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Novato Councilwoman Urging City to Suport Pension Reform Initiative

The Pension Reform Act would allow changes to future pension and retiree healthcare benefits while protecting the benefits employees have already earned. Supporters say it will help cities reduce skyrocketing pension costs. Others aren't so sure

Novato is facing $27.6 million in unfunded pension liabilities, according the latest statistics released this fall by the California Public Employee Retirement System (CalPERS).

Part of the reason is because employees are living longer, so the city has to pay out benefits over more years. But the biggest reason is that investment returns, from which CalREPRS derives a portion of its income, have plummeted since 2008, forcing the city to make up the difference.

Novato is not alone in this quandary. In fact, it’s doing better than many other California cities because of cuts made over the years. But $27 million is no laughing matter and the lack of available funds has prompted one local politician to urge Novato to take a step toward tackling the problem.

Councilwoman Jeanne MacLeamy wants Novato to endorse the Pension Reform Act of 2014, legislation that would allow changes to pension and retiree healthcare benefits going forward while protecting the benefits employees have already earned.

Read more about the initiative here

“We keep saying that we have done all that we can do within the law to control our rising pension costs,” MacLeamy said at a December 17 council meeting. “And we have. This (legislation) will give us a few more tools. And for those cities that are in very bad finance shape it will help assure that retirees will have a pension and that future generations of taxpayers are not left with bankrupting costs.”

Pension Reform Act of 2014 is authored by several California pols who have had a front row seat to the impacts of ballooning pension costs, including San Jose Mayor Chuck Reed, whose Measure B requiring bigger employee contributions and smaller pensions by future employees, was approved by voters in June 2012. The measure has taken a drubbing after police and other unions filed a lawsuit and a judge recently ruled that portions of the law were illegal.

Other authors of the Pension Reform Act of 2014 include San Bernardino Mayor Pat Morris and Vallejo Vice Mayor Stephanie Gomes, whose cities were forced to declare bankruptcy after not being able to afford pension costs.

MacLeamy said she’s pushing for the Novato Council to sign on to the proposed legislation because despite the city’s efforts to address its budget deficit by cutting employees by a third and reducing services, unfunded pension liabilities keep growing.

“Since 2006 when we issued pension obligation bonds for $18 million to refinance our pension debt, our unfunded pension liability has grown again to approximately $16 million, in just 6 years,” she said.

The Novato Police Managers’ Association, the union that represents sergeants, lieutenants and captains, has called the proposed legislation dangerous and illegal.

“In Novato we have just started to stabilized from the staffing cuts of the past, and even considering endorsing the Pension Reform Act of 2014 will send the wrong message to employees who have strived to work on all budget matters,” said Jim Tross, president of the union, recently.

“We do not need any more insecurity and doubt in our lives, and we need to be able to hire and retain quality employees.  We need to do what is best for the city of Novato.  We need to trust the city of Novato will try to do its best for us,” he said.

Other Novato council members appear to be siding with the police union, or at least urging caution before the city signs on its support. One concern are the impending labor negotiations scheduled to start this spring.

“The timing is not good,” said Councilwoman Madeline Kellner. “Individually, if people want to support this initiative, that’s fine, but I don’t think it’s something the city should get into at this point.”

Councilwoman Denise Athas agreed, saying that supporting the Reform Act would “send the wrong message” to city employees.  

“They have been amenable to changes in the past and have really helped the city with all the sacrifices that they’ve made,” she said.

Lucan agreed that supporting the legislation was premature, but said Novato should keep a close eye on how the legislation does.

“But if it does (get on the ballot), we should think about bringing it back because it’s about gathering the information that we need,” he said. “We need to look at the whole picture and make a decision based on that information.”

