Quantcast
 
Loading
WatchSonoma
WatchSonoma Watch

GUEST OPINION: Looking for a balanced solution to state’s pension problem

By MICHAEL ALLEN

I would forgive anyone for asking why I, a former labor leader turned state Assembly member, would become a chief proponent for, and sponsor of, public pension reform. Prior to my election to the Assembly in 2010, I spent many years representing working men and women and their families. That included a 20-year stint as president of the North Bay Labor Council, where I worked tirelessly to foster a living wage and a dignified retirement for the region’s lower- and middle-income workers.

Michael Allen.

After being sworn in to the Assembly, I reaffirmed my commitment to those individuals, but I also dedicated myself to representing the broad spectrum of people, organizations and businesses that live and work within the area I am representing.

In an era of fiscal limits, my goal has been to play a leadership role in discussions and decisions about spending our precious tax dollars, with an eye toward balancing the needs and interests of the people who depend on public programs and services, the workers who provide those programs and services, and everyone who pays for them with their tax dollars. Accordingly, I have focused on one of the biggest, most complicated issues confronting government agencies at all levels: Public pensions.

The problems of affordability, public transparency and accountability have been years in the making, with many contributing factors. But within two months of being sworn into office, I introduced legislation to prevent public employers and employees, such as the University of California system, from deferring pension contributions when the economy was robust.Instead, in good times and bad, they would continue to contribute and maintain a surplus fund in case of an economic downturnThat bill, along with pension-related proposals by other legislators, was sent to a six-legislator conference committee tasked with crafting a single, coherent reform package. Due to my background as a mediator and a negotiator, I was appointed to the committee early this year.

In February, Gov. Jerry Brown released a 12-point plan for what he believed pension reform in California should look like. The conference committee has met multiple times in public hearings around the state to discuss how to properly implement the plan and stabilize the system in a way that is fair to taxpayers, retirees and current and future public employees.

The governor’s 12-point plan provided us with a blueprint for restoring sensibility to our pension system, but as with any proposed legislation, the devil is in the details on how we proceed. California has multiple pension systems, each with different strengths and weaknesses. In addition, many public employees do not participate in, and are thus not covered by, Social Security. For those reasons and more, it became clear that a one-size-fits-all approach would be, at best, problematic for the state, counties, cities and special districts.

Over the past six months, the pension committee has worked hard to provide body to the essence of the governor’s conceptual proposal, including the elimination of pension “spiking,” double-dipping, the purchase of “air time” and retroactive pension increases.

The legislative session resumed this week. It is my hope that the conference committee will release our pension reform package to the public in the coming days. In addition to the areas I mentioned above, we’ll also be unveiling a strategy for encouraging employees to work longer and retire later and for building upon the progress made in negotiations between the Brown Administration and state employee unions (and between local government agencies and their labor groups) to require workers to pay a larger share of their pension contributions.

All told, our reform package will ultimately save taxpayers and government agencies billions of dollars, while providing an appropriate balance between public fiscal integrity and retirement security for public employees.

I believe that the Legislature and governor will work together to put California back on track, but this can only happen if Democrats and Republicans set aside their differences to pass this sustainable package of pension reform bills.

Michael Allen, D-Santa Rosa, represents the state’s 7th Assembly District, which includes part of Sonoma County.





53 Responses to “GUEST OPINION: Looking for a balanced solution to state’s pension problem”

  1. MOCKINGBIRD says:

    THANK YOU LATHE. It’s about time you joined WSC. We need more voices that support working people, union AND non union. We should ALL HAVE PENSIONS AND REASONABLE SECURITY IN OUR OLD AGE. ALL OF US. ALL OF US. (bears repeating.

    But I fear you are spitting in the wind my friend. Some people can’t be educated. They’re resentful and angry and need to blame their fellow workers for what they don’t have and that’s just plain sad.

    I’ve been a government worker for over 25 years. I paid into my pension big time and worked hard for the public. I don’t like being hated, vilified, a target for malcontents and the misguided.

    Thumb up 1 Thumb down 2

  2. Follwer says:

    @ Joseph

    How do you “reign in” a Public Employee Union’s ability to threaten the jobs of the people with whom they negotiate their contracts?

    “Support our demands or we’ll back your competitor in the next election”.

    Many political issues are very complex, this is not one of them.

    Private sector Unions protect their members from employer abuse and exploitation.

    Government does not, has not and never will abuse or exploit their employees. To the contrary, Civil Service has always been and always will be as close as you can get to a job for life without being appointed to the Supreme Court.

    It’s time to put an end to Public Employee Unions. They serve NO purpose other than to raid the public coffers.

    Thumb up 6 Thumb down 3

  3. Lathe Gill says:

    Everyone seems to have decided already what they think they know about pensions. The idea that 401 plans are being offered as a solution for retirement is laughable. Saying “we can’t afford it” is not public policy – it’s an excuse for forcing other people into poverty, people who work to provide services to your city, or your county, or your corporation.

