What should Oakland do about pensions?

Here’s one I know you guys are going to love.

On Tuesday, the Oakland City Council’s Finance and Management Committee will receive an informational report on Oakland’s long term pension and other post-employment liabilities. The report will also list a number of options for reducing future obligations. Although no action will be taken on these options right now, if you feel strongly about pensions (and I know a lot of you do), it would be a good idea to go share your thoughts on this one, or at the very least e-mail or call the Committee members beforehand. The meeting starts at 11 (PDF), although the pension stuff is towards the end of the agenda.

The rest of the post is mostly just a summary of the staff report (PDF), so you guys can get an overview, but again, if this is a subject that interests you, I strongly suggest you read the whole thing (PDF).

What kind of post-employment benefits do we offer?

Well, there are a couple. First, there’s CalPERS. This is how we provide retirement benefits to current employees. CalPERS, or the California Public Employees Retirement System, provides retirement benefits for most (but not all – not everyone uses it) public employees in the State besides teachers. Mostly this blog will talk about CalPERS, but I just want to quickly mention the other ones.

We also have PFRS, the Police and Fire Retirement System (PDF). Before we joined CalPERS, we managed our own system, and it serves sworn employees hired before July 1976. I believe there is only one current employee in PFRS, everyone else is retired already or transferred to CalPERS. I’m sure it will not surprise you that we haven’t managed these obligations well. In 1997, we decided that we didn’t like having to pay every year into PFRS and issued bonds to cover the costs through July of 2011.

At that point, we have to start paying. How much, you ask? The most recent estimate of the unfunded PFRS liability is $435.3 million (PDF). That means that in July of 2011, which, in case you hadn’t noticed, is not very far off at all at this point, we’re going to have to cough up something in the neighborhood of $40 million a year (PDF). Where’s that money going to come from? Well, we’re probably (PDF) going to issue more bonds (PDF).

OMERS, the Oakland Municipal Employees’ Retirement System (PDF), is like PFRS in that it’s from before we joined CalPERS. It covers non-sworn employees we hired before 1970. Employees hired before that date and who kept working for the City had the option of transferring to CalPERS and most of them did. As of July 2009, there were only 50 people in the plan.

OMERS is unlike PFRS in that it’s almost completely funded. The most recent estimate of the OMERS unfunded liability is $518,000 (PDF).

Finally, there are retirement medical benefits. I am not going to get too much into this one right now just due to space concerns and cause it really should have its own post, but basically, Oakland pays for health insurance (up to a certain cost) for retirees. This is a huge unfunded liability, estimated currently to be in the neighborhood of $600 million.

If we were going to put aside money ahead of time to cover the cost of these future benefits, we would have spent $85.7 million last year. Instead we paid $12.5 million to cover the cost for current retirees. You can see the problem here.

The report lists a few options for reducing future liabilities – some sort of prefunding of benefits, instituting medical benefit cost sharing for current employees, and adopting a two tiered system where new employees would not be promised the same level of benefit.

What kind of retirement benefits do people get?

Sworn employees (police and fire) are eligible to retire at age 50, and to receive 3% of their highest annual salary for every year of service. A minimum of five years of service is required to receive this benefit. So, for example, if you retire at age 50 after 20 years of service, you will get 60% of your highest annual salary (PDF) as your pension.

Non-sworn employees have a plan called 2.7 percent at 55. You can probably figure it out yourself, but just in case – that means that if you retire at age 55, you get 2.7% of your highest year’s salary for every year of service. Again, you need to work five years to be eligible. So if you retire at age 55 after 20 years of service, you will get 54% of your highest annual salary (PDF) as your pension.

What does it all cost?

As you can image, providing these benefits is expensive. How expensive, you ask? The City’s CalPERS contribution cost last year was $74.5 million.

That’s based on a contribution rate of 27.877% for public safety employees and 19.588% for other employees. That percentage is set based on a combination of what your pension obligations are going to be and what your unfunded liability is.

Okay, I’ve rewritten that last sentence about a dozen times, and still don’t think I’m doing a very good job explaining it. I’m just going to let the report (PDF) explain it to you:

The contribution rates are comprised of the normal cost (i.e., the future annual premiums) and the amortization base cost which is determine by CalPERS to bring the system to 100% funded over 30 years. The amortization base cost is dependent on the unfunded liability of the City. The higher the unfunded liability the higher this rate will be to make the plan whole. For example, since the City has an unfunded liability of $254.7 million for the safety plan as of June 30, 2008, the City pays a contribution rate of 28.092% for fiscal year 2010-11. If the City pays that unfunded liability ($254.7M), then the contribution rate would only be 17.689% for fiscal year 2010-11. Beause the City has an unfunded liability of $254.7M, CalPERS charges 10.403% (amortization cost) in addition to the normal cost to bring the plan funding status to 100% over time.

So, the way we’re going, we can expect those contribution rates to keep rising – up to 33.7% for safety employees in 2016 and 26.5% for non-safety employees in 2016. And of course, payroll costs will rise during that same period.

How do we pay for it?

Well, the City’s CalPERS contributions are just part of the salary costs. So they come from whatever source of money is also funding the payroll.

Oakland workers also contribute to their pensions. The rate varies depending on what they do. This is called the “employee share.” The idea behind the employee share is not, as some people seem to think, that the employee necessarily pays it. The employee can, and there’s nothing wrong with that at all, but I just wanted to make it clear that it isn’t done that way everywhere. All it means is that the money paid into the employee share belongs to that specific employee rather than the City’s whole pension fund in general. So if you quit the City, you can decide you don’t want whatever pension you may have been eligible for, and take the money that was paid as employee share out of your account and roll it into your IRA or whatever.

CalPERS sets the employee share for civilian employees at 8% of pay, and for public safety employees at 9% of pay. In Oakland, civilian employees pay the full 8% employee share into their pension out of their paychecks. Police Officers contribute nothing, although they will start giving 2% in 2013. Firemen contribute the full 9% employee share, and then on top of that, also give another 4% of their paycheck to help cover the City’s portion of the costs.

What can we do about it?

The report includes a couple of options for reducing the cost of pension obligations.

  • Introduce a two-tiered retirement system: This would allow us to continue the current benefits for existing employees, but give a smaller benefit to new hires. That way, costs would decrease over time.

  • Change calculation of final compensation: Retirement benefits through CalPERS are based on the employee’s “final compensation.” Although this sounds like an obvious thing, it’s not. There is more than one way we can calculate final compensation. In Oakland, we calculate it as the total of your highest paid consecutive 12 months of work. You could make that number based on the average of the employee’s three highest years pay, and it would end up being a little lower in many cases.

  • Increase employer paid member contribution: Another option would be to just make employees pay more. The more workers give out of their paycheck, the less the City has to pay.

  • Pay all or part of unfunded liability: If we paid our whole unfunded liability of $537.3 million, then our annual percentage that we have to pay to CalPERS would be way lower. I don’t even know why this one was mentioned at all, since where would that money come from?

Discussion on Tuesday

Okay, so like I said before, this is an informational report. Nothing is going to happen at Tuesday’s meeting. But if you are concerned about the City’s refusal to deal with ever increasing post-employment liabilities, this is an excellent opportunity to voice those concerns.

Like I said before, the meeting starts at 11 on Tuesday (PDF). You can also contact the members of the Committee beforehand. Their contact information is as follows:

If you do elect to go speak, or send your comments in advance, here are a few words of advice. Try to be reasonable. Read the report, make sure you understand the issues and the options, and try to ask for something that might actually happen. For example, there is no point to calling and saying the City should no longer use a defined benefit plan. You might think that, and it might be a reasonable position, but there is just no way that it’s going to happen. So don’t bother. Don’t go and say that all employees should take a 50% pay cut. That’s not going to happen either. And if you demand things that are completely outside the realm of possibility, you will just be dismissed as crazy and your effort will have been a waste of time. So try to keep it reasonable.

And if you can’t make it in person, you can always catch the action streaming online on KTOP.

323 thoughts on “What should Oakland do about pensions?

  1. Robert

    There are other options. All employees could be switched to a smaller benefit. This doesn’t mean that a 49 year old officer with 19 years of service would suddenly only get 50% when she retires at 50, but would get 19 years at 3% and 1 year at 2.5%, for example. This approach has been used in industry. Moving retirement age up might be more difficult, but should be possible also. Another option used in industry is to allow retirement at 55, but with benefits not paid until 65. If you really want benefits at 55, you get a reduced rate.

  2. Patrick M. Mitchell

    Would bonds issued to cover these pension obligations require approval by voters at the 2/3 threshold? Or can the bonds simply be issued because these are obligations?

  3. Mike Linksvayer

    Is there any reason at all to not do all of the first three — Introduce a two-tiered retirement system, Change calculation of final compensation, Increase employer paid member contribution?

    Also, for what it’s worth:

    Delivery to the following recipients failed.

    PKernighan@oaklandnet.com

  4. Mary Hollis

    Mike,

    Yes, some combination of all of them would have the advantage of being perceived as spreading the pain as widely as possible.

    Although this is an intractably difficult problem to solve, it is a very easy problem to define, since there are only a handful of possible solutions. There is no undiscovered great idea that nobody has thought of that will magically solve this.

    It’s more a tinker here and a tinker there, with the aim of kicking the can down the road.

    V,

    Your advice at the end i.e. to only make suggestions that are “reasonable and achievable” is absolutely sound and correct advice.

    But what is sad is that the real solutions to this problem, rather than the band-aid’s being suggested, are those very same “unreasonable” solutions e.g. DC and pay cuts.

    It’s as if Oakland CC is saying: “Please give us your solutions to the Pensions problem but please exclude any proposals that would actually work e.g. converting to a DC rather than a DB plan.”

    And, while I’m asking, why can’t a two-tier pension plan have DC for the new entrants and DB for those grandfathered in? That’s how the private system has generally handled this.

    One other idea. Is it the case in Oakland, as it is in various other Municipalities, that public employees try and “pad” their final 12 months salary with overtime and unused (and therefore paid) vacation and sick days, to maximize their pension payout? Such games should surely be outlawed and pensions paid only on base salary.

  5. Robert

    This type of study should have been outsourced to a consultant group. Why? Because staff actually has a negative incentive to do a good job on this. Any recommendation that has a serious impact of reducing the amount of money city employees get in retirement has a direct, negative, impact on staff. Thus a basic conflict of interest.

  6. Mary Hollis

    Robert

    The entire reason we are in this mess is that those charged with making these decisions also benefit directly from the current system

    But of course, even if an outside group were retained to perform a study, and I agree that should be done, the Council would still ultimately be the decision-maker and would simply decide to ignore any recommendations that imposed real pain on themselves.

    The only way outsiders would have the legal and moral authority to do what is necessary is in a bankruptcy situation. Then and only then could we freeze the DB plan, cut pay, raise employee contributions, make significant layoffs and return the City to a sustainable fiscal footing.

    But I can’t think of a single politician who would get re-elected for suggesting something that would be painful enough to actually work. While they all never saw a fudge they didn’t like.

  7. Ralph

    Mike,
    I sometimes get that same error when I email Pat. But it corrects on a resend.

    On the first option, what I would like to see is a conversion to a DC for new hires and people with less than 5 years of service. Others could opt in. Corporations and the Federal government made this transition, so it is going to take some a hugely compelling argument, i.e. it will result in the end of civilization, for why we can’t.

  8. zac

    Changing the terms of a pension program that a member is already enrolled in is a heavy lift, legally speaking, and it should be. If employees have been paying into a 3 at 50 system for 25 years, you can’t simply say “oh, actually, now that you’re retiring, we’ve decided it’s only a 2 at 50 system, but thanks for all the extra money you’ve paid in anyways.” It’s like sending Amazon $100 for five copies of a $20 book, and then receiving just two copies in the mail because “times are tough.” Pension are an obligation and a binding contract. Changing course midstream requires large legal hurdles.
    In the interest of full disclosure, I am an Oakland firefighter. As this post rightly notes, we have been paying THIRTEEN percent of our salary into the pension system for many years. No other Oakland employees pay anywhere close to this amount do this. We pay thirteen percent in a good faith effort to keep the system solvent. So whenever you hear a firefighter’s salary, immediately knock 13% off the top of that number. And whenever you hear about a firefighter’s pension benefits, remember that he/she paid 13% of their salary year after year to earn that benefit. While they do have off years, CALPERS genereally does a great job with investments; in almost any job, an employee contribution of 13% + a reasonable employer contribution + CALPERS’s investment smarts will equal a fairly nice return.
    Another issue under consideration is raising retirement ages. You can certainly do this, but remember that firefighting is a young person’s game. It’s the rare 65 year old who will perform well under the heavy physical stress of fighting fire. As a longtime resident of Oakland as well as an employee, I can say that when my house is on fire, I don’t really want to see the cast of Cocoon coming up the ladder to rescue my own kids. Older firefighters will undoubtedly get hurt more, and then we’ll have to worry about paying increased disability benefits.
    I admit that I am far from an unbiased source on this issue. The City has not done a great job of planning for the future, but the working men and women of the OFD are proud of the way we’ve been holding up our end of bargain. We’re happy to explore ways to keep the system solvent, and we just hope that in the course of the discussion everybody remembers the steps we’ve already taken.
    Thanks to everyone for their continued support! Be well and stay safe.

  9. Ralph

    zac, as noted above many companies as well as the Federal government have made the switch. It id for the reasons you stated above that most employers allow some employees (particularly those close to retirement) to remain in an old plan. With regard to age, you can use a different age for public safety versus other types of employees.

    And help me, why am I knocking 13% off of a firefighter’s salary? You get a salary. You contribute to a retirement. That is generally how it works. A private sector employer hires an indivual and gives him a salary of $100K. The employee opts to contribute 13% or $13K to his 401K and this is different from a firefighter earning a $100K and contributing 13%, how? Oh wait, I know; the private sector employer rarely contributes 13% of his compensation. It is more like 7%.

    So while you are living with a secure retirement check, your private sector neighbor, who frittered away his income for current consumption, is now coming to you looking for a loan.

  10. len raphael

    zac, calpers had some very good years, but in hindsight it is very possible they got those high returns by taking on high risk. That would be ok if it were your personal self managed 401k or ira account and your broker asked if that fit your appetite for risk.

    In our situation employees get a guaranteed retirement benefit. When the investment returns are not sufficient to cover the projected payouts, then the City has to make up the shortfall. Last I saw, Calpers was telling cities to get ready to pay additional percent of total calpers covered payroll (please correct me on this) for at least several years. we’re talking millions of bucks of additional deficit here.

    In hindsight it was nuts for Calpers to go into some of the hedge funds, but particularly California raw land deals after the real estate bubble had clearly burst.

    Didn’t the chief Calpers investment officer resign when that came to light?

    It was outrageous that state and local officials shut their eyes.

    Calpers is a retirement plan, not a venture capital fund, not Harvard’s endowment fund. it should have had the bulk of our and your money in bonds. It should have told the city and state officials no, you can’t promise employees retirement benefits better than they’d get in private industry by depending on stock market gains, instead of by paying in much higher contributions to the retirement plan.

    Where do we go from here. For sure you can’t simply break a contract with the current employees who chose to work for the city based on promised pension benefits.

    But if we keep those promises, we won’t be able to give new hires more than a minimal percentage match of their 401k contributions and cut their pay. That’s going to make for some very unpleasant dynamics in the firehouses.

    When the rust belt companies went bankrupt, all employees retired and current had their benefits knocked down to the max amount paid by the Federal pension benefit guarantee fund. It is something like 50K/year.

    If Oakland does not go into bankruptcy, it will cut the benefits and pay of new employees, lay off younger employees, and cut basic services to the marrow. All to keep it’s foolhardy contractual obligation to current and retired employees.

    -len raphael
    temescal

  11. livegreen

    I had the same question as Mary: Is overtime included in the highest 12 months of salary? It should be based on base-pay at a minimum (or better yet based on an average).

    I second Robert’s statement that Staff has a conflict of interest. Same observation for why for the GPF they haven’t suggested permanent reductions in salary. Only cuts in services. An independent consultant/expert would be more equitable for taxpayers.

    This should at least be on the table. A business facing major financial cash-flow problems can’t afford to leave such a large area untouched. Neither can Oakland.

    Oh, before I forget, I have a novel solution: raise property taxes, sales taxes, & parking fines…You heard it here first! :) :(

  12. livegreen

    Funds in 401k’s aren’t guaranteed investments. Neither should retirement benefits be for Govt workers. Instead maybe a hybrid between Soc Sec & 401k’s: a certain amount fixed (invested conservatively) with the balance invested in a fund chosen by an employee at their own risk-tolerance.

    Is the Federal pension benefit guarantee fund for private pensions only?

  13. zac

    Two answers. First, the pension amount is based on base salary, not overtime.

    And second, when I said “knock 13% off” I should have been clearer. You can hammer us for having decent salaries or you can hammer us for having decent pensions, but you can’t hammer us for both unless you realize that some of our high salaries are used to self-fund our high pensions. Thirteen percent is a very big chunk, much higher than other public employees, and I so often hear people say “those firefighters get such a big pension” without understanding that it is, in part, because we have such a high contribution. Ralph: I’m not quite sure why you consider us to be bad actors because we save more money for retirement than some private sector workers do.

    I hope that none of you will get me wrong. I’m not complaining about our pension system in the least. I just hope people understand that the Oakland Firefighters take this issue seriously, and have been contributing heavily to our pensions, far over and above other city workers and other firefighters around the state.

  14. Ralph

    zac, i don’t think you are being bad actors. i think it is silly to imply that you are somehow being screwed because 13% of your salary is going into a pension. I think that people should contribute to their retirement plan. i am opposed to the following: employees who get high pay and high retirement, yet are not required to fund theire retirement.

    All that being said, i think that a DC is a better program. We know the current environment is not sustainable. Possible outcomes: bankruptcy, new ‘ees get a significantly reduced DB plan (i.e. less than their potential had they had a DC) , reduced current hiring because it is impossible to maintain the high pension…there are no good outcomes under the current situation.

  15. oakie

    This is one of my favorite topics. But only because it is a fairly good representation of the degradation of governance we now have come to consider “normal.” One half BILLION dollars of unfunded obligations. If that doesn’t say it all, as they say, then you’re not paying attention. Mostly we’ve built these mountains of obligations over the last 15 fat years. Now we may be in for some or many lean years which really means no real opportunity to work down those obligations.

    This is by definition fiduciary irresponsibility. And to me, the only solution is to completely end any ‘defined benefits’ pensions forever. A charter amendment is the only way to do this, and it’s the only way to hog tie that which goes for political leadership in this place. I am reading that Mayor Dailey in Chicago is proposing exactly this: put an end to defined benefits pensions. But then again, Chicago (like New York) are Can Do cities. Oakland once was, as you can see from all the infrastructure we have inherited (and had no hand in creating), from two monumental bridges (simultaneously built in 4 years) and a housing stock of attractive and functional masterpieces. And since about 1960, not much. Stick a fork in this city, it’s done. And a half billion short.

  16. len raphael

    Oakland’s first round of pension bonds was “famous”. http://www.orrick.com/practices/public_finance/pension.asp

    a good summary of how they work, and why they probably would be a bad idea now
    http://calpensions.com/2009/05/07/gambling-with-pension-bonds/

    the answer to Ralph’s question is that past pension bond issues were found to be exempt from any public vote. amazing, you say?

    Seems litigation over that continues.

    These are general obligation bonds (ie. backed by full faith of the City, but not backed by specific revenue stream and therefore will have to pay a higher interest rate to investors as long as the city finances are bad).

    Interesting is that sometime after the first Oakland bonds were issued in the mid 80’s, Congress changed the rules and made the interest on new issues of these bonds fully taxable to the investors, unlike most other muni bonds. Considering specific revenue source, fully tax exempt bonds are now paying close to 5.5%, would think Oakland would have to pay 7.x or more to attract investors.

    As the article pointed out, this bond shell game worked great as long as the investment returns in the pension funds greatly exceeded the interest rate paid on the bonds. Or as the saying goes about the use of borrowed money for investments: when it works great it’s called leverage, when it doesn’t it’s called a screw.

    -len raphael

  17. Born in Oakland

    No more cradle to grave employment….it happened in Europe and Japan; we are next. It was great while it lasted as all those ex City employees who moved to Idaho. Montana and Oregon can attest. The City will have to shift it’s obligations as necessity requires……just as the private sector has been doing for 15 years.

  18. Gregory Arenius

    Underfunded pension systems are such an interesting topic. So many different and valid points of view.

    For instance, as noted above, employees have worked for years and sometimes even decades with the expectation that these benefits will be there for them. That it was part of the compensation for the work they were doing and that taking the benefits away would be no different than taking back any of the money they were paid. Which is pretty hard to argue with.

    On the other hand who made these obligations? How many of the people (taxpayers) who have to pay for all these obligations had any say in the matter what so ever? How many of them were living here and got a vote? How many were even alive? Is it fair to these individuals to force them to hold up their end of the “contract” that they weren’t party to and didn’t benefit from?

    Another point of view is more of a generational one. We’re gutting the retirement benefits and lowering the wages of new hires (who are likely to be younger) and cutting city services to support the unpaid bills of a previous generation. So todays generation has no hope of getting a retirement as generously funded as yesterdays while being expected to pay for that generous retirement. Or as put above “That’s going to make for some very unpleasant dynamics in the firehouses” but spread across society instead of just a firehouse.

    I have to say while I see and respect the view of city employees with a long time in that they’ve earned their pension from the point of view of a youngster it seems manifestly unfair that all of the last 20 years worth of unpaid bills are being laid on my generation.

    Whats the middle ground?

    Greg

  19. ConcernedOakFF

    As usual, people want to bring down others around them in order to level the field…

    Why not bring everyone up to a higher level of retirement and working conditions.

    Zac is correct, you can only criticize us for one thing. On this board there is the criticism of high salaries as well as for the decent retirement system. Pick one.

    And, just in case this was missed in the above posts, our retirement is based the LAST year you work before you retire, and NEVER overtime.

    We have gotten these benefits from YEARS of negotiations and “GIVEBACKS” to the city, this has not exactly happened overnight. It is due to a long term outlook by our union leadership.

    Also, the solvency of our retirement system is based on the assumption that many of the retirees will die early, as is typical for retired Firefighters. The average age of a retiree’s death was 8-10 years after retirement, based on CalPERS actuarial tables. Do private sector employees have the same tables?

    You cannot compare private sector 40 hour work week Office Workers to 56 hour a week sworn Firefighters. We have different lives, different stresses and dangers, and certainly a different retirement lifestyle.

    The city is just going to have to cough up the money that they owe. It is not the fault of the retirees that our leaders are poor decision makers, is it?

    Maybe a few less million dollars paid to organizations like “Your Black Muslim Bakery” would do the trick.

  20. Brad

    Yes, there is a lot of questionable city support for various politically connected organizations, along the lines of Your Black Muslim Bakery, various non-accredited (i.e., worthless) job training programs, and other “community” organizations — PUEBLO might be an example, I don’t know enough about it though. (There is also a lot of city support to organizations that do good work, too, which is what makes it hard to sort it all out.)

    But at the end of the day, there is also a lot of city caving to public sector unions, also due to politics. For a direct example of a union boss calling the shots for the city, look here: http://defendingmeasurey.blogspot.com/2010/02/when-union-says-jump-city-asks-how-high.html.

    Basically, after a city drafted survey showing that Oakland employees receive higher salaries than comparable cities got a lot of attention on this and other blogs . . .

    “Vice President of Local 21 Jeff Levin shot off an email to City Administrator Dan Lindheim demanding that it be removed from the City’s website. He referred to the salary survey as “outdated” and “incorrect” and claimed that the survey “was supposed to have been removed at conclusion of negotiations.” His email closes with: “Please have them take it down immediately.” And just like my hero, Captain Picard, Mr. Lindheim “made it so.” Within hours, he issued the order that it be removed, and poof, it was gone.”

    Note too that in response to Ms. Sacks’ public records request, the city admitted that “the City apparently has NO documents indicating that the salary survey is inaccurate.”

  21. Mary Hollis

    Whatever the merit in the past of issuing bonds to “flatten out” the funding profile of retirement, I have to agree with others that it is a terrible idea now.

    If every municipality starts doing this we are basically in the next Ponzi scheme – issue a bond to reduce the actual pension contributions made, and then hope that the returns on the investments beats the interest-rate paid.

    In other words, speculating on margin with other peoples’ money. Where have we seen that before?

    And of course who would buy these bonds? Other pension plans, of course. I certainly wouldn’t lend a semi-bankrupt entity like Oakland at 5% for 30 years. Anyone else see the problem here?

    Zac’s points are reasonable, and his honesty and courage in posting them is noted. Certainly there was a contract and he might have made other career decisions in the past if he’d thought or known that the contracts would be reneged.

    I get that and I usually am willing to spare public safety folks the massive cuts I’d like to see imposed on other Oakland employees.

    Parenthetically, it’s too bad that 13% contribution (which I agree is important) wasn’t segregated from the general pot and instead used to build up a private fund more like a 401K. Another change for the future, perhaps.

    But even so, if the pot that is due to pay Zac’s benefits is short half a billion, then he is essentially asking the rest of us to save less for our own pensions so that his pension isn’t affected by any fiscal problems, however big. I’m not sure that’s equitable either. The pain has to be shared.

    I don’t want 60 year old firefighters or cops either. But I also don’t think that one group in society should have a gold-plated pension plan while the rest of us struggle to build something even half as good. Beggar-thy-neighbor strategies aren’t conducive to a harmonious City.

  22. Andie

    If we have to be cruel and militant about cutting these costs, so be it.

    I would like to abolish all pensions and leave that responsibility on the individual. No more pensions and health benefits.

    As for our current obligations, let’s default.

    Will people be angry, like the firefighter? Yes. But I’m ready for a nasty fight because I will no longer tolerate being financially pillaged.

  23. Mary Hollis

    Andie

    While you probably represent the extreme position on these debates (i.e. even more extreme than my position) I do find myself wondering what can I do on a personal level to immunize myself against the coming day of reckoning.

    We can’t predict what would happen in a doomsday scenario but it could clearly result in such things as much higher crime (say if Oakland follows Vallejo’s BK route), street riots if the City slashes payrolls and services, enforced government “taking” of personal wealth & property through taxation or eminent domain, and an erosion of civil rights.

    If there was a way I could “short” Oakland’s finances, in the way you can go short other financial stories, I’d hedge in that way. I guess you can short Oakland’s muni bonds but that’s expensive.

    But there are a few things I can do and am seriously musing. Most obviously, as one who recently moved here and who would be considered affluent by any confiscatory City government, it might make sense to not buy a house in Oakland but rather in one of the surrounding cities that are better managed with less problems e.g. Emeryville, Piedmont etc. it’s not like they are far away.

    Or just bite the bullet and leave altogether.

    Let’s just say my interest in this issue isn’t just academic.

  24. livegreen

    Mary, To the latter of your points, I was thinking the same thing. Moving makes a lot of sense when you combine the fiscal mis-management with the high property taxes (for less results), schools, higher crime, higher emphasis on low-income than medium income housing, etc.

    These combination of reasons prevents Oakland from retaining the balance of middle & high income individuals it needs to pay for services for both taxpayers & low-income.

    Of course Oakland has many positives, like diversity, a DT, restaurants, etc. But the tipping point is different for each family & individual. The more poorly managed the City is, and the bigger its challenges, the more people will leave or not come here in the first place.

    I hope our City leaders will keep this in mind, and City employees & pensioners (including a good % who live elsewhere) will also keep this in mind when we consider how to make benefits sustainable.

  25. zac

    So picture this: you and your partner drive over to Uptown for a nice lunch. This being Oakland, you drop five bucks in the meter to cover your time. An hour and half later you come out and see that you still have some time on the meter. No problem, you figure the city needs the fifty cents more than you do and you’re happy to let them have it. But there’s another thing: a big green parking ticket on your windshield, charging you $128 despite the fact that you’ve paid the meter just like you were supposed to.

    So you hustle downtown for your ticket appeal, and the city person in charge says “Thank you so much for paying the meter. You correctly read and applied all of the terms and conditions and did exactly what you were supposed to. But we’ve decided to ticket you anyways. The fine stands.”

    Huh? “Well, you see,” says the parking dude, “a few years ago the Oakland voters enthusiastically asked us abrogate the pension agreement we had with the firefighters. They’d done everything they were supposed to in good faith for decades, but we decided that our own mismanagement trumped their longstanding contributions. And it’s worked out great! We learned the lesson that from now on we’ll enter into all sorts of agreements, and when it comes time to fulfill our end of the bargain we’ll just stiff the guy on the other side of the table. So, you know, sorry about the parking ticket but…great idea you had with the firefighter pensions!”

    I hate to liken city administrators to misbehaving children, but if you allow them to misbehave once, they’ll try to get away with it forever. Nobody–besides us firefighters–was complaining in years past as the city failed to meet their pension obligations. But now that the issue is coming to a head, the city should be rewarded for years of mismanagement? You can see where this all leads–thanks for the mosquito abatement funds, but sorry about the malarial pond in your corner park; thanks for the police service fee, but did you know we only respond to burglary calls on Mondays and Wednesdays now? The solution isn’t to allow the city to get out of past obligations; the solution is to force them to make tough choices going forward.

    Please don’t think I’m complaining. I love the job, I love the benefits, and I love the support we receive from our community. But you have to understand that the deal we have with the city is as much moral as financial. We take this job knowing that we’ll never get rich but that we’ll almost certainly get injured; we’ll be able to afford a nice life, but never have enough salary to afford a decent house in the city we serve; we’ll put ourselves at risk every shift for thirty years. In return for that, we get job stability in good times and bad, and a pension that will take care of us after we retire. That steady, unflashy pay and pension promise attracts steady, unflashy, hardworking people who like to play by the rules; it attracts the kind of people who make good firefighters.

    When it comes to public safety, it’s hard to talk about the consequences of bad negotiations without a certain sinister tone of “we wouldn’t want anything bad to happen, now would we.” Please don’t think I’m doing that. Your Oakland firefighters will give their all for you no matter what happens. In addition to our 13% payback, we also took an 8% pay cut last year. While the response in some jobs might have been to say “stick it,” our response was the opposite. We realized that we needed to work twice as hard and be twice as professional in order to show the public that we deserve to get our salary back when times improve. So please don’t read any implied threats into this. But the truth is that when you treat your employees well, they give you good work in return. When you treat your employees poorly–renege on contracts, mismanage/devalue their pension contributions, break explicit promises–then you shouldn’t be surprised to see your headaches grow.

    The Oakland firefighters have paid for these pensions, we’ve funded them ourselves, we’ve contorted ourselves to make up for the city’s terrible planning. I don’t think the solution here is to penalize us for having done the right thing all these years. Things have to change, and we may have to make citywide cuts going forward, but if you can’t stick to the legally binding contracts that are already in place, you’ll never earn the trust necessary to do anything else.

  26. Jim

    A few comments on some of the things I read.

    I just wanted to say that some high salaries and pension benefits are due to lack of employees. Since Oakland only has half a police force and twice the crime you pay more per officer to get the job done. It could actually be cheaper since you pay only one pension.
    A little better job management might help get the job done with less cost. I always hear city hall empties out early; are we getting a days work for a days pay down there?
    I bet if I managed your 401K and tanked it you would want me in jail or punished. Strange how the public wants to go after someone else’s money!
    Doing silly things like eliminating pensions and health care just does not work. That all rolls into the job . The best companies to work for use the total compensation model. Pay is not everything.
    Also I doubt that anyone is going to riot or have there property seized in some takeover. That’s usually fringe right wing or left wing dreams that open up the idea of taking the country back for Jesus or godless commies depending on which political side you are on.
    Every time I go to a store or restaurant it is hopping. For poor people we spend a lot of money on food and drink to fill and flush our alimentary canal. Not to mention all of the other things we buy which get tossed out soon.
    Blue collar people didn’t spend like that when I grew up. They realized the value of schools and roads. Perhaps we are better off than we think. We just spend it on gluttony instead of society.

  27. Ralph

    zac, i am a huge fan of public safety employees. but honestly, i think you are complaining. i do not keep a running tally of companies and governments that switch from a DB to a DC, but from what i recall of the federal govt switch, employees had options. under every situation you have posited you assume that you are going to get screwed. our city leaders may be inept but they are not entirely stupid.

    What you don’t want to happen is to allow the city to file for Chapter 9. Would you rather decide the new retirement plan or take your chances in bankruptcy? I am like unions as much as the next guy, but it is their general inability to see the forest for the trees that annoys me to no end.

  28. Ken O

    Agree with the sentiments here. Everyone has good points.

    Livegreen, other novel solutions would include raising dog license fee and bicycle license fee.

