Pension Reform, Solar Energy, and Water Rate Reductions Top List of Priorities
| What:
Councilmember Carl DeMaio will deliver a major speech to civic leaders, updating and expanding his efforts to reform city government and serve the residents of Council District 5. |
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Highlights: Pension Reform: Details of a bold plan to switch all new city employees – including police and fire – to 401(k) defined contribution retirement accounts, impose fair employee contributions and cap liabilities for existing employees’ pensions. Solar Energy: Proposal to expedite San Diego’s transition to renewable energy by eliminating fees for solar and energy efficiency projects. i-Phone Application: A new i-Phone app that allows residents to access city services and report problems (potholes, graffiti, etc.) Road Repairs: A pilot project to indentify and make needed road repairs using volunteers, non-profits and “rapid response” model. Water Rates: Creation of task force to devise reform package to reduce water bills by 15% and freeze for five years through use of public private partnerships, pension reform, and other efficiencies. Who: City Councilmember Carl DeMaio When: Tuesday, February 22nd at 7pm speech (6pm reception for live shots) Where: Marshall Middle School, 9700 Avenue of Nations, San Diego |
Comments 10
Council Member DeMaio has been traveling around the City showing a chart depicting the rise in pension payments over the next 15 years. What he isn’t telling anyone is:
1. The chart originally went out 25 years, but he cut it off at 15 because, after 15 years, the required pension payments drop dramatically.
2. If the only change the City were to make to the pension were to switch all new employees to a 401-K style plan, the required pension payments would INCREASE dramatically during those first fifteen years.
3. The only part of his plan that actually saves the City money on pension payments is the idea of freezing wages and basing the pension on base salary only. These are actually good ideas but I guess not “sexy” enough by themselves to help out a Mayoral campaign.
Rostra readers can see the DeMaio plan for themselevs
in detail by downloading this PDF file (just 270K) with
lots of discussion and charts.
http://cleanupcityhall.com/uploaded/BriefingSlides.pdf
Mr. DeMaio projects saving $250 Million PER YEAR by
2024, in City pension payments, by taking specific cost-
cutting steps now. See especially the chart shown on
page 27.
Alger – You should attend one of those meetings. I went to one in La Jolla let me respond to each of your points:
1. I don’t understand your argument. 15 years of even higher payments towards payments will ruin the city years before we get to year 16.
2. DeMaio says 401K for new employees is one of 15 or 16 pension reforms. His major reform is “pensionable pay”, which leads me to your third point.
3. Capping pensionable salaries. Pensionable pay is the centerpiece of all he talked about at his downhill. He showed a graph showing the dollars saved by implementing pensionable pay vs. same old we have for the next 15 years. This is sexy for a mayoral campaign, and precisely why he focused on the idea. You really should go to his next event and learn.
Hey Alger:
Thanks for bringing us the union argument of “let’s do nothing” and “all is well, just need a little time and more investment returns.”
1. The voters imposed a 15 year repayment schedule in 2004 with Prop G. The experts say it should be less than that — because the debt should be paid by current employees and taxpayers since the debt reflects services already rendered.
DeMaio is exactly right to show the 15 year schedule. You want to “refinance” our debt to what, 30, 40 or 50 years? More snake oil and kicking the can that will hurt taxpayers.
2. I’ve seen DeMaio’s plan for pension reform. 401(k) is one element — there are 15 other elements to it. So your statement as a stand alone is way misleading. 401(k)s are coming dude — get used to it.
3. Wrong again. Go read the Roadmap. 16 pension reforms — all save the city money. right now. immediately.
And as for “sexy” enough for Mayoral campaign: How about candid, blunt leadership? Based on the responses DeMaio is getting, the voters are liking it and supporting him.
“Pensionable pay” is a great idea. I think I actually said that in my #3. Freezing wages also has a huge effect on the actuarial value of the unfunded liability. Wage cuts would even have a bigger effect.
Unfortunately, taking new hires out of the pension and putting them into a defined contribution plan will increase the required annual contribution to the pension fund and will do so for at least 10-15 years.
Getting rid of the defined benefit plan definitely resonates with the public. Unfortunately, it would cost the City. If you don’t believe me, ask the actuary that Mr. DeMaio hired to do his charts.
Union Spin,
Let’s have an honest talk here:
1. A 15-year amortization schedule may just make more sense than a 30-year one, but just like switching to a 15-year mortgage on your house, it makes the payments go up. I went to one of Mr. DeMaio’s meetings and I never heard him mention that as a reason why the ARC has gone up.
2. Going to a 401-K style plan will increase the costs. Ask Mr. DeMaio’s actuary.
3. Don’t assume everyone who disagrees with you is bringing “the union argument.” I don’t want to “do nothing” and waiting and hoping for better investment returns is just stupid – average returns are called average for a reason and even if we had a few great years, they will revert to the mean.
So what should we do – We really should switch to an accrual-based guaranteed annuity, but assuming that isn’t going to happen, we should:
1. Base pensions on wages only – This is one of Mr. DeMaio’s ideas that makes sense because it limits the opportunity to “game” the system.
2. Freeze wages until the pension is fully funded. These two ideas alone will reduce the ARC quicker than all of Mr. DeMaio’s ideas combined, because the other 13-14 ideas either do little, do nothing or actually make matters worse. Again, talk to an actuary if you don’t believe me.
After we do that, we should pass an initiative that:
1. Only allows pay raise or pension increases if the SDCERS actuary certifies that the pension would remain fully funded.
2. Make it illegal to give retroactive pay raises or pension increases.
3..Require the City to pay the full ARC every year – no exceptions.
We already have in place a prop passed in 2006 that requires a public vote on future pension increases. But it is largely meaningless in today’s context since the obese pension horse is already out of the barn and procreating freely.
The subject that’s not getting enough play in this discussion is contracting out city services — and city worker jobs. We can’t contract out all the services, but there are more such options than most people realize.
Contracting out saves big bucks, reduces unfunded liabilities, and helps gut the city labor unions. It’s a win-win-win policy.
I guess the ONLY practical way this can be done is through a “though shalt” city proposition mandating contracting out (or the weaker “managed competition”), with no wiggle room for the elected officials.
Let us keep in mind that the DeMaio critics here may very well NOT be just the usual labor union stooges. Other GOP mayoral wannabees are now in play, and DeMaio is leaving them behind with his innovative plans for reforming our city. Hence I think we are seeing here the start of a lively internal squabble within the Republican Party. The sniping has begun.
Of course, this brings back my suggestion for using real names when posting or Rostra, but such will not be the case.
In honor of DeMaio’s State of the District speech, here’s a little parody from your friends at San Diego CityBeat:
http://www.sdcitybeat.com/sandiego/blog-206-taxpayer-messiah-carl-demaio.html