And then there’s the Public Records Act, California’s landmark law giving the public, mostly via news media, access to official documents, with some exceptions. Unfortunately, the list of PRA exceptions seems to be growing as legislators, who are not inclined toward openness in the first place, protect their fellow officials and/or do the bidding of powerful interests. The current session has had 79 bills involving the PRA. While most of the proposals amount to innocuous boilerplate, the Legislature is moving those that create more exceptions and blocking those that would expand access.
Despite a systemwide drop off in ridership, almost all BART employees will receive a $500 ridership bonus in their paychecks next month as part of their labor contract, the transit agency said this week. San Francisco Chronicle columnists Matier & Ross first reported the bonus, which will go to 3,600 employees BART employees, except for around 12 or so managers who report to BART General Manager Grace Crunican.
The state Supreme Court will review San Diego’s five-year-old pension cutbacks that, if overturned, would require the city to spend millions creating retroactive pensions for more than 3,000 workers hired since 2012. The court voted unanimously on Wednesday to review an April ruling by the Fourth District Court of Appeal that had vindicated the city and its pension cuts.
California’s second-largest public pension fund rode a booming stock market to post its best year of investment returns since 2014.
The California State Teachers’ Retirement System gained an investment return of 13.4 percent for the budget year that ended June 30.
The earnings eclipsed the 1.4 percent net return that CalSTRS reported a year ago, and the 4.8 percent gain the pension fund notched in the fiscal year that ended on June 30, 2015.
Workers who retire from the Los Angeles Department of Water and Power enjoy a higher monthly pension, on average, than retired public employees from the city and county, according to an audit released this week by City Controller Ron Galperin. LADWP retirees received an average monthly pension payment of $5,212 in the fiscal year ending July 1, 2015, the audit said. That figure is higher than the $4,023 average monthly payment for other city retirees and the $3,881 pension amount per month for retired county workers, amounts that are used as comparisons in the audit performed by contractor, Aon Hewitt Investment Consulting.
The California Public Employees’ Retirement System rode a strong year in the stock market and private equity investments to earn a return rate of 11.2 percent for the fiscal year that ended June 30, the pension fund announced Friday morning. That’s about double what CalPERS had expected to earn this year. It’s also a marked improvement over the previous year, when CalPERS’ investment return rate was .61 percent. In the budget year that ended in June 2015, CalPERS’ investment return rate was 2.4 percent.
When we split obligations into how much California owes to those who have already retired and current employees, a startling fact emerges. The assets California governments have now aren’t even enough to cover what it owes to current retirees. For all employees combined, retirees are owed $134.5 billion as compared to $112.6 billion in total assets. California governments do not have enough money to pay what they owe retirees, and they have nothing at all set aside for current employees. Every year, employees have funds deducted from their paychecks to go into the pension funds. Those funds will go to retirees. By the time it’s their turn, there will be no money left for current employees. Current employees are forced to pay into a retirement system that may be bankrupt when they retire.
Many California cities have issued “pension obligation bonds” to cover rising retiree benefit costs with borrowing rather than tax money, based on the same assumption that arbitrage – betting that the difference between loan interest rates and investment earnings – can be a net winner. However, like Orange County and SANDAG, some learned that trying to predict global markets is dangerous. The largest single debt owed by the city of Stockton when it declared bankruptcy was a pension obligation bond. Hundreds of school districts issued “capital appreciation bonds” that postpone repayments for decades while the accumulated interest magnifies debt. Poway Unified in rural San Diego County became a poster child for financial irresponsibility when it was revealed that its $105 million bond would cost $1 billion to repay.
Despite a bright economic climate, voter-approved state tax hikes and $74.5 billion that California will devote to K-12 education and community colleges in 2017-’18 — a $3.1 billion year-over-year increase — schools are in financial distress. . . . With a currently healthy state budget, the biggest threat to balanced school budgets is the growing bite taken by public retirement systems — CalSTRS for teachers and CalPERS for support staff. Next school year, those taxes will be about 15 percent of employer payroll. In four years, the CalPERS payroll tax will exceed one-quarter of salaries and is scheduled to continue growing in an effort to enable it to better cover its projected retirement payouts. CalSTRS also will also grow.
