Investments, Beneficiary Amounts, and Police Officer Industrial Disability-

The City of Piedmont Police and Fire Pension Board will meet Wednesday, October 17, 2012, 4:00 p.m. in the City Council Chambers.   The Piedmont Police and Fire Pension Plan and the California Public Employee Retirement System (CalPERS) are both maintained for qualifying employees and retirees.  The two plans operate concurrently, yet independently. Employees hired prior to the City’s joining PERS continue to be covered by the Piedmont Police and Fire Pension Fund, while new employees are covered by PERS.

The return on investments and Piedmont Fund balance has drawn interest as a potential source of unallocated money when there are no remaining beneficiaries.

The agenda for the October 17 meeting includes:

• Acceptance of Participant Report, summarizing benefits paid in the 1st Quarter of FY 12/13 and current number of beneficiaries
• Report of pension fund investments by Osterweis Capital Management
• Consideration of an Industrial Disability Retirement for a Police officer

Staff reports were not available at the time of PCA publishing. All meetings are open to the public.

Funding for City and School athletic fields –

At its meeting on Monday, October 15, the City Council will consider contributions to the Athletic Facilities Preservation Fund (AFPF) from community sports organizations.  The  Council established the fund on July 16, 2012 for the purpose of financing future athletic field renovation, maintenance or replacement.  [See related article on the Piedmont Patch]

AFPF funding will come from a $25 per player, per season, surcharge on participants in  City sponsored Recreation Department sports programs.  Surcharge fees received for programs held on City property will be held in the AFPF, while fees collected for programs held on Piedmont Unified School District property will be forwarded to the School District.

The Piedmont soccer, baseball, softball and lacrosse youth sports program leaders are anticipated to make a presentation to the City Council outlining a program in which these groups will also donate to the AFPF.

The matter of payment by the Piedmont community sports clubs  to the AFPF for use of city athletic fields was considered by the Recreation Commission on September 19, 2012. At that meeting, the sports clubs’ proposal was unanimously approved by the Commission:

Resolved, that the Recreation Commission recommends to the City Council that it accept the community sports clubs’ offer to contribute an amount equal to $25 per roster member per sport to the City’s and School District’s Athletic Facilities Preservation Funds, with the exact amount of said contribution to be allocated to each of the funds to be jointly determined by the City Council and the sports clubs; and,

Resolved Further, that the Commission recommends that the City Council address how athletic facility replacement projects will be proposed and prioritized.

Public testimony and comment is encouraged. Written comments should be directed to the Piedmont City Council c/o City Clerk, 120 Vista Avenue, Piedmont, CA 94611 or by email to jtulloch@ci.piedmont.ca.us.

The City Council meeting will be held at 7:30pm in the City Council Chambers, 120 Vista Avenue.  The meeting will be televised live on KCOM Channel 27 and will also be available through streaming video on the City Web Site: http://www.ci.piedmont.ca.us under on-line video.

For further information, contact City Recreation Director Mark Delventhal at 420-3073 or City Clerk John Tulloch at 420-3041.

Letter from Member of the Municipal Tax Review Committee on Measure Y –

The refrain will be heard repeatedly over the coming weeks: It’s a renewal, not a new tax, only $9 per week and necessary to maintain vital services. In truth, the parcel tax is unnecessary, wasteful and has nothing to do with funding essential services.
Despite what is stated in the ballot argument for Measure Y, the proposition does not even have the unanimous support of the City Council.  > Click to read more…

A letter from a member of the Municipal Tax Review Committee on whether vital City services will be cut – 

The wasteful spending of the Piedmont City Council in the last 4 years is indefensible so the proponents of extending the “Municipal Services Tax” (Measure Y on the November ballot) have retreated to their last refuge: predictions that defeat of the tax will reduce “vital services.” Other than claiming that paramedic services will be reduced (a ridiculous idea since nobody, but nobody, would entertain such a cut), their definition of “vital services” is utterly vague.  > Click to read more…

A Letter Points Out the 16 Municipal Tax Review Committee (MTRC) Recommendations to the Piedmont Post –

To the Editor of the Piedmont Post

Dear Sir,

Not having heard from you, I was pleased to see that you not only printed my letter, but took the time to add an editor’s note disputing its accuracy – the first such note I’ve seen in any newspaper in my 46 years.

Since your note indicates that you were unable to find the 16 unanimous MTRC recommendations I referred to by searching the City website, may I direct you to pp. 6-8 of the MTRC report, which can be found on the City website at http://www.ci.piedmont.ca.us/html/govern/staffreports/09-06-11/mtrc.pdf.  > Click to read more…

New CalPERS rules impact new hires, leaving cities to struggle with current employee costs  –  

Last week the California State legislature adopted AB340, a pension reform measure that will apply to the City of Piedmont.  The reforms impact CalPERS pensions, primarily for new hires.  Pension costs for current employees and existing unfunded liabilities are not addressed.  (See Pensions 44% and Rising.)  For Piedmont and other local entities, no significant cost savings will be seen in the near future.

