HomeMy WebLinkAbout04-15-2014 b2 boudreauKremke, Kate
From: Mejia, Anthony
Sent: Tuesday, April 15, 2014 11:07 AM
To: Kremke, Kate
Subject: FW: PERS
Attachments: 140414 SLO- Council- PERS.pdf
Agenda Correspondence for 04/15/14 Item B2.
Anthony J. Mejia I City Clerk
(-11"v of San Wis omspo
990 Palm Street
!:pan i uis Obispo, CAA 93401
tel 1805 781,7-102
RECEIVED
APR 15 2014
AGENDA
CORRESPONDENCE
Date H- j5 -1 Item#
From: Michael Boudreau [ma i Ito: mikeb@mtbarchitecture.com]
Sent: Tuesday, April 15, 2014 11:00 AM
To: Ashbaugh, John; Carpenter, Dan; Christianson, Carlyn; Codron, Michael; Dietrick, Christine; Lichtig, Katie; Marx, Jan;
Smith, Kathy; Mejia, Anthony
Subject: PIERS
Dear Members of the San Luis Obispo City Council.
Please see my attached letter regarding today's meeting.
Please feel free to contact me for any reason.
Michael Boudreau
1009 Morro Street, Suite 205
San Luis Obispo, CA 93401
MikeBa-MTBarchitecture.com
805 - 549 -0400 direct
1
April 15, 2014
Dear Mayor Marx, and City of San Luis Obispo Council Members,
I think we can all agree, the 24 page staff report describing our relationship with CAL -PERS is
mind numbing. I consider myself a numbers guy, and I cannot keep up with such complex and
fragmented arrangements. I sometimes wonder if the Council has a clear handle on what our
management and past management have created.
I am writing you for four reasons.
First, I was moved by Council Member Carpenter's comments at the last Council meeting,
regarding the ' /z cent sales tax increase, "Measure Y ".
I agree with Mr. Carpenter. Many of us in the community are concerned that too much of our tax
dollar is spent on staff compensation and their associated benefits.
Second, I also concur with the analysis presented in Mr. Fowler's March 28, 2014 letter to City
Council. I and others believe that our city management has not done enough to rein in employee
costs. And as a result, capital improvements have suffered.
Let me share a little history; I was in the council chambers when Ken Hampian and Bill Statler
advised our City Council to conduct a compensation study in the early 2000's. The results were
significant salary increases, especially at the management level. And as we know, police and fire
unions have been successful at pushing for increases as well.
I also remember the birth of Measure Y, years ago.
Lots of pictures of rotten culverts, pot holes, broken sidewalks and the impression that San Luis
Obispo needed to invest in San Luis Obispo. To me, that meant hard capital improvements. I
thought, "Great, this will be additional money, on top of what we already spend on capital
improvements." We need that.
But then came the disconnect, in all the promotion of a tax increase, there was no mention, at
least in the presentations I saw, no mention of the expanding fiscal liability fueled by the
increased compensation numbers, which in turn produced even higher pension obligations to
match the newly minted pension formulas.
And that, in my opinion, is where the "trust" element within our community has faltered. It was
also a catalyst to measures A and B.
Third, I was taught at an early age, what one earns for a living is a private matter.
But let's be clear, all of the money used to fund our city is first and foremost, ours. It is money
taken from my pocket and yours... and as one can see, with our growing unfunded pension
liabilities, the need for cash will reach into our children's pockets as well.
That said; please refer to the charts at the end of this letter.
As you can see, the base pay levels seem fair, but unlike the private sector, notice how all things
are added. But my focus is on the cost of the pension plans. "PERS"
Notice what is spent on the pension obligation "PERS ". This is a significant number and
apparently expected to increase. I know of no one, working as an employee or a manager,
outside of the city, that realizes this level of contribution to their retirement.
The report seems to make clear, these numbers, as large as they are, apparently do not keep up
with the projected cost of the pensions promised, and debt is being incurred.
Why are the amounts so great? The list of the top 19 retirees may help explain. The list is much
longer when you include those paid over $90,000.00, $80,000.00, $70,0000.00 and on and on.
The chart showing the top 19 San Luis Obispo retirees is what our currently vested employees
can look forward to. These pension obligations will continue to compete with our capital
improvement dollars for many years to come. In fact, over the next ten years, just the top 19 SLO
City retirees alone will be paid over $20 Million dollars.
Fourth, for some reason, everyone has left this pension obligation out of our measure "Y"
discussion. It seems clear to me that in addition to;
Pride in our quality of life
Quality of government services
Community aspirations
And us wanting to be a "better" place, rather that a "worse" place
We need to add the promise of a generous pension to the list of Measure Y objectives.
We must be very clear and specific when it comes to informing the citizens of San Luis Obispo
about what our money buys and why debt is incurred. Staff reports, such as the one used today,
do little to clarify and simplify a complex mess of equations.
In closing, I have a few suggestions.
