Ventura City Council Meeting
May 16, 2011
Ventura City Hall - 501 Poli Street
Solo Item: The meeting's focus was on California's Public Employees’ Retirement System (CalPERS) contract amendment provisions, allowing Council and Staff to proceed with an assortment of labor contracts including Police, Police Management, SEIU units (4) and all benefits resolutions covering the other unrepresented members and employees.
Human Resources Director Jenny Roney along with Kerry Worgan, the CalPERS Actuary assigned to the City of Ventura pension account, were available discuss recommendations and to answer Council questions.
Mayor Fulton brought the meeting to order with a call of the roll – all present. The mayor asked all to join him in reciting the Pledge of Allegiance.
This is Emergency Medical Services Week meaning that several members of the EMS staff were on hand including Fire Chief Rennie along with engine company members and fire fighting staff. The mayor noted that nearly all of our firefighters are also EMS trained personnel. The mayor presented Chief Rennie with a certificate. The chief spoke, saying that hospital staff and paramedics plus engine companies personnel were grateful for the opportunity to represent the community, with their success rates climbing.
The mayor announced a new department head, introduced by City Manager Cole. Staff created a water department by turning one department into two. One department focuses on water sourcing and the watershed along with the other representing wastewater. The water department is a $40 million per year department. The department is operated exclusively as an enterprise function, meaning that funds are segregated and come from the rates that are paid by ratepayers. The retail and wholesale water and wastewater functions both public and private across all cities are seeking double-digit rate increases. Ventura is not proposing an increase, and yet in future years with a newly revamped rate structure the costs of our water will be rising as well. Reduced costs along with investments in infrastructure for the future will be mandatory. Shauna Epstein comes to us from Beverly Hills and has worked in Anaheim. Her position in Ventura will be as Department Head, and in three of her for her last jobs she was the first person to hold that position.
Shauna spoke from the speaker's podium, saying that she was very excited to begin this new chapter. All varieties of water are one, the speaker said.
City Council Communications – The mayor suggested closing the meeting in memory of Nick Haverland. On Telephone Road last Wednesday night the 20-year-old was fatally injured in an automobile crash. The mayor read a letter from Jim and Susan that was also written in memory of their son. Assistant Chief Fenwick was thanked by the mayor for working with the family. A Memorial service will be held in memory of Nick and details will be released later.
Council Member Morehouse spoke saying that the annual meeting of the California League of Women Voters was held in Ventura with the councilman participating in a panel along with Supervisor Linda Parks. Speaker Pro Tem Leona Mark from our own state was also.
Council Member Andrews congratulated the American Cancer Society for its Walk for Life. In the 24-hour event, participants walked in the safety and control of a field track. The National League of Cities Policy Steering Committee will be our guest in Ventura this week. The program will discuss how municipalities can work with Congress and the administration to stimulate economic growth. The proper utilization of Community Development Block Grant funds will also be discussed. Keynote Speaker Bill Wright, the former Ways and Means Committee Chairman, will speak on topics that will be useful to all of us.
The American Cancer Society's Relay for Life was again mentioned by the mayor. The one-day event in Ventura raised in excess of $200,000 making it one of the most successful athletic events in the state of California.
Council Member Monahan desired to thank the Ventura Chamber of Commerce for its recent activities at Ventura Harbor.
Council Member Weir stated that it is Bike to Work Week, with statistics showing that bicycling leads to healthy lifestyles and fewer illnesses. The 19th of this week is also Bike to Work Day, where a booth at the corner of Santa Clara and California Streets will be set up to offer refreshments to all those healthy bikers out there.
The Corporate Games completed another successful year with the finals on Saturday. Dozens of teams and hundreds of athletes competed, including perennial champion Amgen and its large Corporate Division, finally having been defeated by County employee members.
Regional Boards Commissions and Committees – Council Member Morehouse talked about the Ventura Council of Governments meeting, a unanimous vote over the issue of marchers partially enforced by Senate Bill 375. A nearly full contingent at that he can't meeting on Friday morning many of the employers reconvened at the VCT see meeting persuaded by Mayor Walker of Fillmore goals Adrian Fillmore.
Agenda Item No. 1 – California Public Employees’ Retirement System Contract Amendment and Revisions to the Employer Paid Member Contributions. Human Resources Director Jenny Roney along with Kerry Worgan were on hand to present Staff recommendations and answer questions posed by the council.
Jenny began saying that we are moving forward with the CalPERS contract amendment provisions that will allow us to proceed with the labor contracts including Police, Police Management, SEIU units (4) and all benefits resolutions covering the other unrepresented members and employees.
