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Budget Manipulation Using Fiscal Sleight Of Hand

February 1, 2013/in Newsletters/by VREG Editors

Fair is foul, and foul is fair: Hover through the fog and filthy air”
—Shakespeare, Macbeth

STATE OF THE CITY TREASURY

[TRANSPARENCY THROUGH FOUL AND FILTHY AIR]

History continues to remind us that to get to the root of any act of wrongdoing, malfeasance or wrongdoing, you need only follow the money to find the culprit(s). Eventually the truth and they are revealed. That again proved true at the City Council meeting on March 11, 2013.

Balancing the budget through financial sleight of hand

Our acting City Manager, Johnnie Johnson, in collaboration with the Chief Financial Officer, informed the City Council that those in charge of the budget in our City had adjusted [manipulated?] the GENERAL BUDGET to make it appear that we had achieved a balanced budget. In fact just the opposite was true.

The previous City Manager, Rick Cole together with Mayor Bill Fulton continuously publicized the fact that “we were living within our means”, that “we had balanced our budget” and that our “financial affairs were transparent”. On this Monday night the Council learned otherwise.

What the Council learned is that the $12,000,000 in financial reserves, created in 1992, and still in existence as of 2007, was now in fact only worth $4,300,000. The explanation provided is that Internal Service Funds (noted below), which contained money budgeted and set aside to meet real and specific future costs and potential liabilities, had been reduced so as to make it appear as if the budget had been balanced:

($2m) Unassigned.
($2m) Unfunded Workers Compensation liability
($3m) Potential liability claims reserve Information
($700,000) Technology

The explanation offered is that this was a way to make it appear as if our budget was balanced. As stated by Mr. Johnson, “we have not borrowed it from strangers, but we did borrow it from ourselves… (and) if we do not fund this within five years we will be broke”.

Mayor Tracy, at the conclusion of the presentation stated:

“Based on the way I look on the information we received here tonight we have probably been deceiving ourselves and therefore the general public. There is nothing illegal done here, we did not participate in any conspiracy, but I don’t think it (this) was clear to us”.

—Mike Tracy, Mayor and Retired Chief of Police

He then added that that the Council needed to put more oversight controls in place to prevent this from happening in the future. A new budget will be presented to the Council on May 1, 2013.

Editors Comments

Mayor Tracy and Councilman Heitmann were not on the City Council when these budget “adjustments” were made. For those council members and supporters of the former City Manager, this should be a lesson that the public was deceived and there was not total transparency during Mr. Cole’s administration. To have an interim City Manager, in 6 months time, bring to light that the $12.0M reserve was really $4.3M shows how gullible our leadership has been.

THE NEW CITY MANAGER BUSTS THE BUDGET

Mark Watkins’ higher salary and benefits strain Ventrua’s budget

On March 4, 20013, the City Council met to consider the employment contract for the new City Manager, Mark Watkins. On a vote of 4 to 3 the Council approved the employment contract. He will receive the following salary and benefits plus 6 weeks paid leave:

Base Salary	$222,000.00
Annual Cost of Living Increases	(1/2% of annual CPI)
Annual Performance Bonuses (3%-7%)	$15,540.00
Auto Allowance	$6,000.00
City Contribution to 401(K)	$12,000.00
Employer Pension Pickup (2.5%)	$5,500.00
Total Before Benefits	$261,090.00

When invitations for applicants were first published the City Council set the salary rate range of $160,000 to $214,000. The previous City Manager received a salary of $174,000.

The Ventura County Taxpayers Association spoke against approval of the contract because the starting salary was simply too high for an entry level Manager, that the salary should be started lower and then increased to provide performance incentives and the contract provided automatic annual Cost of Living Adjustments (COLA) during the 3 year term of the contract. They also warned against the COLA adjustment because of the precedent it would set when other public union contracts came up for renewal.

Mayor Tracy, Councilman Monahan, Councilwomen Weir and Heitmann approved the contract. They stated that Mr. Watkins was a long time resident of Ventura, that he had worked in the City during his career, that he was an Assistant City Manager in Thousand Oaks and that this was what needed to be paid to attract a qualified City Manager who would focus on the basics of operations of city government. Councilwoman Weir commented that any increase in the salary level could also be justified because “that we have already found savings in the City Manager’s budget to make up the difference”.

Our present acting City Manager commented that Mr. Watkins was a good choice, that this pay increase really only involved “pennies” in the total scheme of things, and that if he did not work out he could just be terminated and given a severance package.

Councilmen Andrews voted against the contract. Councilmen Brennan and Morehouse, after extolling the virtues and accomplishments of the former City Manager, Rick Cole, also voted no.

Editors Comments

Mr. Watkins will cost us an additional 26,102,700 pennies per year. He will earn all of that in dealing with our budgetary issues. We hope that the majority of the Council is right in saying that the additional expense can be justified by the savings that this new Manager will bring to our City.

In the meantime we must be diligent and continue to remind our elected representatives that if they we do not watch how they spend our pennies “we” will have no dollars left.

Editors: 

R. Alviani K. Corse T. Cook J. Tingstrom R. McCord S. Doll

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City Council and Referendum for Election Reform

November 11, 2011/in Newsletters/by VREG Editors

Sad commentary on Ventura's City Council election

A Democracy Will Continue To Exist Up Until The Time The Voters Discover That They Can Vote Themselves Generous Gifts From The Public Treasury.
—ALEXANDER TYLER (1887) Scottish history professor

How Ventura is Really Governed

[Look to the right, look to the left, blame your Neighbor!]

In August we provided our readers information about the November City Council elections, listed the candidates and urged our citizens to vote. This was an important election but your neighbors did not vote. Why? What do the statistics tell us?

Interpreting The Election Results

There are 67,807 eligible voters in the city of Ventura, but 18,945 (28%) of the registered voters voted. There were three open seats so each voter would potentially case three votes in this election. The Ventura County Elections division reported that 47, 062 votes were cast. This would mean the average voter voted for 2.48 candidates.

If we start with the total vote count for the 3 winning candidates (20,398), then subtract that number from the total number of votes cast(47,062), a higher percentage (26,664 or 57%) of voters wanted someone other than those who were elected.

If we extrapolate, using the total of 67,807 registered voters times 3 votes per ballot; the potential number of votes that could be cast would total 203,421. If we then compare the total number of votes received by the three winning candidates to that number it means that these new council members were put into office receiving only 10% (20,398) of the potential vote.

One incumbent proclaimed that his reelection was a resounding approval of his and the City Council’s past performance. Perhaps to his 6,793 supporters, but before we consider the election results as a barometer of public opinion, or that this vote represents a mandate, it should be observed that 72% of the registered voters did not care enough to even vote, and of the voters that did vote 57% of them did not support those who were elected.

Incumbents re-elected. Everyone loses when 72% don’t vote in an election.

Another way to look at this is by adding 48,862 of those who did not vote to the 56.66% (10,734) who did not support the winners; it would mean that 59,596 or 88% of the eligible registered voters did not support these candidates.

The first issue this election exemplifies is that too many candidates provide an advantage for the incumbents to be reelected. When 57% of the voters wanted change but did not get it, it would indicate a need to consider a run off election as part of the Ventura election process of the top 5-6 candidates.

The second issue is that the “special interest” groups are likely controlling how we are governed because they are getting the “Vote Out” for the candidates that support their agenda, while 72% of the eligible registered voters in Ventura did nothing.

NOVEMBER ELECTION STATISTICS

Registration & Turnout

67,807 Voters

	Vote Count	Percent
Precinct Turnout	6,254	9.22%
Vote By Mail Turnout	12,691	18.72%
Total	18,945	27.94%

SAN BUENAVENTURA City Council

56/56 100.00%

	Vote Count	Percent
BILL KNOX	4,912	10.44%
KENNETH M. COZZENS	5,564	11.82%
DANNY CARRILLO	4,138	8.79%
CHERYL HEITMANN	7,090	15.07%
CARLA J. BONNEY	3,981	8.46%
MELODY JOY BAKER	952	2.02%
ED ALAMILLO	2,360	5.01%
MARTIN A. ARMSTRONG	1,377	2.93%
CHRISTY WEIR	6,515	13.84%
BRIAN LEE RENCHER	3,307	7.03%
CARL E. MOREHOUSE	6,793	14.43%
WRITE-IN	73	0.16%
Total	47,062	100.00%

EDITORS COMMENT

To a large extent, we are preaching to the choir when we say that one of the issues is getting the vote out because we believe MOST of our readers do vote. However, statistical analysis shows that too many are still on the sidelines.

It is a sad commentary on our community when the citizens do not vote, do not care to vote, make no effort to participate in their government, nor do anything to monitor the government bureaucracy that governs our everyday lives.

We also believe that there must be a movement to change the election process, allowing a runoff, to allow voters to voice their true feelings and not have their vote diluted among a field of 11-14 candidates.

The apathy of the non-voting public in this community is disheartening. We at VREG are encouraged by the people of other nations who are willing to stake their lives just to earn the freedom to vote.

