Yesterday, April 4, marked the 43rd anniversary of the assassination of Dr. Martin Luther King, Jr. in Memphis, Tennessee. To commemorate that tragic event, union workers nationwide held rallies to protest recent moves against workers’ rights to organize.
King had gone to Memphis to support local workers who had asked to join AFSCME (the Association of State, County, and Municipal Employees) and were striking for higher wages and better treatment in the workplace.
More than four decades later, state, county and municipal employees across the nation are coming under fire again. It’s happening in Wisconsin, and it’s happening right here in San Jose, where hundreds of police officers and firefighters, custodians and clerks could lose their jobs for the sake of a balanced budget. Today, however, there is no Martin Luther King, Jr. to lead them.
That did not hinder a group of workers in San Jose from marking the anniversary of King’s death with a demonstration in support of public service workers. They gathered under the banner “We Are One” to express solidarity with workers across the nation whose jobs are coming under fire. Many pointed to Wisconsin, where teachers and government workers saw their rights almost ripped away from them under Gov. Scott Walker.
Tellingly, some at the local rally expressed the fear that the same could happen here, even under a Democratic governor who has been a friend to unions throughout his career.
The demonstrators in San Jose were just one small group of protesters across the nation, who delivered the same message to their elected representatives: “On April 4, 1968, Martin Luther King Jr. ... was standing with sanitation workers demanding their dream of a better life. Today, we are taking action to honor his legacy and demand politicians not destroy the right to bargain collectively for a voice at work and a middle-class life are under attack as never before.” As a point of fact, there has been no such move against coillective bargaining rights in San Jose or anywhere in California.
More than a thousand demonstrations with the same message were held across the country. Their message—the message of Dr. King—is being reiterated today at a teach-in at the Student Center of San Jose City College.
Read More at the We Are One website.
Too bad Cindy Chavez doesn’t show any concern about the long-suffering taxpayer who is slowly being squeezed dry by all of the taxes necessary to support her union buddies.
This “we are one” crowd is a wonderful bunch. At the DC rally, someone had a sign that read, “Who is pulling the strings when politicians attack union members and the middle class?” And has bullet points on the Koch brothers. Wasn’t this rally was supposed to be about honoring MLK standing up for working class people?
Check out this video:
“As a point of fact, there has been no such move against collective bargaining rights in San Jose or anywhere in California.”
Fact? Not really… Remember Measures V & W?
“As a point of fact, there has been no such move against collective bargaining rights in San Jose or anywhere in California.”
Last time I checked a map, Costa Mesa was still in California. All public employees except PD got pink slips. Danny, check your facts before you make all encompassing statements.
I remember V and W very well! We “got ‘er done” didn’t we?
We told the public: “Hey we love the cops and the firefighters and you love them too! We want a safe City and so do you! Vote for V and W and we won’t have to lay off so many cops and fire fighters!”
The public showed their love by voting for V and W in numbers that gave handed the City a Mandate that said: “We love cops! We love fire fighters! We love fast response times whe we call 911! We love living in one of the safest large cities in America! We want to keep as many cops and fire fighters employed as we possibly can!”
So what is all the fuss about? The City Council hears you! The City Manager Hears you! You spoke at the ballot box and WE LISTENED!
WE are only going to layoff 62 cops on June 30, 2011 then on July 1, 2011 we will ONLY layoff 150, 239 or 461 cops – that’s a maximum of ONLY 41% of the current police force!!! On the Fire side, we are olny going to lay off 60 fire fighters or 10% of the Fire department!!! If they hadn’t given back 10% of their pay we would only have laid off 80 fire fighters.
Again, we heard you and we want the City to be safe. If V and W hadn’t passed we might have had to lay of 60%? 80? 90? or even 100% of all cops and fire fighters just so we can open the library and make sure the parks get mowed once every 3 months whether the grass needs it or not!
Thanks for all your support. San Jose citizens do not realize how much you did to protect our community from registered sex offenders. And when the current council eliminates the 290 team (Sex Registration Enforcement Team), San Jose will be at risk similar to the elimination of the VECET (Gang Unit) Unit.
I remember V & W. The police put out faulty and not truthful information. Check your own flyers you mailed then come back and make a statement.
