SLT revamping upper management compensation
By Kathryn Reed
While the 2017-18 budget is on Tuesday’s South Lake Tahoe council docket, an item tucked on the consent agenda may be the bigger news. Employees not represented by a union are voluntarily rejiggering how they get paid in an effort to save the city money and provide themselves with a cushion if CalPERS implodes.
City Manager Nancy Kerry earlier this summer was the first city employee to go down this road.
At the Sept. 5 meeting if the electeds OK the plan, the compensation changes will affect all unrepresented employees, which includes the fire chief, police chief, director of development services, finance director, public works director, airport manager, human resources manager, deputy city attorney, deputy director of development services, communications manager, unrepresented/non-management administrative employees in the city manager’s office, and any other unrepresented employees who may be added.
(The city manager and city attorney have separate contracts, and negotiate terms directly with the council members. With Tom Watson leaving at the end of the month, it is unknown how the future city attorney’s compensation package will be structured.)
The changes for the rest of the unrepresented employees would be effective Oct. 1 and go through the end of 2018.
Kerry in her report to the council wrote, “To be clear, CalPERS plans to extract approximately 25 percent of the city’s revenues within the next five years, which will severely hamper the city’s ability to meet current expenses as well as any new expenses.”
The city is forecasting a negative cash flow by 2020 in large part because CalPERS obligations are forecasted to double in the next five years.
The California Public Employees Retirement System tells member agencies how much each must pay to cover current and projected retirees. These people get a promised amount of cash which actually on average goes up 2 percent a year. The money comes from taxpayers. It is an obligation members must pay and one they cannot negotiate. It would take an act of the Legislature to change this.
Unfunded CalPERS liabilities are growing for most organizations. Today the city’s liability is $50 million, and is expected to grow to $60 million in a few years.
Kerry in the report went on to say, “Many CalPERS retirees have the incorrect belief that their pensions are ‘paid for,’ and thus are not at risk.”
South Lake Tahoe officials are trying to get rank and file employees as well as retirees to realize the gravy train might derail.
That is why at least the non-union employees of South Lake Tahoe are hedging their bets by restructuring their compensation plan. All employees could, but it would take the will of the union to do something that in many ways is radically different.
The purpose of the changes is to stem the city’s pension obligation, while at the same time providing workers with more control over their future retirement dollars and being able to give them raises. If CalPERS were to go bankrupt or cut payments, they would still have the cash in the 401(a) or 457 accounts.
The police and fire chiefs have agreed to reduce their pensionable salaries to $140,000 a year, the maximum recognized under the 2013 California Public Employees’ Pension Reform Act. The remainder ($29,291) will go into an employer funded retirement account that would be similar to a private sector 401(k).
Employees other than the chiefs, city manager and city attorney will have money put into a non-pensionable retirement account.
Raises they all will receive would be one-time payments that go into the new retirement funds.
In essence their base pay has been frozen and the raise automatically goes into a retirement account instead of being disposable income.
Kerry summarized the changes by saying, “The proposed compensation plan for unrepresented employees utilizes a defined contribution approach and considers the city’s current available financial resources while simultaneously not obligating the city to long-term financial obligations.”
A benefit change is this group will now have paid time off instead of separate vacation and sick pay.
Better never than late.
And who says bribery doesn’t pay when it comes to getting politicians to give away the farm.
I continue to be sickened by this information each and every day. There are many people, my husband included, who retired from the city with promises of what they worked for WOULD BE THERE when they retired. As a rank and file police officer who continued to “work with what the city had to offer at the time with the promise that his retirement and health benefits” would be there later (mind you they aren’t big!), I continue to wonder how city officials who make HUGE amounts of money can act as though they are doing everyone a favor. City manager Nancy Kerry reported to my Soroptimist group only recently how fantastic the city was doing with its revenue; ahead of scheduled projected revenue by the way. Really? To continue to ignore the retirement obligations provided by ALL PAST CITY MANAGERS AND CITY COUNCILS, then this kind of information? Really? Shame, shame, shame. You are messing with people’s livelihood.
I share your concern Lisa. CalPERS is the largest pubic pension fund in the United States. This fund manages pensions for over 1.6 million California Public Employees, Retirees and their families.
The fund relies on three different funding sources: employees contributions, employers contributions, and return on investments. The State of California has come up significantly short on the return on investments, yet their model heavily depends on its success. For years, return on investments has failed to reach its targeted goal which is threatening the fund’s ability to meet their obligations. The CalPERS fund hasn’t kept up with the automatic cost increases and is currently about 35% short of the amount needed to cover current and future obligations.
During the time your husband was a distinguished officer with the City of SLT’s police department, the employees successfully negotiated that the City would pay the employees’ contribution in addition to the employer’s contribution. To this day, and for the foreseeable future, the City will continue to make its CalPERS payments as negotiated.
To be frustrated with the City is misplaced. Your frustration would be more appropriately focused on the State of California.
If our current employees and elected officials are able to learn from our past experiences, and make better choices going forward, this should continue to make the taxpayers of our city confident that we are seeking a new path with hopefully better outcomes.
Empowering our current employees to take control and participate in choices that will directly benefit their retirement is prudent given our ongoing experiences.
Hind sight is 20/20. I only wish employees and elected officials knew then what we know now: the CalPERS system is failing and is in need of MAJOR REFORM. Let’s all lobby together to require our state elected officials to bring about the reform needed to protect our retirees and their families and current employees who rely on these benefits.
In the meantime, the City will continue to fund our obligation as agreed upon.
I agree with Lisa that the city of South Lake Tahoe has not protected its hard working citizens with their retirement finances. My family and I were devastated financially because of the city not following its own rules and regulations. The city even used a “back room deal,” to further their agenda. David Jenkins and every city manager since, including Nancy Kerry, have not cared about the original property owners who lost millions because of the redevelopment /Chateau/Zalanta project. The city sided with the Lane/Feldman group over its local citizens.
It is so ironic, that Brooke Laine never shared my concern, nor addressed my devastation, nor offered to help my family.
Using the process of eminent domain, Brooke Laine, every city council member and every city manager since 2006 share responsibility for how original property owners were treated.
I agree with Lisa Huard that the City of South Lake Tahoe has chosen not to protect its hard working citizens with their retirement finances. My family and I were devastated financially because of the city not following its own rules and regulations. The city even used, what many consider, a “back room deal,” to further their agenda. David Jinkens and every city manager since, including Nancy Kerry, have not cared about the original property owners who lost millions because of the redevelopment/Chateau/Zalanta project. The city sided with the Lane/Feldman groups over local property owners.
It is so ironic that Brooke Laine never shared my concern, nor addressed in my opinion, my family’s city caused financial ruin, nor offered to help me and my family.
The City of South Lake Tahoe used the process of eminent domain or the threat of eminent domain for their redevelopment project. Every city council member since 2006, including Brooke Laine share responsibility for local property owners being treated unfairly.
Every city manager since 2006, including Nancy Kerry share responsibility for being a part of deals that benefited the Lane/Feldman groups while throwing local property owners “under the bus.”
To quote Lisa, “Shame, shame, shame. You are messing with people’s livelihood.”