As Chair of the Debt, Treasury and Retirement Committee for CSMFO, I
have some information I would like to share with you regarding the
Circular Letter just received from PERS regarding cost estimates for
the new 3% at 55 and 3% at 50 options for public safety.
First, by way of reminder, the PERS Board intentionally dangled a
"carrot" to local agencies in order to induce these benefit increases.
This "carrot" comes in the form of a valuation of 95% instead of 90%
of plan assets. The PERS Board knows that a straight unilateral
benefit increase of a 3% retirement plan for public safety would
immediately be considered a State Mandate subject to funding,
therefore, they have to get you to do it "voluntarily". Knowing that
most cities cannot afford such a huge benefit increase, they offer the
valuation "carrot" as a manipulative way of funding the benefit. DO
NOT BE DECEIVED!
Information sent by PERS in the Circular Letter also carries out this
manipulation of true costs. A comparison of existing rates and costs
under a 2% formula to that of a 3% formula WITHOUT THE MANIPULATION OF
PLAN ASSET VALUATION should also have been presented in the Circular
Letter. I contacted Ron Seeling, Chief Actuary about this matter and
he refused to present such a chart. He said the true costs of the
benefit is presented in the tables, "you just have to know where to
look for it". So folks, be warned, you must look at this information
closely.
Avoid the column showing Total employer rate for implementing the new
3% formula. All those 0% costs look pretty good!!! That's just your
city's plan assets paying for the increase. Assets that remain in
your plan if they are not used to fund implementation of a 3%
retirement plan. My advise, dig deep and call PERS with specific
questions, especially Ron Seeling (916)326-3433. If PERS wants to
send out incomplete information or information confusing enough that
the recipient "has to know where to look for it", then they should
expect to receive calls.
As cites, we value our independence but I believe at some point we are
going to have to develop some unified approach to these type of
issues. PERS estimates that within 5 years, the 3% formula will be
the standard in public safety. Why should we let it become the
standard? Shouldn't we as cities make a pledge to each other to not
take this politically crass "carrot" being waived in our face?
Acceptance of 3% public safety retirement plans has a huge ongoing
expense for your city. So when these good times end (and they are
only "good" in certain parts of California), you've still got the
cost. Should not 3% options been coupled with reform in public safety
retirement abuses (i.e. stress disabilities, etc.)?
Have fun and Happy New Year!.