    Bike “license” fee is currently $3.00, although last I checked (Feb) OPD wasn’t enforcing it because firehouses all over the city are out of license stickers. It’s OPD’s job to keep those in stock. (I posted the opd bike guy’s ph# here a while back)

    I don’t see any reason not to raise this particular fee to $15. That is the cost of a low quality pizza. I think it is worth more than $3 for the 10-15 minutes of a firefighter’s time who fills out the quarter sheet of paperwork and gives you a bike sticker. This firefighter, let’s call him Zac, would otherwise be working out, relaxing, napping, reading ABO, etc.

    On the other hand, this would impact poor and homeless Oakland residents immensely. But they also pay less for city services in general.

    This will probably come up as more Oaklanders ride a bike each year for ordinary transportation purposes. (like me)

  29. Vivek B

    Defined Benefit plans need to be stopped instantly. Pay out existing obligations if that’s the only path (aka, 2tiered), but it cannot occur any more. Defined contribution is the only fiscally responsible approach.

    Re: the comment about bringing everyone up to that level. Sure, i’d like to do that. I hereby move that we upgrade social security & CalPERS pensions to $1M/year/person. And, everyone shall be issued butlers, chauffeurs, personal cooks, and masseuses. And a $25K/month housing allowance. Until you die. In which event your spouse inherits the benefit. We shall all live like kings. Until we run out of other people’s money.

    My wife & I both work, which means we are a favorite tax target for those are looking for handouts or just someone else to legally rob. If Oakland doesn’t get its financial house in order, i’m pretty sure me & most of the dual-income families I know are going to say ‘enough is enough’ and move to Kensington/Piedmont/etc, where you actually get something for your tax dollars. Many people I know have already moved away. Good luck finding the $$ to pay the underfunded pensions then.

    Realistically speaking, I see no hope here short of Bankruptcy, and invalidating all current contracts. The CalPERS employees aren’t going to be willing to accept less than the plutonium-plated contracts they have, and I see no way for Oakland to afford both that & the core government services a city needs to provide. God I hope i’m just having a bad day, and the sky isn’t really falling.

  30. Ken O

    Speaking of financial wizards, I saw goons for Jean Quan flyering for her mayoral campaign right on the corner of WholeFoods yesterday.

    I thought to myself, “man, I really don’t like her – she is so financially irresponsible and spent even our city’s reserves during the boom times!”

    But I left them alone since there is little point in wasting my breath talking to them. The young men are doing it for the money, or future advancement (and money).

    Politicians always kick third-rail cans down the road, avoiding challenges to the status quo. The only ones who don’t get killed, and get streets named for them because they were genuinely popular with the people. They serve as examples for other leaders not to get out of line.

    Think Ghandi, MLK or JFK… I really like these guys and wish they had lived. The country would be better. (Well, history repeats, so probably not.) JFK for what it’s worth signed an executive order in June 1963 making our US Treasury issue its OWN currency — instead of borrowing from the private Federal Reserve banks which costs us US taxpayers a lot in interest payments. (aka “seigniorage” — wealth earned for simply issuing currency out of thin air)

    United States Notes. They were backed by USG-owned silver. The private Federal Reserve banks didn’t like that one bit. He also wanted to get us out of Vietnam, which was costing a lot of money and lives (but making bankers rich). That year I think UST had issued 4-5 billion in US Notes. You can find them on ebay now.
    http://shop.ebay.com/i.html?_nkw=United+States+Notes.&_armrs=1&_from=&_ipg=

    See how different every US president since Kennedy has been up to and including Bushes, Clinton, Obama. All of them including Obama are all for “free trade” (offshoring our jobs, increasing banking and corporate profits) and increasing our wars. War contractors, banks and Wall Street make loads of money from war-making.

    I bet most of you “progressive” types on ABO keep a banking relationship with these tapeworm banks. Bank of America. JPMorgan Chase (if you had WaMu). Wells Fargo. All banks that play games with everyone including City of Oakland’s bond issuance. (John Russo sued all these banks and more for their various games – i think it was like red-lining for cities!)

    This country has had a major upheaval every 80-100 years or so. I’d expect USG default or currency hyperinflation to take care of our much-maligned “pensions” so that they are technically paid, but are worth little. Everyone will get to be both satisfied and dissatisfied at once.

    Something big will happen to our whole country by 2025 which definitively shows we are over as an over-spending empire. Today’s Oakland is just one little nodule in it.

    Tip for those trying to plan ahead. Currency and paper investments are not wealth. Those can be taxed, hyperinflated, defaulted, defrauded/ stolen/ transferred to insiders, or scams.

    To me, these constitute wealth: good health, a strong network of trust and mutual security/aid, food and water self suffiency, access to various physical natural resources

  31. Jim

    Since some people want to start raising taxes and fees here is a couple of points. First bicycle licensing was supposed to help recover cycles. It was never meant to be a revenue source. I don’t think it works anyway since the last I heard there is no state wide database for tracking bicycles. The article I read reported a doubling of the recovery of registered bikes. About 3% of unregistered bikes are recovered. Think about it.
    Raising dog fees is another useless tax. If you vaccinate proprely, and care for your dog, what more could the government ask for? I can understand a fee for handling the paperwork, but it should be minimal.
    Last point. I work in Portland quite a bit. They have income and property tax. Across the river in Washington they have sales and property tax. You have all three taxes in California plus high fees ($77 for a year any car in Or.).
    The best thing California could do is a rewrite of the State Constitution and remove all strange taxes except for the big three. No new programs without funding, and limits on ballot initiatives.

  32. Ken O

    Jim, sounds like some heavy lifting.

    Simplicity always sounds appealing yet few of us achieve it. ;)

    Re higher fees, I think it is inevitable, not that I truly want them. Say 500 Oakland bike owners actually go through the motion of “registering” their bike in Oakland x$3 that is $1500. How many stolen bikes can be recovered for that paltry amount?

    Seems like a useless exercise all around. On the other hand, that is the point of it, so if we will have it why not raise the fee so the program at least pays for itself. Firefighters don’t work for free, as noted above. Just saying there’s no free lunch.

    We Americans believe strongly in paying for things we use, except when it comes to parking, etc.

  33. Mary Hollis

    Vivek/Ken O

    Yes, it’s hard to see how this will end well. We either have anarchy with no government. Or an overly dictatorial government trampling all over the Constitution.

    But of course what compounds it for Oakland is that we have parallel fiscal disasters at both the State and Federal levels, each also with their own public pension liabilities and crippling deficits.

    And of course overlaid with the vast unfunded open-ended liabilities of Medicare, Medicaid, Social Security, a mountainous and growing bond interest burden and, inevitably, the odd war here and there.

    So there isn’t a rich uncle who is going to bail us out. The grown-ups are all broke too.

    Now, maybe we can do thigng like sell naming rights on Yosemite NP to the Chinese and they’ll save us. But to me the hard part of figuring all this out is how all these desperate public debtors will interact and overlap when the day of reckoning arrives.

    It’s not only Oakland that has this problem but Oakland starts with the odds stacked against it. Because unlike San Jose (Tech), Berkeley (University) and the theme park that is San Francisco, Oakland just doesn’t have anything unique that the Chinese or any other benefactor might want or need.

    Put another way, Oakland is entirely dispensable and disposable on a macro level. And so given that this problem is almost intractable without some combination of bankruptcy and attendant breakdown of law, order, social and civil structures, it is left to individuals to figure out how they would survive in a post-apocalyptic Oakland.

    Instead of putting energy into fixing Oakland, those who might otherwise be able to help will be heading out of town, like Vivek and I, or holing up with food, water, gold, guns and ammo like Ken.

    There aren’t too many places further along this grim path than Oakland, but I’d ponder that Detroit, Vallejo and New Orleans right after Katrina are appropriate, if depressing, precedents.

    Maybe our best bet is a bad earthquake and the Feds bail us out before they go broke.

  34. Ken O

    @Vivek how about DU-plated pensions? :P I hear the army is wasting it in the deserts of Iraq.

    Yeah, you are just having some bad gas today, no problems here. Nothing to see, move along.

    I cannot wait for City of Oakland/California/USA to go bankrupt. We really need a clean slate. The bible calls it a Jubilee I think. It will happen no matter what I hope/hype anyway. This isn’t the “steady state economy” Herman Daly ever wanted and it won’t get that way until the gun on the wall goes bang.

    Wikipedia should have this as their definition of human civilization or “history”:

    1. Wash
    2. Rinse
    3. Repeat

  35. Ken O

    Mary, I’m not being sarcastic here. I just think you’d really enjoy and maybe benefit from watching the recent film “coLLapse” that came out this winter.

    http://www.collapsemovie.com/

    I’ve met and spoken with the guy who stars in it. Great chap all around.

  36. Livegreen

    Ken & Jim, I was being sarcastic both about raising taxes and it being a “novel idea”.

  37. len raphael

    Just finished wading thru the pdf links v gave. will have to read it three more times and take notes and then figure out more questions. that is some complicated financial actuarial stuff. if anyone on cc understands most of it other than rk, i’d be shocked and awed.

    But ulitmately it’s not rocket science. The explanations are not adequate to keep the voters informed. i doubt if more than 500 residents would able to understand even the summary.

    The details might be highly technical, but the overview doesn’t have to be. Lindheim should be told to send it back to staff and if they can’t do a better job send it to outside tech writers to edit. the kind that big cpa firms have for writing financial statement verbiage.

    At a minimum they need to add a glossary.

    Constantly putting much of the blame on the “economic downturn” is political spin that has no business in a factual document. That ties into the conflict of interest in having city employees write these documents.

    The narrative avoids analysing the causes of the problem. Ok, what’s done is done. But you have to read the tables (and no one but abo readers will do that) to see that a comet must have hit City Hall sometime between fye 2002 and 2005 when our Calpers contribution rates zoomed upward. Must have wiped out our officials ability to project the effect of retirement plan benefit increases than one election cycle into the future.

    btw, what are these “tax override” revenues they say are being collected but are in excess of the existing bond repayemnts?

    in the staff document there was some comment that if we set up irrevocable trust to hold the funding and obligations, we could manipulate (staff used a more discrete term) the assumed rate of investment return to make it look like we owed less. If i were a city council member, that’s a no brainer.

    -len raphael
    temescal

  38. len raphael

    possible federal bailout depends on how many voters in how many swing states live in cities and counties in Oakland’s situation. If it’s mostly blue coastal states, outlook grim.

    bailout would take the form of a federal change to muni bankruptcy laws, making it easier to do a cramdown of lower retirement benefits to existing retirees and employees. maybe down to the current federal level, maybe even to the PGBC 50k/year level for private industry retirement plans. Medical retiree obligations would be cancelled except for current retirees and employees who wouldn’t get medicare for funding (old school employees) or age reasons (eg 56 year old firefighters and cops). Retirement age for current employees pushed out to same as federal.

    Wall Street would love it. Residents would love it. City and county employees would be devastated.

    If dellums can get that bailout, we should rename oakland to Rontown.

    Massive parcel tax increases. i’m not saying it won’t be tried, but property owners would unite and turn out to beat the 2/3 unless Prop 13 is changed at the local level too.

    Absent a federal bailout authorizing abrogation of retirement agreements, maybe something with the feds forcibly merging insolvent cities with solvent cities and counties on a regional basis. mass layoffs of duplicate admin staffs. federal guaranteed bonds to finance resulting smaller deficits for several years.

    -len raphael
    temescal

  39. Mary Hollis

    Len,

    I tried reading it too but gave up at some point due to a combination of boredom and depression. And I’m actually supposed to understand this stuff. A couple of general observations though.

    You are correct that blaming the “current economic environment” is disingenuous. 100% of the entire point of having a long-term investment vehicle is to manage it in such a way as you manage the risks of market cycles.

    CALPERS was for many years vaunted as being a highly professional and fiscally conservative investment manager. That was then and this is now. When returns became harder to get i.e. over the last 10 years, they gradually upped the risk profile to “recapture” the rather ambitious 8% or so per annum return that is widely publicized. They became a hedge fund.

    To do this they appear to have borrowed from the Harvard Endowment fund strategy which involved diversifying into assets that, were supposedly non-correlative and under-researched thereby increasing risk-adjusted returns. Stuff like hedge funds, CMO’s, MBS’s, Swaps, REIT’s and so on.

    Well guess what? When the shit hit the fan, all assets correlated to 1, there was no effective diversification, and CALPERS lost one quarter of its value near overnight. Should never have happened.

    I’m highly suspect about the “30 year smoothing model” that they responded with. What they’re really saying, I’m guessing, is “Let’s pretend this didn’t really happen because a 24% loss is less than 1% per annum if we assume we’ll recover and things will become ‘normal’ again”

    Hooey. They frittered a quarter of everyones’ pensions that they had a fiduciary responsibility to maintain.

    I also don’t like playing games with any “assumed” rate of return just to lower contributions and lower the pain today in the hope that there will be jam tomorrow. They should assume a very modest rate of return and then see what the numbers say. You plan for your worst case and not the best case they’ve been hoping and preying for.

    I quite simply don’t believe what any of these people say any more. They sound a lot like Enron or Lehman executives. And the more unmanageable the funding liability looks, the more tempting it is just to hide the pain with weasel words and a hundred appendices, and hope someone else is in power when the shit hits the fan.

    I’d ring fence the whole mess, start afresh with DC, and pray a lot.

  40. Mary Hollis

    Len part 2

    Yes, something like we did with the S&L mess or the more recent mortgage mess. Merge all the “toxic public-sector pensions” into a “toxic pot” and get BlackRock and PIMCO to manage it as well as possible.

    DK on the current pension commitments and start over with a new DC plan.

    Public staff get the same deal as private staff. Period.

    “Force Majeure” will probably be called on Prop 13 at some point but you can’t get blood out of a stone and the middle class will revolt. The property market will implode again and the middle-class taxpayers will simply say “Can’t pay; Won’t pay”.

    Marc Faber, the contrarian Swiss hedge fund manager is currently advising his clients to buy rural property, not property in cities, as he predicts various levels of a breakdown in civil order when all this explodes. Drastic, perhaps, but I wouldn’t want to own one of those new 500K ticky-tack town houses in West Oakland if this goes bad.

  41. len raphael

    Mary, in the forest of details, I totally forgot about the Calpers “30 year smoothing model” which city staff so smoothly assured us would take care of that minor 25%+ Calpers portfolio drop.

    Conflict of interest. Definitely. Need a truly independent review of City’s retirement obligations and funding situation.

    Anyone up for doing an Oaklandish coffee party thing.

    Second call for residents to join me in picketing city hall (after april 15th).

    -len raphael
    temescal

  42. Ralph

    Len,
    A tax in excess of the one-percent cap, imposed to pay voter-improved indebtedness, is frequently referred to as a “tax override” or “excess tax.” This comes about from Prop 13 which states that the maximum amount of any ad valorem tax on real property shall not exceed 1% of the full cash value of such property.

  43. ConcernedOakFF

    While I understand the frustration felt in some of the postings, it does not change the FACT that the city is required to fulfill it’s feduciary responsibility to CalPERS.

    They will fulfill them. Even if they declared bankruptcy, which I do not believe will happen, they will be sued, sucessfully in all likelihood and then what? A city with an F bond rating?? Ain’t gonna happen.

    The city needs to fund public safety first, and that includes our pensions, part of a negotiated deal. Unless they want to renegotiate when our contract comes up due again in 2013. The other departments and pet projects do not have the contractual responsabilities that PD and FD have.

    I can’t help but hear in many of the anti-pension posts an anger in a manner similar to “they have it, why don’t I have it.. I want it i want it”. They seem to contain more jelousy than anything else.

    We have worked hard over the years to get these pensions. 20 years ago, we had very different pay and benefits. We are lucky that we have what we have, but taking away any of our pension would be wrong and dishonorable.

  44. len raphael

    Concerned, suspect it would be much easier for the city to weasel out of the non Calpers retirement medical benefits as a clawback from all the unions.

    on the morality side, it would be similar to what the fed govt forced GM to screw it’s employees. yes, it would be as reprehensible as what happened to WWI vets http://en.wikipedia.org/wiki/Bonus_Army. officials would wring their hands but without huge concessions from the employees, a bailout from the feds, another real estate bubble, or the discovery of oil under city hall, it doesn’t look
    like there are any options.

    on the fffff credit rating, why should investor’s care if the bulk of the city’s borrowings get repaid timely because they are secured by revenue streams. if anything, the cities come out much stronger financially. i don’t know what happens to city general obligation bonds such as pension bonds, but i suspect they have lower interest rates because they are backed by the investments into which the bond proceeds were put. (hmm, sounds like scant assurance to an investor).

    if enough other local govts go the same route, investors won’t have a choice if they want muni bonds, and yes the interest rates will go up for a few years until investors see that the city is living within it’s means.

    city employees are in the same boat as the teachers. cutting management pay and laying off managers would make a dent, eliminating discretionary programs will make a dent, but ultimately huge cutbacks are required. a shame, because it seems like the firefighters have been much more reasonable than the other unions.

    -len raphael
    temescal

  45. len raphael

    Ralph, tax overrides. But why did the city staff document say the overrides collected exceed the expenditures of those overrides? I thought they could only go over prop 13 ad valorem rates to exactly cover bond payments?

    -len raphael
    temescal

  46. Vivek B

    True, concerned, you have worked very hard.

    Me, I haven’t done squat. Well, except work 60-100 hour weeks in my 20′s, flying all over gods creation as part of the job. Dropping down to 50-70 hour weeks in my 30s. Making sure that i’m constantly upgrading my skillset so that i’m in demand, even if it means giving up discretionary time. As a result, I struggle to spend time with my family, having to go back to work again when the wee little ones go to bed. The wife works but her full paycheck goes to pay $15K/kid/year for elementary school, soon going up to $30K/kid/year for high school because i’m not willing to gamble on my kids education in a public school.

    And what do I get? Someone holding a gun to my head to pay for pensions, inflated salaries, total inability to fire poorly performing government employees, and a loss of confidence in city hall because I chose to live in Oakland.

    I’m not just making empty threats here either; I’ve taken several discrete steps to downgrade ties to Oakland, so that i can easily cut bait if people continue to choke the golden goose. After all, why should I continue to turn the other cheek when all I get is spat upon in return.

    The firefighters may be unique in their high contribution to the pension, but nobody else does that. Good luck getting blood from a stone, have faith that if you keep pushing for high pensions, high salaries, and high barriers to being fired, you won’t have the $$ as there won’t be anyone left to pay for it.

  47. ConcernedOakFF

    @Len – We do not have retire medical for the Fire Department. It is paid out of pocket by the retiree.

    @VivekB – I understand that people work very hard in the private sector as well. I would never underestimate the effort that the vast majority of people make to make ends meet. In the end, it is a choice to choose to work for a private company to perform a certain job, and it is the choice I have made to work for the City of Oakland as a Firefighter.

    We all have choices. I am luck enough that mine has lead me to a career that offers a good job and generous pension, one that I hope I will eventually be able to redeem, barring injury, death or disease that may prevent such redemption.

    Why should the members who have negotiated in good faith with the city pay the price for the irresponsibility of our city leaders?

  48. Marleenlee

    It’s true that the city can’t break the contracts it has made with the unions. But for some bizarre reason the city seems to think it can break the contracts it has made with the taxpayers. And also bizarre to me is how the taxayers don’t rise up and revolt. Ranting here is better than nothing ,but I wish you all would do more in terms of publicly expressing your frustration and outrage for the real reason the city is broke.

  49. Mary Hollis

    Concerned,

    It’s not that we want what you have. It’s that you should share the pain in dealing with the fact that the money isn’t there to pay you what you think you’ve got. The deal that you’ve “got” is really an IOU with nothing to back it up except the goodwill and co-operation of future taxpayers.

    Marleen,

    I think that in different ways, you’re starting to see the taxpayers “rise up and revolt”. However hard-working decent middle class folks don’t block freeways, smash windows and set fire to cars.

    Instead we do things like sue the City (infinite kudos to you on that, by the way), buy real estate outside Oakland, prepare to abandon ship like Vivek, or otherwise scheme about how to personally profit from “shorting” Oakland.

    Leaving the US is not a reality for most people here. Leaving California can be tough for many. But leaving Oakland for Piedmont, Emeryville or one of the other Bay Area Counties is trivially easy.

    Yes, we should protest more to our elected officials. But I fear the disillusionment with them is so great that we don’t even feel there is any point. I feel it’s too late for them or anyone to save the City and I worry more about to save myself.

  50. Andie

    Let’s break these pension contracts.

    I am beyond angry. I see no way out of billion dollar obligations that were made without my say, just on my behalf. Just because there’s a contract does not mean that Oakland will go out of its way to fulfill it.

    There is default and going to court to renege on them. It will be expensive but millions spent to save billions owed is worthwhile.

    When firefighters say there’s a duty, whether moral or financial or legal or just plain human, they are taking the most overused position in the world. You can go to Judge Judy and argue about duty. Well, there is no money, thanks to these contracts.

    We must break them. I am more afraid of Oakland’s unions than Oakland’s criminals. In many ways, they are worse.

  51. david vartanoff

    @ Andie, Excuse me, while I am NOT in that pension system, I should point out that why we have ERISA and the Pension Benefit Guaranty Corp (Feds) is because folks like Hoffa looted pension funds. It makes little difference who the looter is (governors/legislators who cut taxes on the overly wealthy while failing to make the yearly payments or corporate criminals/bankruptcy judges who cheat retirees after a company has spent the pension funds and then filed Chapter 11) the pension was part of the contract. If you show up and do your work based on a promise of wages AND benefits, stealing the benefits is no better than refusing to pay the agreed wages. I have no problem with reconfiguring the deal for new hires, but telling someone who has worked for years that the deal is canceled is not moral.

  52. Marleenlee

    I don’t think bailing is the right idea. Do your heroes give up and let the bad guys win? Should gays just move to Canada to get married? Should blacks have just moved north if they wanted to sit on the front of the bus? No! We need to fight for what’s right! I don’t mean torching cars, breaking windows or blocking freeways. I mean writing letters to the editor, writing to and speaking to your elected representatives or actively organize to put them out of office. Stage a protest in front of city hall. Until honest, hardworking taxpayers start getting the traction the unions have, it will be an uphill battle. Oh , Concerned OakFf, you and I have a different definition of “good faith”. I know how the game is played, and good faith has nothing to do with it.

  53. Mary Hollis

    David,

    Nobody is stealing your benefits.

    You have been promised the contents of a lockbox and, when we opened it up to pay you, we found it was empty. This happened for a variety of reasons and you are free to speculate on that, as you did.

    But the only real question is this – if that income stream is going to continue to be made to you, a new source for that funding needs to be identified.

    So the onus is on you, or somebody, to identify that source of funds. Or whether it is even possible.

    DC pensions, like the rest of us have, simply promise us “whatever is in the lockbox”. they don’t promise us a fixed amount regardless of the disposition of the lockbox. See the problem?

  54. zac

    I’m not exactly sure what is being proposed here. I understand that you don’t like our defined benefit plan, and feel that it should be scrapped in favor of a defined contribution plan. However, since I haven’t been enrolled in a DC plan, the amount of money in my DC plan is…zero. So are you suggesting that I scrap all the contributions I’ve made to my DB plan and just accept the zero dollars I’ve accrued in my DC plan? Even under the angriest sort of mindset, that hardly seems appropriate.

    Secondly, we need to distinguish between the idealistic and the pragmatic. The truth is that Oakland firefighters have a defined benefit plan, by contract, and courts tend to honor contracts that are already in place. So while you might favor a complete elimination of our current plan, you have to ask whether fighting a lengthy–and almost certainly unsuccessful–court battle in really in the City’s best interest. The City of O has a longstanding habit of engaging in Pyrrhic legal fights that cost way more than simply doing the right thing at the outset.

    So it’s fine to dream of a new pension plan, but if you actually want to get to solutions, rather than engaging in sweet dreams of anarchy you need to work on the future plans, not ones that were cemented in the past.

  55. Mary Hollis

    Zac

    I wasn’t proposing anything.

    I was inviting David, and now yourself, to identify the source of new funding that is required in order to meet what you regard as this contractual obligation to you. That is needed because the money set aside to meet the obligation to you is woefully inadequate.

    And even a court judgment in your favor won’t do you any good if your creditor is broke.

    So let me throw the question back at you. Who would you like to pay for this shortfall? And how can you be sure they can and will pay?

  56. zac

    Mary: I don’t want you to think I’m ducking you, but I can’t give you a direct answer to that one. The questions of what we’d be willing to give up–beyond the 13% payback, the 8% pay cut we took last year, the increased health care contributions we started last year, and the fact that we don’t have retiree medical coverage–is a matter of negotiation. It wouldn’t be appropriate for me to speak for the membership of Local 55 and launch some off-the-cuff solution here.

    But on a related note, what would you be willing to give up in terms of fire protection? I’m genuinely curious here, not just being snarky, and want to know what sort of reduced fire protection you would be willing to accept in order to get our fiscal house in order. We’ve already given up the Jack London Square firehouse and we’ve closed the fire boat, making us the largest port city not to have harborside fire protection. Would you be willing to close three firehouses? Ten firehouses? Would you be willing to go from four firefighters per rig down to three, with all of the attendant loss of life and property that statistically follow from such a move? Would you be willing to increase ambulance response time by three or four minutes? Would you be willing to eliminate fire building inspectors or eliminate the (already small) amount of brush clearing that is done on city property? Cutting pension obligations is certainly one way to balance a budget, but cutting fire service is another one. Again, I’m not trying to make any threats here, but in times of fiscal trouble in the past Oakland has dramatically reduced fire protection, and there’s no reason to think that it couldn’t happen again.

    I’m not just asking this rhetorically. I really would be curious to start a discussion about what level of service reduction Oakland taxpayers would be comfortable with. Take it away…

  57. Mike d'Ocla

    I would just like to inject another note into this largely reactionary anti-government carping. I know, I know, you all think that you’re quite progressive and liberal. I don’t.

    Where were all you finance-obsessed geniuses when Oakland officials (and the Oakland publics which elected them) were making poor financial plans? My guess is that you were flying high just like everyone else in your little corners of the bubble.

    Also I don’t think that suing the government about Measure Y performance is going anywhere. The lawsuits just cost us taxpayers more money and waste the City Attorney’s time. If a citizen wants to help improve pubic safety in Oakland, I suggest getting involved with the community policing movement in Oakland, learning about what enlightened policing is and doing some on-the-ground work. I see lawsuits as just more reactionary anti-government negativity. And the effort seems so obviously self-congratulatory. There is a big difference in being “right” about some thorny public policy details and actually contributing to progressive change.

    I, for one, want my Oakland public servants to be paid well, to enjoy their jobs and to have a good retirement. From my perspective we Oaklanders (and Americans generally) pay much lower taxes overall than other wealthy societies. Most public servants are bright, responsible, work hard and support families. Just like the rest of us. I am happy when other people are doing well in their work and in their private lives. If my tax dollars help, then I am glad to pay my taxes.

    And all of you who are threatening to take a powder from Oakland, I wish you bon voyage. I hope you find the perfect suburb, with no dysfunctional families next door, perfect astroturf putting-green lawns in front, no people who don’t look or think just like you nearby, etc.

    It’s too bad this whole blog has taken on such an anti-government, blaming, negative perspective. At one time it seemed promising. I thought (and think) that a democracy is where the people are the government. And thus, being human, we make mistakes. And, if we are good people, we correct them and move on.

  58. Ralph

    zac, if anything, people are frustrated with the current DB structure. I think it is fair to say that most of us want a new plan in place for new hires. We would probably prefer a DC but might be willing to settle for a DB with significantly reduced benefits, which would apply to new hires. This has been enacted in many cities and it should happen here as well.

    I think some would like to file bankruptcy and tear up the contracts. And while I am no lawyer, I suspect this would be a protracted legal battle which the city would lose and cost hundreds of millions.

  59. Marleenlee

    Mike,
    The city is not admitting or correcting it’s mistakes, and therein lies the problem. I bet if the city renegged on it’s union contracts you’d be singing a different tune about suing the city. You obviously have been living in a cave if you don’t know our taxes are amongst the highest in the state, as our inflated emloyee salaries and benefits. Government accountability should never be about partisanship. You also have no idea about the efforts I have made to actively promote real community policing and safety in Oakland. I do plenty. Blind faith in our government is totally counterproductive, particularly when ours has brought us to the brink of bankruptcy. You should also do some research on all the publec good that has come out of suing the government. It is not meant to waste anybodys time or resources. It is a last resort when our government flagrantly violates the law.

  60. Livegreen

    I’m amazed by this “you’re either for us or against us” or “for government or anti-government” mentality on the side of City Unions or their supporters. You’re pretending that we don’t have a budget problem and you’ve said here that NOTHING should change. Are u denying there’s a problem? Have u not seen V’s post?

    As for your accusations that the City government is to blame & therefor you shouldn’t suffer any consequences, are u forgetting that a large part of that mismanagement was paying you too much money? Remember City of Oakland workers are better paid than anywhere else in the country.

    I agree the FF have given more than others. Thank u for being more responsible than the other unions. But the bottom line is that, like in the private sector, when there are less resources, costs and services must b cut. & so far only services have been, without reducing the costs of delivering them.

    The alternative is more taxes on the middle class for less services. And wih a middle class that is in decline (in the U.S. and even more inCA and Oakland) you cando that only so much before citizens bail.

    I do believe in putting up a fight. I also believe good government has an important role to play in society. That is why I’m a moderate D, & not either a liberal D (who got us into this mess) or a R or TP who want no govt at all. But good government means good regulations at a reasonable cost. NOT a false choice between bad government or no government.

    Quite simply if u decide on no compromise on unfunded liabilities, then either Oakland goes bankrupt, raises taxes on the middle class, slashes pay & benefits, or pushes the problem on to future generations. The first is good for nobody, the second WILL cause more people to move out of Oakland (we have a smaller middle class than our burbs, so the costs get spread around less & the weight is on fewer of us), the third results in employees bearing all the costs, and the fourth just pushes the same discussion to a later date and a future generation.

    I sure hope compromise is possible. Based on what Ive heard here I’m not optimistic.

  61. ConcernedOakFF

    I would like to echo Zac’s points. We are already understaffed as a fire department for a city the size of Oakland and for the volume of calls that we respond to. Any cuts in staffing would bring us to the point of seriously jepardizing the ability of YOUR fire departmet to effectively respond to emergencies. We already are severely understaffed in our administration, we have no fire boat (and therefore
    absolutely no way to supply water downtown after an earthquake) and only 3 battalion chiefs to supervise 32 fire companies in 25 stations. Far below the national average for a city our size.

    As people here have stated, you can’t get blood out of a stone, and you can’t cut the fire department more than it already has been cut.

    Our salaries are not extravagant, nor are they higher than our surrounding neighbors. When you see the salaries in the newspaper, people forget that this generally includes state overtime payments that are not paid by the city and are not part of our retirements.

    Our retirement system is also not extravagant and provides merely the industry standard for a firefighter.

  62. MarleenLee

    Here’s a reality check. There are three guys named “Zachary” that work for the Oakland fire department. One firefighter/paramedic had a base salary of $111,409 plus $33,909 in overtime, plus $7524 in “other” pay, for a total of $152,842. An “engineer” had base pay of $109,311, OT at $29,967 and $7512 in “other” pay for a total of $146,749. The other “firefighter/paramedic” had a base pay of $110,423 plus $1232 in OT and $6697 in “other” pay for a total of $118,352. None of the firefighters in Berkeley made anything close to this type of base pay (the highest two were $101 and $104,000). $96,000 was the highest base pay in Hayward. Somebody want to explain to me why we need to pay so much more?

  63. zac

    Marleen: Just for clarification, I am the lowest paid (but the best looking) of the three Zacs in the OFD. I have absolutely no complaints about my pay package and I appreciate all of the support I get from Oakland taxpayers such as myself. I don’t know the specifics of Berkeley’s package, but I think you’ll find that our total package is comparable to theirs. Compare the amount of PERS payback we give (13%) and the fact that our retiree medical is not covered, and I think you’ll find that other cities offer more in the way of benefits than in the way of salary. (You also seem to be comparing apples to oranges by comparing Oakland’s engineers and paramedics to Berkeley’s firefighters. Paramedic and Engineer are promoted ranks, whereas “firefighter” is the entry-level designation.)

    The other Zacs made more than I did because they volunteer for overtime and I don’t. Reducing overtime would reduce the pay that an individual Zac receives, but it would actually increase the OFD’s budget. Hiring an overtime guy for a day is cheaper than hiring a full time employee for the rest of his career. Either strategy is perfectly acceptable, but if you reduce overtime, please don’t then accuse the fire department of being overstaffed.

