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unfunded pension liabilities should force pension reform in Ventura

Latest Facts About Unfunded Pension Liabilities You Need to Know

December 28, 2020/in Newsletters/by VREG Editors

“Stand up to your obstacles and do something about them. You’ll find they haven’t half the strength you think they have.”

—Dr. Norman Vincent Peale

Ventura’s unfunded pension liabilities continued to grow in 2019 to $218.6 million. The City of Ventura continues to sink deeper into debt to pay for city employees’ present and future retirement benefits.

Unfortunately, the economic reality of the city’s current public pension liabilities is not receiving the attention it demands. We raised the warning flag about the growing unfunded pension liabilities debt in 2009, 2011, 2013, 2015, 2017, 2018 and 2019, yet the problem continues to grow unabated.

Revised Unfunded Pension Liabilities Figures

The new unfunded pension liabilities figures come from the 2018-2019 Comprehensive Annual Financial Report (CAFR). Ventura added $3.5 million to its unfunded liabilities. Simultaneously, the market value of Ventura’s assets held by CalPERS dropped to 66.7%, a multi-year low.

A Political Hot Topic

Discussions about pensions get emotional because we’re talking about people’s future and security. Let’s be clear. We respect the work city employees do. There is no denying that fire and police perform a vital job that is both dangerous and requires a high level of training and responsibility.

Our concern is not about their work. We’re uneasy about how the city structures, accumulates and pays retirement benefits.

Neglecting Pension Liabilities Doesn’t Make Them Disappear

For ten years, Ventura has done little to remedy its unfunded pension liabilities. During that time, there have been four different City Councils. Yet, they made only a modest effort to solve the problem. Then-Mayor Bill Fulton and City Manager Rick Cole claimed in 2011 that the City of Ventura had tilled new ground by requiring the city employees to pay something toward their retirement – 4 ½%.

Yet, closer scrutiny showed employees pay their 4 ½% retirement contribution toward the employers’ portion (i.e., The taxpayers’ portion) of what Ventura sends to the CALPERS retirement plan. This accounting maneuver explicitly increases the employee’s total compensation, meaning the “contribution” counts as the employee’s income to calculate the employee’s retirement benefit when they retire.

What Ventura Can Do About Its Unfunded Pension Liabilities

The City Council made this one attempt to improve the current system but did not address the problem in a meaningful way. Since there are no proposals from the Council, the League of California Cities and Government Finance Officers Association recommended these actions to confront unsustainable pensions.

Reduce the unfunded liability by making annual catch-up payments even more than CalPERS instructs you to pay—if you can afford to pay more.
Raise taxes
Reduce services
Require voter approval of any pension obligation bond or POB. (Click to learn more about POBs)

These are terrible choices for the public.

Suggestions For Addressing Unfunded Pension Liabilities

There are two other choices for our City Council to consider if they have the political will.

Make beneficiaries pay more. With the city covering 100 percent of the unfunded liability, the problem will continue to grow. There will be minimal reforms because the actuarial losses fall on the taxpayer. Capping the employer contribution at a fixed percentage of salary would cut pension costs for the city. As pension costs increase over the years, the employees will pay all the growing costs.
Change when retired city employees may begin collecting pensions. This alternative solution applies to new employees only. What if police and fire could vest their generous pensions in full by age 50 or 55, as they do now, but the payments did not start until age 65? Why would that help? The reason is that even if the city makes no further contributions, the fund will have ten more years to grow. At current official pension growth rates, that would more than double the fund’s value over those ten years. Also, the retirement payment period would be ten years shorter, given the same life expectancy. Such a system would still offer retirement security, but it would start at what most of us consider average retirement age.

Public sector employees may resist the changes but this solution makes sense. Private sector employees don’t get their full social security until 65 or even 67, depending their birth year.

Examining How Much City Employees Make

In 2019, 92 of the top 100 salaries on the city payroll are police officers and firefighters. Every one of the Top 100 earns more than $216,762 in pay and benefits. For perspective, the average family in Ventura earns $66,000 per year with two wage earners.

Raw Political Power Behind Unfunded Pension Liabilities

Ventura’s city employee unions negotiate higher and higher salary increases disregarding any concern that the money may not be available to pay their pensions once they retire. Union negotiators believe a virtually ironclad guarantee exists for the workers to whom the city promised the pension benefits. So, many Councilmembers accepted the same thing, although it’s no longer valid. A Federal Bankruptcy Court ruled otherwise in January 2015.

CALPERS argued that the California Constitution guaranteed the union contracts and thereby pension benefits from cuts. And if the court didn’t agree, they pleaded that they enjoyed sovereign immunity and police powers as an arm of the state. And if the court still disagreed, they argued that they have a lien on municipal assets.

The Federal Bankruptcy Court effectively threw them out of court, saying, “It is doubtful that CALPERS even has standing. In his opinion, Judge Christopher Klein writes “It does not bear the financial risk from reductions by the City in its funding payments because state law requires CALPERS to pass along the reductions to pensioners in the form of reduced pensions.”

Judge Klein further stated, “CALPERS has bullied its way about in this case with an iron fist” and “that their arguments are constitutionally infirm in the face of the exclusive power of Congress to enact uniform laws on the subject of bankruptcy…”.

The impact of this decision is that CALPERS cannot stop cities from modifying pensions. Yet, the Ventura City Council appears unaware of the findings.

Editors Comments

Past retirement pension negotiations were based on union bargaining and raw political power, creating a gap between what politicians promised and what cities can really pay. We offer some solutions, but it will take political will to bring the retirement benefits back to reality. Changing the system is the only way these promised benefits can be sustainable and dependable for retirees. It’s also the only way that taxpayers can afford to pay for them.

Write Directly To Your City Councilmember To Insist They Address Ventura’s Unfunded Pension Liabilities

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Why You Need To Pay Attention To The 2020 City Council Election

February 25, 2020/in Newsletters/by VREG Editors

“Good intentions may do as much harm as malevolence if they lack understanding.”

—Albert Camus

The 2020 City Council election is this November. The challenges facing Ventura are so crucial that they will shape the city for decades.

Who the candidates will be for the Council in this election will likely be unknown until July. The nomination period opens July 13th and closes August 5^th.

Our city is no longer the small seaside community to the north of the LA basin. We are a growing community with all of the problems larger cities face. We need qualified representatives to confront and solve those problems. Candidates must have previous community involvement, education, experience and willingness to explore alternatives different from the sclerotic thinking and mistakes of the past.

Water Will Dominate The 2020 City Council Election

Every candidate will acknowledge that water is a concern for Ventura. The specifics on how to address the issue will vary, but how can you judge what they know? Here is what you should focus on.

Wishtoyo Consent Decree Compliance

Candidates for the 2020 City Council election must concentrate on the Wishtoyo Consent Decree, and the impact of the decree in the next decade. That Federal Decree requires Ventura to stop putting a majority of its treated wastewater into the Santa Clara River estuary, beginning in January 2025 through 2030. To do so will be an enormous cost to the city.

We have advocated that the city must request a modification to the Wishtoyo Consent Decree to extend the deadline for depositing wastewater into the estuary.

VenturaWaterPure

Ventura Water has confused the City Council by combining two different ideas to falsely heighten the urgency to drink wastewater. In 2011, Venturans were told, “We are short of water.” Ventura Water proposed treating the wastewater we currently dump into the Santa Clara River into potable water at the cost of $1 Billion. They call the project VenturaWaterPure.