    401 plans could be made to provide retirement security, if employers large and small were required to contribute a fixed percentage of payroll every year. But in the private sector, employers now contribute just 3.6 percent of payroll for retirement, on average. 80 percent of tax breaks for 401 deductions go to the top fifth of income earners. 70 percent of 401 and IRA balances belong to people in the top fifth. 75 percent of 401 holders have balances well below average, and the median balance is less than 20,000.00. How long could you avoid eating cat food with that, I wonder?

    So don’t hold it up as some model of good public policy. And don’t pretend that the bankers and brokers who are anxious to shift all the defined benefits plans to defined contribution plans aren’t salivating at the chance to get their hands on the fee revenue that public pensions could give them – fee revenue that you get to pay for your 401 – which reduces your retirement security.

    There are competing social goods to consider. Is it more important to give people the freedom to choose to spend their money today, even though most of them will be very poor later? It isn’t really a simple question. As policymakers, (or legislators, or voters), you should be thinking about what kinds of effects that will have. The argument will be that employers would have to put up more cash today for employees, so they will hire fewer of them.

    The world is not frictionless, so this isn’t strictly true. People will hire as few employees as they can manage, the same as now. If they need the work the employees do, they will shift investment in other areas, research and development, advertising, regulatory compliance, dividends, stock buybacks, whatever. Forcing employers to invest in retirement for the people they employ would have a real cost today.

    But it would mean that retired people have purchasing power. This is not an insignificant consideration. Retired people make up a very large percentage of the population. Their future ability to buy goods and services, pay taxes and utilities, and make investments, is quite important to the economic health of our society.

    Defined benefit pensions also offer other benefits that defined contribution plans can’t offer as well or as consistently. By pooling risk and returns, they can reduce individual risks caused by living longer than average, providing for survivors, or becoming disabled. Very few Americans have any disability insurance, even through they are three times as likely to need it as life insurance. Finally, defined benefit plans are usually well managed. In defined contribution plans, it is possible to arrange good risk portfolios, but it is much less common, which is partly because of the flexibility of defined contribution plans, and partly because of bad designs, such as those that encouraged or required telecom and energy employees to buy their own employer’s stock.

    Of course, pension reform isn’t just about defined benefits versus defined contributions. It’s also about when people can start collecting them, or when the top “formula” hits. It’s about maximum benefits (because all the really juicy pension stories are about people who make large pensions – which are not typical), and it’s about what is pensionable. Car allowances? Health care payments?

    As someone as closely associated with public workers as Mr. Allen was, I am not neutral in this discussion. I have looked closely at the P-D’s 100k club. What I see is a handful of senior attorneys, a couple of IT professionals, a couple of dozen cops (wow – they sure have a good deal!), and scores of managers.

    The P-D frames the issue as about people who spend a career in public service, those who have at least 20 years of service. But career mobility is the new black. About half of county retirees have less than 20 years. That’s a lot of second-career people. But the P-D’s coverage discounts them as unimportant, because the career people represent more of the costs.

    I realize it isn’t cool or sexy, but you’re voters, people. Think about the whole system. What is expensive about the way Sonoma County governs?

    Sonoma County has a lot of managers, almost as many as before they started shrinking (along with every other government in the country). Managers are very expensive. And their pensions are the ones that make you scream and shout about how expensive it all is. They tend to have worked a long time in public service, so they have many years of service to go with that high final average compensation. If Sonoma County adopted the ratios advocated by leading management academics, they would save almost $40 million a year when it was all implemented.

    Chump change you say? Almost half of what they now spend on pensions for everybody. In our bargaining unit, over the past three years, the median pension is about $35,500.00.
    And our workers invested in their pensions.

    Inside the union, what members say is, “It’s not us.” Personally, I think that focuses on blame. It makes sense that they want to say that, because some of you seem very intent on blaming them.

    I’m wonky. I think about what makes good policy. In my opinion, speaking only as an individual, designing a system that makes sure more people can live with dignity in retirement, and choose whether to continue working or not, and go to the doctor, is what we should be striving for. We should do it in a way that encourages people to make good choices and take responsibility.

    But please spare me the we can’t afford it speech. Sonoma County can afford to pay its workers enough to get healthcare and retire, especially if it trims the fat at the top.

    Thumb up 3 Thumb down 7

  4. Joseph says:

    Becoming Union Free by Francis T. Coleman should be required reading for every Board of Supervisors member as well as the other policy makers. The recent ads on the radio indicate their are no limits to union excesses and must be reined in for the taxpayers sake.

    Thumb up 11 Thumb down 4

  5. Juvenal says:

    @Tom Lynch

    If you are suggesting that the County is paying 150% roll-ups on payroll BEFORE vacation, medical, sick leave etc. are accounted for, then I would suggest that you need a new calculator.

    Thumb up 1 Thumb down 2

  6. Juvenal says:

    @Sonoma Coma,

    The PD did not have this “Comments” feature in 1999-2000, when retirement funds were vastly over-funded and employers were paying ridiculously low rates and, ins some cases, receiving rebates for their contributions. You therefore may be excused for not beating the drum of doom at that time.

    Of course, those kinds of gains in market value were “unsustainable.”

    Reversion to the mean.