    Now I don’t want to get into a pissing match with any other department. All of the departments that I’ve seen in the Bay Area do a hell of a job putting out fires and saving lives. But without a doubt Oakland is the busiest city in the county. We fight more fires, are exposed to more toxins, and run more calls than any other city. We also send more of our firefighters to the hospital and to the grave. I don’t know how to put a valuation on that, but it can’t be ignored, either.

    I don’t think you’ll find any Oakland firefighter complaining about our pensions. We’re worried that the money we’ll put in will not be returned to us. And please do keep in mind that reducing SERVICE is just as likely as reducing SALARIES, so put some thought into what you’d like to see. I was serious earlier when I said I want to start a discussion about what level of fire protection reduction the citizens of Oakland would be willing to support.

  64. Robert

    COFF/Zac, I don’t think there is any reason to be concerned about the money you have already put in to the retirement plan. As has been mentioned, it is now a contractual obligation of the city and, short of a bankruptcy, can’t be reneged.

    But that only applies to contributions to date. Future contributions are an entirely different matter, and are subject to regular contract negotiations between the city and the various unions. It is perfectly reasonable for the city to change both the percentage for each year of service and the retirement age itself, as part of the negotiation. And this can apply to both new employees and to existing employees. The retirement age agreement can be a little tricky, but the percent you get for each year of service is very easy to implement, and does not impact past contributions. You would still get the 3% for each of your previous years of service even if your future contributions were for 2.5%. There is no legal or ethical obligation for the city to continue paying for the same retirement plan in the future as when you were hired. If you don’t like it, you are free to change jobs, just like all of us in the private sector can change if we don’t like our compensation package.

    On the other hand, I do think some of the posters here could go a little easier on the firefighters. In last year’s contract negotiations they did more than their share compared to the other unions in the city. Might not be good enough, but better than anybody else. Save your ire for those who didn’t give much back, the OPOA and the non-sworn employees unions.

  65. len raphael

    seems likely that firefighters in older cities face much higher risks of injury than ff’s in younger cities where a higher percentage of the buildings were constructed to meet higher fire codes.

    on the other hand, are those Calpers actuarial tables up to date showing ff’s tend to die fairly soon after retirement?

  66. Vivek B

    My point isn’t that I want to bail – i really do like Rockridge, I like my neighbors, I like the proximity to mass transit. My point is that when it comes to civil service, I find that Oakland is not able to fire poor performers, nor pay less, nor come close to modifying compensation structures (including pensions) without unions screaming bloody murder.

    Show me that all of Oakland, including city government AND unions are really ready to take on the dysfunction and i’m willing to do my part to fight.

    Until then, explain to me why I should be the only one (well, 1 of maybe the 100 people who visit this blog) blowing against the wind. Clearly the government and the unions don’t give a crap about sustainability of Oakland, why should the rest of us?

    Here’s some random ideas about the pension bit.
    Change the DB to a DC effective immediately for future employment years. Whatever you have in the DB as of this minute is what you get out of it. Don’t violate the contract, honor it, just don’t extend it.

    Then, implement a process that requires mandatory termination of the bottom 10% of performers as measured by a performance scorecard, with a minimum no-rehire time of 10 years. Any manager found to be gaming the system to keep his/her buddies in the system is subject to immediate termination & merciless criminal prosecution.

    Let’s see if the unions really care about keeping a viable & sustainable city with quality performers. If I see evidence of that, i’m willing to dip into my pocket to pay for quality, and stay and fight.

  67. Mary Hollis

    Zac,

    I’m no expert on what the Oakland voters would and would not be able to tolerate in terms of service cuts.

    But in a city of largely wood residences, we need a strong fire department.

    And in a city with a high crime rate, we need a strong police department.

    So chances are most of the cuts would happen outside of public safety.

    I’m not arguing that your contracts should be broken. I’m stating that the money isn’t there and some tough choices have to be made.

    Here’s an analogy. You give me 100K on condition that I pay you a grand a month forever. But I lose my job (my investments fail, take your pick). So now I can no longer pay you a grand a month.

    Morally I still owe you the money. But the money isn’t there.

    Legally I owe you the money. You can sue me for it but I don’t have any excess income or assets i.e. I’m judgment-proof.

    So what happens? Either you agree to take less per month or someone else has to step up and make up the difference.

    That’s where we are at with the pension pot, and the deficit in general. You’re owed the money but the money isn’t there. So where do we get it? And what if we can’t?

    Back to you.

  68. Vivek B

    heh, just noticed Mike’s “And all of you who are threatening to take a powder from Oakland, I wish you bon voyage. I hope you find the perfect suburb, with no dysfunctional families next door, perfect astroturf putting-green lawns in front, no people who don’t look or think just like you nearby, etc.”

    My god what an absolute cop-out thing to say. It reminds me of the ” You’re unpatriotic, move to Russia!” comment GWB’s defenders would say when people would point out the obvious.

    Do you seriously think i’m looking for the perfect suburb? Do you seriously think i’m looking for zero dysfunction? Or are you just pulling the classic rethuglican move of using soundbites by your opponents to create a false strawman that you then tear down?

    I don’t want perfection. I want clear demonstrable proof that those who are currently in untouchable positions have the slightest comprehension of what damage they’re inflicting on the rest of us. I want to see them mobilize on behalf of mayoral & city council candidates who propose things that will hurt them personally but make the city more viable in the long run.

    you know, like they’re doing TO ME right now. My wife works, I work, we are crushed under 2 private school bills due to a mediocre and randomly unsafe public school system, an insane amount of credit card debt, plus all the regular life costs. We have about 2 weeks of savings, so if either of us lose our job we instantly rack up even more credit card debt. However because we have two incomes, I’m being accused of being rich and have to pay through the nose for substandard/non-existent service. God forbid anyone else be asked to pay.

    What you’re asking me to do and not doing yourself reminds me of Kevin Bacon’s infamous line in Animal House. “THANK YOU SIR, MAY I HAVE ANOTHER?”. http://www.youtube.com/watch?v=qdFLPn30dvQ if you haven’t seen that.

  69. david vartanoff

    @ Mary Hollis, No, DB are not a lockbox, they are actual obligations of the employer. If you think that sort of obligation should simply be abrogated, perhaps you could explain what other contractual obligations you are willing to trash? How about a bank or the county abrogating your equity in your home?

  70. Mary Hollis

    David

    I understand perfectly that DB is an obligation of the employer. But that employer i.e. the City, doesn’t actually have the money to pay out those obligations. And so the question here is what to do about that.

    My lockbox analogy was simply saying that i.e. the cupboard is bare.

    I don’t think contracts should be routinely waived. But as a practical matter, if there is no money to fund the DB obligations, then the effect is the same as if no contract were in place.

    You, the creditor, need to work out a payment plan with the City, the debtor. And they don’t have much worth foreclosing on. So the question is this – how strong is your hand? And that depends on the goodwill of the rest of us, since we’d have to vote on any proposal to find new money.

    Based on the comments here, I’d say goodwill is in short supply. So, to paraphrase Dirty Harry, the question you should be asking yourself is “Do I feel lucky?”

    Well, do you?

  71. david vartanoff

    Lucky that I never had a job with defined benefits that corporate or government crooks could abscond with, yes. Appalled that citizens would support abolishing same for public employees or anyone else. In my simplistic view a deal is a deal.

  72. Mary Hollis

    David

    Yes a deal is a deal but you are willfully ignoring the real issue here i.e. the fact that the money isn’t there to honor your deal.

    So what revenue proposal would you like us to vote for so that you never have to feel any pain?

  73. zac

    Mary: I very much appreciate the fact that Oakland has limited resources and that difficult choices are going to have to be made. I also don’t mean to imply that one public function is any more valuable than any other. I’m a firefighter but I’m also a heavy user of Oakland libraries, parks, public schools, etc, so I have competing interests.

    That being said, some of the things the city supplies are under contract and some are not. Unlike in your analogy, the cupboard is not truly bare–money does come into the city and we have to decide who’s going to get it. If city revenues dropped to zero we’d be having a different conversation. But city revenues aren’t zero; they’re way less than we need, but there still is money to pay for certain things, and the debate is WHICH of those things to pay for, not whether we’re going to stop paying for everything. Whether you like/approve of it or not, the money owed to firefighters is part of a legally binding contract. Money for libraries are parks is vitally important for civic life, but there is no contractual obligation to provide these things. Please don’t get me wrong–I’m not advocating for any specific cuts to any other department. However, attacking benefits that are CURRENTLY under contract is tilting at windmills. However distasteful it may be, courts have often told cities that they need to make drastic cuts elsewhere before they abrogate current contracts.

    My point is that let’s not waste our time/energy/city money fighting against money that has, in essence, already been spent. Let’s see what we can change about future contracts and future spending rather than exhausting ourselves with dreams about what we wish Oakland administrators had done in the past.

  74. ConcernedOakFF

    @marleenlee – Just for your information, those figures you quote are no where near the reality of what we get paid. The city bundles our benefits (i.e. medical, retirement, vacation,etc..) and cash payments together so that it appears that our salaries are far FAR higher than they are. And as has been stated in the past, overtime at some level is cheaper than full staffing due to the lack of a need to pay such items as medical and retirement or other such DB measures…

    This was the reason of our past legal challenge to the publication of these figures, not because we do not want people to know what we make, but we wanted people to know what we actually make and the city refused to make this concession, and the News Organizations refused to let people know about the true figures.

    I wish that I made anywhere NEAR the amount that my “newspaper self” is supposed to have made..

  75. David

    David, pension benefits have been regularly cut back in the private sector despite contractual obligations, as Mary mentioned, if it affects/will affect the solvency of the employer, or of course, if the employer is bankrupt.

    Yeah, it sucks to have your pay cut or your benefits cut. Welcome to the real world, guys. It also sucks to have a 100% pay cut when you’re fired.

    Chicago firemen start at $45K/year. In 3 years they are up to around $60-67K.

    NYC cops start around $50K/year. Why do Oakland firemen make 100K+ and cops start at 90K?

    Again, the reality check here is that 1) these pensions are unaffordable 2) the salaries are high enough that you should be able to save for your retirement, like the rest of us.

    The fact is that a private sector drone making $100K/year pays 13% into Social Security (employer contribution), in order to get maybe $2000/month in benefits, or $1400/month if/when Soc. Sec. cuts back by 30% in a couple decades as their actuaries predict. So a private sector guy gets a “benefit” of equivalent to 0.5%*47 working years (retirement age is now 67 for those born after 1960 or whatever). The private sector drone knows this and, if wise, tries to save & invest for retirement, which, if he’s lucky, comes sometime between 65-70.

    Public sector drones making $100K/year gets 2-3%*30 working years. The public sector drone “retires” at 55 and gets another job, or just hangs out.

    I don’t understand how many public sector employees don’t see that what they’re making is really outsized relative to the private sector. Again, as Willie Brown even admitted, it USED to be that public workers were paid less, but had steady work and decent benefits. Now they make MORE, have steady work, and gold-plated benefits. And the rest of us are handing over our money to you. For what? Crappy schools, not enough cops, glacial bureaucracy (No yogurt store for you!), shitty transit (literally, heaven help me what you see at BART stations). Gee, no wonder everyone loves them public sector unions.

  76. Mary Hollis

    Zac

    Yes, I certainly think the City needs to prioritize spending.

    And yes, the City isn’t totally broke. Not yet anyway.

    The City in fact doesn’t have any money of its own. It is merely a conduit for money coming in i.e. from the taxpayers, and money going out i.e. services and payroll costs.

    So it is really “we the people” who have to decide this through elections of representatives and initiatives.

    Now I’ve argued here before that we should maybe fund ONLY public safety because that is more important than anything else. But even that can be a problem since public safety is 2/3 of the City budget.

    I don’t have the answer. I have only questions. But I think the politicians need to be brutally honest about the prognosis for a system that appears to guarantee you a stream of payments that are significantly under-funded. And quit playing games and accounting tricks to hide or delay the truth.

    Then they need to lay out the options.

    Then we need to vote for which ones we like.

    Or else a bankruptcy judge will do that for us and I guarantee you won’t like the result.

    Ultimately I can leave Oakland and not worry about this. But you’re on the hook. So you should be yelling at the City more than I am.

  77. zac

    David: In regards to Chicago firefighters, you should note that Chicago employs one firefighter for every 560 residents, whereas Oakland employs one firefighter for every 1000 residents. So if a Chicago firefighter makes 65% as much as an Oakland firefighter, but there are twice as many of them…you’re probably in the same ballpark. Not knowing much about Chicago I can’t really comment on the relative merits of the two different resource allocation strategies except to say that both cities seem to be spending about as much money on fire protection per capita.

    And Mary: I think you’ll be interested in this article about the proposed deal for Vallejo’s firefighters, who are already dealing with a city in bakruptcy.

    http://www.timesheraldonline.com/ci_14722744

  78. Mary Hollis

    Zac

    Yes I saw that. It seems that the Vallejo’s pension pot has not been raided yet even though most everything else has, so it’s not a bad precedent from your point of view.

    Of course, they fired a lot of public safety guys too.

    As for Chicago, I’m guessing they have far less wood buildings there. And a much damper climate. Plus greater population densities. But I don’t know anything about the subject so really shouldn’t make an idiot of myself by guessing.

    If you’d care to say, what revenue measures would you like to see to bridge the gap? Or would you prefer to just cut everything else?

  79. MarleenLee

    Zac – in terms of reducing fire services, I don’t think that’s permitted under Measure Y. Measure Y provides $4 million annually to the fire department, in exchange for the fire department fulling staffing 25 “engine companies” and seven “truck companies,” and also guarantees an “expansion” of paramedic services. How the City can threaten to reduce services with language like that is beyond me. Not that I haven’t seen the City violate Measure Y over and over and over again. But unless they want yet another lawsuit….

    COFF – I’m a bit unclear on why you say the newspaper numbers are inflated. How do vacation benefits get added to salary? Normally, somebody’s base salary is x, and they get a certain number of paid vacation days (and paid sick days) included in that base salary number. Why would your salary numbers be any different? As for medical beneftis, the value of health benefits is normally not included in salary. So, for example, if your medical benefit package is $13,000 (not unusual in the public sector), that $13,000 would not be added to your base salary, and you would not be taxed on that amount either. Are you saying that the value of your medical benefits is included in the totals printed in the newspaper? As for retiree medical, most private sector folks don’t get such benefits period, so that’s not persuasive to me at all. Lastly, as was pointed out above, private sector base salaries also don’t reflect our true pay, because social security (our pension plan, which totally sucks compared to yours) gets taken out too.

  80. livegreen

    If one takes the “you’re either for us or against us” example of the Republicans, you’ll be able to rail against the results, but they’ll still pass and you won’t like the results. I vote for meaningful compromise. If, however, that’s not possible we’ll simply have to cut both services to taxpayers AND fire workers. & that’s good for nobody.

    So either let’s live within our means or jobs will be lost. There’s just no alternative.

    & God forbid, let’s built as much medium-income housing as ABAG allocates to the City (instead of mostly low-income housing as we do now) so we can bring up the per capita income & tax base in Oakland.

    That way we can afford to pay for the services both citizens AND employees depend on.

  81. zac

    Mary: As you know, the firefighters just took a big pay cut last July, so my first idea about where to cut would be somewhere other than the exact place that got cut less than a year ago. I agree that everybody should share the pain, but I don’t understand how the pay and benefit cuts we’ve already taken don’t seem to count in our favor in the “share the pain” department.

    Beyond that–and I know this sounds like a dodge–I don’t really feel comfortable suggesting other cuts. I’m not in a position to speak for the Local 55 membership as a whole and I wouldn’t want to say anything impolitic about any of the other great unions in this city. Furthermore, the kinds of cutting suggestions you want to hear are probably things that will come up in our next contract negotiations, so I wouldn’t want to jump the gun on that either.

    And on an unrelated point…I don’t really know anything about Chicago either, but your points that they have fewer wood buildings and fewer wildfires would suggest that they should have FEWER firefighters per capita, but instead they have more. They just pay them less.
    Now, while I certainly have some ideas about how I’d run things if Oakland was my fiefdom, the truth is that I’d really like to see some more leadership from the top. It’s not the job of the fire union to tell the city how to run the city. It’s the job of the city managers to make suggestions and then try to find workable solutions to implement those ideas.

  82. David

    My point about Chicago is that:
    1) it’s not exactly a low-cost city–they have high property taxes, high sales taxes, high R.E. costs/prices, high cost of living, and yet
    2) They pay their public safety employees a lot less (as does NYC), and
    3) They actually do have a lot of fires–space heaters, furnace problems, kitchen fires etc.

    And Zac, you just proved my point–if Oakland (and the Bay Area, and in fact, pretty much the entire state of California) paid their public employees more on the scale of other cities, not only would the city (and the state) not be poised for bankruptcy, but be in a pretty good shape….and we’d have more cops and firemen to boot.

    I know every public worker here argues that teachers just must be paid the most of every state, MUNI drivers, ditto, cops, firemen etc. Why? NYC costs more, Chicago costs at least as much, etc.

  83. zac

    Marleen: Measure Y provides for 25 engines and 7 trucks because Local 55 struck a side-deal with the city to provide that level. That agreement expires in 2014. After that–barring any sort of new deal–the city is free to close as many firehouses as they choose to. At this point I have to believe that the city is just biding time until that day, and then they’ll close as many firehouses as they think they can get away with. If you look at the Measure Y propaganda you’ll notice how cheerily they promote the fact that Measure Y ends the firehouse closures. The truth is that the Fireboat has been out of service ever since then, and Station 2, which used to cover Jack London Square, has never been reopened. Look for the city to try closures again as soon as they’re able!

  84. livegreen

    Of course, the City can always stop collecting Measure Y funds…It just has to start laying off Officers & Firemen, and potentially reimburse the Feds for COPS funding or ask for a waiver.

    The only way I would support that is if I knew the City was using it for negotiations with the Unions (& so willing to carry forwards if necessary). Because I do feel we need the Officers & FF, but at a cost we can afford.

    I also feel we need libraries and parks, and the # of employees necessary to collect revenue. Past that everybody else is dependent on what we can pay for. Or not…

    Compromise & bringing City costs (including salaries & benefits) into line is in EVERYBODY’s interests.

  85. ConcernedOakFF

    @David – You are comparing apples to framing hammers…

    For example the Oakland Metro Area has almost a 30% higher cost of living compared to the Chicago Metro Area….and that is on a good day. The median house prices alone are darn near 45% more. It is easily researchable information.

    Chicago Firefighters work a 48 hour work week when we work a 56 hour one. They also have 5 firefighters per Engine when we only have 4.

    NYC Firefighters work a 40 hour workweek and are by FAR the lowest paid fire department in the US in comparison to Metro Area living expenses, again, not a good comparison. That’s maybe why most of them have at least 1 job on their off days and work as much overtime as possible to “pad” their retirements (there contract includes the overtime as part of their pension, ours does not)

    @marleenlee – I am unsure why the city includes the extra amounts of money into our reported salary or how they break down exactly. All I can tell you in that I make significant less than the amount that is shown next to my name in the paper.

  86. Mary Hollis

    Zac

    I can totally understand how, having been the most recent to take a cut, you would reasonably expect to be spared the next round of cuts. And if I were in your situation, that is exactly what I would passionately argue.

    However, strictly from the point of view of the City, that doesn’t matter. If I were put in charge of this (don’t worry, I won’t be) and given unlimited powers to cut, fire and rip up contracts (i.e. like a bankruptcy judge) then I can’t say exactly what I’d do but there would be three underlying principles.

    1) It doesn’t matter if you were the last guys to take a cut. What matters is who still has the most fat to cut. Now, I’m not saying that’s you guys. I really don’t know. But if it turns out to be you guys, then that is where I’d cut.

    I’d probably accompany that with an offer i.e. would you prefer a 40% cut in total comp, take your chances with my firing 40% of you, or split the difference?

    2) I’d prioritize the core services and chop from the bottom. Off the top of my head and totally idiosyncratically, I’d say that in order of importance we have:

    a) Cops. In cities where civil order has broken down, the FF’s get attacked on calls and need the cops to protect them.
    b) FF’s
    c) Revenue collectors/enforcers
    d) Schools
    e) Libraries & Parks
    f) All the politically correct stuff

    3) I would only increase taxes to make new investment and not to preserve existing comp and services.

    And if I wasn’t allowed those 3 rules, I wouldn’t take the job.

  87. zac

    Mary: Totally valid ideas. Just so you know, firing 40% of us wouldn’t change the bottom line all that much. We have minimum staffing in Oakland, meaning that if you fire a firefighter, you still have to fill his spot, usually with an overtime guy making time and a half. Now, you could cut staffing and not have to hire overtime, but you could only do that if you were willing to close firehouses. And closing firehouses if off the table until 2014.

    Another problem in laying off half the force is that it would require those of us remaining to work 24 hours on, and 24 hours off which works out to an 84 hour work week. In order to force us into an 84 work week you would need to work out a massive overhaul in the Federal labor laws, which would probably be a hard sell for any legislator who ever wants to get another vote from any person who has ever worked at any job.

    Look, I understand the mental exercise of governing your own imaginary city. (That city would have to be Hollis-ter, I suppose?) But we’re not running an imaginary city; we’re trying to come up with solutions for a real one. So pie in the sky ideas–like compulsory 84 hour work weeks, 75% pay cuts, the elimination of greed and corruption through the creation of an ecologically sustainable cannabinoid-locavore Worker’s Paradise–don’t really get us anywhere. I’m interested in talking about real and genuine solutions to problems, not just what we’d all do if we had municipal carte blanche.

  88. len raphael

    had an conversation w a vallejo blogger. either by state law or fed, he’s not sure, can’t touch calpers for existing retirees or existing employees. (didn’t get into the nuances of that for existing employees).

    the retirement medical benefit agreements are under bankruptcy court control.

    vallejo has not pushed the envelope on the limits of bankruptcy protection because a majority of the city govt incumbents, even more so than oaklands, is heavily dependent on union support for reelection And Vallejo citizens are heavily pro union town because of its former Mare Island base employment.

    keep that in mind when you read how vallejo city council negotiates with its unions.

    one of the funny aspects of this, is that the Vallejo unions used the high wages paid in Oakland as justification for their high compensation. their leaders argue that if Vallejo will lose cops and firefighters to Oakland. :)

    The arbitration clause in their contracts involved surveying comp in other bay area cities and taking the 7 highest as the measure. Wonder how many other bay area union contracts did the self feedback loop, ratcheting up compensation for the past decade?

    his observation is that the vallejo unions have sold out their younger members by agreeing to layoffs instead of big compensation cuts. apparently, cops or firefighters who remain are even going to get a raise in next year or two.

    -len raphael

  89. Robert

    zac, you say you want to talk real solutions, but then you turn right around and say you aren’t going to make any suggestions because they would affect other unions or the FF own contract negotiations. So which is it? A discussion or just saying that everybody else’s ideas aren’t going to work?

  90. Robert

    zac, I guess you don’t realize it, but outside of government jobs, the vast majority of people earning ~$100,000 are exempt and therefore aren’t eligible for overtime pay. One more benefit of working for a government employee union.

  91. zac

    Robert: I’m absolutely willing to entertain real solutions. That’s why I took the pay cut I did six months ago, and why I’ll listen seriously when the city comes to me and asks for further pay cuts. What I’m NOT willing to do is to use a blog to spitball ideas on behalf of other unions of which I am not a member.

    I’m in a different position than you are. You can speak only for yourself, but when I’m here online I understand that people–both union members and other tapayers–will assume I’m speaking on behalf of Local 55. I came on here to clear up some misperceptions I saw. With some exceptions, I’ve tried to limit myself to explaining how the OFD works, what the current realities are, and why some of the suggestions here might not be workable. I understand that it’s not an even exchange, but I certainly can’t throw ideas out or else people will assume I’m speaking on behalf of the other 450 firefighters, as well as the teachers, cops, public workers, etc. When the time comes to negotiate with the city, I’ll be full of ideas that I’ll share with my colleagues and the city negotiators.

    I’m sorry; I don’t want to be combative. People have a lot of questions/ideas/misperceptions about how the fire department works and I’m trying to supply some information.

  92. len raphael

    Z, i like the way you deftly handled getting your salary info outed. your union should consider putting you on the negotiating committee, or better yet public spokesperson.

    i agree with making public employee wage info transparent in principle, but have no found that it in practice it makes me queasy. doesn’t help that oakland doesn’t give enough info.

    as the nyt’s article on the budget situation statewide in NJ put it, many state workers are taxpayers also who want their state to provide adequate services without taking more of their money. a majority of nj democrat and republican state workers approve of the new NJ republican governor’s tax cuts and job cuts.

    They just don’t want it to be their jobs that get cut.

    -len raphael
    temescal

  93. ConcernedOakFF

    Zac – I used to post on here much more often and attempt to defend our pay, staffing and benefits. However, there are people on here that do not understand what we do, why we make what we make or even feel that we are entitled to industry standards.

    This is why I had stopped posting for about a year, and why I am most likely to stop again.

    You can only defend and inform so much before you realize that there are people that will never agree with any of our points.

    We both know that despite the criticism and rancor that we hear, sometimes even to our faces in public, that the people with whom we serve will always do their best and even give their lives to protect the citizens that pay our salaries.

  94. Born in Oakland

    People who work in hospitals save lives and must contend with infections and needle sticks and dangerous patients. They must also “serve” and display compassion when needed and interact with the “community” of friends, loved ones and death itself. I don’t believe most of them enjoy the same retirement benefits many City, County and State employees receive. Many are on call 24/7 and most forgo vacations and holidays to serve. And they save lives every day. With due respect ,cops and firefighters are not the only ones who make a unique contribution to our public. And they are therefore not beyond review.

  95. Ralph

    Len, I don’t think it is the case of Vallejo not pushing the envelope in terms of voiding retirement agreements. Attempting to do so would likely result in an expensive court battle which they would lose. The same discussion comes up in San Diego. And while Marleen Lee knows full well that our city likes to try the court even when it has no chance, I am sure this would be different. As residents we would lose twice if the city tried to fight the retirement benefit.

    zac, well said on not offering solutions in this forum.

  96. len raphael

    Ralph, when you’re already in for 4mill of legal fees, what’s another 200k to try asking the bankruptcy judge? the writer’s argument is that vallejo will be back in bankruptcy court in a few years if it doesn’t aggressively take advantage of their filing, because they continue to pay out more than they can afford.

    CCFF and Z, this group of civic minded oaklanders disagrees on many things and agree on some broad principles. if you can’t find the support for your position about compensation among abo types, you won’t get it from the vast majority of people in oakland who could care less about the risks of your service, and are much more worried about their own tax bills or jobs than broad principles of reforming oakland governance and finance.

    and they would never have heard that ff’s have made significant concessions.

    -len raphael
    temescal

  97. livegreen

    To paraphrase COFF, if you don’t agree with me, I don’t want to hear your opinion…

    Seriously, I appreciate what OFD & OPD do for us. But we can’t afford the high salaries & benefits. OPD kept it’s salaries & benefits high even when other Depart-ments stopped hiring. (That was the timing of Dellums raid on M-Y to pay for it).

    While other PD’s around the Bay Area were halting hiring, Oakland was increasing. It easily could have lowered it’s offering salary and still had similar results. Now of course at the time they were just enthusiastic to get it done without thinking about the consequences (either GPF Budget or M-Y).

    So OPD Officers got paid higher fiscal than had they waited just a few months. But now we don’t have the funds anymore. So the market (& the taxpayer) dictates that those Salaries & Benefits fall back to earth. But even reduced Salaries & Benefits are still excellent, above those in other big cities, and more than most citizens are earning.

    You’ll still be paid a lot more for putting your lives on the line than the rest of us. & you’ll be even more appreciated for having contributed to a solution. I hope there’s room for such mutual appreciation. But no compromise (on either side) is going to get us there. It’s either that, layoffs, or more property taxes.

    But we’re recycling comments, not getting anywhere. I’d also like to hear some suggestions for solutions, which is what V tried to stimulate in the beginning…

  98. MarleenLee

    For those of us in the real world, our salaries are generally somewhere near the intersection of where supply meets demand. In 2007, OFD announced a recruitment for around 23 positions, and 2000 people applied, lining up with sleeping bags to get a shot at one of these coveted positions. http://articles.sfgate.com/2007-12-04/bay-area/17272555_1_firefighter-frank-ogawa-plaza-oakland-fire-department

    How many jobs announcements that generate this type of response? These applicants apparently thought that landing one of these jobs was tantamount to winning the lottery, and something is clearly wrong with the system if that’s the case. Also, I don’t think the men and women in our military, who put their lives on the line every day to serve our country, make $150,000 a year, plus fantastic benefits. They just don’t have a powerful union behind them. Oh, and another thing – our federal government just couldn’t afford it. If our City government is to get its fiscal house in order, it needs to consider the basics, like “supply and demand,” in making pay and benefit decisions.

  99. Ralph

    Len, I thought you wrote something about voiding prior contracts, with that being the aggressive action that Vallejo had to pursue. Attempting that would probably result in a lawsuit in the hundreds of millions. As for changing retirements for new hires and changing what we can for OPEB – I am all for it.

  100. Mary Hollis

    Ralph

    A lawsuit against a BK entity is futile. The BK process effectively stops all lawsuits proceeding. And of course a BK Judge can repudiate outstanding court judgments..
    A bankrupt entity is judgment-proof. And you’re already in a higher court.

    As we saw with the airlines and car manufacturers a couple of years back, BK is often entered into precisely so that contracts can be torn up and renegotiated.

    We need ideas for concessions and cuts to avert BK rather than threats and intransigence.

  101. len raphael

    Ralph, follow the link to the article at ibvallejo.com by Rbt Schussel. Post your question and let us know what he says. He’s pretty knowledgeable about the budget situation there, doesn’t claim to be a muni bankruptcy attorney. (but then there are probably only three of those in the world).

  102. David

    Easily researched information? Ok. I’ve actually LIVED both places. Chicago house, 1100 sq ft., nice location, price: $550,000. Oakland house, 1100 sq ft, nice location (above 580, maybe not Rockridge, but definitely Redwood Heights/Upper Laurel etc): $550K. In actuality, I live in a less-nice neighborhood, but actually have a bigger house than I did in Chicago for far less money. Both places, you can live in a crapbox in the ghetto for $100-$150K. Both places, the generally considered “nice areas” cost $400-$800K for a house. Chicago has more condos that can be cheaper, but it also has 2.8M people. Go compare, say, “North Center/Lincoln Square/Albany Park/Uptown” on Redfin Chicago with, say, the 94610/94602/94611/94609 ZIPs in Oakland.

    And again, Chicago property taxes and sales taxes are higher, as are utilities etc etc. I’ve lived both places and have personal budgets for both going back to the 1990′s.

    But that’s a moot point.

    The relevant points are:
    1) California public sector (and Oakland) workers get paid either THE most or close to THE most.
    2) That’s unaffordable by us, the taxpayers, who pay your salaries.
    3) Ditto for your retiree benefits
    4) Services here are crap. Period. Schools, cops, etc.

    So, why exactly must we (and we do) pay more for less? ESPECIALLY when the state and cities are running massive, unsustainable deficits? AND when tax revenues are up 30, 40, 50, 60, 70% (depending on the city etc) over the past 10 years, and inflation over the same time is less than 30%? The WSJ had a great graph showing that gov’t spending is up over 212% in aggregate in real dollars over the past 30 years, where salaries are up 50%. That can’t go on. Sorry FF, sorry Zac, the gravy train is running out of track.

  103. Ralph

    Mary, I am not advocating filing for bankruptcy. I emailed council my recs, none of which were bankruptcy.

    Len, I’ll post the question at the link. My assumptions regarding the costs and FUTILITY of going to court over existing contracts comes from press releases from the mayor of San Diego, a city with its own financial problems.

  104. Ralph

    len, on a separate note, I just re-read your linked story. I did not get the impression he was advocating tearing up the existing contract. It appears that even the new benefits are too rich. Courts may have a little more leniency in tearing up newer contracts, but the current retirment benefit will stand.

  105. Ken O

    I’m going to place a $50 bet that Oakland defaults or BKs within 10 years. (In ten years that should not cost me more than $10 in today’s money.)

    I like what I’m hearing as to converting DB to DC for ALL New Hires.

    You people who are unsatisfied with that must want silver bullets or vegas-enron-lehman style magic tricks.

  106. Dax

    ConcernedOakFF…. I know you said you might stop posting here because of how some Oakland residents were responding to you.

    The problem I have with your posts is that a good portion of your facts are bogus.

    A crucial key one…. perhaps the most critical factor in pensions
    How long will the retiree live.