Editors:

B. Alviani K. Corse T. Cook

J. Tingstrom R. Mccord S. Doll

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Pension Spiking Approved in Police Retirement Contract

June 1, 2011/in Newsletters/by VREG Editors

” We Must Hand Together Or Surely We Shall Hang Separately” —Thomas Paine

COUNCIL APPROVES PENSION SPIKING

[Fleecing Time – Again!]

At the Ventura City Council meeting on Monday, May 16, 2011, on a vote of 5 to 2 the Council approved to an employment contract amendment to the Ventura Police Officers Association (VPOA) and Ventura Police Management Association (VPMA) employment contracts. Mayor Fulton and Councilmen Tracy, Brennan and Morehouse voted for the amendment. Councilwoman Weir and Councilman Andrews voted against the measure.

Ventura Police negotiate with City Council to get pension “spiking”

New employment contracts for the VPOA and VPMA were approved on January 16, 2011. However, in May it was pointed out that a correction (amendment) was needed because an important detail had not been treated. “They” forgot to include essential terms in the contract concerning who was going to pay the 4 ½% pension contributions.

Recall, good reader, that this contract was hailed as a masterful accomplishment, unique in California, and that it would save the community money in the long run (Mayor Fulton and City Manger Cole) because our policemen were now going to have to pay something toward their own pension just like everybody else in the private sector.

A Pension Deal Too Good To Be True

At first blush this step was positive, albeit anemic, because in past years this Council had entered into employment contracts with the policeman whereby they entire 9% pension contribution would be paid by the taxpayer. Our Mayor Fulton and City Manger Rick Cole extolled the virtues of this new employment contract because the City of Ventura had tilled new ground by requiring the policemen to pay something toward their own retirement – 4 ½% we were told. Councilman Andrews, Councilwoman Weir and fiscal conservatives in the community argued forcefully for a 9% contribution particularly in light of an unfunded pension liability of $250 million, but we digress.

Now we learn that with this amendment of the contract terms, unlike the SEIU employees contract, the VPOA and VPMA will be paying their 4 1/2% retirement contribution toward the employers’ portion (taxpayers portion) of that is sent to the CALPERS retirement plan. This accounting maneuver is specifically done to increase the total compensation of the employee, making the retirement payout amount higher for their lifetime.

The employee’s goal is to get one year of the highest possible salary so that his retirement for life is higher – called “spiking”.

Giving Context To The Problem The City Council Created With Police Pensions

To help put this into perspective, the employers’ portion of the total annual retirement payment paid to CALPERS by the city (taxpayer) is counted as income to the employee for purpose of calculating the employees retirement benefit when they retire. The employee’s goal is to get one year of the highest possible salary so that his retirement for life is higher – called “spiking”. Until now the city has been paying the taxpayers portion (100%) plus the employee’s portion (9%) toward the CALPERS retirement for a total of 109% yearly. Now, with this contract amendment, we learn that while the 4 ½ % will be contributed by the police officer, from his salary each year, but it will be shown as a payment made by the employer (taxpayer) to CALPERS. The reality is that the employee’s annual salary will be shown as higher by 4 ½ % for purposes of calculating that police officer’s gross salary when they retire. The policeman gives up 4 ½% as his contribution now but recovers it all at the time of retirement. The taxpayer is in effect still paying 109% of what is required to be paid.

Ventura Police Officers put one over on the City Council in pension negotiations.

While some may define “spiking” as adding benefits to salaries in the last year of employment to boost up the retirement amount, this additional 9% accomplishes the same results, an inflated income for retirement formula purposes. It will even compound to a higher amount, should a three highest years plan ever be adopted.

So, why was this fact not made known publicly 4 months ago? Why was it not questioned or challenged at the May 18^th meeting by any council member? Why was the CALPERS representative not questioned about the effect of this decision at the time of the January meeting? There were no questions and there was no discussion about the long-term impact to the city.

Specious Defense Of The Pension Contract

City Manager, Rick Cole, defends the contract amendment by saying that the payment by the employee into the employers’ portion of the retirement, which is then sent to CALPERS, was a non-negotiable item with the VPOA and VPMA. He also said it would make no difference because the current officers would receive retirement benefits based upon their “highest level” of compensation. That statement is true for the current workforce but what he failed to address, nor was he questioned, was how this would have affected officers hired in the future.

While the City Council remains concerned about the long-term effect of taking more general funds for street lighting, they continue to ignore the paying of 9% higher retirement benefits, which also comes from general funds in the form of payments to CALPERS, for years into the future. We can thank soon up for re-election Mayor Bill Fulton and Councilmember Carl Morehouse for this gracious contract approval.

EDITORS COMMENT

If the City Manger concedes that this 4 ½% contribution, paid through the employer’s contribution to CALPERS, was not negotiable with the police officer unions (his words not ours), then what about the taxpayer’s non-negotiable rights not to overpay and provide lavish retirement benefits to these public servants? Who then is protecting the interests of the taxpayer in this City when sitting at the negotiating table? Better to reach impasse and let these folks scramble for a new job then render the community hostage to the potential of bankruptcy. This unfunded obligation can and should be laid squarely at the feet of the council members who voted for this amendment; but, of course when it comes time to pay the bill they will be over the hill and the taxpayer will get the bill.

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Volunteer fire depertment may help Ventura's pension costs

Time To Consider A Volunteer Fire Department For Ventura

April 1, 2011/in Newsletters/by VREG Editors

“Politicians in America exploit economic illiteracy” —Walter Williams, Professor Economics

PUBLIC EMPLOYEE PENSION TRANSPARENCY ACT

We previously reported that there is a bill is currently pending in Congress (HR567) and the Senate (S347) encouraging governments at all levels to switch from a “defined benefit” plan to a “defined contribution” plan by requiring public entities to reveal to the voters the true magnitude of the unfunded liabilities of the public pension plans.

In California CALPERS continues to portray a rosy investment return. The staff at CALPERS recommended a change in the assumption of how much our City pensions investments will make in the future from 7.75% to 7.5%. This went to committee on March 15, 2011. This new direction, had it been adopted would have moved the pension fund on a path to solvency and economic reality. It didn’t happen. The CALPERS committee did not want to pass on the annual increased expenses to the cities that such a modification would cause given their current budget strains. Ventura is of course content to ignore this. You know, “What is a poor mother to do”. In the City of Ventura we owe $67,488,000. Twice that if a more realistic investment return of 3.50% is used.

These Federal bills, called the PUBLIC EMPLOYEE PENSION TRANSPARENCY ACT, would require States and municipalities to report their liabilities to the United States Treasury. The HR bill was sponsored by Representative Darin Nunes, Darrell Issa, and Paul Ryan with Congressman Elton Gallegly acting as a co-sponsor.

If adopted state and local governments will be “encouraged” to switch to defined contribution plans. While they are being “encouraged” they will have to reveal the true magnitude of their unfunded liabilities to their citizens. No more off the balance sheet reporting. This new legislation will require that they report liabilities to the U.S. Treasury using their own glowing investment forecasts as well as a more realistic Treasury bond rate. If the City of Ventura is forced to use a Treasury bond rate of 3.5% our unfunded pension obligation would double to $134,976,000.

THE FIREFIGHTER BENEFITS CONTRACT

Volunteer fire fighters may help Ventura's pension problem

Considering a volunteer fire department hybrid may help Ventura’s rising pension costs.

In the fall of 2008 that Ventura fire fighter benefits and pension contract was modified by the City Council. This was treated in our September, 2008 issue.

“In a vote of 4 to 3 the council approved the Memorandum of Agreement and the new pension contract with the firefighters of this city giving them a pension equal to 3% of their highest salary times the number of years in service plus all medical, dental. The yeas were Councilmen Fulton, Brennan, Summers and Monahan. The neighs were Mayor Weir, Councilmen Andrews and Morehouse. It should be of grave concern to all when one councilman says, before he cast his “NO” vote — “I HAVE GRAVE CONCERNS TO COMMIT WHEN WE DON’T KNOW WHERE THE FUNDS WILL COME FROM”.

“I Have Grave Concerns To Commit When We Don’t Know Where The Funds Will Come From”.

Mayor Fulton and Councilmembers Brennan, Monahan and Summers were thus responsible for increasing the firefighter pension in the fall of 2008 so that these folks could retire with 3% at age 55[1]. Their actions increase our unfunded pension debt by $1.2 million or more annually.

Since then the pension contracts for all City employees have come up for renewal. On Tuesday January 16, 2011, the Ventura City Council approved new labor contracts with the Ventura Police Officers, Police Management and the employees represented by the SEIU. The vote was 5-2 in favor of the agreements. Councilman Andrews and Councilwoman Weir voted against approval. The decision of the other five – Brennan, Fulton, Monahan, Morehouse and Tracy was in favor.

