Union Leaders Start New Organization to ‘Combat Income Inequality’

public sector pension unionWe live in strange times where we have organized labor leaders telling us with straight faces that they are against “income inequality.” But the truth, of course, is that many union bosses believe they are far more equal than the people who pay their salaries.

Launched last month, The Progressive Agenda to Combat Income Equality claims that “income inequality is the crisis of our time, and we need bold, progressive solutions to address it.” The new coalition boasts a gaggle of actors (including Susan Sarandon, Danny Glover), politicos (NYC Mayor Bill de Blasio, CA Congresswoman Barbara Lee, professional agitators (Van Jones, Al Sharpton) and national union leaders. Included in the latter camp are teacher union presidents Randi Weingarten and Lily Eskelsen García, AFL-CIO boss Richard Trumka and Leo Gerard, president of the United Steelworkers.

I can’t remember when such a large contingency of limousine lefties have jumped on a bandwagon that so dramatically reveals their raving hypocrisy. For example, Susan Sarandon, who has pulled in as much as $5 million for acting in a film, is worth about $50 millionaccording to Forbes. I wonder how much she shared with the grippes, the gaffers and the gofers who work on her films and earn pennies on the dollar compared to her.

But Sarandon has nothing on union bosses. As NRO’s Jim Geraghty points out:

  • American Federation of State, County and Municipal Employees’ international president, Gerald McEntee, had a gross salary of $1,020,751 in 2012.
  • James Callahan, president of the International Union of Operating Engineers, reported a gross salary of $352,101 in 2012.
  • Edwin Hill, international president of the International Brotherhood of Electrical Workers, made $326,253 in gross salary in 2012.

Richard Trumka is no better. In 2013, he made over $298,000 and Arlene Holt-Baker earned $368,000 as his executive vice-president. But as this graphic shows, many AFL-CIO members earn under $50,000 a year. In fact, Geraghty writes, the average union member makes $49,400 yearly, a far cry from what the union elites rake in.

And now for the teachers unions …

The ongoing “social justice” meme of the teacher union leaders is that corporate bosses are greedy swine who make too much money compared to their workers. That’s what the honchos say about others, but what do they do?

According to the National Center for Education Statistics, the average teacher pay in the U.S. is$56,383 per year. However, in his last year as NEA president, Dennis Van Roekel hauled in$541,632 – almost 10 times what a teacher makes. American Federation of Teachers president Randi Weingarten made $543,679 as reported in her union’s most recent tax filing. (It’s interesting how their salaries rise even as their unions lose thousands of members.) But corporate CEOs – allegedly the fat cats – make $178,400 yearly, just five times that of the average worker. And while there are some CEOs whose income is at a greater multiple than 5:1, that typically occurs only at the very biggest firms. As Robert Samuelson recently wrote,

“Pay at the most productive companies rose much faster than average, but ‘within a given firm, wage inequality increased little,’ says University of Minnesota economist Fatih Guvenen….. There are 6 million U.S. businesses, he notes. What’s true of a few thousand huge firms doesn’t describe highly successful small and midsize companies.”

In the Golden State, as per its latest tax filing, the California Teacher Association executives weren’t exactly driven by income equality. Executive director Carolyn Doggett managed to bring in over $407,000 and her assistant James Thrasher over $500,000, while President Dean Vogel garnered $277,000 in total compensation. And for the record, the average teacher in California makes $69,000 a year. Hmm. Doesn’t sound very income-equitable to me.

It’s quite clear that The Progressive Agenda to Combat Income Equality is a group that will not live by its own credo. In George Orwell’s Animal Farm, an allegory of Stalinist Russia, the pigs are in charge. Their arrogant hypocrisy is epitomized by the phrase, “All animals are equal, but some animals are more equal than others.” Were a 2015 version to be written, Sarandon, Trumka, Weingarten et al could replace the pigs.

Larry Sand, a former classroom teacher, is the president of the non-profit California Teachers Empowerment Network – a non-partisan, non-political group dedicated to providing teachers and the general public with reliable and balanced information about professional affiliations and positions on educational issues. The views presented here are strictly his own.

Beware the Almond Famine

almond famine

San Bernardino exit plan cuts some pension costs

public employee union pensionA San Bernardino plan to exit bankruptcy follows the path of the Vallejo and Stockton exit plans, cutting bond debt and retiree health care but not pensions. Then it veers off in a new direction: contracting for fire, waste management and other services.

The contract services are expected to reduce city pension costs. Other pension savings come from a sharp increase in employee payments toward pensions and from a payment of only 1 percent on a $50 million bond issued in 2005 to cover pensions costs.

