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Good News: SDCERS Discussing Lowering Interest Rate on DROP Account
Johnny, you can knock the interest all the way down to 6.5% and still have a return over $2 million. Remember that the retirement system is in it for the long run, and not the past quarter or even the past year. We're talking a 30 year career here. Also remember that SDCERS is in the top 3% of public retirement systems over the past 10 years according to Callan. So comparisons to CalPERS might not be as appropriate as you think. For that matter, that could be why Contra Costa Co. is paying more in retirement.— October 24, 2008 2:11 p.m.
Good News: SDCERS Discussing Lowering Interest Rate on DROP Account
Johnny, Let's compare apples to apples. You posted a screwed up link to Contra Costa County. Use this instead. http://ca-contracostacounty.civicplus.com/Documen… You posted data on Deputy Sheriffs. OK, but we're talking about firefighter compensation here. So... scroll down to the F's. Look at Fire Captains, Fire Engineers and Firefighters. Now look at pay vs retirement. Golly, it's about 25%. Damn close to my 20% estimate. And their benefits are a bit better than ours. While you're in the neighborhood, look at total compensation. Since you're all hot on this $200K thing, how many do you see making that kind of dough? It's your document - all the factors are there, how many do you see? Now consider that Contra Costa County is one of the highest paid departments in the state and San Diego is one of the lowest. Still want to make your claim that ALL firefighters make $200K? Thanks for the document, Johnny. It really helped prove my case.— October 24, 2008 1:14 p.m.
Good News: SDCERS Discussing Lowering Interest Rate on DROP Account
Um, Johnny... $16K is the city's contribution, not the total contribution. Remember? It's a 50/50 split these days? Let's see, $32,000/year x 25 years of contributions pre-DROP x the current assumption rate of 8% = $2,547,815.62 Oh yeah, they were going to lower the assumption rate. To 7.75%. So there would only be $2,447,103.02 available to pay that $2 million dollar pension. Pretty much, you just proved my point. Calc'd out the contribution figure I used is pretty close to the value of the retirement you used yourself. And Paul used earlier in this thread. Amazing. Maybe I'm a little closer to reality than you'd like to admit. Curses, foiled again, eh Johnny?— October 24, 2008 12:56 p.m.
Good News: SDCERS Discussing Lowering Interest Rate on DROP Account
Don, you can claim that I'm tweaking retirement costs all you want. Go read the CAFR. Even if I were tweaking the costs, the fact remains that Johnny's higher costs mean even more savings to the city by putting folks in DROP. The higher you believe retirement costs, the more the city saves. Let's look at this a different way. The city was billed $166 million by SDCERS in 2007. There are 11,000 city employees. That's a whole $15,000 per employee. Firefighters make more than the average city employee, so my numbers are in the ballpark.— October 24, 2008 11:10 a.m.
Good News: SDCERS Discussing Lowering Interest Rate on DROP Account
Don, There are a couple of reasons that the European study could be not relevant to today's firefighter. First, it started in 1950. Home furnishings and vehicles were made from natural fibers then, and in fact, through most of the study period. It it the newer synthetic materials that have a higher concentration of carcinogens Second, fires are fought differently in Europe. They put much more emphasis on saving the block by performing a external attack as opposed to our method of performing an aggressive interior attack to attempt to keep the fire to the room of origin. Third, Europe has a much lower fire incidence rate than the US. Thus there is less exposure. The US has the highest rate of fires and fire fatalities of any industrialized nation. Does that mean that the study is invalid? No. But one must be careful to apply what happened over the past 50 years in technology with what is happening now. I never said that we die sooner, though it seems likely. I said that we have a higher rate of cancer and heart disease.— October 24, 2008 11 a.m.