All candidates should remember $1 Billion is a large bet to place with the taxpayer and ratepayer money. Will the candidates know that directly drinking treated water from the treatment plant is not approved and is not safe? Do they know the details of injecting that treated water into the groundwater then pumping it back through a filtration facility? Do they know there are less expensive ways to divert that water from the estuary?

Looming Water Rate Increases

Ventura Water will undoubtedly request a water rate increase from this next City Council. They will claim the money is for VenturaWaterPure or to improve the city’s water infrastructure. Water rates already went up by $220 million with water and wastewater increases in 2012-13. Any Councilmember and any candidate for City Council should be able to explain how Ventura Water spent the $220 million and why another rate hike is needed.

Ventura River Cross-Complaint

In 2014, Santa Barbara Channelkeeper filed a lawsuit alleging Ventura was taking too much water from the river, hurting habitat for wildlife. The city is not the only water user in the Ventura River and Ojai valley. So Ventura asked the court for a cross-complaint to allocate the burden of water sharing among the potential 14,000-plus property owners in the Ventura River watershed. Understanding this pending lawsuit is essential to the voters. The next City Council could approve spending another $4.4 million for legal expenses. Keep in mind that money is equal to the budgetary loss for the 2020-2021 General Fund. Any legal fees come out of the General Fund at the expense of public safety and street repairs.

Homelessness Will Be A Popular Issue In The 2020 City Council Election

Housing Ventura’s homeless is a high priority for the city. Most believe that affordable housing is the solution. As a bridge to permanent housing, Ventura’s homeless shelter, ARCH, is critical.

Ventura has 555 homeless people, according to the 2019 Point-in-Time count. Meredith Hart, Director of Ventura’s Safe & Clean program, believes the 2020 count will be higher. Ventura spends on its homeless are between $3.89-$4.59M per year.

All candidates must have a solution to homelessness, and they must not be afraid to challenge how and how much we are spending on the issue. The ARCH opened in February 2020, so we must allow time for it to impact the community. Yet, Councilmembers must be courageous enough to act quickly if the results are not favorable.

Candidates should also differentiate between the various types of people living on the street. Many of the homeless are “service-resistant,” meaning they will not agree to help regardless of the circumstances. The majority of the homeless are substance abusers or mentally ill. Others are vagrants. The city must have different plans to treat those genuinely needing help from the vagrants.

Budget Deficits For The Entire Term

Budget deficits will plague the new City Councilmembers throughout their entire four-year term. Knowing why the budget is running in the ‘red’ should be a significant consideration for every new city employee hired and every contract the City Council approves in the next four years.

The city staff projects a “most likely” budget scenario for 2020-2021 that will have a shortfall of $4.1M. It does not improve in the following ten years either. So the City Council must weigh the alternatives for cutting different city services.

Pensions Are A Political Third Rail

Pensions are the ticking time bomb nobody wants to discuss. They’re the political third rail issue that candidates ignore. Next year, the CalPERS payments will balloon by $2 million. That’s after a $2 million increase this year.

Pension obligations feed budget deficits. As pension obligations grow, it takes away money that would otherwise pay for essential city services.

Pensions will consume the Measure O tax increase by 2023. Any earnest candidate should demand city staff forecast the anticipated CalPERS increases objectively. Provide the Council with the necessary information to make financial decisions.

Voting By Districts In The 2020 City Council Election

Districts 2, 3 and 7 are competing in the 2020 City Council election.

The 2020 City Council election will culminate the switch from electing Councilmembers at-large to voting by districts—a process that began in 2018. The first round of district elections gave us inexperienced new Councilmembers to lead the city.

This election, voters will select Councilmembers in Districts 2, 3 and 7. Voters elected Christy Weir and Cheryl Heitmann as Councilmembers at-large, but they will now compete in Districts 2 and 7, respectively, if they choose to run again. District 3 will be an open seat as Councilmember Matt LaVere vacates his role to run for County Supervisor.

The city experienced growing problems with district governance when the demands about traffic, housing, crime and services of the districts do not mesh with the other districts’ views.

Campaign Finances

The 2018 City Council election was the costliest in the city’s history. The candidates raised a record amount of money.

A lot of that campaign money came from Political Action Committees (PACs). In 2018, the three largest PACs—Chamber of Commerce, Fire and Police—contributed $79,717 to candidates. Those PACs consider it money well spent if it buys them access to the elected candidates.

Voters should note the influence the PACs have over the 2020 City Council election. Pay attention to who contributes to the candidates, and what those PACs ask in return for their support.

2018 City Council election contributions

Growth As An Issue In The 2020 City Council election

Growth means different things to different people. It’s inescapable that Ventura needs to grow. Everyone agrees that we need affordable housing.

This year’s candidates need to acknowledge that growth and water availability are inseparable. They also need to recognize the opposition to more houses (the NIMBYs) by some in the community. Forward progress on growth means accommodating, integrating and compromise.

Every candidate must have some ideas on growth as part of his or her platform.

Editors Comments

Many complex issues face Ventura. All 2020 City Council election candidates need to be aware of the problems and have a plan to address them. We can’t rely on the candidates alone to be knowledgeable. It’s each person’s responsibility to be aware of the challenges before us. It’s equally important that each voter be confident that the candidates understand them. Only then do our elected officials represent us.

Keep these points in mind as you go to the polls in November.

Make Certain All Councilmembers Can Address These Issues Adequately.

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What Services Will Ventura Cut In The 2020-2021 Budget?

January 28, 2020/in Newsletters/by VREG Editors

“Another Fine Mess You’ve Gotten Us Into, Stanley.”

—Laurel & Hardy

The 2020-2021 budget presents a challenge to the City Council. This Council must weigh how to close the budget deficit in the coming year.

The Coming Problem

Today’s Council is still operating on the 2019-2020 budget that shows everything is fine. In six months we will be in a new budget cycle, how does that look? The city staff projects a “most likely” budget scenario that will have a shortfall of $4.1M. How can the seven members of the City Council take action to save jobs and essential services for the citizens of Ventura?

The Seriousness of the 2020-2021 Budget

In two of these three scenarios, Ventura residents should be concerned about possible severe cutbacks in services and personnel. Ventura has a 67% probability of significant shortfalls in the next fiscal year and the next four years after that. This Council may play a game of fiscal musical chairs with the budget hoping the music doesn’t stop and throw the city into insolvency. Is there a better solution? It may be time for the Council to focus on a multi-year budget to better spend the limited money available to us.

The Council must come to a decision soon and may need to cut back services and personnel. If they don’t, the specter of insolvency looms over the city. The Council should inform citizens and allowed them input before taking drastic measures. Please keep reading!

What Can The Council Do With The 2020-2021 Budget?

The city staff presented the Council with several options to consider remedying the projected shortfalls. The team looked at revenue and expense items available to the Council.

Potential Revenue Enhancements to the 2020-2021 Budget

The added revenue from proposed changes to Prop 13. These changes are beyond the City Council’s control. They are purely wishful thinking at this time.
Increase the Transit-Occupancy-Tax (TOT) rate. The TOT, also known as the bed tax, impacts tourists visiting the city. Each 1% rise in the tax generates an additional $600,000 in revenue. The downside of increasing the TOT is that it makes Ventura less desirable for tourists to visit or may shorten a visitor’s stay.
Additional revenue from cannabis sales might generate $500,000 or more. Prop 64 made recreational marijuana use legal, yet Ventura has been slow to embrace pot sales. Outgoing Police Chief Ken Corney believed Ventura should exercise caution when rolling out cannabis. Yet, even if Ventura pushed hard for cannabis sales, the revenue would barely dent the projected $4.1 million deficit.
Other revenue-generating ideas. The city staff didn’t elaborate on what those ideas might be.

