The Realities of Ventura's Compensation

A couple of weeks ago in a letter to the VC Reporter, Ventura resident Meryl Wamhoff lambasted the City for a variety of supposed fiscal sins, including overcompensating executives, saddling Ventura taxpayers with the cost of Bell's egregious fiscal shenanigans, and not looking at ways to cut compensation in order to balance the budget. Unfortunately, Mr. Wamhoff's letter was incorrect on many counts. Here's the letter I wrote to the VCeporter (published this week) in response:

To The Editor:

Meryl Wamhoff’s letter lambasting reporter Shane Cohn for his perspective on government and taxes (“Just another liberal reporter…,” Letters, Sept. 1) certainly brought a provocative viewpoint to your pages. Unfortunately, Wamhoff was inaccurate in the claims he made about the city of Ventura. (“Tale of two taxes,” News, 8/11)

First, Wamhoff claims the taxpayers in Ventura will be footing part of the bill for the outrageous pensions of two top city of Bell employees, each of whom worked in Ventura early in their careers. This is not true, partly because of a proactive approach by the city of Ventura.

Ventura, along with other cities the pair subsequently worked for, supported a bill in the Legislature — almost certain to be signed by the governor in the next few weeks — that will force Bell, not Ventura or other cities, to foot the bill for their inflated pensions.

As it turns out, CalPERS, the state retirement agency, has already taken action to slash the pensions that were estimated in early press accounts. Instead of getting $411,000 a year, former Bell Police Chief Randy Adams will receive $268,000 — admitted, still a huge number but far less than it otherwise would be. Former Bell Assistant City Manager Angela Spaccia, who worked for Ventura in the 1980s, had her pension reduced from an estimated $250,000 per year to $43,000 per year.

Secondly, Wamhoff asserts that Ventura “overcompensates its public employees.” In fact, however, Ventura’s pay scales are much lower than surrounding jurisdictions, such as the cities of Oxnard and Thousand Oaks and Santa Barbara County. City Manager Rick Cole makes $172,000 a year in base salary, which is about $60,000 less than his counterparts in Camarillo, Thousand Oaks and Simi Valley, and $100,000 less than the city manager of Oxnard. City Attorney Ariel Calonne makes about $190,000 a year, which his $30,000-$40,000 less than most of his counterparts around the county. Both recently took a 7 percent pay cut to contribute to their pension costs. So Wamhoff is wrong in asserting that we “never once considered that the compensation packages for these bureaucrats are too generous.” It was the first thing we considered and we acted on it.

This same pay difference is true up and down the organization. I really appreciate the loyalty and dedication of our city employees, but we frequently lose them to Thousand Oaks, Oxnard and Santa Barbara County, all of which pay 10-20 percent more than Ventura does. Over time, this could cause Ventura to become a “farm team” for these other jurisdictions — something that will surely harm our city government’s ability to get the job done, and something I believe no one in Ventura wants.

Wamhoff is right to be concerned about the compensation and retirement obligations of government agencies these days. It is a major concern to all of us in public life. And I understand that if Wamhoff believes the compensation of all government employees generally is too high, then he’s likely to think that Ventura pays too much no matter what the pay scale is.

It is wrong, however, to single out Ventura as an example of government’s financial problems, when we have worked much harder than other jurisdictions to be both moderate and fair in our approach to compensation and retirement.

The Way Forward ... To 2016

Mayor's State of the City Address, February 7, 2011

On behalf of the City Council, I would like to welcome you to the City Council Chambers and thank you for attending tonight.

After what all of us have been through in 2010, as your mayor, the message that comes to my mind is, “Whew!”

We made it through a year when money was in short supply for everybody, when the political rhetoric everywhere became much more unforgiving, and, whether we liked it or not, when the choices before us were choices would have never before considered.

But what’s remarkable is that despite all these travails, our spirit as a community has not been dampened. Ventura remains a place where people love to live their lives, run their businesses, and enjoy everyday life.

We have made it through some very difficult times by working together, by making sacrifices by finding new ways to do things and by undertaking efforts that inspire us and lift our spirits.

So I think it is worthwhile to acknowledge people and organizations who have helped us – both our City Government and our community – make it to where we are today.

First, from our perspective here at City Hall, I want to reassure everybody that our city is in good financial shape. Our budget is balanced and has been all through this dark time.

Now, let me hasten to add we don’t like the way we’ve balanced it. We’ve had to cut many important things and we know that our reduced level of services is not sustainable. We must find ways to bring our services back so we can maintain our city’s quality of life.

