Here's something you might be interested in.
Joe Esuchanko, a consulting actuary for the City, will tell council tomorrow (Nov. 12) that the San Diego City Employees' Retirement System was only 58 percent funded as of Oct. 31. City Attorney Mike Aguirre warned the council Monday that the numbers are deteriorating alarmingly -- no surprise, since the world's stock markets are in a crippling bear market, and more than half of SDCERS's portfolio has traditionally been in global equities. The City will have to put $245 million into the pension fund for the year beginning in mid 2008, Esuchanko will tell the council. That's up $85 million from what the City had planned to put in. According to Aguirre, Esuchanko will report that the pension fund's assets are $3.8 billion, and the present value of future benefits (for both those retired and not retired) is $7.8 billion. That leaves a $4 billion gap. As of June 30, the unfunded liability was $2.2 billion, up almost $1 billion from a year earlier. According to Esuchanko's estimate, the unfunded liability is now up to $2.8 billion. Although Aguirre went through these numbers with the council Monday, local media did not pick up the story. The City may have to raise taxes and float debt, and use the cash flow from the taxes to service that debt, or go into Chapter 9 bankruptcy, says Aguirre. The dismal SDCERS information will be put in preliminary statements for upcoming water bonds, says Councilmember Donna Frye, but it was not included in the recent annual financial report. That report was approved Monday but she voted against it because of this lack of information. Overall, "our expenditures exceed our revenues," sighs Frye. "I don't think the $2 billion unfunded liability is the worst of it. It will get worse," says Councilmember-elect Carl DeMaio. "The media do not understand the implications. I am greatly distressed that people like Scott Peters are saying there is no [pension] crisis," and then Peters gets named to the port commission. "What you're seeing is a pension system that has tried to delay the inevitable, banking on [expectation of] inflated investment returns."
Joe Esuchanko, a consulting actuary for the City, will tell council tomorrow (Nov. 12) that the San Diego City Employees' Retirement System was only 58 percent funded as of Oct. 31. City Attorney Mike Aguirre warned the council Monday that the numbers are deteriorating alarmingly -- no surprise, since the world's stock markets are in a crippling bear market, and more than half of SDCERS's portfolio has traditionally been in global equities. The City will have to put $245 million into the pension fund for the year beginning in mid 2008, Esuchanko will tell the council. That's up $85 million from what the City had planned to put in. According to Aguirre, Esuchanko will report that the pension fund's assets are $3.8 billion, and the present value of future benefits (for both those retired and not retired) is $7.8 billion. That leaves a $4 billion gap. As of June 30, the unfunded liability was $2.2 billion, up almost $1 billion from a year earlier. According to Esuchanko's estimate, the unfunded liability is now up to $2.8 billion. Although Aguirre went through these numbers with the council Monday, local media did not pick up the story. The City may have to raise taxes and float debt, and use the cash flow from the taxes to service that debt, or go into Chapter 9 bankruptcy, says Aguirre. The dismal SDCERS information will be put in preliminary statements for upcoming water bonds, says Councilmember Donna Frye, but it was not included in the recent annual financial report. That report was approved Monday but she voted against it because of this lack of information. Overall, "our expenditures exceed our revenues," sighs Frye. "I don't think the $2 billion unfunded liability is the worst of it. It will get worse," says Councilmember-elect Carl DeMaio. "The media do not understand the implications. I am greatly distressed that people like Scott Peters are saying there is no [pension] crisis," and then Peters gets named to the port commission. "What you're seeing is a pension system that has tried to delay the inevitable, banking on [expectation of] inflated investment returns."
One thing is for sure...no new Chargers Stadium! Where in the World would the City get the money. Also, I hope all these baseball players (Holiday turns down $72 million/4 years, Ramirez turns down $50 million/2 years) see attendance PLUNGE in this Depression. I urge all to boycott pro sports until salaries plunge.
LOL!
Where is JF at?????
I need to bust his chops on this one.
According to Aguirre, Esuchanko will report that the pension fund's assets are $3.8 billion, and the present value of future benefits (for both those retired and not retired) is $7.8 billion. That leaves a $4 billion gap.