    You stated as fact that CalPers tables say firefighters have short lives in retirement.
    You said “the average of retirees death was 8 to 10 years after retirement”

    This is a flat out false statement. I knew it was false when I read it.
    Below I will give you the true facts, but first I just wonder how you can post such nonsense when common sense would tell you otherwise.
    My grandfather was a 30 year retired Oakland firefighter. Two of my uncles are/were retired Oakland firefighters. I grew up knowing them and their fellow department men. Grandfather lived to 80, uncles one over 90 and the other nearing 90 and still alive. But that is only anecdotal.

    The true facts are as follows…

    Here is the CalPERS life expectancy data for public safety members (police and fire, which are grouped together by the pension fund):

    – If the current age is 55, the retiree is expected to live to be 81.4 if male, and 85 if female.
    – If the current age is 60, the retiree is expected to live to be age 82 if male, and 85.5 if female.
    – If the current age is 65, the retiree is expected to live to be age 82.9 if male, and 86.1 if female.

    Do the math. It is not 8 to 10 years as you wrote.
    Instead it ranges from 26.4 yrs if you retire at 55, to 22 years if you retire at age 60.

    Why did you choose to distort the truth to such a outrageous magnitude?
    Perhaps you were only passing on bogus information someone told you, but didn’t your common sense tell you other wise?
    I knew your 8 to 10 year figures were absurd from my own personal experience of the past 40 years, knowing dozens of retired men, family member as well as the fathers of many of my close friends. As long lived a group as any other I know.

  107. Born in Oakland

    I woke up this morning, feeling round for my shoes and then it occurred to me….What level of taxation would it take to make our deficit hole whole? Seriously, how much tax and from where (homeowners, gasoline, parking, pot, liquor, etc) ? If a percentage figure has been discussed, I missed it. So many great posts but could we simplify the matter to what it would take out of our wallets? Not suggesting anyone would like the idea, just a hypothetical.

  108. David

    Born in Oak–

    If I remember, it would probably be a 30% increase in overall property taxes and another 10-20% increase in overall sales taxes. But I might be wrong.

    Going back to retiree benefits and promises, just read this morning that the NJ governor is changing those benefits (with the legislature). It can be done, it should be done, and it must be done.

    Here’s another handy graph.
    http://globaleconomicanalysis.blogspot.com/
    Showing how gov’t workers continue to gain, private sector has been flat.

  109. len raphael

    Dax, funny stuff. The 8 year life expectancy probably urban myth ff’s tell each other.

    So 55 year retirment for all new ff and opd hires is not cruel unusual punishment?

    But for sure if the Calpers life expectancy’s were 8 to 10 years, would the city’s pension contributions be much lower for the totally single cops and ff’s out there? When a cop or ff dies in retirement, when percentage does the surviving significant other receive for life?

    -len raphael
    temescal

  110. len raphael

    BIO, I’m wildly guestimating $850 parcel tax to cover current operating deficits and fund the 1Bill retirement. Doesn’t include Calpers increases, or OUSD.

    re. parcel tax just to cover city current deficit plus fund the 1Bill retiree medical and old pension. need to know how many taxable parcels, make assumptions about exemptions for owner occupants over say 65 (who probably would be exempted :) , owner occupents below the poverty level, and condos (do they pay lower parcel taxes?), and commercial buildings (don’t they pay somewhat higher parcel taxes based or frontage/sq footage), multi residential rental buildings pay a lower per unit charge.

    All of this info sb avail from our council member’s chief of staffs. But meanwhile, can’t we ballpark it by looking at total Measure Y annual revenue and dividing by the amount of the Measure tax to get total average taxable parcels?

    per the measurey.org site, total collections were about 19Mill. Per my neighbors single fam residence tax bill, he was assessed 90$ for this year. So wildly figure
    19mill / 90 bucks = 211,000 taxable “parcels” Seems high. I’d havLe guessed 100k taxable parcels.

    Gotta reread the retiree med cost doc to see when that obilgation would be fully funded if we paid in the projected sinking fund amount.

    Playing around, say 100Mill operating deficit now, plus 80 mill annually to fund the 1Bill, divided by 211,000 wildly misestimated number of taxable parcels. = $853 average parcel tax per year. Or just say Measure Y brings in 19Mill and we need maybe another 190Mill of revenue, we need a new parcel tax thats maybe 10x the 90 bucks/year my neighbor currently pays.

    That of course doesn’t give a nickle for education or improving services. Measure exempts low income owners, but not owner occupants over 65. if you do that, the parcel tax would be higher. I can just see the popularity of that exemption amoung the younger new residents of Oakland.

    -len

  111. David

    Len,

    What I would note in your calculation is your last paragraph.

    Municipalities and states are disgorging ever-increasing amounts to gov’t workers, with no improvements in services, roads, etc. Heck, states like Illinois are going into more debt and issuing 30 year bonds just to cover 1 year of pensions. Just like adding to your 30 year mortgage to go on vacation (a 1 week expense). It’s fiscal mismanagement.

  112. len raphael

    re parcel tax needed to generate specified revenues. contact your council member to ask for a copy of excel sheets used to project parcel tax revenue from the existing parcel taxes. Might be something we’d have to file a freedom of info act, but i’m thinking RK or DLF office would help.

    Could turn out to be some kludgy stand alone application they use, but that’s ok, if they give us the assumptions and calculations so one of us could approximate it in a shared excel model.

    -len raphael
    temescal

  113. Dax

    Tuesday, around 8:30 AM on the KGO radio news, council member De La Fuente was on saying how bad the pension mess was becoming.

    He went on to say they may have to create a two tier system, with current misc. employees at the 2.7% credit for each year worked, and new hires being put at a 2.0% credit.

    What he neglected to say was that HE, and his fellow council members (Quan, Reid, etc) all voted to create the current financial disaster back in 2003, that became effective in 2004.
    De La Fuente is the creator, the “cause”, the responsible party, or should I say the irresponsible party. Any fifth grader with a $5 calculator could have seen the future implications.

    The most God awful feature of what they put in place back in 2004 was the “retroactive” feature that gave golden parachutes to thousands of employees.
    A 30 year employee, ready to retire in late 2003 at $55,000 per year, need only have delayed retirement a few month and then instead received $74,250 for the next 20+ years of their life.
    Essentially a $385,000 golden parachute in addition to their previously agreed upon pension.
    Hundreds delayed retirement. Thousands since then and many current employees were given the 2.7% credit for all prior years, when all that time they had agreed to work with a 2.0% pension.

    Now, De La Fuente says we can’t go back “retroactively” and reduce years prior to 2004 to the 2.0% level of credit. He is no doubt legally correct.
    So how come we were able to go back and give extra credit “retroactively”

    It was a huge gift…. a golden parachute…..De La Fuente and company throwing money at city employees. Of course, back then, De La Fuente was aiming to become mayor.

    The cost for this giant 35% leap/gift is or will be the $500,000,000 liability he says now concerns him.
    He, more than anyone, created the mess. A financial mistake that makes the Oakland Coliseum, the Ice Rink, and everything else combined, look like a drop in the bucket.
    One simple, largely unreported, financial measure that will sink this city for decades.

    I’d love to see the discussion of those meetings. Council members with GED style backgrounds in financial matters sinking the city with one vote.
    Now I see new council members such as Pat Kernighan at the finance meeting asking questions that make your mouth drop open.

    She apparently knows almost nothing about these pension issues.
    Asking questions so basic about the most important matters.
    She was unaware that overtime did not factor into the calculations.
    A good question, but showing she is starting with the most minimal knowledge about this entire subject.

  114. Born in Oakland

    Len and David, thanks for clarifying tax potential. YIKES!!! My buddy and I have always thought of getting a tiny trailer (like the ones you see abandoned in the Oakland flats) and towing it up to the Delta and renting a small plot on some forgotten island just to have a place to hang out and get out of Dodge once in a while. Looks like it might be in our future as a permanent residence. No coffee shops there, but we might be still be able to afford to make our own.

  115. len raphael

    Born, just don’t make the mistake an acquaintence of mine did when he bought a small parcel on one of those delta islands. Turns out the island started sinking and something about the islands were not zoned for habitation. he lost it all.

    Dax, oakland collective memory suffers from dementia. it’s the role that a healthy local newspaper would have played.

    in defense of the city council members, many of whom are still our elected officials, their eyes probably glazed over when they were given the contracts and just asked how much would the cost be in the next two election cycles. the outside actuaries legally were able to ask city officials what investment rates of return to expect, the officials gave them optimistic rates.

    ultimately, the influence of unions, non-profit community orgs, and real estate developers over local municipal decisions in many cities and counties filled the void created by the decline of civic participation and information availability.

    how to put the power back into the hands of ordinary residents who are too stressed out by making a living is the long term question.

    -len

  116. Mary Hollis

    Born/Len

    I have been wondering if the unincorporated areas of Alameda County (if there are any) or of a neighboring County (if there are not) would make a far more sensible place to buy real estate since (I’d like to think) it’s usually the Cities and not the Counties that have the fiscal problems (Exception of Orange County noted).

    As upset as I am by all this, having hoped to lay down roots here, right now I am near immune to at least the financial implications here. I don’t own real estate in Oakland, and most of my spending happens in Emeryville, Berkeley or San Francisco. So Oakland really isn’t getting much tax revenue out of me right now, and isn’t likely to if things don’t change.

    So it’s not just the fleeing middle classes that will compound this problem. It’s the inbound middle classes that will change their mind.

    Len, by the way, you might want to read up on the current problem in Harrisburg, PA, which are similar in nature. No BK as I believe PA is one of 30 States that don’t allow cities to file BK. A hot nasty mess though.

    Does anyone know if anything interesting was said at yesterday’s meeting?

  117. David

    Nacho needs to take a look here:

    http://www.app.com/article/20100322/NEWS03/100322107/1007/NEWS03&source=rss

    The bills require all government workers to contribute at least 1.5 percent of their salaries toward health care costs, cap the amount of unused sick and vacation time workers can cash out at retirement and bar part-timers from enrolling in the state pension system.

    Christie said the legislation has far-reaching savings. Two of the bills are projected to save $8 billion over 15 years. The third bill, which requires a health care contribution from all workers, is projected to save local governments and school boards $315 million in the coming year alone.
    ….

    Certainly similar increases in employee contributions, changes in overtime policies, etc can all be instituted here.

  118. len raphael

    MH, odd one doesn’t hear much about Alameda County’s money situation. Was there some politician who said “its about to get very bad” ?

    The biggest unincorporated town that comes to mind is Castro Valley. There are a bunch of odd little unicorporated slivers like Cherry Land but you wouldn’t want to live there.

    -len

  119. Mary Hollis

    Len

    I’ve never really understood the difference between Cities and Counties because I’ve usually lived in places where they are the same. I suspect I am about to find out.

    I assume Counties are in better shape because their public safety commitments are limited to Sheriff’s, the Courts and the jails, they don’t have to provide inner-city type help to the most impoverished, and that they have some affluent Cities or unincorporated areas in the mix which balance things out (Emeryville? Berkeley? Piedmont?)

    Also I wonder what obligation, if any, AC has to help Oakland out?

  120. zac

    Just for clarification: Alameda County has its own fire department which is just slightly smaller than Oakland’s in terms of personnel. They perform fire protection for a lot of smaller cities and some unincorporated areas. Their salary and pensions are similar to Oakland’s, and they have a more generous retirement medical package than we do.

  121. len raphael

    Zac, speaking of county and city compensation, one of the factors compounding the effect of high wages plus high retirement pay at age 50, is that high ranking uniformed offciers from one city or county go on to a second career at a different California jurisdiction and earn a second pension. Raising retirement ages would cut down on that. Our former chief of police was a good example.

  122. Ralph

    Len, one of the supervisor just held a budget review session for Alameda County. I think it was to address the red ink. I suspect you don’t hear much about it for a couple of reasons: loss of the local paper and the relative impact on Oakland resident’s lives.

    Mary, I think cities and counties operations are going to vary county to county and city to city. For example, there are standalone cities that have both a PD and Sheriff dept. There are counties which have a PD and Sheriff’s dept. Really no idea how the City and County of SF operate in terms of social services.

  123. zac

    Len: The only way to “double dip” and earn two retirements is if you go from one kind of pension system to another. If you go from one PERS system to another PERS system, then all you do is add to your total PERS time. Some people do take a retirement from a PERS system and then go draw a new salary from a non-PERS system. So maybe the solution is…to make everyone PERS.

  124. Dax

    Zac, I want to clarify a few points regarding medical. If we take a current 55 year old FF who is retiring in June as a example.
    Obviously he has had medical for the past 30 years.

    1. In 2009-10, while employed, what portion was he paying as a active employee?

    2. What, if any, portion of his medical (Kaiser etc) for him and his wife will be covered between age 55 and 65 while retired. For example Kaiser might be $500 per month for him. Does he pay 100% of that?
    Plus what happens if he is covered under a wife’s employment during those years?

    3. What happens to this retiree when he hits age 65…
    Doe he then get Medicare part A because of his time with OFD , or does he have to get it via a wife’s employment or from prior employment he had outside of the OFD.

    4. From age 65 forward does he have to pay Medicare part B and does he have to pay for all of his, for example, Medicare supplement “Kaiser Advantage” or Senior Advantage…

    — On one other point, that I raised after ConcernedOakFF suggested that the average FF dies only 8 to 10 years after retiring.
    As I showed, that is totally false.
    But what I wondered, is that what the union is telling its members?
    I mean, it struck me as so absurd from all the FF’s I’ve grown up with that I looked up the real facts.
    But I am still wondering where this stuff comes from since I have heard other police and fire department staff voice the same erogenous data.

  125. zac

    Dax: I’ll admit that I don’t know nearly as much about retirement medical payments as I should, in part because the rules keep changing every year. I know that the amount the city pays rises every year by a fixed amount, a fixed amount that is always smaller than the wildly unfixed amount that health care costs rise every year. So as time goes by, the city covers a smaller and smaller portion of our medical costs post-retirement. I’m not trying to dodge you–I just don’t know the specifics about Medicare. If someone here knows the (true) answers and would like to chime in, I’d appreciate that very much. For what it’s worth, we’re not eligible for Social Security benefits.

    On your other points…The city covers the full cost of care to the Kaiser level. If you want to choose a plan–and there are only a few others that we are allowed to choose–you have to go out of pocket for the difference between Kaiser and the plan you chose. If you’re covered under your spouse’s plan and choose to drop your Oakland coverage, the city will give you a small credit, $150/month or something like that. I don’t know anyone who has gone that route. (Potential savings here? If the city made it worthwhile for me to join my wife’s plan, they might convince me to jump at a dollar figure substantially less than what they’re paying to cover me.)

    As for how long firefighters live after retirement, I don’t have any actual figures, but one thing about PERS’ actuarial tables jumps out at me right away. I went to the CDC website to see how long a 65 year old male could expect to live, and they say that a 65 year white old male born in 1980–I dare you to wrap your mind around that one–could expect to live 14 more years. So that would put the average life expectancy of a non-firefighter at about 79 years old. Which means that PERS assumes firefighters live significantly longer that non-firefighters? Doesn’t seem right to me, and I’d love some analysis by someone who is better at stats than I am.
    http://www.cdc.gov/nchs/data/hus/hus08.pdf#026

    The bottom line is that I doubt that firefighters only live 8 years after retirement, but I also doubt that they live longer than the average American male. I think there’s some truth in the idea that firefighters die somewhat young. Dax, your anecdotal sample of neighbors is no more relevant than mine, which includes the fact that we’ve buried three retirees in the last month, none of whom made it more than 12 years post-retirement. More importantly–I don’t want to build early death into the model and regard it as an actuarial windfall. I want us to spend the money and take the steps necessary to protect our health so that we really do last as long as the avg American.

    And finally Dax, I love your phrase “erogenous data.” I’m totally stealing that one.

  126. Dax

    Zac, yes, everyone loves “erogenous data”… Actually it showed I was spelling erroneous incorrectly so without looking I clicked on what appeared to be the correction choice.

    I really wish I knew who paid the $500 or $600 Kaiser bill between age 55 at retirement and age 65 when I assumed you went on Medicare like everyone else.
    My brother, retired police, was uncovered between retirement and age 65 as he just got Medicare. He worked in another state, so I was uncertain how Oakland FF were covered in those in between years from 55 to 65.
    My brother made it through his 10 years without a major medical problem but that is a very dangerous practice. One accident could be $100,000.

    OK… next… about how many years lived after retirement.

    Earlier I gave you the PERs numbers

    – If the current age is 55, the retiree is expected to live to be 81.4 if male, and 85 if female.
    – If the current age is 60, the retiree is expected to live to be age 82 if male, and 85.5 if female.
    – If the current age is 65, the retiree is expected to live to be age 82.9 if male, and 86.1 if female.

    I’m sure PERs takes great care when calculating those.
    However I do see at the official Social Security site other numbers
    Male
    Age 55…….live to 79.37
    Age 60…….live to 80.42
    Age 65……live to 81.73

    Female
    Age 55….live to 82.82
    Age 60….live to 83.53
    Age 65 …live to 84.5

    The PERs tables for FF’s and police are about 2 years longer than the national Soc Sec numbers.

    I don’t think the PERS numbers are a mistake or inaccurate.
    You have to realize that national numbers include all states.
    In one chart I see, California is about #10 of 50… adding in a full year, just for that factor alone relative to other states.

    You also have a group, PERS retirees who almost all have excellent medical coverage. Better than the average person. That adds in some longevity.
    One would also think, “on average” that police and ff’s have kept themselves in better physical condition over their years of employment.

    I can easily see how the PERs pool of police and ff’s would be a bit above national figures. Think the Southern states by comparison where rates of obesity are much greater than California.

    I exposure to retired police and fire is fairly large, not just neighbors. Mostly relatives and fathers of close friends. I have no doubt in my little data base that the average is well over the 82 year mark, but that age sounds reasonable.
    So we have folks retiring at 55 and lasting 26.4 years, which is about 3 times a long as ConcernedOakFF was suggesting.

    Not just double, but nearly triple his average.
    This type of skewing the facts is what drives me crazy.
    Bottom line, the pay and the pensions are very very generous.
    Even in good times you have 8,000 applicants in line for a couple dozen positions. That was a major news story back a few years prior to this recession.’
    So many people that it created a huge problem that made all the news stations.

    Ultimately the other part of the story is even if it was a totally fair compensation system, can we afford it.
    Perhaps Oakland and other cities just can’t pay police and fire what they are worth and still stay solvent. A reality that all homes are facing these year.

    I know a new car would make sense, but I just plain and simple can’t afford it.
    Reality. A reality that the Oakland city council has avoided for the past 10 years.

    Personally, though all the talk here is about police and fire, I was much more disturbed by the 2004 action taken to raise ALL misc employees from 2.0% to 2.7% per year worked. That was a huge 35% leap..

    Worst of all.. A fatal sin, they made it retroactive for all prior years worked.
    A complete financial giveaway. Huge golden parachutes.
    A 30 year workers who was going to get $60,000 pension, suddenly got a $81,000 pension by just staying on a few more months until the provision took effect.
    That worker will live over 20 years, making their undeserved gift, over $400,000 more than they had contracted to work for.
    DeLaFuente, Quan, Reid, etc were all yes votes for that fiscal madness.

    All toll that 2004 move will cost Oakland as much as a billion dollars, with loads of it coming out of the general fund.

    Oh well……

    Question… Is my council member smarter than a 5th grader?
    Listening to some of them on Tuesday I seriously must say no.
    Some of the questions they asked about the pension problem indicated they are clueless on even the basic concepts. Truly blind and ignorant about the data.

    A Vallejo waiting to happen.

  127. ConcernedOakFF

    This is it and I’m out. I totally disagree with the premise that I should loose anything from my benefits. I have given up enough already. Period. I, and I imagine those that I work with, will fight tooth and nail for everything that we have, which despite the snide remarks and attempt to out us by posting pay, really isn’t vary much. I struggle to pay for everything I have, and the last thing I want to hear from the people for whom I have given up most of the good part of my life for is that we aren’t really worth it. I have permanent injuries from my job with the OFD, I come home tired every shift and have to sleep for at least 3-4 hours before I can function as a member of my family. I see and do things that do one else wants to deal with. Not hyperbole, FACT. THAT is why we get paid more than the “average” job.

    I call BS on the Chicago cost index. Every cost of living calculator states that this is not true, and Oakland is 30-35% more in the cost of living index. And I would love to see a house in Rockridge for 550,000…. Sure. And I would like to see a firefighter whose wife does not work afford anything over 400 in these days of full down payments.

    I am sorry that others don’t make as much or don’t have benefits, but frankly – not my fault. It is your own choice and own fault to CHOOSE to work for a profession that does not offer the benefits that you so obviously crave. Public safety is always testing, if you want to get on board this “gravy train” as has been so ludicrously stated, you have that option.

    Dax you are making the classic mistake that we all learned about in college logic classes : fallacy of composition.

    Just because you incidentally “know some firefighters” that beat the odds, does not make your statement true. At all. I know some that died at 20,30 and 40. Does that mean that all firefighters die at those ages?? No. No more than your incidental information means that we all live happily ever after.

    If you noticed a few nights ago channel 2 had a story on a study of the cancer rates of Firefighters. They stated that we have on AVERAGE a 300 times greater chance to get cancer. Your statement not only does not make sense, you are looking at incorrect numbers.

    If you understand actuarial charts, they are required to break at the point of failure. What you read was the failure criteria for PERS.

    No actuarial chart is going to post numbers that high for average death ages, that is not the purpose for the chart.

    To all – Complaining about our salary and benefits is not going to change the FACT the the city is going to keep paying us, and going to keep paying our pensions for those that are currently working. There are other programs that are going to take the hit, and frankly, I stand by my belief that we have given up more than anyone else, and should not have to give anything else.

  128. Patrick M. Mitchell

    COFF, while I understand your position I really question your overall reasoning. Anyone who has spent even a moderate amount of time reviewing the City’s financials knows that current compensation schedules and future promised compensation schedules are pyramid schemes that are going to collapse. FACT. You can continue to lash out if it makes you feel better, but I think you’d be better served understanding why we are all talking about reduced compensation rates for city employees. None of us belittles the hard work you do…but we’re also realistic. What we’re proposing is not to punish or “take away”; it’s to ensure that we can afford to pay you promised benefits in the future. Currently, your future benefits from the City of Oakland is based entirely on wishful thinking.

    I do find it kind of interesting that you feel entitled to live in Rockridge. There are plenty of nice homes in other areas of Oakland that are priced well below $550k.

  129. Dax

    ConcernedOakFF, You sound like your going to leave in a huff.

    I am hardly anti-firefighter. As I stated, that was the profession I grew up with in my extended family, and it has continued into the next generation with cousins etc.

    However, you put forth totally bogus data here when you tried to suggest that the average firefighter was only living 8 to 10 years beyond retirement.

    I then gave you the actual data from PERS for the specific category of firefighters and police retirees.

    You have now responded with nothing other than the following…

    “If you understand actuarial charts, they are required to break at the point of failure. What you read was the failure criteria for PERS.”

    That is gibberish…. That is baloney.
    Where did you find that “explanation”? Give me the PERs page where that kind of explanation is offered.
    I know the difference between the case of my relatives and neighbors who are firefighters……which I clearly stated was “anecdotal” and that is why I gave you the PERs figures which you now try to discredit as being impossible, without giving any source or alternative data.

    Look, your prior data was shown to be absurd. Don’t throw a fit because you passed on some inaccurate data. No doubt you probably believed it was true after reading something in some union publication.

    BTW, I know firefighters are injured, and disabled on the job. I know a friend I grew up with and went to high school with who was disabled before age 50.
    A real injury, not one of those that people suggest is just a way to get early retirement.
    My grandfather was disabled and in pain to the end of his life after falling through a roof during a fire in the era before hip replacements were available.
    I never knew him without a limp and a cane.

    But none of that changes the average years lived after retirement for the average firefighter covered under the PERs system.

    So you can leave and stop posting if you like.
    All I request is you give me a valid source of information that shows the PERS data I gave you is incorrect.
    I’ll keep looking and report anything I find here regardless of whether it backs up the data I have given.

    I ask you to do the same. If you don’t find anything contrary to what I have posted then we’ll have to assume my previously posted data is accurate.
    Accurate regardless of what you choose to believe.
    I don’t understand why you want to avoid the true facts.

    UPDATE… Friday 12:11 pm….
    I just got off the phone with the Sacramento Public Affairs Office of PERS. I spoke with a manager for that office.
    We went over the specific question involved here regarding the longevity of the retirement of police and fire employees.

    He, the manager, was aware of this specific issue and the precise nature of the issue.
    He affirmed the data I gave above, regarding how many years, and to what age, the average police and fire retirees live.
    He further went into detail about how PERS actuaries have studied and concluded that the average police and fire retiree lives to almost precisely the same age as all their other retirees .

    There is no difference in how long police and fire live after retirement, relative to the other PERS employees. That is PERS data.
    Like I said, this PERS manager was familiar with this specific issue since he has had to address it before.

    You really need to stop suggesting the truth is other than what I have posted, because in doing so you are straying away from the true facts.

    Once again,
    ————————————————————————–
    The true facts are as follows…

    Here is the CalPERS life expectancy data for public safety members (police and fire, which are grouped together by the pension fund):

    – If the current age is 55, the retiree is expected to live to be 81.4 if male, and 85 if female.
    – If the current age is 60, the retiree is expected to live to be age 82 if male, and 85.5 if female.
    – If the current age is 65, the retiree is expected to live to be age 82.9 if male, and 86.1 if female.
    —————————————————————————————-

    I challenge anyone to come up with factual PERS data showing the above to be untrue.
    From age 55 to death is 26.4 years for the average PERS “fire and police” retiree.

    That is it… Please stop distorting reality.

  130. Dax

    Secret new way to boost Oakland pensions is soon to be passed by our state legislators.

    From the CC Times, Daniel Borenstein ( who has done loads of reporting on this shady stuff)

    Regarding AB 1987 by Assemblywoman Ma of San Francisco
    =======================================================
    “The legislation would add to the list of permissible spiking techniques. For example, public agencies typically pay not only the employer’s share of payments into the pension plan, they also pay part or all of the employee’s share. Under AB 1987, that latter amount would be counted as INCOME when computing the employee’s pension.

    For Contra Costa County employees, the effect would be to immediately boost pensions for new retirees by as much as 4.4 percent. Future retirees of the Central Contra Costa Sanitary District would enjoy a pension spike of 6.5 percent. And at the San Ramon Valley Fire Protection District, the bill would instantly sweeten pensions by an average 6.7 percent.
    ==========================================================

    Now, with regard to regular and safety employees, think about the employee portion of the pension contribution that the city pays.
    Earlier in this thread, at the intro, it was stated that regular Oakland employees pay their full share, as do fire men/women.

    But I believe in the case of the OPD, that Oakland pays the entire 9% of the employee portion.
    Thus if this bill was put into effect, that alone could raise all police pensions by 9%.

    BTW, BART pays the entire employee contribution and thus all their pensions could be raised by this AB1987 bill.

    These legislators, you can’t stop watching them for even 5 minutes that the public employee unions don’t slip tiny changes into legislation.
    This trickery amounts to legalized theft and deception.

    Read the Borenstein article, which was also mentioned by Dan Walters in the Sac Bee.
    http://www.contracostatimes.com/ci_15087961?IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com&IADID=Search-www.contracostatimes.com-www.contracostatimes.com

    I don’t know why that appears that way, but it seems to work as a URL

  131. livegreen

    I mean, how does one even start to get a handle of this abuse. It’s so over the top that it’s not hard to imagine the Republicans inventing this type of nonsense to rap on the Democrats. But with the Democrats doing it to themselves (& to the rest of us), is there any hope between these two radical parties?

    By the time the Moderates wake up and shake off these yo-yo’s it will be too late, the bill will come due. And whoever’s remaining is going to either deal with mass bankruptcy, or just leave.

    When that happens, how do the Govt Unions think this is going to get paid for? I’m beginning to think Vivek is right…

  132. zac

    Since this thread seems to have become (somewhat) active again, I just want to make sure that you guys have the facts on how pensions work for Oakland firefighters. We currently pay THIRTEEN percent of our salary towards the pension, and we have been for many years. No other union in the city comes close, especially not the police. And while I can’t comment on what goes on with spiking in other cities or in other Oakland departments, I can say that a firefighter’s pension is based on his/her BASE salary–not overtime, not pension contributions, etc.

    I understand the anger of public employee pensions, but it’s important to make distinctions between different bargaining units. While other units pay 0 or 2 or 9% toward their pensions, the Oakland firefighters have been paying 13% for years, and will continue to do so for the foreseeable future.

    Thanks for listening.

  133. Ralph

    I can only assume that Fiona Ma is not long for the state; otherwise, I assume she would be more responsible with our money.

    Wondering a few things about what she is trying to accomplish, but I wonder if her immediate goal is to claim tax money now presumably when people are paying higher rates.

  134. David

    Zac,

    I appreciate that FF pay 13% of their income to the pension. And the pensions would be in much better shape if other employees paid their share, and were based on base salary, not the last year’s spiked salary etc.

    however, you also have to realize that after we correct (if sanity could prevail for once) other public pensions, you are still going to have to have some kind of adjustment. Again, let’s say you pay 13% of your salary, and let’s say for argument’s sake, your base is $80K (yeah, I know it varies, but that’s a pretty normal-to-low base around here).

    You save then $10,400/year. At the end of 30 years, ignoring inflation, you’re getting a pension payment of ~$70,000/year. For us private sector folks, an annual $70,000 retirement would require a savings sum of around $1.4M, assuming a withdrawal rate of 5% (a bit on the high side to be “safe” –to allow for your savings to last).

    Ergo, you’re retiring with an annuity roughly equivalent to $1.4M. For your $10,400/year savings, that equates to about a 9% annualized return, after inflation etc etc. Care to guess what the BEST investment class (foreign stocks, bonds, domestic stocks, munis etc) returned over the past 30 years after inflation? Stocks at an earth-shattering: 6.33%.

    The problem remains that when your pension has a shortfall (and it will, based on these assumptions, it’s guaranteed), the taxpayers back it up. When my retirement fund has a shortfall, I have to go greet people at WalMart.

    D

  135. zac

    David,

    Two things. First, I may not be following your math correctly, but you need to remember that the 13% contribution is all from the employees. Your math assumes that the employer would be contributing nothing to the pension. But I think it’s fair to assume that the employer should have some sort of matching contribution for the pension; most private companies do. So yes, a nine percent return might be high; but if we get say, a 5.5% return AND the employer kicks in something, shouldn’t we be close to ballpark?

    Secondly, I hear you saying that we’re still going to have to do more. And I want to remind you that we just agreed to work four more hours a week for FREE, which is essentially an 8% pay cut. Before the increase in hours we worked 52 hours per week, and now we do 56 for no more money. Imagine the same situation in the private sector. You’re working hard, 52 hours a week, and your boss comes in and says now we need you to give back 13% of your salary every year. And by the way, we also need you to come in every other Saturday and work a full day. For free. Now, you might agree to it wholeheartedly–as the firefighters did–because you want the company to remain solvent. But here’s the rough part: after a year of working those extra Saturdays, after ten years of giving up 13% of your salary, the boss comes in and says, “hey, how come you guys haven’t made any concessions?”

    I don’t mean to be ungrateful, and I am more than willing to do my share to bail Oakland out, but at some point I begin to wonder why Fire has to keep taking the hit. People say policeandfire with one breath, despite the fact that with our 13% and our extra hours, we’ve essentially given a 21% concession over and above the police. Don’t even get me started on the Mayor’s pay cut. I’m not trying to be obstructionist, but at some point it stops making logical sense. If the response is just as angry whether we make concessions or not, at some point we might as well stop making concessions.

  136. JB

    Zac,

    Two things. First, if you’re the Zac who wrote “Working Fire”, kudos for writing such an interesting book. Second, why does OFD’s Local 55 tout their 13% pension contribution as a signal accomplishment when it was only implemented in return for a corresponding 13% raise in base salary? The increase in base salary increased all of the roll-ups and structured overtime built into the Local 55 contract. So ultimately it represented an INCREASE in cost to the city.

  137. zac

    JB,

    Yes, that’s me. I’m glad you enjoyed the book.

    And I don’t believe that there was such a direct quid pro quo as you’re suggesting. We didn’t get a 13% raise in response to a 13% giveback. The bottom line is that cops and firefighters make about the same amount, but firefighters give back 13% of our salaries. History aside, that’s not an equivalent bottom line for the city.

  138. David

    Zac, by all means, and I think I’ve stated it before on here, that it would be fair now to demand givebacks by the OPD first. However, if and after that is done we will still be in a situation where the taxpayer cannot fund your retirements and your salaries and your benefits.