What do you think? Would you like to see the Pension Reform Act pass and should the city of Novato sign on in support? Let us know in the comments below.
Concerned Citizen January 02, 2014 at 11:21 AM
How about we adopt the same funding for public employees the Post Office is forced to use. It seems Calpers and possibly all others have a blank check from working stiffs like me and you. They can project any moronic return they want and when they miss we have to make up the difference in perpetuity. ABSURD!, Criminal, Ponzi Scheme = current retirement funding or as they like to euphemistically refer to as unfunded. Unfunded = unsupportable tax burden. Where is the comparison for public employees vs. private sector. I am not angry at those that work for the City but it is unfair for expectations to fund their retirement without real contribution. As for more political posturing "worthless" and of course "priceless"
Steven Leonard January 02, 2014 at 12:10 PM
I agreed wih Tom james. In the old day "public employees" were paid less than the average private sector employee but they recieved fair pensions and medical plans in retirement so they weren't so oblicated to save for retirement like public sector employees but were afforded comfortable pensions for "time served" . Now they get both.....not fair. Reform is a must if our tax dollars are to be spent on much needed infrusture upgrades and repairs and not public employees pensions and medicial plans. We all have taken hits and they should too.
Ken Bacon January 02, 2014 at 12:45 PM
I am happy to see more than a few Novato residents paying attention to this issue. The politicians are understandably reluctant to take a stand, because the unions are ruthless to anyone opposing them. They will do whatever it takes to keep their gains, and the public , so far, has not done much to stand in their way. The taxpayer cannot continue to get screwed by the public unions! We are going bankrupt fast, and the sooner we take action, the easier it will be to make changes to keep the system sustainable. This is a smaller example of what is going on with the state of California, Social Security and Medicare. Bravo, Jeanne MacLeamy! You deserve a ton of credit for taking the first step. Citizens of Novato! Let's wake up! The public unions have steamrolled us, and it is time we voted in Council members who will to do what is necessary and right.
Roger January 02, 2014 at 12:50 PM
The IJ today stated its support for pension reform. See the editorial. The IJ is usually a rather liberal paper. I think MacLeamy feels the unions won't win this fight.
Brady. Bevis January 02, 2014 at 01:37 PM
Pension reform is long overdue! Our cities and counties across America are crippled by unaffordable and overly generous obligations that were made during times of an inflated economy that most believed would never end. When the bubble burst, most Americans had to accept the substantially reduced values of their homes, and often their savings as well. Why would the equally unrealistic enriched pension plans be uniquely protected from "reality adjustments"? This is not a suggestion to deprive anyone of their legitimate and well-earned retirement (like what happened with foreclosures across the country). It merely allows for some reasonable adjustments that would allow the current government services to continue, current employees to be fairly compensated, and taxpayers to not be limited to paying for the past rather than the future.
Bubba six pack January 02, 2014 at 02:10 PM
Wanna know what unions are like? Look at BART. They fought over many issues, but had settled on the family leave clause and were many pages past that entry when they finally ironed out the last details and sent the agreed contract for signatures. Somebody slipped in a new page that gave the union 6 weeks of a paycheck without working, and the management never caught it. The union says "you signed it, suckers, so pay up!". This disregard for the system shows that the union is heartless. The only way to cover this is to raise fares or lower maintenance. One hundred grand a year, and you don't even have to steer. Tell them the same thing you should have told the cement heads lining the council chamber walls-"Check out Burger Kings package and get back to us". Instead they sat on their hands and watched Jeanne go down in flames because they knew that the unions vote more than the homeowners, (who actually make up 63% of Novato residents). Time to tell the homeowners to vote for their future. Join the Novato Homeowners Association and read the material. Every reader should tell 10 people and let it grow before the next election.
David Rollison January 02, 2014 at 05:54 PM
It seems to me the worst possible solution to financial problems to screw the city employees who entered into work agreements in good faith and earned pensions. It's not the line of duty workers--the cops, firemen, street workers, gardners, clerks, secretaries, dispatchers, and other dogsbodies who have gamed the system--it's the managers and executives who inflated their own salaries in many cases and stand to reap porcine-level pensions never having done an honest day's work. But they won't suffer these changes, I'll predict. It's the guy with the stop and slow sign on duty when the roads are paved who will be sacrificed so the fat cats can keep their ill gotten gains.
Ken Bacon January 02, 2014 at 06:11 PM
David, you sound like a union guy. The facts are that the current system cannot be sustained. Public employees are being compensated well above the private employee rate, and the system is going broke. It is unreasonable to expect the taxpayer to pay even more. Do want to see all of the current public employees really get screwed? Watch what happens after the bankruptcy when their current contracts are voided. That's what's happening in Detroit. They will get far less than the reasonable reforms being proposed now
Bubba six pack January 02, 2014 at 06:14 PM
