MOORLACH UPDATE — City CAFR Rankings – Vol. 4 — February 12, 2018

Today’s Volume 4 provides the cities ranked between #350 and #301. It includes the Orange County cities of Placentia (#349), Westminster (#346), Garden Grove (#330), Los Alamitos (#328), La Habra (#315), and Buena Park (#302). This brings us up to 12 out of the 34 OC cities that are in the bottom 182.

This group of 50 represents about 7 percent of the state’s population, bringing us to about 52 percent of Californians residing in the bottom 38 percent of cities. See the chart below.

For the first three volumes, go to:

MOORLACH UPDATE — City CAFR Rankings – Vol. 1 – February 7, 2018
MOORLACH UPDATE — City CAFR Rankings – Vol. 2 — February 8, 2018
MOORLACH UPDATE — City CAFR Rankings – Vol. 3 — February 10, 2018

Last year I proposed eight measures addressing public employee defined benefit pension plans. The deadline to submit bills for the 2018 Session is this Friday. Last week I introduced Senate Bill 1031, which addresses pension plan cost-of-living adjustments. We started this discussion last fall (see MOORLACH UPDATE — Rising Tide — October 5, 2017).

I have recommended this modification for many years, including when I served as a County Supervisor. It’s this simple: If the pension system is not at least 80 percent funded, then cost-of-living adjustments, also known as COLAs, should be put on hold for retirees.

California’s taxpayers are contributing more every year to public employee pension systems. Public employees are paying more out of their biweekly paychecks. But, retirees are not making any sacrifices, while they have the most at risk if the system becomes fiscally unsustainable. Consequently, prospectively, COLAs should be put on hold until the pension plan is in better fiscal shape.

How did we get here? For a math lesson as to why pension systems are demanding higher contributions, see MOORLACH UPDATE — Straight Talk Magazine — March 30, 2011. It’s a great tutorial on how this mess came to be in California.

May I also introduce some of you the the “Rule of 72”? Here is how Investopedia explains it (https://www.investopedia.com/ask/answers/what-is-the-rule-72/):
The “Rule of 72” is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself.

If retirees receive a 3 percent COLA, then their initial retirement benefits will double in 24 years. Using the example in the Straight Talk Magazine UPDATE, if a city police officer retires at the age of 50, after 25 years of service, and is making $100,000 in his final year, the annual retirement benefit will be $75,000 with the current “3% @ 50” formula. An annual 3 percent COLA means that at age 74 (in 24 years), the retiree will be receiving $150,000 per year. And this retiree also had 15 years of additional earning power, between the ages of 51 and 65. I would suggest that this individual will not go insolvent if the COLA is put on hold for a brief period of time.

Cities are looking for some relief. Temporarily prohibiting COLAs by poorly funded pension plans will assist in keeping the unfunded actuarial accrued liability from ballooning. It will be one more tool in the tool box to assist with the pension crisis. And, it means that all impacted parties are working to assure the promised retirement benefits.

Rank City Population UNP UNP Per Year of
(Thousands) Capita CAFR
350 Concord 128,370 ($75,116) ($585) 2017
349 Placentia 52,268 ($30,490) ($583) 2016
348 Daly City 109,287 ($62,902) ($576) 2017
347 Willits 4,928 ($2,830) ($574) 2016
346 Westminster 93,533 ($52,892) ($565) 2017
345 Manteca 76,247 ($42,550) ($558) 2016
344 Davis 68,740 ($38,119) ($555) 2016
343 Santa Paula 30,654 ($16,936) ($552) 2016
342 Fairfax 7,571 ($4,179) ($552) 2016
341 Morro Bay 10,762 ($5,767) ($536) 2016
340 Pleasant Hill 34,657 ($18,511) ($534) 2016
339 Indio 88,718 ($45,879) ($517) 2017
338 La Verne 33,174 ($17,093) ($515) 2016
337 Napa 80,628 ($41,524) ($515) 2016
336 Sutter Creek 2,582 ($1,320) ($511) 2015
335 Lynwood 71,997 ($36,107) ($502) 2016
334 San Marino 13,467 ($6,745) ($501) 2016
333 Folsom 78,525 ($39,220) ($499) 2016
332 Clovis 110,762 ($54,927) ($496) 2017
331 Desert Hot Springs 29,111 ($14,320) ($492) 2017
330 Garden Grove 176,277 ($86,632) ($491) 2017
329 Rialto 106,528 ($51,934) ($488) 2016
328 Los Alamitos 11,739 ($5,717) ($487) 2017
327 National City 61,210 ($29,694) ($485) 2016
326 Beaumont 46,179 ($22,231) ($481) 2016
325 Pittsburg 69,818 ($33,348) ($478) 2017
324 Red Bluff 14,070 ($6,672) ($474) 2017
323 South Pasadena 25,992 ($12,261) ($472) 2016
322 Fairfield 114,157 ($53,391) ($468) 2017
321 Sebastopol 7,579 ($3,525) ($465) 2016
320 Paradise 25,841 ($12,005) ($465) 2016
319 Manhattan Beach 35,488 ($16,091) ($453) 2016
318 Del Mar 4,297 ($1,945) ($453) 2017
317 Lincoln 48,165 ($21,707) ($451) 2016
316 Gilroy 55,936 ($25,032) ($448) 2016
315 La Habra 62,084 ($27,711) ($446) 2016
314 Novato 54,522 ($24,236) ($445) 2017
313 Ridgecrest 28,349 ($12,569) ($443) 2017
312 Alturas 2,660 ($1,120) ($421) 2016
311 Simi Valley 127,309 ($52,860) ($415) 2016
310 South Gate 98,633 ($40,323) ($409) 2016
309 Milpitas 75,410 ($30,591) ($406) 2017
308 Brawley 26,928 ($10,866) ($404) 2016
307 Union City 73,452 ($28,777) ($392) 2017
306 Guadalupe 7,414 ($2,885) ($389) 2016
305 Victorville 123,565 ($47,007) ($380) 2016
304 Oroville 18,037 ($6,858) ($380) 2016
303 Suisun City 29,295 ($10,521) ($359) 2015
302 Buena Park 83,884 ($29,221) ($348) 2017
301 Turlock 72,879 ($25,383) ($348) 2016

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