Davis Mayor and Mayor Pro Tem Among Those Signing Petition Opposing Pension Reform Measure

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Krovoza-WolkBack in October, a group of bipartisan California mayors – including San Jose Mayor Chuck Reed (D), San Bernardino Mayor Pat Morris (D), Santa Ana Mayor Miguel Pulido (D), Anaheim Mayor Tom Tait (R) and Pacific Grove Mayor Bill Kampe (D) – filed a statewide ballot initiative to provide state and local governments with the tools needed to fix California’s unsustainable public employee retirement plans.

Last week, a group of mayors, county supervisors, city council members and other elected officials from throughout California, including Davis Mayor Joe Krovoza and Mayor Pro Tem Dan Wolk, “urged San Jose Mayor Chuck Reed to end his effort to put a measure on the November 2014 ballot that would slash retirement security for millions of California’s teachers, firefighters, police officers, school employees and other public workers.”

Nearly 20 mayors and vice-mayors signed the letter, including: Pete Aguilar (D-Redlands); Rusty Bailey (No Preference-Riverside); Connie Boardman (R-Huntington Beach); Aja Brown (D-Compton); Gary Davis (D-Elk Grove); Marie Gilmore (D-Alameda); Steve Hardy (D-Vacaville); Joe Krovoza (D-Davis); David Lim (D-San Mateo); Evan Low (D-Campbell); Gayle McLaughlin (D-Richmond); Andre Quintero (D-El Monte); Gina Papan (D-Millbrae); Jean Quan (D-Oakland); Jason Scott (R-Corona); Tony Spitaleri (D-Sunnyvale); Jim Wood (R-Oceanside); Vice Mayor Jim Wood (D-Healdsburg); and Vice Mayor Gilbert Wong (D-Cupertino). Collectively, the bipartisan list represents nearly three million Californians.

“Like most Californians, we believe pension matters are best decided locally at the bargaining table rather than the ballot box,” wrote the mayors. “Our cities have been successful in doing just that – as have the overwhelming majority of those in California.”

According to CalPERS (California Public Employees’ Retirement System), more than 386 jurisdictions have negotiated more than 538 changes to pension benefits, producing hundreds of millions in savings through higher employee contribution levels, reduced employer costs and reduced benefits.

“We believe that engaging our public servants in constructive dialogue rather than political battles is a more effective way of achieving balancing budgets,” wrote the elected leaders.

“We also are extremely concerned about several specific provisions of your measure that will likely increase costs to California’s cities by hundreds of millions of dollars. We believe those dollars are better spent on local services and attracting and retaining quality public employees, providing services to our city than in reducing their retirement security.

“Last year, Governor Brown and the Legislature enacted sweeping pension measures that will save our communities and the state nearly $100 billion. Combined with the actions we are taking in our communities, we believe this will address the concerns about retirement benefits that your measure proposes to address. As a result, we urge you to withdraw your measure and engage with us in constructive dialogue with public employees to address the pension challenges facing our communities.”

Other officials signing include: San Francisco County Board of Supervisors President David Chiu and Sonoma County Supervisor Mike McGuire; City Council members Erin Carlstrom (D-Santa Rosa), Victor Gordo (D-Pasadena), Mark Johannasen (D-West Sacramento), Kevin McCarty (D-Sacramento), and Dan Wolk (D-Davis).

The release also noted that Mayor Miguel Pulido (D-Santa Ana), one of the five mayors listed of a proponent of Mayor Reed’s measure when it was submitted, also has withdrawn his support.

“The Pension Reform Act of 2014 would amend the California Constitution to give government agencies clear authority to negotiate changes to existing employees’ pension or retiree healthcare benefits on a strictly going-forward basis,” a release stated in October. “The measure explicitly protects retirement benefits government employees have already earned, while allowing benefits to be modified for future years of service.”

“Many of California’s public employee retirement plans are simply unsustainable and it’s in everyone’s interest to provide the tools to fix the problem now before even tougher actions are necessary,” said Mayor Chuck Reed of San Jose, who is heading up the initiative. “During tough economic times, we believe employees would much rather adjust their future expectations than risk seeing their accrued benefits slashed in bankruptcy. We’ve already seen that tragic situation play out in cities like Stockton and Central Falls, RI. Our teachers, police officers, firefighters and other dedicated public servants deserve to know that the pensions they’ve earned will be there when they need it – not just the day they retire, but also when they’re 85 or 90.”