Great statement, David, and I can agree with you on keeping promises, but we've still got a fireman making more than the president, and a city manager making more than the governor. These promises were made to secure votes from unions, who tell their members who to support. It's bribery. The council should represent the 63% of Novato residents who are homeowners and must pay for this fiasco, not the unions who organize voting blocks or line the council hall with heavies. Start now, with a new deal, and guess what? They'll take it because I checked, and Taco Bell pays less. Sorry about that Tahoe cabin, but this recession has been democratic, and we must all do our part in tightening up the belt.
Joan January 02, 2014 at 11:45 PM
I guess noone on this post knows why a city the size of Novato has so many employees who earn six figure salaries. Is it because of overtime pay for the service employees (fire and police) or is it salaries for department heads, etc? What do other cities of our size pay for staff in the same type of positions?
Eleanor Sluis January 03, 2014 at 01:27 AM
Tom- please put the issues that you found and solutions to the pension reform on Patch. It is a matter of negotiating policy changes; I support Jeanne MacLeamy in beginning the discussion. What matters is that we read the pension reform act and find the pros and cons to discuss. Questions about details of caps on pensions for those making more than $140,000 need to be discussed. What other details are important and how can the citizens get more information from the city and county about pension reform? Who is interested in forming a research group and look at the Grand Jury’s report on pensions as well as San Jose’s. What are other groups doing to discuss this issue? Information on Patch can help in understanding the complexity of changing pension policy.
Eleanor Sluis January 03, 2014 at 01:57 AM
Pension Issues: Info for Novato LA Time’s opinion: “...Conservatives need to dial down the rhetoric and stop trying to use pensions as a Trojan horse to abolish public employee unions. They also need to accept that defined-benefit pension plans with firm guarantees for the future are good public policy if managed prudently. Union members need to acknowledge that, in order to keep some very favorable benefits, they will have to contribute more of their own pay. They also need to accept that state and local governments have limits: salary, benefits and job security have to remain in line with a city's actual resources. That's all it would take. If only it weren't politically unacceptable to both sides…” Opinion on pensions by John Clark Please read the article and see what you think-thanks http://www.latimes.com/opinion/commentary/la-oe-clark-california-pension-reform-20131229,0,5603872.story#ixzz2pJdswzFg
Craig Belfor January 03, 2014 at 04:35 AM
So, in other words, you're running again for council. Your post is pure politics, showing your understanding of the issue but still not taking a stand. We need people who can make a stand, not sit on their hands when asked to lead, not follow.
cathy January 03, 2014 at 10:50 AM
Eleanor Sluis is right on! We need to inform ourselves instead of just making rhetorical noises. We have a problem and we need to deal with it. I applaud Jeanne MacLeamy and I applaud Eleanor. Come on fellows! We can't 'sit on our hands' any longer. If we don't want to go bankrupt or pay ever-increasing taxes, then we, the people, have the responsibility to look at the Pension Reform Act and figure out what we can do, what makes sense, and then do it.
Pat January 03, 2014 at 11:01 AM
Instead of reacting with your emotions, you might want to do a little research about this Proposition before jumping on the band wagon. It could actually make things worse. Please, before jumping into something you do not know anything about, inform yourself. Here is just one of many interesting articles about the subject: http://www.publicceo.com/2014/01/three-strikes-for-reeds-pension-measure/
Al Dugan January 03, 2014 at 12:55 PM
The issue is simply the public pensions issues can not be continued to be kick down the road as any savvy investment person knows 7.5% per year is not a reasonable budgeting number for pension system returns. For budget purposes, 4.5% would be a reasonable assumption and assure pensions funds would not have to risk high volatility to try and make goals. This will also help dig us out of the current deficit. With this budget and funding, the discussions to how the budget is allocated should take place between the interested parties. In the private sector, this is the only way you can stay in business and it certainly should be no different then a fiscally responsible approach public pensions.
Craig Belfor January 03, 2014 at 01:21 PM
I read the article Pat referred to and it was obviously written by a person against the measure. I noticed that part of the plan was to pay down future obligations with the savings from the measure, so in truth, this measure would save money in the long run, but the city in question would not see cash flow helped immediately. To oppose this measure is to not care about the future, but to only want the present at the cost of the future. The 63% of Novato residents who are homeowners have skin in this game, and want a financially stable future, unlike Detroit, who gave it all to the unions. Sizzler found that 20% of their restaurants were losing money, so they declared bankruptcy, got out of all of their leases, and resigned the good ones only. We could do this here. Disband the Fire Board, who collects twice the money from property taxes that the city does, and tell the fireman the next time he sees a paycheck of $400,000 a year, he'll be the President, disband the Sewer Board, charge Veola one million dollars a years road use fee like the other cities do, pass on the cost to the customers ($2.88 per month), pay off the deficit of $300,000, give $700,000 back to the city to pay down future obligations, repeal the sales tax increase that drives away big business, get rid of the chick that money was paying to beg business to come back, and have a balanced budget. The assistant fire chief alone makes more than our deficit. Tell the fire chief to work harder.
Al Nymous January 03, 2014 at 01:51 PM