The agreement with the Fire Department union is still in closed negotiations, which, of course, are not made public. Many criticized the past decision of the Council in approving the employment contracts for the Ventura Police Officers and Police Management, not the least of which was Council Member Weir, who rejected the proposal and stated “Fiscally, the city needs more than this right now.” and Council Member Neil Andrews said the agreements “simply don’t go far enough.” The SEIU, who agreed to a lower 2^nd tier retirement plan (2% @ 60) also agreed to a salary average of the three highest years in calculating their pension entitlement for all new hires. The Ventura Police Officers and Police Management stuck to 3% @ 55 and the single highest year for all new hires.

ANOTHER POINT OF VIEW

[The case for a volunteer Fire Department program]

Due to the present Firefighter negotiations, this next article is timely and worth greater consideration.

Municipal governments in other states are beginning to come to grips with bloated payroll and pension demands of public employee — fire unions and have handed these folks their walking papers in favor of a volunteer fire department. There is a persuasive argument to be made in favor of such a step, or some hybrid of that concept so that the community becomes more involved and vested in community safety. The following is summary of study performed by Bill Knox, former candidate for the Ventura City Council. The complete 10-page report, complete with comparison charts and footnote links, is available upon request. (Simply email vregventura@gmail.com)

Solutions for Ventura’s Fire Department

[The Case For A Volunteer Fire Department]

Ventura is in the midst of an unprecedented reduction in public safety services. Mounting overtime costs, enormous pension liabilities and shrinking revenue streams have resulted in the closing of a fire station and elimination of firefighter positions. Using volunteer firefighters to assist professionals could save the city millions annually and dramatically improve public safety.

Response Times

Understaffing at Ventura’s fire stations has resulted in substandard emergency response times. According to national standards, firefighters should respond to emergency calls within five minutes. This time frame is critical in that resuscitation from cardiac arrest after five minutes typically results in brain injury, coma or death. As a result of inadequate staffing, the department fails, on average, to meet the response standard over 62% of the time. With the elimination of three firefighter positions and the fire’s department’s plan aimed at reducing sworn staff positions by nine, response times are anticipated to increase by an additional 30%.

As a result of inadequate staffing, the department fails, on average, to meet the response standard over 62% of the time.

Lack of Funds

The fire department’s budget for 2010-2011 is $14.5 million. The city closed station No. 4 in hopes of reducing costly overtime pay. In 2009, the city paid $1,700,000, (nearly 12% of this year’s budget) in overtime payments. Employees with one year of experience receive a compensation package well in excess of $98,000. Senior-level employees cost exponentially more. In addition, the city of Ventura has an unfunded pension obligation of more than $50,000,000. Taken together, the fire department’s budget is stretched to the limit and the city simply cannot afford to maintain, much less expand, the professional force.

Volunteers

Ventura should consider a volunteer fire department program similar to Volunteer policing.

The Ventura Police Department uses 44 volunteers to supplement the professional force. Volunteers have donated over 40,000 hours of their time to serve the city. If 44 volunteers each donated 48 hours per month to the fire department the city could save more than $1.06 million in basic compensation costs. If overtime was eliminated, the savings would amount to nearly $3 million annually! If law enforcement supplements its professional force with volunteers to improve public safety, reduce costs and partially compensate for reductions in its budget, there is no reason that the fire department cannot achieve similar if not better results with a well crafted and executed plan.

If law enforcement supplements its professional force with volunteers why can’t the fire department achieve similar results?

Most US Fire Departments Use Volunteer Fire Fighters

According to the Federal Emergency Management Agency (FEMA), over 92% of fire departments in the United States use volunteer firefighters, either exclusively or on a supplemental basis. California cities such as Chico, Fillmore, Santa Ana, Santa Clara, Santa Paula, Stockton, Compton, Rohnert Park, Turlock and many more successfully use volunteers to supplement their professional forces. These communities receive outstanding results and substantial cost savings with their highly trained and dedicated volunteer forces. If Ventura created a supplemental volunteer fire fighting force modeled after any one of these communities, it would save between $2.5 and $3 million annually.

If Ventura created a supplemental volunteer fire fighting force, it would save between $2.5 and $3 million annually.

Volunteer firefighters do come with a minor cost, but not a salary or massive pension obligation. The city would still need to cover costs of training and equipment; costs already incurred by the city for its professional firefighters. To protect the city’s investment, the volunteer should be required to serve a minimum term or pay back the costs associated with certification and training.

Volunteers are a viable option to ensure a timely response to emergency calls, to reopen station No. 4 and possibly staff additional stations, like a much need station in Ventura’s harbor. Volunteers, like professionals, must complete mandatory training comparable to beginning professional firefighters. Having more well trained first responders in our community will provide a broader measure of safety to the population in times of emergency. Furthermore, a well trained volunteer force will provide a quality pool of applicants from which to pick when the time comes to add additional professionals to our force. By training and utilizing volunteers now, the professional department would have in-depth personal knowledge of a person’s character and fitness to serve as a member of our truly honorable and professional force.

The use of a volunteer force will help alleviate some of the burden on our professionals and allow them to reduce the amount of overtime currently required. In addition, creating a volunteer force would provide adequate staffing and help reduce response times to emergency calls. Not only will this help save lives but it may increase Ventura’s ISO rating (a figure used to determine the cost of homeowner’s insurance). This could help lower the cost of homeowner’s insurance citywide. A supplemental volunteer force is the right answer for Ventura.

Editors’ Comments:

We all need to consider viable alternatives to what we have been doing in the past. Ventura’s police department has its Volunteers in Policing program. It is time we gave a much needed hand to our fire department and help them to do what they do best: serve the public interest through ensuring public safety.

Editors:

B. Alviani K. Corse T. Cook

J. Tingstrom R. McCord S. Doll

[1] 3% at age 55 means 3% of a policeman’s or firefighter’s highest annual salary times the number years of employment. For example, a 20year old works 35 years and in his last year his salary is raised to $80,000. He will be paid $84,000 a year for the rest of his life.

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CALPERS Increases on City Out of Control

January 1, 2011/in Newsletters/by VREG Editors

“Americans always get it right, after they have tried everything else”
—Winston Churchill

HMS TITANIC

[Moving Deck Chairs to Avoid a Disaster over Pensions]

The story of the sinking of the HMS Titanic and the causes are known to all. Had the ship not been traveling too fast, or had the officer on the bridge ordered a change of course earlier the collision with the iceberg would not have occurred The courses of action to avoid disaster were clear, but ordering the crew to move deck chairs to avoid a cataclysmic event was not one of them.

Police salary negotiation victory jacks CalPERS

Ventura Police unions extracted concessions to pay for CalPERS contributions.

So it was on Tuesday January 16, 2011, when the Ventura City Council approved new labor contracts with the Ventura Police Officers, Police Management and the employees represented by the SEIU. The City Council vote was 5-2 in favor of the agreements. Councilman Andrews and Councilwoman Weir voted against approval. The decision of the other five — Brennan, Fulton, Monahan, Morehouse and Tracy was in favor.

The agreement with the Fire Department union is not due for another 6 months, but results are likely to be similar. Recall that Mayor Fulton and Council members Brennan, Monahan and Summers were responsible for increasing the firefighter pension in the fall of 2008 so that these folks could retire with 3% at age 55[1], thus increasing our unfunded pension debt by $1.2 million or more annually. Mr. Summers is gone but Councilman Tracy (retired police chief) will predictably follow in his footsteps on this pension issue. (See Res Publica, August, 2008 for a complete summary)

The City Manager’s “Victory Lap” Over Pensions

Below is an email from City Manager, Rick Cole, recently proclaimed by Mayor Fulton, conveying the news of this purported accomplishment. The email is upbeat and congratulatory for their success of having the employees start to pay towards their own retirement and the establishment of a two-tier system, where new employees will have to be older before they may receive full retirement.

Active citizens,

This week the Ventura City Council approved new labor contracts with employee bargaining units that will move the City toward a more sustainable pension program. The agreements are expected to save a net of $250,000 during the remainder of this fiscal year, $1.0 million in fiscal year 2011/12 and $1.3 million in fiscal year 2012/13, for an estimated savings of $2.6 million over the three fiscal years.

The new employee contracts require employees to pay 4.5% of CalPERS pension costs, resulting in a higher percentage saving for Ventura taxpayers than any other city or county labor agreement in Ventura or Santa Barbara County since the beginning of the economic crisis.

The agreements will also implement a second tier CalPERS retirement formula, based on a later retirement age for newly hired employees. Ventura is the first to do so in the two County regions for either safety or miscellaneous employees. The agreements approved by the City Council cover both.

Concessions were made on both sides to reach agreements that safeguard the delivery of quality services to our community. For the first time in several years, employees will receive additional employer contribution to optional benefits to cover a portion of the rapid rise in health care costs. A key part of the package was an increase of three days in paid leave time for employees who have been forced to take unpaid leave time during the City’s winter shutdown. Executives and managers are not eligible for the additional leave time.

Pension reform has been the subject of public debate across the State and beyond. Last year, the City Council set the goal of raising the retirement age for new employees and returning to employees paying their share of pension costs. Both goals were achieved in the agreements ratified by the Council this week.