Potential Expense Reductions to the 2020-2021 Budget

Reduce overtime for city employees. The largest single expense category in the city is staff salaries and benefits. Reducing overtime might save as much as $5.6 million in the budget.
Reduce “extra help” expenses. Such a reduction would generate $2.3 million in expense reduction. Extra helpers supplement city workers.
Reduce anticipated pay increases. That means fewer raises or smaller raises for city employees. Every 1% decrease in pay raises contributes approximately $800,000 in savings.
Transfer some Information Technology (IT) or Internal Services Fund (ISF) costs to Measure O. The city staff believes transferring some of these costs to Measure O will support staff needs. The cost savings would be $120,000. If they do move those costs, though, it will represent a shift in policy.The Measure O proponents told voters the money would address specific needs. IT and ISF costs were not among those needs. Measure O money goes into the General Fund, so the City Council can use it as they see fit. Yet, using it for operating purposes would invalidate the spirit of the sales tax increase. Using Measure O breaks one of then-Mayor Erik Nasarenko’s promises of the Measure’s benefits. The Measure O Oversight Committee should be concerned.We warned you.

Review warehouse costs. This alternative lists no amount of savings.
Review all discretionary spending:
Review the money Ventura pays to support the Ventura County Museum. This option will save $250,000 per year. Prior Councils agreed to give the museum more than $1 million through the fiscal year 2022-23.
Review the money spent on Ventura’s Libraries. Savings could be as much as $250,000 per year. No one mentioned the unintended consequences of such a cut, however.
Evaluate Community Granting Programs. The amount of potential savings is not listed. This category includes programs like Community Access Partners (CAPS). CAPS received a contentious fourth amendment through December 31, 2019.
Assess contributing to Ventura’s Visitors Bureau. The savings could be as high as $968,000.
Examine other discretionary spending. This alternative included no specifics.

Potential Use of Fund Balances

Use $3 million in 2021, $2 million in 2022 and $1 million in 2023 (or some other variation) from the Unassigned Funds.
Use the Catastrophic Reserve of $15 million if a recession strikes.
Use Measure O revenue. Certainly not its intended goal.

These three options are the most troubling items presented by the city staff. Using the city’s various fund balances should be considered as a last resort and, while it’s prudent for city staff to present them as options, the City Council should consider using them only in dire circumstances.

Considering the 2020-2021 Budget

The city staff assumed some projects would continue as planned. That is a false assumption. The City Council should consider all alternatives. More than ever, the Council should review “Business As Usual.”

Do we the Citizens want to authorize spending up to a BILLION dollars on a water project?The Water Agency and the Council continue to put forward the need to spend $1 billion because we need drinking water, thus the need to use recycled wastewater by building VenturaWaterPure to satisfy supply needs. Are there regulations in place to allow that? The State of California won’t have an approved test for water safety until 2024, at the earliest. Seemingly the purpose behind this is that the Council needs to ship the Santa Clara River effluent somewhere else. Yet, they could choose the most cost-efficient option of shipping that water to Oxnard’s Advanced Water Treatment Facility. A $70 million option versus $1 billion. What do the citizens want?
Should the Council ask city employees to contribute a higher percentage of their pay towards their retirement?
Should the Council consider options for the Fire Department? Evaluate whether to merge Ventura Fire with Ventura County fire?
Shouldn’t the Council and citizens know precisely how Homeless services cost and how they get allocated? Let’s ask for the facts as citizens. Just some of the costs include:
1. The Homeless Shelter ($712,000 per year)
2. The police Homeless Task Force (seven officers)
3. A Safe & Clean Program manager
4. An embedded mental health professional
5. The Downtown Ambassadors
6. The police and fire personnel that answer service calls in addition to the Homeless Task Force

Editors Comments

We’re confronted with several key questions when considering the 2020-2021 budget. How is it that after more than ten years of economic growth and market growth, and the imposition of a sales tax increase, we are about to face a sudden, significant budget deficit? We believe it’s the cumulative effect of more than a decade’s worth of poor economic policy choices by both the city government and the citizens.

Ventura hasn’t projected a budget deficit this large since the 2008-2009 Recession. With the stakes this high, there is little room for error. Poor decisions could lead to the city’s insolvency.

Yes, we must solve the current budget shortfall. We expect this City Council will focus on meaningful change and keep citizens informed. This Council has a difficult task ahead and must weigh how to best spend the limited revenue we have and substantially cut expenses to close the budget deficit.

Citizens expect the Council to be astute when evaluating these alternatives and to have staff report as clearly as possible. That’s why we believe taking on a $1 billion water project is lunacy without direct input from the voters.

The decisions the Council make with the 2020-2021 budget will have consequences for years to come. Citizens must help with input and oversight. Please consider contacting your representative and let them know you are concerned, want to be informed, and are watching the process.

Tell City Council You’re Concerned, Want to be Informed, and Are Watching the Process.

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

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Why You Should Worry About VenturaWaterPure

November 26, 2019/in Newsletters/by VREG Editors

“And it never failed that during the dry years the people forgot about the rich years, and during the wet years they lost all memory of the dry years. It was always that way.”

—John Steinbeck, East of Eden

For the second time in four years, Ventura Water failed to present scientific findings that challenged its decision on VenturaWaterPure. Either Ventura Water withheld this pertinent information from the Ventura Council, or it is unaware of the reality that Indirect Potable Reuse (IPR) is unhealthy.

IPR presents a danger to humans. The September 2019 study from the University of Southern California (USC) concludes that IPR contaminates water with antibiotic-resistant bacteria. Once infected with the bacteria, medical science cannot combat these antibiotic-resistant strains.

Reasons VenturaWaterPure Is Not Ideal

There are several reasons VentuaWaterPure is not an ideal solution. For whatever reason, Gina Dorrington, Ventura Water’s Assistant General Manager, neglected to tell the Council about these findings at the October 14th meeting.

It appears that the health of Ventura’s citizens is not a priority in these decisions. Furthermore, it begs the question, “What is the motivation for a misguided recommendation?”

VenturaWaterPure project will need an extra 20-27 employees, according to Susan Rungren, Ventura Water’s General Manager. Each employee will earn a pension. At a time when rising unfunded pension liabilities threaten the city’s finances, the prudence of adding 20%-27% more employees to Ventura Water is questionable.

VenturaWaterPure will cost $1 billion over 30 years. That’s a considerable sum of money for the community to absorb. Water bills will double to pay for VenturaWaterPure’s infrastructure alone. Operations and maintenance costs will add even more. Remember, water costs already went up by $220 million with water and wastewater increases in 2012-13.

To recommend anything contrary to moving forward on this project would not only jeopardize many jobs, but it would also imply that past City Councils and City Managers were wrong with previous decisions, and we have wasted millions of dollars in the process.

City Council Has Its Motivation To Approve Plan To Spend $1 Billion To Drink Wastewater

The City Council has been rushed by Ventura Water to comply with a Consent Decree Ventura agreed to in 2012. The 2012 Consent Decree with Wishtoyo Foundation contended that Ventura Water was dumping its waste into the Santa Clara River Estuary and harming the Santa Clara estuary. The decree requires Ventura to divert seven million gallons a day beginning in 2025 and concluding no later than 2030. What better way to justify a horrible decision than to convince people that it was for their good? They pointed to drought conditions and offered VenturaWaterPure as the solution.

