This week we are seeing increasing tensions facing municipalities and their finances. Employees want raises. Customers do not want price increases. Funders do not want to pony up more. And, retirees want their promised pension and health care benefits paid for.
With four decades of Democratic control of the state’s Legislature, we’ve seen the public employee unions involved in who is elected to serve in Sacramento and on school boards. Keeping pension plan contributions artificially low, paying for retiree medical on a pay-as-you-go-basis, and giving raises that only worsen the situation, public employee unions have finally painted themselves into the proverbial corner.
My editorial below provides a review of this Gordian knot. Something is going to snap and our Democrat-controlled state needs to be put on notice. They have allowed this tension to build and they now have to provide the leadership to fix it. Not an easy task, but a necessary one. It’s the first piece below in Fox & Hounds.
The second piece below is my next set of rankings, this time for the 72 California Community College Districts. It is not a pretty picture. Only one district has a positive unrestricted net position (UNP). Fortunately, it is partially in my 37th Senatorial District. Coast finds itself in 49th place and Rancho Santiago in 52nd. The population numbers, whose total falls far short of the state’s total population, were provided by the California Community College Chancellor’s office. (Population is used to be consistent with the previous UNP calculations for California’s cities and counties and for the 50 states.)
If you’re asking how the California State University system is doing, here’s the most recent update:
The third piece below is from the Agoura Acorn. It shows that my ranking of the 482 cities is being noticed (see MOORLACH UPDATE — City CAFR Rankings, Vol. 10 — February 27, 2018). City managers and their staff members, city council members and the voters all need to work together to develop strategic financial plans to bring their balance sheets back to a healthy position. Those that have been good stewards deserve the right to give themselves a pat on the back.
By Senator John MoorlachCalifornia State Senate, 37th District
I get the impression the University of California workers who went on strike May 7 don’t know the half of the financial problems of which the UC system suffers.
According to the Los Angeles Times, more than 20,000 members of the American Federation of State, County and Municipal Employees “walked off their jobs,” including “custodians, gardeners, cooks, truck drivers, lab technicians and nurse aides.”
Among other things, the union is demanding “a multiyear contract with annual pay raises of 6 percent, no increase in healthcare premiums and continued full pension benefits at the retirement age of 60.” UC countered with 3 percent annual raises for four years, raising the retirement age “to 65 for new employees who choose a pension instead of a 401(k) plan” and $25 a month in increased health-care premiums.
The AFSCME strikers were joined Tuesday by 14,000 members of the California Nurses Association and 15,000 members of the University Professional & Technical Employees, such as pharmacists and physical therapists. That forced the rescheduling of “more than 12,000 surgeries, cancer treatments and appointments.”
I guess the Hippocratic Oath’s pledge to “First, do no harm,” isn’t so important these days. And because this is a government-run system, the strike may be a strong warning against single-payer and other proposed socialized medicine schemes. In the private sector, if one part goes on strike, you can turn to another part. But when government goes on strike, you’re stuck, perhaps even getting a date with the Grim Reaper.
One worker was quoted lamenting “her pay increases over two decades at UCLA have not kept up with rising rent.” Of course, that’s a complaint almost all California renters could make because the Legislature and recent governors have refused to adequately address the causes for the state’s low housing supply. Blame also goes to AFSCME and the other public employee unions who keep financing the campaigns of legislators who refuse to solve the state’s pressing problems, while doing the unions’ bidding on pay and other issues.
But the UC strikers do have a point that the system’s finances are not in good shape. Let me add a few more concerns to their litany of problems.
First, according to Gov. Jerry Brown’s January budget proposal, p.13, UC system retirement liabilities amount to $10.9 billion for pensions and $19.3 billion for health care – $30.2 billion total.
Second, from the UC system’s 2017 Comprehensive Annual Financial Report, p. 36, the unrestricted net deficit is $19.3 billion. The U.C. system is upside down by nearly $20 billion! If the retiree health liability were added, it would double the deficit. Such is the joy of making financial promises that come due in the future.
Third, the Democratic-controlled state Legislature continues to reduce state funding of the UC system. Their fiscal priority is endorsed by Gov. Brown.
Fourth, as the Los Angeles Times reported in 2015, the UC system now employs more administrators than professors: “The number of those making at least $500,000 annually grew by 14percent in the last year, to 445, and the system’s administrative ranks have swelled by 60 percent over the last decade – far outpacing tenure-track faculty.” As of that year, the system employed 10,539 administrators to 8,899 profs. Does anyone think a private-sector company could survive with more executives than production workers?
Tragically, these same administrators refuse to provide a 10-year strategic financial plan to provide a road map out of their fiscal morass.
And just a year ago, an audit by State Auditor Elaine M. Howle revealed severe financial mismanagement by UC President Janet Napolitano, including, “The Office of the President accumulated more than $175 million in restricted and discretionary reserves that it failed to disclose to the regents and created undisclosed budgets to spend those reserve funds.”