Let's see now, current budget deficit $43 million, pension deficit $4 BILLION! (I won't even go into the $1 Billion retiree healthcare deficit).
We cannot dig out of a $43 million budget deficit, yet KFC Sanders thinks we can dig out of a 4 BILLION dollar pension deficit-99 times the budget deficit????
Oh brother!!!
Someone has flippd their lid if they think we are not filing BK!
Nike Aguirre is going to be the one who laughs last in this financial meltdown.
Oppsss.. I mean MIKE Aguirre!
One seldom mentioned aspect is that the San Diego City Council is unique in that in 2000 they gave themselves pensions that can start IMMEDIATELY after retirement. Maienschein is -- what? -- 39?? Assuming he earned or bought a total of 10 years, ee can start his pension immediately with almost zero penalty.
I know of no other government officials that have this benefit. Nor a group less deserving of it!
Richard Rider Chairman, San Diego Tax Fighters
One seldom mentioned aspect is that the San Diego City Council is unique in that in 2000 they gave themselves pensions that can start IMMEDIATELY after retirement. Maienschein is -- what? -- 39??
When the IRS implements their new rule on how early people can "retire" in 2010, including these governemnt welfare queens, then hopefull everything will get in check (Normal Retirement Age);
http://www.nco1921.org/pdf/normal_retire.pdf
Response to #5: How in the world is it legal for the city council to vote themselves benefits way out of scope with what is provided to a typical public employee? My understanding is that they also have an abnormally high multiplier to go with the "early" retirement age. There is no way that should be legal.
Don, Have you looked into how the city got its rating back? Do you think it was a credit default swap? I dont see any other way that the mayor restored our credit rating over night except by buying a credit default swap--I saw they could be used for municipal bonds. It essentailly means they would have bought a credit rating from a company like AIG when in reality our credit is still no good. ust curious.
Johnny Vegas, Richard Rider, historymatters et al. the paramount fact is that we’ve got political and economic problems in San Diego and America that you folks and Don keep documenting, and the root cause is that both the republican and democratic parties have failed to protect American Democracy and American families as their highest priority.
I grew up as an “I Like Ike” republican, served in the USAF under Ike, and have hated nazis and communists all my life.
But something went terribly wrong with the GOP when Nixon got elected President, which has now gotten totally out of control under “W” and his attacks against the U.S. Constitution, our civil rights and our economy.
The facts are that we have political judges who overthrow the Rule of Law as a way of life, and we have far too many politicians like Sanders, Cunningham and “W” along with corrupting GOP special interest groups like the Neocons, U-T Editorial Board, Lincoln Club and Wolverine Network that are actually destroying public safety and the American Way of Life with attacks against taxpayers and families in San Diego and throughout America.
Our only hope now appears to be for Obama to be our Great Black & White Hope and save us from the republican party that ironically I have now grown to hate because the GOP has become the party of hate under Nixon and “W”.
One other root cause that must not be overlooked though is the failure of American education system due to political interference. Most obvious examples of this failure are “W” and the GOP that have been now undermining American Democracy that requires an education system that works. Most ironically, Ike warned us about this failure mode in his 1961 Farewell Address, but even the GOP marginalized Ike’s grave warning. And a most hellacious consequence is that we have universities such as Berkeley and Harvard that graduate people who have failed to protect and preserve American Democracy.
Indeed, history matters, but far too many have failed to learn from the learn from history and have thus failed America.
So Anon92107, it's the GOP -- and apparently (after your perfunctory first paragraph sop to equal party guilt) ONLY the GOP -- that's caused our pension woes. Is this a joke? Is that why you post anonymously?
Don't get me wrong. The GOP is equally guilty with the Dems. It's been a BIpartison effort. You seem incapable of recognizing that fact.
A change of the party in power will not improve our situation.
I deal with a lot of local governments, and I find the differences between the local GOP and Dem Party elected officials to be indistinguishable. Both party's members vote benefits for themselves and "their" employees that are unsustainable, unfair to taxpayers and totally unjustified.
You gotta' get over your tribal animosity and deal with the facts.