Good News: SDCERS Discussing Lowering Interest Rate on DROP Account
Now, back to Johnny's $200K BS. I just gave the actual figures for retirement cost. I'll do my best to give real costs for most of the department below. Sorry... it will be a bit long. Each fire engine has four personnel. 1 Captain, 1 Engineer, 1 Firefighter/Paramedic, and 1 Firefighter. The FF/PM is paid at the same rate as the Engineer, to compensate for the Paramedic skill. So 3/4 of personnel are paid at Engineer rate or lower. I'll round up a little and say that Engineers make $80K salary to make the math easy. We just saw that retirement is 20%, or $16K. Mayor Sanders has split health care into three tiers. The top tier (Married with family) gets around $12K/year. Not everyone gets that. Most of the lower ranking (younger) folks only get the single coverage, at $6K/year. Let's average and round up to $10K. So total we're at $106K. Leave is around 1 shift per month, or 10%. (It's lower for everyone with less than 15 years time, but I'm rounding up at each step to make Johnny happy) Since it takes OT to backfill for leave, we'll use 15% or $12K. So now we're at $118K -- or lower. I rounded up considerably at each step. And I used the highest paid individual as the base. So each and every firefighter makes $82K (or more)in overtime? For the folks listed above, that's a dozen shifts just of OT (at 24 hours/shift) per year. I don't think so. In fact, the top paid lists support my theory.— October 24, 2008 10:47 a.m.
Good News: SDCERS Discussing Lowering Interest Rate on DROP Account
Don, here's one thing your article didn't quite mention. DROP interest rates are tied to the assumption rate for the entire system. The SDCERS board discussion was not about reducing DROP interest rates, that was an aside to the discussion about dropping the assumption rate of the system. I'm not sure why you reported just the DROP side of the story. Maybe that's the info you were fed. Maybe you know the whole story but chose to report only half of it. Dropping the assumption rate would likely result in an increase in payment required -- except that they're tweaking other assumptions as well. It's interesting that folks like Richard Rider keep harping about "mortality rates set artificially low" and things like that. Turns out that the actual mortality rate was greater than the assumed mortality rate, so they tweaked that as well. Gee, maybe Richard is exaggerating just like JV.— October 24, 2008 10:26 a.m.
Good News: SDCERS Discussing Lowering Interest Rate on DROP Account
Johnny, You keep claiming that retirement benefits are 60% of salary. They are not. As you'd put it, another whopper. Take a close look at the SDCERS CAFR. There, in black and white, in the center of the page, surrounded by circles and arrows is the actual percentage of salary paid by the city. If memory serves, it's around 14.2% on average, for all employees. It's around 19% for firefighters. You're welcome to provide a link showing that it's 60% of salary. Or you're welcome to quit posting lies. Saving almost 20% of salary is *a huge savings*. For the sake of round numbers, let's say that 20% of employees are in DROP. That's pretty close to the actual number. Let's say they average $100K in salary per year and that their retirement package costs the city 20%. So, that's 200 employees x $20,000 each, or $4 million dollars. That's enough to staff around three engines, including all salary, fuel, utilities, overhead costs, etc. But here's the kicker -- let's say your 60% figure is correct. That number goes up to $12 million. Now we've saved enough to staff almost a quarter of the city's engines, just with the savings from DROP. The higher you push your imaginary retirement cost, the more money DROP saves the city.— October 24, 2008 10:08 a.m.
Good News: SDCERS Discussing Lowering Interest Rate on DROP Account
Paul, One other thing. The numbers I posted above show how money going out of retirement in DROP vs. no DROP are about the same. But what you haven't taken into account is that the city saves a ton by not having to pay retirement benefits on people still in the employ of the city. That's a huge savings to the city.— October 24, 2008 6:51 a.m.
Good News: SDCERS Discussing Lowering Interest Rate on DROP Account
Um, Johnny, they also have a lower cost of living and lower housing prices, thus less property tax income. As you say, simple math. You just can't get over this $200K thing, can you? They make medication for that, you know. Since they've been publishing the stats, there have been something like 3 firefighters that have made over $200K in cash and maybe 30 that have done it INCLUDING benefits. That's divided over three years.— October 24, 2008 6:49 a.m.