But it’s important to note that we have not shirked from the tough choices. Other cities have papered over their problems and now they will face severe cuts. We have attacked the issue of declining revenue head-on – meaning that future cuts will not be nearly as painful as other cities will see. I want to thank our City Manager, Rick Cole, for his willingness to tackle the hard issues head-on; and our CFO, Jay Panzica, for leading us through these difficult financial times with clarity, simplicity, and goodwill. I also want to thank our line department heads – Elena Brokaw of Parks & Rec, Rick Raives of Public Works, Jeff Lambert of Community Development, and especially Police Chief Ken Corney and Fire Chief Kevin Rennie – for doing more with less under difficult circumstances.

We also have our employees to thank. They have agreed to changes and reforms that will help make our future city budgets sustainable. One of my greatest concerns is that even when the economy recovers we will not be able to restore necessary services because of increased pension costs. But just this month our employees agreed to contribute to their own pensions, thus covering increased cost of pensions and they agreed to pension reform for future employees, which will save us a great deal in the long run.

These changes require sacrifice on the part of our employees but will help our city to focus – revenues increase – on restoring those services that we desperately need to bring back. I would like to thank the Ventura Police Officers Association and the Service Employees International Union for their help. I also would like to thank the Ventura City Fire Fighters Association for their support and look forward to working with them on a contract Finally, I’d like to thank our Human Resources Director, Jenny Roney, for guiding us through these tough negotiations.
Making these changes has required change in the way we do business. It’s always easy here at City Hall to think that we can solve all problems – and pay for them too. And because we meet in public and on television every week, it’s also easy for others to appear before us and demand the same – solve all problems and pay for them too.

But we up here can’t solve and pay for all problems – not all by ourselves. And one of the most important accomplishments of the last year has been to partner with other organizations in the community to get things done.

Perhaps the most important partnership we have forged in the last year is with the Greater Ventura Chamber of Commerce. We cannot succeed as a city without a strong and involved business community and the Chamber has reinvented itself during tough times with great gusto and energy.

So I want to thank that dynamic duo of Marni Brooke, chair of the Chamber board, and Sandra Burkhart, the chamber’s new CEO, for everything they have done and also thanks to Steve Perlman, vice chair in charge of business development and a representative of, let us say, an older generation of Chamber leaders.

The City has also worked with many, many other community organizations and institutions to help get through these tough times and still provide important services to our community.

For example, in tough times volunteers play an especially important role in making sure essential services and activities move forward. As a member of the national “Cities of Service” organization, we have come to realize the value of volunteers more than ever before

Just the week before last we hosted the first-ever “Volunteer Summit” for all the organizations and agencies here in town that use volunteers.. More than 30 organizations participated, and we have now set a target of recruiting 200 brand-new new volunteers in our community in 2011. I want to thank everyone who participated in the Volunteer Summit and especially the City’s volunteer staff, including Cary Glenn and Rosie Ornelas, for putting it together with great enthusiasm.

Similarly, we are increasingly working with nonprofit organizations to pool resources so that all of us can move forward doing the things we all need to do to maintain a high quality of life in our community. And this cooperation goes both ways – sometimes they help us, sometimes we help them.

Last year we thought we would have to close our Downtown Senior Recreation Center. But thanks to a collaboration with the nonprofit organization Urban Encore, we are able to keep the building open. Urban Encore is leasing the building and providing space to other nonprofits, while maintaining the senior center’s activities. I want to thank Dave Armstrong of Urban Encore – and one of Ventura’s most dedicated volunteers – for his efforts.

We’re also entering into an innovative arrangement with the Ventura Botanical Gardens organization. Everyone loves Grant Park – but we’ve had to postpone our plans to improve it for many years. Now, we have entered into an agreement to possibly lease parts of Grant Park to this new nonprofit group as an alternative way to make Grant Park better! Thanks to Doug Halter, who is representing the Botanical Gardens here tonight.
At the same time, we at City Hall are partnering with other nonprofit organizations to help them through these difficult times as well. By creating the Nonprofit Sustainability Center on the 4th Floor of 505 Poli, the City has helped 10 nonprofit to make it through the recession. By providing these organizations office space at low cost, we at City Hall can help them to maintain the vital services they provide to the community – services that our community otherwise might lose.

Just to give you an example of the diversity of these groups they include Focus on the Masters, Turning Point Foundation and Ventura Film Society. I’d like to thank Donna Granata, Clyde Reynolds, and Lorenzo DeStefano for their leadership and cooperation.

