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
balanced.
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
payroll.
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
retirement.
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.”
There is a financial and a pension crisis. It’s a financial crisis because the City has in excess of $100 million of obligations with no money to pay for them. It’s a pension crisis because a large percentage of the City’s budget goes to fund pensions, a number that is bigger than the City’s revenue stream can pay for. It doesn’t matter how the City got to this place, the damage has been done and it will get worse unles major cuts are made. I’d like Mr. Mims to explain how the City can balance its books with the current and future employee compensation obligations on its books.
There is a financial and a pension crisis. It’s a financial crisis because the City has in excess of $100 million of obligations with no money to pay for them. It’s a pension crisis because a large percentage of the City’s budget goes to fund pensions, a number that is bigger than the City’s revenue stream can pay for. It doesn’t matter how the City got to this place, the damage has been done and it will get worse unles major cuts are made. I’d like Mr. Mims to explain how the City can balance its books with the current and future employee compensation obligations on its books.
You describe only the tip of the ‘berg. The employees contribute too little–6%? They are able to retire too early. They are able to retire at very high guaranteed percentages of income. They are able to take new jobs and not reduce their pension–essentially we pay them to have another job.
And yes there are too many employees. One reason is labor union resistance to sensible practices: example: why do we still lack automatically resetting traffic lights? Answer: the union representing the DOT employees fights them.
We DO have a pension crisis: from a bloated payroll that is the fault of the inions as much as the clueless leadership’s fault. From featherbedding work rules and ridiculous retirement rules.
With all due respect, Charlie, we have both a leadership crisis *and* a financial crisis.
…. Charley… sorry ’bout the spelling.
With pension funds “having lost 20 to 40 percent of value during the recession,” under the management of top pro’s, the city would have been a lot better off if the money was just stuffed into giant mattresses. Or banks at even no interest – if there were a way to ensure such large amounts.
As it is, those of us private citizens who also lost similar amounts of our own investment and retirement portfolios, now have to make up this shortfall. It’s all crazy. The very WAY in which investments are handled need to be reassessed from the bottom up.
“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.”
That is a GREAT point. What are they all doing?
Charley’s out to save his own hide.
He negotiated a pension benefit that he, himself, is going to benefit from as he has elected the ERIP.
In San Diego, that led to criminal indictments.
Charley’s out to save his own hide.
He negotiated a pension benefit that he, himself, is going to benefit from as he has elected the ERIP.
In San Diego, that led to criminal indictments.
Charley needs to stop posting comments.
He negotiated a pension benefit that he himself can benefit from and is going to benefit from because he has elected the ERIP.
In San Diego, this same behavior led to criminal indictments even when there was a lack of intent by the public officials involved.
That he admits here he served previously on the LACERS board solidifies that participating in the ERIP negotiations was not an innocent mistake.
Get an attorney Charley, because you are going to need one.
Charley: You’re the problem. And guess what? Eli’s coming…
So, was Mr. Mims leading the charge during the last 4 years saying that the city could not afford more workers? Or, was he one of the union leaders that was claiming that the city was short staffed? Where was Mr. Mims’ voice when it came to the last raise for DWP workers in the last few months? Does Mr. Mims agree with shifting workers off the city payroll to Harbors and airports? Was Mr. Mims one of union members holding a gun to the heads of the elected to get his union the best for them and city finances be damned? And, not a pension problem? What does he call 25% out of every dollar going to retirement benefits? A sound financial footing?
Mr. Mims reminds me of the murderer of his mother and father who wants sympathy because he is an orphan.
Tom LaBonge, Herb Wesson, Paul Koretz, Bill Rosendahl, Richard Alarcon, Eric Garcetti all pretty much admitted to using it at one time (marijuana that is). I have to wonder if they are all still smoking with the decisions they’ve been making or not making
I don’t care what Charley or anyone says…the city has got to get out of the pension business. All city employees — all government employees — should be on Social Security. If they want to supplement that, they can forage for themselves just like the rest of clucks have have had to do.