    Thumb up 3 Thumb down 16

  7. Joe Public says:

    I am a local government employee.

    I am in the CalPers retirement system.

    Michael Allen represented the union I was in years ago and did very well for us.

    Now that that’s out of the way…

    Do not trust this guy, he has one agenda, him.

    He wants to be and will be part of pension reform, can you say fox in the henhouse.

    He does have a nice smile but it’s only for covering up his forked tongue.

    He will do a good work for those who will help to advance his career, namely union workers (not really the workers themselves but the union leadership who does their best to influence the worker on how to vote) and those here illegally who the dems are tirelessly conniving on a way to allow them to vote as well. The dems don’t care at all about the people, just their votes.

    Michael Allen is about as slimy as they come and like so many that are he’s also very smooth. He says exactly what he thinks you want to hear, and unless you’re on top of your game, you’ll believe him.

    Thumb up 31 Thumb down 12

  8. brown act jack says:

    Heck, no one wants to pay the cost of their pensions. You go along for 30 years say, start out at $15,000 end up at $125,000 and you want your retirement benefit to by 90% of 4125,000.

    But you didn’t pay into your retirement at the same rate when you were making $15,000.

    Now that is why I said 50% of the average salary earned over the years employed.

    You earned $1,000,000 for 30 years work, paid in 15% of your $1,000,000 and you have $150,000 in paid penfits.

    You would get $15,000 a year in pension payment

    Now if you feel that is too little , let us say that you get a retirement pension of 100% of your average salary over the years.
    Your average salary would be $33,000 a year in retirement benefits.

    Why should you get 90% of your last years income, when you did not pay enough money into the system to pay the benefit?

    But it would be possible to arrange another system, such as being able to collect the 90% of full salary for last year if you buy the difference is payments to the systems from your retirement payments.

    You have been paying $15,000 a year for retirement benefits in last year, but the total should be $450,000 for the 30 years. So you owe the fund4300,000 in back retiremen payment. so you have a life expectancy of 20 years , so you have to deduct $15,000 a year from your pension payment to bring your account current.Plus the $15,000 the city didn’t pay, so your retirement payment would drop to $70,000 instead of $100,000, but you might have a better chance of getting it all in the future.

    You get your $100,000 retirement but you pay into the fund the cost of the retirement figuring the payment necessary to cover the cost of the plan over the 30 years employment

    Once you have paid the cost of the retirement you would get the full retirement benefits.

    Simple computer programmng would make this easy

    Thumb up 19 Thumb down 8

  9. Union Guy says:

    Skippy makes my point. Thank you. One comment from a person and everyone gets there fur up. The ones wanting to dismantle the pension system does not care about retirement planning and contracts or integrity. Their solution, “Screw them, take their money and their houses too”. Seriously? If you just wnat to upset a few people and marginalize yourselves, bring that. Because your understanding of the situation is marginal to begin with. BROUGHT IT thinks a half baked article about Stockton with some regurgitated numbers is a winning shot.

    I am against raising taxes. I against spiking and I am against throwing the system out and screwing everyone.

    The county had 135 suggestions submitted last year to cut costs. The looked closley at 15 and did nothing. My own suggestion would have saves $3 million. Nope, business as usual. I am sure many other suggestions would have saved a ton. They have the power to say “NO” and the power to say “YES”. They choose “NO” and business as usual. The electeds are the problem and they protect the managers. Where do you go from there? There is no whistle to blow, they are doing it legally, they are just legally spending like drunk sailors, and blaming the front line workers. OK, I guess I won’t retire, I will just keep on working. Blame the reason.

    Thumb up 17 Thumb down 5

  10. Tom Lynch says:

    Here’s the deal…for five years Sonoma County has contributed 50% ($700 Million) on each $1.00 of salary toward retirement benefits +/-, incurred another 50% ($700 Million) in unfunded liability, which paid back over the next twenty years at 7.75% will pay out another 50% ($700 Million).

    In other words, we have paid in and incurred principal and interest of $1.50/$1.00 of salary once paid back over the next 20 years. This is 15-20 times what most in the private sector lucky enough to have a job get from their employer; for most the 7.65% Social Security match.

    The $1.4 Billion paid back in unfunded liability doesn’t include the massive unfunded liability for retiree medical.

    The problem is we are compensating our public servants for one years service, with a salary and benefit, the retirement benefit not paid the year of service but over the next 20-30 years by the next generation of cops, teachers, social workers ,road crews and taxpayers.

    We have to fully fund the benefits for that years service. It is not fair to anyone that we do otherwise and it is very costly. So…when Sonoma County incurrs an unfunded liability of $150 Million (as it has for each of the last five years), it needs to be paid that year.

    What does Juvenal and David S. think of this solution? If you can’t fund a benefit today, how can you pay it tomorrow?

    http://www.tomlynchforassembly.com

    Thumb up 18 Thumb down 10

  11. Skippy says:

    “Many of you want to destroy our benefits because they are unsustainable. Right back at you. BK doesnt effect them, so raise taxes to make good on your promises and have a nice day.”

