Tag Archives: California

Shocker, not: Despite strong returns, California pension funds’ fiscal hole got deeper

kick the can down the road

Sacramento Bee: With a new ballot proposal reigniting debate over government retirement benefits, the latest federal figures show California’s public pension debt in 2013 stood at $4,425 for every man, woman and child in the state, despite strong investment returns by public retirement funds.

The per-capita obligation ranked 11th highest among U.S. states, according to a Sacramento Bee analysis of latest data by the U.S. Census Bureau. California’s total pension debt, $610.3 billion, is the largest in the nation.

Such statistics will likely pour into a complex debate over state and local public retirement benefits in the new few months. The ballot proposal aimed for the November 2016 election would, among other things, change California’s constitution to require that voters approve public pension enhancements. Unions oppose the measure as an attack on working people disguised as voter empowerment.

California, the nation’s most populous state, also has more government workers than any other. Nearly 1 in 10 Californians belongs to one of 85 government pension systems, according to a new report by Kevin Cook of the Public Policy Institute of California. About two in three pension members belong to either the California Public Employees’ Retirement System or the California State Teachers’ Retirement System.

Those two public pension funds, the largest and second-largest in the nation, respectively, are still recovering from the losses during the recession. Despite significant investment gains in 2013, the disparity between the plans’ obligations and the value of assets stood at $62 billion for CalPERS and $74 billion for CalSTRS.

CalPERS has since raised rates on employers in the fund, and lawmakers have approved higher contributions to CalSTRS. A 2013 law also rolled back benefits for new public pension system members.

Cook says the gap between unfunded liabilities and assets suggests that the systems “have been underfunded over time.” Retirees are living longer, further pressuring the funds, he said.

math is hard

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Most new California licenses go to drivers in country illegally

california-crazy

Fox News: More than half of all new California driver’s licenses this year have gone to people who are in the country illegally, the state said Friday

The California Department of Motor Vehicles reported it has issued roughly 397,000 licenses to people who live in the country illegally. A total of 759,000 licenses have been issued in the first six months of the year. The DMV only issued 435,000 licenses in the first six months of 2014.

The new law initially generated huge interest causing long lines at motor vehicle offices in January and February. The DMV expects to see about one million more applicants over the next three years who are covered under new law. “We hope that all of those people will be able to pass the testing and have the necessary documents to obtain” a license, said DMV spokeswoman Jessica Gonzalez.

Supporters of the law say giving licenses to people regardless of their immigration status makes the road safer for everyone. New drivers say having a license means they can travel more freely for work or pleasure.

“It’s great that people are taking advantage of this new law,” said Jackelin Aguilar, community organizer for Placer People of Faith Together, an Auburn, California-based group that supports the new licenses. “It’s definitely a step forward for the families, and having identification is huge,” Aguilar said.

Opponents say people who get into the country illegally shouldn’t be rewarded.

Roy Beck, president of NumbersUSA, which advocates for legal and limited immigration, criticized California for making life easier for people in the country illegally, at the expense of citizens and legal residents. “There are now 400,000 more signals to people all over the world that working illegally in California is encouraged by the government itself,” he said.

About 687,000 people have applied for the licenses issued to illegal immigrants. Applicants must pass driving tests and show proof of residency and identity. The new license is marked differently than those issued to other drivers in the state and is not considered a valid form of federal identification, for example, to board an airplane.

More than 1.1 million people who qualify for the new licenses took the written driver’s test between Jan. 2 and June 30, and 436,000 have also taken a behind-the-wheel driving test.

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Measure loosens discipline disclosure requirements for California state workers

SEIU's best buddy...

SEIU’s best buddy…

Sacramento Bee: Some state workers fired from their jobs could apply for another state position and not disclose their termination, under the terms of a bill that is now in the California state Senate.

Several public employee unions, including sponsor SEIU Local 1000, support Assembly Bill 466. It allows fired state employees who have agreed to never again seek employment with an agency (as opposed to never seeking any state employment) to apply with other departments – and not disclose their prior discipline settlement.

The unions say the measure clarifies a law enacted last year. It changed state employment forms to require job applicants to disclose whether they have ever reached a disciplinary agreement that bans them from seeking or accepting subsequent employment with the state.