Wall Street Journal:  “The reforms reduce benefit formulas for new workers and require employees to pay half of the “normal cost” of their pensions. However, that doesn’t include the cost of paying down unfunded liabilities, which is what’s really sending local pension bills through the roof.  Municipalities also won’t realize material savings until new employees retire in another two to three decades . . . .”

Legislative Analyst: “Since increasing current employees’ contributions is one of the only ways to substantially decrease employer pension costs in the short run, the legal and practical challenges that we describe mean that the governor’s plan may fail in its goal to deliver noticeable short-term cost savings for many employers.”  . . . “

Calpension.com   – For cities using CalPERS, AB340 “extends retirement ages, caps pensions and gives new hires a lower pension by imposing a single formula (rolling back increases after SB 400) instead of allowing bargaining on a menu of different formulas.  The legislation calls for a 50-50 split of “normal” pension costs between employers and employees [for new employees].  As current contracts expire, if unions do not agree to equal cost sharing in bargaining by 2018, cities can impose an employee contribution increase.

The Wall Street Journal asserts the reforms were designed to help pass Governor Brown’s new tax measure, Proposition 30, in November, but “retirement costs will soon consume all $8 billion that politicians hope the ballot measure will raise” rather than helping school budgets.

Collective bargaining by public employees has been allowed in California since 1978.

The League of California Cities supports a “hybrid” pension plan that would cap defined benefit PERS pensions at 70 percent of base pay and supplement with a professionally-managed defined contribution plan.  See details.

AB 340 changes primarily affect new hires

• prohibits retroactive retirement benefit increases

(Note:  In 2004, the City of Piedmont increased all employees pensions by 50% retroactively.  See PCA pension article.  These past increases are not reduced by the reform measure.)

• for new hires, 50-50 contribution cost-sharing between employer and employee
• for new hires, caps maximum pension benefit at $132,000 plus annual Consumer Price Index (CPI) increases ($110,000 cap if participating in Social Security)
• for new hires, raises the retirement age and limits plans to:
  

• miscellaneous employees:  2% at 62, with adjustments to a maximum of 2.5% at age 67  (to encourage longevity)

• safety employees:   2% at 57     OR    2.5% at 57    OR    2.7% at 57

• for new hires, use highest 36-month period rather than highest year to calculate pension (to avoid spiking)
• for new hires, generally requires 180 day sit-out period for retired persons to return to work in the same retirement system in which they receive a pension; EXCEPT  a public safety officer or firefighteror if agency certifies a “critical need”
• For new hires, limits the definition of “pension compensation” to base pay (without including unused sick/vacation, cash conversion of in-kind pay, overtime (generally), uniforms or car allowances, etc.)
• prohibits purchase of time not actually worked; prohibits contribution “holidays”

LINKS:

• Legislative Analyst Review (a good summary of California pension issues)
• CalPERS analysis of new reforms

Piedmont is faced with uncontrolled liabilities –

The 5 majority members of the Municipal Tax Review Committee are to be thanked for presenting some unpleasant, yet hugely important, information concerning the financial situation of our lovely Piedmont.  Here are some of the surprising … and scary… facts which I was previously not aware of, and I suspect many of the other readers also may not be aware:

1)        Piedmont has a $40 million un-funded employee benefit liability; which is about $10,000 for every Piedmont household, or looking at it another way, is $400,000 for every full time position within the Piedmont city government.  (Note: this is an un-funded liability!)

2)        The Piedmont city employee fringe benefit costs are now nearly 60% of their employee salary, and this has grown from 33% in 2004.  (This is huge growth; especially in these difficult times.)

3)        The dollar difference between the current 60% fringe benefit costs as a percent of the employee’s salary costs versus the 2004 amount of 33% equates to about $1.9 million dollars per year.

4)        The Parcel Tax, if passed, will generate revenue of about $1.6 million dollars, which is similar to the $1.9 million amount being paid annually which is in excess to the amount being spent in 2004.

5)        To tie things together, it is clear the Parcel Tax revenue of $1.6 M is needed to pay for the yearly excess fringe benefit of $1.9 M.

Based on all the above, it seems clear to me that we should not be passing the City Parcel Tax (Municipal Services Tax).  Further, that the Piedmont City Council should implement actions to bring Piedmont’s employee fringe benefits down to an affordable level, and do so while maintaining the quality and quantity of our existing services.

David Schmidt, Piedmont Resident

Editors Note:  The opinions expressed are those of the author and not necessarily those of the Piedmont Civic Association.

I have read the arguments for and against the extension of the parcel tax, and was struck by the seeming contradiction between some of the City’s recent actions and the arguments in favor of renewing the parcel tax. > Click to read more…

Article Discusses Cost Sharing between City and Employees –

The following article appears in the September 2012 Piedmont League of Women Voters newsletter, the “Voter,”  by Ann Chandler. > Click to read more…

Deadline for filing Piedmont parcel tax ballot arguments is August 20.   Rebuttal arguments due August 27. 

Individuals and groups submitting arguments for or against Piedmont’s municipal parcel tax renewal on the November ballot must meet strict requirements, including length, language, and prioritization of the arguments.  After acceptance by the City Clerk, qualifying arguments will be published in the Voter’s Information Pamphlet that is mailed to all Piedmont voters. > Click to read more…