    Thanks for demonstrating the colossal arrogance of the elitist 1% who are Big Govt employees.
    IOW, us stoopid taxpayers are gonna pay you whatever some long-gone politician promised you, even if we have no jobs.
    This sounds like the line from Goodfellas:
    No money? No job? **** you. Pay me.
    When the union-shill judge reaffirms your right to pick my pocket, tell him he only has to have the police break down 11 million front doors to fund your retirement.
    Good luck with that.

    Thumb up 23 Thumb down 8

  12. Sonoma Coma says:

    Thanks again Juvenal,

    Talk about cognitive dissonance!

    I understand that you’ll keep beating the drumm of how brilliant the public defined pension benefit system is. I and others will keep pointing out the negative results…

    More and more debt on the County’s books; fewer and fewer rank and file employees. Reversion to the mean?

    Time to catch some ZZZzzz.

    Thumb up 21 Thumb down 10

  13. Miss Peach says:

    @Fiscal Conservative

    “In my opinion, as well as several others, the only real option is the removal of the defined benifit pension.”

    The first step in getting rid of anything is to learn to spell it.

    Thumb up 6 Thumb down 16

  14. Juvenal says:

    @Sonoma Coma

    “I guess us posters and all five members of the Board of Supervisors don’t understand how the current pension system is sustainable.”

    1)Posters

    As has been pointed out, most posters on this site are T-Party-oriented nutjobs whose anger is fueled by anti-union pro-1% propaganda plus, possibly, a perpetual inability to pass any Civil Service examination. I leave it to you to decide whether you are one of these.

    According to Segal Company’s most recent valuation, SCERA’s Unfunded liability is overwhelming due to the financial meltdown of 2008. Tell me, Mr. Coma, did you cash out your IRA accounts when the markets took a downward turn? For that matter, did they close the New York Stock Exchange for lack of interest?

    If not, why not?

    2) “All five members of the Board of Supervisors.”

    The Board of Supervisors is in bargaining with employee groups. They do not wish to pay the increase recommended by SCERA’s actuaries. This could well be because they don’t have the money, due to the reduction in property tax revenue; or it could be on general principle–a posture for the bargaining table. That is for employee groups and the County to work out.

    There IS currently a financial problem which needs to be addressed. That problem is not SCERA’s unsustainability.

    Wake up Mr. Coma! Reversion to the mean!

    Thumb up 5 Thumb down 21

  15. David Stubblebine says:

    Brown Act Jack suggests limiting pensions “to 50% of average salary over term of employment.” This idea gets repeated at WSC from time to time and while it might sound attractive to run-of-the-mill pension bashers, it has a fatal flaw. Running a few examples shows that the more inflation there is over the course of a career, the lower the pension is as a percentage of final salary (THE measure of a pension’s actual purchasing power).

    Within the Defined Benefit model, basing the pension on some final salary calculation is the only way that works.

    Thumb up 6 Thumb down 20

  16. Union Guy says:

    I vote for Brown Acts solution. Since it is illegal and impossible, it will be shot down. Many of you want to destroy our benefits because they are unsustainable. Right back at you. BK doesnt effect them, so raise taxes to make good on your promises and have a nice day. Do I care about your situation? Not if you don’t care about mine. I will have to see what I can do with all the power you seem to think I have. Bring it.

    Thumb up 6 Thumb down 25

  17. Accountable says:

    SCERA ANNUAL REPORT – “Subsequent to the year ended December 31, 2002, the Sonoma County Board of Supervisors approved new benefit formulas on February 25, 2003. The new benefit formulas are phased in as follows: Safety members 3% at 55 (effective 7/1/03), General members 3% at 60 (effective 6/22/04) and Safety members 3% at 50 (effective 2/1/06). The new benefit formulas, which were the result of collective bargaining culminating in February 2003, include new employee contribution rates to help fund the enhanced benefits. The new employee rates and other cost offsets for General members were structured to make the new benefits approximately cost neutral to the County of Sonoma. For Safety members the new employee contribution rates and other cost offsets were structured to provide approximately 50% funding by the County of Sonoma.

    Based on actuarial analysis included in the 2002 Actuarial Report, AFTER FULL IMPLEMENTATION OF THE NEW BENEFIT FORMULAS, THE FUNDED RATIO WOULD DECREASE FROM 89% TO APPROXIMATELY 81% (caps added). To improve the funded status of the plan and satisfy the Unfunded Actuarial Accrued Liability (UAAL) as then calculated for the contractual liability resulting from the new benefit formulas, the County of Sonoma issued $210,200,000 in pension obligation bonds in May of 2003. After receipt by SCERA of the pension obligation bond proceeds on May 28, 2003, the funded ratio, including the contractual liability related to full implementation of the benefit enhancements approved in February 2003, would be approximately 100%.” http://www.scretire.com/pdf/documents/annrpt02.pdf page 3.

    The assertion that the POBs were “issued to get a better rate” is ridiculous, based on SCERA’s own financial report. Prior to this time, the funded ratio was consistently in the 90% range. Not only did it NEVER reach 100% as promised, after taxpayers ponied up $210 million, but it has dropped every year since the new benefit formulas took effect.