Some disciplinary agreements narrowly prohibit reapplying with the disciplining department, however, so there’s confusion over what must be disclosed, the unions say. That means disciplined employees may shy away from reaching limited settlements because of the boundless mark on their work history. And that, the unions say, will result in higher numbers of cases that don’t settle and go on to more-costly full hearings before the State Personnel Board.

There is no filed opposition to the measure, which cleared the Assembly in May. The legislative deadline to send bills to Gov. Jerry Brown is Sept. 11.

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Shocker, not: No high-deductible CalPERS medical plan in California budget

SEIU's best buddy...

SEIU’s best buddy…

Sacramento Bee: A proposal to add a low-cost, high-deductible plan to the state’s menu of medical insurance options was left out of the budget that Gov. Jerry Brown signed on Wednesday, although it could resurface later.

“Staff advise that those provisions weren’t included in the final agreement” that Brown struck with the Legislature, Department of Finance spokesman H.D. Palmer said in an email.

The governor wanted lawmakers to require that CalPERS, which negotiates and administers medical coverage for state employees and retirees, add at least one health plan to the state’s menu that would give subscribers lower monthly premiums paired with a tax-advantaged health-savings account. Since the state pays a percentage of premiums, a high-deductible pay would save money for the state and, by extension, taxpayers.

But high-deductible plans exchange those lower premiums for higher co-pays for visits to doctors and significantly larger deductibles for treatments, hospitalization and drugs. Employees bear those higher out-of-pocket costs.

Unions blasted Brown’s proposal, while some state experts questioned whether such a plan – common in the private sector – would save money. And the lowest-premium insurance that CalPERS offers is also its least popular, raising the possibility that state employees would stick with their high-premium plans even if offered a high-deductible alternative.

Although the proposal wasn’t in the budget, Brown could still resurrect it. The governor has said he wants to negotiate lower-tier benefits with labor unions, and he’s in talks with four groups right now. If any reach agreement for a cheaper plan before lawmakers adjourn in September, a bill could be rushed through for Brown’s signature. And with three more state budgets to craft before he is termed out, the governor could float the idea again in subsequent proposals.

While your insurance costs go up thanks to Obamacare (and some of us can’t afford insurance yet pay for others’ plans on our federal taxes), government employees reap the benefit of their unions donating to the democrat party. Enjoy!

DCG

Pension payments are starving basic city services

lauren bacall

Sacramento Bee: The Governmental Accounting Standards Board is implementing new rules that require governments, for the first time, to report unfunded pension liabilities on their 2015 balance sheets. This sticker shock should create new urgency for meaningful pension reform.

A recent study put the unfunded pension liability for all state and local governments at $4.7 trillion. For too long, pension fund officials and politicians have increased payouts and low-balled contributions. As a result, they now have insufficient funds to pay the promised benefits. Accounting gimmicks have hidden the true cost from the public, who are now on the hook to make up the difference between pension promises and assets.

Illinois and New York have unfunded pension debts north of $300 billion each, while New Jersey, Ohio and Texas exceed $200 billion apiece. But nowhere is the problem worse than in California, which accounts for $550 billion to $750 billion of the total, depending on the calculation.

The Golden State reveals the damage from long-term financial mismanagement of pension systems. For example, Ventura County’s pension costs have gone from $45 million in 2004 to $162 million in 2013. Overall from 2008 through 2012, California local governments’ pension spending increased 17 percent while tax revenue grew only 4 percent. As a result, a larger share of budgets goes to pensions, crowding out spending on core services such as police.

state pensions

In San Jose, the police department budget increased nearly 50 percent from 2002 through 2012, yet staffing fell 20 percent. More money has been consumed by police pensions, leaving less money to hire and retain officers.

In Oakland, police officers were given the option in 2010 to contribute 9 percent of their salary into their pensions and save 80 police jobs, or keep paying nothing into their pensions and see 80 jobs eliminated. The police union voted to continue paying nothing. Now the department refuses to respond to 44 different crimes because of the staffing cutbacks. Any pension system that forces this trade-off is immoral by threatening life and property.

Skyrocketing pension costs also crowd out other quality-of-life services. Public libraries, parks and recreation centers are shortening their hours or closing. Potholes go unfilled, sidewalks unrepaired and trees untrimmed. A new pension rate hike for California’s local governments will cost the city of Sacramento $12 million more a year – the equivalent of cutting 34 police officers, 30 firefighters and 38 other employees.

