By Charley Mims
SEIU Local 347 Trustee, City Chief Construction Inspector, Griffith Park NC leader
(Originally posted today in comments)
There is so much misunderstanding and so much misleading and false information listed in the Blog article and in the mostly anonymous postings, that I hardly know where to begin! Let’s start with a little history.
Four and a half years ago the City of Los Angeles had 26 thousand plus employees. At the height of employment in 2009 the City had 30 thousand employees.
These people were hired by the Mayor and the City Council. If they had not hired 4 thousand employees, we would not be having this conversation now and the City budget would be
This is not a financial crisis. It is a leadership crisis.
As a City employee, a union leader, a community activist, and having served on the City’s retirement commission and on the Charter Reform Commission, I have personal knowledge of City operations and finances.
We do not have a “pension” crisis.
In 2000 when I was on the retirement commission it was fully funded and the City was having a pension funding “holiday.”
The “normal” cost for the City’s share of funding the retirement system
is about 13% of payroll. The employees contribute an additional 6% of
In 2000 the City contributed less than 5% of payroll due to the system
being fully funded at that time. Had the City continued to merely fund
at their actuarially determined “normal” cost, we would be in much
better shape today.
One reason we have pension systems is that when you hire money managers
to invest 200 million dollars you can reduce money management costs to
a very low amount in comparison with an individual hiring a money
manager to manage their 50 or 100 thousand dollars of investments for
The investment risk is also lowered considerably. while pension funds
have lost 20 to 40 percent of their value during this depression,
individuals as a whole have done a lot worse.
Controlling risk and minimizing management costs matter to society
unless you are an investment manager in the private sector. Drexel
Burnham, Merrill Lynch and others charge much more to manage your
investments–oh! wait, they went bankrupt and were either disolved or
taken over by a bank “too big to fail.”