Five to Five

The now “famous” deadlocked 5-to-5 vote last week, regarding whether or not to move forward with a second-tier retirement system for new employees, was fascinating to watch but extremely disappointing in the end.

Sixteen months ago, 74 percent of San Jose voters approved of the city adopting a second tier for pensions. One could feel the shock in the chambers when half the council did not support the voters.

I believe it was a lost opportunity for labor to not embrace a second tier. If the unions would have embraced a second tier, it would have taken pressure off if the first tier, but that opportunity is now gone.

Retirement in the United States was never supposed to match your peak years of net income nor surpass the years actually spent working. Second tier is about new employees who do not work for the city yet.

One speaker had a good point—that a second tier should be actuarially sound. Ultimately, only a 401K would do that, but unfortunately there are not enough votes on the council to do adopt a 401K for new employees. Even the second tier considered last week would still produce debt for the next generation but significantly less than the current generous level of benefits.

Regarding health care, the city is subject to national price increases and the only way to reduce costs today—outside of a mandatory wellness program, like the city of Chicago—is raising deductibles. Neither the city of San Jose nor you and your family are immune to the double-digit health care cost increases. All residents of San Jose are included in the costs and fees that people pay for health care. All individuals across the country weigh deductibles/fees in their decisions on health care.

Another speaker at the council meeting said that he paid 1.45 percent towards his future retiree health care when he was employed by the city. However, that did not keep up with double-digit health care costs nor did it put any money aside to pay the billion dollar-plus unfunded liability.

If unions had agreed to pay a little something towards the unfunded liability when they agreed to a 50-50 split in 1984, we would not face the peril of running out of funds to pay for retiree health care. However, that would have required someone then to pay/sacrifice more, which it seems no one wants to do on any given day at any level of government when you can simply pass it on to the next person.

Retirees will still have healthcare and Medicare supplementals provided by the city, which in contrast is thousands of dollars per year if purchased on the open market. Current employees would avoid paying approximately $2,000 a year out of their paychecks with the implementation of a second tier since they must split the cost 50-50. Without changes, current city employees’ health care costs will increase dramatically.

I accept that some of my colleagues view important issues quite differently. Some of my colleagues voted against putting Measure W on the ballot in 2010 and also voted no last week. One of my colleagues has a long track record of publicly endorsing Measure W during his campaign but voted no last week as well.

I invite you to a conversation at City Hall on a similar dilemma at 7pm on May 9 with the Concord Coalition. The evening will allow you to make tough choices that elected officials from both parties have not made for decades at the Federal level. RSVP is required: http://concordcoalition.org/RSVP

22 Comments

  1. PO,

    You say – I believe it was a lost opportunity for labor to not embrace a second tier. If the unions would have embraced a second tier, it would have taken pressure off if the first tier, but that opportunity is now gone.

    Why is this gone?  You know the city could open negotiations again.  Whay did this happen?  Because the city never negotiated in good faith.  Why?  Because Chuck was hell bent on his measure and busting the union.

    And then Deb wrote:

    • Continue services that were funded on a one-time basis in 2011-2012, including three police officers for field patrol, two park rangers.  WOW 3 officers, are you kidding me!

    And you wonder why city workers are leaving employement here at a crazy rate.

    Vote Steve Kline.

  2. Why is this a union’s lost opportunity—this is the Council’s opportunity.

    In addition, the unions have embraced a second tier and have presented a variety of proposals including a second tier. It is very disingenous to say otherwise.

    Finally, it seems that the you and the Mayor would prefer to continue to address pension modification piecemeal. Each time you come in you take a bigger bite of the apple and sell voters that this is needed. Yet, you fail to remind the voters what you already asked of employees and what they have already given up. Why don’t you remind voters that employees already agreed to a 10% pay cut which produced the surplus this year and that they have agreed to pay toward the unfunded healthcare liability—which liability I understand that City has never paid once toward in the 20+ years of the obligation—why is that now this group of employees’ sole problem?

  3. “Another speaker at the council meeting said that he paid 1.45 percent towards his future retiree health care when he was employed by the city. However, that did not keep up with double-digit health care costs nor did it put any money aside to pay the billion dollar-plus unfunded liability.”

    Your take on the speaker’s very reasonable question reveals a smugness that you seem incapable of concealing. What do you believe to be the definition of the word “pay,” as used by the speaker in question? Do you think it means donate or invest? Are you under the impression that this former employee had, back in his working days, decided on the 1.45% figure on his own? Allow me to offer your a bit of clarification: the man who asked that question was not an actuary, market expert, or insurance analyst. He was a worker, most likely a cop or firefighter who did the job he was hired to do and, as a condition of a contract hammered out by the City Manager’s costly consultants and high-paid staff, PAID a determined amount of money every month IN EXCHANGE for something, in this case his health care in retirement. In other words, the city set the price, the worker paid it, and now, after he paid that set price every year of his career, you believe you have the right to brush him off with a condescending counter and the city the right to renege on its commitment.

    When did this country start confusing people who think like you as anything but con artists?