California’s vested rights doctrine locks local governments into pension benefits for life on the day they hire an employee. They cannot modify pensions, forcing them to cut core services or declare bankruptcy, as happened in Vallejo, Stockton and San Bernardino.

Fortunately, it’s not too late to stop this death of communities by a thousand cuts. Former San Jose Mayor Chuck Reed is leading an effort to craft a statewide pension-reform ballot measure in 2016. One needed change is to give state and local governments the option of adjusting future pension benefits for all employees, including a switch to 401(k)-type plans, which are more affordable and always fully funded.

Swelling pension costs are like tapeworms, starving the public of municipal services. The new accounting rule will provide needed transparency, but action must follow.

hands off my pensions

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The grass IS greener in Hollywood: Aerial photos expose how stars are wasting water to keep their gardens lush despite state’s worst drought in history

yard1

Daily Mail: California is currently in the fourth year of its worst drought in history, but the rich and famous residents of Los Angeles are still keeping up with the Kardashians when it comes to their over-the-top landscaping.

Residents across California have been demolishing pools, cutting back on showers and letting their lawns turn brown after experts estimated that there will be less than a year’s worth of drinking water left in the state’s reservoirs by the end of 2015.

But for the residents of Los Angeles’ wealthy enclaves, a $100 fine for wasting water is chump change and a fee they are apparently glad to pay in order to maintain their almost fluorescent green lawns.

Photographer John Chapple recently went out in a helicopter to photograph these private oasis and found the mega-mansions owned by Kanye West and Kim Kardashian, Jennifer Lopez and heiress Petra Eccelstone to be among the worst.

‘The Kardashian flowers and hedges are right in our face,’ a neighbor of West and Kardashian in Hidden Hills told the New York Post. ‘It’s disgusting. You walk by and you can smell the freshness.’  The reality star previously claimed that she was washing her hair only every five days in response to the drought, a move she called ‘a little excessive, maybe.’

Sister Khloe Kardashian may be alienating some of her new neighbors with the ever-green landscaping at the Calabasas mansion she purchased from pop-star Justin Bieber last year.

Signs of the crippling drought were not at all sight at the homes of singers Jennifer Lopez and Jessica Simpson either.

yard2

A neighbor of Lopez says the American Idol judge has been approached before to tame down her lawns but didn’t seem to care. ‘She has been pretty dismissive. She has said, “Oh, so I’ll just pay some fines, what are they going to do?”‘ the source told the Post.

And of course the lawns at the notorious Playboy Mansion remain well manicured, where magazine mogul Hugh Hefner keeps residence with his 60 years younger wife.

While this devotion to appearances may not be entirely unexpected from style-obsessed stars like the Kardashians, it is shocking to see Barbra Streisand’s yard just as green when she has been a proponent for energy conservation. A spokesman for Streisand issued a statement to the Post, claiming she had cut down her water usage by over 50 per cent in the past several months but it certainly doesn’t show by her full pool and manicured lawn.

yard3

Meanwhile, British Formula One heiress Petra Ecclestone’s estate is as green as ever though she reportedly doesn’t spend much time in Los Angeles. Ecclestone bought the estate in 2011 for $85million from Aaron Spelling’s widow Candy.

But the grass wasn’t always greener on the celebrity’s side of the fence. Jennifer Aniston pulled out the water-sucking vineyard on her Bel-Air estate and planted drought-resistant succulent plants across the property instead. And while singer Cher’s relatively-small yard of grass was very well watered, she has also opted for an orchard of water-saving palm trees in her front yard.

yard4

Actress Julia Roberts, perhaps inspired by her role as environmental advocate Erin Brokovich, has started to let patches of her lawn turn brown and has also installed solar panels on her roof.

And other celebrities have taken alternative measures to contribute to the water-conservation effort. Former X Factor judge Sharon Osbourne, 62, said she and her husband Ozzy, of Black Sabbath, reserve flushing the toilet as much as possible. ‘When I pee, I don’t flush,’ Osbourne said. That sentiment was echoed by Cameron Diaz. The 42-year-old said: ‘Only when I do number two, I flush. If it’s yellow leave it mellow; if it’s brown flush it down.’

Others have written checks to help the thirsty state. William Shatner launched a campaign to raise $30billion for a pipeline from rainy Seattle to California (perhaps ill-advised since Washington State is also going through a drought) while Lady Gaga donated $25,000 to a water supply study.