When anyone is looking to justify a bad or ill-conceived idea, they look for another similar decision to defend their own. A case in point is finding other locations in California that have made bad decisions. Misery (bad choices) enjoys company. Two locations in California, Orange County and Monterrey, use Indirect Portable Reuse (IPR). The real question should be ‘Why only two?’ It took Monterrey 10 years to get a permit and build it. That alone is not a sound reason to pursue this premature direction to recycle wastewater in drinking water.

By misdirecting attention to drinking water—fundamental to life—it created the misperceived need for VenturaWaterPure. Complying with the Consent Decree is not the same as providing drinking water. Yet Ventura Water has been mingling the two needs since 2011. Separating the two issues helps make decisions more transparent.

Conflating Two Issues To Achieve The Desired Result

Ventura Water has confused the City Council by combining two different ideas to falsely heighten the urgency to drink wastewater. Since 2011, the campaign has been “We are short of water,” they say, “and the best way to meet that shortage is to drink wastewater.”

Ventura Water was quick to adopt DPR as the solution for an alternative water source. Then-Ventura Water General Manager Shana Epstein had no data to support that assertion, except for the representations of the sales company designing the hardware for VenturaWaterPure. Ms. Epstein repeatedly announced it was good water to drink. She and the other supporting that view were dead wrong.

Dispelling the Myth about Drinking Water

Ventura has enough drinking water for the next 15 years at current consumption rates, according to the 2019 Ventura Water Report (Table 4-3, p. 65). Unlike most cities in California, we are fortunate to be bounded by Ventura and Santa Clara rivers, Lake Casitas, plus groundwater basins.

To add more reserves, in 2018, the City Council approved a project to construct a pipeline to access a new water source—State Water. Besides providing more water to the city, we can mix State Water with our existing water to improve the taste of Eastside water. Ventura has had this option for the last 47 years.

Ventura Water’s public objection to State Water as a primary source has been that it is not available in dry years. They contend that State Water is thus “unreliable.” However, allocations of State Water over the past five drought years have averaged 55% of the contracted allowance. Ventura Water also conveniently ignores the fact that 75% of Ventura County relies on State water as a primary water resource.

Missing the Consent Decree Deadline

We may not be able to meet the timing of the Consent Decree if we pursue VenturaWaterPure. It took Monterrey ten years to apply for permits, be granted permission from the different agencies and build its IPR plant. Ventura has not applied for a single permit to begin constructing its plant. If it takes ten years from today to complete our plant, we will miss the Consent Decree deadline by five years. There’s no reason to believe Ventura will apply for permits and build its plant faster than ten years. VenturaWaterPure is destined to miss its target date.

A Waste of $1 Billion For VenturaWaterPure

IPR is inefficient and will not meet Ventura Water’s projections. Orange County and Monterrey use IPR already. IPR shows a net water loss of 23%, based on Orange County’s experience. If VentuaWaterPure treats 4.5 million gallons per day of tertiary water, this will yield approximately 3.5 million gallons per day of drinking water, or about 3,900 Acre-Feet per year (AFY). According to the Final Environmental Impact Study, that is 1,500 AFY short of the 5,400 AFY needed to meet Ventura’s estimated demand.

The fact is that Ventura reduced its wastewater by 17% from 2009-2018, despite increasing water connections by 3.5% (according to the Comprehensive Annual Financial Report). The amount of wastewater sent to VenturaWaterPure is decreasing. We can reduce the affluent further by using more tertiary water for irrigation in the city. Ventura could increase to 1,200 AFY for irrigation from the current level of approximately 500 AFY. The cost to ratepayers is only the cost of a pipeline for the delivery of tertiary water.

Ventura’s Imprudent Decisions

This City Council has shown a propensity to pay for the same outcome they could have gotten for less. We saw this when the city placed its high-use electricity accounts in the Clean Power Alliance. We may be witnessing it again with VenturaWaterPure.

The opportunity exists to adhere to the Consent Decree at half the cost to ratepayers compared to VenturaWaterPure. For the price of a pipeline, Oxnard will take Ventura’s treated tertiary water. They may even provide Ventura clean water credits. It’s unthinkable not to consider Oxnard Advanced Water Treatment Facility (AWTF) as an option.

Editors Comments

Every citizen should have serious doubts about the pragmatism of the City Council’s decision to fund VenturaWaterPure. It’s time to slow down. Some studies show that VenturaWaterPure is unsafe. Ventura Water for six years has continued to announce that it is safe for human consumption. Yet, the fact that there isn’t a consensus among scientists should be a warning flag to Councilmembers. Do they want to be remembered as supporting VenturaWaterPure if it’s shown to be unsafe, unregulated and unhealthy in the future? Let’s hope not.

One billion dollars is a large bet to place with the taxpayer and ratepayer money for a process that is questionable among scientists. There are cost-effective alternatives available, but it’s unlikely they’ve been examined since the initial decision to create VenturaWaterPure was made in 2011. Times change. Circumstances change. Now is the time to reconsider options to be sure we’re making the best choice available.

Reverse the decision to proceed with IPR, and certainly DPR, until there is more investigation on its safety. The Council is dealing with public health. The Council reversed its decision on DPR in 2018 when they learned a state expert panel deemed DPR unsafe. The Council should be prudent with IPR and change or pause that decision, too.

Finally, the City Council should more rigorously question Ventura Water on its proposals and actions. Twice, Ventura Water has failed to present scientific findings that challenged its direction with VenturaWaterPure. The Council would do well to keep in mind the adage, “Fool me once, shame on me. Fool me twice, shame on you.”

Tell City Council, “Slow Down On VenturaWaterPure!”

Below you’ll find the photos of our current City Council. Click on any Councilmember’s photo and you’ll open your email program ready to write directly to that Councilmember.

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Retirement Pensions Are Our #1 Problem (and what you need to know about it)

September 17, 2019/in Newsletters/by VREG Editors

“It’s not what we don’t know that hurts us, it’s what we know that ain’t so.”

—Will Rogers

America’s significant retirement pension funds are underfunded by an unfathomable $4.2 Trillion, according to an August 6 Wall Street Journal article. Ventura mirrors this phenomenon. Ventura workers participate in the state pension fund, CalPERS—the largest in the country. CalPERS is only 71% funded as of June 30, 2018, despite a 10-year bull market and a growing economy.

Because of the chronic funding shortfall, CalPERs demands rapidly increasing contributions from all participating local governments. Ventura will have permanent increases of at least $2 million per year for five to six consecutive years.

We respect the work city employees do. There is no denying that fire and police preform a vital job that is both dangerous and requires a high level of training and responsibility. Our concern is not about their work. It’s about the structure by which their retirement is accumulated and paid after retirement.

It is undeniable that city employees’ retirement pensions are crowding out the city’s ability to provide the service itself. Moreover, chronic underfunding of pensions will eventually hit a breaking point jeopardizing benefits too. Something in this equation has to change.

Retirement Pensions Today

Most state, county and local pension benefits are considered to carry a virtually iron-clad guarantee to the workers to whom they have been promised. Even the smallest attempts to alter future benefits—much less current ones—have been met with furious opposition. Workers’ representatives and also the plan managers themselves—like CalPERS—oppose changes. That opposition has been mostly successful. Governments at all levels are hamstrung between their duties to provide on-going services to their citizens and their ever-increasing financial obligations to pension funds. In the State of California, once one hires an employee, their retirement cannot be changed.