Last week, a member of the city council had a question as a long-delayed “plan of adjustment” to exit the bankruptcy, declared in August 2012, was approved on a 6-to-1 vote, meeting a May 30 deadline imposed by a federal judge.

“The justification from what I’m understanding from the plan — the justification for contracting is more or less to save the city from the pension obligation. Is that correct?” said Councilman Henry Nickel.

One of the slides outlining the summary of the recovery plan said: “CalPERS costs continue to escalate, making in-house service provision for certain functions unsustainable.”

The city manager, Allen Parker, told Nickel “that’s part of it” but not the “entirety.”

In addition to pension savings, he said, contracting with a private firm for refuse collection now handled through a special fund is expected to yield a “$5 million payment up front” into the deficit-ridden city general fund.

Parker said the California Public Employees Retirement System safety rate for firefighters is between 45 and 55 percent of base pay. “So if you have a fireman making say $100,000 a year, there is another $50,000 a year that goes to CalPERS,” he said.

An actuary estimated that contracting for fire services could save the city $2 million a year in pension costs, Parker said. The city expects total savings of $7 million or more a year, similar to a Santa Ana contract with the Orange County Fire Authority.

Unlike other unions, firefighters have not voluntarily agreed to help the struggling city by taking a 10 percent pay cut and foregoing merit increases. The cost of firefighter overtime has averaged $6.5 million in recent years.

After the court allowed the city to overturn a firefighter contract requiring “constant manning” last year, the city expected reduced staffing during off-hours. But overtime has not decreased, wiping out anticipated savings of $2.5 million this year.

Negotiations with the firefighters are difficult, Parker said, and their union has filed several lawsuits. He said the situation is “out of hand” and “can’t be contained,” part of the reason for the plan to contract for fire services.

The city expects fire service bids from San Bernardino County and others. A private firm, Centerra, has shown interest. Councilman Nickel said a legislator called about contracting with a private firm, suggesting “concern at the state level.”

Parker said a contract with a private firm would need a mutual aid agreement with neighboring government fire services. He said a San Manuel private fire service has been accepted by a fire chiefs association that manages the regional agreements.

Contracting for police services is not planned. Parker said the “one possible agency,” the San Bernardino County Sheriff‘s Department, made a $60 million proposal in 2012, reaffirmed last year, that would not yield city savings.

Fire and waste management are the biggest opportunities for savings and revenue among 15 options for contracting city services listed in the recovery plan summary. City employees are expected to be rehired by contractors.

Estimated annual savings are listed for contracting five other services: business licenses $650,000 to $900,000, fleet maintenance $400,000, soccer complex management $240,000 to $320,000, custodial $150,000, and graffiti abatement $132,600.

San Bernardino plan to return to solvency

In the 1960s, San Bernardino was the “epitome of middle-class living,” said the plan summary, and then a “profound and continuous decline” turned it into the poorest California city of its size (214,000).

Median San Bernardino household income was at the California average in 1969, an inflation-adjusted $54,999, before steadily falling by 2013 to $38,385, well below the state average of $61,094.

Financial trouble began before the recession. A unique form of government created “crippling ambiguities” of authority among the city manager, mayor, council and elected city attorney, leaving no one clearly in charge as the city slowly sank.

When the reckoning finally came in 2012, San Bernardino faced an $18 million cash shortfall and an inability to make payroll. After an emergency bankruptcy filing, the city became the first to skip its annual payments to CalPERS.

Now the skipped payment of $14.5 million is being repaid over two fiscal years with equal installments of about $7.2 million. The recovery plan also said with no elaboration: “FY 2019-20: $400,000 annually in penalties and interest.”

Replying to Nickel last week, the city manager explained why, if most employees are to be replaced by contract services, the plan does not propose to cut CalPERS debt. The city’s pensions have an “unfunded liability” of $285 million and are 74 percent funded.

Parker said the plan protects pension amounts already earned by city employees, even with a new employer, and like the Stockton and Vallejo plans reflects the view that pensions are needed to compete with other government employers in the job market.

“We naively thought we could negotiate more successfully, but that didn’t necessarily happen,” Parker said of mediation with CalPERS. An early plan called for a “fresh start” stretching out pension payments, yielding small savings in the first years.

And like Vallejo but not Stockton, which said from the outset it did not want to cut pensions, Parker said there was fear of a costly and lengthy legal battle with deep-pocketed CalPERS, possibly all the way to the U.S. Supreme Court.

One of the unique provisions in the San Bernardino city charter, which voters declined to overturn last year, bases police and firefighter pay on the average safety pay in 10 other cities, not labor bargaining.