Richard,
Why is it that the Libertarian Party can gain no traction? I understand the mechanisms that have been put in place by the reps and dems to prevent the emergence of any third party, but aside from that why is it that most people I know that aren't ardently partisan dems or reps express views that most closely would align themselves with libertarians, yet those same people tend to view the libertarian party as a bunch of dope-smoking, open-border anti-tax nuts?
I would actually lay the slightly more of the pension blame at the hands of the Democrats (and I was a Dem for years-now independant) because they are the ones doing the bidding of the public unions (Scott Peters said we have no pesnion problem today)-but it is a two way street for sure.
But make no mistake about it, Republicans are just as guilty and one just needs to look to Orange County to see a mess almost as big as ours (Specifically former OC Supervisor Todd Spitzer, R-Unions).
No, we have two sets of constituents in America, the "donor" class and the "non-donar" class. And it is both parties.
So if you're not giving/donating, you're getting screwed.
How to return $15 million to the budget immediately:
Stop giving the Chargers over $5 million in annual city subsidies.
Stop giving the Padres over $10 million in annual city subsidies.
This money should be enough to fund at least a few of the closing libraries and recreational centers.
Best,
Fred Williams
Fred, that makes WAYYYYY too much sense-it would never go over at City Hall.
Fred and Johnny,
I am not sure what happens if the city defaults on the stadium bonds, but it begs the question of how come budgets like the SEDC and CCDC haven't been pegged for large cuts.
I read ( http://weblog.signonsandiego.com/news/breaking/2008/11/aguirres_first_pension_victory.html ) with interest that Mr. Aguirre has found a chink in the pension armor. Although this is a tentative ruling, it seems that some purchase of service or "PSC" benefits may be unwound, rolled back, correctly credited or some other remedy may be applied.
I also note, the current "financial state of the nation" may have affect on judicial analysis. With times tough now and potentially tougher in the foreseeable future for pension system it seems this judge wants to spread the costs like Obama wants to share the wealth.
My question is how long will it take to calculate and what happens next. Has the court open Pandora Box or is this a crack in the dam.
My question is how long will it take to calculate and what happens next. Has the court open Pandora Box or is this a crack in the dam.
What happens next-Bankruptcy happens next.
This victory is like using a water pistol to put out the 2007 Witch (Creek) fire.
No, it is way TOO late to fix the pension underfunding, we are so far behind the 8 ball now we will never get out from behind it. We are DONE.
BK is coming and there is NO stoppping it at this point.
We should have LOWERED pensions 4 years ago and then worked on shoring up the hole-but by not fixig the pension costs we just kept digging a deeper hole, now we cannot dig ourselves out.
Stick a fork in San Diego-becaus we're done;
San Diego pension payments to soar
The city's annual pension payment has never exceeded $163 million, even at the peak of its own fiscal crisis. But a new five-year financial outlook the Mayor's Office released Wednesday shows the payment will be $166 million July 1, and as much as ****$236 million a year later.
In the three years that follow, that payment could continue to grow, to *$256 million, then 276 million and finally ***$291 million -- payments that would consume increasingly larger portions of the city's general fund that pays for a broad range of city services.
(In case you did not add up those 4 short years of pension payments, it is = $1,059,000,000.00........over a BILLION dollars in 4 short years, and that number will only go up).
http://weblog.signonsandiego.com/news/breaking/2008/11/san_diego_pension_payments_to.html
BTW-I have a C-Note that says San Diego files BK within 12 months-who wants some of that action???????
JF-you game????????????
Under the state constitution cities like San Diego cannot default on bonds. San Diego must pay the bondholders before it pays any other expenses, including police and fire salaries.
I predicted two weeks ago on this blog that the City's unfunded pension liability would swell to $2.8 billion and I was right. I also predicted that the City will layoff 25% of its workforce in 2009, and I stand by that prediction. Instead of the $43 million budget shortfall projected by Mayor Sanders for Fiscal Year 2009, my rough calculations indicate the City's budget deficit will range between between $320 million and $380 million. If Arnold can't swing a large tax increase, the City's budget deficit should easily reach $420 million or more.