    The CAFR FY 12/31/99 also verifies that the County WAS making its Employer Contributions dating back to 1991.

    Thumb up 19 Thumb down 3

  18. brown act jack says:

    Very simple solution to the problem.
    People pay into the pension fund under the present payment rate.

    Pensions limite to 50% of average salary over term of employment

    Solves all of the problems with the pensions.
    Which , as you know, is the monthly payment benefits.

    This would cut outgoing expenses.

    if you want a 100% salary, simply double your payments to the fund over the term of your employment and your monthly payment doubles.

    If you want wife to have coverage, use above doubling thing to get wife’s successor payments.

    No death or illness payments under retirement as that should be separate contract paid by employee.

    have at it, folks

    Thumb up 18 Thumb down 4

  19. bear says:

    I just get a little suspicious when the majority of posters crucify public employees and retirees.

    Where do you actually live? How do you stand to profit from lower taxes and reduced services? Or suffer from modestly higher taxes to get all of this through this republican-induced economic nightmare? How do you make whatever money you may – in theory – have?

    Until you come clean, you may be just one person getting off in the basement of Mommy and Daddy’s house.

    Is it possible to have many IDs on this site? I have only one.

    Thumb up 8 Thumb down 24

  20. GAJ says:

    @Fiscal Conservative, your link absolutely nailed it…and the fact that there is a disconnect between Union puppets like Allen and the rank and file. Allen has nothing to lose but Union money for his next election, the Union members face possible gutting of their benefits if a municipality goes into bankruptcy and uses the hatchet to bring things under control.

    “The majority of opposition against AB 961 has come from the powerful union bosses,” said Assemblyman Mansoor. “Rank and file members supported AB 961 because they know the pension system is unsustainable without reform and are relying on a sustainable pension system for their retirement.

    Mansoor, former public employee and union member himself, continues to support the rank and file members of California’s public employee unions. “AB 961 would have created a sound system for their retirement by taking the negotiating power away from the powerful public employee union bosses and give it back to the taxpayers,” said Mansoor. “

    Thumb up 25 Thumb down 8

  21. Lisa Maldonado says:

    “Terry” While a great many of posters on this site proudly proclaim themselves “Tea Parters” obviously not “all” are. If you would read my post you would see it does not say “all”. It is directed at those who are Tea Partiers and Agenda 21 nutjobs. If you are not a Tea Partier then why take offense? Of course since you insist on hiding behind anonymous posts to attack Mr Allen (including these recent screeds) we have to take your word for whether you are a Tea Partier or not. M However, the fact is that most intelligent people give little credence to anonymous letters and postings. They rightfully consider that if a person believes that their speech is true and has merit, they would sign their name and stand behind it.

    Thumb up 12 Thumb down 33

  22. Fiscal Conservative says:

    Assemblyman Allen voted against Assemblyman Allen Mansoor’s bill AB 961. Why?

    This bill will again come up for reconcideration in 2012.

    Can we count on you Assemblyman Allen to vote yes and save our State?

    here are the facts about the Bill.

    http://arc.asm.ca.gov/member/68/?p=article&sid=429&id=248356

    Thumb up 22 Thumb down 9

  23. Noah Webster says:

    @Joseph

    Thanks for providing the definition of “tyranny.” Now it has been made plain that neither Michael Allen nor any other ELECTED official in our THREE BRANCH form of government is or can be a tyrant.”

    Thumb up 6 Thumb down 22

  24. Lord Russell says:

    @Lisa

    ““The Tea Partiers on this website will never be satisfied with ANYTHING” – Lisa Maldonado (Aug 9, 11:46 post). Dear Ms. Maldonado, I am neither a “Tea Partier”, nor a hater of government… .”

    Lisa, put your thinking cap on. If you are not a Tea Partier, then Ms. Maldonado was not talking about you.

    Thumb up 16 Thumb down 5

  25. Sonoma Coma says:

    Thanks Juvenal,

    I forgot that we are “saving money” by taking on enormous debt. I didn’t realize that GASB was eliminating smoothing “to deprive some of the posters in this space from founding their “unsustainability” argument…”

    I guess us posters and all five members of the Board of Supervisors don’t understand how the current pension system is sustainable.

    I’m pretty sure if the market doesn’t come through to keep the pension system funded; we still have 3,500 rank and file employees to lay off to protect the County’s “upper crust”.

    This strategy has worked very well in past.

    Thumb up 24 Thumb down 4

  26. Fiscal Conservative says:

    Did the boss approve that statement, or did he write it Arlyn?

    I don’t know how many people here are buying the story that the best man for the job, spent most of his career twisting the arms of government for unsustainable raises and pensions that are now the problem. That’s not to mention that his political carrer is bought and paid for by the unions.

    Assemblyman Allen begins his press release by ‘forgiving’ us for questioning him and his motives.

    How about he forgive the taxpayer, the taxpayers children, grandchildren and great grandchildren this largest debt of any state in the Nation? After all, he helped create it.

