6-21-09

 
6-21-09
Sacramento Bee
Ginger Rutland: Pension watchdog barked early and often...Ginger Rutland
http://www.sacbee.com/opinion/v-print/story/1962177.html
As far as the leaders of public employee unions in California are concerned, Marcia Fritz is public enemy No. 1. A certified public accountant who specializes in government work, Fritz is an expert on pensions.
A diminutive woman with pale blond hair and perfectly manicured nails, she is the numbers cruncher behind the California Foundation for Fiscal Responsibility, an advocacy group that seeks to reform California's runaway public pension system.
Last month, the group launched its $100,000 Pension Club, a Web site that posts the names, former employers and annual pension amounts received by retired state and local government workers in California who collect more than $100,000 in retirement pay.
"Anyone who looks at our $100,000 Pension Club is in shock and awe," Fritz says. "People have no idea the level of benefits we've promised people; even elected people were not aware."
A typical government worker in California can retire at age 55 or 60 and collect 70 percent or 80 percent of their salaries or more. Most public safety workers, police officers and firefighters, can retire in their early 50s with 90 percent of pay and, in some local jurisdictions, with pensions worth 100 percent of their final salaries.
The $100,000 Pension Club that Fritz has compiled already includes more than 5,000 former government workers and continues to grow daily (www.californiapensionreform.com). Locally, the former president of California State University, Sacramento, Donald Gerth, made the top 10 on Fritz's list, weighing in at No. 3, with $278,555 a year in retirement pay.
Some governments, Sacramento County among them, have so far refused to disclose the names of their retirees. Fritz and her group are fighting efforts around the state to keep that information secret.
But even incomplete, the list proves what Fritz already knows, that the public pension system in California is too rich. If it is not reined in, she believes, it will bankrupt the state and local governments.
She has reason to know. In 1999, just as the Legislature was contemplating approving sweeping retirement benefit increases for state employees, her accounting firm was hired to help assess the staffing needs of the actuarial services division at the California Public Employees' Retirement System. The division is supposed to determine what various retirement formulas would cost state and local governments. Those determinations are calculated based on workers' expected ages at retirement, projected pay rates, length of service, life expectancy for them and their spouses and benefit levels.
In 1999, when Fritz joined the team of accountants reviewing the division, she says CalPERS' actuarial work force was in disarray, short-staffed, ill-trained, hampered by sizable backlogs, sloppy standards and procedures, and too few safeguards.
In the midst of that turmoil, key members of the division were pulled away to analyze Senate Bill 400, the bill that authorized the big pension benefit increases. There was no way, Fritz says, "they could have possibly given anything reliable to the Legislature."
Still, the analysis the division provided was used to justify the pension benefit increases. And the magnitude of the miscalculations is staggering.
The actuaries predicted back then that by 2009-10, taxpayer contributions to the public employee retirement fund would amount to just $258 million, only 1.85 percent more than the cost of the retaining the older, lower benefits. Instead, the state's retirement contributions for the coming fiscal year have been set at $3.3 billion, 12 times what the CalPERS' actuarial staff predicted.
Some of that difference results from misjudging the cost of the benefit increase. Much of it stems from the recent market crash, which left investment returns far below the level needed to maintain current benefits without increasing the public's contribution to the fund.
Fritz is appalled but not surprised. She doesn't blame public employee unions for pension excesses. She thinks non-union managers whose salaries and benefits are tied to the rank-and-file's pay and benefit rates are even more to blame. "Managers didn't stand in the way of unions because they were able to personally benefit from the union demands," she said.
A wife and mother of a grown son, Fritz talks up her concerns about pension excess before taxpayers groups, business leaders, government officials and reporters, wherever and whenever she can get her message out. She is aware that her activities are risky. She knows she's probably lost clients, especially local government clients whose governing bodies are heavily influenced by public employee unions.
But she doesn't seem intimidated. She comes from pioneer stock. Her family owned the property Capitol Park is built on. They farmed in Citrus Heights in the 1800s. A California native, she cares about the state and worries about what pension greed will do to it. "My roots are in California," she says. "It bothers me this is going to break our state."
Stockton Record
Stockton, Valley touted as a disaster waiting to happen...Michael Fitzgerald
http://www.recordnet.com/apps/pbcs.dll/article?AID=/20090621/A_NEWS0803/906210306/-1/A_NEWS
An Economic Disaster Area.
That's what Stockton is, two Valley congressmen said at a hearing Friday in Washington.
That's what the San Joaquin Valley is - a disaster area, just as devastated as New Orleans was by Hurricane Katrina or as other regions are by tornadoes.
And the federal government should rescue the region, pleaded Congressmen Dennis Cardoza, D-Atwater, and Jim Costa, D-Fresno. With federal dollars, as soon as possible.
Cardoza, whose district includes parts of Stockton and San Joaquin county, and Costa really deserve credit for their performance before the Financial Services Committee. Both congressmen made a powerful case.
They actually seemed to convey to committee members that the Valley is not Malibu, Disneyland or San Francisco - not the California others think of.
That's an important step. Though bigger in population than half the states in America, the Valley has no identity, no brand. Valley residents are invisible actors on a national stage. Though they grow half the nation's fruits and vegetables, their needs go largely unnoticed.