Respectfully,

—Rick Cole, City Manager

Our City Manger and Mayor Fulton hail their accomplishment as a milestone and enormous accomplishment. Or was it? Councilwoman Christy Weir did not think so. She rejected the proposal and stated “Fiscally, the city needs more than this right now.” Council Member Neil Andrews said the agreements “simply don’t go far enough.”

“Fiscally, the city needs more than this right now.”—Christy Weir, Councilmember

New police salaries will cost Ventura taxpayers piles of money.

Here are some extracts from the reports of CALPERS, the folks who manage our pension money (or losses) dated October 10, 2010, based on data as of June 30, 2009. The Council members had these reports when they voted on these pension contracts.

First, the “employer contribution rate”, which is the percentage of total payroll that must be paid yearly to fund the pension plans. The rate for police and fire for example must be paid for policemen and firemen yearly in addition to their pay and medical costs:

FISCAL YEAR EMPLOYER CONTRIBUTION RATE (Police & Fire only)

2011/2012 35.190%

2012/2013 36.4%

2013/2014 40.6%

“The estimated rate for 2012/2014 uses the valuation assumption of 7.75% as the investment return. Member contributions are in addition to the above rates”.

CALPERS, report of 10-10-10

We next turned to page 5 of the CALPERS report which provides the following data about the police and fire retirement:

Funded Status	June 30, 2008	June 30, 2009
Present Value of Projected Benefits	$ 270,877,057	$303,536,023
Entry Age Normal Accrued Liability	$ 223,938,241	$248,929,746
Actuarial Value of Assets	$177,314,177	$184,660,390
Unfunded Liability	$ 46,624,064	$ 64,269,356

An identical report was provided for all other employees with the following results:

Funded Status	June 30, 2008	June 30, 2009
Present Value of Projected Benefits	$ 205,128,033	$217,940,958
Entry Age Normal Accrued Liability	$ 167,837,616	$184,806,501
Actuarial Value of Assets	$157,529,148	$165,040,339
Unfunded Liability	$ 10,308,468	$ 19,766,162

A 47.6% increase in unfunded liabilities in one year.

What is to be gleaned from these statistics is that as of June 30, 2008, we as a City owed $ 56,932,532, and that as of June 30, 2009, we owed $84,035,518. This represents an increase of $27,102,986 or 47.6%. The data however gets worse when you look at the projected employer contribution rate between 2011 and 2013. Apply those percentages against the current police and fire payroll of $48,000,000 and the losses are staggering. In 2014 for example we will have to pay CALPERS another $19,488,000 on top of a payroll cost of $48,000,000, for a total of $67,488,000.

Discrepancy Between What CalPERS Reports And What The City Manager Reports On Pensions

Compare those numbers to the City Manager’s email about how much we will save in the same period. The opportunity to achieve true reform and to attain a sustainable pension plan was now. The City Council was negotiating from a position of “impasse”. This means that if no agreement were reached, the Council would have been able to insist upon more reasonable terms to correct the lavish and excessive benefits conferred upon the public employees in the last ten years and achieve sustainability. The advantage was in the City Council’s favor of getting a “three year average salary” as the basis for calculating the amount of retirement, or lowering the percentage of retirement and/or increasing the age of retirement, or moving from a defined benefit to a defined contribution plan. Instead, the management team and the City Council settled for far less than what was fair to the taxpayers of this City. The SEIU contract was a good step forward.

The management team and the City Council settled for far less than what was fair to the taxpayers of this City.

A spreadsheet is attached to allow you to evaluate the decision. These are real numbers. Please note that the pension entitlements and amounts are fixed, but that the General Fund Revenue is not. The income projection is based solely upon educated “guesses” by City officials. The other assumption is that CALPERS is correct in projecting that the investment of City of Ventura pension dollars will yield 7.75%. If our investment does not yield that return on our investment the losses get far worse. If you want to determine how certain entries were calculated, such as percentage calculations, place your cursor over the number and left click once. The formula for the calculation will appear at the top of the form. For those who want the bottom line here you go:

In 2008 income was $94,100,000 and the City sent CALPERS a check for $11,948,759. This was 12% of our total income on top of the payroll cost of $48,087,281. Total spent on people and pension benefits totaled $60,036,040 or 63% of our actual income.
In 2011 income is budgeted at $80,400,000 and the City will send CALPERS a check for $13,142,936. This is 16% of our total income on top of a payroll of $47,056,848. Total that will be spent on payroll and pension benefits will total $70,199,784, or 87% of our budgeted income.
In 2013 income is budgeted at $82,000,000 and the City will send CALPERS a check for $13,929,524. This is 16.9% of our total income (*) on top of a payroll of $47,056,848. Total that will be spent on payroll and pension benefits will total $70,199,784, or 85.6%% of our budgeted income.

*The budgeted income (projected) for the City in 2012 is $80,800,000 and in 2013 $82,000,000. If their guess at income is wrong then the percentage of payroll and benefits gets larger.

EDITORS COMMENT:

Bad negotiating increases CalPERS contributions

Bad salary negotiating increases Ventura’s CalPERS contributions

Had all of the agreements mirrored the SEIU contract this might have been a positive step toward solvency. Instead Councilmen Fulton, Brennan, Morehouse, Monahan and Tracy decided to move the deck chairs on our ship of state in a token effort to avoid a looming financial disaster. Such votes cause one to reflect and ask how this simple majority can continue to float above economic reality. Are these five elected officials reading the financial reports? Do they truly believe and hope our local economy will rise out of the ashes like a phoenix in a nation with $15 trillion in Federal debt and a State that is broke?

Do not mistake, the SEIU contract was a positive step, however the police unions and this council majority used lavish benefits and entitlements as their starting point in negotiations rather than economic reality.

Editors:

B. Alviani K. Corse T. Cook

J. Tingstrom R. McCord S. Doll

CALPERS	2008	2009	2010	2011	2012	2013	3 year net gain from employee contribution to CalPers increase
*Total Employee Payroll	48,087,281	51,240,487	48,940,168	47,056,848	46,685,947	47,287,512
* Percentage of Contribution by Employer	17.08%	17.88%	18.65%	21.31%	22.61%	25.78%
* Dollars of Contribution by Employer	8,211,264	9,162,430	9,128,522	10,026,168	10,555,745	12,190,178
* Percentage of Contribution for Employee Portion paid by City	7.77%	7.74%	7.89%	6.62%	4.57%	3.68%
* Dollars of Contribution for Employee Portion paid by City	3,737,495	3,967,333	3,863,616	3,116,768	2,131,282	1,739,346
* Percentage of Contribution by Employee				1.04%	3.16%	3.97%
*Dollars of Contribution by Employee				488,063	1,477,236	1,877,308
*Total General Fund Revenue	94,100,000	94,100,000	85,100,000	80,400,000	80,800,000	82,000,000

*Source is City of Ventura Finance Staff



Percentage of CalPers to Total General Fund	12.70%	13.95%	15.27%	16.95%	17.53%	19.28%
Total of CalPers Payment	11,948,759	13,129,763	12,992,138	13,630,999	14,164,263	15,806,832
Percentage of City’s payment to CalPers	100	100	100	96.42%	89.57%	88.12%

Dollar Increase, year over year, to CalPers		1,181,003	(137,625)	638,861	533,264	1,642,569
$ of Contribution by Employee				488,063	1,477,236	1,877,308

Employee Portion over City’s increase				(150,798)	943,972	234,739	1,027,913

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A Little Here. A Little There. Pretty Soon It Adds Up To Real Money.

July 1, 2010/in Newsletters/by VREG Editors

Bellwether: “A male sheep which leads the flock, with a bell on its neck. A leader of a thoughtless crowd” —Webster’s New Collegiate Dictionary

THE SOUND OF THE BELL

[SHEARING TIME?]

Three years ago nobody in city government would pay attention to the voices of caution who warned the City Council about the money excessive public employee salaries cost and the unfunded pensions of public employees. Now, thanks to the City of Bell perhaps the citizens of this community will pay attention to their role in government, and the need for serious and drastic reform.

Everything went wrong in Bell. It was greed in all of its glory, and it illustrated what is wrong with the arcane public pension system in this State, and in every city in this state, including Ventura. Bell City Manager, Robert Rizzo, resigned after it was revealed he was being paid $800,000 to oversee a town with a population of 40,000. Now the LA Times reports that the records actually show that he was paid $1,500,000 a year. Included in that was 28 weeks of vacation and sick time at a cost of $386,000. Well he is gone but he is not out because he will collect $600,000 yearly from his pension benefits with CALPERS.

Ventura taxpayers get fleeced in Bell disaster. We will pay money to Randy Adams for life.