Labor Negotiations, showing: (1) May 2010 labor negotiations begin with SEIU Units, Police VPOA, and Police Management VPMA – (2) City Council’s Goals – (1.1) Cost reductions through employee contributions toward retirement benefits – (1.2) Implementation of a 2nd tier benefit for new employees
Impasse Reached Fall 2010. showing: (1) City and SEIU and VPOA reached an impasse in their negotiations – (1.1) Council offered Last, Best and Final offer to be extended to both groups – (1.2) Prior to imposition all groups entered into good faith negotiations with the city manager
Agreement Reached January 2011, showing: (1) Agreement was reached on employee pension contributions and lower tier benefit for new hires in exchange for City mitigation of rising health insurance costs and additional leave time – (2) January 18, 2011 Council approval all agreed upon terms of negotiations for SEIU and Police Association and changes to the city’s Benefits Resolution covering unrepresented city staff
Memoranda of Understanding Approved March 2010, showing: (1) City Council approved and authorized the city manager to execute Memoranda of Understanding between the city and police, police management and all SEIU units – (2) Adopted the Benefits Resolution covering executive, management, confidential and administrative confidential unrepresented city staff
Ventura Police Officers and Ventura Police Management Associations, showing: (1) 4.5% employee CalPERS retirement contribution – (1.1) 2% January 2011, or as soon as is practicable thereafter – (1.2) 3.5% July 2011 – (1.3) 4.5% June 2011, police management; July 2012, police – (2) Police safety employees to share in the cost of what is defined as the employer contribution (cost-sharing) in the CalPERS retirement system
City Manager Cole offered comment on (2) above in the following way, saying that police safety employees cost-sharing portion was not called out in the January 11th report to the City Council, that is, the report relating to the tentative agreement that had been reached subject to ratification of the MOU. The MOU had as one of its provisions that SEIU would pay its 4.5% toward the 7% employee contribution, and that the police officer/police management associations would pay their 4.5% toward the employer’s share. Mr. Cole said that there are differences, and while not large dollar-wise from the city’s standpoint, Mr. Cole felt obliged nonetheless to apologize for not having spelled out the facts more clearly back in January.
Cost Sharing and Second-Tier, showing: (1) Cost sharing maximum = 7.629% – (2) 5.330% represents accrued liability due to prior benefit improvement amortized over 20 years – (3) June 30, 2020, cost sharing reduced to 2.299% with additional to be paid in some other form – (4) Second (lower) tier retirement plan of 3% at 55 and one-year final compensation for all new hires after the effective date of this amendment
The city manager noted that this contract expires in 2013, well ahead of 2020, which should help reach the council's goal of having employees pay all of their retirement benefit percentage (100%) by the time the end of negotiations has been reached. This will be pursued in ensuing contract negotiations all the way through the year 2020 according to Mr. Cole.
[Comment] Note the number of times the words, “reduced – reduction – lower" have been used in this brief presentation. What if these words were being used in conjunction with your future, Mr. or Ms. Ventura? You’re hearing plenty these days about fiscal problems in the public sector – budgetary imbalances, soaring costs, and revenue declines. Funny. . .it didn’t used to be that way. . .caused lately by people who specialize in the Enterprise/Cato “School of Running Things," no doubt. Well you’d have budgetary imbalances too if you were the person who hatched the “enterprising" idea behind the WAV Condo/Affordable Housing project, which is likely to see a cool $1 million of your tax dollars go bye-bye. How far would a million dollars go toward defraying the costs of special needs education or a day care facility for our first responders and other city employees? But of course paying people a fair rate of return including benefits for their hard work and dedication to the job is something the city just can’t afford. Well there’s something we as a community can’t afford. We can’t afford the likes of people who sit in high places and make these kinds of decisions. [Ed.]