    Second, an “employer contribution” is also a taxpayer contribution (just like when the pension funds fall short, taxes go to paper over the losses–Calpers just requested another $600M to cover their losses). It is also compensation.

    In the private sector, such contributions are given in lieu of wages (as wages are taxed, but the 401(k) match is not, so the company can split the difference etc). To get $1.4M at 7% annual return (again, a low estimate as to what the pension is worth), the city would have to kick in an incremental $400/month or so, or another 5-6% of salary as match, or as the private sector would calculate it, about a 50% match to your retirement contributions. I’ve never heard of such a high match rate in the private sector. My maximum match at my previous employer was 3%. So if I put in $10,000, the company put in $300. Knock me over with a feather.

    Finally, as to working more for less, welcome to the Obama economy. Our peptalk at my prior employer was, “you’re going to have to work more for less.” Exact quote from the CEO. And guess what? I took a 40% pay cut and worked more. And 13% didn’t go into a pension fund; it didn’t go anywhere, because the MONEY DIDN’T EXIST. The money that the cops etc want DOES NOT EXIST.

    D

  139. Dax

    “The money that the cops etc want DOES NOT EXIST.”

    This is a foreign concept that is not yet accepted by either the city council or the public employee unions (or the state, for that matter)
    After all, for decades they have always created money from smoke and mirrors, bonds, fees, loans and shifting of funds from one purpose to another, including under-funding all the pensions.

    But now, the money DOES NOT EXIST, except in the pockets and savings accounts of the residents. Or in selling the Chabot Golf Course as Mr. De La Fuente suggested in the news yesterday.
    So, public employees are quite willing to ask or scare the public into taking that money out of their pockets to keep the pensions, benefits, health care, and salaries, of city employees at levels much higher than the typical resident enjoys.

    Residents who have, as a group, seen their income and benefits fall.
    The gap between city workers and city residents has grown even greater in the past 3 years, yet there is talk of a new parcel tax to keep the gap in place.

    Go to the Tribs new data base where you can see city worker salaries by job and department. Remember, that those figures do not include the benefit package which tacks on another 55 to 60 percent. Mostly untaxed.

    Simply put, a parcel tax will not pass this year. Any reliance on that is simply dreaming the problem away.
    This is a financial drought year. You can’t water your lawn with dollars that don’t exist. City workers don’t deserve more water than other Oakland residents.
    We can’t afford to give you part of our scarce water when we’ve already cut our use 20%.
    In this case the water is money.

  140. David

    PS. I just looked up inflation adjusted annuity rates, which is the closest thing a person in the private sector can get to a pension.

    you would need $1.5M to purchase an inflation-adjusted annuity yielding $70,000/year if you were…wait for it…68 years old. Typically an annuity that will last 30 years versus 20 years costs 20-25% more, so to retire at 55, with that inflation-adjusted income, a private sector worker would need to save about $1.8M.

    To put this amount in perspective. I know public sector employees seem to think that all us private sector folks walk home and roll around in $100 bills for fun, but in reality, the average value of all retirement accounts for workers 55-64 was $272,000 in 2007, with the median being 100K, and the median 401(k) balance for a worker with 30 years of tenure was $191K.

    So, a gov’t worker that retires at 55 with a $70K/year pension has the equivalent of about NINE times the median workers’ 401(k) plan, assuming that worker stayed with the same employee for 30 years. This is why benefits cannot be sustained. At some point, you simply consume every last private sector dollar.

  141. zac

    David,

    I’m sure your math is better than mine–part of the reason why I’m a fireman–but I just entered some numbers into a standard compound interest calculator to see how my 13% contribution would fare if the city contributed nothing. Assume an income of 100k/year, which means a contribution of 13k/year. Figure 30 years of appreciation and no raises, so a contribution of 13k every year for the next 30. At 6 percent interest, my pension account would have $1.16 million in it. If I earned 7% interest, my pension would be at $1.4 million without the city kicking in anything over and above my 13% payback. So, ANY 100k worker, public or private, who can manage to save 13 percent of his salary over 30 years would accrue $1.4 million.

    I understand that the 13% is part of my compensation, but the problem comes when people assume we’re double dipping. They say “you guys are 100k workers AND you get big pensions.” Well, no. We’re 100k workers and we decide to spend 13k of our own money every year for savings. I suppose you could have a system where each member got to choose whether to send 13k a year to PERS or blow it all on flat screen TVs and know he has no pension coming. Don’t get me wrong–87k is still a great salary, but I want people to understand that we’re self-funding our pension, and that anybody who elects to save 13% of his salary for three decades is probably going to end up with a pretty nice nest egg.

    That being said, I understand that we’re all on the road to ruin, financially speaking. So, since the courts have ruled that you can’t yank a pension promise out from somebody who has been paying into it for years, what do you all suggest we do going forward?

  142. Mike

    FACT: Oakland Police Officers stepped up to the plate last year to support your city by opening their closed contract and giving back to the city more than any other city union.

    FACT: The Oakland Police Officers Association was the only city union that had a closed contract. There was no obligation on us to open it, but theye did so to show their commitment to the citizens of Oakland.

    FACT: Oakland Police Officers gave back more to the city in contract concessions than the sum of any two of the other city unions.

  143. Dax

    “I know public sector employees seem to think that all us private sector folks walk home and roll around in $100 bills for fun,”

    I’ve discuss these issues with public sector workers and they really believe the myths that their unions tell them. The stories and examples are passed back and forth until they believe them as facts.
    Witness what we saw earlier in this thread about police and fire personnel dying far earlier than regular folks. A complete myth and yet we saw how they backed it up with arguments A, B, and C….. These are passed around and accepted as fact.

    It benefits the union leaders to keep the myths alive.

    Every time I’ve discussed the issues with public employees, they really believe they are not paid as much as private employees. Every recent study indicates otherwise.
    They pick out someone like a private carpenter, assign him union rates and then make believe that he works 52 weeks a year, getting full union wages and benefits.

    Uh, find me that carpenter. Perhaps there are what? 6 or 10 of them in all of Alameda County? The others, working in the real world make half of that working only some of the months each year given the weather and jobs available.
    Yet those are the types of examples that are spread around, giving public employees.

    I know a employee in administration at the OUSD. Not a higher up. I have had interactions with her over the years. Just in the last release of the Tribs data base, they included the OUSD for the first time.
    Now, before I looked her name up, I thought real hard about her duties and position and guessed how much she might make. I knew it would be higher than for a similar private position but I took that into account.
    I guessed about $42,000 to $52,000.
    Then I looked it up. I was stunned. It was $80,0000.
    I would have been shocked at $60,000.
    And that doesn’t even take into account the benefit package.

    I’m starting to second guess that I must have her name wrong. I will recheck to be sure after have my next interaction. I simply can’t believe what I see listed.
    There must be a mistake.

    IF you finally get a worker to admit they are getting more than the private sector, then they’ll say, “Well everyone should get more”

    Yeah, right, except the private employer can’t just jack up the rates he charges, like I got in the mail today about how my sewer taxes will ONLY be raised 12 cents per day.

    Just 12 cents. Just $3.60 more per month. Chump change, who could turn down such a small increase?

    On the other hand, I had a wonderful interaction with one city worker yesterday.
    Couldn’t have been more understanding and helpful.
    BTW, she thinks the current wage/benefit package is irresponsible.
    Hence, I won’t mention her name, but needless to say she was making under $50,000 per year. What a breath of fresh air she was.
    No sense of entitlement or attitude.

  144. zac

    Hey Dax, I know you’re angry, but we don’t solve anything by attacking each other. I’m a union leader and I do my best not to go around spreading rumors and lies, as you accuse. I don’t think private sector workers are rolling in money; many of us in the OFD are married to private sector workers and we know how hard things are these days.

    And as I’ve said before, I don’t know whether firefighters die earlier than non-firefighters–I’ve seen compelling evidence on both sides–but I don’t want that subject to be part of the discussion. I hate it when firefighters use our (real or supposed) early death rates as some kind of actuarial windfall. If we DO die earlier, then my number one goal is to erase that gap.

    As I said in my last post 9and many others): given previous court rulings, how do you suggest we solve the problems going forward? Cutting each other down often feels good, but it doesn’t save a lot of money.

  145. Mike

    Our Fire & Police deserve their pay for a job few people can do. The emotional trauma alone from seeing people shot up, tore up in car accidents, victims of child abuse, drug addicts, skid row, daily violence, breathing in toxic carcinogen carrying smoke, risk of being assaulted, wrestling around with parolees. etc alone is maddening. OF COURSE they retire at age 55. 25 years of seeing that stuff is ENOUGH!

    besides, do you really want 65-70 year old cops and firefighters out there? Give me a break! And there aren’t enough “desk jobs” to put them all on and besides, it’s CHEAPER to pay a civilian to do a desk job than a sworn employee to do the same thing.

    Let alone the PHYSICAL ailments they develop from 25 years (if they even LAST that long) of carrying people down flights of stairs on medical calls over and over without wrecking their backs and shoulders or walking around with 25 extra pound gunbelt strapped to your hips 12 hours a day and sitting in a patrol car with all your gear pushing up against your back and have to run after people and/or fight with them. Not even mentioning sacrificing their lives in the line of duty for YOU. Who runs TOWARD gunfire? Who ENTERS a burning structure instead of running OUT? Not any of YOU!

    You chose your path in life. They chose theirs. Most any of you could have taken the entrance exam for the police or fire dept but you didn’t. Don’t browbeat those who chose to serve now because you chose a sedentary career. Their pay is well deserved and earned.

    If you want to be angry with someone, be angry with the politicians who steal the money and lie to you. Vote the politicians out!

  146. Ralph

    Zac, if your contributions cover your expected benefit I don’t really care. I don’t consider a person who earns and contributes a double dipper. I’m okay if the city has some small contribution maybe 2-3%, but the lion share needs to come from the employee.

    I take exception when a employee gets a benefit and contributes nothing.

    I take exception when someone works for 27 yrs at $100K/year and then his buddies decide to move him/her into a $250K/yr position. Three years later s/he retires and collects a tidy pension off the $250K.

  147. David

    Zac, the problem with your calculation is that you use $100K=$1.4M. I used $80K going to a $70K pension. A 100K fireman gets $90K pension after 30 years. That’s going to be more like $1.8+M equivalent.

    And of course you’re right. Any private sector worker who saves $13K/year could end up with a decent sum.

    It’s quite a bit harder in the private sector, however, when you’re also paying $12K/year (yours+employer “contribution”) to Social Security. You don’t have to pay Social Security.

    Now, I know you will argue that we get Social Security and you don’t. Again, I will gladly trade you my Social Security for your pension. Even if you add in Social Security to my numbers above, here’s what you get:

    Public sector pension equivalent: $1.8M to use a $100K base salary, retire at 55. Annual benefit: $90K to use the $100K number

    Private sector: 12.6% of salary goes to Social Security that will yield $27K/year, retiring at 67. Would need to save $1.26M to get up to $90K annual. Savings required: $6Kyear for 40 years. So, a private sector worker needs 18.6% of his salary diverted, assuming he’s making $100K/year at age 27, and retires 12 years later.

    How many non-firemen, non-cops are making $100K/year at 27? Oh, wait, we know that. You have to get into the highest quartile of earners with a Bachelor’s degree or higher to get to $100K, never mind if you’re 25 or 35 or so, where it’s more like the top 10% of 25-35 year olds earn 100K.

    My recommendation for you would be to state that 1) I know I have great benefits and 2) other people/cops etc need to come to the table also and then 3) recognize at a later date that it will not be enough and you will still have to give back.

    As to the court ruling, I don’t care. You cannot get blood from a stone. If the money is not there, and it IS NOT, your pension will not get paid. Period. Ask the steelworkers, airline workers, etc who saw their pensions re-written by a bankruptcy judge. It will happen. It just hasn’t happened yet to public workers, but it will.

  148. Mike

    The money will be there.

    Economies are cyclical. We are in a temporary downturn. Things will improve again like they always have and then none of us will be having this conversation.

    And maybe next time we have a downturn our politicians will have used the money wisely instead of spend irresponsibly and there will be an available surplus so they can’t place the blame on California’s workers instead of themselves – the greedy politicians!

    Aww no, I’m dreaming. Politicians will always be politicians. oh well.

  149. Ralph

    Mike, you are right things will improve again. However, we have needed pension reform for years. It only escapes the attention of most people because the liability has been reported off-balance sheet. Money will be there just not what you were expecting.

  150. Dax

    Interesting article by Daniel Borenstein in the CC Times

    http://www.contracostatimes.com/daniel-borenstein/ci_15136333

    Relates closely to Oakland’s situation and the many comment here about the pensons ONLY being short because of the recent stock market declines rather than a systemic problem.

    No one has followed the pension mess closer than Borenstein.
    Read some of his articles from the past.

    Jean Quan and Mike (here) should read them.

  151. John A

    Thank you everyone for your contributions to the dialogue on this website, from this lurker and first time poster.

    The pension thing is huge, and any talk about this being a shorter term blip I fear is misguided. This nationwide problem is structural, and a sea-change is upon us relating to the attitudes of the silent majority in Oakland and elsewhere, folks who strongly support public safety but are starting to see the writing on the wall (Above CC Times article illustrates).
    Looking at the PDF file (Pension obligations) from the city that V posted a while back (Page 17, attachment A) I read it to show that the city pays 37% of base salary for the OPD into Calpers (Employer plus the 9% employee requirement). Along with the OFD contributions, the amount is not suprisingly a large percentage of the GP fund.
    Some kind of reform seems necessary.

  152. Dax

    Oops… The the implications of the below articles could blow 40 to 100 million dollar holes in future Oakland general fund annual budgets.

    ——————————————————————————————————–

    “CalSTRS’ expected annual rate of return has been set at 8 percent since 1995. Consultants and investment staff told the board Friday that the fund should decrease its expected rate of return to 7.5 percent annually. ”

    From the Friday Tribune

    http://www.insidebayarea.com/ci_15229108?IADID=Search-www.insidebayarea.com-www.insidebayarea.com&IADID=Search-www.insidebayarea.com-www.insidebayarea.com&IADID=Search-www.insidebayarea.com-www.insidebayarea.com

    “CalSTRS is the nation’s second largest public pension fund with assets totaling about $138.5 billion as of April 30, 2010. It serves about 833,000 members.”

    “CalSTRS estimated its unfunded liability at $22.5 billion in 2008. Reducing the projected rate of return would increase that unfunded liability.”

    “Smoothing” isn’t gonna make money appear like magic.

    Far worse is the rate Cal PERS expects and how much it may have to cut it.

    —————————————————————————————————–
    Also, March 01, 2010
    CalPERS Could be Cutting its Rate of Return Assumptions by 2 Percent

    CalPERS, after several years of brutal losses, is going to review its assumed actuarial rate of return of 7.75 percent, and will make a recommendation to its board whether to lower it in December. “Given the market conditions over the last year we feel it’s prudent to review our assumptions,” fund spokesman Brad Pacheco said in an email to Reuters.

    Yeah, probably. But what does this mean for cities and counties? As Reuters put it: “Three-quarters of Calpers’ resources for paying obligations to members come from its investment returns, so less-than-expected gains could force a greater share of the cost of benefits onto members and public agencies using the fund.” The Wall St. Journal was more direct: “A cut could force cash-strapped governments in California to pay millions more each year to cover their employee pension obligations.”

    How much they plan to cut is up for debate, many analyst are expecting a pretty steep cut, down to about 6 percent. The WSJ added to its report that “You’ll be lucky to get 6% on your portfolios, maybe 5%,” BlackRock Inc. Chairman and Chief Executive Laurence Fink told Calpers board members last July.

    http://californiacitynews.typepad.com/californiacitynewsorg/2010/03/c.html

    ————————————————————————————————–
    It will be worse than expected. City politicians always act like results will be better than what can be reasonably expected.
    Heck they do that even in the best years.

    If they cut even 1% off the expected PERS return, then Oakland will have to suddenly need to begin putting more general fund money into pensions.

    Simply put, the Oakland employee pensions, regular and safety, are unsustainable unless you wipe a large number of other programs.
    The insane 2004 change from 2.0% per year, to 2.7% per year is going to kill the future. That they made it “retroactive” was nearly criminal.
    Many of the genius minds that did that are now debating the same issues.

  153. len raphael

    Per Brunner’s public info email, the decline in general fund revenue from it’s peak was 70Mill. So even if we’re (un)lucky enough to soon have another every 100 year real estate tax revenue bubble, it’s nowhere close to funding the 150Mill or so annual drain projected to hit us sometime in the next 2 to 4 years.

    what’s not clear to me, is what’s the situation in the restricted funds that make up 60% ? of total 1Bill budget. Other than public safety employees whose cost gets billed to the Coliseum, RDA, Port, do most depts. get their compensation funded entirely out of one fund? Or is funding an accounting allocation game with many depts getting paid out of multiple funds?

    Not obvious is the 398Mill post retirement medical obligation entirely that of the general fund? and coming Calpers increases all out of GF?

    When cc talks of across the board cuts, is that only for employees with depts that work on general fund activities

    If the directed revenues to the other funds assumedly has not taken as big a percentage hit as the gf experienced, so would cuts in their costs result in surplus’s that we can only borrow from or sell stuff to ourselves?

    -len raphael
    temescal

  154. len raphael

    David and Zac, seems like a disconnect between your calculations or your assumptions. Zac is saying that OFD retirees will essentially just be getting back what they contributed at 7% or so (lol).

    if that were true, why is the city’s total contribution (including the employee’s %) something like 27%? of gross public safety wages; and 19% for other employees?

    (from the june 30 2009 notes to financial statements: Funding Policy
    Participants are required to contribute 8% (9% for safety employees) of their annual
    covered salary. The City makes the contributions required of City employees on their
    behalf and for their account. The City is required to contribute at an actuarially determined
    rate; the current rate is 19.553% for non-safety employees and 27.513% for police and fire
    employees, of annual covered payroll. The contribution requirements of the plan members
    and the City are established and may be amended by PERS.”

  155. len raphael

    let’s take a break from pensions and start on OPEB POST EMPLOYMENT BENEFITS OTHER THAN PENSION BENEFITS.

    That’s the one which the same fye 6/09 financial statements footnote describes:

    “Funded Status and Funding Progress
    As of July 1, 2008, the most recent actuarial valuation date, the plan was zero percent
    funded. The actuarial accrued liability for benefits was $591,575,250 and the actuarial
    value assets was zero, resulting in an unfunded actuarial accrued liabilities (UAAL) of
    $591,575,250″

    For that fiscal year, to fully fund just that year’s obligation would have beene 54Mill. 12mill was paid out. So net increase in our obligation for that year alone was 42Mill.

    I don’t understand why the govt accounting rules allows us to omit showing the unfunded current cost as a current expense, thus increasing the deficit by 42mill. My guess is that was an “election” made by city accounting staff and allowed by GASB 45 and 43.

    some links to gasb sites:
    gasb.org ;

    iaff.org/gasb45 (the fire fighter union is more savvy about OPEB than our own cc members. )

    http://online.wsj.com/public/resources/documents/DroppedB.pdf

    Reading back on some prior abo posts, i thought one of the ff’s explained that the medical benefits cover the period between retirement at 50/55 etc. and age 65 when medicare kicks in. no mention of dental. But that doesn’t sound right. I’m thinking these are lifetime med and dental benefits for entire family, that are adjusted for Medicare part ?, but reimburse as Dax said for the expensive part of Medicare. Plus it provides for supplementary
    coverage. (need help on this please)
    -len

  156. Ken

    it will. and those pensions won’t be paid. either officially (default) or unofficially (inflation). wait for it…

  157. Ken

    dax, don’t forget commercial real estate (we’re in it: high rents and no offers, thus empty storefronts all over oakland & the world), more mortgage resets coming 2010-2013, and more people to lose millions more jobs due to city/county/state govt job cuts. only national govt is net hiring, seemingly.

  158. len raphael

    the feds will have to bail out state and local governments. the final moral hazard of the real estate/world debt bubble.

    fascinating that the rating agencies haven’t greatly lowered their ratings on Oakland. City web site has a link to a Fitch report from 2009 which lists all of our serious fiscal problems, but still gives Oakland a decent rating. They did however change their “outlook” to “negative”. Maybe all they care about is the our capacity to absorb additional real estate tax increases/overrides and ratio of debt to assets so we can sell off our city facilities

    even if the muni bankruptcy law discharged local govts from vested pension obligations (don’t think it would),and even though it probably would discharge OPEB medical/dental post retirement benefits, it would be politically and economically a too big to fail situation.

    i’d expect the feds to take over the pension obligations but limited to the 55k/year which private sector plan govt pension insurance covers. retiree medical benefits will be picked up by early medicare.

    feds will insist on retirement age schedules similar to the fed govt employees.

    which is all to say if you were the oakland cc you wouldn’t even want to murmor the B word until a bunch of vallejo’s have already occurred and a bunch of other local govts have started publicly considering going B.

    at that point we could get all the benefits of threatening bankruptcy, while hiding from the rating companies among hundreds of other local govts also threatening B. if the feds don’t bail us out, we use the threat of B to get huge concessions. if they do, you can make nice with the unions and get their gratitude next election time.

  159. len raphael

    my favorite scene from a recent cc finance committee meeting was the (i assume) SEIU rep telling the cc not to distract the voters with any charter amendments because we have to keep the voters focused on getting the city more revenue.

  160. Dax

    The city does need more revenue, but the city departments just aren’t thinking outside the box..

    I know in my neighborhood we no longer have the street sweeper come by.
    I’m thinking thats a potential revenue source. Pass a ordinance that you have to keep your gutters clean. Then, hire some “Gutter Maids”……and write citations for those who fail to keep the gutters clean.
    Stuff in your gutter, ZING. $55 fine.
    Its a win win….win.. You keep the gutters clean, you raise lots of money from the multitude of fines, and you also create a dozen or more new well paying jobs, the Gutter Maids.

    That is keen and imaginative thinking.
    Revenues, clean streets, and new jobs all rolled into one measure.

    I should run for CC… Heck, I should run for Mayor!

  161. len raphael

    While i imagine Transform would see a public net benefit from no street parking fines imposed every day on both sides of the street, the rest of us expect that alternate side of street parking fines go to street cleaning.

  162. livegreen

    You can’t do that sort of stuff until you’ve cut ALL city salaries. & not just OPD & OFD. All the other unions, & CC members. At one of the recent budget mtgs w the public, one of the City Council Members admitted they haven’t started talking to the others. WTF are they waiting for?

  163. David

    If I kept my books like the government (of Oakland, the state, and feds), I’d be in jail.

    Savor this:
    http://www.nytimes.com/2010/06/12/nyregion/12pension.html

    And, in classic budgetary sleight-of-hand, they will borrow the money to make the payments to the pension fund — from the same pension fund.

    As word of the plan spread, some denounced it as a shell game and a blatant effort by state leaders to avoid making difficult decisions, like cutting government spending or reducing pension benefits.

    Jail is too good for these crooks. Tar and feathers?

  164. Mary Hollis

    Buffett is correct. And David, that is really special, borrowing against an underfunded pension fund to fund that very same fund.

    What this tells Buffett, Soros and even someone as unsophisticated as me, is to never, never piut yourself in a place where a municipality has you over a barrel.

    That means do not own a property, Prop 13 nothwithstanding.

    Do not buy municipal securities.

    Make sure your savings and investments are relatively immune to governmental agencies at all levels up to the Federal government.

    Perhaps this why the price of gold has tripled in the last few years?

    I don’t know but these politicians will scorch the earth they walk on rather than deal with the problem

  165. Andrew

    Not to worry. Our federal Govt. is talking about another 50 Billion. Coming to a city, state or county (Public employee union) near all of us.

  166. len raphael

    Greg Harland is the only announced candidate who grasps the magnitude of our fiscal problems and is willing to discuss the entire issue of Oakland’s overpriced labor force. At this point a total unknown, 64 year old retired white business guy, who went to Oakland High. He has started a discussion on muni bankruptcy on his sparse site, http://www.harland4mayor.com/.

    Surprisingly he comes across as a pragmatic person who is neither a armchair liberal nor a law and order type. eg. he is very skeptical of the North Oakland gang injunction. Has some decent ideas for economic development to reduce the extreme unemployment of Oakland hoods that are not dependent on the dope industry. I’m skeptical of his economic development ideas, but I haven’t heard anything better. Agree with him that bringing in more retail is not the solution to that high unemployment and poverty.

    -len raphael
    temescal

  167. Ralph

    Harland is an interesting character. While I may not agree with him, at the Mayoral forum, I thought he brought some ideas to the table that are rarely discussed by the general public. I for one would like to hear more about Oakland’s enterprise zone.

    But I also think we need to be clear about retail attraction. It is not about employing unemployed youth. It is about sales tax. Until these young people start attending school, stop sagging and obtain the type of education that makes them somewhat desirable employees, thery are not going to be working retail anywhere.

    What I do not understand about Harland and others is the connection between unemployemt and crime. Per Harland, crime should be off the chart right now, yet it is on the decline. Unemployment does not lead to crime.

    There is no doubt that we are overpaying for labor but I am not sure how bankruptcy will correct the problem. Courts generally only allow for changes to OPEB; so, we are still on the hook for the pension obligation. We can possibly renegotiate OPD contracts, but SF, thanks to Oakland, still pays quite well. So over time, we could end-up losing our best officers to SF and stuck recruiting the worst candidates. We should disband the Oakland, Richmond, and SF PDs and make a regional law enforcement agency with a new pay scale.

  168. Livegreen

    Re PD’s competing for the same Officers, that’s how O & SF got themselves into this mess to begin. It is really stupid. It only takes 2 to compete & drive up costs (municiple wages) or down prices (retailers). At some point it becomes cost prohibitive and they stop. & they could do so even sooner if the Mayor’s spoke to each other. Now how hard is that?

    Just agree to spend money on lateral or new academies and stop having a PD arms race. How hard is that? Pretty hard apparently…

  169. len raphael

    Ralph, i didn’t attend the forum but did talk with Harland afterwards. In our discussion he was not pushing bankruptcy as the solution to our problems. He’s talked to Vallejo officials as to how they used it and it’s impacts there. In conversation his point was that we’d be pushed into involuntary muni bankruptcy unless we made major adjustments.
    Maybe it’s difficult for any candidate to present a nuanced position in those kind of venues that seem to favor soundbites?

    Again, i’m skeptical that his economic development ideas will produce significant numbers of decent paying jobs for long term unemployed badly educated residents, and that those jobs stay here in the face of the very high cost of doing biz in Oakland. But worth a try unless we’re planning to ship all our poor residents to Stockton and Gunpoint or you believe that many of them can get good paying jobs packaging marijuana baked goods or installing solar panels on homes.

    As to correlation between unemployment and crime rates, i’ll go out on an unsupported limb and opine that unemployment among Oakland African Amercian males in poor sections of town have been over 50% for many years. The effects of the last 3 years economic turmoil would have only indirectly hurt people who have down that far for so long. I wouldn’t have expected to see a correlation for that section of residents.

    I’m mostly guessing that for that segment of our town, the underground economy is the economy.

    If it were possible to stimulate economic development that brought in stable decent paying jobs with benefits, I doubt if there is any way to prove that would dramatically reduce crime rates of say black on black. But how could it not help?

    This isn’t in the same speculative realm of theory as claiming that reducing class must improve education results.

    What is unknown is whether such industries would come here; will they stay here; and are our chronic unemployed residents employable?

    -len raphael
    temescal

  170. Livegreen

    I second what Len has said.

    Re the sizeable underground economy, I believe this exists rampantly among jobs for the poor that are day to day. And probably also for many small businesses in poor areas, and who only employ a few people often part-time and off the books.

    Who’s going to go after a small business in a low income area, for small tax $? And how else are these businesses going to survive, either because of CA regulations, or low-wage competition?

  171. Dax

    Well, as long as the subject of unemployment has come up, I’ll ask the question that is not brought up in any city forum. The question that is politically unacceptable for anyone in the Oakland political community to discuss.

    –Over the past 15 to 20 years, what has the large influx of “undocumented” workers done to the employment prospects of African American males between the age of 18 to 40?

    We know that less than 50% of African American males in our Oakland schools are graduating with a diploma, thus greatly limiting their employment prospects, mostly to categories for those with lower skills and lesser education.

    Then as we look at current employees doing that same type of work we have to ask ourselves if there has been a significant substitution of labor over the past 15 to 20 years.

    Is there anyone who is not aware of this situation?
    Is there anyone in the Oakland political community who ever publicly discusses this issue.
    Or is it simply a subject that is not discussed?

    “are our chronic unemployed residents employable?”

    Will they ever be employed if there is a continuous, inexpensive, and unlimited supply of alternative labor available, or is 50% unemployment in these men with us forever?

    Does Oakland have any realistic policy for addressing this situation with anything other than a Band-Aid?

  172. David

    It’s not just Oakland. Talk to anyone who lived in, say, Chicago, Milwaukee, or Des Moines about who used to work in meatpacking plants 20-30 years ago. You’ll get the answer–working class American citizens, both white and black. Now, ask what happened to those plants. The answer will be, “oh, they moved to North Carolina,” and then go to North Carolina and ask who works at those plants. “Oh, they’re all Mexican.” And I’ll bet a lot of money that they’re all illegal, as witnessed by recent sporadic raids. This is a whole rant, but my favored response to this and the usual, “those are jobs Americans won’t do” is, “oh really? Did you have meat on the table in 1985? Strawberries? Were the hotel rooms you stayed at clean? Who changed your oil? Was your yard nice and tidy? how? Did you have tile in your house 30 years ago? How’d it get there?”

    The whole immigration mess is an unholy alliance of Wall Street Journal (editorial: more labor supply does not depress wages…the only market apparently where supply/demand does not apply) capitalists and Lefties (mmm, poorly educated, low-skilled immigrants=votes, legal or not, re: ACORN). And the people getting screwed, yet again, are actual American citizens and higher-skilled, wannabe-legal immigrants (why are legal H1-B’s limited, but essentially illegal unskilled Latinos are not?)

  173. Livegreen

    DAX and David, Exactly. & you’ll b labeled a racist for saying that, & if u explain why u are not (ie. the economics of labor supply & demand) it won’t get reported by either the liberal editorials or their corporate owners (the same liberal-wallstreet nexus u mention).

    BTW, this situation impacts not just the under-employed in white & AfAm communities, but also in Latino communities, & allows the slaughter & poultry houses to control and blackmail their workforces into submission.

    Finally, it also reinforces the underground economy by making law abiding businesses less efficient and more expensive, forcing then to follow the same strategies or go out of business.

    Tax $ are then negatively impacted, as employment and even entire businesses are run “off the books”. & since it’s “off the books” it can’t b documented or even studied by the govt or economists.

    Our economy (at least a portion of it) gradually slides into third world status and doesn’t even show on liberal or conservative radar screens…

  174. Dax

    Menlo Park putting their pension reform on the ballot.

    Asking the voters to put the pension rate back to where it was not that many years ago… 2.0% –> 2.7% –> 2.0%…

    Typical problem though is that all “existing” employees get to keep the 2.7% bump-up rate until they retire. They get to keep the unsustainable bump.

    Question, why should all bump ups be made retroactive while all lower moves not only NOT be retroactive, but you can’t even lower it for their subsequent years.

    Article in San Jose Merc.

    http://www.mercurynews.com/breaking-news/ci_15121149

    How long before Oakland is forced to make the same move?
    Reality is just around the corner. I can already see the train lights coming down the track. Will Oakland be run over?

  175. len raphael

    if a pension right is “vested” it’s set in concrete because it’s a promise to pay for past services. Dax, maybe ERISA maybe state law are what protect vested pension obligations above normal debt obligations.

  176. Dax

    What is unseemly is the following.

    Back in 2004 they changed the system from 2.0 to 2.7 percent.

    At that time they gave all prior years worked before 2004 a unneeded bump up from 2.0 to 2.7. Unneeded and unpaid for.
    Essentially retroactive credit.

    Now when financial sanity returns and we see the problems ahead, not only do they get to keep the 6 year bump from 2004 to 2010, and the unpaid for years prior to 2004 at the new 2.7, but they say there is no way to stop these folks from getting the 2.7 for all the next 10 or 20 years they may keep working while new hires working right next to them will be getting only 2.0.

    Talk about getting gifts on both sides of this financial blunder.

    In a fair world, they would never have been given all prior years worked at the new 2.7 rate, and when it became clear, the 2.7 was a mistake, they should now work at the same 2.0 as all the new hires doing the same work.

    So a example would be 15 years at 2.0, then 6 or 7 years at 2.7 and then 5 or 10 years at 2.0.

    So their average at retirement might be composed of 23 years at 2.0 and 7 years at 2.7%.
    Giving them a 64.9% retirement at 30 years.
    Instead they unfairly get 81%.