What exactly was faulty about what the FD or PD put out? We said response times would suffer and they have. We paid $85,000 in fines to the County from June through December 2010 for late response times. The most ever. We said they will come back for more and lay more off despite their claims and guess what, they are. We said the city will continue to spend money on frivolous things and put themselves deeper in debt and they have (i.e. remodel of the convention center – the city is on the hook if the bonds can not be paid with the hotel tax right? Sounds very much like the problem with the pensions they keep complaining about where they are on the hook if the pension is not fully funded). So please tell me what we said that were lies!
Cops and firefighters unions abused taxpayers and political system by buying politicians who gave them excessive unaffordable pensions multi million pensions
Many people who get abused like their abusers but not the abuse Same for Taxpayers who like cops nad firefighters not the abusive pensions
Excessive unaffordable multi million pensions were not earned they were politically bought
Even Gov Brown wants pension reform and recognizes many pension abuses – retroactive increased pension, pension spiking, requiring all workers to pay their full portion of pension costs not government paying employees costs
Little Hoover Commission stated in comprehensive pension report that the problem can not be substantially eased without reducing future benefits accruals for current employees
” A GRAND JURY convened in San Francisco finds that “both unions and politicians are to blame for abusing the system by negotiating extraordinary pension and retirement benefits without considering the unfair burden on future generations.”
Now majority of San Jose and statewide taxpayers want unfair unaffordable pensions returned to reasonable lower pensions which is why Measures V and W was passed by voter majority and Gov Davis was recalled
If Gov Brown and Legislature do not fix unfair excessive politically bought pensions then voters will with Public Employee Pension Reform Act in June 2012
For one, the pension system structure and percentages contributed by the employee and employer have been around for about 80-100 years. Look back at the original city Charter. The reason the final percentage payouts went up was competition and comps during the boom years. The reason we are all in this state now was that everything collapsed not just one segment of the financial industry. These funds were fully funded and in fact in SJ’s case over funded. There is no doubt we have a problem now but to blame the unions, the city or the employee is just wrong. The blame lies with the corporations, financial industry and poor regulations.
So in essence we’re equating todays public employee union trough feeders with Jim Crow era black Americans?
Martin Luther King is spinning in his grave at warp 9.
God, your pathetic Glen Beck talking point is so old. Grow up with the childish name calling.
Actually, MLK fully supported the public employee unions, and he was shot while doing so. He recognized that the the struggle of working people was a related to the struggle for equality that he was leading.
King’s niece, Dr. Alveda King, told The Daily Caller her uncle really wasn’t in Memphis because it was a strike – he got involved in the strike because of racial discrimination. Black sanitation workers were treated unfairly compared to white ones, and, in fact, all 1,300 strikers were black. The unfair treatment led to the death of two black workers, too, Echol Cole and Robert Walker, who were crushed in a mechanical malfunction.
“My uncle was in Memphis, not specifically because of the union strikes but to help bring an end to oppression of the garbage workers which was racially driven,” Alveda King said in an e-mail.
Actually – You have distorted partial facts and bad memory about who were all guilty parties that actually caused government budget and employee pension problems
1) ” The reason the final percentage payouts went up was competition and comps during the boom years.”
caused by Gov Grey Davis and Legislature who received millions campaign contributions after s heavy lobbying from prison guards union increased pensions to unsustainable 75 – 90% pensions Davis gave prison guards a 37 percent pay raise shortly before he was recalled.
Almost all union contracts require comparisons to other union contracts amd prison union contracts and pensions caused a domino effect of higher government pay and pensions across California causing much of the state and local government budget crisis
2) “The reason we are all in this state now was that everything collapsed not just one segment of the financial industry There is no doubt we have a problem now but to blame the unions, the city or the employee is just wrong. ”
Politicians elected by unions gave government workers higher pay, benefits and pensions that tax base could not support even in good times with recession making it worst
3) “The blame lies with the corporations, financial industry and poor regulations. ” Yes, recession was caused by greed of corporations and financial industry because politicians weakened banking and financial regulations
We would of still had billions in budget and pension problems without recession because union elected politicians give political paybacks of unsustainable pay, benefits and pensions to government employees
To point #1: The original payout was 75% after 30 years which had nothing to do with Grey Davis. Yes the percentages increased over the years to 90% and yes that in hind site was too much but at the time the actuaries were showing they could support this. Again, prior to 2008 these systems were fully funded. As I said earlier, this system has been functioning fine for nearly a century and until the last few years has been fine. I don’t see how you can look at all the damage to the financial system and housing market that also destroyed 401 K’s and come to the conclusion that all the short falls in the pension systems are because of greed.