A typical city employee would receive a pension almost the same as his or her working salary if they participated for their whole career. In the case of many public safety employees, their retirement will last longer than their employment as they are fully vested in their retirement pensions by age 50 or 55. For so-called “miscellaneous” employees (all others) the retirement age is higher, usually 62. Nevertheless, the years in retirement can still equal or exceed those worked.

Discussions about pensions get emotional because we’re talking about people’s future and security. What gets lost in the arguments is this. The law and politics guarantee retirement pension benefits, but not the actual returns on investments. There is no separate investment market for pension funds. All investment pools, large and small, invest in the same markets. The myth is that pensions are safe. They are not. The difference is that taxpayers pick up the difference between reality and what politicians promised.

Unprecedented Bull Market

For the past ten years, since mid-2009, there has been an incredible bull market in stocks. CalPERS has posted many good returns during those years. However, Ventura’s pensions are underfunded by $215.1 million. For far too long, pension promises have been at levels far beyond what the real markets can provide.

What Can We Do To Fix Retirement Pensions?

Politicians have made many attempts to improve the current system, but none have addressed the problem in a meaningful way. CalPERS does offer one solution: Cities can buy out of the system—technically—but the costs are so enormous that no municipality can realistically consider that an option. It’s no accident, of course. CalPERS’ onerous payment demand to end participation is designed to be a straight-jacket. As of June 30, 2017, for the City of Ventura, the amount required to get out of CalPERS is $1.254 Billion.

League of California Cities and Government Finance Officers Association recommended actions to confront unsustainable pensions.

Reduce the unfunded liability by making annual catch-up payment even more than CalPERS instructs you to pay—if you can afford to pay more.
Raise taxes
Reduce services
Require voter approval of any pension obligation bond, or POB.

Pension Obligation Bonds Explained

A city issues a pension obligation bond to pay down the unfunded pension liability. The POB converts the pension liability into a fixed rate of return. There are considerable underwriting costs when issuing a POB. The city invests the money received from the bond into higher returning investments, usually in the stock market. The central idea is that the stock market investments will produce a higher return than the fixed interest rate on the bond, thereby earning money for the pension fund.

A POB creates debt to pay off debt. Such a bond is essentially a gamble with public money. Simi Valley is considering issuing a POB, and Ventura might follow suit if Simi Valley is successful.

The League of California Cities and Financial experts, including Government Finance Officers Association, strongly discourage local agencies from issuing Pension Obligation Bonds (POBs). This approach (going into debt to pay off debt) “only delays and compounds the inevitable financial impacts.”

These are terrible choices for the public.

What The City Council Might Do To Reform Retirement Pensions

There are two other choices for our City Council to consider if they have the political will to do anything about this crisis that will cripple the City of Ventura.

Make beneficiaries pay more. With the city covering 100 percent of the unfunded liability, the problem will continue to grow. There will be minimal reforms because the actuarial losses fall on the taxpayer. Capping the employer contribution at a fixed percentage of salary would cut pension costs for the city. As pension costs increase over the years, the employees will pay all the costs associated with the growth.
Change when retired city employees may begin collecting pensions. This alternative solution applies to new employees only. What if police and fire could fully vest their generous pensions by age 50 or 55, as they do now, but the payments did not start until age 65? Why would that help? The reason is that even if the city makes no further contributions, the fund will have ten more years to grow. At current official pension growth rates, that would more than double the value of that fund over those ten years. Also, the retirement payment period would be ten years shorter, given the same life expectancy. Such a system would still offer retirement security, but it would start at what most of us consider average retirement age.

Public sector employees may resist the changes but think about it. Private sector employees don’t get their full social security until 65 or even 67, depending the year they were born. Moreover, Social Security is only going to be one quarter to one-half of your working earnings.

Editor’s Comments

Even with an unprecedented bull market, Ventura’s unfunded pension liability grew over the past ten years. During such a period, one would expect the excess liability to at least shrink some.

Instead, the pension liability is growing faster than market returns can ever expect to make up. CalPERS annual demand will now permanently increase by about $2 million per year for the five to six years and then stay there. There is no assurance it will not increase even further in the future. Something has to change. Otherwise, the city will either cut back needed services, raise taxes, or both.

Past retirement pension negotiations were based on union bargaining and raw political power, creating a gap between what politicians promised and what cities realistically can pay. We offer some solutions, but it will take political will to bring the retirement benefits back to reality. Changing the system is the only way these promised benefits can be truly sustainable and dependable for retirees. It’s also the only way that taxpayers can afford to pay for them.

Demand Retirement Pension Reform

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How The Right Steps In The 2019 Budget Make Your Tomorrow Better

June 18, 2019/in Newsletters/by VREG Editors

“Giving money and power to government is like giving whiskey and car keys to teenage boys.”

—P.J. O’Rourke

Ventura faces severe revenue shortfalls in six of the next seven years, the size of those during The Great Recession. Ventura is on pace to lose over $9.07 million over the next six years. You should be concerned about the financial conditions in the City of Ventura, and you should also know this budgetary crisis is avoidable if the City Council acts this year.

Ventura’s General Fund Financial Outlook For The Next 10 Years

Ventura city staff calculate the city’s revenue and expenses for the next ten years [see graphic]. Costs will exceed income for six consecutive years beginning in the fiscal year 2020-2021—that’s next year.

Pensions are the main reason for the rise in expenditures. Annual pension costs will climb to $31.48 million from $19.71 million by the fiscal year 2025-2026. That’s an $11.63 million increase. The city projects property and sales taxes to increase by only $10.6 million over the same period. Not a rosy outlook.

Next year (the fiscal year 2020-2021), Ventura faces a $2.52 million deficit because of the $2.17 million in rising pension costs.

The city staff estimations are optimistic. They do not factor in a recession, which some believe is imminent. If a recession comes, people will lose jobs. Also, if a recession hits, property and sales tax revenues will suffer and projected losses may be even worse. What’s more, the city plans to add no money to reserves in the fiscal year 2019-2020. Current reserve levels for the City of Ventura will keep the city government running for only 45 days.

Wasn’t Measure O supposed To Save The Budget?

Measure O passed three years ago and will continue for the next 22 years. It brings in $10.8 million in additional sales tax revenue each year. Still, it isn’t enough to cover the projected shortfalls. Why is that?

There are several reasons why Measure O can’t save the city’s budget. First, there is no consensus among the City Councilmembers about how to use Measure O money. Alex McIntyre, Ventura’s new City Manager, asked all seven Councilmembers individually how they would spend it. All seven Councilmembers gave differing opinions on how to use the Measure O taxes. Without clear direction, it’s difficult for the City Manager to focus the city staff on what’s most important for our city. Confusion over Measure O is one example of how the City Council is dysfunctional on the budget’s priorities.

A second problem is how special interest groups lined up to get their share of Measure O. At the May 20^th City Council meeting, Councilmembers Lorrie Brown, Jim Friedman and Mayor Matt LaVere tried to move funds from Measure O to the General Fund for Fire Station No. 4. The Star report said the Fire Department union members felt insecure (sic) about Station No. 4 funding coming out of a temporary tax fund. (The tax lasts for 25 years)

In 2016, The City Council sold Measure O to voters with the promise that Fire Station No. 4 would remain open with its funds. Voters agreed to the idea of a temporary 25-year tax. VFD is now trying to persuade the City Council that when Measure O expires, there may not be funding for Fire Station No. 4. They fearmonger that response times to calls will increase, and lives could be lost. A 4-3 vote defeated the motion.