The VoSD had an interesting take on this today. They noted that Sanders had a plan to borrow $574 million by putting city assets up for collateral such as the downtown police station. Aguirre nixed the deal as illegal because the proceeds would not be used for the assets being put up as collateral.
If Sanders had gotten his way (which he would have if Goldsmith was CA), the pension fund would have invested that money and would have just lost 20% of it (probably even more by now). Aguirre directly saved the city $115 million dollars that Sanders would have pissed away.
Under the state constitution cities like San Diego cannot default on bonds.
Federal BK law (Title 11 of the United States Code) pre-empts state law-so virtually any muni in any state can file Chapter 9 BK, irrespective of state law or state constitution, .
What Vallejo did, or I should say the BK judge did, was put bond holders in the lead/front positions and Vallejo has not defaulted on any bonds.
So you are corect in that the bonds will have priority over PD and FD obligations-their contracts.
Retirees may be a different ball game though-they may jump in front of bond holders-we will have to wait and see what happens in the Vallejo case and how that number plays out. Retirees have their own lawyers in the Vallejo case and are litigating seperate from the PD/FD/other unions.
by JohnnyVegas:
"BK is coming, I guarantee that. Sanders won't file on his watch, he will just pass the buck while San Diego's deficits grow bigger and bigger."
"BTW, since Mike lost I am going on record today, right here right now = San Diego will never be able to dig out of the unfunded pension and retiree healthcare liabilities and will file BK, sooner or later."
"BTW-I have a C-Note that says San Diego files BK within 12 months-who wants some of that action???????"
Make up your mind, JV.You're starting to sound more and more like fumber every day. You make valid points sometimes, but sometimes it just looks as if you're just a blog version of someone who likes to hear himself talk. Circumstances didn't change that much in 2 weeks. Pick a stance and stick with it. If you really are a lawyer them I'm sure you have had a little experience at being wrong.
From the Voice of San Diego...11/13/08 12:30PST
In what could be a final blow to outgoing City Attorney Mike Aguirre's flagship pension lawsuit, the Fourth District Court of Appeals has dismissed the city's appeal on procedural grounds, according to the court's website.
In August 2007, Superior Court Judge Jeffrey Barton threw out the last remnants of Aguirre's pension case. The case, based on conflict-of-interest violations, was barred by the one-year statute of limitations for conflict cases, Barton ruled. Aguirre filed the civil lawsuit in 2005, alleging that retirement trustees improperly boosted their own pensions while at the same time agreeing to let the city underfund the retirement system in 2002.
Aguirre appealed the decision and it has been pending at the Fourth District Court of Appeals. Other arguments contained in Aguirre's original case had been struck down previously.
The appeals court recently considered a motion by the San Diego City Employees' Retirement System, the defendant in the lawsuit, to dismiss Aguirre's appeal on procedural grounds, according to the docket. The court docket says that the justices read and considered that motion and agreed with SDCERS, dismissing Aguirre's appeal.
The docket says that the city is, effectively, attempting to appeal a decision that is couldn't be appealed. Here's what the docket says:
The City purports to appeal the September 17, 2007, judgment of dismissal of the City's sixth amended cross-complaint, which is a nonappealable interlocutory judgment.
There's no more information on the docket about why the justices decided the appeal shouldn't be heard. Neither Aguirre nor attorneys for SDCERS could be reached immediately for comment, but we'll have more information as we get it.
Make up your mind, JV.You're starting to sound more and more like fumber every day.
I have never wavered, I said BK is coming and it is-just read my posts.
It should be filed yesterday-but Sanders is more than likely just going to keep his head stuck in the sand until his term ends.
No way out of it.
The City purports to appeal the September 17, 2007, judgment of dismissal of the City's sixth amended cross-complaint, which is a nonappealable interlocutory judgment.
OK, the appeal can and will be heard (unless Goldsmith caves in).
What the 4th District Court of Appeals said was they want to hear ALL the appeals issues TOGETHER, not piece meal.
The UT made it sound (like they did in the past with the trial court) like this was the end of the case-like it is over. 100% completely false.
Mike filed this appeal interlocutory-which basically means in the middle of the case, not at the end.
