Originally Posted By Darkbeer <a href="http://www.nytimes.com/2006/08/09/business/09pension.html" target="_blank">http://www.nytimes.com/2006/08 /09/business/09pension.html</a> >>Independent experts brought in to help San Diego dig its way out of a deepening financial hole said yesterday that city officials broke federal securities laws and other statutes as they tried to conceal their failure to put enough money into the city’s pension fund for police, firefighters and other public employees. The investigators, led by a former Securities and Exchange Commission chairman, Arthur Levitt Jr., recommended that San Diego be placed under the supervision of an independent monitor who would report to the S.E.C. They also said the city should adopt changes similar to those undertaken by the private sector in recent years, as American business has sought to restore confidence in the wake of big accounting scandals at Enron and other companies. San Diego officials had hoped Mr. Levitt’s report would represent a conclusion to years of financial turmoil, but it did not offer any simple answers that quarreling city officials could rally around. “The city’s pension system was not brought to a crisis merely as a result of abnormally low investment returns,†Mr. Levitt told city officials, dismissing an explanation frequently cited for pension problems in San Diego and elsewhere. “Nor was the system brought to a crisis as a result of a ‘perfect storm’ of unpredictable catastrophes.†Instead, Mr. Levitt said, “San Diego officials fell prey to the same type of corruption of financial management and reporting that afflicted municipalities such as Orange County, and such private sector companies as Enron, HealthSouth and any number of public corporations.†Officials created a maze of calculations and artificial devices to make it look as if the pension fund was in fine shape. But in reality, it was developing a shortfall currently measured at $1.4 billion...... City officials who heard Mr. Levitt’s findings in a special city council meeting yesterday seemed torn between their desire to follow his instructions and hasten a return to normalcy, and their anguish as it became clear that fulfilling his recommendations would mean still more time and more pain. “I’m sitting here more upset than I’ve ever been as your representative,†said Tony Young, a middle school teacher and president pro tem of the San Diego City Council. He said he was fully committed to cleaning house. But he asked again and again how much longer it would be before the outside auditors would sign off on the city’s accounts, and just what the city had to do to get a green light. Mr. Levitt’s investigation took about 18 months and has cost the city $20 million. Even though it explains in great detail what went wrong, it does not answer the biggest question of all: Where the city will find the $1.4 billion it will take to make the municipal pension fund fully solvent. <<
Originally Posted By Darkbeer <a href="http://www.latimes.com/news/local/la-me-sandiego9aug09" target="_blank">http://www.latimes.com/news/lo cal/la-me-sandiego9aug09</a>,0,3513690.story?coll=la-home-local >>A long-awaited audit released Tuesday blames San Diego's pension fund debacle on mismanagement and illegal financial manipulations that recall the fiscal crises of Orange County and Enron Corp. The 266-page report concludes that some former city and pension board officials violated state and federal laws in their ill-advised pursuit of short-term solutions for a pension fund deficit that now approaches $2 billion. The evidence demonstrates not mere negligence, but deliberate disregard for the law, disregard for fiduciary responsibility and disregard for the financial welfare of the city's residents over an extended period of time," said Arthur Levitt Jr., the former chairman of the Securities and Exchange Commission who oversaw the independent audit.<<
Originally Posted By Darkbeer <a href="http://www.bloomberg.com/apps/news?pid=20601103&sid=auocHUxLW95U&refer=us" target="_blank">http://www.bloomberg.com/apps/ news?pid=20601103&sid=auocHUxLW95U&refer=us</a> >>One benefit increase granted in 2002 applied only to Ronald Saathoff, a firefighter union leader and pension board member whose support was seen as key to the decision to continue under- funding the pension, according to the committee's report. He was among those to face felony charges by the San Diego District Attorney and a U.S. grand jury. Today's report by the consultants working for Kroll Inc., a unit of Marsh & McLennan Cos., heaps more blame on city officials than a 2004 report by Vinson & Elkins LLP that was criticized for failing to take officials to task. << >>San Diego has since increased its pension contributions and the mayor, who previously had little power, has assumed the responsibilities over the budget and finances held by a city manager when the allegedly illegal acts took place. The city council approved a ballot measure that would require pension benefit increases to be approved by voters. Levitt's committee recommends that the city further strengthen the role of its chief financial officer and establish an independent audit committee to oversee the production of financial reports. It criticized a proposal to use a bond issue to shore up the fund, saying it would only delay reckoning with the shortfall. San Diego isn't the only local government facing a large, unfunded liability to its workers' retirement fund because of mismanagement. In February, Standard & Poor's said in a report that state government pensions alone had $284 billion less than they will need when workers retire in the coming decades. San Diego's financial practices have been under scrutiny since January 2004, when the city disclosed it found several errors in its 2002 financial statements, including several related to its description of its pension fund. Among the mistakes was a failure to disclose a 2002 agreement that allowed the city to postpone paying enough into the fund to pay for all the benefits it promised. That caused the pension shortfall to balloon. <<
Originally Posted By Darkbeer <a href="http://www.voiceofsandiego.org/articles/2006/08/09/opinion/01editorial.txt" target="_blank">http://www.voiceofsandiego.org /articles/2006/08/09/opinion/01editorial.txt</a> >>His painless plan was to issue $574 million in pension obligation bonds -- a second mortgage on a crumbling City Hall. It was a plan to incur even more debt than his predecessor had imagined at the behest of the employee unions. It would be a gamble of the highest magnitude, leaving the city open to the possibility that it could go into debt even more than it already was. As Levitt and Kroll put it, it is not a solution. "It has been suggested that the City address the deficit through the issuance of pension obligation bonds which would use borrowings from investors to increase pension assets, but which would not reduce the City's underlying obligation to fund the pension liability. In doing so, the City would continue to push off the funding of these obligations to future generations of taxpayers while avoiding the difficult fiscal decisions that must be made," the report states.<<
Originally Posted By cmpaley Let the record show that the leaders who did all this are...dun dun dun...Republicans. You know, the party that has absolutely NO interest in ensuring that public employees HAVE a retirement whatsoever. In fact, they FIGHT against public employees getting PAID, let alone retiring.