This example however is even closer to home. Two people in the City of Bell used to work for the City of Ventura. Angela Spaccia, Assistant City Manger for Bell was paid $376,000 a year before she quit, and moved over to work for the City of Maywood. She used to work for the City of Ventura. Then there is Officer Randy Adams who worked in Ventura for 23 years as a police officer. He then gravitated through various jobs until he became the Chief of Police for the City of Bell. He too resigned after it was revealed that he was earning $457,000 a year. He can retire, as will Ms. Spaccia eventually, but whose money pays the pension?

Not the City of Bell. They escape nearly all the costs of Chief Adams $411,300-a-year pension. Under CALPERS rules, the city is responsible for just 3% of that because he only worked there for one year. Taxpayers in Glendale, Simi Valley and Ventura would have to pick up the tab.

This happened because Bell hired Adams at more than double the money he was making as Chief in the City Glendale. That salary spike doubled his eligible pension amount under CALPERS, the state’s public employee retirement plan. Add the state’s permissive pension laws and a host of variables that can dramatically affect retirement pay and we find a system that leaves you in a bleary daze

Other cities will be on the hook for Adams’ pensions costs even though their salaries were relatively modest. until he landed in Bell. When he resigned Chief Adams was making $457,000. He will now get approximately 90% of that sum. Glendale will have to pay around 16% of Simi Valley 18%, and Ventura 63%. Ventura alone will have to pay this guy $259,119 per year for life. Remember, none of this has ever been funded.

CITY OF VENTURA’S RESPONSE

Ventura’s mayor, Bill Fulton, has written several articles on the subject. You can go view the articles here. He, like everybody else, condemns the excesses by employees and officials in the City of Bell. His articles are well written and deserve a read, but how transparent is our city government? Mayor Fulton answered this question in one article:

“…democracy only works, even in small cities, if people pay attention, and oftentimes people aren’t paying attention. But one of the most disturbing aspects of the Bell situation … is how hard it is to figure out what’s happening even if you are paying attention. In spite of the state’s vaunted Brown Act open-meetings law, California governments are still not particularly transparent”.

HOW MUCH MONEY DOES THE COUNCIL MAKE?

The City Charter limits council members to $600 per month and the mayor to $700 per month, plus members are paid for participating on certain boards and commissions. Here is the yearly total:

Councilmember	Salary	Boards	Travel
Fulton, Mayor	$ 8,800	$2,000	$1,200
Monahan	$7,200	$3,800	$1,200
Tracy	$7,200	$0	$1,200
Morehouse	$7,200	$1,440	$1,200
Weir	$7,200	$0	$1,200
Brennan	$7,200	$0	$1,200
Andrews	$7,200	$0	$1,200

CITY EMPLOYEE COMPENSATION

Employee	Salary	Medical	Pension Contribution	Car
Ken Corney, Police Chief	$195,153
Quinn Fenwick, Asst. Police Chief	$160,012
Kevin Rennie, Fire Chief	$187,000
Don McPherson, Asst. Fire Chief	$170,014
Ron Calkins, Public Works Director	$175,547
Jay Panzica, Chief Financial Officer	$171,265
Rick Cole, City Manager	$174,158
Mary Walsh, Asst. City Manager	$171,265
Ariel Colonne, City Attorney	$194,909
Jeff Lambert, Community Dev. Dir.	$171,265
Elena Brokaw, Director, Parks & Rec.	$167,088
Jenny Romey, Human Resources Dir.	$159,037
Total	$2,096,713

*In response to a VREG request for the full cost of each of these employees the City Manager, on August 10, 2010, provided the following response:

“Within the next few days, we (will) have calculations on the cost of employees over and above regular salary (we’ve just posted those earning over $100,000 including gross pay and overtime) to be followed by the Box 5 W2 calculations (which also includes city paid deferred comp and the value of life insurance) to be followed by a total all-in of that plus city paid benefits and CalPERS contributions”—Rick Cole, City Manager

Editor’s note:

For detailed information on past or present Ventura city employees’ salaries, visit transparentCalifornia.com.

As for Ventura’s exposure to the Randy Adams pension claims, purportedly the City has sent a letter of protest and/or legal challenge to CalPERS to try and stop payment. Good luck with that one! Even Chief Adams will lawyer-up and argue we are a nation of laws and not men.

Editors’ Comments:

How many more Randy Adams types do we have out there? How much more do we owe, over the amount funded through CalPERS, to those who are retired or about to retire in the future? It is time for government to become proactive instead of reactive in the management of our tax money and find out before we end up in the shearing shed. Stop listening to the bellwether !

Editors:

B. Alviani S. Doll

J. Tingstrom K. Corse

B. McCord T. Cook

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City Council Lacks Expertise On Pension And Budget Matters

May 1, 2010/in Newsletters/by VREG Editors

Insanity: doing the same thing over and over again and expecting different results.
—Albert Einstein,

THE FIREFIGHERS PENSION INCREASE – A CONTRACT?

[ NOT!]

In previous editions we informed you that in 2008 the City Council, on a vote of 4 to 3, increased the Firefighters salary and retirement benefits. They voted to increase those benefits from 2% to 3% even though they knew (were told) they did not have the money to fund it. The vote resulted in an approval of a Memorandum of Understanding (MOU) with the union.

City Council approves an 11% increase in firefighters’ pension.

The issue had to be revisited because of the failure of the City Council to obtain an actuarial report from CALPERS on what it would cost to increase these benefits. To “try” to fix the problem the Council, at their regular meeting on April 26, 2010, was presented with a report from the CALPERS actuary, Bill Karch. He informed the council that the “present value” of the cost of the increased benefits (in addition to what we are already obligated to pay) would be $5,047,760, that the city would have to pay $548,271 this year, and a sum yearly thereafter to fund the $5.4 million increase. He didn’t say how much we would have to pay beyond 2010.

An actuary is a specialized, mathematical expert trained to compute values for present and future events. Actuarial “present value” calculations convert future occurrences, such as retirement payments, to a present dollar value. The “present value” of benefits represents the total dollars needed today at an estimated investment rate of return to fund future benefits for members of the pension plan. The lower the rate of return (say 4.5%) the more you have to pay up front now to meet the future payment demands. The higher the rate of return (say 7.75%) the less you have to pay now.

The CALPERS actuary used a rate of return of 7.75%. Interesting choice given that CALPERS lost $55.2 billion (25% of its value) in 2008-09, and just billed the State of California f $600,000,000 this year to pay for unfunded pension liabilities, but we digress. None of the Council members asked about the investment rate of return that was used to make his calculations and/or whether the 7.75% rate of return of interest was a reliable dollar estimate in today’s market, and/or whether we should use a lower rate of return, to predict how much our present pension obligations would have to be increased in order to fund and pay future pension obligations.

Subsequent to the Council meeting Mr. Karch was asked in an email from VREG if he could calculate what the present value of the increased obligation if 4.50% was used, and how much more Ventura would have to pay this year. That number was selected because actuaries today conservatively use 3% to 5% as the investment rate of return in making such calculations. Mr. Karch declined. His response was that we could get that the data if VREG made a Freedom of Information Act request through formal channels; and, by-the-by send a large check to pay for the voluminous computerized report. Well Bubba I guess we know who that fella works for!

So in a state of blissful ignorance Council members Fulton, Brennan, Monahan and Tracy voted yes. Council members Andrews, Morehouse and Weir voted no. The deciding vote was that of Deputy Mayor Tracy, who in casting his yes vote stated:

“…what is clear tonight is that we are not deciding on whether or not we give our firefighters an enhanced retirement program. That decision was made two years ago. We have received (a) very competent legal opinion that frankly we have no choice but to honor that contract…”

City Council negotiates questionable contract with Ventura firefighters.

What the Deputy Mayor was referring to was a letter from a law firm named Liebert Cassidy Whitmore of San Francisco, attached to the Administrative report for Agenda item #8, which concluded – “Once approved by the City Council, the memoranda of understanding (MOU) between the City and the Association (firefighters) became a binding and legally enforceable agreement…”.

Just prior to the vote the City Manger, Rick Cole, advised the Council that the reason for the public hearing on the actuarial valuation was to let the public know about the cost of the increase, referring everyone to Government Code section 7507. Connect this reference with the Deputy Mayor Tracy’s statement and we arrive at the crux of the problem — was there a valid contract?

Read Government Code § 7507 and you decide. That code provides:

“The legislature and local legislative bodies shall secure the services of an enrolled actuary to provide a statement of the actuarial impact upon future annual costs before authorizing increases in public retirement plan benefits…”

The future annual costs as determined by the actuary shall be made public at a public meeting at least two weeks prior to the adoption of any increases in public retirement plan benefits”.

The letter written by the San Francisco attorneys, LIEBERT, CASSIDY WHITMORE does not address this error. For reasons that are not apparent, these high priced legal types did not even discuss this issue.

A mutual mistake of law and/or fact is always a good defense to breach of contract action. If both parties to a contract operate under a mutual mistake of fact that there has been compliance with the law, and in fact there has been no compliance with the law, there is no contract

Questions for our readers:

Why a letter, bearing the legend “CONFIDENTIAL—ATTORNEY CLIENT PRIVILEGED”, which does not discuss a critical legal defense, would be attached to a public document?
Why not a single firefighter asked to speak in support of the measure when the room was packed with the fire folk, who were straining at the bit to get more benefits?

