Writer explains need for Charter City as solution to Antioch’s financial challenges, unfunded liabilities
Editor’s Note: The following was received via email on May 5 but not published, until now. I apologize for the oversight and delay. Allen Payton, Publisher & Editor
Dear Editor:
It is the process in today’s internet driven world that everyone should and seems to express their opinion. Criticism, finger pointing and blame are the actions of the day. Solutions seem few and far between. This is the case with the article written by Ms. Barbara Zivica aka Watchdog.
Alarmed? You should be alarmed Barbara. The City of Antioch is moving quickly to massively reduced services and possible bankruptcy in about five years. The necessary reductions in service and staff at the City will make the Great Recession look like a walk in the park. Why? Because this Council and recent previous Councils simply want to keep kicking the financial responsibility can down the road.
I know of no business including my own that runs in such a manner. At least not for very long.
What is your solution, Barbara?
This problem cannot be budgeted away with savings. Go back and look at the Finance Director’s General Fund projections for 2017 to 2023. Don’t look at the power point presentation for 2015-2016 which is on line. That is just fluff for today. The projected negative numbers are massive; and rises quickly to a negative $28,000,000.00 for a budget projected at $65,000,000.00 in 2020.
CalPERS [the California Public Employee Retirement System] calls the retirement program a “Golden Handshake”. Sounds similar to “Golden Parachute” doesn’t it? Just who’s gold are we dealing with here anyway and can we just walk away from the commitments we have made to past and current employees? Well; legally no we cannot; and morally it would be fundamentally wrong.
What we can do is close our participation in the current CalPers system, grandfather existing employees, and move all future employees to a City “Defined Retirement Contribution” system. Or, close all participation and move all current and future employees to a new system, vesting current employees to the date of termination of CalPers participation in the old system and paying our unfunded obligation.
And, the City must take a position that the full retirement contribution henceforth must be paid in the year it is earned in any new retirement system. This is called fiscal responsibility.
What I proposed as a possible solution is an income generation from transfer fees applied to real property transfers with the entire amount collected on an annual basis going to pay the unfunded retirement obligation the City is facing as noted in the Annual Valuation Report from CalPers. Nothing else to be funded by this income stream until the CalPers unfunded obligation is paid in full. No option by this or future Councils or staff for any other use of these funds.
Coming to a real number owed to CalPers is not easy to calculate. It appears to be somewhere between $35,000,000.00 and $133,000,000.00 for safety employees and for all other employees it is between $43,000,000.00 and $123,000,000.00.
A solid unfunded number to work from would be an average of the best and worst numbers stated by CalPers. Meaning the most likely liability by the City of Antioch for all employees would be approximately; $164,000,000.00.
Why is the range so large? Because based on the numbers provided by CalPers the only way one can truly come to some understanding of what is being processed is to look at the projected number if you continue in the plan infinite or if you terminate participation. There is no projection if you grandfather current employees and move future employees to a new system.
In simple terms CalPers projects for 2015 a return of 18%. Unrealistic nonsense. Also, what is very clear is that CalPers uses funds deposited this year and every year by participant Cities to pay retired employees if the return on investment does not meet the projection. We all call that in the real world a Ponzi scheme.
But wait there is more. Because it is a Defined Benefit Program, when it really gets economically bad, CalPers can just send the City a subsequent bill for the additional funds that are needed to pay the Benefits. Or the City’s unfunded liability goes up. There is no limit, ever.
So, let me ask you one more time, Barbara. What is your solution?
Mark Jordan, Antioch
Jordan is a Real Estate Broker in and resident of Antioch.
Retirement programs and employee benefits are a thing of the past. There’s no money to pay for anything but crime and necessities and that is pathetic. One only has a future of long work hours and more taxes that are never enough to pay to keep from getting shot or robbed. Try thinking about how to make money, it’s selfish to tax someone else instead of yourself.