Amazingly enough, we have also seen remarkable progress in constructing and remodeling a wide variety of buildings and facilities downtown – helping to strengthen Downtown Ventura as the very epicenter of our region. Last year the WAV was completed. During this past year, the Kingdom Center has opened. So did Phase 1 of the Museum of Ventura County’s expansion, including the fabulous Smith Event Center. We’ve seen refurbishment and new vitality at the E.P. Foster Library. And we’ve seen the Housing Authority begin construction at Encanto del Mar at Oak and Thompson; and People’s Self-Help Housing begin renovation of the historic and beautiful El Patio Hotel just a block away.

These would be remarkable achievements at any time. But to accomplish them all in 2010 – the worst year in recorded history for construction in the United States – is truly remarkable. I’d like to thank some of the community leaders that have made this possible – including Pastor Sam Gallucci of the Kingdom Center, Tim Schiffer of the Museum of Ventura County, Mary Stewart of Foster Library, and John Polansky, chair of the Housing Authority board for all of your leadership.

We also an excellent holiday shopping season downtown and everywhere else – much to our surprise. I want to thank each and every one of you for your commitment to shopping locally. I also want to thank everyone who took me up on my challenge at the Mayor’s Arts Awards – to buy one piece of local art during this holiday season and another piece during 2011. Personally, I’d like to thank Jennifer Livia of Red Brick Gallery for the wonderful art she created that now belongs to my family. And don’t worry – I’m still on the lookout for that beautiful piece of local art to purchase in 2011. The Mayor’s Local Art Challenge is still going on!

Finally, whenever a community endures tough times, there is nothing like a group of inspiring athletes to lift our spirits and keep us going. This year, all of us in Ventura were inspired by the Ventura Deep Six Relay Team and their dramatic four-day swim through cold and choppy ocean waters. These guys didn’t just beat the world record – they killed it. In case you haven’t heard, the previous world record for an open water relay team was 78 miles – by the way, on a lake in New Zealand. Our guys swam over 202 miles in the Pacific Ocean in one of the coldest years on record. Oh, and by the way, these remarkable athletes are all in their 40s and 50s.

Thanks so much to Jim McConica and the other swimmers for keeping our spirits up in a tough year.

I’ve gone on at some length about all these people and organizations and accomplishments because I think it’s important to remember all the positive things that occurred during a difficult year. Thanks to all of you, we have made it through what I called last year “Our Defining Moment”.

Now, we must all work together to channel all of our energies toward charting “The Way Forward” here in Ventura.

And I do mean all of us – everyone in the community, working together – not just the City Council.

The decisions we on the City Council make up here every Monday night about what to fund and what to approve -- yes, these are important. But we can’t do it alone – and, anyway, these days nobody trusts us in the government to do it all by ourselves anyway. But with all of us working together – government agencies, nonprofit organizations, private businesses, individuals – we can do a much better job of figuring out what’s right for our community and a much more effective job of getting it done.

I think I can speak for all seven of us up here when I say that we must focus on two important and inter-related goals.

First, working with all of you to create a sustainable and enduring prosperity for our community.

And second, using that prosperity to maintain and enhance our quality of life.

Let me begin with prosperity, because without prosperity we cannot succeed as a community.

I have spent most of my life trying to understand how cities work, and I can say one thing: whether they grow or increase in population or not they never stay the same. To prosper – and to maintain a high quality of life – cities have to reinvent themselves economically again and again. This is true no matter how big or small they are; and no matter how fast or slowly they are growing.

Ventura has already reinvented itself many times from mission town to fishing town to agricultural center to oil boomtown to surf town to government town – and we remain all these things to some extent today. But we cannot stand still. We must continue to forge ahead, reinvent ourselves – find enduring prosperity in the 21st Century global economy while retaining the small-town feel we all cherish.

Everything we are moving forward with right now is focused on exactly this goal – and these efforts are tightly intertwined.

We talk a lot about creativity and artists galleries and projects like the WAV. Sometimes it seems like we have staked our whole future on art galleries, artist housing, and arts events. Some people love this; others are understandably skeptical that we can base a city’s entire economy on this proposition.

To be sure, arts and culture are important for their own sake. But they’re also important as a way to connect to the fast-growing creative and innovation economies regionally and worldwide which we in Ventura must be a part of in order to prosper in the future.

The creative arts – performance, visual arts, graphic and architectural design, publishing, fashion -- represent one of the fastest-growing sectors of the American economy. No American city, large or small, will be able to prosper in the future without nurturing these creative arts. The future of the creative arts in Ventura is virtually unlimited – and essential to our future in so many different ways

Over the last year, we have increased our visibility in Hollywood with the Film Ventura! Initiative – kicked off last fall at our downtown movie complex with a screening of the independent film, “Not Fade Away,” by local filmmaker Meredith Markworth Pollack. This effort has reminded us that we have an enormous supply of local film talent here in Ventura – actors, craftspeople, and even many writers and producers.