    Thumb up 31 Thumb down 9

  27. Arnold Toynbee says:

    @Big Jim

    “Mr. Allen was the biggest proponent of the 3% at 60 pension formula that was passed in 2002 to give Sonoma County government employees a 50% increase in their pensions retroactive to their hire date.”

    Easy, big guy… . In 2002 Michael Allen was not an elected official.

    Thumb up 7 Thumb down 22

  28. Juvenal says:

    @Sonoma Coma

    Thought I saw your lips moving there, but I guess not.

    1) Pension Obligation Bonds were issued to get a better rate: no different from choosing a longer amortization period over a shorter one when buying a home.

    2) Smoothing is considered a “best practice” from the standpoint of crafting public entity budgets. Assets and liabilities are and always have been just what they are. The primary effect of eliminating smoothing will be to deprive some of the posters in this space from founding their “unsustainability” argument on “X successive years of losses.”

    The ONLY reason the current problem with pensions is more than routine is that the 2008 recession was rooted in a real estate crash. Because the problem was real estate instead of e.g. a burst tech bubble, county government’s property tax revenue stream and therefore ability to make needed adjustments to employer contributions was drastically affected.

    Let’s not forget that over the life of SCERA, employer contributions have been as much as they are now, and much less than they are now, depending on market conditions.

    Bottom line, defined benefit retirement has been a public policy success, allowing government to compensate employees in part with future dollars, most of which have been thanks to Wall Street.

    Thumb up 9 Thumb down 27

  29. Terry says:

    “The Tea Partiers on this website will never be satisfied with ANYTHING” – Lisa Maldonado (Aug 9, 11:46 post). Dear Ms. Maldonado, I am neither a “Tea Partier”, nor a hater of government as you claim “ALL” are on this web chain. Your world view is that anyone who disagrees with you or does not believe that unions are necessary anymore are as you claim, “Tea Partiers” or haters of “ANYTHING”. Hold on a minute Missy. What you fail to realize is that many of us are hard working folks that feed our families and put away money in savings and retirement. Our opinions matter even if we are not a member of one of the organizations you represent…unions. Get off your high horse and recognize that people that disagree with your world view are not evil, just people with an opinion that should be considered in the debate.

    Thumb up 25 Thumb down 10

  30. Sonoma Citizen says:

    Mr.Allen exemplifies the “perception is reality” methods by which the Supervisors, Water Agency–the personal piggyback for Mr. Allen and other insiders–and’ what do you know, the Press Democrat itself operate. The underlying premise for their blithe myth-making is this: the voters and taxpayers are sheep. They’re easily herded; easily shorn. That premise used to be true. The rising economic tides of the mid-2000′s lifted all boats, and concealed the systemic self interest by which the County was run; not enlightened self interest, just self interest unleavened by judgment or administrative foresight. The tide’s gone out. Our leaders, it turns out, were swimming naked. Our emperors have no clothes. The County of Sonoma may be the worst governed county in California: not just one of the highest per capita pension burdens; not just $1 billion in unfunded–and potentially unfinanceable road maintenance cost–but a leadership culture steeped, reflexively, in deception and insider dealing. That our civic culture should produce, here and there, modern day Babbitts and Boss Tweeds, is in the ordinary course of democracy; what’s more interesting than Mr. Allen’s smiling effrontery is the Press Democrat’s relentless promotion of Mr Allen and his associates.

    Thumb up 23 Thumb down 10

  31. Arthur Diamond says:

    This puff piece is nothing but a pre-election muttering by an SEIU elected politico whose main and sole interest is in his constituency, public employee unions and their benefits.

    If Allen and his demoncrats cohorts in the state assembly had an interest in resolving the public pension crisis, they would have acted long ago. Allen and his acolytes would not even cooperate with Brown in introducing any bill to control public pension spending.

    This is all a charade to make it appear Allen is concerned about the massive debt and crisis facing public pensions in Sonoma County and this state.

    Thumb up 26 Thumb down 9

  32. Reality Check says:

    Yes, Mockingbird, Texas has an oil extraction tax. But virtually every other tax is lower than California’s. It’s corporate income tax is half California’s.

    So, how about we enact an oil extraction tax, just like Texas, and cut the corporate income tax by 50%, just like Texas since you like their tax policy? Deal?

    California more than makes up for its lack of an extraction tax with a high corporate income tax, not to mention other high taxes.

    Thumb up 20 Thumb down 8

  33. Paul says:

    I have NO trust in this guy. Allen has been investigated for so many times for unethical violations. He gives a bad name to politicians.

    Thumb up 27 Thumb down 7

  34. Taxpayer says:

    This guy is part of the problem.

    Thumb up 26 Thumb down 8

  35. Joseph says:

    tyr·an·ny   [tir-uh-nee] Show IPA
    noun, plural tyr·an·nies.
    1.
    arbitrary or unrestrained exercise of power; despotic abuse of authority.
    2.
    the government or rule of a tyrant or absolute ruler.
    3.
    a state ruled by a tyrant or absolute ruler.
    4.
    oppressive or unjustly severe government on the part of any ruler.
    5.
    undue severity or harshness.

