San Diego judge allows transfer of pension overcharging case to L.A. despite city’s objection

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A lawsuit filed by the San Diego city attorney against its pension system will be transferred to another venue, according to a ruling by San Diego Superior Court Judge Joan Lewis.

The transfer was sought by the San Diego City Employees Retirement System and local labor unions because they felt that the recent damaging stories in the local press about alleged abuses in the pension system would prevent them from getting a fair trial.

The city tried to stop the transfer saying the request was not made timely, and only for the purpose of delaying the trial. The case was originally scheduled to begin on April 29 in San Diego.

City Attorney Jan Goldsmith brought the lawsuit last May, based on an interpretation of the city charter requiring that workers and the city contribute “substantially equal” amounts into the employees pension plan.

The lawsuit claims that the city has been overcharged by tens of millions of dollars each year by pension system officials.

“In light of the constant media attention that San Diego’s pension funding has received, we believe it is prudent to change venues to ensure a fair trial and we’re very pleased that Judge Lewis agreed with our position,” pension official Mark Hovey said.

Goldsmith told the San Diego Union-Tribune that “The labor unions and their supporters see this case as such a threat that they pulled out all the stops to delay, confuse and bury it — anything to avoid a decision on the merits.”

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Report shows every Chicago resident owes $12,000 for pension liability

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A report set to be released today by the Chicago Civic Federation, shows that the massive unfunded pension liability of the city and county’s 10 public pension plans has reached nearly $23 billion. That amount, plus Chicago’s share of the state’s unfunded pension liability, adds up to a total of $11,934 owed by every man, woman and child in Chicago.

Ten years ago, the combined city and state unfunded pension liability amounted to $2,442, only one-sixth the current amount.

The report from the Civic Federation comes to the same conclusions as a series of stories reported in the Chicago Tribune in November about the massive debt owed by city residents and taxpayers.

In 2000, eight of the 10 pension funds, were funded over an 80 percent level; now, eight have fallen below 60 percent. Despite the precarious position of the funds, only recently has pension reform become an urgent issue with Illinois Gov. Pat Quinn and the legislature.

The two funds that were above the 60 percent funding level in 2009 are the Chicago Transit Authority and the city’s labor union.  The only reason the CTA was above that level was because of an emergency infusion by the state in 2008 to keep the plan from becoming insolvent.

The Civic Federation blamed the deficits on the Illinois pension code, which allows the state and local governments to avoid having to pay in actuarial –determined contributions each year.

Making the problem worse are the steady increases in benefits, early retirements incentives and the weak economy. The ratio of active to retired workers has also decreased by 75 percent since 2000, meaning that as more retired workers need to be paid, fewer workers are paying into the system.

Even though the funds have experienced large investment gains over the last year, there is no way that investment performance can restore the funds to solvency.

The only two options are raising taxes, or sharply cutting back on retiree benefits. So far, politicians seem to prefer taking the risk of angering the public by suggesting hikes in property and income taxes, instead of incurring the wrath of the public employee unions.

Information from: Chicago Tribune

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New Jersey Republicans advance pension reform initiatives

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A plan supported by Gov. Chris Christie to reform the state’s troubled public pension system was introduced on Monday in the New Jersey House by Republican Assemblymen Declan O’Scanlon and Gary Chiusano, with Sen. Joseph Pennacchio planning to introduce the same measures in the Senate.

“The system in its present form is unworkable which is a major concern for every resident in the state,” O’Scanlon said. “This legislation will provide comprehensive and substantive improvements to save the system and protect taxpayers. If continue on our present course, public employees will lose their pensions and beleaguered taxpayers will face crushing tax increases.”

“There are several major public policies which need to be reformed in order to make New Jersey more affordable, and the public pension program is one of them,” Chiusano said. “The plan is grossly underfunded and will collapse without far-reaching systemic improvements. By enacting these measures, we will stabilize the state’s pension contribution at a manageable level and ensure its long-term viability. These reforms will ease the burden on taxpayers and strengthen the pension system for our public employees.”

If no changes are made to the current system, O’Scanlon and Chiusana said that the current unfunded liability of $54 billion will balloon to over $180 billion by 2041.

Under the sweeping proposal, future employees would be mostly affected by the 139-page bill.  The highlights include:

  • The retirement age would be raised to 65 for most employees, reflecting an increase in life expectancy. To retire early, workers would be required to have worked 30 years, instead of the current 25.
  • Workers would be required to contribute 8.5 percent of their salaries towards retirement.
  • Pensions would be calculated on employees’ earnings from their five highest-paid years, up from the current three.
  • Firefighters and police would have the maximum pension benefit reduced from 70 percent of their current salaries to 65 percent.
  • Cost of living increases would be eliminated.
  • The 9 percent pension increase given to workers in 2001 would be eliminated for current and future employees.

Two weeks ago, Democrat Senate President Stephen Sweeney proposed a bill that stopped short of the Republican’s bill.