We’ve also strengthened our connection with our most important local educational institution dealing with the creative arts, Brooks Institute. Hundreds of Brooks film and video students already live and work in Ventura, and I recently met with Brooks’s new president, Susan Kirkland, to reaffirm our mutual commitment to each other. Brooks is a critical component of Ventura’s creative economy – attracting talented young people to Ventura and helping us to attract regional and national attention. Thank you, Susan, for your leadership.

And even in these difficult times, we have seen many other business leaders in the creative arts strengthen their commitment to Ventura – and, in particular, to downtown. Rasmussen Associates moved downtown and transformed the top floor of the Earle Stanley Gardner. Thank you, Larry Rasmussen for this commitment. Ann Deal of Fashion Forms has continued to help build Ventura’s reputation in the apparel industry and recently located her designers in our creative downtown, where she has long lived herself. Thank you, Ann.

The creative economy is important to our future prosperity, but it will not sustain us all by itself. The creative economy is important to Ventura for a much bigger reason as well – it provides us with an important connection to the worldwide innovation economy. The creating of new products and new services – especially using the the Internet – today serves as the engine of the global economy.

No city can prosper in the 21st Century without strong, local innovators. Innovators are themselves creative and they thrive on a lively and creative local community.

That’s why our Ventura Ventures Technology Center on the 3d Floor of 505 Poli Street has been so successful. V2TC is now home to 19 startup companies. The entrepreneurs located there are changing the way the world uses information – through online advertising, geographic location systems, online marketing, and many other innovative ideas. They’re drawn to Ventura not just by this incubator but also by the high quality of life, the recreational opportunities, and the creative buzz in our downtown.

I’d like to acknowledge one of those entrepreneurs right now – Jeff Green, founder of The Trade Desk, an online advertising startup that has been so successful that it’s actually busting out of the incubator and moving to the 5th floor of 505 Poli. Jeff, on behalf of everyone in Ventura, I want to say thanks for your commitment in creating jobs here in town. I’d like to thank all the other entrepreneurs in the incubator as well for their commitment to Ventura. And I’d like to invite everyone here to visit the incubator during the reception at the incubator, on the 3d floor of 505 Poli in a few minutes.

Creative artists, designers, entrepreneurs – all are essential components in creating enduring prosperity. But businesses cannot succeed without startup capital. And local capital is especially important. If we can finance our innovative companies through local sources, then the resulting wealth will stay in our community, to be recycled into yet more business ventures and also providing the basis for local philanthropy.

That’s why I am grateful to people like John and Dan Peate of Peate Ventures, who have decide to locate their venture firm right here downtown. Thanks so much, John and Dan, for being financial pioneers here in Ventura, and thanks to our financiers and entrepreneurs -- we are getting more attention from investors every day.

There is yet another dimension to our future prosperity, one that is also linked to creativity and the global innovation economy – the medical and biotech fields.

Here in Ventura, we have long been blessed with extremely high-quality medical care, thanks largely to our two fine hospitals and all the medical talent they attract to our community. This year, we’ve seen both our hospitals make major, forward-looking investments in Ventura.

Community Memorial Hospital is building a new cancer center and is about to embark on a $300 million expansion that will improve medical care, create new business spinoff opportunities in the medical and biotech fields, and help to revitalize business in the Five Points area. It is inspiring to see such an enormous investment in our community during these tough times. And the new CMH will also be a place where biotech entrepreneurs will be able to create and innovate, bringing even more jobs and wealth to Ventura.

And Ventura County Medical Center is also about to embark on a major hospital expansion, adding even more good-paying jobs – construction jobs and medical jobs – to our community. Together, these institutions make Ventura a center of medical care – and medical innovation.

I would like to express my thanks to Gary Wilde, the CEO of Community Memorial Health Systems, and Mike Powers, the outgoing director of the Ventura County Health Care Agency, for spearheading these large and significant investments in our community. They have truly taught us here in Ventura that working together produces far more wealth, health, and happiness than the alternative!

The purpose of building prosperity, of course, is to provide the funds – public, private, and philanthropic – necessary maintain and improve our quality of life.

Part of The Way Forward here in Ventura must be to refocus on our quality of life – for all citizens. My colleagues and I on the council look forward to renewing our long partnership with the Ventura Unified School District and Superintendent Trudy Arriaga – not only to ensure safe and high-performing schools, but to work together toward major community goals that will benefit everyone in our community. Yes, Trudy, we will build the Westside Pool.