    Thumb up 11 Thumb down 8

  36. Arlyn says:

    I never cease to be amazed that the most vocal people spouting off about needed pension reform in California don’t have even a basic understanding of what the problem is or how we got here. That’s why it’s so important that we have knowledgeable public officials like Michael Allen addressing the issue. He gets the complexity of our pension system and that a one-size-fits-all solution will not only fail to solve the problem but will end up costing state and local governments more money. It is precisely his experience working as a labor mediator that will be instrumental in ensuring that all the stakeholders buy into the governor’s and legislature’s proposals and that true and sustainable pension reform is enacted.

    Thumb up 17 Thumb down 43

  37. Fiscal Conservative says:

    In my opinion, as well as several others, the only real option is the removal of the defined benifit pension.

    http://youtu.be/7khKZb5HsRo

    Moonbeam and company have targeted the low hanging fruit or ‘legal fraud’ but that is about it.

    Shame on the PD for again publishing a liberal PR piece and not asking real questions.

    Thumb up 37 Thumb down 13

  38. Big Jim says:

    Mr. Allen was the biggest proponent of the 3% at 60 pension formula that was passed in 2002 to give Sonoma County government employees a 50% increase in their pensions retroactive to their hire date. No the bill is coming due and we can’t afford it! Is he the one to find a solution, or is he a wolf in sheep’s clothing trying to forestall the inevitable return to sanity?
    The pension problem is not of Banker’s making: In 1993 Sonoma County’s Pension Fund had a big funding deficit – so the County borrowed nearly $100 million by selling Pension Bonds. Most of the cash went into the Pension Fund. But then a decade later the Fund was back in the hole – big time. So the County sold more Pension Bonds – $230 million worth. In 2010 Sonoma County sold another round of Pension Bonds – this time $290 million. Income from the CalPers system’s $1.8 billion investment portfolio was flat in 2011, essentially adding $140 million to the long-range unfunded liability. The 20-year returns to the system are now at 6.8 percent a year, significantly less than the assumed return rate of 7.75 percent.
    This is a disaster for workers expecting a retirement and for taxpayers who are expected to pay for CalPers losses and the funding shortfalls. It can’t be sustained. A balanced approach is to switch to a defined contribution model, and the workers get whatever benefits the system produces, just like the private sector. Otherwise we will see services dwindle to nothing and ever increasing tax burdens!

    Thumb up 33 Thumb down 11

  39. GAJ says:

    Mr. Allen takes no responsibility for his efforts prior to being elected in supporting the massive Pension increases starting in 1999 that led to this mess in the first place!

    It was he and his ilk who bought the CalPers lies hook line and sinker, (ie. it would not lead to increased costs to the taxpayer), that lead to new 3% vesting with some elite workers able to retire at age 50 with 90% of their pay.

    He is directly responsible for the problem locally yet makes not mention of that.

    His support has led to a situation where his SEIU clients are suffering the most due to his short sighted thinking that the packages given to the elite would “trickle down” to his SEIU members.

    That has not happened and the first employees to be sacrificed as Public Safety eats up an ever growing percentage of municipal budgets are SEIU members.

    How SEIU can continue to support him, now in office, when he has led to a decimation of their membership is beyond me.

    It’s like asking an arsonist to put out fires for him to continue to be involved in a problem he had a hand in creating.

    Thumb up 42 Thumb down 14

  40. MOCKINGBIRD says:

    Lisa-that’s one of thing I resent is paying more taxes than the oil industry. All other oil producing states in this country INCLUDING TEXAS charges an oil extraction tax. California DOESN’T. I want to know why? How many billions is California losing?

    I say Kudos to Michael Allen for working so hard to be FAIR to all. Afterall, it isn’t just union workers who voted for him. His resume of working for WORKING FAMILIES of Sonoma County includes more that just union members. Even the safety and trades unions like him and they tend to be conservative.

    Michael has been in office a meager TWO YEARS and he’s worked tirelessly for the all working families in CALIFORNIA. That’s his focus. The teapartiers couldn’t find their way out of a dark room even with a door open with sunshine pouring through it.

    Thumb up 18 Thumb down 39

  41. Lisa Maldonado says:

    Thanks to Assemblyman Allen for doing what the people of Sonoma elected him to do- find solutions and solve problems. The Tea Partiers on this website will never be satisfied with ANYTHING since they hate government(and just about everything else) but most voters are tired of blame, finger-pointing and complaining and want to see results. Assemblymember Allen knows that there are a myriad of ways to address cost and pensions issues that take into account fairness to workers and taxpayers. (After all workers ARE taxpayers and we pay more taxes than some of the big oil companies in CA.) Workers have made concessions on all levels of government and we hope that managers, directors and those at the top will share in the sacrifices that so many union members have made. After all, it is not the state park ranger or dmv clerk who is getting the six figure pension, it is the NON-UNION Manager and Administrator. Thanks to Michael Allen for not being afraid to roll up his sleeves and start working on solutions like a pension cap and an end to pension spiking when other leaders (and the tea party know-nothings on this site) are content to just blow hot air.