Curious that , but we leave “that” to your speculation.

Editors Comments:

An actuary report was NOT presented prior to the decision to increase benefits in August and October of 2009, thus was not enacted as required by the California Government Code. The attempt to finesse this critical error, by pretending it could be presented after the fact, on April 26, 2010, ignores the underlying issue – THE RIGHT OF THE CITIZENS OF THIS CITY TO KNOW IN ADVANCE WHAT AN INCREASED PENSION BENEFIT WILL COST BEFORE THE CITY COUNCIL MAKES A DECISION. The firefighters’ will of course dismiss this as a mere formality. This contract should be rescinded and an accurate and reliable actuarial report provided to the citizens of this community.

FROM READERS OF THE MARCH EDITION OF RES PUBLICA

[THE PIPER WOULD PLAY A FAR DIFFERENT TUNE IF THREATENED WITH THE LOSS OF HIS PIPE]

This regarding the Pension Reform Committee appointed by the Ventura City Council:

“Very interesting news letter this time as always. Only one public member appointed to the “ad hoc” committee. All the rest have a vested interested in the system. What would happen if the no guts council just plain and simple told the unions that from now on the fire and police will have to pay at least 1/2 of their contribution. Would the fire and police walk off? If so I am sure they can replace the lot. The problem as I see it is that all the cities have to ban together so that there will be a closed door to bouncing around of personnel.”

—K. Weber

THE COUNCIL ACCEPTS VENTURA’S NEW BUDGET

[A SORRY EXCUSE, AT BEST]

Another letter concerning the current budget format mandated by the City Manger for use in 2009-2001 (called a Budget Book). We mentioned in our last issue that the current “Budget Book” looked useless and appealed to you for help.

“Regarding the City’s budgeting process and the budget document itself, I spent some time looking at it after reading your latest publication and you hit the nail right on the head. It is most assuredly not a decipherable budget document. It lacks clarity and the detail required for the average lay person to begin to understand it, much less a person with a financial background. I’m not even sure that it meets the minimum legal requirements, as promulgated by the State Controller’s Office.

I am a C.P.A., have a Masters degree in Public Administration, and have worked in government finance and budgeting for the past 29 years and, without a doubt, this is the most sorry excuse for a budget document that I have seen in my life.

In Santa Barbara County, we have developed a true program/performance-based budget that actually links dollar amounts with stated goals and performance measures. Not only can you clearly and easily see the amount of money, staffing, and other resources allocated to each program area within each department of the County, but you can also see the performance and outcome measures associated with each individual program area. In other words, as a taxpayer, you can actually see what you’re getting for your dollars.

The firefighter pension increase is just another example of the arrogance and disconnect with reality coming out of City Hall these days. I certainly hope we can make some changes in the next election. We definitely cannot continue down this path or bankruptcy becomes an inevitability”

—M. Gibson, CPA and 2009 candidate for Ventura City Council

EDITORS’ CORRECTION

Last month we reported that the Firefighters pension increase was 50% (2% to 3%). The City Manager corrected us and pointed out that it was ONLY 11%. . After his response we received the CALPERS actuary report and confirmed that our report was in error. Under the current pension plan it is a 20% increase if the Firefighter retires at age 50, and an 11% increase if the Firefighter retires at 55. That aside, this correction does not excuse the ridiculous statement by former Councilmember Ed Summers that it was only a 1% increase. It is still hard to believe he wants to be the County Treasurer.

EDITORIAL

The City Council is called upon to make many difficult and complex decisions concerning the financial welfare of this community, but one of the greatest decisions they will have to make concern the pension contracts with the public employee unions now and in the future. Except for members of the public employee unions there is not a single informed individual in this society that would disagree with the conclusion that our pension system is bankrupt and unsustainable. The collective decisions of our City Council are costing the citizen’s of Ventura for decades in the future. Not to ask the hard questions, when asked to approve a new liability of $5.4 million dollars, such as the interest rate used for the assumptions of a pension increase, or to discuss if the right questions were asked and answered in a legal opinion statement, borders on malfeasance. It is not enough to say, “the report was too lengthy” or “we didn’t have enough time”. If decisions need to be delayed and other opinions sought, the City Council needs to control that process and remember the admonition of Jean-Jacques Rousseau to ”keep your experts on tap and not on top”.

Editors:

B. Alviani S. Doll J. Tingstrom

K. Corse B. McCord T. Cook

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Budget and Pension Crises Throughout California Inflict Harm

March 1, 2010/in Newsletters/by VREG Editors

“If there must be trouble, let it be in my day, that my child may have peace”—THOMAS JEFFERSON

CALIFORNIA – A FAILED STATE

[THE “TERRITORY OF CALIFORNIA”]

You can watch the stock market successes, listen to the pundits braying out messages like “we have turned the corner”, but the reality is that the State of California and the municipalities nationwide, including the City Ventura, are in trouble.

The recession caused budget and pension crises throughout California.

The fortunes of the State of California are grim. The S&P and Fitch Investors lowered the debt rating on General Obligation bonds to BBB. This rating means that California bonds now are “speculative with major risk exposure”. It is projected that the rating will be lowered to B (junk bond), which means “adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal”.

During a VREG forum at the Ventura Beach Marriott on February 24, 2010, the guest speaker, Chriss Street, of Orange County whistle blower fame, currently serving as the Orange County Treasurer and Tax Collector, put the State of California with the debt problems of Greece, which imploded because of their governments “credit default swap” ventures. They and the State of California are broke, but our state does not have a Eurozone to bail us out. It is so bad that the Governor’s office is looking at bankruptcy. By law, a state cannot file bankruptcy, but state government has been advised that bankruptcy is an option if they convert to a “territory”.

Mr. Street also was of the opinion that between July 21 and July 24 of 2010 the State of California will be in the position of being unable to obtain any financing to continue operations. Is he right? We do not know but we have marked it on our calendars.

VENTURA’S CUPBOARD –ALMOST BARE?

[IN THEN JUST OUT OF THE PICKLE BARREL]

The economic failure of the State will have a direct effect on municipalities including the City of Ventura. Recall, that last year our state government, pursuant to Proposition 1A decided to “borrow” [take] our real property tax money. They can do that for two years with a promise to pay it back. This served as a major argument by Mayor Weir, Councilman Fulton and the “TAX ‘EM” bunch to convince Venturans to raise the sales tax. Didn’t work the first time in 2006 and it cost the citizens a bunch of money again in 2009.

California withholds property tax revenue from Ventura to close budget gap.

Then, after the November election we learned that the City did get the real property tax money through a concept of “securitization”. Here is a hopefully simple explanation. As part of the 2009-2010 budget, the California Legislature suspended the local agency protections of Proposition 1A and passed a provision to withhold more than $2 billion of property tax revenue from cities, counties and special districts. Ventura’s share of that was $2,718,041. So, in a plan equivalent to a “forced loan”, the State exercised the right to hold those funds to close the budget gap, with the intent to repay the money in three years. As an alternative, the legislature also permitted the establishment of a third-party securitization program for cities to use to avoid the loss of revenue. A group called the California Communities Development Authority (aka California Communities) was appointed as the exclusive authority to offer a program to purchase the receivables due to local government agencies from the State. They did that, $2 billion in bonds were sold in the market place and the property tax money due to each municipality was paid with all interest and costs paid by the State. View the amount taken from each city/county here.

The City of Ventura again faces the specter of losing this same amount of money in the 2010-11 budget. Given the deplorable condition of the State finances one wonders who would again loan the State another $2 billion. On a positive note the City of Ventura has joined with the California League of Cities in signing a referendum petition to prevent the State of California from taking the real property tax money in the future. Our city is sitting on the edge of the proverbial pickle barrel.

THE $11 MILLION PROJECTED BUDGET LOSS

employees largest budget item in Ventura

City employees are the largest budget expense in Ventura.

On March 15, 2010 Mayor Fulton invited community leaders to attend a BUDGET WORKSHOP to help decide where to make cuts in the 2010-11 budget to compensate for an $11,000,000 PROJECTED LOSS. Liberally attended by policemen and fireman, due to invitations extended, by our Chiefs of Police and Fire, to “Friends of the Fire Department” and “Friends of the Police Department”, the participants came up with a variety of proposals. The giddy report from Mayor Fulton was that it was a resounding success, with proposed solutions like – “muddle through”, “strategic layoffs”, “use of volunteers”, “delay projects” and “shift funds”.

One participant reported that during this conference the major budget item that needed to be addressed was all but ignored, which is the cost of people. At least 80% of our expected income of $85 million will be spent for people and pension costs. Police and fire consume 56% of the total budget cost.

EDITORS’ COMMENTS:

The original budget was based on a prediction that the City would have income of $97 million to cover their expenses. It was a bad bit of guess work. Realistically, the City could never have expected more than $85 million in the first place, however now they want the citizens of the community to believe they have an $11 million shortfall. Not true. What they have is long-term expenses of $11 million more than their income.