    A 16.1% bonus for the next 22 years.
    Or on a typical $70,000 salary, that gives them a $247,940 bonus over and above what they would have received if this blunder had never taken place.

    Multiply that times 4,000 employees and what do you get.
    $919,000,000…..

    How often have I suggested that the “unreported” 2004 vote to allow the huge pension increase was a 500 million to 1 billion dollar mistake.

    Makes the additions for the Raiders deal like a minor book keeping error.
    Petty change.

  177. Livegreen

    Have any of you thought about the impact of Pensions on the stock market?

    First, there’s like a giant sucking sound from taxpayers to investment banks on Wallstreet, who are investing the money for the pensions. To understand the full impact, it would b interesting to know what %age of current and new investments Pension Funds make up on Wallstreet.

    But 2nd, what happens when that spigot gets reduced or shut off completely?

    If there’s a liberal-Wall St. nexus on immigration, this is bigger by orders of magnitude.

  178. Dax

    First of all, there would be no “shut off”, and it may not even be reduced by any substantial amount anywhere in the near future.

    At best, the cities that are changing are only dropping the 2.7% back to 2.0% for new hires. Thus it would be a very gradual lowering of some future investments.

    Additionally, the investments for the higher 2.7% payments never actually were designed to achieve what is needed. Thus there is not that far to fall, especially since it will be gradually introduced.

    As such, I don’t think this is bigger than the immigration nexus, by “orders of magnitude”.
    I think the key feature of being blind about illegal immigration’s impact is that you are trying to capture some “interest group” so they may support you in current elections. I’m not talking about the future voting abilities of future naturalized citizens, but rather the votes of those who pressure for them in the present political matters.
    I don’t think many politicians think far enough ahead to consider potential votes that may come about in 10 or more years.

  179. livegreen

    You’re right, “shut off” is too drastic. The worst would be, for example, if Pension Funds were switched to Defined Contribution. However the money would still be flowing to Wall Street.

    However, however, if municipalities around the country are looking at trimming both their budget deficits & unfunded liabilities in the current year, then there’s going to be a lot of either pension reductions this year & next, all at once.

    That is bound to have some impact on new cash inflows into the markets. Not to mention municipal and state bonds & bond ratings.

  180. Mary Hollis

    Live

    I dispute that reducing public sector pension subsidies will have a negative effect on the markets.

    That money won’t vanish. It will simply flow to other parts of the economy.

    The problem right now is that public sector deficits are getting so large that they are sucking in investment dollars (all those bonds being issued) which means less investmnts in more productive areas.

    It sounds like a PSU argument that unless we continue to pour money into PS pensions, the stock market will crash. I’d bet on exactly the opposite happening as deficits and subsidies decline, confidence and bond ratings increase, and the nation finally deals with its spending sickness.

  181. livegreen

    Less money into the markets will have an affect. But it could be limited.

    Alternatively, Pension Fund money definitely plays a large part in the markets, as they’re one of the biggest sources of capital.

    Yet again, I realize that even with defined contributions, that money will not go away it will only decrease.

    I realize the argument could be made on behalf of PSU’s. The counter would be that artificially, unaffordably high benefits have contributed towards a bubble in the stock market (cash seeking a home for a defined return, no matter whether there’s an investment that can live up to those guaranteed returns or not. Therefor looking for riskier investments that give above-market returns.)

    So the problems with the PUC Pensions aren’t only the amount that’s contributed, but the amount of the guaranteed return (which I understand is STILL artificially high, based on pre-crash returns).

  182. Ralph

    Live,
    I assume that plan document restrict the amount of risk a pension fund can take and CalPERS et. al. have a fiduciary duty to the plan participants which would similarly limit the risk.

  183. David

    Pensions usually have somewhere between 40-60% of their money in the stock market. CalPers, of course, is famous for doing big, (recently very stupid) california real estate deals/investments. Never mind big, stupid bond investments. But that’s what happens when you pick managers based on political connections and kickbacks like CalPers.

    In my opinion, the effect on illiquid, less frequently-traded assets like R.E., lumber, commodities and such will be larger than the effect on a huge, liquid market like the stock market, should pension funds shrink. However, fundamentally, I agree that the money won’t disappear, instead (hopefully) the public employees will have 401(k)’s, which will be put in the stock markets anyway.

  184. len raphael

    Amazing how fast Calpers fall from grace as the very model of a modern green public governance version of harvard’s endowment fun. Lehman like.

  185. Livegreen

    Len, do u mean CDO’s or CDS’s? The article linked above refers to CDS’s (though u might not b referring to this).

  186. Mary Hollis

    Len/Live

    I don’t give much credibility to articles in the Fool. But there is little doubt that hedge funds and speculators have vehicles they can use to short Muni’s just like any other asset class.

    Since Muni bonds are fairly illiquid and come in thousands of variants, and since there are no listed Options or Futures on Muni’s, it makes more sense to short them through synthetics and swaps then the bonds themselves.

    So the only issue here is whether Muni instruments should somehow be exempt from shorting for some higher reason? Assuming it’s legal to short them, hedge funds will do so, if only via private OTC deals like those cited.

    Why should shorting Muni’s not be allowed when shorting Treasuries is routine?

    I take the view that shorting adds liquidity and better allocates risk, thereby making Muni’s more efficient and actually lowering costs for Municipalities.

    I just wish there was a decent way the average Joe could short Muni’s, because I can think of some doozies right now.

  187. John

    Zac,
    Just wondering…but how many of the mailings that you have posted defending the OFD pensions was done while you were “on the clock”…that is, getting paid as a firefighter?
    I, along with previous writers, question the validity of a system where an employee pays into a retirement fund at at fixed percent for many years at one salary and then has their salary bumped up for retirement calculations. Sufficient money was not contributed for enough years to cover the higher payouts upon retirement.
    I know that this is often done and in all fairness acknowledge that I will benefit to a small degree by this precedent. However, I question the sustainability of such logic and believe that we need to take a serious look at this and maybe even avoid this train wreck by renegotiating this unsustainable pattern.

  188. David

    Len,

    I’m sure there are some CDS’s (Credit Default Swaps) that have been written against Oakland muni bonds. Small-fry investors (I’m assuming you don’t have, say, $1-5M to put to work on this) do not have access to this market. It is all done OTC (Over the Counter), meaning not on a market exchange, and also meaning that you would have to call up, say, Goldman Sachs prime brokerage and say that you want to build a CDS shorting Oakland muni bonds. Obviously GS will not return your call unless it’s worth their while (back to the $1-5M comment).

  189. Mary Hollis

    Len

    Yes, David has it correctly. A hedge fund, for instance, would call up Goldman and say they want to short 5MM of a particular type of municipality.

    GS would then structure an OTC deal that has the characteristics of a short 5MM position. And they’d use their smarts to somehow hedge that themselves, leaving them with a risk-free crust on the deal.

    It’s really a glorified bet against, say, Oakland with GS as the bookies. And betting against deluded and myopic politicians can be highly profitable.

  190. livegreen

    How would one hedge the CDS? CDS on a CDS?

    You know who could really earn money shorting a municipality? Somebody who has insider info. Say, a party involved in the negotiations…

  191. Dax

    Article from today’s Sac Bee… regarding the recent pension changes for a select group of state employees.
    —————————————————————–
    “Michael Shires, a Pepperdine University expert in state budget and state employee issues, said Wednesday’s contract announcements underscore the pressure on the unions to make significant pension concessions.

    The Highway Patrol and state firefighter allowances are particularly significant, Shires said, because the gains that those employees made a decade ago fueled a statewide pensions and benefits arms race among local governments. “They will set a precedent that local city councils point to,” Shires said. “That will make it easier to reduce benefits.”
    ——————————————————————————

    http://www.sacbee.com/2010/06/17/2828606/state-contract-deals-roll-back.html

    This afternoon, San Jose is on the brink of 10% pay and benefit cuts.

    So, will Oakland be able to achieve similar cuts, or will the unions force the savings to all come from layoffs?

    The money not there and the citizens will not support new parcel taxes.

    How many months can Oakland delay before instituting a two tier pension system? Won’t save that much now, but just as everyone jacked up pensions, they will all lower them in the future.

    Completely unfair that a few select workers in the middle will collect unfairly.
    Unfair because they got all their prior years jacked up, and they won’t likely get any of their future years reduced. Totally unfair to benefit from a gigantic financial blunder on the city’s part.

  192. len raphael

    hmm, the 600Mill calpers premium increase for just the state of cal, is almost 20% increase?

    http://www.calpers.ca.gov/index.jsp?bc=/about/press/pr-2010/june/pension-contribution-increase.xml

    though calpers says it might be much smaller. even if say 10% increase, any reason to think Oaklad’s % increase would be any smaller? Someone help me here and look at the total budget for Oakland (i’m out of town) and figure what a 10% to 20% increase in contribution cost (less the 8%\27% paid by employees) works out to be for the total Oakland budget, general and restricted for coming year. Not sure of my 27% estimate of total premium paid as percentage of gross wages. Couldn’t this be another 10 to 20 mill cost to the city for next year total overal budget? then maybe 40% of that to general fund?

    scary part is that calpers still assumes 7.x% investment yield and has “smoothed” the rate increase many years into the future.

    Mary, David, how risky is that 7x% assumption?

    -len raphael
    temescal

  193. len raphael

    theTerminator agreeing to non layoffs in return for the compensation cuts. i guess he figured that was the price to pay for those unions leading the way on pension cutbacks. he won’t be able to offer that deal again.

  194. David

    LG, I’m shocked, shocked, that you might suggest our government masters would benefit from insider dealings. Oh wait, never mind.
    http://www.washingtonpost.com/wp-dyn/content/article/2010/05/04/AR2010050405124.html

    Again, if I did **** like this, I’d be in jail. See also today’s WSJ for Congressmen trading on stocks of companies they regulate.

    Len,

    7% is ok for a single person starting investing at 25 and having a generic mix of stocks and bonds. One of the (many) problems with pension investing is that the fund is constantly cashing out for current benefits, and therefore needs a lot more liquid cash and shorter-term bonds to match its liabilities, so rather than a 25 year investing with that time horizon, it’s more like a 55 year old. With 30 year gov’t bonds yielding 4%, long-term corporate bonds yielding 5%, the only way for pensions to generate 7-8% returns is for it to put a larger-than-usual, i.e., portion of the fund into riskier assets, i.e. commodities, land, R.E., stocks, junk bonds.

  195. Ralph

    For those interested KQED Forum had a pension discussion during the 9am hour. You might be able to catch either a rebroadcast tonight or listen to it online.

    I caught the closing comment from the union representative, as usual, the union is out of touch with reality. He blamed the problem on Wall Street, skipped over the impact of retroactive benefits, and of course thought he deserved high pay and equally high benefits.

  196. Dax

    Ralph,
    “as usual, the union is out of touch with reality. He blamed the problem on Wall Street, skipped over the impact of retroactive benefits, and of course thought he deserved high pay and equally high benefits”

    You got that right. On that show, in this forum and elsewhere this mantra of deflection is used by the union representatives. They always blame the banks and Wall Street, as though, but for them, the problem wouldn’t exist.

    The sad reality is that they have all talked to each other so much, they actually believe what they say. I have spoken to so many public employees that really don’t understand the basic flaw in the entire system. They don’t believe the pensions are impossible to fund and they don’t even believe public employee compensation is excessive.

    Worst of all, they all think they’d be making more in the private sector.
    They are really out of touch with reality.

    Very telling in the current news is what is happening in Europe.
    From Greece, to Portugal, to Spain and now even to France, the entire subject of public pensions has suddenly come to the surface, come to the true reality.

    And look at what the response has been over there. The people are in disbelief. They resist believing that they can’t continue to get all the promised benefits and retirements. The real world is telling them different. Harsh reality is setting in.

    Now, look at their issues and compare them with Oakland’s public employee delusional reality.

    Most of those nations are now telling their people they will have to retire later and contribute more.
    At the very low end…..even the French are telling their people they can’t continue to retire at 60, with 75% pensions.
    People are screaming about being raised to age 62..
    Most of the other nations are raising it much higher and lowering the percentages of final pay.

    Compare that to Oakland and our other public employee pensions.

    In Oakland, if you come out of school, go to work at age 23, you can retire at age 55 with a 86.4% pension.
    Heck, if you don’t go to college like many Oakland city employees, you can begin at age 18, work only until age 55, then retire with a life expectancy of 82, with 27 years of pension at a full 100%

    Oakland’s pension system is WAY WAY beyond even Europe’s most generous. The same generous systems that are collapsing this very week.

    Yet Oakland’s city council, its employees, and much of the general public don’t see the writing on the wall.
    How is Oakland any different than the rest of the world?
    Do they think we exist in a different universe?

    Total disconnect from reality.
    (BTW, the figures I used above are not even for the more generous safety workers.)
    And don’t forget, our regular city workers are only expected to work 37.5 hours per week to get these huge pensions.

    The system in Oakland and elsewhere is complete madness, yet many on the city council act like it just needs some tweaking.

    The worlds financial system is telling Greece, Portugal, Spain and even France, that they have been living in a dream world.
    You don’t think Oakland is going to be told the same harsh reality?

    Oakland is Greece, Portugal, Spain, and France….
    Oakland is worse.

    Just who is suppose to pay that 55 year old Oakland retiree a 100% pension for life.

    Show me the member of the working public, especially those who are 63 or 64, still working, who are suppose to pay more from their check so that the 55 year old Oakland retiree can live well.

    For God’s sakes, point out that 64 year old working person, and tell me why he is working and paying more to support the 55 year old city pensioner.

    Have the public employee unions lost all touch with reality?
    Have the members of the city council been so blinded and distorted, that they can’t see the clear reality the entire world is showing them?

    The Emperor has NO CLOTHES… country after country is now seeing it, now saying it, and now acting.
    Yet in Oakland we continue to admire the naked man’s clothing.
    The “group think” public employees are so deluded they want to know who the Emperor’s tailor is.
    Perhaps he can help them with their private investments.

    The world reality is coming to Oakland’s door. Anyone who listens can hear the footsteps. Louder and louder.

  197. len raphael

    Dax, a year or two ago before people on my local oakland yahoo groups learned to hit delete on my pension and budget rants,the most common response wasn’t outrage or agreement, but “instead of opposing decent wages and retirement benefits for Oakland employees, you should be fighting to extend them to everyone”.

    i think residents are now in the first stage of grief:denial.

  198. len raphael

    David, somewhere i read that many of the surviving larger private pension funds put most of their money into long term bonds because they don’t want to deal with the risks of underfunding.

  199. Mary Hollis

    Len

    In some other nations, pension funds are mandated to hold a fixed and large percent of their assets in bonds. Exactly how much depends on the likely profile of disbursements i.e. the age of the participants.

    But not here.

    The return from a long-term Treasury is exactly pre-defined, and the risk of default is as low as it gets, and so Treasuries are the most appropriate vehicle for ensuring adequate long-term funding of known and fixed liabilities.

    However, in order to reduce contribution levels, funds have defined future rates of return that greatly exceed the rates available on Treasuries. This in turn has led those funds to sell off their boring bonds and get into not just equities, but commodities, hedge funds, derivatives and so on.

    That worked great for a while. But this chase for yield has now seriously backfired. And Treasury yields are now so low that the only solution is greatly increased contributions.

    Except there is no money to pay them. Bingo.

  200. len raphael

    mary et al, any idea whether big private pension plans are still using rates in the 7′s like calpers or rates closer to 5%?

    i assume that if calpers dropped its assumed rate even to 6% it would be required to greatly increase contributions? how rate sensitive are the contribution premiums?

  201. Dax

    len,

    “the most common response wasn’t outrage or agreement, but “instead of opposing decent wages and retirement benefits for Oakland employees, you should be fighting to extend them to everyone”. ”

    Oh yes, I hear that one often.
    Its like everyone should receive the pay rates, health benefits, dental benefits, vacation, sick leave, and pensions that all the Oakland employees get.
    Yes, wouldn’t that be wonderful. Then everyone could work from 19 to 56 and retire with 100% pension.

    Good gosh, even France is running away from a system that doesn’t come anywhere close to that fairy tale. In fact, the whole world is running away from that myth.
    But here in the Bay Area, they still drink 6-packs of Kool-Aid on a daily basis. They include Kool-Aid as the drink of choice at all functions.

    Sadly, they really do believe it. Especially those who are current city employees. Oh sure, they’ve never done the math, but their union leaders tell them tell them it all will work out and that they DESERVE it.
    Yes, they deserve it because they could all make even more money in the private sector.

    I’m telling you, they tell and re-tell these stories. They’ve passed them back and forth for some many years, even the higher ups totally believe them. Its like a entire group of thousands that has been brainwashed with a myth.

    They even tell themselves they won’t live so long so they deserve it even more now. Then when you give them PERS own longevity data, they refuse to believe it.

    As you indicated, the death of these myths will not go down without a fight. All around are the grim realities and 2011, 2012, 2014 look to be even worse regarding deficits.

    The truth, the real truth, is that Oakland’s pay scale is about 25% over what real market rates would indicate.
    The pensions are even further out of whack.
    #1, they are out of whack in the entire 35% increase that took place in 2004. Removing that alone would drop the pensions down by 26%.
    #2, they are out of whack in using the final year as the basis.
    They should at the very least be using the final 3 years, or better yet a inflation adjusted level of each of the prior years of work. Add up all the inflation adjusted earlier years and then divide by the number of years.
    #3, they are out of whack in that they allow a absurdly early retirement age.
    There is no reason why regular city employees (not fire and police) should be able to retire any younger than those on Social Security, which is now about age 67, not 55 or 60.

    The whole system is insane and is a perverted version of what it was 40 years ago.
    No wonder it is on the verge of collapse.

    The basic employees and city council members don’t seem capable of using a $5 calculator.
    How come it has taken Mr. De La Fuente 6 years to realize his 2004 vote was a monumental mistake. Doh!

    Jean Quan, oh my!

    Watch them squirm as reality keeps pounding them on the head.

    Simply put, every single employee in Oakland City government is overpaid relative to the true market. Not a popular theme.
    Not a believable theme when they have lived so many years above their true levels. They just don’t see it. Everyone around them tells them otherwise.

    It doesn’t help that 95% of the Oakland city residents are clueless about the true pay and pension levels that city workers enjoy.
    Fully 99% of Oakland residents are unaware that city pensions were raised 35% in 2004.
    NO, make that 99.9% are unaware, if you exclude those who are city employees.

    The most under reported story in Oakland history. Even to this day, the Tribune hasn’t reported that explosion that took place back in 2004.
    Certainly no one in city government is talking.

    Several of the newer city council members are only now being made aware of it.

  202. len raphael

    Was rereading V’s article and then the fye 6/30/09 financial statements. page 116 or so, put the city’s contribution for that year at 98Mill to CalPers. Not clear to me if that’s for all city employees or just those paid thru the general fund. V?

    Anyone hear of the City Budget Advisory Committee? consisting of citizens appointed by mayor and cc members. (i volunteered a couple of months ago, but gee I didn’t get picked)

    Vicky Kolokowski listed as a member, but the website like our budget is not in good shape.

    We should drop in on their meetings held every third Monday at City Hall.

    The link to city’s financial statements are for fye 2002. The Advisory Committee minutes stop fye 2000.

    Head of the Budget Dept gets 136k plus 9k.

  203. len raphael

    Dax, the other day someone told me that Oakland pols assume the “masses are asses”. It pissed me off, but the residents sure seem a lot like ostriches. Even the relatively well informed residents believe that the deficit is just a temporary rough spot combined with a contract fight with the cops that will get worked out like those things always do.

    all mayor prospects except for harland and macaleay, are going along with the mass illusion.

    it’s partly the fault of IRV that you don’t dare criticize your opponents or say anything that suggests that say JQ or RK have only rearranged the deck chairs as we steam toward the iceberg.

    -len raphael
    temescal

  204. Dax

    Here is a run down of the latest state agreements with a small portion of their unions.

    Some movement, but probably not enough for Oakland to follow in order to bring the budget in line over the next few years. Oakland has a much more severe problem in light of its inability to raise new sources of revenue.

    http://www.sacbee.com/2010/06/19/2833785/qa-whos-covered-under-four-union.html
    —————————————————————————-
    From the Sac Bee

    What are the terms?

    Future Highway Patrol officers and firefighters will be promised retirement at 3 percent of their highest three-year wage average times their years of service at age 55. Current employees can retire at 50 with 3 percent of their highest single year. That amount is capped at 90 percent of their annual pay, and that wouldn’t change under the new contract.

    New hires represented by the other unions would retire with 2 percent at 55 (instead of the current 2.5 percent at 55) or with 2 percent at 60 (rather than the current 2 percent at 55 formula), depending on their job classification and where they work.

    The deals also increase employees’ pension contributions to 10 percent of their pay. That’s double the 5 percent most workers kick in now. Firefighters currently contribute 6 percent. Patrol officers now pay in 8 percent.

    AFSCME and CAPT also tentatively agreed to 12 unpaid leave days during fiscal 2010-11. The firefighter and patrol deals don’t include that. The administration says those jobs are too vital to force them to take the time off.

    The tentative pacts include eventual 5 percent step raises for CAPT and AFSCME members at the top of their job classifications. Firefighters would get a 4 percent step raise and patrol officers would get a 2 percent step increase.

    All of the contracts exempt members from imposed furloughs and guarantee full wages when lawmakers fail to pass a budget on time.
    ——————————————————————————

    These agreements only cover about 15% of state workers.

    In my mind, fair would be regular workers, 2% at 65 and safety workers 2.5% at 55. Both groups with a 80% cap.

    Regarding raises, how about limiting them to the CPI when the city has the funds to support such.

    And while we’re at it, there should be a increase in the work week, spread over 5 years. Adding back a half hour per week each year until regular city workers are on the job 40 hours per week, just like the other residents of Oakland.

    The extra hours worked would allow the city to not hire slightly fewer new workers as people retire.
    Eventually we’d have 1.) 40 hour work weeks. 2.) 2% pensions at age 65, and 3.) Maximum 80% pensions. 4.) Pension based on highest 3 years pay rather than 1 year. 5.) No unused holiday or unused sick pay allowed to be added into the final 3 year calculation of pension.

  205. len raphael

    the nyt article today on state pensions, quotes experts in several states, not CA, opining that that in many states it rollbacks in non vested pension benefits could be done. appears that within a couple of years the law will have been settled. not clear to me if we have the employer leverage to force unions to contribute more than the employee portion. ie. reduce our 27% and 19% employer contributions by the employees putting in half of the total, say 18%/13%. If we could also raise vesting age for existing employee future contributions…

    But all of this takes political will. Will layoffs create that?

  206. len raphael

    on rereading, it does seem that the Terminator didn’t drive a very hard bargain. Looks like it was more important to him to get a win on pension give backs, then a certain major cost savings.

    also makes me realize how saavy the OFD was to accept higher pension contributions in return for job security.

  207. Dax

    Interesting article on what Colorado did and what other states and local governments are contemplating regarding readjusting those currently in pension systems.

    In other words, like in Oakland’s case, lowering the 2.7 back to where it was prior to 2004, at 2.0 and giving that 2.0 rate to all years from now onward, rather than limiting it only to new hires.
    Now that would make a much more immediate impact on city budgets.

    In effect say, we now realize we made a huge blunder, so we need to go back to the old rate now, instead of letting all current employees stay at 2.7 until they retire.
    Apparently that option is not out of the question regarding the legal interpretation.

    See the NY Times article (2 pages)

    http://www.nytimes.com/2010/06/20/business/20pension.html?hp

    Though I doubt they could go back and place all those years prior to 2004 at the rate they originally promised. That giveaway was the real tragedy, just giving away something the employees never earned or demanded. So stupid of the city council.
    Those 10 or 20 years bumped up from 2.0 to 2.7 for no reason at all.
    Not every city did that. They had every right to begin the 2.7 from 2004 onward, without making it retroactive.
    I still find it almost impossible to believe they could have done that.
    Even harder to realize that NO reporters told the public about a decision that would cost hundreds of millions of dollars just for Oakland.

  208. David

    Len, lowering the assumed rate of return even just a little bit would reveal the black hole that these pensions are.

    http://www.businessweek.com/news/2010-04-05/california-pensions-are-500-billion-short-stanford-study-says.html

    “The report, from five Stanford graduate students and their faculty adviser, said the funds estimate average annual returns of 7.5 percent to 8 percent. The funds ought to use a more conservative calculation of 4.14 percent, the report said.”

    But…
    “It ignores the reality of the last 20 years — that even in spite of several market downturns, Calpers continued through a well-balanced, diversified portfolio to return 7.9 percent in investment earnings over the last 20 years.”

    Of course, the pension official does not state that the past 20 years included a rip-roaring bull market, lucrative venture capital deals that matured in the ’90′s and the R.E. bull market as CalPers is one of the largest holders of Cali R.E. And heck, government bonds in the early ’90′s were yielding 6, 7, 8%, compared to 3% now.

    Who thinks that any one of these asset classes will return what it did over the past 20 years? Stocks? No. Bonds? No. R.E. ? AHAHHAHAHAH. Venture capital? How many IPOs have gotten out the door lately? (thanks, Sarbanes-Oxley and other gov’t idiocy).

    If anyone thinks the morons in charge of CalPers who only owe their jobs to political connections think that they’re going to get 8% returns over the next 20 years, that person is a fool. Period.

  209. len raphael

    Dax, Ralph, Mary, David, and the rest of youse guys and gals the next CC meeting is this Thursday, June 24th. Sign up for a speaker card online and show up and talk or cede your time. If you can’t/won’t do that, I hope you’re active on your neighborhood yahoo groups, and mayoral debates because there are faint but definite signs that residents are starting to understand the situation.

    -len raphael
    temescal

  210. Mary Hollis

    David

    Yes, the problem is akin to the dilemma even those of us on DC pensions plans have. When we retire at, say, age 65, we may have a pension pot of, say, a million if we are very lucky.

    How much of that do you spend down every year to ensure that you dont run out before you die?

    The general rule of thumb is around 4%, meaning an “income” of 40K pa.

    Take out more than that and, if we have a few bad market years, you could be woefully short.

    I believe the same rule of thumb should apply to the projected rates of return for collective pension funds.

    If market returns exceeed 4%, then the fund has a bonus, which is not a problem.

    Len,

    The people who actually understand this stuff (in my case, because it is my job to) are very few in number. Typcially we get drowned out by the special interest groups who never want any cuts in anything, ever.

    You just know that the 6/24 meeting will be a litany of sobbing speakers begging for their pet program to be retained.

    While the CC are just trying to save themselves.

    I seriously think the time has come for each of us to take our own personal action to mitigate this problem. The political process has failed us because of incompetence, greed and (probably) corruption.

  211. David

    I’d like to, but I’m actually going on vacation on the 24th.

    Mary is right about “safe withdrawal rates.” It’s a little different in pension accounting as contributions continue from other workers, but still, my points about asset class return stand. Assumptions of 8% with bonds yielding 3% is unrealistic. In 1990 with bonds yielding 7%, that’s a fair assumption.

  212. len raphael

    first glance at CC latest budget proposal is more of the same short term patches, one time asset sales some phoney to RDA and some sell our birthright for a bowl of porridge to private (Kaiser Auditorium), plus their desperate tinkering with OPD. Must have missed the golf course piece?

    Some modest cuts in social programming. Looks like big cuts to library?

    Still leaving deficit a year from now. Still no appropriations for Calpers increases, retirement medical etc.

    conclusion: needs about 2 months more hard work and hard decisions.

    -len

  213. Dax

    “Looks like big cuts to library”…

    Oh by all means, cut the library. Then in a couple years, cry to the public about how there isn’t even enough money for books…
    Allow the memory short public to “feel the pain” of our beloved library and then foist another (#3) parcel tax on them to keep the library running.

    They’ve done it twice before by lying to the public.
    The last library parcel tax was to stop them from going into deficit.
    Only they didn’t tell the naive public that the ONLY reason they were in deficit was because they had raised all library staff salaries by from 15% to 18.5% in one giant leap. Nothing to do with regular raises or COLA’s, NO, this one giant leap in salaries was to bring library personnel up to Bay Area standards found in the other 5 largest cities.

    So, in effect, they gave a unique boost to library salaries equaling 2 extra months salary. The public was not told.
    They only found out later that the library had run out of money so soon after the first parcel tax that was suppose to keep the library sound for 20 years.

    A complete sham. A lie to the public. Now they are going to do it again and you can be sure they’ll be back in a few years with a parcel tax to save the library.

    Back to the public to pay for the unsustainable salaries, benefits, and pensions for city employees.

    Think about the library staff member who was planning on retiring in Sept. 2004. Back a few years he/she had been making perhaps $60,000 per year.
    With a 30 year career they had been expecting a $36,000 pension.

    But the they got the 18% boost in salary, and the 35% boost in pension.
    Suddenly, and without any extra effort, that same retiring employee now was getting a $57,348 pension.
    A extra $21,348 per year, with a life expectancy of 22 years.

    Yes folks, that is a double bonus, giving them a $469,656 Golden Parachute.
    Thank you taxpayers…

    The number of Oakland taxpayers aware of this near half million dollar gift….? A few dozen perhaps.
    Number of Oakland Tribune articles spelling this out? Zero
    Number of Oakland Tribune reporter even aware of these facts? Zero

    IT seems that the Oakland Tribune has ONE reporter following this stuff.
    He is paid to get the basics of what is said each day. That is what he is paid for and that is what he does.

    No one is paid to look or report about the big picture and thus, no one does. Everyone in the city is just trying to make it from month to month. Paycheck to paycheck. Aiming towards retirement, then hoping the pension fund doesn’t go bust.

    Grumble, grumble, grumble…

  214. V Smoothe

    Actually, the library is not getting big cuts. Under this budget proposal, the library’s funding will remain, same as it was last year, at legal minimum required by Measure Q. There will be additional burden on the library because of the new branch opening at 81st, however.

    And Dax, while I agree the City’s post-employment benefit structure is unsustainable, and that pension increases should never have been retroactive, I think you’re being kind of over the top complaining about the salaries of library employees. The pay for library staff is not at all unreasonable, especially when you take into account the compensation cuts over the last few years.

  215. Dax

    Smooth—-My complaint about the library salaries is the manner in which they were done several years ago.
    The did not boost the library salaries because there was any money in the budget to give such raises. Rather someone brought up the concept that Oakland needed to pay their library staff as much as the top 3 or so, other cities in the Bay Area. No attention was paid to the fact that, at that time, the Oakland library had the money to pay such raises. Instead, they made the raises and only then told the public that now the library was in deficit and that we “suddenly” needed a new parcel tax because we didn’t have enough money for books and library hours.

    I spoke to the top financial person in the library at that time. I asked him how long the library budget would have stayed in the black had they not made these special category “jump-up raises”.
    He told me that but for the special raises (in addition to the regular contract) that the library would have stayed in sound fiscal condition well into the future.
    The raises, the raises alone, took the library into deficit. As stated, these were special un-called for raises to fulfill some concocted need.

    Then the public was mislead about the cause of the deficit.
    Perhaps other cities did have higher salaries, but no one seemed to ask if those other cities had the money, while Oakland did not.

    This is the same concept we are facing with police staffing vs police salaries. We’re talking about cutting 20% of our police force.
    Perhaps we just don’t have the money and can only afford our current police force if they accept 20% less in compensation. But over the years we’ve raised police and fire compensation to a point we can’t afford.

    Not every family can afford the same car as the other family. Oakland has fooled itself into thinking we can afford the top library and police salaries just because everyone else is doing it..

    CitizenX— Regarding the “retroactive” boost of pensions.
    Back in 2004 when Oakland raised all the regular employees pensions by a gigantic 35% leap, they had the legal right to only make that boost applicable from that point forward.
    Thus a person with 29 years would have kept their 2.0% for 29 years and gotten 2.7% for 1 year, in a 30 year career.
    Instead they gave all those 29 prior years the full and undeserved, budget busting bump up.

    Here is what you need to know. NOT all cities who made those pensions boosts, gave the boost to all prior years. It was a choice of the city as to how they would credit prior years.
    That poor choice has cost Oakland HUNDREDS of millions of dollars.
    So much money, that it dwarfs any other fiscal decision ever made in the history Oakland.

    Now for a PS—Side issue. I’m sure some will feel this question is off base, but it is the first thing I thought when seeing recent news conferences.

    I see the Oakland police officers union president Sgt. Dom Arotzarena .

    Then I see this officer listed in the Oakland salary data bank.
    I assume this man is therefore a active officer.
    Is that correct? or is he off active duty as a union president?

    My question. How can a person with such girth pass the minimum physical requirements to be a active officer.
    Look, in many occupations excess weight is not a factor but in others it certainly is. Clearly he could not be a fireman in such condition.