To point #2: So your point like so many people’s is that it is horrible that a union would contribute to a politician because they may show some favoritism to that union. Ok so how is that different than all the big corporations like Cisco, HP, Apple, GM, Facebook, etc that contribute to politicians who then give them special deals on land, tax breaks, or other benefits at the tax payers expense? For that matter all special interest groups. That is how our government works right now. Now, I do not disagree that, that is not a great way to work but until you change the field for all involved you can not just blame a union for playing by the same rules everyone else does. I mean just look at GE, they paid NO TAX at all on what 40 billion dollars. Who’s pockets are they lining? It’s not a great system to be sure but blaming the worker for trying to have competitive wages and benefits to other like agencies is not the answer.
Point #3: I guess I would disagree that we would still have pension problems like this had the financial system not collapsed. If we still had 1 pus Billion in the FD and PD pension system that was lost I seriously doubt pensions would even be a thought.
I have not distorted any facts nor do I have a bad memory about things. I have not said there is not a problem now that needs addressing and we have been trying to do so. My problem is with demonizing the worker and placing blame on them for something that has been in place for decades. I came to work and took the job because the city offered these benefits to me just like I am sure you did at your job.
One of the big problems and facts not mentioned in the above post was the last Fire Arbitration that awarded a 3% at 20 years, something you will not find anywhere else in pension plans. There is 3% at 50 (thanks to Grey Davis who was voted out of office) which all public agencies were piggy backing on except San Jose PD which negotiated a more reasonable and less costly way to get to the 90% by increasing the last ten years, but the 3% at 20 is far more costly. The piggy backing syndrome was a result of the organized public labor union leaders (not the rank and file) and the politicians they had bought with their political contributions. I do not blame the regular Firefighters or the Police Officers and respect the jobs they do every day in our City, but there was arrogance and better then you attitude particularly with the Fire Union under the last Union President to the point that no other City labor groups, particularly the POA were not happy with him and his arrogant style. This 3% at 20 was put forward by the FF union and awarded by an arbitrator who has no ties to the City or the City’s ability to pay which is the reason I voted for Measure V. The cost to put 3% at 20 years in place retroactively is in the $10’s of millions of dollars. And if you look at the recent rash of retirements since this has been in place almost none have the full 30 years and some have even left at just 20 years, a true burden on the system. I believe that even without the recession, this 3% at 20 issue alone would have caused serious problems to the system. We could ask the last Fire Department rep on the Retirement Board who was also an Executive Board member, but oh yeah he was fired (which was upheld by an arbitrator) for fraudulently spending funds. Just another example of how the past union leadership felt they were above the rest.
Also another fact not mentioned in the post is the Governmental Accounting Standards Board #45 (GASB45) which brought new accounting standards to pension plans in 2004 that helped to show the underfunding of these accounts. This is where these retirement systems being held accountable began, not some actuarial study which at times are just wild guesses.
I suggest a read of the article on pension reform in Sweden by the Heritage Foundation. This major success is what occurs when competence rules over demonization. Reed and the Tea Party have so much in common it is truly confounding. They are both making a laughing stock to other civilized developed countries and municipalities, as our polarized vindictive electorate send this country down the sewer. Note surprisingly the Swedish solution was contrary to “socialist” assumptions, but instead added partial privatization. As I have said before, I believe outsourcing is the solution. That is, to replace the Mayor’s and City Manager’s office with private apolitical consultants.
Good Lord when will Cindy Chavez go away? She apparently didn’t get the memo from the voters, citizens and taxpayers of San Jose. You were a distant third when you ran for Mayor Cindy. Go away. We don’t trust your leadership and don’t want you pilfering our tax dollars anymore.
As if the DC “we are one” rally wasn’t bad enough, now comes a report out of Chicago:
“While Tea Parties have received massive amounts of ridicule for being so called “Astro-Turf” (corporate funded) from the institutional left and mainstream media, left wing protesters claim the moral high ground of being a “true” grassroots movement. However once again, our footage reveals an extremely elaborate and costly production put on by these so called “true” grassroots activists. This particular protest had at least hundreds of protesters bussed in on at least 12 school busses we counted taking up two city blocks in downtown Chicago, and an audio/video system that could outdo many local rock concerts at Chicago’s infamous summer street fairs. It seems unlikely that there is no “Astro-Turf” funding for these nationwide protests that occurred this past Saturday.”