While this City Council takes precious time debating moving funds from one column to another, the growing unfunded pension obligations put pressure on the entire city budget, even with Measure O.

The Canaries In The Coal Mine

Economic disasters are all around us. There is no reason to think that Ventura is immune to them. The City of Oxnard is preparing to lay off hundreds of employees. They also plan to close a fire station and reduce the number of fire personnel available to respond to emergencies. The Oxnard City Manager says, “We are down to bare bones.” What’s happening in Oxnard is a preview of what could happen in Ventura unless the City Council acts quickly.

Ventura County Medical Center is losing over $40 million per year. That adds more unemployment to our community. With the City of Ventura own forecast of financial shortfalls, the City Council would do well not to ignore the economic disaster warning like ‘a canary in a coal mine.’

How Do We Fix The Budget?

The budgetary crisis is entirely avoidable if the City Council acts now. The solutions are simple, but they are not easy. It requires significant political will and resolve.

Improve The Budgeting Process

Currently, the City Council approves the city’s annual budget one year at a time. It doesn’t consider subsequent years’ financial demands. Given that the 10- year forecast shows losses for the next six years’ budgets, to ignore the next six years will be pushing the problem “down the road.”

Now is the time to change this systemic shortsightedness. City Councilmembers have the opportunity to discuss budgeting on at least a 3-year basis, not one year at a time.

Not Filling All Open Positions In City Hall

To balance the budget over the next six years, the city staff has two potential solutions. They can increase revenue through taxes and fees or reduce expenses. Since it’s not easy or popular to raise taxes and fees, the alternative is to cut costs.

The single largest expense category is city employees. Cutting staff is the obvious choice to reduce expenses. To avoid the unpopular cutting of current employees, the City Council can take a less unpleasant path and cut positions in the budget that the city never filled.

There are currently sixty unfilled positions at City Hall. If each vacant position costs the city $100,000 per person (salary, overtime, retirement and benefits), the cost to budget for these open positions adds to the projected deficit (losses).

If the city reduces the unfilled positions to thirty instead of sixty, the savings to Ventura would be $3 million per year. A $3 million reduction in expenses will balance the budgets for the next six years.

This decision puts the City Council on the horns of a dilemma. Should they hire all sixty positions now and later fire employees during the budget shortfalls? Alternatively, should they hire only thirty people knowing they can add personnel if the city’s economic situation improves? Eliminating unfilled staff positions is less disruptive to city government than laying people off.

Economic Development

An alternative toward improving the budget is to attract new or expanding businesses to Ventura. Several Councilmembers understand this and agree. More business and local jobs are the best solution for filling the budgetary shortfalls. More jobs generate more sales tax, encourage community spending and increase property values. Higher property values increase property taxes and reduce blight.

Imagine the stimulus to the community of filling the old Star Free-Press building or the Toys-R-Us location would have.

The city has already taken the first step in this direction. City Manager, Alex McIntyre, has moved the Economic Development division under the City Manager from under Community Development. Elevating the reporting of this department to the City Manager signals the increased importance economic development has for the city.

Empower The Economic Development Manager

Another simple step the city could take would be to empower the Economic Development Manager (EDM). The EDM must have readily available an inventory of all commercial locations, complete with square footage, zoning, parking, pricing, and a list of commercial real estate agents and contact information.

The City Council must be ready to provide incentives to new or expanding businesses. The incentives must include fee reductions and process simplification to entice the companies. One such motivator must be a single contact within the city who will guide the relocation process through the bureaucracy.

Finally, the EDM must identify and target new commercial business to locate in Ventura.

Each of these positive steps toward economic development has one drawback. They are long-term solutions. None of them will happen quickly enough to fix a budget by next year.

Streamline the City Hall Experience

The city has started reorganizing boards and commissions that oversee Planning, Design Review, Historic Preservation, and other committees filled by residents appointed by the City Council. While this is a good start, it must go further.

Reducing boards and commissions saves staff time in preparing and attending meetings. The staff attends about 20 meetings a month. Fewer meetings will allow more time for the employees to better supervise operations in planning, design review, code enforcement, etc.

The city must look at other ways to reduce staff time in other duties—especially if the city hires only thirty of the sixty unfilled positions. All staff operations should be scrutinized to end obsolete or redundant activities.

Revamp Ventura Fire Department

Now is a good time to modernize the fire department. Ventura Fire operates in much the same way it did 100 years ago except the needs are far different:

Building codes are stricter making fires less frequent
More buildings have sprinkler systems
Over 75% of calls are for paramedics

Each fire station has paramedics on duty to serve those calls. In addition to Ventura Fire, each medical emergency requires an ambulance from a private company in case a victim needs transporting to the hospital. Rolling a fire truck plus an ambulance seems like duplicated efforts.

Any change to the Fire Department would likely be unpopular with the public. That makes it a subject considered by Councilmembers, to be too controversial to discuss. The fire department union will become protective of their fellow firefighters and will want to preserve the status quo.

As they have in the past, the unions will apply pressure to the Council. Since four of the seven elected Councilmembers received campaign contributions from Ventura Fire in their last election, the politicians will likely concede as they have in the past. Ventura Fire Department needs reorganizing. Now is the ideal time to do it.

Editor’s Comments

The community will not support another tax rate increase. Pension costs already absorbed the entire $10.8 million raised by Measure. Still, citizens ask why the city doesn’t repair their streets and sidewalks. We can’t hope for an economic miracle to increase revenue, so the city must take steps to curb expenses. Ventura must:

Lower expenses by not filling all open positions at City Hall. Add those costs back into the budget
Design and target new commercial businesses to locate in Ventura
Offer incentives and fee reductions to bring more jobs to Ventura
Streamline the City Hall process and operations to reduce staff time. It will accelerate the processing time for building and licenses
Streamline medical response procedures within Ventura Fire. Find ways to reduce fire department costs for those calls. Dispatching a private ambulance and fire trucks with paramedics every time is expensive
Hold in-depth discussions at the City Council to expand budgeting to a 3-year basis, not one year at a time

INSIST THE CITY COUNCIL MODERNIZES THE BUDGET PROCESS

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What You Missed In The 2019 State-Of-The-City Speech

April 22, 2019/in Newsletters/by VREG Editors

“The great enemy of the truth is very often not the lie…but the myth, persistent, persuasive and unrealistic.”

—John F. Kennedy

Mayor Matt LaVere filled his 2019 State-of-the-City address with images of a utopian Ventura. Unfortunately, it lacked specifics on addressing Ventura’s most pressing issues.

The mayor laid out his seven goals for 2019-2020. His vision included several goals that his predecessors didn’t achieve. Six of the seven were unmeasurable. What’s more, many goals are mere rhetoric and very little substance.

VENTURA’S HOMELESS CENTER

Topping the mayor’s list of priorities was opening a permanent, full-service homeless shelter by December 31, 2019. The date gives this goal specificity. Opening the center doesn’t begin to solve the problem, though. Mayor LaVere and the City Council equate opening a homeless center with improving Ventura’s homeless situation. They are not the same thing.

Homelessness has risen the past three years to 555 persons from 300 in 2016. In that time, the city has increased spending on the homeless. The problem continues to grow despite spending more tax money to solve it.

