I attended Tuesday's City Council meeting with the intention of commenting about an agenda item submitted by the Mayor and Councilman Ewin. The item had to do with establishing a new pension plan for new hires. The motion was tabled - so I didn't have the opportunity to comment - but here is what I would have said.
I'm here to heartily support a recommendation made by mayor Madrid and Councilman Ewin for maintaining financial stability in La Mesa -- consideration of a two step pension plan for city employees. I consider that a "must do" objective in ongoing MOU negotiations. It is a must do to lessen our future budget risk. It is also a must do to allow us to pay down our unfunded liabilities, to build our reserves, and to again manage without the six million dollars of excess taxes provided by proposition L when it expires.
However, even were the City in a strong financial position, I would urge a second (lower) tier pension program strictly on the basis of fairness. While I am certainly not opposed to providing pensions for City employees, they should be somewhere in the ballpark of what the taxpayers, who continue to foot most of the bill for pension costs, can expect to receive. Maybe more important, taxpayers bear all of the risk when contributions previously made are insufficient. Looking at what has happened with our City pensions in the past few years provides a good example of the unfairness of this arrangement. The taxpayers made 100% of the pension contribution to CalPers, who had total control over how that money was invested. When investments were good, a decade or so ago, our City increased already very fair, even generous, pensions by 50%, retroactively! Now when the CalPers investments aren't supporting those over the top pensions, taxpayers are required to increase payments to make up the difference. The unions treat those recently increased and over the top pension programs as if it were a god-given birthright. There is nothing fair about that.
If we had a defined contribution plan, with the City contributing about what most private sector employers do -- I think somewhere around 10% of salary each year -- I would care less that Dave Burk (our recently retired fire chief) will receive $142,342 in pension payments each year, for only 30 years of work, at 50 or so years of age - AND GUARANTEED FOR LIFE BY TAXPAYERS. I wouldn't care if he made twice the $142,000. He would be responsible for his investments. If he took a flyer and made money, more power to him. It is when the taxpayers are stuck with most of the burden and all of the risk for overly generous plans that I get upset.
Consider our non-safety employees - they can retire after 40 years of work (which I think any reasonable person would have to agree is on the low end of a normal working career in this day and age) with 120% of final years salary. When they mature enough to reach Social Security age, they will receive another 30 percent or so! A pretty good average of what financial planners say is enough to maintain lifestyle is 75 - 80 percent of salary. Why does our City require taxpayers to support a pension plan that can easily provide 150% of salary? Could it be the raw power of public sector unions?
A second tier pension program is both the financially responsible and fair thing to do - ad it needs to be done now. I hope that our council will have the courage to stand up to the City's employee unions and make this change.