1. We owe it to our children to keep our excesses, our unfunded liabilities, off the shoulders
of our children. For our children, we must hold firm and continue to advocate a "pay as
you go" approach with fairness, fiscal restraint and transparency.
2. I believe the pension obligation should be identified as a debt and we should move to
begin negotiating changes to these obligations.
3. Just as the entitlement often reach back retroactively to maximize years worked to
increase pension amounts, so too should we be able to realize that we made a terrible
mistake, and negotiate for a $100,000.00 maximum annual pension limit, retroactively.
We should also move away from a guaranteed pension toward guaranteed contribution,
"pay as we go."
4. Last, I suggest that our city council move toward creating a completely independent ndependent city
manager.
a. I believe our city manager, and possibly our city attorney should not be tied in any
way, to the benefits and pension plans enjoyed by our city employees.
b. This arrangement will improve the climate for unbiased analysis and advice, from
two of our key employees.
c. Currently, and understandably, our city manager must weigh what is in the best
interest of our city, and what is in her best interest. A difficult task for anyone.
The City of Bell, of course is the worst example.
d. I say this because currently our city manager is vested in all of the same benefits
and pension formulas as those she manages.
e. This relationship should change with our next city manager.
Thank you,
Michael Boudreau
1009 Morro Street, Suite 205
San Luis Obispo, CA 93401
(805) 549 -0400
Governor Jerry Brown brought up reform in his .Ian. 201.4 budget proposal for fiscal year 2014-
15, which begins on July 1:
"Future liabilities — to schools, public employees' pensions and retirement health benefits,
infrastructure debt, deferred maintenance, and unemployment insurance — total $355 billion.
These liabilities were built up over decades, and likewise, it will take decades to pay them off. "
City of San Luis Obispo's Annual Salary and Benefits for Department Heads
Updated as of January 2012
Retirement I Insurance
CLASSIFICATION TITLE
NAME
SALARY
PERS
DEFERRED
COMP
HEALTH
INSURANCE
LIFE &
DISABILITY
INSURANCE
CAR OR
UNIFORM
TOTAL
COMPENSATION
City Manager
Katie Lichtig
$221,520
$71,691
$7,753
$11,136
$931
$0
$313,031
City Attorney
Christine Dietrick
$155,012
$50,167
$5,425
$15,060
$931
$3,000
$229,595
Assistant City Manager
Michael Codron
$123,578
$39,994
$2,472
$15,060
$756
$2,832
$184,691
Director of Community Development
Derek Johnson
$142,012
$45,959
$2,840
$15,060
$756
$2,832
$209,460
Director of Finance & Information Technology
Charles Bourbeau
$145,002
$46,927
$2,900
$15,060
$756
$2,832
$213,477
Director of Human Resources
Monica Irons
$139,516
$45,152
$2,790
$9,480
$756
$2,832
$200,526
Director of Parks and Recreation
- Shelly Stanwyck
$139,516
$45,152
$2,790
$15,060
$756
$2,832
$206,106
Director of Public Works
lay Walter
$151,450
$49,014
$3,029
$15,060
$7561
$2,832
$222,141
Director of Utilities
Carrie Mattingly
$154,544
$50,015
$3,091
$11,136
$756
$2,832
$222,374
Fire Chief
Charlie Hines
$148,382
$77,473
$2,968
$11,136
$756
$825
$241,540
Police Chief
Steve Gesell
$157,508
$82,238
$3,150
$15,060
$756
$1,000
$259,712
Vacation accrual based on length of service with the City or agreement.