Originally Posted By cmpaley Also note that DB is only quoting portions of the articles that make it appear that rank-and-file public employees are to blame for the problem. Truth is, it was Republican politicians that directed the bad and illegal decisions involved here.
Originally Posted By Darkbeer Excuse me, it was members of BOTH parties, many council members were and are Democrats and had major roles in the illegal activities, and many folks think that Mayor Murphy was a pawn and had major Union ties. <a href="http://www.signonsandiego.com/news/metro/pension/20060618-9999-mz1n18labor.html" target="_blank">http://www.signonsandiego.com/ news/metro/pension/20060618-9999-mz1n18labor.html</a> >> When San Diego's business and political establishment decided to ask voters for an expanded Convention Center and a new Padres ballpark downtown, they turned to an unlikely ally: organized labor. For the city's Old Guard, teaming with labor meant campaign ground troops and the appearance of broad community support. For the unions, it meant hundreds of jobs on signature projects whose combined value approached $1 billion. The year was 1998, and these strange bedfellows would hit the jackpot: Both ballot propositions passed with commanding majorities. But from this “growth coalition†would emerge a movement that would eventually take the city's business community by surprise: Union leaders, realizing their ability to swing elections, embarked on a quest to build up their own power base. Their efforts would result in a pro-labor, Democratic majority on the San Diego City Council, a body dominated for years by Republicans. “Labor's influence really grew in the '90s,†said Steve Erie, director of UC San Diego's Urban Studies and Planning program. “And like the sorcerer's apprentice, once labor realized its power at the polls, it decided that it would pursue its own agenda.†This dramatically altered the political landscape of California's second-largest city. The council passed a law mandating higher wages for private-sector workers contracted to the city. Major private-sector construction projects began having pro-worker language hammered into their contracts. Retirement benefits for city workers were boosted – even in the face of a hemorrhaging pension system..... Still, public-employee unions were key players, though not necessarily the architects, in plans to underfund the pension system. Those schemes were engineered by city managers and approved by councils led by successive Republican mayors Susan Golding and Dick Murphy. These arrangements gave policymakers budget relief, allowing mayors and councils to pay for big-ticket items, such as expanding Qualcomm Stadium and hosting the 1996 Republican National Convention, without raising taxes. In exchange for support from a pension board that included several union representatives, San Diego municipal workers – historically paid less than their peers in other California big cities – were granted increasingly lucrative retirement benefits. The pension arrangements, passed in 1996 and 2002, provided short-term gain for some union leaders, top city bureaucrats and politicians – but helped inflict damage on the pension fund and the city that is likely to be felt for years to come...... Unions used this momentum to back clean-water activist Frye for an open council seat in 2001. The next year, labor pulled out all the stops to support council candidate Michael Zucchet, a Democrat and former firefighters union lobbyist who defeated Republican Kevin Faulconer. Independent expenditures in that race topped $370,000, with labor lined up behind Zucchet and the building industry behind Faulconer. Zucchet would end up resigning in disgrace in 2004 after being convicted in a federal corruption case. Most of his convictions were later overturned. Faulconer and his backers spent $829,000 to win a special January election to fill out the remaining months on Zucchet's term; he was re-elected, with little opposition on June 6, to a four-year term. The Zucchet election in 2002 gave labor a firm grip on the council, at the time leaving then-Mayor Murphy, a Republican, as the only member of that body without any labor backing at all, though even he would eventually seek and gain union support. Labor already had begun flexing its muscles in June 2002 – showing hints of overreaching, critics say – with a council majority voting in closed session to require SeaWorld to use union labor in its $50 million expansion. SeaWorld owner Anheuser-Busch threatened to leave town, and the council reversed itself. Although the union majority retreated on that issue, their power was established. How long it holds in the face of the backlash against unions is a matter of debate.<< By the way, here is a link to the actual report... <a href="http://www.signonsandiego.com/news/metro/pension/20060808-9999-krollreport.html" target="_blank">http://www.signonsandiego.com/ news/metro/pension/20060808-9999-krollreport.html</a>
Originally Posted By vbdad55 <...Republicans. You know, the party that has absolutely NO interest in ensuring that public employees HAVE a retirement whatsoever< and you somehow think this is different in the private section ? Then you are misinformed...almost all major corporations have also moved away from traditional pension plans, and have been doing so since the early to mid 90's -- when dun dun dun - the Democrats were in office..and continued up thru now. this is a bi partisan issue period.