Union leaders were quick to blast the proposal, attacking Mayor Reed as “a self-aggrandizing political lifer” and “puppet of Wall Street interests.”

Dave Low, Chairman of Californians for Retirement Security, responded, “This extreme proposal, advanced by a career politician and funded by a former Texas-based Enron trader, breaks the promise of a secure retirement made to millions of Californians, many of whom are ineligible for Social Security and have an average pension of $26,000 per year. It will allow public employers to unilaterally cut the retirement benefits promised to current teachers, firefighters, police officers and school bus drivers — a promise upheld by the Supreme Court that politicians and hedge fund managers want to change to allow employers to reneg on it.”

He warned, “If it is put on the ballot, it will energize the same coalition that defeated Proposition 32 by a record margin in 2014. Californians have constantly shown their distaste for measures put on the ballot by Texas interests and secret out-of-state contributors, and we expect this flawed proposal to be no different.”

But a large group of Democrats, emanating from cities across the state, have come to recognize that the public employee pension system is putting a huge strain on city coffers.

“In Pacific Grove, pension costs have crowded out library hours, overdue street and infrastructure maintenance, and other important services,” said Mayor Bill Kampe of Pacific Grove, a Democrat. “This initiative states a simple and fair principle for a retirement benefit: you’ve earned it when you’ve done the work. If you haven’t done the work, it’s still negotiable. It’s the right thing for the people, for the city, and ultimately for the employee’s retirement security. We need to fix a very broken system.”

The Pension Reform Act of 2014 also includes provisions to:

• Prevent the State of California, pension plan administrators, and other government boards from interfering with elected leaders’ or voters’ ability to amend their public employee retirement benefits for employees’ future years of service.
• Protect existing collective bargaining agreements by requiring government employers to wait until current labor contracts expire before negotiating changes to retirement benefits.
• Require any government agency with a pension plan that is less than 80% funded to prepare and publish a public report outlining how it can achieve full funding in 15 years.

Cities like Davis have been forced to slash employees and seek two-tiered approaches, which will be very slow to recognize cost savings as we move forward.

The California public pension system is underfunded by billions of dollars and those dollars will come from future general fund budgets for communities like Davis.

—David M. Greenwald reporting

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About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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6 thoughts on “Davis Mayor and Mayor Pro Tem Among Those Signing Petition Opposing Pension Reform Measure”

  1. Mr.Toad

    Interesting that you haven’t reported on the mess down in San Jose created by Chuck Reed’s local pension reform. Now you want to make a mess of it statewide. Both Dan and Joe are correct the initiative process, with all its unintended consequences is not the way to reform pensions. Negotiated contracts or thoughtful legislation create better paths to reform.

    http://www.mercurynews.com/pensions/ci_24782960/pensions-city-workers-cant-be-cut-but-pay

  2. realchangz

    The Mayor’s Initiative, while politically controversial, does provide the opportunity to engage a statewide conversation and debate about the urgent need to address the mounting, unsustainable financial liabilities now facing virtually every city, county and district agency in the state.

    Why not have statewide discussions of the problem? After all, with rare exceptions, it is a statewide problem. Particularly in the case of underfunded pension programs, which are largely the result of a complete repudiation of the actuarial accounting and funding requirements upon which the original guidelines were established by the original 1937 Act (aka California Employees Retirement Law), there is an urgent need for a uniform and constitutionally valid interpretation of the law’s protections, together with enforceable guidelines allowing each jurisdiction to deliver equitable resolution in a timely manner.

    Does it really make any sense to require every single city, county, and district agency in the state to independently litigate the issue on the backs of their own, already precarious budgets?