Appeals courts do not like hearing interlocutory appeals unless there is immediate harm that could happen without the interlocutory appeal. They like to hear all the appealable issues at one time-which is at the end of a case.
So, the 4th dismissed the appealed issue/s WITHOUT prejudice. When the case comes to a final conclusion ALL the issues, including the ones raised here interlocutory, can be refiled on appeal.
This is very common procedure, in fact the exact same thing happened to me back in January.
Well that begs the question....why? Johnny, if what you say is true... "This is very common procedure, in fact the exact same thing happened to me back in January."
Then why did our City Attorney file this appeal now? If as you say..."They like to hear all the appealable issues at one time-which is at the end of a case." Yes, I read previous sentence regarding harm but as we know there are many avenues of harm when it comes to the pension mess.
It seems a better tactic would have been to complete this case at the trial level. A year has been "wasted" while the appeals court mulled this over, with their outcome ...."[a] very common procedure" very predicable.
I suspect this is why most people, considering the recent election results, lost faith in Mr. Aguirre's "ability" to bring some positive resolution to this matter.
But what I find more interesting is the ruling by Judge Nevitt, on the Purchase of Service Credits issue. He tentatively ruled in the Dec Relief action the City is NOT liable for underpricing of credits by SDCERS. He offers no remedy path, not a single suggestion.
While it's obvious the taxpayers are now off the hook for at least $40M, which is good, how does SDCERS go about unwinding these purchases ... fairly? I see some potential solutions. I list them in order of what I think should happen.
Cancel all PCS contract and refund the moneys to employees. In researching the program, I believe its original purpose was to fix a loophole for employees who had "broken service" a result of being recalled to military service. Somehow, someone in authority, someday, just decided they wanted up to 5 more years of service to raise their lifetime pension and subverted the original intent. This needs to be undone.
Reset the time purchased to the rates set by 2003 that made the rate cost neutral as required by the MuniCode.
Have the employees pay the difference between their purchase price and the appropriate rate set in 2003 if they wish to keep the "time purchased.
BTW-I have a C-Note that says San Diego files BK within 12 months-who wants some of that action???????
================================================= Given your track record of non-payment of other bets, no, I'm not interested in betting with you.
Just Wondering, You state that ALL PSC contracts should be canceled. Yet, Joe Esuchanko has stated that the city MADE money on PSC contracts with firefighters. Since the contracts are required to be cost neutral, should the city refund money to firefighters? Or grant more time? I never have agreed with PSC under cost, but when the city is making money at it(for firefighters only), it seems to make sense.
Well that begs the question....why? Johnny, if what you say is true... "This is very common procedure, in fact the exact same thing happened to me back in January."
Then why did our City Attorney file this appeal now?
The answer to that is because, I am told anyway, Mike believed the ongoing harm under the pension scams were causing irreversible and severe damage to the penion system and City finances. That is a guess by a person who does not knwo the facts of the case.
Now, I am not on the inside nd I don't even know what issue Mike appealed, so I am NOT the one to really answer this question. But that is how an interlocutory appeal works-you do them when there is immediate harm happening.
Send Mike an email and ask him-he is the one that knows the answer-not me.
Given your track record of non-payment of other bets, no, I'm not interested in betting with you.
I have never lost a bet, therefor I could have never welched.
You need to stop listening to RW's welfare queen sermons of baloney.
Since the contracts are required to be cost neutral, should the city refund money to firefighters?
First off, let me state that PSC's are a total scam. It should be MANDATORY that you work the years you are being given pension credit for.
As for the ones that lost money/were purchased far short of their value-we should cancel them and refund the money paid or have the mloyee make up the difference.
As for anyone that paid MORE, then yes, there should be a refund (if that is indeed true- JF is not a certifiable source to me).
Just for the record, here's what Johnny wrote about Joe Esuchanko back in September, "But if Joey did say that then Joey needs to put the crack pipe down. That dope is clouding his thinking." (Go search the Reader archives) Now all of a sudden, Johnny is praising Esuchanko's every word. Interesting.
JF you said ..."Joe Esuchanko has stated that the city MADE money on PSC contracts with firefighters."