Despite that link, police and firefighter compensation is said to be 8 to 10 percent below market because of low benefits. The bankrupt city stopped paying the employee CalPERS share and raised police and firefighters rates to 14 percent of pay.

Higher pension contributions from employees saved the city about $8 million last fiscal year, the plan said. Retiree health payments were reduced from a maximum of $450 per month to $112 per month, saving $213,750 last year.

“The filing of the plan is only the beginning of a long and very difficult process regarding confirmation and continued litigation with some of our creditors,” the city attorney, Gary Saenz, told the city council last week.

Berdoo

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Calpensions.com.

Audit of L.A. ‘training institutes’ reveals abuse of ratepayer dollars

Photo courtesy of 401(K) 2013, Flickr

Photo courtesy of 401(K) 2013, Flickr

Ratepayers are mad as hell after Controller Ron Galperin’s financial audit of the Joint Safety and Training Institutes revealed that we have been ripped off by IBEW union boss Brian D’Arcy for tens of millions of dollars. This audit revealed bloated salaries, credit card and expense account abuse, prohibited payments to DWP employees to conduct training sessions, and no bid contracts totaling millions.

The City Administrative Officer’s performance and operational evaluation revealed an inefficient organization without adequate management, oversight, controls, policies, and procedures.  As a result, the CAO’s report outlined 36 recommendations, all of which have been agreed to by DWP and the IBEW.  This includes appointing an executive director and developing a plan for a money saving merger of the institutes.

The CAO’s report indicated that the Institutes provided some value, including servicing as a catalyst and focal point for training and safety and an incubator for “researching, developing and implementing programs relatively quickly to address specific issues or concerns.”

Because of the lack of adequate controls and performance metrics, there is no way to determine how much bang for the buck the ratepayers received for their $20 million that was funneled to the two nonprofit trusts over the last five years.

We have a right to be mad as hell as the Joint Safety and Training Institutes have squandered over $40 million of ratepayer dollars over the last 15 years without any accountability.  But our wrath should not be directed at DWP and its management, but rather at the city council which has provided air cover for IBEW union boss D’Arcy and his shenanigans.  But this is not surprising as at least ten members of the city council have received campaign contributions from the IBEW and its cronies. The other members are whipped into shape because they fear that D’Arcy will use the IBEW slush funds to finance the election campaigns of their opponents.

This kowtowing to D’Arcy was evident in the delays leading up to the release of Galperin’s audit.  It took over a year from the Los Angeles Times front page expose in September of 2013 for the city council to approve a limited five year audit of the trusts, and another six months before the financial review was completed.  This included a two month delay because D’Arcy was concerned that the audit was too comprehensive.

Furthermore, previous general managers and other senior members of management were told by then-Mayor Villaraigosa and selected members of the city council that the Joint Safety and Training Institutes were off bounds and none of their business.

Rather than bury the reports of the controller and the city administrative officer, the city council and the Energy and Environment Committee, led by D’Arcy acolytes Wesson and Fuentes, respectively, should hold comprehensive, open and transparent hearings so that ratepayers and voters can develop a better understanding of what happened to the ratepayer money that was funneled to the trusts over the last five years.

The trusts would need demonstrate that they are efficient and why they should not be shuttered, especially given that the department spends over $100 million a year on safety and training.

The trusts would also be required to discuss the timetable for implementing the 36 recommendations that IBEW and DWP have approved.

Ratepayers deserve a full accounting of what happened to their $40 million that was laundered by the Joint Safety and Training Institutes.  Without a full disclosure, the Mad as Hell Ratepayers will vent their fury November 2016, when the city, LAUSD, the county and the state want us to approve massive increases in our taxes.

(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee, The Ratepayer Advocate for the Greater Wilshire Neighborhood Council, and a Neighborhood Council Budget Advocate. Humphreville is the publisher of the Recycler Classifieds — www.recycler.com. He can be reached at:  lajack@gmail.com

Schools want spotlight on huge CalSTRS rate hike

class teacher education schoolThe push back from schools hit with a huge CalSTRS rate increase, expected to be an additional $3.7 billion a year when fully phased in, is not that it’s unaffordable and will hurt students or unfairly lets the state and teachers off the hook.

Instead, a coalition of school districts, including the giant Los Angeles Unified School District, is proposing a separate budget item for the CalSTRS rate increase within the Proposition 98 school-funding guarantee.

The change would not require the state to spend more money on schools. But the coalition thinks a separate budget item could ensure that funding for the CalSTRS rate increase, as it’s phased in over seven years, “will grow at a predictable rate” for all school districts.