In response to the crippling drought, Gov Jerry Brown has enacted even tighter rules on water consumption calling for an up to 36 per cent cut.

Las Virgenes Municpal Water District which, supplies many of these opulent homes with their water supplies, says they are trying to get A-listers ‘on the bus’ but that a maximum fine of $100 dollars doesn’t exactly inspire huge motivation to millionaires.

Gov Brown promised to get new legislation passed that could up the penalty to a $10,000 fine, though no such bill has been introduced as of yet.

rules

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Shocker, not: Audit finds California departments break law, game personnel system for money

state_worker_shuffle

Sacramento Bee: A new state audit concludes that California state departments illegally pad their budgets with millions of tax dollars earmarked for employee salaries by manipulating their payroll to make it appear they have more employees than they do.

The report released Friday on the Department of Finance’s website did not include an estimate of how much money departments hoard by breaking the law, but it confirms a 2014 Sacramento Bee investigation that concluded tens of millions of tax dollars earmarked to pay workers is hoarded and funneled to other purposes.

By law, departments are supposed to forfeit money for a position that goes unfilled for six months, returning it to its source fund for reallocation. But as The Bee’s report and the new state audit found, departments deceptively move employees between jobs ahead of the six-month deadline. They accomplish the phony transfers by altering the identifying job numbers to make it appear that a position was filled with a transferred employee, thus avoiding a cut to their budgets.

The unspent salary can then be used for other operating costs, such as paying off leave balances, covering office rent, purchasing new equipment or funding employee raises. The Bee found instances of employees “transferring” between positions in as little as two days. In one instance, a Department of Food and Agriculture worker moved 14 times through nine positions in one fiscal year. Her title and workplace never changed, but the serial numbers the state used to identify her position changed repeatedly.

The audit was based on a sample of 798 “transactions” in which multiple transfers occurred in 10 departments. It found “widespread noncompliance” with the law: 58 percent of the transactions “lacked adequate justification or documentation to determine compliance or were found to be noncompliant.” It did not name individual departments.

It also described a “general lack of commitment” by managers and other top department officials to follow the vacancy rules. It said they plotted about how to avoid them.  “We observed a culture at some departments where circumvention of the code was commonplace and even encouraged by management,” the audit read.

Among the other findings:

  • At one department, the same employee was transferred into multiple positions. The department could offer no justification for the transfers and “noted that these types of transfers were typically initiated to preserve the positions.”
  •  Most transfers of employees to vacant positions lacked adequate documentations. At one department, 104 of 118 transfers lacked supporting documentations.
  • Several departments changed employees’ position numbers, even if there were no changes in an employee’s job description or funding source.
  • In one department, units routinely swapped vacant positions closing in on the six-month threshold with positions that had been vacant for a shorter amount of time. There are no state policies regulating the movement of vacant positions within a department.
  • The state rule is based on the honor system. All 10 departments said they complied with the rule. Auditors, though, found that nine were not in full compliance.

The audit noted that departments face no penalties for violating the law. “In the absence of specific accountability measures, consequences or penalties, departments appear willing to circumvent the code to preserve positions,” the audit read.

Some departments justified the vacancy shuffling by telling auditors it sometimes took longer than six months to fill a position. Departments have the ability to restore a position that has been eliminated, but department managers viewed that process as onerous and with no guarantees that they would get the position back, the audit said. “Instead, departments have chosen noncompliance out of convenience and to reduce the risk of permanently losing the positions,” the audit said.

The report notably lacks any estimate of how much money the illegal vacancy maneuvers diverted from other state programs and uses. The Bee 2014 investigation estimated, conservatively, that the average total pay shielded by illegal transfers in 2012 and 2013 was at least $80 million.

drain

The audit offered several recommendations. Officials could abolish the 2012 rule and create a new one that includes a process for monitoring departments’ compliance, it said. Or officials could increase oversight of departments’ compliance with the existing rule.

Lynda Gledhill, spokeswoman for the California Government Operations Agency, said the administration will present its response next month. “The state must focus on recruiting and retaining the best available workforce and the May Revision will include specific proposals to respond to the issues raised in the audit,” she said in a statement.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, said the practice lets the government hide money. “The state has been caught red-handed engaging in what appears to be intentional personnel mismanagement,” he said. “It’s contrary to the notion of transparency in government. This practice has got the stop and those responsible for it held accountable and reprimanded.”

images

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