk.

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  4. The policy makers along with those expensive lawers that work for them, gave us this newer version of government golden parachute retirement funding. Many city councils in California, then voted for this new updated investment with the state.

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  5. Watch the presentation by the county vector guy at last night's council meeting about the increased threat from mosquitoes. Very scary.

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  6. The City Council should continue downsizing city expensives by the title change of City Manager; back to City Administrator, with no assistant.

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    1. The City Manager has a very competent secretary who handles a lot of work for the CM.

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    2. 8:12 is the threat as bad as the Killer Bees were?

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    3. Zika virus.
      https://www.cdc.gov/zika/

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    4. What about SARS? Or was it the swine flu? Or maybe it was the communist. For those living in fear there's always some sort of 'threat' to over worry about.

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    5. Zika is some pretty serious stuff. And no, I do not think it subscribes to any known political ideology.

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  7. Cox is moving to the city that John Gillison jumped to, where he makes $384,500 as city manager. So now she'll be his deputy for something like $264,000. (Transparent California, 2015)
    He has probably been waiting to hire her away.
    Neither of them deserve those tax dollars.

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    1. $640,000 a year for the pair. What a world they live in.

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    2. Tell your kids, if you want to be rich when you grow up, get a job as a secretary for a city.

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    3. Rancho Cucamonga is a hard town to work in. All of the houses look the same.

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    4. I guess $178,000 wasn't enough.

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    5. Imagine, $80 thousand more for pushing the same kind of paper around.
      And once you learn the jargon required, that's all those jobs are.

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    6. Nu-uh 6:38! Have you forgotten all the party planning they do? Can't have any city parties without the staff.

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  8. Look at the terminology: Secretary, Executive Secretary vs Assistant City Manager; City Manager or City Administrator; Director of Communnity Services vs Community Services Supervisor, etc. etc. etc. It is all a power struggle and don't you forget it!

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  9. John Gillison was appointed as City Manager for the City of Rancho Cucamonga effective September 1, 2011. He served as the Assistant City Manager for the City of Rancho Cucamonga since 2009. Prior to taking over the position as Assistant City Manager, John was the Deputy City Manager for the Administrative Services Department, which includes the Finance, Human Resources, Risk Management, Geographic Information Services, Special Districts, Purchasing and Information Services functions. John served in that capacity from 2007 through 2009.

    Was Gillison the CM who preceeded Elaine? Has she been here since 2007 or did we have an interim for a bit of time?

    I am getting whiplash watching these "professionals" ping pong back and fourth around the southland in these musical chair city government positions.

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    1. Sounds like Sierra Madre is Rancho Cucamonga's minor league affiliate.

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    2. Eliza moved up from city lifeguard to community services to community services/personnel director to personnel director to her current job. During that time she went into a graduate program (paid for by the City). She has certainly paid her dues to the City. Ambitious? Yes but more power to her for hanging in there. I wish her good luck without any sour grapes and hope the City can find someone who can put up working with Elaine. You couldn't pay me twice as much as Elisa was getting to work for Elaine.

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  10. I've always heard that Ms. Cox did good work, and I have nothing against her personally. It's just the I work in the private sector, so I find these municipal salaries and benefits truly outrageous, and can't see any future for them that doesn't involve bankruptcy.

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    1. Eventually ticks fall off, or, the host dies.

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  11. Local government is organized crime. The local pols who enable it pimps.

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  12. Sierra Madre always had a City Administer never a City Manager. Another Bart Doyle council decision for upgrading that position
    .

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    1. He also handpicked the people who got that position.

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  13. Just another example of how cities waste tax payers dollars and run thriving business out a town to which they complain we have little or no tax revenue coming in? This is a follow up from a previous RAID lead by Glendora's finest with other California police agency's which ended in a complete failure and embarrassment to Chris Jeffers, D. Wayne Leech, Police Chief Tim Staab. Andy's Auto will be closing and move out of Glendora but just to throw more salt in the wound Glendora decided to make another raid / inspection. Was this raid a jr. Dick Tracy Detective Club meeting, July 01, 2016. Just think of the $65 million dollar budget 2016 - 2017 for the city of Glendora, California - 53% of it goes to people a fore mentioned and their minions. I wonder if these hardcore investigators realize how juvenile they look skulking around on a dangerous railroad track right of way and parking a civilian automobile along side a active rail track. Tim Staab and Chris Jeffers and D. Wayne Leech must be proud of them and how much it costs in investigation fees and insurance coverage for allowing them to be in a dangerous area. Since they can not just walk up to the front door of this business and start their inspection of Andy's Auto center as stated in a search warrant they had drafted up and signed by a superior court judge just more waste of Glendora, California residents tax payers dollars.

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