Health Insurance represents the City contribution to medical, dental, and vision insurance
City owned vehicle and receive a uniform stipend. City Manager opted to eliminate her car
allowance,
April 2014
CA
cc
W
a
32%
32%
32%
32%
32%
32%
32%
32%
32%
52%
52%
Retirement
SALARY
PERS
DEFERRED
COMP
$221,520
$71,691
$7,753
$155,012
$50,1671
$5,425
$123,578
$39,994
$2,472
$142,012
$45,959
$2,840
$145,002
$46,927
$2,900
$139,516
$45,152
$2,790
$139,516
$45,152
$2,790
$151,450
$49,0141
$3,029
$154,544
$50,015
$3,091
$148,382
$77,,473
$2,968
$157,508
$82,2381
$3,150
April 2014
CA
cc
W
a
32%
32%
32%
32%
32%
32%
32%
32%
32%
52%
52%
2012 San Luis Obispo Retirees - over $100,000.00 annual pension
Empiovcc Employer per month per vear 10 vears* 15 vea rs*
Blanke, Daniel R
SLO City
$11,699.08
$140,388.96
$1,403,889.60
$2,105,834.40
Brown, Ronald D
SLO City
$8,535.42
$102,425.04
$1,024,250.40
$1,536,375.60
Crocker, Richard A
SLO City
$8,575.34
$102,904.08
$1,029,040.80
$1,543,561.20
Dunn, Gregg H
SLO City
$8,698.40
$104,380.80
$1,043,808.00
$1,565,712.00
Dunn, John 0
SLO City
$8,768.68
$105,224.16
$1,052,241.60
$1,578,362.40
Gardiner, James M
SLO City
$11,408.66
$136,903.92
$1,369,039.20
$2,053,558.80
Hampian, Kenneth C
SLO City
$12,999.76
$155,997.12
$1,559,971.20
$2,339,956.80
Hazouri, Josef S
SLO City
$9,231.34
$110,776.08
$1,107,760.80
$1,661,641.20
Lesage, Paul
SLO City
$9,138.68
$109,664.16
$1,096,641.60
$1,644,962.40
Mandeville, John H
SLO City
$9,008,64
$108,103.68
$1,081,036.80
$1,621,555.20
Miller, Steven W
SLO City
$8,548.54
$102,582.48
$1,025,824.80
$1,538,737.20
Moss, John E
SLO City
$8,666.81
$104,001.72
$1,040,017.20
$1,560,025.80
Neumann, Robert F
SLO City
$9,058.17
$108,698.04
$1,086,980.40
$1,630,470.60
Rutledge, Robert F
SLO City
$9,866.52
$118,398.24
$1,183,982.40
$1,775,973.60
Statler, William
SLO City
$11,991.01
$143,892.12
$1,438,921.20
$2,158,381.80
Stephenson, Warren
SLO City
$9,916.38
$118,996.56
$1,189,965.60
$1,784,948.40
Tolley, Steve J
SLO City
$10,924.85
$131,098.20
$1,310,982.00
$1,966,473.00
Topham, Barton H
SLO City
$9,292.34
$111,508.08
$1,115,080.80
$1,672,621.20
Zeulner, Thomas D
SLO City
$9,440.91
$113,290.92
$1,132,909.20
$1,699,363.80
* does not include cost of living increases.
Total Sum for 19 People = $185,769.53 $2,229,234,36 $22,292,343.60 $33,438,515.40
[InD:fl 3lxpensiansnrsL cam_ /raluers2iYS2J ?llrst names - . tsaner_- S�muiove [= envrof +5an +tulg *pt�lsu�
Cost of CAL -Pers retirement Plan - Employer and Employee Contribution
City of San Luis Obispo, CA 2013 best estimate
Millions
97 -98 98 -99 99 -00 00 -01 01 -02 02 -03 03 -04 04 -05 05 -06 06 -07 07 -08 08 -09 09 -10 10 -11 11 -12 12 -13
1997 2013
Council Agenda Report — Options for Paying Down Liabilities
Exhibit C
PERS city
PERS Estimated city Estimated
Projected Side Fund Estimated Side Fund Annual
Year Payroll Payment* Payroll Payment ** Difference
2014 -15
11,237,153
1,758,042
8,890,878
1,390,978
$367,064
2015 -16
11,574,268
1,810,794
8,979,787
1,590,500
$220,294
2016 -17
11,921,496
1,865,118
8,822,919
1,744,615
$120,503
2017 -18
12,279,140
1,921,072
8,603,285
1,734,872
$186,200
2018 -19
12,647,515
1,978,704
8,413,384
1,778,545
$200,159
2019 -20
13,026,940
2,038,065
8,188,917
1,828,545
$209,520
2020 -21
13,417,748
2,099,207
7,970,161
1,874,464
$224,743
2021 -22
13,820,281
2,162,183
7,706,052
1,917,889
$244,294
2022 -23
14,234,889
2,227,048
7,388,395
1,945,979
$281,069
2023 -24
14,661,936
2,293,860
7,007,530
1,966,190
$327,670
2024 -25
15,101,794
2,362,676
6,497,767
1,958,591
$404,085
2025 -26
15,554,848
2,433,556
5,952,111
1,948,377
$485,179
2026 -27
16,021,493
2,506,563
5,345,305
1,943,625
$562,938
2027 -28
16,502,138
2,581,759
4,797,707
1,961,571
$620,188
2028 -29
16,997,202
2,659,212
4,197,733
1,968,434
$690,778
2029 -30
17,507,118
2,738,989
3,585,359
1,929,367
$809,622
2030 -31
18,032,332
2,821,158
3,024,286
1,915,848
$905,310
2031 -32
18,573,302
2,905,793
2,453,041
1,873,968
$1,031,825
2032 -33
19,130,501
2,992,967
1,927,480
1,798,020
$1,194,947
2033 -34
19,704,416
3,082,756
1,485,829
1,760,066
$1,322,690
2034 -35
20,295,548
3,175,239
1,118,545
1,736,862
$1,438,377
2035 -36
20,904,415
3,270,496
842,050
1,747,060
$1,523,436
2036 -37
21,531,547
3,368,611
633,902
1,799,472
$1,569,139
$ 58,760,703
$43,490,531
*amount is based on the CaIPERS estimate for payroll which grows 3% under their
assumptions
* * amount is based on the estimated actual payroll costs for the city
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