The city as we have reported repeatedly to little effect has failed to deal with the two 800-pound gorillas staring it in the face–the unfunded medical liability soaring at between 42 and 65 million dollars and the pension crisis.
Ed Mendel from Calpensions.org reports this week that that Vallejo has cut retirement health care payments but has not touched pensions.
Writes Mr. Mendel:
“Retirement costs are by far Vallejo’s biggest debt. The top two creditors listed by the city in its bankruptcy filing were retiree health, $135 million, and the California Public Employees Retirement Association, $84 million.
Although Vallejo has been hit by declining property values and the loss of some businesses, the bankruptcy filing seemed to acknowledge that the city council had let labor costs get out of control.
The bankruptcy filing said the city expected to begin the fiscal year in July of 2008 with an estimate of $77.9 million in general fund revenue, less than its $79.4 million cost for labor.”
Is Davis moving in that direction? Understand that Davis financed much of the increases to salary for employees based on the housing bubble and the half-cent sales tax measure that brought in three million. With the collapse of the housing market, the city faces a deficit. What has saved Davis is the landing of the housing market has not been nearly as hard as its neighbors. But the crash could come down the line.
That is not the case for the county or schools.
As we reported, the district is currently planning to issue layoff notices to 102 employees to close a $5.6 million shortfall which is by the way, the largest in the district’s history. The picture is far worse when you consider that the district cut its budget in both 2008 and 2009.
Sobering is the statement that Sheila Allen made on Tuesday night, that without the two parcel tax measures, the district would be facing an $11.6 million deficit. Soak up that number for awhile.
As it is, the district is facing 102 layoffs.
The good news, if there is such a thing, is that the teachers and classified staff appear ready to take concessions that would save $1 million or about 16 positions.
And they may be able to save a few more. The school board approved a retirement incentive plan that can also reduce the number of layoffs.
The plan would offer incentives beginning at 60% for the certificated employee’s highest salary if 25 teachers participate and up to 80% if 40 participants retire effective at the end of June. The retirements must be submitted to the District prior to April 16, 2010.
Eligible are those who are age 55 or higher who have been with the district at least five years and those age 50 or higher who have been with the district for 20 or more years. The estimated savings would be $30,000 annually for each participant.
But let us not kid ourselves here, it is much appreciated that the teachers and other employees have agreed to these concessions and but these are pain reducers, not solutions. The Davis Schools Foundation is going to launch another drive at the end of the month as well, but this is a disaster.
The county gets the least coverage here, but the news there is probably the worst. Last year, they had to cut $20 million from their general fund. And the horrific thing is they have to do that again. The county provides social services to the most needy and most vulnerable in our society. In recent years it has been asked to pick up the slack for state and federal government cuts to social services.
The Woodland Daily Democrat yesterday had an article about the cuts to the county mental health department.
“The Department of Alcohol, Drug and Mental Health can now only serve the obligatory severely mentally ill, after 15 employees were laid off and will work their last shift today [Friday]. Residents seeking services will continue to be screened at ADMH but those not determined to be seriously mentally ill or disturbed will be referred back to a primary care physician.”
Explains the article, the department acts as the specialist in the field of mental health. The county was able to operate for years off general fund money since Medi-cal only pays 61 cents on the dollar. But now the county no longer has the funds to continue to subsidize the program which means it will cut back to the core.
What will be the impact of these cuts? Hard to know.
Overall 44 county employees were laid off in late January and those cuts come with a reduction of public services. In addition to the Alcohol Drug and Mental Health Department, the Department of Employment and Social Services lost 15 employees while the Health Department lost 14.
This would not be quite as bad without the cuts that occurred last year.
The people most affected by these cuts will not be the affluent members of society but rather the poor and the mentally ill. Again, it is tough to assess the impact of these cuts. But last year we discussed the cuts of health coverage in the county to illegal immigrants.
Many people will argue we need to cover our own first. And at some level that makes sense. The problem is that when people become ill, we are forced to deal with them in emergency rooms which costs more in the long run.
There is another aspect to it, the more people without health coverage, the more people with health coverage are exposed to illness and disease. When you are talking about epidemics like swine flu or perhaps HIV, there is an impact to everyone when these services are cut.
The board approved cuts to department programs like tobacco cessation, syringe exchange, nurse home visitation, free vaccine clinics, and counseling for HIV/AIDS patients.
How much of an impact will that make on the population?
We know where the state is headed–toward more cuts. Again, at some point the economy will turn around, the question is how much it will. And one has to wonder if all of these cuts might not force us down into another recession or worse. What we have done is cut the safety and stopped investing in the future in the case of cuts to schools from K-12 to Higher Education.
People will argue that we have to live within our means, but if we cut out our ability to extricate ourselves from the mess, we have cut off our noses to spite our faces. There are people in this community who are living very well right now, and those people have not had to sacrifice nearly as much in all of this as the average person. At some point that will take its toll.
How much worse can things get? That’s the question we face now, but right now, if you look at state, county, schools, and even local, things are as bad as they have ever been at least since the Great Depression and at least in California, there may be no end in sight.
—David M. Greenwald reporting