The Vanguard continues its series of articles examining the impact of the landmark pension reform legislations that was agreed upon last week by the governor and legislature, with a discussion of the impact on the city of Davis by Davis’ City Manager Steve Pinkerton.
Mr. Pinkerton’s take-home message is that this is probably as good a piece of legislation as we could have gotten, under the circumstances, but it is unclear some of the implications of it at this point, as few have had the chance to cull through the text line by line.
While provisions may prove helpful in the short term, the biggest impact will be on new hires. However, it may take 20 to 30 years to really feel that impact.
“We have to deal with now, not the future,” Steve Pinkerton told the Vanguard in a phone interview, “It does give some comfort for the future.”
“By far the biggest issue we face,” he said, “is what we’re going to do with the people who are now employed and how we can get some protection.”
“We have to convince the existing workforce there have to be enough dollars down the road, that we have to get off this kick that it’s sustainable the way it is right now for existing employees. Or that fixing it for existing employees has somehow shifted the sustainability issue for current employees,” he added, “It has not.”
Steve Pinkerton made it very clear that, given the current nature of ongoing collective bargaining for the round of MOUs that had expired on June 30, he could not specifically comment on the impacts that this legislation would have for the city budget or contract negotiations.
He believes that it does impact current negotiations.
“Every city negotiator right now is looking at a two-tier system,” he said. “Now we already have one.”
As far as current negotiations goes, the two-tiered system, Mr. Pinkerton argued, was “probably the biggest thing.”
The biggest impact overall may be on the issue of cost-sharing. But even there, Mr. Pinkerton cautioned that we still do not know exactly what cost-sharing means in this context.
“That was the part that I was very impressed that they put in there,” he said. “But I don’t want be overly-complimentary until I see some of our experts wade through the [new legislation].”
He wants to have at least a month for everyone to wade through the legislation and see the interpretations as to what is legal and what is not legal and how it is going to be implemented.
“But at first glance, that’s a real positive step for dealing with some of our current issues,” he said.
It is his understanding that the cost-sharing is one of the few provisions that will impact current employees, but he could not go into details as to how that might impact current notiations.
Again he cautioned that the impacts of this legislation are largely unknown at this time. He said that in the past, similar legislation had wide-ranging impacts that no one fully anticipated at the time it was written.
“I get particularly worried that when they shove through legislation without the proper vetting there’s often unintended consequences,” he said. He added that, while they probably had to do it this way, “I’m absolutely 100 percent sure that we would have come up with something better had they even given us a month for the local agencies to review it.”
Mr. Pinkerton added pointedly, “That’s just not the way that the legislative leaders work these days and it’s pretty disappointing because it creates a lot more uncertainty for all of us.”
Defining exactly what constitutes a new hire will be a critical phase, however.
“If someone moves from city to city, does that mean they’re in the second tier?” he asked. “In this legislation it’s pretty clear that when you move from city to city, you don’t suddenly become the lower tier.”
Steve Pinkerton noted that, while pensions are an important issue, the issue of retiree medical is a far bigger issue for the city of Davis right now. As we have noted, the costs of retiree medical put it somewhere between 20 percent and 25 percent of payroll.
In the long run, this might help the city by raising the retirement age and thus reducing the years that the city has to fully cover employees.
However, as Steve Pinkerton was quick to note, the impact does not affect anyone currently employed.
And that’s the problem. Other than implementing the two-tier, Mr. Pinkerton acknowledged that they are largely in the same boat in the near term.
“Other than symbolically, I think it was important,” he did acknowledge. “There are a lot of things that haven’t been touched like the composition of the PERB… That will have a lot more impact.”
In general, Mr. Pinkerton said he supports the defined benefit concept. At the same time, he is not opposed to exploring a hybrid plan.
“I don’t have a real problem with where they’re heading with this,” he said. “But I think I’d like to hear a lot more discussion about the hybrid. I wish there had been more dialogue.”
“There’s not enough information out there to make a judgment on it right now,” Mr. Pinkerton added but he supports the discussion.
Steve Pinkerton concluded, stating that OPEB (Other Post-Employment Benefits) is the city’s biggest issue at this point. We don’t disagree.