Service Employees International Union, SEIU Units, showing: (1) 4.5% employee payment towards CalPERS retirement – (1.1) 2% January 2011, or as soon as practicable thereafter – (1.2) 3.5% July 2011 – (1.3) 4.5% July 2012 – (2) 2nd (lower) tier retirement plan of 2% at 60 and three-year final compensation for all new hires after the effective date of the amendment
Unrepresented Employees; Executive, Management, Confidential, Admin Confidential, showing; (1) 4.5% employee payment toward CalPERS – (2) Same implementation schedule as all oher groups – (3) 2nd tier 2% at 60 and three-year final compensation for all new hires after the effective date of this amendment
Comparisons to Labor Market, showing: (1) Several agencies giving cost of living raises with no employee CalPERS contributions – (2) Limited term employee contributions to CalPERS mark other labor agreements in our market – (3) State of CA implemented 2nd tier for CHP, Fire and SEIU with 2% - 5% employee pension payment increases
Setting a New Standard, showing: (1) First in our labor market to implement 2nd tier CalPERS formula for Miscellaneous or Safety groups – (2) Ventura employee concessions show highest percentage savings of any agency agreement in Ventura or Santa Barbara Counties over last 3 years
Fiscal impacts, showing: The summary shows savings to the city based on the employee contribution to pension costs, along with additional savings that will be realized due to the reduced employer-paid contribution over and above a 3-year aggregate savings of $2,630,000
CalPERS Actuary, showing: Tonight the CalPERS Actuary assigned to the City of Ventura pension account is available via telephone to answer Council questions (1) Kerry J. Worgan, FSA, FCIA, MAAA Senior Pension Actuary, Actuarial and Employer Services Branch, CalPERS
Recommendations, showing: (1) Adopt a Resolution of Intention amending CalPERS contract as follows – (1.1) 2% at 60 and three-year final compensation for newly hired miscellaneous members – (1.2) 3% at 55 and one-year final compensation for newly hired police members – (1.3) Employee cost sharing for police members – (2) Introduce and waive first reading of ordinance authorizing amendment to CalPERS contract – (3) Set proposed ordinance for second reading and adoption June 6, 2011 – (4) Adopt a resolution implementing provisions of CC 20516 (c) (4). This resolution reduces the current value of employer-paid member contribution that is reported as compensation earnable.
Council Member Weir asked what over the next three years will be are increased Pers cost and what would be our three-year net savings when those costs are in included, was the question.
City Manager Cole answered by tossing out an order-of-magnitude number – this year's increased Pers cost were budgeted with the city manager not wishing to put an exact number on it. The savings will go toward the increased number which is in this year’s budget – until July 1 the savings are essentially flat with the city saving the additional cost of Pers contributions in the following year. In the third year we more than cover the SEIU and Unrepresented, but fall short in Police Safety, while not having yet reached the Fire negotiations. Overall the next two years are covered with some shortfall on the Police side.
Public Communications – David Grau with the Ventura County Taxpayers Association spoke, thanking Mr. Cole for the oversight he explained earlier. The speaker said that one of the goals of taxpayer associations is to ask for transparency in government. The speaker thought that what the council intended was shown clearly in the presentation, but the employee cost sharing is a bit of a concern. Contributors to their own employee pensions rather than allocating their portion to the employees “required amount" means that some added burden is still taken on by the employer. It was stated that with this being applied to one group (Police and Police Management) over the others, this could establish precedent for other groups to come back at some future date and demand equal consideration.
[Comment] So the VCTA just does not want the city having anything to do with its employees’ retirement plans. Funny thing. The speaker looks old enough to at least begin thinking about his own retirement. See, there are just enough people out there who think that putting taxpayer money into public pensions forces them to pay for other people’s retirement, and, more often than not, the most “concerned" also tend to be the guys wearing Armanis. Say after us – “It’s nothing more than paid-up life!" But like any annuity, not everyone lives long enough to collect the full cash value. In fact, for a white male, life expectancy beyond 65 (the usual retirement age) is just eight years, give or take. Would you think that insurance peddlers don’t know this? Why do you suppose Mr. Worgan has the word “Actuary" behind his name? Would it help to say that it’s merely taking money legitimately earned and placing it in the piggy bank over here instead of the piggy bank over there? Some people, however (did we mention the Armanis?) seem to think there shouldn’t be any piggy bank at all. They see a return to slave labor as the only way to save America, when actually the way to save America is to help assure that people remain self sufficient as late into life as possible. What the Armani guys fail to realize is that the employer-assisted, defined benefit pension package has more to do with incentivizing “little people" to maximize their savings through tax deferments than it does to simply irritate the rich. Have the Armanis ever been known to take advantage of a tax loophole? Puh-lease. Only if it’s large enough to drive a truck through. [Ed.]
City Manager Cole asked to be excused to retrieve some of the figures that had been requested.
Council Member Morehouse asked about a number on page 5 saying that he was curious as to this being an aggregate of all of the bargaining units. It was his desire to see a breakdown of all the units in segregated form. Jenny said she had it and was in possession of it while in negotiations but could not produce that exact document. All groups were treated equally and therefore the percentages were deemed to be comparable across the board, according to the speaker. With this being the case the savings as far as concessions and contributions go, they all equaled out, meaning that the savings were nearly equivalent in the first, second and third years including the total.
The mayor said that since police officers may have higher salaries, this may weigh in favor of the SEIU group, counterbalanced by the lower compensation in other groups. The speaker agreed, tentatively, while saying that using percentages made the numbers come out much more equal.