THE PENSION DEBACLE

A few months before the November 3^rd election the City Council proudly announced that the City Council, in an effort to address serious budget woes, had appointed a special committee to investigate potential reform of the salary and benefits paid to the City public employees, and particularly police and fire. They did that and here are the folks appointed to come up with a recommendation:

Vern Alstot	Fire Management
Neal Andrews	Councilmember
Bart Bleuel	Public Member
Eric Burton	Code Enforcement officer
Benny Davis	Fire Department
Ramon De La Rosa	Maintenance Department
Quinn Fenwick	Police Management
Randy Hinton	Public Member
Sylvia Lopez	City employee union representative
Frank Maxim	City employee and supervisor
Ed McCombs	Public Member (former City Manger)
Jim Monahan	Councilmember
Richard Newsham	Union representative
John Snowling	Police officer
Mike Tracy	Councilmember

This group did not come up with a recommendation. On Monday, March 22, 2009, they disbanded and submitted a report to the Ventura City Council. The report consists of a compilation of different views including position statements of the nine (9) union and employee representatives.

To their credit the City Council received the “report” then unanimously voted to adopt a “policy” whereby in all future salary and benefit negotiations with the unions and employees the City Council would seek a two tier retirement benefits system, plus ask the policemen, firemen and other employees to pay one-half of the pension contribution requirement. Nothing was accomplished other than to state publicly that in future contract negotiations the City would seek to establish a two tier system.

THE PUBLIC EMPOLYEE PENSION DEBACLE

[THREE CANARIES IN THE MINE]

A reporter named Ed Mendel wrote an article on January 25, 2010 for the San Diego Tribune. Here are few of his comments:

“A wave of higher pension costs is hitting California’s three major coastal cities, prompting proposals to shore up future budgets with ballot measures in Los Angeles and San Francisco and eroding progress in San Diego, once dubbed “Enron by the sea.”

The surge from an historic stock market crash, which punched big holes in pension investment funds, is creating concern that pension benefits approved in better economic times are not “sustainable” and need to be cut for new hires.

City council members in Los Angeles and San Diego have mentioned the possibility of “bankruptcy” in remarks to reporters this month, a path taken by the city of Vallejo two years ago when labor costs consumed most of its budget.

Labor unions, agreeing to benefit cuts in some cases, are trying to figure out whether current pension levels are unaffordable and should be reduced, or if city officials are overstating the problem to use the economic downturn as leverage for givebacks.”

Vallejo, CA delcares bankruptcy following bad budget management

The City of Vallejo filed bankruptcy because 70-80% of their general budget was devoted to paying police, fire and other public employee salaries and benefits. When the old port city on the far side of San Francisco Bay filed a rare municipal bankruptcy in May 2008, there was speculation about whether bankruptcy would become a way for deficit-ridden cities to shed crushing retirement debts. In a precedent setting ruling in the Vallejo case, U.S. Bankruptcy Judge Michael McManus in Sacramento decided that city labor contracts can be overturned in bankruptcy, and then dissolved the contract.

In the shadow of this decision the Vallejo firefighter union agreed to cut pensions for new hires to 2 percent of final pay for each year served at age 50, down from the current 3 percent at 50, a previous trend advanced by state legislation a decade ago. They also agreed to a new two-year contract with no pay raise and increased their pension contribution to 13.4 percent of their pay, up from 9 percent..

EDITORS’ COMMENTS:

Given the serious budget issues we hope the Ventura police, fire and public employee unions are paying attention, and do not continue to believe that they have found the golden goose.

Editors:

B. Alviani S. Doll J. Tingstrom

K. Corse B. McCord T. Cook

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Ventura asks for more money in Measure A

Shameless Politicians Propose Measure A For More Money

September 1, 2009/in Newsletters/by VREG Editors

“No creature smarts so little as a fool. Destroy his fib, or sophistry – in vain! The creature’s at his dirty work again.”—Alexander Pope

911 TAX – POSTMORTEM

[THE GREAT BOONDOGLE. WHERE DID THE MONEY GO?]

The City Council keeps saying they do not understand why the citizens of this community have such distrust for city government. They are not likely to understand if they are not listening.

Ventura refunded only part of the money collected in the 911 Tax.

No need to again examine the history and the woof of the pathetic effort of the City Council to tax 911 calls, but it does serve to examine the aftermath.

This idea, spawned by our City Manger, Rick Cole, followed on the heals of the defeat of his Measure P6. Of course he has no public exposure and can duck any critics’ comments because he was not elected to office, and did not vote for the tax. Councilmen Monahan, Summers and Brennan, currently up for re-election, however were elected to office, and they did vote for the 911 tax.

Citizens protested, but did so in vain. Lawsuits followed, and only then did the Council take steps to set this all aside to avoid being tagged with a huge bill for attorneys’ fees if they lost. Make no mistake, they were going to lose. It would then be logical, and reasonable, to assume that the money collected under this concocted scheme would be refunded to the people who were FORCED to pay into the program, right? Au contraire!

Citizens left hanging for refund of over $1.2 million from 911 tax.

Our fine City government collected $1,220,005 during FY 08-09, representing 54.2% of the hoped for annual revenue of $2,250,000. Once the law was cancelled you were then offered a refund, if you could prove you paid, only if you had “opted out”, and only then if you attached the necessary documents, and jumped through the required administrative hoops to get your money. Why only if you “opted out”? Because the City Manager surmised that if you did not “opt out”, you must have chosen to “opt in”, meaning that you wanted the city to have this money, and it was your intention for the city to keep the funds all along.

Only $17,096 was refunded. The City kept over a million dollars, used $800,000 to balance the 2008-09 budget and kept $402,909 in the general fund for use this year. Having bilked the citizens of this community, and having failed to refund the money to those who paid, it would seem that at least the Council would have the decency to do the right thing and use the money for its declared purpose – fund the 911 system! That did not happen. Instead the money was stuffed down the proverbial rabbit hole. [okay! used for other expenses like?]

Editors Comment:

Are we hoping in vain that this Council may exhibit some shame, and do the right thing?

THE NEW SALES TAX- “MEASURE A”

[COUNCIL ASKS VOTERS FOR MORE MONEY TO FINANCE FAILED POLICIES]

Ventura politicians are shamelessly asking for more money with Measure A.

It has been clear, since Measure P-6 was defeated at the polls, that this Council would attempt a new sales tax measure. This new measure to raise the city sales tax by ½% was put on the ballot for November, 2009, on a vote of 6 to 1. Councilman Neal Andrews opposed that measure.

In the process of approving Measure A the Council referred constantly to the fact that a “Blue Ribbon Committee”, appointed to consider this proposal, had recommended that a sales tax increase be put on the ballot for public approval, and that the tax be automatically cancelled after 4 years. This was something to behold — that this Council would have our good citizens believe that the Council really needed a Blue Ribbon Committee’s approval in order to place a new tax measure on the November ballot. Members of the Council appointed a majority of the blue committee because they were “friends of the Council” (FOC), so the result was always a foregone conclusion. Former Mayors Jim Friedman and Sandy Smith were on that committee, and each was heard to smirk that they thought “the Council was just trying to seek political cover”.

Now the spinning and fact distortions begin anew. As you are reading you will recall what happened when P6 was proposed. The Council wanted a 1/4% special tax for police and fire. That measure failed, as well as the lawsuit filed by “the City” ( Actually, it was filed by a political action committee headed by Assistant Police Chief Corney, to which each Council member contributed money) against citizens who opposed the tax. They lost that too after paying their Santa Monica lawyers $30,000.

The Council and the City Manager vowed to come back at the citizenry with a new tax. Thus Measure A was put on the ballot seeking double the amount of money sought by P6, but this time as a general tax, which only requires a 50%+1 voter approval. Their hope is that since they received 61.95% of the vote on P6, ergo the voters will approve a ½% general tax increase.

So the rhetoric and distortion begins by the cabal controlling “the City”. To avoid the label of being a “special tax”, requiring a 2/3 vote, the Council decided to promise to spend any new sales taxes in certain ways, but without telling the voters at the same time that they were not obligated to do so [ one could almost see a sly grin and wink from the 6 Council members as this statement was made]. Their promise of how they will spend this $10,000,000 in new sales tax money may prove to be their undoing.

If approved by the voters it will be interesting to see how Measure A survives a legal challenge, and it will be challenged under Proposition 218. That state proposition requires a 2/3 voter approval for any tax devoted to

Police and Fire departments would receive 40% of the money collected from Measure A.

a special purpose as opposed to general tax, which is collected and placed in the general fund. The Council hopes to avoid this problem by saying the funds are “not required” to be used for any specific purpose, yet they announce that the funds will be used for a specific purpose as in inducement to get voters to approve the measure.