We also have to focus on our neighborhoods. Ventura’s neighborhoods are great places to live. But they’ve taken a beating in the last couple of years, as we at City Hall have been forced to cut back on many basic services that neighborhoods depend on – police and fire service, park and median maintenance, tree-trimming, street paving, libraries.

Again, we on this dais are committed to working in collaboration with our neighborhoods to create stability and improve the quality of life. I’d like to thank the chairs of Ventura’s Community Councils for meeting with me regularly to discuss these issues. And I’m proud to announce that we are all working together to bring about Ventura’s first-ever Neighborhood Summit later this spring.

Lastly, I would like to note that, in approaching the future, we must be inclusive. Ventura is a diverse community, and we must ensure that both our prosperity and our quality of life is shared by all residents. Frankly, we have fallen behind in our efforts to implement the Americans with Disabilities Act and ensuring that every place in our community is welcoming to everyone. I look forward to the City’s rollout in 2011 of new efforts to make our community more accessible to those with disabilities.

As a person who is rapidly developing a severe disability, I have learned that while there may be physical disabilities, there is no such thing as a disability of the heart or spirit. We are blessed in Ventura with fabulous people active in promoting the cause of those with disabilities. I’d like to thank Chera Minkler for being a personal inspiration to me – as an advocate for the disabled and as a person with great compassion for all.

Here in Ventura, The Way Forward inevitably involves a look backward toward the past. We are a city of history. Ventura was incorporated as a municipality in 1866; and, indeed, of the 481 cities in California, only 22 are older than we are.

On April 2, 2016, our city will celebrate its 150th anniversary. In case you’re counting, that’s 1,880 days from today.

So here’s a challenge:

Let’s dedicate ourselves to making Ventura’s new prosperity – and much better quality of life – a reality by that date. Let’s make sure that, by then, we are

A city that has successfully combined our creativity our innovation and our opportunities to create a new and lasting prosperity

A city that has fulfilled its commitment great education, high-quality public safety great medical care, great parks and recreation, by the way great and by the way, a great place for all kinds of people to live.

In short, let’s make ourselves the best small city in California.

We have a long list of things we know we must accomplish to achieve renewed prosperity and a better quality of life. So here’s my challenge: I ask you to join me in a concerted effort to get those things done.

Within 90 days, let’s form a group of community leaders to lead this effort.

Within 3 to 6 months, let’s agree on a to-do list – the high priority things we must do to establish long-term prosperity and a better quality of life by 2016. And then let’s spend every day between now and then getting things done, crossing items off the list, until we have made sure Ventura will be a great place to live and work for the next generation.

Remember, when you wake up tomorrow morning, there will be only 1,879 days left.

And on Wednesday, only 1,878.

So let’s get going. Let’s make every day count. Let’s make each one of these days count.

Why We Have To Make Tough Choices on Pensions

As you may have noticed, things are not going well between the city and our unions.

We have not reached agreement with our labor unions on new contracts, even though for most of the unions (including the police union and the Service Employees International Union) the contracts ran out last summer. Last week, all of our unions crowded the City Council chambers to speak about the value of their work and their concern about our negotiating position; and on Monday, SEIU plans a march on City Hall before the council meeting.

While I can’t speak publicly to the specifics of the labor negotiations going on right now, I can talk about what is on the public record – the changes in the compensation policy that the City Council approved last spring. I’d also like to take some time in this blog to explain why I supported those changes – and why I think those changes are important in order to actual protect our ability to pay out good wages, benefits and pensions to our city employees in the long run.

I know that our city employees are very unhappy with the City Council’s bargaining position right now. Our city employees feel like they are being asked to bear an unfair portion of the burden of the financial downturn. They don’t feel as though we value them. And they feel we are being inflexible at the bargaining table. Under the circumstances, these are all understandable feelings and I respect those feelings, probably more than our employees know. I am sure that if I were a full-time city employee I would feel the same way.

But I do want to explain publicly why I supported the changes in the Council’s compensation policy. Frankly, I don’t expect that what I say in this blog will change how any our city employees feel about what’s going on. I totally understand that and I respect it. But I would like both our city employees and the rest of our constituents – many city employees are constituents – to understand where I’m coming from. It would be a disservice to all these constituents, city employees included, not to do so.

I am not interested in placing the burden on the employees just because I think they should pay more. Rather, my goal to make sure that our employees’ pensions are not at risk in the long run – and to make sure that we will have the money to pay competitive wages to our current employees even as pension costs go up.

Last spring, the City Council voted to change its official compensation policy to add two components – first, to ask our employees to once again pay their legally defined “share” of pension contributions (9% of salaries for public safety officers, 7% for everybody else); and, second, to seek a second, lower “tier” of pension benefits for future employees.

