Monday, July 31, 2017

City Hall Report: Sierra Madre's Employee Pension Obligation Numbers Are Impressively Large


Mod: Back at the beginning of what has been a fairly eventful month of July, City Manager Gabe Engeland released several reports on Sierra Madre's rather at-risk financial condition. These reports dealt with the coming year's budget, the travails of the "water enterprise" and its scary bond laden debt load, and city employee pension obligations. Today we'll deal with pension obligations. What we are supplying here comes from the pension shortfall numbers being supplied by the City of Sierra Madre, and a somewhat copacetic report from the Stanford Institute for Economic Policy Research. Here is the CoSM report (link):


Mod: What follows now are the numbers supplied to us by the Stanford Institute for Economic Policy Research, which are no better. This is how they display Sierra Madre's pension woes (link):


We have never claimed to know everything here at The Tattler, but we've also never been afraid to ask questions. It is always better to know. I'll be running these following questions by City Manager Engeland today, who has really been exceptional at getting back with answers.

While the "Actuarial Liability" numbers being supplied by both City Hall and this Stanford based outfit are the same at $10,678,00, there is another number. The Stanford Institute for Economic Policy Research also talks about something called "Market Pension Debt." At right around $40 million, that figure is approximately four times Sierra Madre's reported actuarial pension debt, or $8,500 per unhappy household.

Sierra Madre's report does not discuss "Market Pension Debt."

The American Enterprise Institute claims that "Market valuation of pension shortfalls more accurately shows the risk" to city budgets and its long suffering taxpayers. You can link to an interesting article the AEI has supplied on this topic by clicking here.

My questions today are why is there such a large numerical difference in these two methods of reporting pension debt, and why has the city been averse to discussing the far more robust market valuation figures?

I will let you know what I find out in the next day or so.

sierramadretattler.blogspot.com

33 comments:

  1. The expected debt per household will become a severe burden in coming years as limited ability of tax base will lay the problem of paying for former and current employees pension will amount to a albatross around everyone's neck. Each time there has been a cost cutting plan presented to the public those who stand to gain the most have shot them down so now all are stuck watching the debt raise to a un bearable amount and still climbing.

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  2. This is really a crime. As cities slash services to customers and sell off assets like the the library property in Sierra Madres case, we continue to pay exorbitant salaries and allow the public employees to retire at the ripe old age of 50. We do this because the city council is afraid to stand up to the public employee unions and because the unions often financially support their campaigns to get into office. Cities also have to "compete" with other cities and match whatever benefits other cities offer which creates this leapfrogging of ever higher salaries as one city after another plays fast and loose with the taxpayers money. Meanwhile cities starving for revenue sources allow overdevelopment which causes increased pollution, traffic congestion and the loss of open space. The public employees should never have been allowed to unionize. At the very least, let's shift them to defined contribution pensions rather than defined benefit pensions. That way cities actually have to budget each year for what they promise. City Councils then cannot over promise and then a future city council has to deal with the consequences long after the people who made the irresponsible promise are long out of office.

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  3. Like most cities in California that signed up for current form of pensions; Sierra Madre had its own retirement pension system, until this new change was voted in by council.
    Sacramento and Unions did their best to convince California's cities, their system was best.
    Sierra Madre council members took the bait, this town is on the hook
    What makes this set up better for the heavily Democratic lawmakers and Union reps in California, is that the retirement investments are market driven.
    If the investment ties into a loosing or falling stock, the Sacramento/Union's investment club is allowed, by how the bi laws were written into contracts, to make up that short fall from the cities.
    Although simplified picture, you get it...were stuck!
    Attend council meetings, ask questions and expect answers.
    Majority of bad management and poor decisions from the council are in the past.
    As for the public safty CalPERS portion, the more that; lets say the Fire Department, could show an increase in calls answered, rid itself of Volunteers and increase salaries; the more lucrative the CalPERS platinum parachutes for retires; the amount you retire on is based on your highest portion of pay!

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  4. So Sierra Madre is either $10 million in the hole to CalPERS, or $40 million? Depending on the accounting practices you use? Naturally those who favor these pensions, or want to make it look like things aren't quite so bad, would go for the $10 million number. Like the City Manager did. And those who oppose CalPERS and revel in even more financial disaster? They choose the $40 million number. It is like a smorgasbord. Just choose the dish you like best and have at it.

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  5. It our staff and police work hard and remember they are underpaid. Lol

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    Replies
    1. They have to. There's bagpipers out there!

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    2. If you hear something, say something.

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    3. 9:23, all that victim moaning and complaining that came from everyone in city hall was really encouraged and amplified by Elaine Aguilar. Maybe some of it will be tampered with the new guy. As in, "Gee, we sure are lucky to have this easy job with all these benefits that are hard to come by in the private sector."

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    4. This city has been run into the financial ground. The question now is can it be brought back.

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  6. Anthony Scaramucci is out as White House communications director, Trump can't even pick his nose.