I know a firefighter and every time I talk to him he is on overtime. They have it rigged so they are always short one man so they make extra money on the taxpayers dime. Then when voting season comes along, they cry like babies that they are all getting fired unless you vote in a measure to save everyone. At this point Firefighter have lost the stigma of hero and earned the title of thief.
Craig Belfor January 03, 2014 at 02:18 PM
Don't even get me started on the double dip game of musical jobs with your buddy across the border. We even have triple dippers here, shaking us down for 3 pensions and a consultant's salary.
Steven Maviglio January 03, 2014 at 03:06 PM
Fact: the average CalPERS pension is $26,000. Half under $18,000. Only 2 percent earn over $100,000 -- most of those are managers who'd get that much (or more) in the private sector. There are thousands of bankers, lawyers, doctors, and corporate executives in this city for whom such benefits and far higher salaries are taken for granted. It's the least we can give those public servants who teach our kids, fight crime, and protect our homes from fire.
Tom James January 03, 2014 at 03:31 PM
Pat, Like Craig Belfor, I read the article and I believe I read Chuck Reed's referendum, although it was some time ago. It seems obvious, as Craig pointed out that the Analysts office is against this measure because that are part of the problem. Of course the unions will sue but we have to fix this problem or we will all be bankrupt and then pensioners will get pennies on the dollar. But the unions don't care. They figure that they will all be dead before the reality hits the fan. So they want to keep kicking the can down the road. Those of us interested in public employee pension reform think that if the problem is not addressed soon, employees will get little or nothing. The unions see taxpayers as a bottomless source of tax revenues. Lastly, the Novato Fire District is a joke. If you look at how much each employee cost the district, it's criminal. The voters must be fools for re-electing the same people who created the problem to the Board.
Al Nymous January 03, 2014 at 03:54 PM
So government employees need to be on the same level as the 1%? Private sector jobs pay/ benefits relate to the income they generate by a product or service. Government jobs don't have a self regulation of the free market to determine what is fair wage and pension. Now cities are borrowing too much and not balancing their books, kicking the can down the road then going bankrupt.
Tom James January 03, 2014 at 05:49 PM
So I Ggogled the name Steve Maviglio, turns out Maviglio's private consulting work includes clients such as Californians for Retirement Security, a public employee union coalition that opposed pension reforms adopted last year. Public employees have such a good deal they hire high priced consultants/lobbyists to protect their good deal.
Bob Innes January 03, 2014 at 08:43 PM
Save $27 Million in benefits and spend $15+ Million on a new City Hall. Go City Council. You can probably make it up on holdbacks and extra taxes from the Affordable Housing scam. Good Grief!
Bubba six pack January 03, 2014 at 10:55 PM
We need to go to the "Paint the Towns Financial Future in the Red" party on the 24th and tell them that they are nuts celebrating the looting of our town. Our council deserves to be hanging from a swing set, not dancing to one.
Eleanor Sluis January 04, 2014 at 01:31 AM
Desert Springs has problems with paying their employees-not that they are overpaid. This is another article about pensions and perspectives and how to handle the unfunded liabilities. Until I understand better the complexities-I will encourage others to help in explaining the pension debt to the taxpayers. How will Novato plan for this deficit? It will take thoughtful consideration and cooperation by the city, its employees, and the city council to figure it out. As residents we can educate ourselves about the pros and cons and then write or speak or find groups who support the state’s recommendation or not. Please see: http://nation.foxnews.com/2013/12/31/desert-hot-springs-calif-closes-fire-co-faces-bankruptcy-pension-costs
Craig Belfor January 04, 2014 at 01:56 AM
Thanks for the link, Eleanor. I hope we can avoid this scenario, and getting at the task early can't hurt. It was good reading, and I suggest that anyone interested in this story check it out.
Craig Belfor January 04, 2014 at 02:16 AM
P.S., Eleanor- I'm staring to change my opinion of you for the better.
Tom James January 04, 2014 at 04:14 AM
Eleanor, very good info. I now better understand the origin of these generous safety officers pension plans. We have Gray Davis to thank or them. I will give the public employee unions credit for recognizing that if they bought off the Democratic party they would get almost everything they demanded. And screw the tax paying public.
Eleanor Sluis January 04, 2014 at 05:20 PM
Pension Issues: Info for Novato Marin County has a report on Pensions from the Republicans. Question is where is a report by the Democrats? Or by the Unions for understanding and finding solutions to the costs of pensions for Novato? Please see: http://www.maringop.org/index.cfm/heartbeat.htm#Pension Reform See also a group formed in 2011 to investigate pension reform: Citizens for Sustainable Pension Plans : Consider joining or contacting them. http://marincountypensions.com/uploads/2/9/0/9/2909492/cspp_report_100413.pdf See page 8 for the Introduction: “The amount and implications of between $1.2 billion and $2.3 billion in unfunded public employee retirement benefits for the County of Marin and its towns and cities is a serious problem that needs to be clearly understood by residents, politicians and public employees. While Marin is not in the same position as Detroit, Vallejo, Stockton, San Bernardino and other cities and counties that are facing bankruptcy, the data in this report demonstrate that we are moving steadily down the same road that has led to their financial and service insolvencies...”

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