This move came as something of a surprise to a lot of our employees. Many were more than surprised; they were hurt. Oftentimes this summer and fall, they have sought me out to ask why we have chosen this path. Don’t we value them? Aren’t we worried about falling so far behind “the market” that it will be hard to recruit and retain talented employees? What’s going on?

I do value our employees – and I never say so often enough. Our city employees work hard serving the public, and most of them could make more money working for another city or public agency. Our public safety officers put their lives on the line for us, and most of the rest of our employees work hard during long careers for relatively modest pensions. And yes, I am worried that Ventura – a venerable city that prides itself on providing excellent service to the public – won’t be able to recruit great new employees nor keep talented ones we already have.

But I’m also worried about the long-term future of our City’s ability to pay pensions to our employees. As a member of the City Council, I am one of seven stewards of the employees’ retirement funds. One of my goals is to make sure that when they retire, 10 or 20 or 30 years from now, the money will be there to pay them the pensions they have earned. And that we won’t have to “short” our current employees in order to pay the pension bills.

This is something that is almost never discussed openly by the City Council or our employees. In our day-to-day conversations and our labor negotiations, we all assume that the money will be there when it needs to be. But as we have learned in the auto industry and other “mature” business sectors, this isn’t always the case.

Part of the reason I am worried is that the world of California public pensions used to be very simple, but now it has become very complicated in a way that places our ability to pay pensions at risk in the long run. At the very least, paying the pensions our current and recently retired employees employees have earned will become much more expensive – and that will make it much more difficult for us to pay our current employees competitive wages and, in fact, to provide public services of any kind.

In the old days, cities contributed money to a system such as CalPERS, the California Public Employment Retirement System, on a regular basis. PERS invested the money in safe things like bonds and averaged an investment return of about 4%.

Virtually all employees received a guaranteed pension, which was pegged to some variation of the 2% formula – you’d get 2% of your annual salary in retirement times the number of years you worked. Most employees retired at 60, though police officers and firefighters tended to retire earlier – at 55 or sometimes even 50 – because you didn’t really want those folks out on the streets at an advanced age. Somehow it all worked out – just like, somehow or other, Social Security always worked out.

But, like Social Security and most other things associated with finance, the world of public pensions has gotten a lot more complicated in the last 30 years.

At cities and other agencies that belong to PERS, salaries have gone up, retirement ages have gone down, retirees are living longer, and, in the case of public safety officers, the old 2% formula has been increased to 3%. Obviously, all these changes have increased the pressure for PERS to deliver greater investment returns – and turned PERS into a very different kind of investor than it used to be.

The whole PERS story is probably best laid out by Ed Mendel, an old friend of mine from my journalist days, who is now a blogger specializing in California pensions. In one recent blog, Ed noted that the world changed dramatically in 1984, when the voters passed Proposition 21, which repealed a law limiting PERS to investing only 25% of its portfolio in stocks. That opened the way for PERS to increase its investment returns by participating in the boom stock market of the ‘80s and ‘90s – which, in turn, increased the pressure to improve retirement benefits for California’s public employees.

As Ed points out in his blog, in 1980 PERS received twice as much revenue from member and employer contributions ($1.6 billion) than from investment returns ($800 million). In 1983, when the stock market started going up, that flipped; PERS got $1.8 billion from contributions and $2 billion from the portfolio.

PERS then rode the exploding stock market all through the ‘80s and ‘90s. By 1998, PERS got $3.7 billion in contributions and $23 billion in investment returns. To reiterate: In 1980, PERS got two-thirds of its funds from member contributations. Less than 20 years later, PERS got 85% of its funds from investment returns.

It was about this time that the state first permitted the 3% formula for public safety officers and also lowered the allowable retirement age for non-public safety personnel from 60 to 55. Most cities in the state quickly adopted both of these options, including Ventura (though Ventura adopted the 3% rule more gradually than most). However, because the stock market continued to skyrocket, cities did not have to pay any “price” at all for these increases – at least not right away. During the Internet boom of the early 2000s, investment returns were so high that PERS actually didn’t require cities to make contributions – at the exact same time that pension benefits were going up and retirement ages were going down.

Then, of course, came the Internet crash and the whole rocky period of the ‘00s, when everybody got caught in the housing bubble. The net result of this is that CalPERS has not been getting the same return it used to – even though costs are now much higher, based mostly on the assumption that returns will remain high.

According to Ed Mendel, CalPERS returns have averaged only 3.1% for the last decade. Yet PERS continues to operate on the assumption that its long-term rate of return will be 7.75%.