The Council and city government are hoping the new homeless shelter will stem the tide. A closer look at the facts, though, shows their hope is not well-founded. There will be 55 beds, and it will cost Ventura $712,000 per year. Filling every bed will still leave 500 homeless persons on the street. The shelter will serve only10% of the homeless population.

What’s more, the City Council conflates opening the center with helping the homeless. The goal shouldn’t be to have beds available. That’s an intermediary step. The goal should be to get the homeless off the street and return them to a healthy way of life.

The real solutions to homelessness—a very complex problem—was missing from Mayor LaVere’s vision. There are examples of successful programs in other cities. Looking at successful programs, like the one in Providence, Rhode Island, would be a step in the right direction.

UPDATE THE GENERAL PLAN

The second goal was to reinitiate the General Plan update. Ventura city government will conduct public outreach throughout 2019. Other than holding several long-overdue citizen input meetings, the outcome will be unmeasurable.

The city must try new, innovative ways to reach citizens. Otherwise, it will miss valuable input. Young people are most likely to be underrepresented. Our younger citizens are generally absent from public meetings. Yet they will live with the consequences of the General Plan.

The mayor and City Council are relying upon the voters to be content that the city was doing the outreach.

ECONOMIC DEVELOPMENT

The third goal is to create a comprehensive economic development strategy. The strategy would include several key focus areas, including:

Auto Center and Focus Area 1
The Johnson Drive corridor. Mayor LaVere cited the North Bank Apartment project as an example.
Front Street. The mayor wants to turn it into Ventura’s version of Santa Barbara’s Funk Zone.

Missing from the address is the vital fact that economic development begins with other people’s money. It takes investors willing to put up the capital to improve the business environment. How will the City of Ventura invite and welcome investors who want to start or move their business in Ventura?

Santa Barbara’s Funk Zone succeeds because the city made it easier to rebuild in the area. Developers lament that Ventura’s city government makes it difficult to do business. Stifling regulations, fees and planning delays force investors to look elsewhere. The new economic development plan should have one single goal to stimulate growth. Force the city to review, streamline or remove building codes and regulations wherever possible.

VENTURA BEAUTIFUL

Mayor LaVere’s fourth goal is to beautify the community. He wants to end what he termed “blight.”

Like the economic plan goal in the 2019 State-of-the-City address, this goal relies on “other people’s money.” Homeowners must invest in eliminating the so-called blight. There is no compelling reason for property owners to reinvest in some properties. The same stifling regulations and fees that deter investors hurt homeowners, too.

Following the Thomas Fire, the city reduced the building permits and fees for rebuilding. If the mayor is serious about improving blight, offer similar reductions to anyone enhancing their property. That would be measurable.

COASTAL AREA STRATEGIC PLAN

The fifth 2019 State-of-the-City goal is also unmeasurable and unspecific. Mayor LaVere says we must develop a Coastal Area Strategic Plan. He contends we need this because of climate change. He offered no further details.

The same faults of gaining input for the General Plan apply to the Coastal Area Strategic Plan. Find ways to reach all citizens.

BUILDING COMMUNITY

Mayor LaVere’s sixth goal is for the Ventura community to come together by building parks. Building community was a goal of both Mayor Erik Nasarenko and Mayor Neal Andrews. Three years and three administrations later, this goal remains.

The mayor hopes to achieve this goal by building community parks. The Westside Community Park set the model. Mayor LaVere’s first target is Mission Park.

Like the other goals, rebuilding Mission Park lacked specifics, budgets, timelines or measurable results. Moreover, this plan has one fault the others don’t have, public safety.

Mission Park is home to a growing number of Ventura’s homeless population. To prepare the area, the homeless must move elsewhere. The 55-bed homeless shelter isn’t the solution. Also, even if we scatter the homeless, there are safety issues. Someone would have to clean the discarded needles, drug paraphernalia and human waste from the park.

STOPPING THE BLEEDING

The need for key personnel is a huge problem. To fulfill any of our mayor’s goals requires adequate staff. The final 2019-2020 goal is to stabilize and strengthen our city government. The city has eight unfilled, critical managerial positions and dozens of vacant jobs. The city will achieve none of the other ambitious goals if there aren’t enough workers at City Hall.

We know this is City Manager Alex McIntyre’s responsibility. In February, he requested six months to fill those positions. Four months remain. He needs time to recruit qualified people and offer competitive compensation. We hope Mr. McIntyre will fill those roles soon, but if he doesn’t, how will the City Council help and support him?

EDITORS’ COMMENTS

This year’s 2019 State-of-the-City speech was platitudes, a utopian vision and fuzzy logic. Those may have worked when we were a quaint beach town, but they don’t work today.

These are challenging times for the city. An understaffed government is trying to do the people’s work, but it’s hard. Issues like homelessness, economic development and community building, are secondary to the daily duties.

Mayor LaVere presented his vision of what Ventura could be. Unfortunately, he may have made promises his administration can’t keep. Worse still, his optimism lacked specifics and failed to address Ventura’s most pressing issues: employee retirement costs, water costs and public safety. Nonetheless, if the commitments are vague enough, no one will be able to measure if we keep them or not.

FORCE THE CITY COUNCIL TO BE MORE REALISTIC WITH ITS 2019 STATE-OF-THE-CITY GOALS

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Unaddressed Issues That Threaten Ventura’s Quality Of Life

February 28, 2017/in Newsletters/by VREG Editors

Three unaddressed issues will be difficult to overcome.

VREG’s STATE OF THE CITY

[THE UNADDRESSED ISSUES MAYOR NASARENKO NEGLECTED TO DISCUSS]

No doubt that Ventura is a magnificent place to call home. On many aspects, VREG agrees on more points with our Mayor and City Council, than disagree. Ventura’s citizens are proud of our fine police force and our fire department. Our city employees are a dedicated group of men and women, who work hard and serve the community well.

THREE UNADDRESSED ISSUES

Some issues Mayor Nasarenko highlighted in his State-of-the-City speech are ones VREG has written about for years. Ventura has several issues that need attention before they grow out of control.

Mayor Nasarenko identified water and pensions among those issues in the State-of-the-City. The impending Brooks Institute lawsuit was conveniently overlooked. The mayor was short on details on how to solve them.

WATER: UNADDRESSED ISSUE #1

Water has been an unaddressed issue for over 37 years.

For 150 years, Ventura has failed to find an alternative source for water. In fact, with the loss of the Ventura River water wells, there are fewer resources. In 1972, Ventura opted to import 10,000 acre feet of water from the north. Ventura has paid and continues to pay for that every year without any pipeline with which to receive it. In 1989, the community faced a drought, and 52% elected to pursue desalinization. 48% chose to build a pipeline as an alternative. For the last 26 years, nothing has happened.

Now, with another 7-year drought which may be ending, a recent editorial in the Ventura County Star on the water crisis states:

“The department’s poor handling of Ventura’s water has created an avoidable “perfect storm.

“The loss of Lake Casitas water will force it to adapt cross-town pipelines and start pumping east-side water to the west side to meet demand. Continued implementation of the horribly timed housing boom on the east side will further exacerbate water shortages and leave residents with high-priced/low-quality water and not enough of it.

“Meanwhile, the city is frantically trying to dig replacement wells rather than moving ahead with new ones, and consumers’ water bills will go even higher to offset that cost.”

In January, the Ventura City Council authorized a $430,976 study (or as low as $297,176 depending upon the results of the engineering study) to research the cost to connect to the State Water Project. The State Water Project that has existed for 46 years. Yet, Ventura cannot use it without extra infrastructure.