    The problem has now been exacerbated nationwide with a series of very weak and outdated government accounting (GASB) standards which allow current period operating expenses (i.e. employee post retirements benefits) to be financed with long-term debt rather than being paid in the current period in which they are incurred. Quite naturally, this option has proven itself very attractive to politicians, as it allows them to pursue pet projects during their term in office – thereby “delivering on their promises” – while pushing off/deferring the payment/funding contributions for the retirement benefits for employees currently serving under their watch.
    From a government funds accounting standpoint, this means no impact to the current year’s General Fund ending account balance AND it means no money sent to Sacramento with which to make the investments necessary to pay for those future retirement benefits. And, apparently, that’s just hunky dory with all involved…………….until the basic laws of actuarial accounting begin to enter the picture.

    Full Disclosure: I don’t profess to be an expert in these matters. If these characterizations and view of the world prove hopelessly inaccurate, I trust that somebody more expert than I will set the record straight.

    Governments at every level have now clearly demonstrated that they can’t be trusted with this level of discretion and fiduciary financial responsibility. Can you imagine what the 401K pension plans would look like in the private sector if the employers had the option of not contributing the “promised employers matching share” to the employees’ 401K retirement plans – kind of like an IOU and a “Trust us, we’ll make it up next year”? I’m guessing that wouldn’t go over real well with the folks responsible for “The Employee Retirement Income Security Act (ERISA)” and the Securities and Exchange Commission.

    There are many important concepts and underlying causes associated with this issue, not the least of which is the concept of Intergeneration Equity – the basic tenet that one generation shall not be entitled to do all spending, while following generations are required to pick up their tab. And, on that basis, the Mayors’ Initiative doesn’t appear to tackle the really difficult question of how did we get into this predicament in the first place or why those in charge while the problems were being allowed to multiply shouldn’t be the ones held more to account in settling the score.

    Anyone is welcome to simply shoot the messenger, but that doesn’t mean the problem is going quietly into the night. Shutting down the conversation isn’t going to fix anything. Anyone with any constructive recommendations on how to best resolve this thorny and unsustainable mess…….please have at it.

  3. Frankly

    What a hoot.

    I’m sure many of those demanding the we don’t implement any statewide mandated controls on run-away public sector pensions would have absolutely no problem with the federal government limiting private sector executive compensation.

    There is such dripping hypocrisy in these two positions it makes we want to spit from the bad taste in my mouth.

    That hypocrisy is made all the more profound given the fact that private companies are private and there is a legal limit to what the government can and should be able to dictate and public sector unions contain employees that should work only at the pleasure of the government and hence should be under complete control for dictating compensation.

    “Absurd” is the word that comes to mind.

  4. Mr.Toad

    There is a difference between a discussion and an initiative. Initiatives are difficult to fix if they prove to be over bearing and have unintended consequences,

    I have never asked for public control of private business decisions. In fact I was critical of the mayor for interjecting the City into a private agreement demanding Conagra fund Davis Roots instead of David Morris’ venture capital fund. However I do think we could tax higher earners more. We have a large deficit and there is no reason people making millions should pay a 15% or 20% tax rate on capital gains, dividends and carried interest.

  5. SouthofDavis

    realchangz wrote:

    > The problem has now been exacerbated nationwide with a series of very weak and
    > outdated government accounting (GASB) standards which allow current period operating
    > expenses (i.e. employee post retirements benefits) to be financed with long-term debt
    > rather than being paid in the current period in which they are incurred.

    It is criminal what the politically connected are allowed to do from Unions that pay retired fireman $10-$20K a MONTH telling us that they are OK (and don’t need to contribute more this year) to banks getting to make up the value of loan collateral (so they don’t need to contribute more this year) to schools getting $100 million today but having to pay back a BILLION (so they don’t have to contribute more this year):
    http://www.bloomberg.com/news/2012-08-06/payments-on-105-million-school-bond-will-top-1-billion.html

    > Full Disclosure: I don’t profess to be an expert in these matters. If these characterizations
    > and view of the world prove hopelessly inaccurate, I trust that somebody more expert than
    > I will set the record straight.

    You don’t need to be a finance “expert” since any kid over 10 with a better than average understanding of math knows that you can’t take a small portion of a the pay from a guy that goes from getting $20K in 1983 to $200K in 2013 and pay him $15K a month (and pay for his entire families health care) for like that will probably be 30+ years since unlike most guys he got to spend a lot of the time working out while getting paid on the Universal weights in the garage “and” at the gym on his 20 days off each month.

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