Fifth, this combined financial mismanagement obviously has increased tuition. Although an increase was avoided this year, the current resident tuition is $11,502, compared to just $2,896 in 1998. That’s a 297 percent increase in 20 years. By contrast, the Bureau of Labor Statistics’ CPI Inflation Calculator clocks overall price increases during that time at just 116 percent. Put another way, UC tuition increased at almost three times the inflation rate.
There are numerous tensions impacting the UC System. A defined-benefit pension plan prevents pay raises, as does the inability to constantly raise tuition. The solution resides with the state’s Democratic governor and Legislature.
More than 40 years of Democratic control have created this Gordian knot and something will snap soon. Perhaps the unions should realize the mess they have helped create. And voters should do the same.
|Rank||District||2017 UNP||2017 District Population||UNP/Capita|
|1||South Orange County||$83,186,942||591,081||$141|
|3||Mt. San Jacinto||($26,107,605)||544,193||($48)|
|22||North Orange County||($101,654,778)||613,254||($166)|
|33||San Joaquin Delta||($101,561,796)||487,504||($208)|
|36||San Luis Obispo||($40,940,406)||185,523||($221)|
|54||Mt. San Antonio||($176,761,054)||494,640||($357)|
Goals set for Agoura
By Stephanie Bertholdo, — sbertholdo
Council members, managers and personnel from all departments of the City of Agoura Hills met last week to outline achievements reached this past year and upcoming goals.
The city took a broader look at goals for the first time, discussing projects, budgets and priorities for two years instead of one.
City Manager Greg Ramirez kicked off the meeting with news that Agoura Hills ranked 35 out of 482 cities for “fiscal soundness” in a study commissioned by state Sen. John Moorlach (R-Costa Mesa).
The two-year budget review demonstrated the Agoura’s fiscal focus. Ramirez said the city’s budget is projected to be balanced this year and next.
Two new hotels are planned for Agoura Hills, which will add more revenue to the city’s coffers. The general fund revenue, Ramirez said, is on the uptick; Expenses are going up also, but slightly less so.
Several people attended the meeting to praise officials for contributing city funds to help pave Fairview Place, a private road in Old Agoura. A group of neighbors in the area chipped in money to repair the road, but they didn’t have enough funds to complete the project.
Ramiro Adeva, director of public works, said the midsection of the rural road off Fairview Place and Chesebro Road was in bad shape. While cities generally won’t spend public money on private projects, he said, there was a public benefit in helping with the project. Fairview Place provides an emergency exit out of Old Agoura. If a mass evacuation was needed, the road could have damaged cars, slowed traffic and created a dangerous situation for residents and first responders.
Adeva said Fairview Place is also used as part of the route for the annual Great Race 10K. Keeping runners safe is an additional public benefit, he said.
The city paid for about 300 feet of pavement for the road. The cost was estimated at $50,000, which was included in the overlay budget.
Old Agoura resident George Colman thanked the city for the help.
“It wasn’t in our ability to fund (completely),” he said.
Mayor Bill Koehler said the newly paved road would be beneficial on many fronts. Dan Halprin, an Old Agoura resident who organized the road improvement with his neighbors, was thanked by the council.
Other goals discussed at the meeting included the construction of Old Agoura Bridge, which, when completed, will provide a walkway connection to Old Agoura Park. The crosswalk will be moved and a prefabricated bridge will be installed, Adeva said.
The project will cost about $186,000 and will be paid for through community development grants. Construction will begin in May and June, and the project is estimated to be completed by July.
Water quality was also discussed. New laws will require the city to pay for a water treatment plant and a low-flow diversion project. Stormwater that flows down the Lindero Creek channel will be pretreated, and large debris like branches and rocks will be removed before the water lands at the treatment plant, Adeva said. Phase two, he said, will see the transformation of the concrete channel into a natural wetland area.
Adeva said the treatment plant-wetland area will offer an educational component to science classes offered in Las Virgenes Unified School District. The cost for the projects is estimated at $10.6 million, and half of the cost will come from a matching grant program.
Landscape beautification of Reyes Adobe Road is underway. Adeva said the project is now under state review, and bids will open by July. The project will include the planting of 60 new oak trees.
Adeva said private property owners have agreed to allow the city to removed diseased oleander trees from their properties; also, recycled water will be used on properties that face a main arterial road.
A new park is being planned for the city. Agoura Village Park, now in the concept phase of planning, will be built over a flood channel on Cornell Road. Pedestrian and bike trails are planned for the area, and equestrian use will be maintained via the Zuma trail.
The project, Adeva said, will benefit the city in many ways: water quality will be improved, and the park will add beauty to the area.
Surrounding businesses, he said, have agreed to partner with the city on the project, which, when completed, will offer educational opportunities as well as community activities.
Other projects discussed at the meeting included the remodeling of park restrooms throughout the city and the addition of charging stations for electric vehicles at the Agoura Hills Recreation and Event Center.
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