Even if investment returns do total 7.75% from now on – extremely unlikely, in my view – our PERS cost is going to go up, because PERS has to cover the cost of investment losses the last couple of years. My best guess for what’s going to happen in the next few years is this: Even if our city revenue starts going up again in a couple of years, those revenue increases will be completely eaten up by increased PERS costs.

Under the circumstances, I think the only responsible position to take is that, whether we like it or not, we will have less money available for salaries and pensions over the next few years – not more, or not even the same amount we have now, but less.

And if investment returns are lower – say, 3% or 4% or 5%? Then the bill from PERS goes way, way up – far more than our revenue. This will affect not only our ability to pay pensions to those who are retired, but also our ability to pay competitive wages to those who still work for us because more and more of our money will go to pay pensions.

If you’re a taxpayer advocate, this is probably a satisfying “I told you so” moment. But even if you believe – as I do – that public employees do important work and deserve a good pension, you’ve got to be really worried.

What happens in, say, 2030, when many of our current employees will be expecting their hard-earned pension checks? When we have 1,000 or 1,200 retirees instead of 600? When we may have to balance the cost of those increased pensions on the backs of people working for the city at that time? And when PERS investment returns have not come anywhere close to 7.75% for years or maybe decades?

How big will the bill be then? Will we be able to afford to pay that bill – and still also provide police and fire service, and pave the streets, and run the parks, and everything else? And provide good wages and benefits to the dedicated employees who do the work?

I don’t know the answer to that question. The fact that I don’t know the answer to that question worries me a lot. And I believe it should worry our city employees a lot as well.

I know that the current labor negotiation is an extremely emotional issue for everybody. I know that many city employees are worried about how they’re going to pay their mortgages or their rent in the future. I know they do not feel valued and they fear we will lose good employees to other cities. All these things concern me too -- a lot. Our employees do great work and everyone in town needs them to continue doing so. And most of our employees are great citizens of our community and we want to continue that too.

But the one thing, I have noticed, that the employees do not seem to be worried about is whether the money will actually be there to pay their pensions in 2020 or 2030 or 2040. Our employees tend simply to assume that they will receive what they are legally entitled to.

But in my opinion, there is no guarantee the money will be there and there is considerable risk that it won’t be. Furthermore, for younger employees, providing those pension benefits to retirees in the future will mean we probably won't be able to provide wage and benefit increases for those still working. This is something that should concern all of us just as much as taking a pay cut now – maybe more. And as one of the seven stewards of the city’s pension system, I believe we must pay attention to this festering problem.

That’s why I believe it’s necessary to take steps to restrain long-term pension costs now – in order to make sure that our current and future retirees will get their pension checks far into the future and our current city employees will not have to pay the price for increased retirement costs. Yes, there are costs and risks to this approach. In the short run, our employees will have to give something up and it will be that much harder to pay the mortgage or the rent. But I believe it is equally important to make the tough choices now to ensure that our employees actually receive their pensions decades from now. And to make sure that we will be able to pay our current employees good wages and benefits, instead of sacrificing their well-being to pay the PERS pension costs for those who are already retired.

One of the things I hear most often from our employees is why we in Ventura seem to be worried about this when nobody else is. After all, most public employee labor contracts negotiated in the last year have had something between a 0% raise and a 3% giveback. If we cut compensation more than that, they say, we will become less competitive and we will lose good employees. So why are we seeking higher compensation cuts when nobody else is?

This is a good question. My answer, frankly, is that I don’t think the other agencies are looking at these issues straight-up – or they’re not being straight-up with the employees.

At Ventura County (which has its own separate retirement system), most employees agreed to start paying 3% of their retirement cost. That’s great. But the county retirement system’s investment portfolio has lost something like 25% of its value, and with lots of retirements in the offing, county pension costs are estimated to increase 50% in the next five years. Clearly, more givebacks will be necessary.

Another tactic we often see is for a city to promise future increases in salary -- say, 2-3-4% in the "out years" of a five-year contract -- in exchange for zero increase or a giveback in the early years. But this doesn't really solve the problem, because other cities are going to be facing huge increases in PERS costs just as we are. When you ask the elected officials in these cities how they are going to pay for the future salary increases, they'll say: “We don’t know.”

In such a situation, the price of short-term labor peace is to kick the can down the road, assume that somehow or other more money will be available in the future, and ignore the fact that there are looming long-term risks.

I cannot, in good conscience, do the same. Our employees are entitled to these pensions and they deserve them. But they also deserve straight talk about the future from their City Council.