Darn, here I was ready to buy into this pity party and then I realized, when all is said and done, thanks to a state law, the taxpayers are on the hook to make up any pension liabilities that the cities can’t make.
We don’t have leadership in our government any longer. The special interests have taken over.
The question is when will the public get angry and then get even?
Darn, here I was ready to buy into this pity party and then I realized, when all is said and done, thanks to a state law, the taxpayers are on the hook to make up any pension liabilities that the cities can’t make.
We don’t have leadership in our government any longer. The special interests have taken over.
The question is when will the public get angry and then get even?
Sure Sandy Sand
Then maybe you can give us employer matching too and tax-deductable 401k’s and raise management salaries to the hundreds of thousands you guys make in the private sector
I love how you guys automatically assume an us vs them mentality when it comes to us city workers. It gives us no choice but to back our unions
Darn, here I was ready to buy into this pity party and then I realized, when all is said and done, thanks to a state law, the taxpayers are on the hook to make up any pension liabilities that the cities can’t make.
We don’t have leadership in our government any longer. The special interests have taken over.
The question is when will the public get angry and then get even?
Darn, here I was ready to buy into this pity party and then I realized, when all is said and done, thanks to a state law, the taxpayers are on the hook to make up any pension liabilities that the cities can’t make.
We don’t have leadership in our government any longer. The special interests have taken over.
The question is when will the public get angry and then get even?
The CAO said the problem was the pension losses on Wall Street. If Wall Street goes down, the city is sunk. Because of the pension money invested. We have this pension crisis because of a lack of leadership. We all knew that is why, already. All that matters is what matters.
If we had 30,000 for 3,500,000 residents of L.A. city that’s about 1 employee for every 117 residents.
Indeed, what were they all doing?!
Now we have less but cut that number in half and that’s still 1 employee for every 235 residents.
You would think that with this high level of potential city employee help for residents some of those employees could be put to work finding jobs for residents? Or affordable housing. Or tracking and filling all the new pot holes that have opened up since the rain. Or covering all the graffiti.
I don’t want anyone to lose their job but having such a high city worker to citizen ratio and yet, not all people here can find the help they need when they need it, tells something about how badly the system is messed up.
1 employee for every 117 people. Those were the days…
Pension plans are the big problem but only because like everywhere else, they lost 20-40% in value. Why didn’t they just bank the money or stuff them into mattresses? Are there any structural changes being made to HOW pensions are invested?
To Sandy Sand – You want everyone to go on Social Security when we know that Social Security will not be able to support us when we need it?
Many State employees pay into a State pension plan – not Social Security.
It would be good if people (Accountants) that understand tax laws and pension plans commented instead of just anyone that does not know who pays what into their retirement plans.
Mr. Mims wrote: “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.”
Might that be because we, the rate and tax payers, have been used to pick up the tab on your behalf?
Who the hell would ever waste their life working for the City of Los Angeles unless there were some benefits attached?
City pays higher salaries than the private equivalent with more paid holidays, pensions and cadillac health care benefits to boot, and Joseph thinks that the issue is the “sacrifice” that city employees make and that these employment packages are what is needed to attract a work force.
To have to deal with annoying and rude LA community members like the ones commenting here, you need a good benefit package.
8:15: That is why it is called “work.” On the other hand, the disrespect that you demonstrate towards the people you serve is contemptible.
KK – 7:38 AM, you say the city pays higher salaries than the private equivalent. I just wondered where you get your information. When I check salaries.com for the equivalent pay for my job in the private sector at my level, the pay is on average $20,000 to $30,000 a year higher than what I earn. So yeah, I would say I am “sacrificing” working for the city. If I’m getting paid significantly less than the same job pays in the private sector, I certainly think the other benefits should close that gap (which they don’t). Anyone who thinks you will get rich working for the city is operating a few bricks shy of a load. I’ve worked in the private sector and in the public sector and L.A. city workers are some of the most professional I’ve worked with ever. Amazing that the mayor’s and city council’s decisions put the city in this predicament and the tax payers blame the workers. I and my coworkers are already taking a 10% cut to our pay by furlough. I guess you won’t be happy until we are unemployed.