—David M. Greenwald reporting
[i]We have to deal with now, not the future[/i]
Absolutely. But, instead… more kicking the can down the road.
Watching my DVR recording of the DNC convention last night I could not help but think about all the duped young people in the crowd. I’m sure many of them were starving student paid actors transported in to help maintain the Obama brand of being hip to youth. These kids are supporting the political Party currently responsible for saddling them with astronomical debt that they are going to have to pay. It is the Party that is refusing to roll back our unsustainable public sector spending – actually pushing to accelerate that spending – with a wink and a nod to their union benefactors for screwing the upcoming workforce.
Comedian/actor Albert Brooks wrote a book “2030”. It is not a literary masterpiece, but it is an entertaining and thought-provoking story about an American government fully leveraged (all revenue paying for debt service), China the new global economic superpower, and a civil war developing between the old and young. This is not science fiction. It is a view of the future that is very probable given the trajectory. It is a predictable vision realized being led by those lacking humility, common sense and vision.
We adults screwed up. We lived the high life on debt. We took our fake tech stock equity and our fake real estate equity and bought larger houses, nicer cars and multiple vacations overseas. We all wanted to live the life of the rich and famous. We did it, and now we have a big bill that we want others to pay for. But we are not just satisfied with that demand. We also demand that we still get to retire young and have all of our retirement and healthcare paid for by others.
Who are these others that will pay for our massive debt and our unsustainable retirement expectations?
It will be our children. In fact, they are already paying for it.
Americas used to live their life for their children. However, we have become selfish and self-centered.
We are the “Me First” people now.
Shame on us.
Jeff, you are way off topic.
Let’s try to keep the topic on local budget issues.
Thanks Don.
“Absolutely. But, instead… more kicking the can down the road.”
This doesn’t kick the can down the road, it just deals with most of what we can deal with at this time with the exception of the PERS composition.
David starts with:
> The Vanguard continues its series of articles examining
> the impact of the “landmark” pension reform
I’m not sure that the “minor changes” to the pensions of most state workers and changes for new hires that will basically put retirement ages back to where they were for most of this century should be called “landmark” reform…
Then Jeff wrote:
> These kids are supporting the political Party currently
> responsible for saddling them with astronomical debt that
> they are going to have to pay.
I thought the same thing when I saw the Ryan and Romney kids and grandkids on stage at the GOP convention supporting the party that gave us more debt than the Democrats in the last 30 years including debt related to the war in Iraq, the Bush tax cuts, the Bush prescription drug give away and billions more funneled to Blackwater, Halliburton, Bechtel and other big GOP donors while screwing the middle class. I don’t want to let the Democrats off the hook since they are basically doing the same thing and if you look at top 100 donors to each party it is amazing the amount of overlap. I have a dream that more people will wake up and realize that political parties may do a little pandering to their base on issues like gay marriage (that none of us even gay people who get everything but the word “marriage” through contracts in all 50 states should be worried about) while doing what they can to screw the regular guy and take his money to support big donors (Unions, Wealthy Individuals and Big Companies)…
Then David wrote:
> This doesn’t kick the can down the road,
> it just deals with most of what we can deal
> with at this time
My Dad always said “can’t means won’t”… There are many ways to deal with the current pension problem (that is just getting worse) but most politicians (on both sides of the aisle) won’t deal with it at this time…
SouthofDavis: [i]”I thought the same thing when I saw the Ryan and Romney kids and grandkids on stage at the GOP convention supporting the party that gave us more debt than the Democrats in the last 30 years including debt related to the war in Iraq, the Bush tax cuts, the Bush prescription drug give away and billions more funneled to Blackwater, Halliburton, Bechtel and other big GOP donors while screwing the middle class.”[/i]
Agree, but Romney and Ryan are not Bush. However, Obama is Obama.
The way I see it, at some point some leader(s) are going to step up to the plate recognizing the problems of past behavior and promising to fix what is broken. What is broken? It is spending and the economy. Everything else is political and media twaddle. Every denial, deflection or delay implementing policies to address these two problems is more kicking the can down the road.
And… it this does have a direct impact on local budgets. The state of the national budget and ecomony trickles down to the state and to local budgets and economies.
[i]My Dad always said “can’t means won’t”.[/i]
I like that and agree.