Jenny wished to comment on equity and fairness with respect to all the groups, as to how cost-sharing works. The miscellaneous employees had a different option. The numbers didn't work out in the same way as for other groups, without there being enough benefit to cost-share and meet the standard that Pers requires. Some groups were cost-sharing and some are not. The savings garnered from each group, however, was nearly equal.
The mayor said that cost-sharing if defined more precisely, would be stated as the employee paying part of the employer’s contributed amount instead of (or in addition to) simply paying their own share, which was agreeable by Staff.
The mayor said that the governor has a plan for eliminating the cost-sharing provision in personnel salary and retirement contracts for the State of California, wishing to hypothesize over the ramifications this would have on current negotiations. The city attorney was brought into the conversation saying that the future is unclear in this regard. One of the long-standing vested rights doctrines forbids the state from making changes to the benefits of current employees, yet opposing and well-founded legal arguments exist, meaning that much of this may end up in court.
Mr. Cole said that the net impact to savings works out to 3 to 3 1/2%, also reflecting the cumulative impact for SEIU over the next 2 years. The cumulative impact for safety hovers near 4-1/2% – a gap of 1-1/2% which shows up in the second year. For police the 1-1/2% number is around $200,000. The total slippage is on the order of $300,000. With bonus savings coming from the enterprise funds, and being that we are staying current on the civilian side of the house, these figures will be useful in the ongoing fire negotiations, according to the city manager.
The mayor said that for the next two years the package covers 80 to 90% of the CalPERS bill as a city payout, with Mr. Cole saying that it's 75 to 80% of the increase only.
Council Member Andrews said that we needed to secure the full contribution from our employees as provided by state law for existing employees. We didn't to that. We needed at a minimum to set the entitlement rate at 2% for all new employees and to increase the age for current employees to draw their pensions. The councilman continued by saying that we need to get the three best-year average as the basis for the formula. Ultimately we need to move toward a defined contribution program and abandon defined benefit. The councilman said he has voted against this consistently
[Comment] Here we see the tip of what would be a really bad company to work for. Picture this on a corporate brochure under the heading of “Employment Opportunities” – (1) D-I-Y Pension Benefits! (Dozens of 401(k) plans to choose from!) – (2) D-I-Y Cost-of-living Raises! (No objection to moonlighting!) If this were the corporate world, plans like this would be going nowhere and neither would the company, except maybe to China. We as Americans are smarter and better than this and we would like to be able to say the same about the councilman. What is a defined benefit retirement plan? If you have one you know that you become fully “vested” in the plan after a certain period of employment, often either five or 10 years, with your employer footing the bill. . .one of the “bennies” you get in working for a great company. Why would a company do this, and why should you have to wait five years to sign on? The answer is simple. They're a great company; you're a great recruit and if you're good enough to prove yourself in five years, you'll be the kind of employee that the company does not want to lose. The councilman obviously doesn't agree with this, and the best you can do, sadly enough, is hope he never becomes your boss.
This is all about wrong-headed political ideology; no one loses with defined benefit. The employer pays more, but this just works itself out in translation, often showing up in additional salary without extra benefits, which is the way other entities (lesser ones) choose to go. With defined benefit your company pays into your account, but no one believes that the money just sits in a vault waiting for you to retire. If the pension managers are any good, your boss puts in thousands, perhaps, but at retirement you draw out tens or even hundreds of thousands. Where does all that money come from? Is it the taxpayer's money? Of course not. It isn't the councilman's money either, so what is his problem? It's the employees money. He or she earned it. It's leveraged compensation and the magic of our capitalistic system leverages it upward. Is it possible for a conservative ideologue to be at odds with this plan when the employer obtains employee loyalty, the employee obtains peace of mind along with something else – the ability to remain independent and off the welfare rolls after reaching his or her dotage. If the councilman can't agree with this, then neither can the City of Ventura, unfortunately, and [Houston] we have a problem. [Ed.]
Deputy Mayor Tracy said that if we had wanted to abandon the defined benefit plan today we would have found that through our Compensation Task Force we could not actually do that immediately. Somewhere down the road other options may arise [concerning defined benefit, apparently] but if it happened locally it would be a disaster if it didn't happen statewide, according to Mr. Tracy, saying further that our current fiscal resource situation would not probably permit a move in this direction on our own. Mr. Tracy then moved Staff recommendations A through D. With a second the roll was taken – Brennan, yes; Weir, no; Morehouse, yes; Andrews, no; Monahan, yes; Tracy, yes; Mayor Fulton, yes.
The mayor found that there were no speakers and no Council communications, and with no further public discussion the mayor decided to recess the meeting into its private session.