THERE IS SO MUCH DECEITFUL INFORMATION FROM WHAT THE UNION LEADERS SAY!!!
He says, “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
balanced. ”
I say, “If it weren’t for the coercion by the other union leaders to hire these worthless 4 thousand employees we would not be having this conversation now and the City budget would be balanced.”
YES, RELATIVELY SPEAKING FOR WHAT YOU PAY… I CALL THEM WORTHLESS, OR ELSE NOT WORTHWHILE AT BEST.
WHY DO WE NOT HAVE AUTOMATED READING OF ELECTRIC AND WATER METERS? DO YOU HAVE ANY IDEA HOW MUCH MONEY THAT WOULD SAVE?
THE UNIONS FIGHT IT.
Warren:
You might want to refer to the comments from Former Democratic state asssembly speaker Willie Brown made in San Francisco Chronicle on January 3rd:
“The deal used to be that civil servants were paid less than private sector workers in exchange for an understanding that they had job security for life.
But we politicians, pushed by our friends in labor, gradually expanded pay and benefits to private-sector levels while keeping the job protections and layering on incredibly generous retirement packages that pay ex-workers almost as much as current workers…..This is politically unpopular and potentially even career suicide . . . but at some point, someone is going to have to get honest about the fact.”
Go ahead and refute these vicious facts…
9:50 AM, the reason there’s no automated reading is because the project itself – replacing old analog meters with digital meters is more expensive than you think. Not only would you have to pay for costs and labor to install a new meter on every single home in LA, you’d have to figure out how to run the communications and pay for a new cable to every home if needed. Then you’d have to pay for computers and software to automate the whole thing. On top of that the technology is continuously evolving into Smart Grid technology. If you want to see problems with the technology, go look at the problems PG&E has regarding their automated meters. Until the technology matures, it’s better to just have meter readers.
KK, I think it’s funny how you quote and make claims instead of producing actual numbers regarding salaries. That’s because you can’t back it up and are too lazy to do any research
Anonymous: You are wrong on several counts:
1. The California Supreme Court dismissed the case against all but one of the San Diego trustees and kept that one open only because he negotiated a benefit that applied to only one person–him. He was not found guilty, but was told he would have to stand trial.
2. While I did play a role in negotiating the Early Retirement Incentive Program, I did not apply and continue to work for the City.
3. Take a course in the management of money(assets) from any reputable business school and you will find out that through up times and down the person who invests prudently in the markets will over time make substantially more return on investment that the person who stuffs their money in a mattress (or in an interest earning bank account or bond.) That works even if you start counting the month before the 1929 crash began. You can check that for any 30 year period and that is the shortest time horizon that pension trustees should be considering.
Hey KK,
You want me to refute facts? Since when were comments from a state assembly member automatically accepted as facts? You provide not a single “fact” in your comments to refute. However, I will anyway. It’ll be easy. Job security in the public sector? I don’t know if your head is buried in the sand but city workers job security went out the window when the city clowncil stated they are going to start laying off workers. By the way, I provided facts on pay rates. I checked on the pay scale for my job. I was already making considerably less than that…and that was BEFORE I was subjected to a 10% pay cut by means of furlough unlike the sorry excuses for city council members who are already the most overpaid people on the planet (with exception to Wall Street executives). Not only do they make twice what the next highest paid city council members in the entire U.S. make, but they have a huge slush fund, free cel phones, free cars, etc… Refute your facts? I’d be happy to as soon as you PROVIDE some.
Warren,
Best of luck, most of us are rooting for our favorite Departments to be left relatively unscathed…but others hae legitmate reasons to begrudge the job security, though shaken a bit, which still exceeds what has become standard in the marketplace.
And so, while you state your job is typically paid higher in the private sector, a wider sample would be more illustrative.
Lastly, it should be pointed out that there is a differnece between a pay cut and a furlough, in the long run. When hell freezes over and we have leadership in City Hall (and other halls of Government) and these temporary actions are reversed, you will undoubtedly be returned to full time at your normal rate of pay, which will continue to increase in the manner your contract provides.