This is perplexing....if this was correctly analyzed by the actuary, then why did SDCERS change the rate from 26% for those who bought time prior to Nov. 1, 2003 to 37% for safety employees purchasing credits on or after 11/1/2003.
Is there a difference between being "Cost Neutral" as required by the muni-code or, as he said, the City made money on them. To me this is the issue.
And after thinking about this further, no solution I can think of is equitable for ALL involved. Whether it's taxpayers or other vested SDCERS members someone is going the get the short end up with the short end of a very stinking stick.
In all likelyhood, since the Writ of Mandate offered no path or remedy, other than the taxpayers are not liable for their error. So, whatever SDCERS decides will ultimately be litigated by one party or another who feels they had a contract and now it's breeched. This means this matter will be tied up for years in the court, enriching lawyers, who'll argue until the cows come home.
Just Wondering, I may have been mistaken when I said that it was Joe Esuchanko who said that. I looked for the source document this afternoon, but couldn't find it. Nonetheless, it was either Esuchanko, the IBA, Cheiron or someone like that. I also found it odd, but there it was in black and white showing PSC caused losses for all employee categories EXCEPT firefighters.
There was a increase in cost for all safety employees. Safety employees are police officers, firefighters and lifeguards. Two of those three categories works a 40 hour week. The other third works a 56 hour week. Do you suppose that applying the same formula across the board may have overestimated it for those working more hours?
The reality is that there is very little chance that there will be a zero in that column. As you say, someone will end up on the short end. In this case PSC made money from firefighter's contributions.
Two of those three categories works a 40 hour week. The other third works a 56 hour week.
JF, are you still claiming that "on call" is "working"?
Johnny, Perhaps, as an (supposed) attorney, you could provide a different definition, according to FLSA, of a situation in which I am required to be at a certain location and subject to the rules of employment.
In other words, it doesn't matter what you want to call it. I'm required to be away from home and available to respond. By law, I'm required to be compensated for that, although I'm not always. If you don't want that level of service, move somewhere covered by volunteers.
hmmmmm where's DON? I enjoy reading his comments...
In other words, it doesn't matter what you want to call it. I'm required to be away from home and available to respond. By law, I'm required to be compensated for that, ...
Of course when you are away from your home and family you should be compensated-no argument there.
BUT, many of the duties of a FF who is "working" a 24 hour shift include numerous duties that 99% of Americans would not define as "work", bona fide "work".
OK, so where's your argument? Even you agree that I should be compensated for... as you put it, "duties". You might not like it, but most of what you dislike is assigned and required by the city. Meanwhile, I still do around 8-10 hours of volunteer work for the city per week, in violation of FLSA. I'm not complaining, just making a point. It all works out in the end.
Again, you're welcome to move somewhere that is protected by only a volunteer department. Then you won't need to worry about how much the pension is costing you or what we do while at work. You can shift your worries to whether or not anyone will actually show up.
By "duties" I meant things such as shopping, cooking, eating and exercising.
Maybe "duties" was not a very good way of describing the point I was trying to make-which is everyday acts of living (which we all do) are not normally considered "work".
Johnny, When I can do those things without interruption and without carrying a pager and radio, then maybe you can consider them "not work". In the meantime, I can't begin to count the number of times those activities have been interrupted by emergency activities.
Again, it's a moot point... no matter how much you don't like it, I'm still going to be paid to do those things.
I suppose if you don't want us to do those things at work, you can push for a 40 hour work schedule for all of us, but that's going to require hiring another full shift of people. I guess you'd really show us, forcing that upon us. Yep... pay 400 more people just so we have more time off and don't have to eat at work.
Response to post #1: But the establishment is still angling for a broke San Diego to subsidize billionaire Alex Spanos's team. Best, Don Bauder
Response to post #2: He will still figure out a way for city employees to rake in even more. Best, Don Bauder
Response to post #3: Maybe Mike will be named BK trustee. Best, Don Bauder
Response to post #4: close though. Best, Don Bauder
Response to post #5: Yes, the emoluments council granted themselves were disgraceful. Best, Don Bauder
Response to post #6: Can we wait until 2010? Best, Don Bauder
Response to post #7: This is worth looking into. Best,, Don Bauder