Sweeney’s bill would replace the present oversight boards of the public employees, teachers, police and firefighter pension systems with joint boards of management and labor organizations. The boards would oversee the management of the pension funds and have the power to adjust annual contributions and benefits based on the investment performance of the funds.

The plan would require workers to make additional pension contributions if the wanted to take advantage of the 9 percent pension increase given in 2001.

Workers with fewer than five years of employment would not receive cost-of-living adjustments, unless the board found some way to pay for it.

Sweeney said “This legislation will remove politics from the process and establish a private-sector model for the pension system. This will be comprehensive reform that will ensure that those who benefit from the pension fund are paying their fair share without adding any additional burden to already overtaxed taxpayers in New Jersey.”

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Labor coalition raises environmental issues to stall power plants and win contracts

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A labor coalition that has made a practice of raising environmental concerns on large-scale renewable energy projects in the California desert, then dropping objections after signing lucrative labor contracts, is being called out by a competing labor faction for its deceptive behavior.

The coalition, the California Unions for Reliable Energy, or CURE, includes unions representing boilermakers, electricians, plumbers and pipefitters. Since 2000, Cure has raised environmental concerns for all 12 renewable energy projects proposed for the Southern California desert, filing over 1,300 requests for information about water and air pollution, and endangered species.

Thus far, developers have signed master contracts with CURE’s union affiliate, the State Building & Construction Trades Council of California, to supply union workers on eight power plants, including one geothermal plant and seven solar installations. Once the labor contracts were signed, CURE dropped its environmental objections on those projects.

Some of the contracts contain a provision that the developer pay monies into a  CURE trust that promotes the industry group, in one case nearly $400,000.

The rival union group, representing trades including carpenters, operating engineers and laborers, say that CURE’s tactics are slowing down the approval of new projects and substantially boosting the projects’ cost. They worry that eventually, developers will take the projects elsewhere, costing area labor groups thousands of future jobs.

According to a feature story in the Los Angeles Times:

CURE and the council operate out of the same Sacramento office and have the same top executive, Robert Balgenorth.

State Energy Commissioner Jeffrey Byron said that CURE is entitled to participate in power plant licensing proceedings and that it sometimes provides useful research and expert witnesses. But he’s skeptical of the coalition’s motives.

“It does strain credibility when you have an organization called CURE that is concerned with the desert tortoise and wildlife habitat and turns around and disappears when a project labor agreement is signed. Then it takes credit for improvements to the project to justify its existence,” he said.

CURE countered that it was motivated by a desire to protect the environment. Sophisticated labor groups, said CURE’s lawyer, Marc D. Joseph, understand that any complex project must meet stringent environmental standards.

“This is not the 1960s,” Joseph said. “People in the building trades are not stupid. They understand that their economic future depends on developing projects in an environmentally sustainable way.”

CURE’s intervention in power plant licensing hearings is aimed at making sure that construction workers and residents of nearby communities are protected from environmental dangers, Balgenorth said. A subsequent project labor agreement is “a tool to make sure labor standards are set in place and the owners have what they need,” he said.

In an industry publication last September, Balgenorth denounced the carpenters union’s leaders as being “anti-worker” and involved in a “transparent attempt to snatch more than the carpenters’ fair share of good jobs away from the building trades workers.”

The dispute between Cure and the rival union alliance has escalated over the last year as renewable energy projects have been singled out as a way to get unemployed trade workers back on the job, and meet the growing demand for clean power.  However, the persistent threat that CURE will stand in the way of the projects have many parties up in arms.

Daniel Curtin, director of the California Conference of Carpenters, said at an Energy Commission hearing about solar plant licensing last year that CURE is “here for one reason, which is to extract or shoehorn this company, this industry, into a project labor agreement that is not only costly and restrictive but inappropriate under the circumstances.”

“To use the environmental issues to extract this is really shameful,” he said.

Information from: Los Angeles Times

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Prison guards said to be source of cell phone smuggling for inmates

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Once again, the second time in the last two years, convicted killer Charles Manson was found to have a cell phone in his prison cell. The likely source: smuggled in by a prison guard.

Prison spokesman Terry Thorton told the Los Angeles Times the incident occurred on Jan. 6, although no other information about it was disclosed. Thorton said that over 10,000 phones were confiscated from prisoners last year – up from 1,700 in 2007.

The possession of cell phones by prisoners in California and throughout the country is a quickly growing problem, one that shows no sign of slowing. Officials say that the phones are used in drug operations, to organize protests and work stoppages and other banned activities.

Last year, legislative analysts with the state of California that investigated the problem, said the main source of the illegal phones was prison employees, half of which are unionized prison guards. Employees can freely bring phones or other contraband into prison facilities because they do not have to pass through metal detectors, like visitors or others.

So far, the main obstacle for requiring prison guards to go through the metal detectors, like everyone else, seems to be the added cost to taxpayers. Because union rules require that guards must be paid for “walk time” – the time it takes for them to get from the main gate to their work area – having them stop, remove their steel-toed boots, equipment belts and other metal objects, would be costly.