It would be very easy for me to pretend there is no long-term problem and therefore no reason to make tough choices now, just as our neighboring city did. Even though this would make me more popular with the unions, it would be fiscally irresponsible of me – and, frankly, pretty unfair to our hard-working employees. Because, in the end, I won’t pay the price for that fiscal irresponsibility. That cost will be borne by our employees, both current and retired.

Simply put, it would be wrong of me to reap the short-term political benefit of pretending there’s no problem, and then dump the problem on my successors and on our employees themselves in the decades ahead.

As I said, I know our city employees are unhappy with what’s going on and angry at me and my fellow councilmembers. I don’t expect my explanation here to change that. But I do hope both our employees and our other constituents recognize that making tougher choices now will create a more solvent city – and a more stable retirement system – in the future, and that everyone – most of all employees – will benefit from that stability.

We Really Don't Do It For The Money

In the wake of the City of Bell compensation scandal, I suggested that the best way for public officials to be accountable to the voters on compensation is simply to reveal everything in public. I began my professional life as a journalist and I know that “sunshine” is often the best remedy for back-room deals.

Many others, including Gov. Schwarzenegger and the League of California Cities, have reached the same conclusion. And so has our city. I’m proud to say that Ventura has now posted an entire package of material about our own city compensation online. Much of this information was already public – we approve our salary schedules, our union contracts, and our contracts with the city manager and city attorney in public session – but it wasn’t readily available. Now it is. So please take a look if you’d like. As I say, sunshine is often the best medicine.

Given the controversy in Bell – where City Councilmembers made upwards of $100,000 per year by serving on various commissions that did nothing – many people have been asking how much we on the City Council make. The answer is simple: As mayor, I bring home about $12,000 per year, all in. That’s down about $2,400 from the last fiscal year. And that’s a lot less than what our colleagues in the other large Ventura County cities (Thousand Oaks, Simi Valley, Oxnard, and Camarillo) make. It’s a little hard to compare apples-to-apples, but all of them seem to make somewhere between $20,000 and $30,000 per year.

Here’s how it breaks down:

-- The Mayor makes $700 a month, or $8,400 per year. This is established in the City Charter and it has been the same for about 40 years. (Councilmembers make $600.) These amounts can’t be changed without a vote to change the charter.

-- All councilmembers also get a $100 per month local travel allowance. This used to be $300 for the mayor and $200 for councilmembers, but we cut it back to $100 starting on July 1 to help meet the City Council’s budget reduction goal of 10%.

-- I am on two boards for which I receive a stipend. Both have to do with transportation – the Ventura County Transportation Commission and Gold Coast Transit. For each, I receive $100 per meeting and there are 10-11 meetings per year of each, so that’s another $2,000-$2,200 per year.

I’m also on the county Library Services Commission, but there’s no stipend associated with that (just a lot of headache!). And although some cities compensate their councilmembers additionally for serving as Redevelopment Agency commissioners and so forth, we get no additional compensation for things like that.

So that’s about $12,000. As for travel beyond the $100 per month for local travel, the council’s overall travel budget for travel outside of Ventura County is $17,500, which is about half of what it was three years ago. Each councilmember gets $2,750 and can choose their travel, though they can trade back and forth if they want.

Councilmembers also participate in either Social Security or the California Public Employment Retirement System, whichever they choose. In either case, the city’s share of the contribution is a pittance. And we are permitted to participate in the city’s health insurance program, but we must pay 100% of the cost. I choose to participate in the dental and vision insurance programs at my own expense, but I get medical insurance through my day job.

We recently checked around with the other cities in the County to see how we stack up. We were actually a little surprised to discover how poorly we are compensated compared to our peers.

In most larger cities in Ventura County, the Mayor and City Councilmembers get paid between $1,000 and $1,750 per month -- essentially, double to triple what we get. In almost all these cities, they also get additional compensation – things like city-paid medical insurance that they can cash out or flexible spending accounts, bigger travel allowances, and sometimes even contributions to a 457 retirement program (the public-sector equivalent of a 401k) or a deferred compensation program. As I mentioned above, as near as I can figure it’s between $20,000 and $30,000 per year, compared to $10,000 to $12,000 per year for us in Ventura.

I won’t lie: I certainly wish we made more money. In addition to being mayor, I hold down a full-time job (which, fortunately, I also love). I think fair compensation for a councilmembers would be somewhere around $40,000 a year, which is about what our colleagues in Santa Barbara make.

But I’m not complaining. I knew what the pay was when I signed up for this job and I have certainly never asked for or expected more than that. I don’t know about Bell, but here in Ventura the mayor and the city council clearly don’t do it for the money.