CalPERS Investments Made 1%, Not Projected 7.5%, Meaning LB City Hall (i.e. Taxpayers) Will Face Add'l Pension Costs; Councilman DeLong Comments, Mayor Mum (For Now)
|(July 17, 2012, 6:30 a.m.) -- An announcement yesterday (July 16) by California's Public Employees Retirement System that it earned only 1% on its investments instead of its projected 7.5% likely means that LB City Hall -- and thus LB residents -- will face additional costs and possible service cuts (unquantified at dawn July 17) to pay what some previous elected officials voted to obligate current taxpayers to pay.
As of dawn today (July 17), the exact amount hasn't been publicly quantified by CalPERS or LB City Hall.
Asked for comment last night, Councilman Gary DeLong emailed: "The continued poor performance by CalPERS again demonstrates why it is important for the City of Long Beach to move away from defined benefit plans to 401(k) type pension plans. Employees should have more control over their investment returns."
Mayor Bob Foster hasn't responded publicly at this point but since 2009 (and the start of the "Great Recession") has repeatedly voiced concern about pension obligations at the city and state level.
Within the next 60 days, with a vote expected by mid-September, LB's City Council will decide on a FY13 City Hall budget. City management's proposed budget is now with the Mayor who is required to release it to the Council and the public with his recommendations no later than Aug. 1 (leaving the Council less than six weeks to act).
Among the pending issues: will a Council majority fund a replenishment police academy class in FY13 (commencing sometime before Sept. 2013) or continue to divert recruit funding to pay current officers, which Council majorities did as a budget balancing tool in Sept. 2009 (unanimous), 2010 (unanimous) and 2011 (6-3, with Schipske, Gabelich, Neal dissenting). The three years of Council-majority approved attrition has left LB taxpayers today with roughly 160+ fewer police officers than the city had in 2008.
The budget decisions will be made in part by Councilmembers Al Austin and Patrick O'Donnell whose recent election victories were fueled by major money campaigns backed organized labor (LA County AFL-CIO + LB's police and firefighter union PACs) against a major money campaign by the LB Area Chamber of Commerce PAC.
The CalPERS announcement comes roughly ten years after then Mayor Beverly O'Neill scheduled votes (on the last day of an outgoing Council and the first day of an incoming one] to approve a taxpayer-costly spike in the pensions of City Hall's non-public safety employees, enabled by Sacramento-enacted legislation. Those 2002 Council votes (both 9-0) were denounced by Mayoral candidate Bob Foster ("pension potholes" was the phrase coinced by candidate Doug Drummond) in 2006.
In 2007, Mayor Foster supported re-opening City Hall's contract with the Police Officers Asssociation (to bring pay to near median with other cities, ostensibly to stem LBPD exits) and in 2008 supproted five year (instead of the previous three year) contracts with LB's Firefighters (8-1, Gabelich dissenting) and non-public safety employee union (7-2, DeLong and Gabelich dissenting).
Those contracts didn't include pension reforms that the Mayor has subsequently advocated. The POA and Firefighters unions have since agreed to those pension changes while IAM (thus) far hasn't (and legally doesn't have to, under the 2008 five-year contract).
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