Prison officials say that the additional compensation for union employees would be several million dollars of additional pay each year throughout the system.

For over three years, state Sen. Alex Padilla has unsuccessfully sponsored legislation that would make it a crime to smuggle cell phones into prisons.

“Everybody coming into the state Capitol building has to go through a metal detector…. You even get searched when you go to a Lakers game,” said Padilla, who for three years has sponsored unsuccessful legislation to crack down on the contraband phones. “Why don’t we have that requirement at correctional facilities, of all places?”

Current laws do not exist that prohibit smuggling in the phones, although having them behind bars violates prison rules. A corrections officer, who made $150,000 in a year selling phones to inmates at $1,000 each, was fired but not prosecuted because no law was broken.

Padilla is now suggesting legislation that would charge a fine of $5,000 on anyone trying to smuggle a phone to an inmate. Padilla’s earlier bills included screening all prison employees, but that provision was dropped after union representatives raised the salary issue.

Los Angeles Times

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Washington State looks at school health care system reform

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A report issued this week by Washington state auditor Brian Sonntag, laid bare inefficient and costly practices within the health insurance system covering 100,000 of the state’s public school employees.

Among the highlights of the report were the existence of over 1,000 pools of money to underwrite over 200 plans, offered through 10 different insurance companies. Last year, the total cost of providing health care to participants exceeded $1.2 billion, of which 64 percent was covered by the state, and the remaining 36 percent, by local districts and employees.

The auditor’s officers said that the tangled system should be streamlined and standardized to make it simpler, and to save millions of dollars annually. A consolidated system would be more efficient, saving administrative costs and making the system more transparent.

A spokeswoman for the Public School Employees of Washington, a 26,000 member union representing school support workers, said that the system is unfair, and that while the state picks up the cost of health insurance for other state part-time employees, school employees working part-time must pay a pro-rated share of their health care premiums.

“We’ve been asking lawmakers to look at this for years,” said Rick Chisa, adding that many state bus drivers, cafeteria workers and teacher aides are struggling.

Besides streamlining the existing system, the Sonntag offered two other options.

One would involve standardizing coverage throughout the system and letting employees choose coverage that would be appropriate for them.

Another option would involve an entire restructuring of the existing system, and create a state governing board to oversee its operation.

Information from: Seattle Times

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Bloomberg proposes changes to NYC pension system to save city from financial disaster

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New York’s Mayor Michael R. Bloomberg announced a proposal on Wednesday that would end some of the city’s most generous pension provisions for its workers and save billions of dollars in the process. He said unless there is aggressive pension reform, the current system will soon bankrupt the city.

Bloomberg, who until recently, was considered an ally of the unions, is now in the position of drawing their ire.

Vowing to save the city from bankruptcy, NYC Mayor Michael R. Bloomberg proposed controversial pension reform.

Some of the proposed changes include mandatory 10 years of employment before new hires are eligible for benefits– double the current number of years, and require them to be at least 65 years old before receiving benefits. Currently, workers can begin drawing benefits as early as age 57, and many cops and fire fighters receive full benefits after 20 years, no matter how old they are.

Another proposed change would prevent employees from being able to use overtime wages in determining the base for their retirement pay, a controversial and widespread abuse known as “pension spiking.” City managers routinely allow retiring workers to load up on overtime in their final year before retirement, often increasing their pension payments by over 50 percent.

All new city employees would be required to pay more of their own monies into their retirement accounts, and some existing employees, mostly police and firefighters would lose some existing benefits, namely a $12,000 annual stipend they receive in addition to their regular pension.

“This reflects the dire fiscal circumstances the city faces, the devastating impact of increasing pension costs and the desperate need for aggressive reforms,” said Marc La Vorgna, a mayoral spokesman told the New York Times.

The current move is an about-face for Bloomberg, who in the past has used generous pension benefits as a way to keep the city’s 300,000 workers happy and prevent them from striking at times of contract negotiations. As recently as 2008, Bloomberg helped push through a new teachers union contract that included a pension provision allowing them to retire five years earlier than before, with full retirement benefits.

Later that same year, as the financial crisis was in full swing and wages were stagnant throughout the country, Bloomberg gave the city’s largest municipal union back-to-back 4 percent raises, without any concessions on pension benefits.

If successful, the changes could immediately save the city at least $200 million per year, although far larger savings, in the billions of dollars would be further down the road.

One union official, angry over the proposals, called Bloomberg a “dictator.” Harry Nespoli, chairman of the Municipal Labor Committee, an umbrella group of unions, said that Bloomberg had “has set back labor relations 40 years.” Nespoli added “We’re fed up with this. He’s going to have a battle. We’re just not going to roll over.”

Teachers union chief, Michael Mulgrew, called the mayor “insane,” and said that Bloomberg “has just decided, I’m going to attack, attack, attack everybody.”

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