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    Replies
    1. Ridiculous circus. It would be funny if the head clown didn't have possession of the nuclear launch codes.

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  7. New York-New York...
    Too much attitude, the mouch is out.
    When communicating with others,extra adjectives are not necessary when trying to get your point accross.

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    Replies
    1. Who could have predicted there was someone who could be even more offensive than the Vulgarian in Chief?

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  8. Just think...if Sierra Madre had contracted with LASD for police service, not only would the city be saving money today, they wouldn't have the PD portion of the pension debt getting bigger (except by the amount they aren't paying anyway to keep or catch up).

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  9. Great ! The City goes bankrupt because of the pensions for bagpipe chasing Police. Barney Fife would roll in his grave.

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  10. 3:51pm. Stop with the fake news and go listen to the Sierra Madre City Council meeting when the Sheriffs vs PD contracts were discussed.
    The City would have been responsible for CalPERS with the Sheriff's Department after the initial year was worked. Nothing is for free.

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    Replies
    1. Wrong. Sheriffs do not get CalPERS. Stop the fibbing.

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    2. 5:01. No. Just shows you don't understand what's what with public pensions. LASD is part of the LA County Employee's Retirement Association, NOT CalPers. The county system is probably the healthiest such one in the country. The city would not have incurred any additional CalPers obligations. They still would have to deal with the existing debt on the PD pensions. The LASD contract rates include pension contributions to the county system.

      Learn what you are talking about before you try to make people think you actually do.

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    3. 5:01 is the fake news.

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  11. LA Metro Water Department, same system as the LASD?

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    Replies
    1. No, only employees of LA County.

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    2. 7:16 is thrashing around like the snake that just lost its head.

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  12. What was the agenda package and study comparison of both departments after a three year contract, where it was shown that Sierra Madre would end up in the same place that it is now?

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    Replies
    1. How's that Replacement Sierra Madre PD working our for you? Have they caught the Keebler Elves yet?

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    2. The SMPD appear to be doing a good job, they were never replaced.
      What's your problem? are you with the Sheriff's department and looking for a job closer to home?

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    3. You must be new to town.

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  13. My cat's breath smells like cat food!

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  14. Thanks Mod, I read this article twice and find it a little over my head....lots of numbers. But I'm thinking that those UAL expected annual increases are going to put a stake through the heart of Sierra Madre. Why is there such a large difference in reporting these two numbers of pension debt is an excellent question. Glad you are looking out for us. I'll be anxiously awaiting Mr. Gabe's answer.

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    Replies
    1. I did get a response from Gabe, and I will be posting his take on Wednesday. I also asked a couple of other folks for their opinion on this, and there is one I have yet to hear back from. I'm giving him an extra day.

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  15. We're in the hands of idiotsJuly 31, 2017 at 10:56 PM

    Scaramucci, Senior White House Officials Fooled Into Sensitive Exchanges With Email Imposter
    http://www.slate.com/blogs/the_slatest/2017/07/31/white_house_officials_fooled_into_exchanges_with_email_imposter.html

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  16. It’s unfortunate that future generations, unable to vote today, will bear the costs of many enacted pension programs, entitlements and boondoggle projects, requiring them to pay higher taxes and work later into their lives to pay for these promises. It’s the inmates running the pension Asylum that are loading up system with lucrative packages for themselves, to be paid for by taxpayers.

    The international business world is intelligent enough to know that DEFINED BENEFITS, neither capped nor precisely quantifiable in advance, financial disasters to any business, thus all businesses focus on the known, i.e., defined CONTRIBUTIONS alone.

    Stealing from the young who have no votes, but silently shoulder the costs and bear the burden of unfunded promises of these programs to enrich the old seems to describe the Governments expansion of entitlement benefits and other government services, along with the taxes young people will have to pay to support them, mostly to subsidize older Americans.

    The inmates know that debt for our future generations buys votes. Over the decades, the proven “concept’ practiced by voters is to defer as much financial responsibilities as possible from our current financial responsibilities to future generations, that have no votes on the subject. Simply stated, if we cannot afford it today, pass it off to the future generations to minimize any impact on our current lifestyles.

    Another insult to the taxpayers and future generations paying their pensions is that many of those early retirements collect their guaranteed pensions, and then take a second job.

    Virtually all elected officials are heavily financed by unions which are focused on entitlements for their current members. The unions, government, and other bureaucrats have been very successful in manipulating the system to enrich themselves. Thus, no changes can be expected in the foreseeable future for elected officials to ever abandon their source of votes.

    Even before those young folks can vote our Golden State schools are on track to force substantial budgetary cutbacks on core education spending, as public schools around California are bracing for a crisis driven by skyrocketing worker pension costs that are expected to force districts to divert billions of dollars.

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    1. Excellent analysis - and totally accurate, Mr. Stein!

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    2. Excellent analysis - and totally accurate, Mr. Stein!

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