As it stands now, school districts would have to pay for the CalSTRS rate increase with money from a new K-12 funding plan adopted two years ago, the Local Control Funding Formula.

The big bite for CalSTRS would be obscured among other funds, the coalition fears, and the new funding plan’s goals of restoring funding to the pre-recession 2007-8 level and providing more money for targeted schools could be disrupted and delayed.

“The requirement of schools to fund these increased (CalSTRS) contributions within the LCFF undermines the goals and the promise of increased services for students in California,” the coalition said in a statement last December.

“Addressing this important funding issue up front will keep the goals and objectives of the LCFF intact, and is essential to ensuring students are served as envisioned.”

Since December the coalition membership has grown to 160 school districts, and legislators and the Brown administration have been told of the proposal, Scott Patterson, Grossmont Union High School District deputy superintendent, said last week.

A potential issue is whether the California State Teachers Retirement System rate increase could create winners and losers among school districts.

The new funding formula gives extra money to targeted schools with large numbers of students who are English language learners, recipients of subsidized meals, and from foster homes.

If there is no separate budget item, a district that gets mainly the base grant might have much of its Proposition 98 increase eaten up as the CalSTRS rate increase is phased in. But a district that gets additional targeted money could still get a substantial increase.

STRS pension costs are based on the number of teachers, which tends to be proportionate to total student enrollment. Extra money for targeted schools under the new funding formula is based on a different factor, student demographics.

Patterson said the coalition believes its proposal for a separate state budget item “would help alleviate” the creation of winners and losers as the CalSTRS rate increase is phased in.

The coalition knows of no active opposition to its proposal among schools or community colleges, he said, and the powerful California Teachers Association has not taken a position.

Rate increase projected to get CalSTRS to full funding

The Brown administration had no comment on the coalition proposal last week. Gov. Brown is expected to issue the “May revise” this week, an update of his January proposal for a new state budget for the fiscal year beginning July 1.

The state could have a surplus of several billion dollars, though much of the tax revenue surge may be temporary. It’s a windfall for schools, possibly too much for lawmakers who want to restore funding for other programs cut during the recession.

“Surprisingly perhaps, these revenue trends pose a risk for the state budget mainly because higher revenues in 2014-15 boost ongoing spending on schools and community colleges under Proposition 98, potentially making it harder for the state to balance its budget in 2015-16 and beyond,” the Legislative Analyst’s Office said last month.

The timing is remarkable for CalSTRS, which unlike most California public pension funds lacks the power to raise employer pension rates, needing legislation instead. Lawmakers ignored CalSTRS pleas for a rate increase for nearly a decade.

Now the big rate increase finally approved last year begins to phase in amid an incoming tide of school funding, arguably making it more difficult for the coalition to catch the ear of lawmakers because there is no squeaking wheel.

If the coalition is not successful this year, the issue may heat up before the CalSTRS rate increase is fully phased in by 2020.

The coalition expects CalSTRS costs for the average unified school district to increase from 3.8 percent of the budget to nearly 9 percent over the seven years. Districts also have another big pension cost for non-teaching employees in CalPERS.

In the new fiscal year, the coalition expects the CalSTRS rate increase to increase school costs by an estimated $430 million and then to escalate, step by step, to an additional $3.7 billion a year by 2020.

“We want to be careful in expressing that we are not opposed to the increased CalSTRS contributions that are necessary to help put the program back on sound financial footing,” said Patterson.

A big rate increase is sorely needed. A new actuarial report last month shows that CalSTRS as of last June 30 had 68.5 percent of the projected assets needed to pay future pension obligations. The debt or unfunded liability was $72.7 billion.

The total contribution to CalSTRS from schools, teachers and the state last fiscal year was $5.7 billion, about half of what CalSTRS paid out during the year for pensions and death and survivor benefits, $11.7 billion.

The CalSTRS investment fund, expected to pay roughly two-thirds of future pension costs, was $180 billion in 2007, dropped to $112 billion in 2009, and was only back up to $191 billion last March 31, despite a major six-year bull market.

Before the increase last year, the CalSTRS contribution rates for schools and other employers (8.25 percent of pay) and teachers (8 percent) were similar. Now the schools rate will more than double to 19.1 percent of pay by 2020.

The rate for most teachers goes up about a quarter, reaching 10.25 percent of pay next year. The increase is regarded as a violation of “vested rights” only allowed if offset by a new benefit that, in this case, is guaranteeing a 2 percent cost-of-living adjustment.

