Steve Ware quoting Charles Manson.  Not fit for a family newspaper.  Dennis Kurimai demanded that Steve be fined.  A scuffle ensued, and whether the coffers were enriched could not be determined.  

 

GUESTS

 

 Rotarians: Chuck Vogel, Lafayette Nooner president

            John Sherry, one of his subjects

            Alicia Cragholm, controlling them both

            Grant Withers, Westlake Sunrise, imported by Dennis

                       

 Other:  Jackie Welles, looking resplendent

            Kristina, Alex Arnold's daughter (Happy Birthday)

            Doug Reichert, from a fine old family

            Mark Meuser, Toastmaster buddy of Buddy

            Chris Lane

            Mike Gilson

            Rod Haut, brought by Brad

                       

A LITTLE MISCELLANY

   

Most of this meeting was devoted to the two items down below, so there was less harassing of the president than usual. 

Sherry makes sure Vogel gets noticed

Visiting Royalty Chuck Vogel announced that Lafayette Club member Tom Henry donated two tickets to the first Cal game, and asked for bids.  Actually this might have been a wise investment because it's the only game before the Bears take on Ohio State in Columbus and USC in La-La-Land, after which there may be very few Bears remaining.  But the only aspiring investor was Paul Bettelheim who, as a Davis graduate, was proud enough of the Bears to bid $5.  We'll see if he wins.

 

Chuck stayed in the limelight by winning the Raffle.

 

 

A PROJECT TO BE PROUD OF

Outstanding job, Brad

Brad Davis gave the most effective pitch to get volunteers that has been seen around here in quite a while.  Well, a little hyperbole never hurts.  He said the Interfaith Housing Council, which spearheads the 27-unit Garden Park Apartments, represents 30 church congregations.  Ray Welles, who knows a little about these things, gently made the correction that there aren't quite that many.  Undeterred, Brad continued on, explaining that the apartments house formerly homeless and addictive families. 

 

He was quite impressed that the staff at Garden Park very thoroughly critiques themselves in carrying out classes for the parents in these families, to help make them part of the community.

 

But our focus in this project is the kids.  They tend to be high risk, often having lived under a bridge and without schooling.  After joining Garden Park, their progress is measured by their school performance.  There are a total of 38 kids now, 1/3 of which are under age five.  If the older kids perform well, they are valuable role models for the younger.  The statistics show that in K through 5th, 90% of them have improved.  But the numbers declined for older kids.  So we want to get to the younger ones on a solid learning path earlier.  A worthy cause, to say the least.

 

The immediate point is this:   On Saturday August 25, 8:30-12:00, we're needed to move stuff out of the Garden Park community center prior to its planned expansion.  A number of hands immediately shot up, and Brad happily said "Enough already!"

 

Kudos to Brad, and to Thomas Peeks who is a new director and committee member engaged in raising the bucks.

 

 

PUBLIC PENSIONS, CONTINUED

Dan's the man!

Due to overwhelming public demand, Buddy Burke broke his own rule and had a speaker repeat.  This was Daniel Borenstein, columnist extraordinaire for the Contra Costa Times and other media, speaking on a topic of interest to each member and his/her wallet.

 

In his last public pension presentation on April 6th, Dan presented the situation and the problems in detail.  Today his efforts were directed at possible solutions, or at least partial solutions.

 

He took us through a quick review of last time.  The subject is defined benefit pension plans, which at their best provide predictable income, risk pooling, and inflation adjustment.  But they have to have an affordable level with good accounting.  Otherwise future generations could feel a crushing impact.

 

He reminded us of the formulas certain public entities use which award 90% of top salary with inflation adjustments.  In addition, spiking is caused by unused vacation income, sick leave, and car allowances. 

 

These pensions are supposed to be pre-funded, paid for by employers (taxpayers), employees, and investment returns.  The "Normal Cost" (amount to be set aside each year) for police and firefighters is 28 cents for each dollar, paid on the average 9 cents by employees and 19 cents by employer.  The state of the stock market has no relevance to this.

 

To calculate pensions, an assumed rate of return must be determined.  The higher the assumption, the less needs to be invested, but the greater the risk.  As an example, CalPERS assumes a 7.5% annual rate of return. 

 

Liabilities minus Assets equals Unfunded Liability.  Liability is calculated by actuaries.  Assets may be either market value, or actuarial value with "smoothing" of gains and losses over a 15-year period.  The debt is amortized.  Normal Cost doesn't include this debt.  The total cost is 91 cents per dollar for fire districts.

 

So, how to solve this conundrum?

Q&A very helpful

A big legal obstacle is Vested Rights.  A private employer can partially reduce pensions.  What's already accrued is protected, but future accrual can be changed.  However, in the public sector, constitutional and other legal clauses say that contract rights cannot be impaired.  The question is whether this means the pension is untouchable for one's entire career.  This has been the approach of many public entities, along with any increases having been given cannot be taken away.

 

There are two types of employees: current, and future (yet to be hired).  Making this a 2-tier system could help get around the vested rights problem.  But this would take a long time to have an effect, and is resisted in negotiations. 

 

Last summer Dan wrote a detailed editorial illustrating what it would take to bring pensions under reasonable control:

 

Honest numbers - no smoothing, no amortizing over 30 years, an honest discount rate, more reasonable accounting rules.  This would be painful but necessary.

 

Neutral management - pension boards are top heavy with elected politicians and labor representatives.

 

Share current costs equally - Normal Cost should be equally split between workers and taxpayers, giving the workers incentive to help contain costs.  Future liabilities should also be split. If Normal Cost is split, employers will end up with extra money, which should go to paying off past liabilities.

 

Reasonable benefit limits - such as 75% of salary, including Social Security, for a full 35-year career.

 

End pension spiking.

 

Miscellaneous - no pension holidays, future benefit increases only go forward and are not unalterable, no double-dipping with government paycheck, and job-related felony conviction results in loss of pension.

 

             

The Governor's plan can be seen on his website.  (He does have a website.  Or you can google.)  Dan was stunned that the plan actually adopts the splitting of costs with employees, which is a major sticking point in negotiations.  The split has never been tested in court, and Dan thinks it should be, because at the federal level, vested rights do not seem to be so cut and dried. 

 

All parties agree that something has to be decided in the next few weeks.  To Dan, the Governor's plan is a good step forward, but not an ultimate solution.  For example, it is a hybrid, including both defined benefit and defined contribution plans, which is hard to understand.

 

But one thing that is easy to understand is a suggested policy combating the pensionization of terminal pay for such items as vacations:   "Use it or lose it."

 

Interestingly, the state Republicans actually tried to introduce the Governor's plan as legislation, and were blocked by the Democrats.

 

Don't want to put pressure on our esteemed Program Chair to further break the rules, but a review of whatever the politicos come up with in the next few weeks could be mighty interesting.