The need for facts

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Mike Mohill’s letter “Glendale is on the hook with CALPERS” has a title that is true enough.  Unfortunately, what follows in his letter are a few kernels of fact coated in ill-informed speculation.

The City’s participation in CALPERS has long been embedded in the City Charter.  The City’s PERS rates – the percentages of payroll for safety and non-safety/miscellaneous employees – have increased in the wake of the Great Recession.  Indeed, the rates today are approaching the historic highs of the early/mid 1980s; in the coming years, the rates will very likely exceed even these levels.  That said, it was not too long ago when Glendale’s pension obligations were super-funded – meaning that the City’s PERS rate was zero.  That was all before the horrific economic collapse of 2008.  Today, CALPERS is making up for lost investments and bad decisions.  As a result, they are increasing member agencies’ rates.  The good news is that the PERS Board is today focused and conscientious, and we fully expect to see the rates plateau in the coming years.  This will be aided by our employees cost-sharing on the employer portion of the PERS rate, saving Glendale more than $2 million per year.

Additionally, it is worth noting that Glendale has historically maintained a fiscally conservative view of pensions and retirement obligations, and never offered exotic combinations of pension or retiree medical benefits.

For the record, and to correct Mr. Mohill ‘s inaccuracies:

  • Glendale’s pension obligations are 84% funded (as opposed to 84% unfunded). 
  • 64% of the City’s General Fund pays for public safety services – the entire Police and Fire Departments, not simply “police and fire union employees for their salaries and pension benefits”.  In a full-service municipality like Glendale, public safety services typically take up 2/3 of the General Fund budget.
  • CALPERS’s portfolio earned 16.2% last year, and an average of 11.06% over the last five.
  • While the PERS safety employee formula is “3%@50” (or 55 depending on whether an employee is part of the City’s 2nd tier retirement system) – not all employees are able to realize the maximum benefit.  People get hurt and don’t finish their careers in public safety; people retire before they maximize their retirement benefit.  There are many reasons why the average safety employee pension amount in Glendale is roughly $53,000 per year.

Lastly, and perhaps most perplexing, is Mr. Mohill’s suggestion that perhaps Glendale can “temporarily” invite the LA County Sheriffs and Fire Department to work in Glendale.  Forget for a moment that Glendale is one of the safest cities in America and that we have a Class One Fire Department (as rated by the Insurance Service Organization); and never mind that Glendale residents overwhelmingly support and value their local public safety services.   Mr. Mohill somehow believes that LASO and LACFD can reduce costs significantly and that contracting with the County would no longer place “taxpayers on the hook” for pension obligations.

The County is a public agency and its costs are generally driven by the same factors as the City of Glendale’s costs –  their pension promises are equitable and, in some cases, more costly than Glendale’s obligations.  Are there savings to be gained by contracting with the County or neighboring cities?  Certainly…if we are willing to accept less local control and lower levels of service.    Based on the objective feedback from our residents and businesses, I don’t think folks are asking to surrender control over their public safety apparatus in exchange for a marginal cost savings.

 

In our great country, citizens can speak their minds without fear of retribution.  You even have the right to be wrong in arguing your point.  However, if you desire to be taken seriously, then you ought to develop a reality-based understanding of the apparatus of municipal governance.

Scott Ochoa

Glendale City Manager

Sochoa@GlendaleCa.Gov