“What was even more disturbing to us, was the amount of young children brought to the protest with their parents, holding signs which prominently advocate for a new alternative economic system in America, and being taught what we believe is a very “un-American” message, by the reoccurring theme these Chicago protests contain. Communist protesters at this rally even claim they are “very patriotic” for their advocacy to end capitalism in America.”
We have heard it time and time again from Mayor Chuck Reed and others: San Jose worker pensions are on an unsustainable course. If the trajectory of pension contributions were a straight line, this would be true. However, they are not and it is not. It is time to set the record straight about the imaginary pension crisis in San Jose.
From actuarial reports to unfunded liabilities, pensions can be easily misunderstood. The most important thing to know is that pension funding is cyclical, since the markets in which they invest are volatile.
Presenting pension contributions as being linear instead of cyclical has allowed the city of San Jose to create an extremely inaccurate picture by comparing the peak of one cycle to the trough of the next.
In 2000, retirement plans had just experienced 15-20 percent returns for many years. Contributions were typically below normal levels, plans were well-funded, and actuaries projected low costs for decades. In contrast, the plans of today are climbing out of investment-related deficits, contributions are above normal levels, and projections look dire. Simply put, projected pension costs look very different at these peaks and troughs.
We have seen these cycles before, and will again. As economist Dean Baker pointed out in a recent Center for Economic Policy and Research study, the major driver of current pension shortfalls is the stock market crash in 2007-09. This flies in the face of those who would suggest that it is caused by ever-increasing or overpromised benefits to employees.
Accordingly, the city’s retirement plans are already bouncing back along with the stock market. Near the trough of the financial crisis in 2009, San Jose’s federated plan had an unfunded liability of $1.13 billion. By 2010, only one year later, the unfunded liability had fallen to $998 million.
Since then, the S&P 500 index has increased 30 percent. We estimatethat recovering markets will eliminate nearly half of the unfunded liability during this fiscal year.
In other words, half of the “pension crisis” may have solved itself by June.
The cyclical nature of pension costs has allowed politicians to unfairly target public employees across the nation. The same arguments are being used everywhere, the same comparisons to early 2000 contribution levels, and the same projections of future costs based on figures developed at the trough of the cycle. It sounds very scary, indeed. It is meant to.
The scariest, and most dubious, figure is the city’s much-touted $400 million in contributions by 2015. Much of this figure stems the city’s attempt to prefund retiree health care, an issue that is separate from pensions and far more discretionary.
Few governments prefund retiree health care, and even fewer companies do. This is akin to paying for two generations of retiree health care now, and doing so during the worst economic climate in 80 years. The city has lumped in these costs in a deliberate attempt to drive up the numbers and further alarm the public.
There is a real crisis in retirement, but it is not the one being talked about. Retirement security for working people across the country is plummeting, as too many pensions in the private sector have disappeared and the system is increasingly reliant on 401(k)s. A recent article in The Wall Street Journal pointed out that the median household for workers aged 60-62 with a 401(k) account has less than one-quarter of the needed amount.
In San Jose, the attack on city worker pensions is misguided at best and does nothing to further economic recovery. We call upon city leadership to stop conjuring up crises that pit working people against one another and instead focus on finding real budgetsolutions.
To The Mayor Who Cried Wolf Author,
The above post is a reprint of the article written by labor in Sunday’s Mercury News editorial pages. I would encourage everyone to read the City Auditors article on the same subject for a different perspective which is on the same page of the paper.
One of the big problems and facts not mentioned in the above article was the last Fire Arbitration that awarded a 3% at 20 years, something you will not find anywhere else in pension plans in teh Country. There is 3% at 50 (thanks to Grey Davis who was voted out of office) which all public agencies were piggy backing on except San Jose PD which negotiated a more reasonable and less costly way to get to the 90% by increasing the last ten years, but the 3% at 20 is far more costly. The piggy backing syndrome was a result of the organized public labor union leaders (not the rank and file) and the politicians they had bought with their political contributions. I do not blame the regular City employees and respect the jobs they do every day in our City, but there was arrogance and better then you attitude with Union leaders, particularly with the Fire Union under the last Union President to the point that no other City labor groups, particularly the POA were not happy with him and his arrogant style. This 3% at 20 was put forward by the FF union and awarded by an arbitrator who has no ties to the City or the City’s ability to pay which is the reason I voted for Measure V. The cost to put 3% at 20 years in place retroactively is in the $10’s of millions of dollars which was unfunded. And if you look at the recent rash of retirements since this has been in place almost none of the retirees have the full 30 years and some have even left at just 20 years, a true new burden on the system. I believe that even without the recession, this 3% at 20 issue alone would have caused serious problems to the system. We could ask the last Fire Department rep on the Retirement Board who was also an Executive Board member, but oh yeah he was fired (which was upheld by an arbitrator) for fraudulently spending funds. Just another example of how the past union leadership felt they were above the rest.