    The city’s debt is not the the business of the cop on the street or the firefighter in the station house, and your insinuation that it is is appalling. You seem to be under the impression that it is the responsibility of every city worker—past, present, and future—to pay for whatever liability City Hall allows to go unfunded. What is that, your own moronic, twisted version of Original Sin? “Congratulations on your appointment to the police department, young man; by the way, you owe us big time!”

    Let me ask you, Mr. Oliverio: how much are you willing to pay for your Original Sin, the fiscal irresponsibility of past councils? How about Deb Figone? She’s spent a career in an office that has, primarily through misfeasance and cowardice, left this city saddled with huge debt. Managing debt IS THE BUSINESS of her office. Obviously, they’ve done a lousy job of it. The way I figure it, the folks in the City Manager’s office—past and present, owe the treasury so much money that they should be denied their pensions. Maybe that will teach the next generation to do their damn jobs so that the rest of the city’s workforce can do theirs—without risk of being scapegoated.

    • I thought I read some where that the Residents of San Jose Pay Doug Figone’s portion of her retirement and the city pays the rest as well as maxing out her Defferred Comp all courtesy of the Residents of San Jose . Could someone please correct or confirm?? it would be nice to know the truth

  4. Pierluigi:

    I have noticed that those in the “liberal/leftist/progressive” community like to intrude themselves in every conceivable discussion and issue by declaring themselves to be, in some fashion, “stakeholders”.

    I think that taxpayers and all citizens are clearly stakeholders in the affairs and practices of public employee unions, so isn’t it about time for citizens’ stakeholder role to be taken seriously.

    The City Council should consider and pass legislation mandating that all residents of San Jose be allowed to vote in all union elections.

    What unions decide affects all citizens, so all citizens should have a say. 

    It’s a matter of fairness.

    • Unions don’t decide anything.  The City Council decides whether by negotiation, edict or ballot measure.  The unions simply do what they are charged with doing—securing the safest working conditions and negotiating pay.  It is the Council who makes it happen.

    • Outstanding!  Can I vote now to see how much I want to pay for gasoline?  Alcohol? Taxes?  Nice try.  Lou, you always assume that Police and Fire should be an indentured-servitude job, or volunteer. 
        What would be REALLY stellar is to have a list of people who voted FOR measure V and W, and to have a list of those who are going to vote for Measure B.  That way, the Fire Department and the Police Department can know whose house they are responding to. Not for any reason…….or maybe so.  Whatever.

    • Hey Lou,
      How about a vote requiring all city employees eat dog food and walk backwards on Tuesdays?  Might as well when you and PO are at it.

      • > How about a vote requiring all city employees eat dog food and walk backwards on Tuesdays?

        Why is it necessary to vote on this?

        Can’t city employees just do this on their own.

        But, if city employees are asking the city to PAY for this, then, absolutely all San Jose residents should be allowed to vote on it.

    • Dont you get a vote when you vote for your council person? Aren’t they supposed to vote for the collective masses? If you would like to vote on everything then why do we even need a Council and Mayor?

  5. P.O.

    I read your column and wanted to as a few questions, and make a few comments.

    I’d like to know why Pete Constant was allowed to vote on this issue when he has and has HAD a direct conflict of interest regarding this issue, and why it took him so long to recuse himself from a vote on this? I think EVERY vote he made on this has been illegal, and should be discounted.

    What ever happened to your request for public negotiations?

    Why didn’t you cover the fact that the public was lead to believe that if City employees made the huge concessions they were asked to by all of YOU on the Council, that our budgets woes would be a thing of the past? Employees did make those concessions, and now we’re being told it wasn’t enough! Now you want to pass an illegal ballot measure that takes an attorney to understand,that is poorly written, and will cost us millions to defend if passed.

    Where did the $50K for the new City Hall gym come from, and when was it built? Who gets to use it? Are Council Members, the Mayor, and City staff using it? Can tax paying citizens use it free of charge? Did any of the money from Union concessions pay for that gym?

    I’d like to know how you could write a column like this that doesn’t disclose the TRUTH about why half the Council voted NO on this measure? They voted NO because the measure is poorly written, NOT because they don’t believe in pension reform, and they want to see “good faith” bargaining on the part of the City. 

    Honestly, I am so tired of all the misinformation being put out by you, the media, and others. It is sickening that our public servants are treating us, tax paying voters, like idiots, pushing your own agenda, and bashing dedicated City employees like this.

    If you are going to write a column about your fellow Council Members, at least tell the truth about WHY they voted against something and stop trying to stir the pot. Give us the FACTS on measures and let us use our own God given brains to figure out how we want to vote without miring it in a BIG pile of personalized BS!

  6. The ballot/initiative process has made you pols irrelevant.  You proposed measure’s V and W got them passed then didn’t have the fortitude to do what you said needed to be done. Now you reap what you sow.

    RIP Sgt. Anthony Colon #2435 retired from SJPD and died at age 52 – within 2 years of his retirement. He leaves behind his wife , a son and a daughter, plus his mother.  You have no idea the sacrifices that the men and women of the Police and Fire departments make to earn their retirement. 