Interestingly one of the specific promises made by this Council, as an inducement to voters to approve the measure is that they will spend 40% of the new tax on police and fire — the exact sum they sought to raise in the failed P-6 measure.

Today it’s hard to know what the City is really doing, except that most of the individual Council members are campaigning hard to convince you that you should ignore the waste and spendthrift policies of the past and impose the new tax. They do not want to address the underlying economic malady – overpaid public employee unions and the millions wasted in ill advised decisions like the plan to narrow Victoria, or the ill-fated 911 tax or increasing the fire department retirement programs by 50%. Councilman Fulton, who is also campaigning hard for the incumbents advised one contender that he could not approve of their candidacy because they (the Council ) would lose “consensus” – he really means control. He also stated in a public meeting that we should forget the past and move on. So how, again, was the 911 tax money spent?

Editors’ comments:

Only a fool does not learn from the mistakes of the past.

THE STATE STRIKES

It is now official. Remember that money that you sent in for property taxes, and which is supposed to be returned, in part, to our community? Well our fine state government has decided that to correct their mismanagement and budget deficiencies by taking the money that is supposed to be returned to the cities. Thus our City will not receive $2,760,358 that would be normally returned. We have been forced to loan to a state government that has achieved junk bond status in the market place.

The money is not gone, just delayed in delivery. Of course the State promises to pay this back in 3 years. How about interest? The answer we get is that this will be set by someone and sometime in the future — you know the line — “trust us”.

It gets worse. In addition to the loss to the general fund, the Redevelopment agency has lost $1.2 million, and that will never be repaid. It is gone. Makes you wonder if Ventura had spent some more Redevelopment agency funds in the last 2-3 years, whether there would have been any funds to raid?

CITY COUNCIL USES A SMOKESCREEN

[NEVER LET A GOOD CRISIS GO TO WASTE]

This City Council again has to scramble to adjust their budget to allow for this loss. The hyperbole and spin from City Hall, and the proponents of this tax is that we really need the new sales tax because they have adjusted the budget as much as they can, employees have taken a 5% pay reduction and our State Government has taken our money. What is a poor City Council to do? Long before the state did its most recent raid on City funds the die had been cast. The ½% sales tax was already in the plan. The City Council members are campaigning hard for the new tax as if the problem is all due to the State and they had some great insight – in short playing the fear game as a reason for the voters to approve the new tax.

Opponents point out that such a tax is regressive, that business has never prospered in such in an environment, that even though there is a 4-year sunset provision the Council proposes to use the new tax money to make long term commitments to police and fire (40% of the new tax money), and that when the 4-year period is up the Council will go back to the voters arguing that if we do not extend the tax there will be cuts in services — you know the old saw — crime, untimely emergency responses to medical emergencies, etc. The opponents also point to the spendthrift policies of this council over the last 6 years, for example $1,000,000 alone was spent to narrow Victoria Avenue. That should be money in the bank, but instead is sitting in the pockets of City employees and Los Angeles consultants. There are $13,000,000 of such expenditures, which should be in the bank, but is not because of unrealistic planning and spending by a liberal out of touch Council.

Mayor Weir is campaigning for the new tax and has stated publicly “we will not spend any money we don’t have”.

Editors’ Comments:

We hope each citizen will reflect on whether the past should matter in deciding how to vote.

Editors:

B. Alviani S. Doll J.Tingstrom

K. Corse B.McCord T. Cook

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Grand Jury Exposes City Pension Out of Control

August 1, 2009/in Newsletters/by VREG Editors

“The democracy will cease to exist when you take away from those who are willing to work and give to those who would not” —Thomas Jefferson

THE FLEECING OF VENTURA

The Ventura County Star reports the Grand Jury finds Ventura’s Pension Out Of Control

On July 26^th the Ventura County Star published an article about the deplorable conditions of the public pension plans in Ventura. The Ventura Grand Jury labeled these city pension plans as headed for disaster — an out of control cost [They actually said “uncontrollable cost”]. To see how out of control the one in Ventura is see the October, 2008 issue of Res Publica, which provided an in depth analysis of just how much unfunded debt exists because of the lavish pension plans given to public employees by the City Council. We republish some of that article here as a reminder to our citizens when they go to the polls in November.

(c) THE FIREFIGHTER PENSION

In a vote of 4 to 3 the council approved the Memorandum of Agreement and the new pension contract with the firefighters of this city giving them a pension equal to 3% of their highest salary times the number of years in service plus all medical, dental, the same plan received by policemen. The yeas were Councilmen Fulton, Brennan, Summers and Monahan. The neighs were Mayor Weir, Councilmen Andrews and Morehouse who stated just before his “NO” vote — “I HAVE GRAVE CONCERNS TO COMMIT WHEN WE DON’T KNOW WHERE THE FUNDS WILL COME FROM”.

I have grave concerns to commit when we don’t know where the funds will come from.

In our August 2008 letter and postscript letter titled “IN THE SHADOW OF VALLEJO”. We posed a hypothetical retirement scenario — a fireman goes to work for the department at age 20, works 35 years and retires at the age of 55 earning a salary of $100,000 per year. The adopted increase now provides that he/she will receive 3% of their salary in their last year of employment multiplied by the number of years of service. So he/she will retire earning $105,000. [$100,000 x 3% = $3,000 x. 35 = $105,000].

Councilmember Ed Summers voted for pension increase because city employees only live 7 years past retirement.

Since that publication Councilman Summers, who is up for reelection in November, pointed out that we need to make some “minor corrections”. We quote from his letter:

In the example it indicates that an employee has the ability to retire and receive 105% of their annual salary. Regardless of the time of service and age at retirement, the program is capped at 90% of the eligible salary. The example also includes add-back for accrued sick leave and vacation. The City’s formula does not include any add backs, the formula uses only the base salary. It is the County’s formula that includes add backs…(in addition)…unfortunately the assumption of a 30-year future obligation per employee is incorrect, the average life expectancy of a public safety employee is 7 years from retirement”.

We do not know what source Councilman Summers uses for this remarkable revelation that firefighters retiring at age 55 are projected to live only 7 years. His assertion is nonsense and not supported by any credible source. Further, when he and the other profligate four argued that “the increase was only 1%, it in fact was an increase from 2% to 3%, which is a 33 1/3% increase in the retirement plan. So what is the reality? We have less money now than we did in October, 2008. This City Council has led us into a sea of red ink — $294,673,595 as of April, 2009, yet our Council and the public safety unions ask us to pretend that this not a problem. Instead they want more money in the form of new taxes. Here is an example of what we now have to pay just 15 retired folks yearly for the rest of their lives — $1,707,086.

Mike Tracy*	$ 186,902
Gary McCaskill	$140,602
Neil Gedney	$129,856
Brian Gordon	$132,548
Carl Handy	$122,022
Douglas Aldridge	$124,396
Bill Rigg	$121,333
Robert Boehm	$120,494
Donald Davis	$112,735
Jim Walker	$ 110,570
Everett Millais	$105,245
Shelley Jones	$105,013
Roger Nustad	$101,836
Gail Bogner	$100,515
* Retired Chief of Police. Running for City Council

Police Chief, Pat Miller

Fire Chief Mike Lavery

More recently we learned that our present Chief of Police, Pat Miller and Fire Chief Mike Lavery would retire. Why did they push so hard for an increase in the retirement benefits in October, 2008 ? Well Duhh ! Thank you Councilmen Fulton, Brennan, Summers and Monahan.

More recently Councilman Fulton announced that the City was going to appoint a committee to examine the public pension plan. Let us hope against hope that they don’t pack it with FOCs like they did the Blue Ribbon Committee, and that they read the Res Publica analysis of April 2009, which concluded that the pension plan is headed on the same path as the City of Vallejo – Federal Bankruptcy.

Councilman Neal Andrews has advocated for a change. in this area, and has published a lengthy memo on the subject:

“Immediately abandon the compensation formula that essentially forces us to mimic the weakest and most incompetent policymakers in other communities. Today we promise to compensate our employees at approximately the average level of other communities, though we sometimes count the highest paid three times as heavily as others. This is an artificial and arbitrary benchmark. We should instead adopt a clear policy of compensating at a level adequate to provide a sufficient workforce with the high level of competence we want in them.

Adopt a two-tier retirement system that provides a guaranteed contribution to the retirement plan for all new employees, instead of the current guaranteed benefit program. This would not change a thing for current employees, but over time it would significantly reduce the volatility of our budgets by stabilizing a major element of our financial liability. This is the same type of retirement program offered today by most of the private sector.”

—Neal Andrews

Editors’ Comments:

Councilmembers FULTON and MONAHAN deflect any criticism and defend the retirement plan by saying the decision to raise pension benefits was deferred. When questioned, they cannot recall when the motion or official action was made, do not recall who recommended delaying the firefighters retirement plan increase or just what happened. They act as if this is a non-issue. For your information councilmen, the pension increase which you approved in October 2008, has NOT been rescinded or modified.

Editors:

B. Alviani S. Doll J. Tingstrom

K. Corse B. McCord T. Cook

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