Also another fact not mentioned in the article is the Governmental Accounting Standards Board #45 (GASB 45) and GASB 43 which brought new accounting standards to pension plans and health care benefits in 2004 that helped to show the underfunding of these accounts. This is where these retirement systems being held accountable began, not some actuarial study which at times are just wild guesses. There are solutions but it will require both sides to have open honest conversations with the real facts, not the name calling and finger pointing that goes back and forth.
San Jose’s pension crisis is real and immediate. With more retirees and fewer employees, the cost of the pension plans is increasingly consuming the dollars needed to maintain the services we are here to provide—police officers on patrol, libraries open and streets free of potholes. Next year, the city’s bill for pensions and retiree health care will top $256 million. By 2015-16, it could top $400 million. San Jose will pay its bills. But this is not sustainable.
Costs have skyrocketed. In a report to the City Council last year, our office found that since 1990, pension and retiree health care benefit payments by the city’s two retirement systems grew sevenfold—from $30 million to $210 million. This is largely because there are more retirees and benefits are higher than in the past.
To pay these benefits, the city has more than tripled its contribution into the pension plans in the past decade, from $45 million (6 percent of the general fund) to $156 million (17 percent of the general fund). Half of next year’s budget deficit is increased retirement costs.
Pension payments have exceeded contributions since 2001. That wouldn’t be a problem if the pension plans had enough money set aside to cover benefits already earned, but that is not the case.
The city’s pension liability is $5.7 billion. The pension plans have an estimated $3.7 billion in assets, leaving an unfunded liability of $2 billion. Another $1.5 billion is owed for
retiree health care. These estimates by the plans’ actuaries are based on projected investment rates of return. The actuaries expect that what we owe will continue to outpace how much we have, resulting in significant pension contribution increases, unless changes are made to contain costs.
What happened? The city and its employees made their annual required contributions in good faith. However, when times were good, benefits were enhanced—some retroactively. Meanwhile, the plans underestimated future costs: Employees are living longer and retiring earlier. In addition, the ratio of employees to retirees is dropping. Thirty years ago there were five active employees for every one retiree; now that ratio is approaching 1-to-1.
These factors would have led to increases in pension contributions anyway. But then the funds lost $1 billion in the economic downturn, even though San Jose’s funds did better than others, earning a healthy 7.5 percent annually over the past 30 years.
However, the plans had assumed they would earn even more. And while investments did well last year, earning 14-15 percent, it takes a lot to recover from a market collapse. Here’s an example: If you have $100 and lose 50 percent, you have $50. Even if you are able to earn 50 percent on what’s left, you still only have $75. So even with the recent investment gains, we’re $2 billion short.
Most important to remember, the demographic shift creates a longer-term problem bigger than just the 2009 market downturn.
What could make a difference in controlling costs? The cost drivers in San Jose are the same ones influencing pension costs everywhere: retirement age, benefit levels, cost-of-living increases and definition of final average salary. Reducing pension costs requires changing some or all of these.
With $3.7 billion in the bank, San Jose’s pension plans do not face imminent collapse. San Jose is facing up to its obligations—more so than many other jurisdictions—and the city and its employees will continue to make their contributions into the plans. However, inaction will allow rising pension costs to continue to threaten basic city services and may, in the long term, threaten the city’s ability to pay retirees.
Don’t we all wish we had seen it coming? Now that we know, can we really just close our eyes and do nothing?
SHARON ERICKSON is the city auditor of San José. Her report on pension sustainability is online at http://www.sanjoseca.gov/auditor/AuditReports/1010/1010.pdf. She wrote this for this newspaper.
Can we file a class action lawsuit because of all of the lies and misleadings that will result in reductions? If so, I say we go with back pay and interest.