    Oliverio you must go!

  7. Typical Pierre, tell YOUR version of a story……………..why bring up the truth? First off I would like to state that I am as much a fan of P.Constant as I am of yours(NOT) . I believe that he is out for himself and is inline w/Mayor to push his Agenda. But , and it pains me to say so , Pete did the right thing because of his obvious conflict of interest. so for that ONE stand up moment in time, kudos to Pete.
    Secondly why dont you tell the residents of San Jose that The Unions proposal (that was never even considered) would have saved the City of San Jose $500 million inside of 5 years , or that a second tier system was on that same proposal, or that certain guarantees were in place to offset shortages that the workers themselves would make up the difference and NOT the city.
    Why dont you tell the residents of San Jose, That City Employees DO NOT COLLECT SOCIAL SECURITY?
    Why not tell residents that Employees DO pay for Med/Den and Do contribute to their own retirement.

    why not tell Residents that this crisis is not because of pensions, but do to Mismanagement,irresponsibity, and lack of payments in the good times by the city.

    why dont you tell the residents that city workers have made viable offers to the city that met all requirements that was asked of them by the city and still turned down.

    why not tell them that City never had any intention of “good faith bargaining”  that thier only intention was to go to ( ILLEGAL) Ballot

    Why Not tell the residents that the city of San Jose will be on the hook for all court costs and back pay   that will be well into the millions

    I guess the truth hurts

  8. Pierluigi,

    I don’t enjoy being the bearer of bad tidings but it’s clear that your column has outlived its usefulness.  Perhaps you could resign from this duty and give us all a break.

  9. Thank you for your comments

    RIP Sgt. Anthony Colon #2435 retired from SJPD and died at age 52 – within 2 years of his retirement.

    Most do not understand the stress that officers go through!  The aveage live span after retirement is about 7 years. 

    Hopr chuck figures this into his pension numbers.  Most of the money goes back into the pension fund.  All goes back if the officer was not married prior to retirement.

    I hope people will say a prayer or atend the viewing tonight in LG or the funeral tomorrow in SJ.

    Lost a great friend as did the city of San Jose.

  10. Pier,
    It is an absolute and complete lie to say the unions did not support or offer a second tier pension plan for new hires. How you and others on the city council get away with complete lies and fabrications, with no challenge from any of the media is utterly amazing.

    • PO,

      why is the rest of the city council not held accountable for thier flat out lies.

      The SJMN praises Rose Herrera for showing courage and character for standing up to the unions

      However, I encourage everyone to go to

      http://www.protectsanjose.com

      To read about the many lies she has told.  This is why it is so hard to believe anything that comes out of yours, Chucks, Petes or Roses lips.

      Time for a change.

      Vote Steve Cline!

  11. The director of retirement conducted a study and determined that the city took a “pension holiday” between 1993 and 2004, skipping out on almost 79 million dollars in payments, creating a 120 million dollar unfunded liability, but the employees still paid their full amount. Read it in the “Vanguard.”

    Another fact that the city won’t tell it’s citizens. Why? Then they would have to explain where the 79 million went. Maybe PLO knows.

    Maybe channel 11 can do a special on that.

  12. It ceases to amaze how intelligent people can render themselves harmful ignoramuses by blindly adhering to a strict ideology, in this case the bias that municipal employees are dirt and should be treated as such. The positions made here are loaded with exaggeration and misinformation too tedious for comment at the moment. Let us focus on what was presented by the Manager’s synopsis, a prominent characteristic of the Reed/Figone/Constant mission to deceive.

    1st and most basic, the specific amount of the deductible in the Kaiser “High deductible plan, nothing mentioned . More important, Councilman Oliverio did not even hint at the deal killer actually provided in the Mercury News article the day after the vote.  Not presented at Council session was a breakdown of current retirees under 65 by age. This was extremely relevant as depending on the distribution, the brunt of the “excessive” health liability would expire in a few years, assuming a higher proportion in the over 60 range than the under 60. Including this modification in the proposal for this particular group already on fixed income would have a relatively small impact in comparison to the changes to Tier 1 and 2.  Also a blow below the belt for those who recently involuntarily retired prior to what they had planned, due to the elimination (as opposed to a reduction) of sick leave payout for hours accumulated slowly over an entire career.

    I recommend a look at the material available from the National Institute on Retirement Security to see what more responsible large government retirement systems are doing to solve the benefit funding issues.  A far better source than the Chamber/Rotary driven propagandists. Note the Councilman’s recent campaign stating that Measure B “requires both city and employees to contribute to the system” suggesting to the many ill informed voters that employees currently don’t pay now. Note in the Budget Watchdog’s flyer with the Mayor prominently included the statement on Measure B “Restore services not increase pensions”. Now what union is proposing increasing pensions!? Ballot measures who’s proponents resort to lies should be discarded. Other cities have achieved fair pension modifications, San Jose has chosen slash and burn.