CITY COUNCIL NOT CONSIDERING ALL AVAILABLE OPTIONS

Our Mayor has also shared that Ventura is looking at potential sites for a water reuse plant. Dubbed the Ventura Water Pure, the plant is an advanced treatment facility. It will take 8 years to build the treatment facility. Projected costs range between $120 million and $142 million.

Water from this treatment facility could cost less than state water and would be more reliable. It is also about half the cost of energy-intensive desalinated water. From the start, such a plant could yield about one fourth of the city’s current annual water demand. According to our Mayor, the plant could later expand to meet future supply needs of Ventura.

One advantage of connecting to the State Water Project is that it will not take 8 years like the Ventura Water Pure plant will require.

Is there another water rate increase in the offering?

PENSIONS: UNADDRESSED ISSUE #2

Pensions are an unaddressed issue Ventura struggles with.

CalPERS annual billing for pensions is rising faster than employee contributions. As a result, the city continues to lose ground on employee pensions. The city’s annual cost of $16 million is projected to be $25 million by 2023. Ventura’s CalPERS payments are rising at over $1 million per year. Because CalPERS lowered its rate of return to 7% from 7.5%, add another $750,000 to the $1 million annually.

While our Mayor acknowledges the problem, he offers no solutions.

BROOKS INSTITUTE LAWSUIT: UNADDRESSED ISSUE #3

In August 2016, VREG concluded a lawsuit over Brooks Institute was inevitable. The lawsuit will come at taxpayer expense. The City Council and the City Manager downplayed the possibility at the time. This may have been an attempt to deflect the seriousness of the problem.

Fast forward to Feb. 8, 2017, one week before the Mayor’s State of the City. Ventura is now suing Brooks.

Editors’ Comments:

City government tries its best to serve our citizens. Like any community, there are also areas that either need improvement or simply require attention before big troubles get out of control. This is a collective reminder that we, as a community, through our elected officials, still have work to do in vital areas in order to sustain our way of life.

THINK VENTURA SHOULD TACKLE AT LEAST ONE UNADDRESSED ISSUE?

[WRITE YOUR COUNCILMEMBER]

Click on the photo of a Councilmember to send him or her a direct email.

Erik Nasarenko, Mayor		Neal Andrews, Deputy Mayor
Cheryl Heitmann		Matt LaVere
Jim Monahan		Mike Tracy
Christy Weir

Editors:

R. Alviani K. Corse T. Cook B. Frank
J. Tingstrom R. McCord S. Doll C. Kistner

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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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City Government Clueless About What Citizens Need

December 1, 2009/in Newsletters/by VREG Editors

“The characteristic complaint of our time seems to be not that government provides no reasons, but that its reasons seem remote from human beings who must live with the consequences”—William Brennan, U.S. Supreme Court Justice

THE END OF THE FIRST DECADE

It is the end of the first decade of the 21^st century. This first ten years have been marred by war, scandal, fraud, economic failure and government malfeasance at all levels. Venturans will also be happy to turn the page and try to rebuild. The questions is whether local government can provide the insight and leadership to achieve prosperity, or will be mired in the failed policies and decisions of the past.

THE NOVEMBER 3RD ELECTION – BEFORE AND AFTER

[THOSE WITH INTEGRITY AND THOSE WITHOUT]

We start with glimpse of the events leading to the last election. It was not pretty and hopefully is not an indicator of how the politics of city government will perform in the next ten years.

Police Association Smears Candidate Andrews

Prior to the last election the Ventura Police Association commissioned a telephone poll (push poll) for the specific purpose of trying to eliminate Councilman Neil Andrews. A push pole is a seemingly unbiased telephone survey that is actually conducted by opponents of a particular candidate in order to smear or disseminate negative information about that candidate.

Police Association interjects itself into city government

Then immediately prior to the election came the mother of all polished and salacious brochures. You know, the one about Neal Andrews taking public money to the tune of $20,000. None of it was true, but the policemen in charge didn’t care about that. They too have a right of free speech, even rotten speech and fraudulent utterances.

It didn’t work. The voters wisely returned Mr. Andrews to office. He was elected to his third term of office, and was the next highest vote getter [9,246] next to our newbie retired chief Mike Tracy [9,777].

Councilman Andrews. of course, was punished for his position when the majority of the Council at their December meeting. The Council refused to elect him as the mayor of this fine city or even the position of Deputy Mayor. Councilmen Andrews and Morehouse were in the minority. The Ventura County Star published an editorial castigating the members of the council who condoned this miserable spectacle.

THE UNFUNDED PENSION PROBLEM PLAGUES GOVERNMENT

The unfunded pension liability of this city is the biggest problem facing this community, and will be the focus of VREG in the first quarter of 2010.

Councilmember Andrews believes city government should bear all the cost of police and fire pensions.

Councilman Andrews is the only elected official who has not lost focus on this enormous issue. His public position, and one that he has espoused for years, is that the benefits of the members of the public unions, particularly police and fire, are excessive and must be changed from a defined benefit plan to a defined contribution plan. That of course is not to the benefit of the union members because they want all they can get — FROM YOU.

This is real. If you do not believe this City has a serious debt problem you are not paying attention. Attached is a letter which VREG published in April 2009, titled “THE SPECTRE OF BANKRUPTCY”. The unfunded liability for the City of Ventura, as of June, 2007, totaled $294,673,595. We believe the 2008 Comprehensive Annual Financial Report will reveal that the debt picture has improved somewhat and will report on that analysis in our next issue. VREG will also sponsor a public forum and speaker on this issue in the first quarter of 2010. We will announce the time and place.

A MESSAGE FROM A CITIZEN

[WHAT OUR CITIZENS WANT FROM GOVERNMENT— PAY ATTENTION CITY COUNCIL]

Just before Christmas the Ventura County Star published a letter from one of our citizens. With his permission we publish that letter as a message to start the new year:

WHAT CITIZENS WANT

Re: Your Dec. 12 editorial, “Council’s Action a slight to voters”:

I concur with the editorial that called the selection of Mike Tracy as deputy mayor as a slight to voters. I have no problem with Tracy and feel he will do a great job, but as a brand-new, untested councilman he hardly deserves to be appointed deputy mayor.

Skipping the popular, at least with the public, not electing Neal Andrews [as Deputy Mayor] is truly an insult to the people who voted. What the City Council and city manger do not understand is that there’s a reason no new tax measures have been passed. The voters are unhappy with the way things are going.

I was particularly irked by Councilman Brian Brennan’s comments after Measure A failed. He basically said the public wants more city services, but doesn’t want to pay for them. I think he is wrong. I believe the public wants basic services and is willing to pay for them. Those services, in my opinion are:

Well-maintained streets and storm drainage.

Library services at the Helen Wright Library.

Adequate police and fire protection.

Safe neighborhood parks.

Being able to move about the city without harassment by professional bums.

A city that encourages a Walmart, which would provide tax revenue and jobs.

One reader wants city government to stop wasting money.

What I believe citizens do not want are:

Large, expensive sports complexes.

Expensive housing projects for “struggling artists”.

Worthless and expensive bus-stop art at the mall.

Exorbitant pensions.

City leadership that seems to enjoy punishing the public for not going along with their agenda.

And, finally, a city leadership that thinks residents who do not agree with them are just ignorant.

I feel better now.

—Ray Holzer

Editors’ comments:

Thank you Mr. Holzer. Could not have said it any better.

Editors:

B. Alviani S. Doll J. Tingstrom

K. Corse B. McCord T. Cook

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