    I don’t say this to pick on the man. He may do a excellent job as the union president, but clearly this man is in no physical condition to be a officer on the street.
    Perhaps his current position is only a desk job and has been such for 5 or more years. I don’t know.

    Its just that several times, posters here telling us how physically fit officers and firemen need to be.
    Clearly from the recent public appearances in the budget debate, it would seem Arotzarena is in no physical condition to perform normal police duties that require reasonable movement to apprehend a suspect for example.

    Just wondering… I think it is a fair question that can be asked without bias or prejudice.

  216. Ralph

    I propose givebacks for all officers who do not meet the fitness requirements. On the plus side at least the officers have gotten to the ugly public scare tactics of the Stockton PD, but OPD is not far behind.

  217. Ralph

    For Ballot measures with a floor, I recommend the city send them back to the people with a change that the floor be tied to a percentage (x) of the city’s revenue for the base year. Thus, when city revenues decline such as they have, instead of some fixed dollar number the city can not go below, the city has the flexibility to cut but must maintain x% of current year revenue.

  218. Livegreen

    Yes Dom has a desk job. He is Oakland Police Recruiter.
    (For some this might bring up more questions).

  219. Dave C.

    Has anyone else gotten a recorded phone call from Dom Arotzarena in the last day or two? I got one today. In the call he warns that Oakland will become a “war zone” if they lay off police officers, then he urges the listener to call Jean Quan and tell her not to lay off any cops. He even gives out her office’s phone number in the message to make it easier for people to call.

  220. LoveOakland

    The proposed budget cuts by the Council and Mayor are not very strategic. Cutting staff who promote econ development and jobs, who monitor, enforce and collect revenue is short sighted. Cutting the internal staff who maintain computer systems, pay bills to vendors, etc. will cost more in the long run. Like when the computer system goes down and there is just 1 person at the Help Desk.

    Police should share in the solution. Last year they delayed pay hikes while librarians, rec staff and others took home 10% less pay. This year the cops need to step up to reduce the layoffs. City para-legals, translators, senior center staff and crime prevention employees now earn less than they made in 2005 while cops earn 12% more.

  221. Naomi Schiff

    Fishy business with those robocalls targeting Jean Quan. Did you all get one? Here’s the transcript from my answering machine.
    Lovely male personage calling did not identify self at beginning or end of message:

    “The Oakland City Council is threatening to lay off 200 police officers. This would _____?____ [unintelligible word] their public safety response and place everyone who lives and works in Oakland at risk. A private citizen wrote in a local paper that “it would turn Oakland into a war zone.” The City Council Finance Committee led by Jean Quan has refused to consider other viable options or even to consider making cuts to nonessential city services. Please call Jean Quan’s office to protest the layoff of police officers. Her number is 510-238-7304. Let’s work together for a safer Oakland.”

    (Gee, that “private citizen” sure is smart. And a civic booster I bet.)

    Okay, that’s it. A. They are trying to influence the mayoral election; clearly this is a campaign-related call targeting Quan. No thank you, Danville and Hercules residents. B. This lying cynical phone call is how they are using what money from where, exactly? C. Okay, cops, time to contribute to those pensions. If you can’t keep the peace on a reduced budget I guess we will have to volunteer, just like we do in the parks. I envision an army of middle-aged women stalking the streets and shaking their fingers at miscreants. Who knows, it might work!

  222. Dax

    I also got a robbo call from Dom. He then gave a phone number for Jean Quan. Curious, I called and the box was filled.

    As expected his message was very one sided and filled with lots of scary predictions. No mention of the police salaries, pensions, or benefits.
    He makes it like there are only two choices.
    Raise revenues or fire police officers.

    Now, on a different subject.
    Did everyone see the mayor’s new conference.
    You could not make this stuff up. It almost seemed like Saturday Night Live was doing a parody of Dellums, except it was actually him.

    My favorite line… “I am the Master Strategist”

    As to why he doesn’t have to attend budget meetings…
    “I’m briefed to the max”
    Claims his job is 24/7 and he can work from anywhere via telephone, fax, and email.

    Apparently he will not be running the Oakland office of Jerry Brown for governor. Seems he is steamed at Jerry, big-time.
    Jerry made comments that he was the last mayor Oakland has had, meaning that Dellums is totally missing in action.

    The saddest part is that Dellums seemed to think anyone would believe him or his worn out rhetoric. His phrases, as listed above, made him seem like a caricature of himself.

    From what I can see of his meeting with the city council is that they have come to two options.
    #1, lay off 150 police officers right now and hope the two measures pass in November.
    #2. lay off 80 officers now and a total of 210 later if the two measures don’t pass the vote of the people.

    In other words, both options are based on the voters passing both measures, one of which is a revenue parcel tax?

    A parcel tax that will NOT pass.
    Thus both #1 and #2 are worthless proposals.

    Interestingly, neither included the police officers taking substantial compensation cuts. I guess they are willing to lose 100+ fellow officers rather than giving up any significant amount of their compensation.
    Compensation which, adjusted for inflation, is far above what officers got 10 and 20 years ago.

    Go to the people and tell them to raise their taxes so that nearly 100% of Oakland officers can be kept over the $100,000 level.
    I don’t think that is gonna fly for people who are struggling to get by on far less.

    From San Jose, to Vallejo, to San Carlos, to Fairfield, and so many other cities, the members of the police departments are digging in their heels, saying to the taxpayers, raise revenues so we can keep our current compensation, even during this fiscal crisis. We deserve it even if residents must pay more.

    I see this attitude coming to a less than pleasant end as this year and next unfold. Public employees, even police officers, are not above everyone else when it comes to sharing the burden of the fiscal downturn. Frankly, I getting tired of it being the news headline every night when so many other tens of thousands of Bay Area workers are losing their jobs in relative silence. Its as though public employees are better and deserve more consideration.

  223. Naomi Schiff

    We should all call OPOA at (510) 834-9670 and request of Mr. Arotzarena that they volunteer to pay their half of their pensions like other Oakland employees so we won’t have to lay off so many police. I plan to do this first thing tomorrow. We already know the City Council’s proposal. Time to ask OPOA how they are going to help solve the problem.

  224. Dax

    From the Chronicle

    “If voters don’t go along – and they reject a separate $54 million parcel tax that would cost the average homeowner about $360 a year – the number of police layoffs could balloon to 216 by the end of the year.”

    The City Council, Dellums, and the OPOA must be convinced that all those “medical” marijuana outlets mean most of the citizens are higher than a kite if they actually think the voters are gonna pass a $360 parcel tax in November.

    BTW, is that a 50% or 66.7% vote required for the tax?
    I believe it is a two-thirds vote required.
    Personally I don’t think they even have a chance of 50%, let alone 2/3s

    Seriously, they are so out of step with the public attitude that they seem insulated or isolated beyond belief.

    THREE HUNDRED SIXTY DOLLARS? Heck why not make it $1,000 and wipe out the entire deficit. Make it $2,000 and give everyone raises.

    Sheesh!, Lunacy abounds..

  225. Naomi Schiff

    I think the council knows full well that a parcel tax is unpopular. To me, the question is, what is the OPOA smoking? Obviously they are the ones who want us to pass a gargantuan tax. Then they can take their nice salaries home and spend it in Danville or wherever, and not even pump it into the Oakland economy, while we pay their pensions. This is not exclusive to our town. El Cerrito just decided to put a 1/2 cent sales tax on their Nov. ballot.

  226. Mary Hollis

    Naomi

    It is at times like this that I am profoundly grateful for two CA State limitations:

    1) Prop 13. Imagine if the CC could just raise property tax at will, without the 2/3 voter requirement? They would ramp it up in a minute.

    2) The CA prohibition against any CA city implementing a city income tax. I could the CC imposing a 3% income tax with the claim that that is “only” the same as Philly and Detroit have.

    The parcel tax won’t pass and the Sales Tax, while it might pass, will simply drive even more of us to shop in Emeryville.

    No, they will just have to cut spending. And damn right too. Thursday will be interesting.

  227. MarleenLee

    Forget $360.00. With the $90 Measure Y tax, we’re talking $450.00 a year. And under the Quan proposal to “fix” Measure Y, we’ll be paying Measure Y taxes with NO minimum number of officers required! Which means they will lay off officers AND take all your money. They are delusional! Also, what is being lost in this conversation is that the current budget proposal calls for eliminating all police academies, presumably for the next year or two. The department loses approximately 4 officers a month. That’s 48 officers a year. So if we’re at 770 now, and they lay off 200, and lose another 50 to attrition, that means we’re at 520 officers a year from now. I really am thinking bankruptcy is the better option.

  228. Livegreen

    No matter the income, this whole issue is a disservice to Oakland and is but one more factor driving middle class families, especially those with children, out of Oakland. Further deteriorating our tax base, city services and, yes, even programs for the poor & city salaries. So ultimately it works against the very feel good programs our elected officials like and want always to tax us more to provide.

    Our City Council does not appreciate this or the relationship to it’s tax base. It does not appreciate it’s Middle Class.

  229. Naomi Schiff

    Oakland is not alone in this situation. Other cities are experiencing the same thing. What I am not seeing here is how we are to make it better. Marleen, I understand your objections. What are you proposing, though? Do you think we should repeal Meas Y entirely? Are you proposing cutting all library, parks & rec? (I hope not; only about 6% of gen fund.) I get that folks are angry at mistakes past. But going forward, what? I’m still mad about the raiders deal too, but at some point we have to go to solutions moving forward.

  230. MarleenLee

    I have proposed solutions to the City, as I have explained on my blog. I have repeatedly said that I would support a new parcel tax under the following conditions: (1) the tax is temporary; (2) the City commits to allocate its resources in such a way as to prioritize funding public safety without relying on parcel taxes in the future; (3) the City commits to honoring the commitments of Measure Y on the back end (i.e. agrees to full staffing of 803 officers for an additional 5 years after Measure Y expires, without requiring us to pay the tax) so that the citizens ultimately get what they were promised – 10 years of full staffing for their $90.00 a year; (4) the tax does not pass along to the citizens the cost of the previous Measure Y debacle.

    I never got any response to my proposal.

  231. Ralph

    on Cottontop: I am not a fan, but if one reads the charter, one will note that this does not fall under his realm of responsibility

    Per the Oakland charter:
    The Mayor shall be responsible for the submission of an annual budget to the Council which shall be prepared by the City Administrator under the direction of the Mayor and Council.

    Now contrast this with the language in SF’s charter:
    The Mayor shall have responsibility for: …
    Introduction before the Board of Supervisors of the annual proposed budget or multi-year budget which shall be initiated and prepared by the Mayor.

    So what do we need to do:
    1) Figure out a worst case 5 year revenue picture.
    2) Negotiate with the unions with a 5 year horizon. No one wants to come back to the table every year
    3) Rewrite the elephants in the room. There should be no sacred cows. (AND yes I am proposing we cut library, parks & rec and MY revisited)
    4) tell the police union – do you honestly think you are the only PD getting cut? Cities around the country are cutting PD because residents are not going for tax increases. It is time to get on board.

  232. Ralph

    Marleen, for some reason, I do not see the city buying off on your propsed solution. Items 2 and 3 seem rather subject and hard to implement. How do you determine priortized funding, what happens if for reasons beyond the city’s control they do not have the resources to allocate funding for a staff of 803 or better yet, what if we do not need a staff of 803 officers.

  233. Naomi Schiff

    Thank you, Ralph and Marleen, for getting a bit more concrete. Myself, I think libraries and parks&rec are key functions of the city, as important as cops, and better bang for the buck (that is, the employees on average are cheaper and have great numbers of positive contacts with the public, and overall provide diversion and alternate focus for young people as well as the rest of us). But of course, we aren’t really getting to have that discussion, since we are in emergency mode all the time, are dealing with a hybrid set-aside plus generally-funded budget, and all these union agreements. (I like the idea of a five-year plan, even though the name is reminiscent of the old Soviet Union.)

  234. MarleenLee

    Ralph: If the City can commit to 30 year pension obligations, it can make the commitments I am asking them to make. I don’t think that there is any worry about us not needing 803 officers minimum for the next 10 years. Not with our outrageous response times for 911 calls; not with our outrageous homicide rate etc. Listen to Chief Batts. He’ll back me up on that one.

  235. livegreen

    A 5-year plan won’t be better than the recent employee-contracts the City signed (1 year ago?) if it doesn’t put in place flexibility to work with changing economic situations. This flexibility, along with prudent spending during boom times, is key.

    Naomi, Each part of core city services feels it’s role. But it doesn’t mean Libraries and Parks & Rec can replace OPD. As Russo likes to say, “It’s not this or that, it’s this AND that.”

    In the meantime, there are serious questions about Measure Q library spending, and there are also questions about the effectiveness of Parks & Rec.
    The City doesn’t seem to (at least openly) self-examine it’s mis-spending or learn from it’s mistakes. As such it’s hard to trust how those areas are being spent either.

    Those would be some of the topics at hand if Public Safety wasn’t the crisis de jour. Instead it’s only the tip of the ice burg…

  236. len raphael

    parcel tax math. if Y raises about 20Mill/year from an average of about 90/unit-parcel. (lower for multiple residential; formula for commercial). that wb 222,000 parcel units

    using the same method of taxing multiple residential and commercial, say we want to fund the 400M for pre calpers and the 600mill of med benefit for retirees. over say 15 years. probably have to assume we stop those benefits from accruing going forward.

    ignoring both increases in medical costs and possible investment gains, 1Bill divided by 15 years divided by 222,000 parcel units = $300

    Not sure how much to throw in to cover increased Calpers’ “smoothing” for investment losses. Maybe 15Mill/year ? for next 20 years. Not sure how much to add in for using 4.8% investment return instead of their current 7.75%. So say 30Mill/year indefinitely divided by 222,000 parcels = 135/year per parcel unit.

    That bring us to $435/year additional parcel tax, not covering current operating deficits, and of course nothing for OUSD additional. would think that if OUSD manages to half it’s current 85Mill deficit to 42Mill, they’ll need an additional parcel tax of about 200/parcel unit.

    Total additional parcel taxes of 435 + 200 = 635/year per parcel unit. Assumes that we balance our current deficits without raising taxes.
    Assumes we get all the money to fix our deferred infrastructure work from the feds.

    So i could see a minimum of a 1,000 year parcel tax needed even there are big cuts in all city unvested personnel costs.

    That high of a parcel tax would lower real estate values, depressing other tax revenue.

    OK, now who’s willing to picket outside the CC meeting Thursday evening to protest this sham balancing act that will only turn residents against each other and not come close to fixing the underlying problems? email me directly. i won’t do it unless i get at least 3 other people out there with me.

    -len raphael
    temescal

  237. Ralph

    Naomi, I used five years because the city is suppose the present a fiver year plan, updated annually. Knowing what was on the horizon they should have taken a longview approach when they reopend the contracts.

    Don’t get me wrong as someone who has Palo Alto, Alameda County and Oakland library cards and one who played little league sports, I am all for the library and youth sports.

    I definitely thing the city has an obligation on the library. I think the city should look into creating an endowment – like the Enoch Pratt Free Library. I also think residents should pay their fair share to maintain park & rec services. I am not going to chk the salaries but given how much more we pay, in general, relative to the neighboring cities, I am guessing we overpay here as well.

    Marleen, I am not saying that we won’t need 803 officers but as I am against ballot box budgeting, and 110% against any proposal with hard number, I am not a fan of your proposal. But I am not mayor yet, so run with it. I believe there is a distinct difference between long-term comprehensive compensation packages and day to day operational needs.

  238. len raphael

    Ralph, update every two years for the 5 year budget. In 2008 the city council the need to update the 5 year budget any more often than that.

    How many times have they revised the current two year budget?

    Gotta love their financial confidence.

    -len

  239. Naomi Schiff

    To contradict someone up above who said we need prop 13 to keep things under control, it is totally unfair right now. I am not so bothered by parcel taxes because having owned my place for a long time I am underpaying by comparison with my younger neighbors. For them, addl parcel taxes is a really large burden. I strongly believe that prop 13 is a culprit here. That doesn’t mean that we should allow unfettered escalation of property tax. But some structure in which the burden is spread more equally would be a large improvement. Right now, it is all stacked in favor of the older people and older companies who have owned prop. for a long time, and is expensive and punishing for younger people and newer businesses that own property.

  240. Livegreen

    Naomi, Thank u for that acknowledgement about the costs of Prop 13 (as currently configured) to younger gen’s, one that I’ve not heard many of our wise elders acknowledge. This combined with the retirement and SocSec costs of babyboomers. Most retirees are prioritizing what is their own due and not the impacts on their children and grandchildren.

    “Apres moi, le deluge” seems to b the unacknowledged, defacto motto for many.

  241. len raphael

    Naomi,

    Defeat of prop 13 would not have helped CA, if NJ and NYS are only indication. Extremely high property taxes in both states, very high income tax rates in both states. Very big fiscal problems at both state and local levels there.

    btw, both states pay teachers much better than we do (not as sure about NJ on that), and pay cops and firefighters much less than we do.

    They have similar massive retirement obligation and benefit problems.

  242. len raphael

    Professionialization of opd and ofd. effects on compensation costs.

    An acquaintance was giving that as the main cause of the high salaries in bay area. the theory goes that by turning police work into a white collar profession from the blue collar job it is in the rest of the country, we’re competing for the same applicants that qualify for higher paying white collar normal civilian jobs.

    Second part of the theory has it that college educated cops don’t stay much past the 10 year mark. and have a disproportionately high permanent disability rate.

    wouldn’t be able tell a difference between opd and nypd by looking at the job qualifications on their sites. nyc requires 60 college credits or 2 years military.

    i didn’t see any college credit requirement on opd site.

    Wonder if we could get data on that via foi request?

    -len raphael
    temescal

  243. Dax

    Politicians are the same everywhere.
    They will spend up to and a bit beyond the limits of whatever revenue you make available to them.
    How can you doubt that? Everything we know suggests it to be true.

    I will never vote to repeal Prop 13 because of that very fact. Politicians, local, regional, and state, will be willing to drive people out of their homes under the guise of providing “essential” services via generously compensated public employees.

    Essential services provided at the very top dollar of cost.

    In Oakland, they would argue that we need the streets painted with lines. Then they would hire a person to do that at $68,500 base pay.
    His full compensation would cost over $108,000 for a street line painter.
    On top of that they would give that worker a 100% pension if he did the job from age 23 until 58. They would also supply him with full medical coverage for life.

    And you think by allowing them to change Prop 13, they wouldn’t take such advantage of that so they could boost public employee compensation even higher?
    They will always listen more closely to those who “want” the public funds than to those who pay the funds. Those who “want” the funds are organized to get the funds.

    Look at this article from the Merc about San Carlos and their parks.

    “Officials say Gachina and Echo will maintain the city’s open spaces, medians and 15 parks for a total of $281,000 per year, less than half of the $719,000 the city currently pays for maintenance. Officials say the savings will likely be even greater, as the contractors will assume other costs like vehicle replacement and insurance. ”

    http://www.mercurynews.com/breaking-news/ci_15299014

    BTW, California teachers are either #1 or #2 in every years ranking of highest paid.
    According to the National Education Association’s current data, California teachers are #2 after NY with both being very close.
    The average teacher salary in California is now $70,400
    According to the CTA journal, the average retirement age is 61.4 years old.
    ( I do not think teachers are overpaid, nor are their pensions excessive)
    They are mostly at 2.0% for each year worked. Exactly what Oakland use to be prior to their 2004 leap up.

    Then again, look at what I just wrote above. The average teacher in California is making less in total compensation than the Oakland street line painter. A tiny bit more in base salary, but few teachers get the overtime many Oakland employees regularly do.
    Plus the Oakland street line painter gets a much more generous pension. 35% better.

    The average OUSD teacher is not paid $70,000 per year so they actually make much less than the Oakland street line painter.
    How fair is that?

    NO, no way am I ever voting to give away prop 13, because you can’t trust politicians who thoughtlessly blow-up finances with gigantic 35% leaps in pensions. Foolish, mindless, clearly irresponsible, 35% leaps in pensions. Leaps they locked in even though they now realize what a blunder they made.

    Do not trust their wisdom. Their current wisdom ONLY comes because they’ve simply run out of money and know the public won’t pass a parcel tax.
    I called Reid and Kaplan today and both their offices know a parcel tax will fail.
    Everyone knows a parcel tax will fail.

    This year will be grim and they all know the next two year’s deficits will be larger and larger.

  244. MarleenLee

    At one of the recent budget meetings I thought it was so sweet with all the kids pleading to save the Hacienda Peralta house funding. I live not that far away and had never visited the place. So I made a concerted effort to go there on Saturday. My husband and I got on our bikes and took a leisurely ride to the ol hacienda. What a dump. The docent was this well meaning, sweet but doddering guy who really couldn’t properly tell us the history of the place. We were the only people on the tour. It was sad. Some will say, that’s all cuz it’s underfunded. I say, cut it loose. Focus on essential services.

  245. len raphael

    Dax, are you gonna get out there tomorrow evening with me carrying our signs reading ” UNSUSTAINABLE” . Maybe with a drawing of our cc and mayor as ostriches, heads in sand.

    -len

  246. Livegreen

    Len, Thee are two reasons for the high costs for OPD in the Bay Area:
    –Overall pro-union sentiment here;
    –The high cost of living in the Bay Area makes it expensive for city servants and blue collar jobs to live here. Or so the story goes. Why that applies to Oakland, + when public servants earn as much or more as the private sector (except, as DAX pointed out, teachers) u’d think this myth would have been dispelled some time ago;

    –Bay Area cities were engaged in a bidding war for Officers. Oakland started it’s recruiting drive (with the Measure Y raided funding) right at the end of the boom (so still at boom prices).

    When I asked Dom if he thought Oakland would b able to hire officers after previous challenges, he said yes, because almost all other cities had stopped hiring officers.

  247. David

    Heh. “pro-union” sentiment? sure didn’t exist when UPS went on strike 10 years ago or whenever.

    I’m sorry, but again, I’ve heard two things recently that tick me off. One is that a cop can’t afford to live in Oakland (in a “nice” neighborhood) on $70K/year. I’m going to open the kimono here, as it were, and reveal that yes, for a couple years in the first half of the decade, I was earning $65K/year. I rented a (small, 2/1) house in Upper Rockridge with panoramic Bay views on that salary, did not have a pension, nor have health insurance (I paid for my own Kaiser plan). I didn’t know I was “poor” and didn’t know my lifestyle was unaffordable I guess. Certainly didn’t know that Upper Rockridge was a crappy ‘hood. (just off Broadway Terrace, below 13).

    Prop 13. I’m a young(er) person. At least younger than what I presume people usually talk about when they state that Prop 13 benefits old folks. I really, really like knowing what I’m going to pay in property taxes. For people on a..you know…budget, this is great. I lived in Chicago, I had my taxes raised THIRTY PERCENT IN ONE YEAR. Boom, here’s your bill, oh yeah, it’s another $1200/yr. Pay up, sucka. We’re complaining (justifiably) on a $400 or whatever parcel tax, chew on what other city residents deal with–a $1200 increase with NO vote.

    Prop 13 is the only thing keeping California from turning into Illinois, the only state with a WORSE credit rating. Or Jersey, where again, a $600K house ain’t great shakes, but lucky you, you get to pay $12, $15, $20K in prop taxes.

  248. Mary Hollis

    Naomi and Live,

    I’m sorry, but Prop 13 is absolutely essentially if you want any discipline imposed on the CC. As I said, if they could double your property tax over-night, they would.

    Now, I agree there are some anomalies, and that it favors established long-term Oakland home-owners over, say, people who recently purchased a “Brown Condo”.

    But then when Oakland implemented rent-control, it did exactly the same thing, keeping rents low for long-term renters while allowing higher rents for new tenants.

    And remember, even young and new home-buyers benefit from the security of knowing their property tax increases are now limited to 2% pa (parcel taxes excepted). It helps give them the confidence to buy in the first place.

    Prop 13 will go away over all of our collective dead bodies.

  249. livegreen

    I didn’t say I was for repeal of Prop. 13. I said thank you to Naomi for acknowledging it discriminates against younger generations. Which it does.

    I know people roughly 2x my age who pay 10% of what I do in taxes. Now they might be on a fixed income, but their fixed income is more than I earn now, their benefits they retired with are no longer available in the private sector (unless you contribute 50-100% of it yourself, depending on if your employer has a 401K match or not).

    Remember this is the first generation whose average earnings have declined compared to our elders. Yet our elders receive both superior income, superior retirement benefits, and the tax subsidies.

    Future unsustainable bubbles. But we have time for posts when that [building] future crisis hits.

  250. Ralph

    Correct me if I am wrong but Naomi did not state that Prop 13 discriminates against young people, which I believe is her normal position? I interpreted her comments to mean that longterm owners are more receptive to parcel taxes because they aren’t paying their “fair share.”

    Wasn’t the whole point of P13 to keep the old folk from getting tossed on the street when their assessed value rose well beyond their ability to pay the taxes. If these people can now pay the taxes, then tax them.

    That being said, there is not a chance in heck that I will vote to repeal it. Today, I might pay more in taxes than my neighbor but presumably I earn more. But when the day comes that a property similar to mine comes on the market and sells for 2x what I paid, I will be content knowing that my assessed value is capped and I will not be losing my home due to an inability to pay my r.e. taxes.

    I do not think that new owners are burdened as the assumption is incomes rise over time. They earn more, have saved more, come into some serious stock options and can afford to pay more for a home. P13 adds some stability to the home buying/planning process.

    If some owners and non-owners want to give more, then I recommend they make direct donations to the state and city.

  251. Naomi Schiff

    Guys, I didn’t say repeal Prop 13. My point is it should be fixed. It unfairly undertaxes business property that has been held for a long time, way undertaxes it. Thus individual homeowners overall are paying a substantially higher percentage of the prop. taxes than at the time 13 passed. Among those homeowners, the more recent purchasers are paying disproportionately high rates. It’s all very well to moan about poor old people having to give up their houses due to property taxes, but that was mostly propaganda from the very first day, used to pass the initiative, and was never the true impetus. I’m amazed that people still believe that’s what it was about. Don’t be so gullible!
    You can cap property taxes more fairly, without making it horrendously punitive to the younger generation, upon whom we are depending for our economic survival. In making it difficult for our children to progress, we are making it hard on the whole state. Prop 13 needs a tune-up, which could be done without abandoning it. First step: split the roll between commercial property and homeowners.

  252. Dax

    A little math to think about.

    A 70 year old home owner in a market value $500,000 home in Oakland, that is fully paid off.

    A 40 year old home owner in that same house, with a $400,000 mortgage.

    OK, the 70 year old home owner has their property assessed at say $100,000 while the 40 year old has theirs at $500,000

    Each pays in Oakland, about 1.34% on assessed valuation (plus parcel and other taxes which are not based on valuation)

    $500,000 x 1.34% = $6,700
    $100,000 x 1.34% = $1,340

    Thus the older person saves $5,360 compared to his neighbor.

    However, the 40 year old has a $400,000 mortgage while the 70 year old has no mortgage.

    The 5.5% interest the 40 year old pays is tax deductible at 5.5% for a tax break of $22,000 at say 25+6 31% rate of taxation or a savings of about $6,800 annually.

    The older homeowner gets none of that interest tax break.
    Additionally, the $5,360 the younger person pays in additional property taxes saves them another $1,616 dollars in taxes.

    So while the younger person pays a extra $5,360 in property taxes compared to the younger homeowner, they save $8,416 more than the older person does because of lower income taxes.

    Thus that younger person with the $500,000 valuation is actually getting a overall tax break of over $3,000 compared to that older homeowner who is getting the Prop 13 “tax break” but who has no mortgage.

    Perhaps that younger home owner ought to be offering to mow the lawn of their older neighbor for free, in order to make up for their generous tax breaks.

    Now, if we want to make our calculations more complex, we can throw in the cost of educating that younger person’s 3 children in the local schools, or the cost of paying for that older person’s Medicare which without such coverage, would cost the 70 year a thousand more each month.

    I’m just saying that typical simplistic calculations regarding the unfairness of Prop 13 can be very misleading and are misused by groups who want the city, county, and state, to raise more revenues so they can keep such generous salaries and pensions.
    The CTA is typical of the groups who beat up on Prop 13 with their constant clamor for more money.
    ————————————————————————
    One other thing often overlooked.

    The local and state budgets this year would be far worse if there was no Prop 13 in effect.
    Why?
    That doesn’t make sense, right?

    Well here is the reason. We all know that politicians spend everything they can get and even some money they don’t have.
    The always have and always will.
    So if Prop 13 had never been passed, the Oakland city government would still be spending at 101% of their revenues….the limit.

    Now, the recession and real estate crash would still have happened.
    However, without Prop 13 being in place, instead of perhaps 20% of the homes being re-assessed, you would have 100% of all homes being re-assessed downward by 30 to 40 percent.

    Thus, property tax revenues would have gone into the basement instead of the very small decreases we have seen in overall total property tax revenues.

    Without Prop 13 in place, cities like Oakland would now be facing budget deficits double and triple what they now deal with.

    Oakland’s $31,000,000 shortfall might be $100,000,000 without Prop 13 minimizing the decline.
    You see, 80% of Oakland homeowners are paying more, not less property taxes year over year this year, even with the huge decline in housing prices.

    Did you ever think about that? Prop 13, actually saving Oakland’s budget in 2009, 2010, and onward.
    Without Prop 13, the city budget would be crushed this year.
    Prop 13 doesn’t only offer stability for the homeowner, but also for the city revenue stream.

  253. Ralph

    For the record, I was not paying property taxes when P13 passed. I was either 11 or 12, and oh, I was not living in CA! I only know what was reported in the news. And the story presented in my neck of the woods was that old people would get tossed on the streets. I can’t believe people think every one is as old as dirt, has only lived in CA and knows the complete history of CA. Don’t be so arrogant!!!

    Are “the more recent purchasers paying disproportionately high rates?” when everyone pays the same ad valorem. Parcel taxes will result in two different effective rates even if “identical” homes sold for $20K difference.

    Now, if our resident underpayer is proposing that the residential market cap and ad valorem should be lowered while corp tax raised, I can get with that. If not, then tax the old people who want to be taxed and fix the corporate issue, but keep the stability of residential. And don’t give the new money to those pesky unions.

    Dax, shouldn’t your $100K homeowner have a slightly higher effective rate? Doesn’t change the analysis, but the parcel tax assuming neighboring identical houses should be the same.

  254. Dax

    “Dax, shouldn’t your $100K homeowner have a slightly higher effective rate? Doesn’t change the analysis, but the parcel tax assuming neighboring identical houses should be the same.”

    Yes, that is why I limited my simple example to only the portion that is a percent of assessed value.
    Obviously the parcel taxes etc. are equal for everyone on the street.

    BTW, I won’t be going to tonight’s meeting.
    Last budget meeting I attended, I spent $14 between parking and driving, only to listen to a HUGE number of public employees line up for the speakers position. Simply put, I don’t have the money now.
    More important for me to buy groceries and pay my Kaiser.
    Tonight, the OPOA will be out in force big time….
    Probably hundreds.

    I find more impact by calling my council members, district and at-large several times.
    Tonight will be a media circus.
    The saving grace (if you can call it that) is that there is NO money and the voters will NOT pass a parcel tax.

    From their FaceBook site according to the Chronicle.

    “the union’s Facebook page urges, “Please click on this link and make comments on this article. Let’s flood out the cop haters.”

    “Let flood out the COP HATERS.”

    Anyone with any fiscal sense is a “COP HATER”.

    Sgt. Dom Arotzarena’s desk job salary last year $127,000
    If I had made even 30% of what Dom did last year I’d be happy.

  255. Ralph

    Dax,
    Did you get your SEIU flyer? Save the Heart of a Livable City – Protect Basic Services for Oakland.

    They want us to save
    Felipe, a Heavy Equip Mech, who per the Oakland salary scale earns $6133/ mo or $485 over the mean

    Then there is poor Alison, a library asst, struggling to get by on $5948/mo versus a mean of $4624/mo

    Then there is everyone’s fav street cleaner, Tanya, who has to make ends meet on $66,378/yr

    Anyone want to guess what a first year teacher in Oakland earns?

    If these people really wanted to make Oakland livable they would reduce their salaries and possibly give some to the teachers.

  256. V Smoothe

    Where are you coming up with those salaries, Ralph? The library assistant one is nowhere close to accurate.

  257. Ralph

    V, I am guessing you think the number are a bit high. All figures come from Oakland’s Wage — Comparability Wage and Benefit Data 2008.

    Per the study, wages reflect a 40 hr week and include any retirement contribution. Data was from 12/2007 – 01/2008.

    The answer to your question is Yes.