The state contribution to CalSTRS, which had been a combined total of 5.5 percent of pay to two separate funds, tops out after three steps at 8.8 percent in July of next year.

When a soaring stock market briefly pushed the CalSTRS funding level above 100 percent in the late 1990s, a half dozen measures increased pension benefits and cut contribution rates.

A Milliman actuarial report two years ago said if CalSTRS were still operating under its 1990 structure, pensions would have been 88 percent funded instead of 67 percent — a gap that could have been closed with a much smaller rate increase.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Calpensions.com.

6 things to know as state proposes tougher vaccine rules for children

From OC Register:

Moms who turned out last week to hear vaccine critic Andrew Wakefield speak in Dana Point said the debate over whether to inoculate their children has become so divisive it’s severing friendships.

“The ‘V’ word, man, it’s a hot topic,” said Dotty “Sunshine” Hagmier, founder of local moms group Moms In Charge.

(Read Full Article)vaccine2

Innovation or insanity? Californians’ ideas for busting the drought

From LA Times:

Last month, after Gov. Jerry Brown ordered Californians to cut back their water use, a retired engineering professor in Carmel revived a decades-old proposal for easing the drought: icebergs

He wrote to officials urging them to consider towing giant hunks of ice across the ocean to California, a fantastical concept that has never quite gained steam.

(Read Full Article)Drought

Undocumented students disrupt Janet Napolitano’s speech at UC summit

From SJ Mercury News:

The University of California’s national summit on undocumented students started going sideways seconds after UC President Janet Napolitano stepped to the podium to make her opening remarks Thursday morning.

As Napolitano greeted 260 attendees from across the nation who came to share ideas on admitting, retaining and supporting students who lack legal immigration status, dozens of undocumented students around the room suddenly stood and raised their fists in the air.

(Read Full Article)Janet Napolitano

Union-led coalition launches campaign to change Prop. 13

From Sac Bee:

A coalition of public employee unions and other liberal groups, including many churches, launched a campaign Thursday to alter Proposition 13, California’s iconic property tax limit, and raise billions of dollars by hiking taxes on commercial property.

The organization, Make It Fair, is headed by unions, including the California Teachers Association and the Service Employees International Union, which would be the main source of millions of dollars to qualify the initiative for the 2016 ballot and campaign for its passage.

CA Politicians Reach Into Transportation Funds, Ignore Crumbling Infrastructure

california roads infrastructureNow there is no question that road and bridge maintenance is lagging in the Golden State. Most counties have an average pavement rating of “at risk” or “poor” according to a finding by the California Transportation Commission. In addition to the safety hazards caused by poor road maintenance, there is a direct cost to the average California driver of hundreds of dollars for vehicle maintenance and tire wear.

Before assuming that that the Sacramento politicians are justified in seeking to dig deeper into drivers’ wallets, it is important to point out that billions in transportation tax dollars have been spent on other programs. State government has been diverting a billion dollars a year in annual truck weight fees to pay debt service on general obligation bonds and another $100 million annually in gas tax revenues to the general fund.

Now, in theory, all transportation tax revenues are to go for transportation purposes. Voters have passed several propositions they were assured would guarantee this result.

However, Sacramento has used slight-of-hand to divert these revenues. For example, after voters approved $20 billion in transportation bonds in 2006, bonds that were to be repaid from the general fund, officials later decided to use transportation tax revenue for bond repayment, freeing up general fund revenue for other purposes.

Some will argue that it is appropriate that transportation taxes repay transportation bonds, but voters were lead to believe the money would come from the general fund. When the state passes school bonds, they are repaid from the general fund.  When water bonds are passed, they too are repaid by the general fund. There is no reason transportation bonds should be different. By using transportation tax revenue to pay off bonds, there is not enough money left to maintain the improvements the bonds pay for.

Senate Republican Leader Bob Huff has a better idea that will slap the hands of those who have been reaching into the transportation tax cookie jar and diverting funds from road and bridge maintenance. Huff’s legislation, Senate Constitutional Amendment 7, would close the loopholes and stop this theft of transportation dollars. SCA 7 is the only plan in the Legislature that would provide funds to improve state roads and highways without raising taxes.

However don’t look for quick or easy passage of SCA 7. Its flaw? It does not require a tax increase and for the majority party in Sacramento, which is obsessed with extracting more money from taxpayers, this flaw is likely to be fatal.

It is hard to blame California drivers if they feel a like a lot like the late comedian Rodney Dangerfield who would complain, “I don’t get no respect.”

Jon Coupal is president of the Howard Jarvis Taxpayers Association. Originally posted on HJTA.