    Thumb up 24 Thumb down 48

  42. Sheryl says:

    PD promo…nothing more.

    Thumb up 32 Thumb down 16

  43. Sonoma Coma says:

    @Juvenal

    Such a impressive “long term” return and yet the County has accumulated over half a billion dollars in PoB debt…hmmm

    Also, isn’t GASB getting rid of “smoothing”? Maybe it’s a not so best practice after all?

    Thumb up 29 Thumb down 8

  44. Political Scientist says:

    Posters here seem to forget that this man has been in office for less than two years and seems to already be doing more for the issue than the rest of our “representatives” have for the last decade.

    Thumb up 19 Thumb down 35

  45. Juvenal says:

    @Robert Pines and Others

    The mean long term performance of both SCERA locally and CalPERS state-wide is above 9%. In 2008, there was a downturn in financial markets at the extreme of the 30 year data set: minus 37%. The only data point that far removed from the mean was a PLUS 37% (or so) in 1992.

    NEITHER the 1992 increase nor the 2008 downturn was or is “sustainable.” The principle is “return to the mean.”

    Furthermore, in conformance with best practices, retirement systems smooth both gains and losses over some number of years: Thus SCERA and CalPERS are still subtracting portions of the 2008 loss, while gains in the years since are still in the pipeline.

    If weather data were interpreted in the same way as you all insist on interpreting financial data, the world would already have ended from flood, drought, global warming AND global cooling.

    Assemblyman Allen’s proposals are sound ones which should have been enacted years ago. That they were not is not his fault.

    Thumb up 17 Thumb down 37

  46. Terry says:

    Is this a political ad for Michael Allen? Sounds like it. If you follow Allen’s posts on Facebook, you’ll see someone who paints all of private business and “Corporate America” as evil corrupt machines. Believe me, I have my problems with corruption in Corporate America, but let’s keep balance in the discussion and attack specific corrupt actions of the few while not lumping all of those that provide us with work and a living, and keep this economy rolling, into one large evil corrupt monolith. I work for a “corporation” (family owned incorporated business). Am I evil? Are the owners evil? Mr. Allen consistently seems to come across as saying so. I pay into my own 401k and am treated fairly (not union, surprise!). This article says very little to nothing on what the balance needs to be in pension reform, but does a fine job at promoting the Assemblymember’s own pat on the back…Shame on you Mr. Allen.

    Thumb up 39 Thumb down 18

  47. Marc says:

    He help create our pension problem and now all he offers us is hot air and no real solutions to fixing it.

    Thumb up 43 Thumb down 15

  48. Follower says:

    “my goal has been to play a leadership role in discussions and decisions about spending our precious tax dollars, with an eye toward balancing the needs and interests of the people who depend on public programs and services, the workers who provide those programs and services”

    ..and therein lies the problem.

    God forbid you should “play a leadership roll” in “spending our precious tax dollars with an eye toward” helping these people become self sufficient instead of making Government dependency more comfortable, more easily accessible and socially acceptable!

    But I guess then you would be labeled a Conservative and that’s no way to remain in office in Kahlifonia!

    Thumb up 39 Thumb down 13

  49. Don says:

    Does that smile not say that I am about to take everything you have and smile the whole time I am doing it! I would not buy a used car from this guy!
    This is his idea of saving us!

    Thumb up 35 Thumb down 13

  50. Jim says:

    This is hilarious. Pension “reform”? Are you kidding me. When the state has $500 BILLION in unfunded pension liability anything beyond complete elimination of all pensions going forward is merely slowing the drive towards bankruptcy, not stopping it. As for current employees, unless there is a massive increase in their contribution rate, none of the lies and re-election campaign rhetoric matters.

    And we all know that the liars in Sacramento see that fiscal conservatism is the current way the wind is blowing so weasels like Allen are spouting off how they are for “reform”, knowing full well nothing will change. They are ALL owned by the unions. The union dues siphoned from the taxpayer through unnecessary government employee paychecks is used to line the pockets and coffers of the slimy weasels in the Legislature.

    Am I the only one who sees this?

    Thumb up 38 Thumb down 12

  51. Robert Pines says:

    One word applies here, unsustainable. Allen and his public union elected fellow politicians have not offered a plan that is sustainable. They cannot and will not cut public pensions in California that will in a truly meaningful way stop the bleeding of ever growing public debt caused by bloated pensions.

    Even in his article, he bloviates about how with his background in mediation, he can right the sinking public pension system. If only those pesky Republicans can see it the democrat way all will be resolved.

    Requiring employees to pay a larger part of their pensions will not solve the pension crisis as Allen proposes. It isn’t even a stop gap measure.

    A totally new pension scheme, if there is to be a public pension, must be developed with a 401 type plan to save something for California public employees. Anything else is just politicians playing around the central issue of lack of money to pay for the plans. The end result will be bankruptcy for the state if Allen’s plan is adopted.

    Thumb up 37 Thumb down 13

  52. bill says:

    giving too much money to our public workers is bad policy..

    Thumb up 34 Thumb down 12

Leave a Reply