The Valley receives half the federal dollars other regions do.
Yet a Detroit-like economic spiral is sucking the entire Valley down. True, no American city has a monopoly on suffering. But the Valley has a colossal market share.
Home values plummeted 42 percent in Merced and Stockton over the last year, and nearly 70 percent - staggering, 70 percent - over the last 3 years, Cardoza testified.
The national average: 8.2 percent.
Homes in this region are so far underwater they don't qualify for federal rescue programs.
Stockton is in the top 10 for unemployment nationwide, and those who do work earn 33 percent less than the average American worker, Cardoza told increasingly stunned members of the House Financial Services Committee.
As property values plunge, property tax revenues decline, governments struggle to function. Banks close, or freeze lending. Business cannot access capital. Commerce withers. Foreclosures rise. Whole families become homeless. People lose hope.
Even Republicans skeptical of federal bailouts appeared aghast at the Valley's dire straits. They were "astounded and shocked," in the words of one congressman.
"It's nothing but a nightmare," Alabama Rep. Spencer Bachus said.
Bachus seemed to have a light bulb moment about the Valley's combination of crisis and perpetual neglect.
He mentioned New Orleans after Katrina. "Unfortunately for you, the television cameras are not trained there every day," he sympathized. "If they were, I think people would be demanding a solution."
The solution proposed by Cardoza and Costa is legislation that would authorize the President to declare Economic Disaster Areas and rescue them with federal funds.
For Cardoza, it's another way up the mountain he took a run at in 2005 when he had a congressional study compare the San Joaquin Valley to Appalachia. That study gained the Valley no more federal dollars. But it shifted the paradigm.
"The reality is for a number of years the Congress people who represented our area didn't want to talk about how bad things were, because then there would be the expectation to fix them," Cardoza said by phone after the hearing.
"I just take a different approach. Unless we document it and talk about it we'll never get it fixed. Now we have to continue the work that's necessary."
Hard as times are, I doubt Stocktonians think of their city as a disaster area on a par with New Orleans. Yet a profound transformation of the city is under way.
Only a few years ago the Council disapproved of plans to build up to six Wal-Mart superstores. Up-and coming Stockton, the decided, was no "Wal-Mart town."
Now, high-end retailers are dying. Dollar stores are booming. Discount grocers are opening right and left. Restaurants are offering bargain menus. Stockton has become a Wal-Mart town, whether it builds Wal-Marts or not.
Cardoza and Costa appear to have won a powerful ally in committee Chairman Barney Frank, who pledged to help. Still, Cardoza couldn't predict the proposal's prospects.
"I think they're good because the case is so compelling," he said. "But that can be a matter of degree. I don't want to falsely raise expectations. But I do believe today's hearing will be a significant first step, and a day we can mark down on a calendar and say, today the Central Valley began its recovery."
Los Angeles Times
Keep the politics out of UC
The university has hurt itself with high salaries for executives and resistance to reform. But proposals to give the Legislature direct control are unnecessary and potentially damaging.
http://www.latimes.com/news/opinion/la-ed-uc21-2009jun21,0,2912431,print.story
The University of California has itself to blame for the current wrath of legislators. It has approved dismayingly lavish packages for executives, conducted too much business in secret and at least initially resisted calls for reform. Its leaders' misdeeds have been frustrating and high-profile -- but they amount to a small part of what is overall a well-run public university system that is managing under trying circumstances to protect its functions of top-tier education and renowned research. Two proposed amendments to the state Constitution that would strip UC of autonomy are unnecessary and potentially damaging. They should be kept off the ballot.
State Sen. Leland Yee (D-San Francisco) has been leading the campaign to place UC under the Legislature's direct authority, much as the California State University operates now. As the author of bills seeking to restrain what he considers to be UC's excesses, including chancellors' salaries of several hundred thousand dollars a year, Yee understandably feels thwarted when his legislation can only urge the Board of Regents to change its policies rather than order it to do so.
The university raised public eyebrows when it paid a manager $125,000 in relocation costs to move the 70 miles from Santa Cruz to Oakland and granted full retirement pay to a campus police chief who was immediately rehired at a higher salary. It didn't help when UC responded to Yee's latest effort with a haughty statement that called his goal "absurd" and disparaged the Legislature for the current fiscal crisis and conditions at public schools. As a respected academic institution funded in part by the public, UC should abandon its too-cool-for-accountability attitude, acknowledge its errors and vow to be worthy of the taxpayers' trust.
That said, many of the high salaries may have been necessary to attract the right personnel. At most, they add up to a barely noticeable fraction of the university's budget. Under-funding, not executive perks, has been most responsible for recent tuition hikes. As an elite research institution that draws brainpower and business to California, UC's mission is different from that of Cal State; it should be protected from political incursions that would interfere with hiring decisions, harm its reputation and impose inefficient bureaucratic controls.
Yee should credit the regents for changing several policies to provide more transparency and require more review of hiring decisions, even if they have done so more slowly and reluctantly than he would have liked. UC also has frozen executive salaries in response to recent criticism. The Legislature already has mechanisms -- public pressure, funding -- to curb UC's worst inclinations. It can turn to those when it needs to, rather than trying to grab the university's reins.