Originally Posted By cmpaley I disagree. It is the Republican party that is against most government services. The only real difference between today's Republican and Libertarian is that Republicans claim to be "pro-life" and against gay "marriage." They are therefore against the very notion of public employment, so they will do anything to discredit it, including misappropriating and losing pension funds so as to create a funding crisis so they can eliminate public employee pensions. That corporations decided to screw their employees out of what they had earned is bad enough. The government should set the example, not join in the race to the bottom.
Originally Posted By fkurucz >>That corporations decided to screw their employees out of what they had earned is bad enough. The government should set the example, not join in the race to the bottom.<< With revenues that are not keeping pace with expenditures, they may have no choice. Its only a matter of time before California is insolvent.
Originally Posted By Darkbeer <a href="http://www.latimes.com/news/local/la-me-retirees9aug09" target="_blank">http://www.latimes.com/news/lo cal/la-me-retirees9aug09</a>,1,4044950.story?coll=la-headlines-california >>O.C. Faces Tough Pension Debt Choices County supervisors, also up against burgeoning medical costs for retirees, have no easy options. By Christian Berthelsen, Times Staff Writer August 9, 2006 During two days of hearings in June, Orange County supervisors discussed all manner of spending for the coming year. They decided to shell out $10 million more for indigent healthcare and declined to kill a $187,000-per-year tourism promotion program. But one of the biggest spending increases was barely mentioned. Buried in the appendix of the budget under the heading "Miscellaneous" was $65 million more for the county's pension fund. The increase, which brought the county's spending on pensions to $255 million this fiscal year, equaled more than half the county's property tax windfall from recent lofty assessments. The growing cost of paying for retired employees' pensions and medical coverage is wreaking quiet havoc on Orange County's finances, no small thing in a place still recovering from the largest municipal bankruptcy in history. The county owes its pension and retiree medical funds about $3.7 billion, an amount that dwarfs the $1.7 billion in debts it cited in the 1994 bankruptcy filing. The spiraling burden is the result of soaring medical costs combined with a large population of retired workers who are expected to live longer. At the same time, investment returns that support the funds have fallen in recent years, dipping below 1.5% in 2003 and 2004. The issue is a politically sensitive one for supervisors, because at least part of the pension fund's increased cost is the result of sweetened labor contracts the board has approved. That has angered conservatives who complain that the cost is eating into the county's ability to deliver services.<<
Originally Posted By SingleParkPassholder Bothmy wife and I are going to get government pensions. Yee-haw.
Originally Posted By fkurucz >>During two days of hearings in June, Orange County supervisors discussed all manner of spending for the coming year. They decided to shell out $10 million more for indigent healthcare and declined to kill a $187,000-per-year tourism promotion program.<< As California continues on its path to become a 3rd world state, these numbers will continue to grow.
Originally Posted By Darkbeer <a href="http://www.ocregister.com/ocregister/opinion/homepage/article_1242880.php" target="_blank">http://www.ocregister.com/ocre gister/opinion/homepage/article_1242880.php</a> >>Says one actuary quoted by the Times: "There's no oversight; there's no requirements; there's no enforcement." Public entities don't have to conform to the same stricter reporting standards as private companies, although efforts are under way to impose new standards in both public and private sectors. These local and state plans are not covered by federal pension law. Most shocking: "[T]hey are governed by boards that often include municipal labor leaders, whose duty to represent their workers' interests can easily conflict with their fiduciary duty to represent the plan itself," wrote the Times. "And even the most exemplary pension boards can be overruled, in many cases, by politicians whose priorities may be incompatible with sound financial management." In other words, the game is rigged, and, in the end, taxpayers – through higher taxes or pension bonds – will be forced to pay for outlandish pension promises negotiated by labor unions and agreed to by politicians who fear those unions' clout. The article notes the many ways that public employees play the system, i.e., by using excess overtime to spike their final years' salary to ensure a larger payout in retirement. There are few efforts to rein in these abuses. Orange County is not exempt from this problem. Two years ago, three pro-union supervisors – Bill Campbell, Jim Silva and Tom Wilson – spiked pensions by 62 percent for county workers. The deal was retroactive, meaning that employees who were about to retire gained the increase (to about 81 percent of their final pay, after 30 years of work) even though they hadn't paid extra into the system. The supervisors accepted at face value the promises of the union, and now the county faces $3.4 billion in unfunded pension and health-care liabilities, $300 million of that coming from the votes by Campbell, Silva and Wilson. Despite the financial crisis, the unions and their advocates continue to push for more pay and benefits, ignoring the fiscal crisis that is threatening the budgets of cities and taxpayers. At least the issue is starting to get national attention.<<