In a big victory for labor, the Los Angeles City Council on Wednesday approved a contract giving six raises in five years to members of the Department of Water and Power’s biggest union. The vote came despite objections from some council members over what they considered a rushed process that didn’t give them time to scrutinize the deal. It also is expected to open the door for other labor groups at City Hall to demand generous salary packages at a time when the city is struggling with tight budgets and financial woes
Union dues take a large bite out of the paychecks of California teachers. We estimate that newly hired, full-time teachers will pay $37,000 in dues over a 30-year career. Further, if new teachers could fully opt out of the union and instead save their dues in an Individual Retirement Account, they would each have $228,000 extra in after-tax retirement savings.
In Santa Barbara County, the 2017-2018 budget calls for laying off nearly 70 employees while dipping into reserve funds. The biggest cuts are to the Department of Social Services, which works to aid low-income families and senior citizens. Meanwhile, $546 million of needed infrastructure improvements go unfunded as Santa Barbara County struggles to pay off $700 million in unfunded pension liabilities. County officials estimate that increasing pension costs may cause hundreds of future layoffs. Unfortunately, Santa Barbara County is far from alone. Tuolumne County is issuing layoffs in the face of rising labor and pension costs from previous agreements. In Kern County, a budget shortfall spurred by increased pension costs has led to public safety layoffs, teacher shortages, budget cuts, and the elimination of the Parks and Recreation department, even as Kern County’s unfunded pension liability surpasses $2 billion. In the Santa Ana Unified School District, nearly 300 teachers have been laid off after years of receiving pay raises that made them unaffordable, including a 10% raise in 2015.
But despite the upbeat rhetoric, a crisis is looming in the nation’s second-largest school district as enrollment falls from a projected 514,000 in 2017 to 480,000 in 2020. Since the state’s main education funding formula is based on average daily attendance, this could force mass layoffs of teachers or even drastic measures like shortening the school year. A $422 million deficit is anticipated in 2019-20, with red ink after that for as far as the eye can see. None of this comes as any surprise. A blue-ribbon commission’s report issued in November 2015 said L.A. Unified was facing fiscal disaster because of the enrollment declines, which are primarily due to falling birth rates, and because of the cost of pensions and retiree health care benefits. Employee retirement benefits will claim 8 percent of the school budget in 2017-18 and more than double that sum in coming years as the state’s 2014 bailout of the California State Teachers’ Retirement System ratchets up required payments from districts and as more of the district’s aging workforce retires.
On first blush, the latest effort by Gov. Jerry Brown and Democratic legislators to give public-employee unions access to public agencies to hold “orientation” seminars with new hires is an unfair special privilege not normally provided to private groups. It’s even more disturbing that the legislation authorizing such access is being rammed through the Legislature in a secretive manner without the full hearing and vetting process.
But critics of this brazen example of union muscle-flexing should take heed. It’s the latest reminder that even public-employee unions understand that the world is about to change. It’s only a matter of time before they lose a key to their enduring power: the current system by which public employees are forced to pay dues to their respective unions, even if they have no desire to give a large chunk of their paychecks to these unions.
All California’s agencies conduct important work that protects and provides for the public, and all are held accountable to the people by conducting the SRIA. Cal/OSHA’s process is not different and does not warrant a special exemption. SB 772 excuses Cal/OSHA from this important analysis, allowing regulations having a significant impact on the economy to avoid the close scrutiny that would reveal their true costs and any unintended consequences.
The bill’s proponents suggest that the cost and benefit analysis of a regulation is completely satisfied by the debate in the Legislature, advisory meetings, and the public notice and comment process required by the Administrative Procedure Act (APA). This is not true – The regular rulemaking process does not adequately address economic impacts and alternative policy approaches.