  258. charlie s

    Regarding tonight’s council meeting –

    The robocall from OPOA that my wife and I received was beyond annoying, it was infuriating. At a time when public safety consumes approx 75% of city resources, we’re told by the police that councilmembers “must explore other ways to cut waste from the budget.” But the facts are these. Oakland police are the fourth-highest paid in the country; their average salary and benefits package is four times as large as this city’s average household income. Over thirty percent of officers earn more than 200k per year, in a town where unemployment is 18%. And now we’re told to tax ourselves. . .again. . .so that the police can retire with nearly full pay at age 50, and without contributing a dime to their own pensions. Unbelievable

  259. Ralph

    V, I am not sure what reality you are using, but I found an Oakland salary table and recalculated the salary on the same basis as the 2008 Oakland survey excluding the retirement and came up with the following:

    Lib. Asst. step I: $24.27/hr * 2080hrs = $50,482/yr
    Lib. Asst. step V: $29.79/hr * 2080hrs = $61,963/yr

    Sr. Lib. Asst. step I: $29.51/hr * 2080hrs = $61,380/yr
    Sr. Lib. Asst. step V: $36.23/hr * 2080hrs = $75,358/yr

    Again the above figures do not reflect any employer paid retirement

  260. V Smoothe

    Ralph, at the monthly salary you listed, a library assistant would make $71,376 per year. In reality, a library assistant starts at $24.26 per hour. Working a 40 hour week, the actual salary would come to $50,481 per year – a substantial difference. However, the City’s work week is actually 37.5 hours, so the annual salary without taking into account retirement contributions and furloughs comes to $47,307 per year. But then there is the 5% reduction all employees took last year due to furloughs to help balance the budget, so that brings you to $44,941 per year. And of course, there’s the 8% retirement contribution (the full employee share), which brings you down to $41,795 a year, or $3,482 a month (substantially lower than the $5,948 figure you used above).

  261. Ralph

    V, I see you were also doing your research. As noted above, I did say the answer to your question was Yes – i.e. the survey put all salaries in an apples to apples basket so Oakland was calculated at 2080, not the 1950 you would have preferred. But the point is the same, we pay more per hour for the same type of work. Furthermore, the subject was wage, not what one takes home, which is a huge difference.

    The furloughs are temporary. So, unless the city plans to reset permanently the wage structure to a new lower base, they are not relevant. Using 1950 hrs, the base wage is still $47,327 on the low end and $70,648 on the high end.

    The agreement I saw indicated that the city pays 3.75% into retirement and the employee 3.75%. I discount your retirement contributing because the same holds true for anyone who participates in a 401K plan. The actual take home is going to be reduced by the amount contributed to the plan.

  262. Dax

    V, that figure for the Library Asst. doesn’t seem that far off if you calculate it as was seemingly indicated.

    I took the 2009 base salary for a regular Library Asst (not senior) and then added in the city pension contribution of, my guess, 13% (from the above data) and did NOT include any other benefits such as health, dental, etc etc, and then adjusted for the 37.5 hour work week and came up with a figure of $5,497 per month.

    Remembering that a Library Assistant is not someone that qualifies as a official trained “librarian”.

    I’d need more data and figures to make it accurate.

    —————————————————————————
    Regarding another post suggesting that 30% of Oakland police officers make $200k and above, that is inaccurate—unless…..

    In the data base only 22 officers are over $200,000 in 2009.

    However if you used “total compensation” as the criteria then I’m thinking that might end up at more than 30% making over $200,000.
    Actually it might end up at 50% over that figure.
    Again, I’d need more data to figure out the precise figures and levels.

    I would think the following. A midpoint Sgt. at about 113k in regular base pay. Add to that the benefit/pension package which combined might bring that an additional 65 to 70 percent… bringing that Sgt up above $190K … Add in some OT and you are over $200k.

    All depends on how you figure the various costs.
    BTW, as a comparison, the Golden Gate Bridge Dist. has a average benefit/pension package equaling 67% of salary.

    These safety employees have benefit packages higher than regular city workers. I don’t know Oakland’s exact average for regular workers, but I would be shocked if it was below 50%.
    My guess is its between 57% and 65% of base salary.
    Thus my guess that safety are 65 or 70 percent of base salary.

    Anyone have other figures.

    Very few, if any, local Bay Area agencies are below 50% for the benefit/pension package.

  263. Ralph

    PS: I really wish that edit feature were around in ABO lite. But again for clarification, the salary survey the city of Oakland conducted looked at the upper limit, i.e. the Oakland equivalent of the Step V, for job classifications.

    Don’t you think it just a little wrong to compare a Step I salary to the Step V person used in the above examples? I’m on to you and your dirty tricks campaign :)

  264. Dax

    Wait, ….Wait a minute…

    V… your method of reduction is just the kind of method a city employee union would use to blur the real truth of compensation.

    The wages SHOULD be based on a normal work week of 40 hours.

    That Oakland employees work only 37.5 hours is a separate issue and would only server to mislead the public as being comparable to what they use as normal.

    Secondly, you should NOT use the furlough days to reduce the income of the city employees.
    They are NOT working those days and should not be paid for them.
    Were it handled in a normal manner, they would have had 10% of their fellow workers let go.

    Also, you cannot further reduce the perceived salary by the 8% for their pension contribution.

    That reduction upon reduction method of ending up as some lower figure is a total distortion of their true wage rate.
    It misleads the public as a fair comparison of what city workers are paid.

    It also leaves out the huge benefit/pension package levels.

    You also used the “starting” level. This is crazy. Like the CTA talking about $40,000 a year teachers, when the state average is over $70,000
    .
    People move up the pay levels rather quickly and would spend most of their career at the top level, which is also the level upon which their lifetime pension is based. What they make in the first year or two is insignificant.

    You must base it on the highest level that any normal employee woulds spend most of their years at, and it must be based on the normal work week of 40 hours, and it must not deduct temporary furlough days.
    All those items, if not handled properly, only serve to distort the true picture of public employee compensation.
    That without even starting to look at the enormous benefit/pension package plus the generous vacation holiday effects.

    The $3,482 figure is a distortion.

    Heck if you are going to use that method, you might as well deduct their federal and state income tax and perhaps their cost of commuting as well as their lunches.

  265. V Smoothe Post author

    I don’t think it’s wrong to use the more common figure. I think that doing so gives readers a more accurate picture of how much city employees earn, since very few people are going to be at Step 5. Readers are free to decide for themselves whether the salary is too high or too low, but in order to make that decision, they need to have correct numbers to look at. If you don’t want to include the pension contribution, that’s fine. But even without taking that into account, the reality is a monthly salary for a Library Assistant working full time at the City of Oakland starts at $3,745, not $5,948, and it maxes out at $4,600. If you want to make the case that the position is overpaid, you need to make the case based on actual figures, not by arbitrarily adding to it to make it seem higher than it is.

  266. Ralph

    V, your’s is an apples to oranges comparison. I guess the good thing is anyone can Google the Oakland salary pay schedule and recalculate, without bias, the actual salary for themselves.

  267. len raphael

    Dax, I don’t want you to go into the cc meeting but picket outside. Don’t worry, not a single person was willing to join me so I won’t hobble over there either.

    Using the income tax deduction for mtge interest expense is n/a unless you were going to calculate a discounted cash flow of the cost of owning for someone who bought years ago vs recently. The tax benefit for paying interest is less than 100% so still a net cost to borrowing money unless you want to factor in leverage when house prices rise.

    Yes the difference in after tax cost of the property taxes is reduced by the the fed and state income tax deduction some owners get. many blue state coastal owners are in fed “alt min tax” and get 0 income tax benefit for real estate taxes.

    -len

  268. V Smoothe Post author

    I’m not sure how I can be comparing apples to oranges when I’m not comparing anything to anything. I’m simply stating the real salary for the position.

  269. Dax

    V,, “But even without taking that into account, the reality is a monthly salary for a Library Assistant at the City of Oakland is $3,745, not $5,948.”

    Please, please, please, that is a total distortion to the general public as to what the true pay rate is compared to their own world.

    How long do employees stay at level 1, 2, 3, 4 , and 5 ?

    Normally employees move up through the various levels in less than 10 years.
    Even if we only place them at the average of the 5 levels, $27.03 and then multiply that times a “normal” work week of 40 hours we come up with a $4,685 per month figure, for a library asst.

    Go out and ask the people of Oakland how long the city employee work week is. Ninety percent will say they don’t know, but will guess 40 hours, like anyone else. They will be surprised if you inform them they only work 37.5 hours.

    Similarly, ask them how large a pension will a city worker receive if they work from age 25 to only age 55…..
    Few will guess that such a worker will then get 81% of their “highest” year pay for the next 27 years of their expected life.
    I am telling you, the general public is totally unaware of the true compensation situation that Oakland workers currently have.

    Sure, they hear a few stories about the police and fire compensation, but they don’t know of the excess in the regular employee packages.

    Again, if you know, how long must a individual stay at each of the 5 levels for a library assistant position?

  270. Naomi Schiff

    On the other hand, if you don’t have the money, you don’t have the money. It’s not that the workers want to work a shorter week or take furlough days; they are being forced to. Many city workers are feeling the pinch of lower actual income. (Aside from the ones who have been laid off entirely.)

    It’s similar to your assuming everyone needs a tax deduction in your property tax calculation. Mortgage interest deductions is not quite the same as cash. They are much more valuable to those who pay more income tax.

    Time not worked and not paid is only useful if you don’t need the hourly pay.

    It’s not as though I write from the labor union side of things; I am an employer, and have been one for almost thirty years.

  271. len raphael

    yeah, no edit function is scary. and i can’t find the open thread or any other thread except this one.

    The way the cc and the unions and the ngo’s are framing the budget debate is self serving to the extreme without getting us past the next few months before we have to go thru this again, and then again and again until we really will have to consider Chapter 9.

    I have no sympathy for the OPOA the way they’re playing the scare game, but the effect of the way that the cc making the cops the fall guy for the problems cc created, has opened a huge door for the ngo’s to cut total funding to cops and never allow OPD to be properly staffed.

    Cops and all other employees should take 20 pct comp cuts, but no layoffs, no service cutbacks. Ngo’s need more than 20% cuts.

    Instead the cc has unleashed forces which will cut the cops but nothing else until next month’s crisis.

  272. MarleenLee

    V – you sound like a budding labor negotiator. Ralph – figuring out “actual” compensation is actually a lot more complicated than looking at a salary schedule.

    Disputes frequently come up during “fact finding” in stalled labor negotiations. Then both the employer and the unions look at comparable salaries elsewhere to determine whether the compensation is fair, and they put together wage studies. It makes no sense to compare the salary of somebody working 37.5 hours a week to somebody making 40 hours a week. That’s like comparing somebody working full time to somebody working part time. (For the same reason, it makes no sense to compare somebody working 180 days a year to somebody working 250 days a year.)

    You also need to look at all steps of the salary schedule, including starting salary, and highest salary, as well as average salary, to get an accurate picture of whether the position is overpaid, underpaid, or just right. And, of course, you also need to take into consideration the value of all benefits – health, dental, pension, retiree health and dental, number of vacation days, sick days etc. Without this sort of detailed analysis, you just get a lot of propoganda.

  273. len raphael

    The seiu budget proposal states that non safety employees took a 10% cut in pay last year.

    Are they talking about the furloughs were there any actual pay cuts?

    Someone pointed to cc proposal to rent out vacant office space (LOL) as proof that the city has made substantial cuts in non critical staff. Fact or fiction?

  274. Ralph

    It is apples to oranges because you are discounting a Step I employee for furlough and retirement and comparing it to the non-dscounted Step V employee. The actual wage is the non-discounted wage and to be consistent you need to compare it at the step.

    If you want to say the salary is $3,745, not $5,948, at least be clear that you are not using the same step nor the same methodology. Someone, I do not know who is a Step V employee. Typically speaking, firms do not like to maintain a pay grade for a position they don’t have.

  275. V Smoothe Post author

    I’m not discounting anyone for anything. I’m saying the actual wage people earn, without any deductions. The monthly salary for a library assistant, working full time, in the City of Oakland is $3,745 at the entry level, and $4,600 at the maximum for employees who have reached the highest step.

    I’m sorry if that doesn’t fit as nicely into the narrative you want to create as the made up number you used, but there’s not really anything I can do about that. Facts are facts.

  276. len raphael

    Can we start a betting pool for mayor here? Looks like JQ and RK will IRV tag team each other with the support of all the unions other than public safety. That assures a JQ win this time, presumedly RK gets something next time.

    Impressive the way JQ can sail into a public meeting and swat away tough questions. A much better pol than I realized.

    Funny that DP made the mistake of letting OPOA kiss him on the check, though it looks like he’s ready but to toss them to the sharks. Too late.

  277. Dax

    V,, “But even without taking that into account, the reality is a monthly salary for a Library Assistant at the City of Oakland is $3,745, not $5,948.”

    OK… again on the same subject…

    Using the Level 1 hourly wage is a total distortion.

    Why?

    I just called the Oakland Library.

    How long does that Library Assistant remain in Levels 1 thru 4 ?

    Only during their first 4 years. Beginning month 49, they are placed in Level 5, the top scale, as long as they are making normal progress.
    That progress is just doing a normal expected job.

    Thus the 2008 wage level for that position Level 5 is the normal level of pay for that position. You begin day one at Level 1 and go to level two after 1 year on the job. By year 4 you finish level 4 and after 48 months you are Level 5.

    That would be in 2008 already at the following

    Lib. Asst. step V: $29.79/hr * 2080hrs = $61,963/yr

    $5,163 a month or more if the COLA’s have raised it since then.

    If you worked from age 25 to 60 at that position, you would have spent 31 of your 35 years at that top level.

    Your pension would be based entirely on the top level.
    Even under the 37.5 hour week, you’d get a pension based on $58,090 per year.
    Your pension at just age 60 would be $54,895 per year for your position of Library Assistant. (not a Librarian 1 or 2)

    It is a distortion to speak about that position and use the Level 1 as a example for the public.

    How many people in the Oakland public understand that a person beginning that position at say, age 20 could retire at 55 with a pension of $54,895 for the next 27 years of their expected life.

    That is a $1,482,179 dollar pension…for a “Library Assistant”, not a university trained “Librarian”
    Sorry, but that is a level just out of step with the public’s ability to fund.

  278. Ralph

    If I used compensation, that was an error on my part. I am only discussing the per hour wage, except as noted in the salary survey, where they made certain adjustments to compare across municipalities.

    I only use the straight hourly wage because I have neither the time nor the interest to do a comprehensive unpaid study of Oakland’s total compensation package.

    I will concede that if Oaklnad city employees pay the lion share of their health benefits, while in other municipalities that is paid by the employer, I could understand higher wages. I just don’t think that is the case.

    In any event, I can only work with the information I have presented fairly and without bias.

  279. Ralph

    I have no idea how I can make up numbers taken straight from the Oakland salary schedule. And if anyone thinks that I fabricated numbers to tell a story please be my guest to Google Oakland salary schedule and search for Library asst.

    Dax, thanks for debunking the myth about the non-existent Step V Lib Asst.

  280. al

    we’re finally getting somewhere. Now, we need to start training a minimum of local residents(per whatever number, say 100, or two square blocks, or something like that) to get familiar with equipment, protocols, etc. Start em early with field trips and public outreach by actual firemen.

    That’s a step in the right direction as well. How are a few firemen who primarily live somewhere else supposed to handle a worst case scenario?

    These new firehouses are the PEOPLE’s. It is a disservice and an insult to the population at large to continue supporting these self-serving, sacrosanct institutions which only enrich areas beyond our borders.

    I suppose it’s just as easy to continue with all the denial and trimming around the edges.

    How the H*** does some written agreeement entitle someone to prosper at the expense of everyone else? Doesn’t anyone understand that the only difference between these proceedings and a papal bull condoniing slavery is exactly the same as the difference between Christopher Columbus and Adolf Hitler? nuthin

    The winners are still writing our history and we keep repeating it. end it.

    Let’s just hope they take the wind out of the sails of the pending riot/insurrection following the slam/dunk trial of Mesherle. Now more than ever, we need to be patient and do the little things for ourselves.

    People have to step up, fight blight and boycott where it can make a difference.

    I’ve been writing to Congress, et al, about some of the cottage industries that have been sucking the life out of oakland for decades. This place is the prize but they keep covering it up with bad press and we keep enriching the same criminals, in city hall.

    And I finally learned the real value of IDF’s grumbling, mumbo jumbo. We he wants you to focus on something….then he speaks most clearly. I noted that they all but rubber stamped the new Parking contract which has a cost variance of over 1.6 million dollars. IDF was very good at pointing out Oakland’s history of cost-overruns. I would really like to know what specific kinds of cost-overruns he was alluding to…or was this one more way we get conned into more of the same.

    But yes, OMG, we may actually get by without all the bling, and the pomp and what not.

  281. Naomi Schiff

    My favorite typo in this thread, now that we eschew proofreading:

    Funny that DP made the mistake of letting OPOA kiss him on the check,

    Unless you meant to say that, in which case, bravo! Kiss him on the check is exactly what likely happened!

  282. Dax

    Look at the debate that takes place here for a simple Library Assistant.

    Step 1 vs Step 5….. 37.5 versus 40 hours…. with or without employee contribution.
    And on and on.

    No wonder the general public is totally unaware of what the real compensation and benefits are relative to what the general public “thinks” is in place.

    This obfuscation is not by chance. Neither the city council, city staff, mayor, employee unions or their allies really ever intended that the public fully understand the true reality. THAT is how the wage/benefit compensation has gotten so far out of line in Oakland.

    Instead, they just wait until the deficits become unmanageable and then cry calamity if the voters don’t do something about the “crisis”…

    Then the various groups with a vested interest do their best to further hide the reality by crying out about the dire repercussions if cuts are made.

    The public is still left clueless about the real compensation structure that typical city employees enjoy.

    Do you really think even 1% of the public was ever, or is ever, going to be made aware of the 2004 pension leap of 35%, or that it was made retroactive?

    Do you think they understand the thousand of “golden parachute” gifts that were given away.
    The hiding of such largess is akin to straight out deception by both the city council, and the city employee unions.

    If the public had been made aware they never would have agreed to such a give-a-way.

    Can’t wait to see the media circus tonight.
    Do you think any TV reporter will get the true facts about what the average income of the typical police officer is?

    No, we’ll get mostly scary and emotional stories. All true, but none of which will create new money.

  283. len raphael

    Dax, the only compensation data that the media will understand will be that of police because every ngo, every other other, and every cc member except larry reid has been pounding that into them.

  284. Dax

    How come Larry Reid hasn’t been doing that?

    Well, I certainly don’t expect anyone to be discussing “Library Asst Step V” on the news tonight.

    Certainly any discussion about retroactive pensions and $400,000 Golden Parachute bonus packages based on a 2.0 vs. 2.7 percent differential are likely to NOT be discussed.
    Frankly, even if a reporter went completely mad and did so, in the 55 seconds he had available, it would sound like he was reading from a technical manual for a new computer system.
    Many viewers would be injured as their eyes rolled back in their heads and they fell off the couch.

    That is why the city council is such a good interface with the general public. Since they personally don’t do math, they relate well to most of the voters.

    Oakland don’t need no math, just one more parcel tax…
    I promise, this is the very last one, really, this time I mean it.

    Wait, why not a real parcel tax……
    Seriously, how about a simple $1.00 parcel tax for every package delivered in Oakland by UPS and FedEx…

    That could raise millions per year and would be easier on the poor who have fewer parcels delivered.
    It would also make Oakland business pay their “fair share”.

    Gosh, why didn’t I think of that before. Put it on the ballot.
    It will pass overwhelmingly.
    A nifty way to recover all those sales tax revenues we’ve lost to Amazon.

    A true “parcel tax”…
    Big Brown trucks driving through every neighborhood with a cha-ching at every stop.

    This sounds almost reasonable.
    Hey, we could even make the police happy by giving all the proceeds to keep full staffing for the department.
    UPS drivers would be happy because they’d never be given tickets.
    Imagine the revenues during Christmas.

    I’m calling the council right away. I’ve got the solution!
    You heard it here first.

  285. Livegreen

    That said, the discussion today on KQED’s Forum was (relatively) a good one. They got through many of the intracacies of the current negotiations, including OPOA robocalls (playing into Mayoral politics), IDLF voting for the 04 benefit increase (though only briefly so it might have gone over most peoples heads), details about the negotiations such as the OPOA being willing to accept a 9% contribution if there were guarantees of no further layoffs or compensation cuts, which the City can’t accept even if it wanted to because of even larger projected deficits in following years, etc.

    The only items that were brought up but not answered, that the Council should look into, are:

    a) Pulling a Newsom and threatening to fire employees then rehire them at lower wages (Newsom didn’t have to do this after the SF Unions caved);

    b) Bringing ALL the Unions to the table and opening the books for the next SEVERAL years to fix them, instead of negotiating like this year after year.
    (Of course it’s too late for that now for this year);

    c) Finally, one subject that was not brought up is you negotiate based on your values and core services. While I agree with the CC & Naomi that libraries and p&rec are important I don’t agree that they are as important as public safety. & this leaves out other Departments that are even less important. Yet our CC has made a decision to target OPD this round. That is their perogative, but that is a political decision. It doesn’t have to b.

    For example in SF they made a decision that Public Safety would b the only area not subject to the cuts made in other departments. Personally I would favor something in between.

    That said c) is subjective (& shows us where our CC priorities lie).

    a) & b) are more Essential and would help the City better negotiate wih it’s Unions without having to risk losing 200 officers. A gamble the OPOA thinks the CC won’t do, and we won’t know if they are willing until after the hand is shown & cards are on the table. By then it might b too late…

    PS. I forget if the Parcel Taxes were discussed, otherwise it would have been my d)…

  286. charlie s

    Regarding a previous post that questioned police salaries plus benefits and pension (the so-called “fully loaded officer”) I believe the best figure we’ve got is a mean of 188k. Straight salary average is 103k.

  287. Ralph

    Didn’t I say that I hope you are using the 5 year revenue plan as a guide? I sarted with one set of comments and ended with another.

    I think at the end of the day I wanted to focus on the my disgust with OPOA. I realized I had more than 1.5 minutes of stuff to address and I could never cut enough of it. I was keeping my eye on the clock and held a few items to myself.

  288. MarleenLee

    I have absolutely no idea how cutting 80 officers saves any money. Cut one officer, you lost $20 million. At $180k per officer, you’d need to cut 111 officers just to break even for the Measure Y loss. Can somebody explain that to me?

  289. Naomi Schiff

    Ralph I think you did great; you came off as well-spoken and very clear, which is not that easy and not that common among well-meaning visitors to the CC. I very much appreciated your comment about the robocalls. I hope OPOA realizes that their maneuver did not put them in a good light and may not even benefit their favorite mayoral candidate.

    Generally not too much new happens in meetings like that. I had to leave but I assume they passed the thing. The theatrical opportunity was for the community members and other unions to give the city council some support in negotiations with the cops. I am pretty sure a lot of discussion is still going on about both the details of the budget and I hope something like your 5-year strategy to deal with these cumulative and escalating shortfalls. We should speak to city councilpeople, on the side, to urge them to do this.

    To LG’s comment: the city has already made clear its priorities: it isn’t spending 72% of the budget on those quality of life departments. I can’t imagine whittling down the parks & rec and libraries much more by saying they are lower priority. They are already receiving relatively small allocations. I firmly believe we can’t do without them. They give very good bang for the buck compared with the police.

  290. len raphael

    Ralph, it’s a tough format. I was too critical at least you mentioned the 5 year budget.

    IDLF answered your hopes but not the way you and I would expect. He said something to the effect “we will probably have a deficit next year and we all know what’s coming in the years after that”.

    I interpret that to mean that the cc members know we’re in very deep financial doodoo that could easily lead to bankruptcy or massive layoffs in the next five years, but have agreed not to discuss it too much in front of the residents and employees because the kids might get very angry.

    Or, you can lead a politician to long term budget, but you can’t make her/him do anything about it.

    The two speakers with great command of the minute format were Larry Benson (guy toward end who told all the employees not to whine about 10% cuts cf what state workers have taken and then defended high wages for cops; and the black woman with the crazy sunglasses who was drumming up angry storm about the 188K cops make here.

    Sad to see all the community organizations and the city employees get all worked up to fight the cops to take 10% cut in compensation.

    They do appear to be clueless that in a year two they will alll have to give up another 20% or more.

    Apparently? the words “structural deficit” are city council code words for the +1Billion of unfunded retirement obligations.

  291. Ralph

    V, so after listening to 1001 people from the union I have a question were the pay cuts that the union took permanent? If so, I concede that my calcs are overstated by the cut. If those cut were temporary solutions and are subject to immediate restoration when the budget recovers, then I still classify them as temporary.

    Naomi, thanks. Tonight’s important lesson, sign up early. I started to cede time to Marleen but the robo call so pissed me off that was all I could focus on and as additional residents came up to express that same fear that OPOA voiced, I grew more annoyed and had to speak.

    Max and I were talking afterwards and that call was a blatant mayoral swipe. I hung up on the call but got far enough to hear them mention JQ. Not sure if this is more or less obvious than the cancer flyer. You know assuming the same or affiliated people were behind it.

    I honestly hate these dog and pony shows but feel I need to supplement my emails with a voice. Not so much for council, they know me, but tonight was to let OPOA that the public will be neither intimidated nor bullied by their scare tactics.

  292. len raphael

    Ralph, don’t take your eye off the “structural deficit” ball.

    All of the city’s employees except cc chief of staff are dead men walking in the eyes of the city council.

    If you were their sights of their desperate cuts, you’d play every dirty campaign trick also.

    Hey cop layoffs don’t affect my personal safety, but they certainly would affect them in many other parts of town.

  293. len raphael

    Dax, if watched ktop cc tonight, close to the end, did you catch the closest thing to an apology we’ll ever get from the cc pres., JB, for decisions that the cc made several years ago?

    Ralph, when Sanjiv was talking, whom did JB want escorted out?

  294. Ralph

    I pretty much stopped watching when they went to a vote on item 5. I had it on until the end but wasn’t paying attn.

  295. Livegreen

    Re the other unions getting worked up, this is part of the behind the scenes negotiations. The more the cops take the less they have to.

    Naomi, I never said the other departments should have their services cut more. They’ve only had a 10% give-back. There’s plenty of room to give back more without cutting 1 iota of service. (& BTW, I’ve recently heard some negative things about services Parks & Rec give to youth).

    I agree with u and Ralph about the robocalls…

  296. Naomi Schiff

    Parks & Rec should get more training in working with young people, and they are woefully understaffed too. I’m not necessarily a big fan of everything they do. But if we expect them to entertain, educate, and keep safe the huge number of kids out and about after school (not to mention their parks function), they will continue to need resources with which to do it. They should also get performance audits and seek partnerships with other institutions. I haven’t studied their salary structure at all, can’t comment on that, but do know that they have quite a few modestly-paid part timers working with the kids, many of them not long out of school themselves.

    The reason I went down there, and was happy to see Ralph and others do so too, is that we citizen taxpayers need to make sure we are heard alongside all the various voices with obvious personal and political interests. I do advocate speaking with, emailing, writing the city council. As I mentioned before, what one says during these meetings has limited impact. More important is what happens beforehand.

  297. livegreen

    Naomi,
    -I note how you minimally addressed my suggestion that salaries & benefits could be trimmed, without cutting services. The Park & Rec directors & FTE do plenty well. Like the Unions, it’s easy to reduce it to “either you’re for it or you’re against it” when that isn’t the issue.

    -Another funding source would be a minimal raise in the cost of their programs, which are really really inexpensive (reflected in the programs themselves). Also more “outside the box” revenue generation, like space rentals for parties, birthdays, etc.

    -I agree with you that we need to maintain enough funds to Parks & Rec to offer services. & the way the Rec Center Directors have trained their part-time employees is deplorable. Many of them aren’t trained to deal with kids, barely talk to them, etc. Our family & neighbors have stopped going to our local Rec Center because the employees are so unengaged.

    -I agree with you about performance audits. However when will Oakland ever actually do this? & If they ever do a performance audit, will it REALLY make a difference? I doubt it.

    Instead, like OFCY programs, it’s either good or it’s bad, City Staff & the CC either approve it or they don’t (mostly the former) based on whether the idea is good, not on whether it works or not.

    As such, how do they know whether the programs are really working or not, whether taxpayer $ are being well spent or waisted?

    As a middle class taxpayer it sure makes it feel like Oakland doesn’t care about how our money is spent or what we contribute. Instead everything becomes another jobs program, and that in turn gradually leads to those employed by the City (represented by the Unions) becoming more important to the City & CC than their constituents.

  298. Naomi Schiff

    That is why it is important for citizens (of every economic class!) to speak up and let the city council know what is going on. If need be, organize. The key thing is not to wait for meetings at city hall. By then it is usually too late, the votes determined.

    P&R programs are quite variable, and it is not easy to monitor them. So we can.

  299. Ralph

    Does anyone know where to obtain either best practice in pension reform or trends in pension reform documents?

  300. livegreen

    Naomi, Your reply makes me wonder if you’re answering my points & questions or trying to ignore them…

  301. Dax

    Interesting law suit by Orange County regarding the “retroactive” feature of the pension changes that so many local governments made in the 2001 to 2006 era.

    http://taxdollars.ocregister.com/2010/06/23/jerry-brown-weighs-in-on-countys-retroactive-pension-lawsuit/59675/

    Take a look at Jerry Brown’s position on this law suit. Seems to be flawed logic even if not a flawed legal position.

    http://totalbuzz.ocregister.com/2008/09/03/jerry-brown-defends-his-involvement-in-deputy-pension-case/4920/

    He has effectively doomed Oakland’s budget future for decades to come with such thinking.

    The law suit may go now where but IF it did, it would seem it could affect Oakland’s retroactive feature.

    Now, I have said here several times that the cities were not required to make any pension changes “retroactive” for all prior years worked.

    In this article it seems that it is PERS “policy” to insist on that.
    However, in my calls to several East Bay cities that make pension hikes in the past years, I am certain that at least one of them said their pension hike was NOT retroactive.

    Right off hand, I can’t remember which one it was.
    I think it was either Alameda or Albany.
    I’ll have to call them back and see if their pension plan is done through PERS and double check about the retroactive feature.

    Perhaps it is PERS wish, but not mandatory for a city to implement the retroactive feature.
    It would seem that fiscal common sense would dictate against such a retroactive feature.
    Good gosh almighty, why would you boost a 29.5 year employee’s prior years if they just work .5 years at the higher rate.
    Seems like pure madness and totally unfair to the public paying for such.

    Interesting that Jerry Brown is such a strong supporter of the “retroactive” feature.
    Remembering he was mayor when Oakland passed their 35% pension leap from 2.0 to 2.7 percent for each year of service.
    Of course, as I’ve always indicated, the killer part of the 35% boost was #1 the “retroactive feature, and #2 the indication or legality that even if we return to the 2.0% all folks working now and prior to that change will have to be given the 2.7% for the rest of their career whether Oakland has the resources or not.
    Both those features are downright UNFAIR to the taxpayers.
    Its as though, even if you are on 3 or 5 year contracts and circumstances change dramatically, you can’t reduce benefits for subsequent years.

    Imagine that kind of law for health plans. If you ever gave a worker a 100% paid plan, then you could never demand in future contracts that he pick up a 25% share as times change and health care costs skyrocket.

    All NUTS…..with every advantage going to the public employee at the expense of the residents, even if it means higher taxes draining their income to the point they can’t afford half the benefits the city employees get. A really sick system.

    And they talk about a new $360 parcel tax… HELL NO

    Now calm down Dax…

    Oh, if you want some real reading here is the 30 page Amicus Brief filed by Jerry Brown opposing the lawsuit.

    http://files.onset.freedom.com/ocregister/news/2010/06/20100602_CalPERS_Amicus_Brief.pdf

    There, your state dollars at work fighting against your right to not get stuck with retroactive pension boosts.
    You know, I really don’t like Meg (I’ve never voted) Whitman, but this kind of stuff from Jerry Brown is rather infuriating. Seeing as how this retroactive stuff is destroying the future of cities like Oakland.

  302. Dax

    Just another note about that Amicus Brief linked above,

    It is very readable and interesting on the various concepts involved in the troubling and expensive “retroactive” feature it covers.

    While I hope the lawsuit is successful, I fear its a bit like trying to un-ring a bell. How foolish were various city councils and boards of supervisors to have given public employees such grand and unearned gifts for the past, present and far into the future. All for a few extra votes and campaign donations. How God awful costly were those decisions. (of course, as in Oakland, those voting on such, were also entitled to the same pension boost, including the retroactive feature)
    Even the currently very vocal IDLF……. a recent convert to sanity.