Pacific Grove Council Begins Unwinding Pension Gifts Granted Illegally in 2002

Last evening Pacific Grove’s City Council unanimously took a strong step forward to correcting a great wrong — which is currently costing the city tens of millions of dollars and pushing it towards bankruptcy.

Former Pacific Grove City Manager Ross Hubbard had Council Adopt Illegal Pensions – Is Now Long Gone

In fact City Manager Hubbard knew it would cost some 15 times more, some 800 thousand dollars that first year alone, because Hubbard had the legally required report from an Actuary, but he hid it from the Council – who merrily adopted the retirement raise (called “3 at 50”) without any discussion.

Of course it is horrible that Hubbard hid the actual cost, but it turns out he and the City Council seriously violated a state law in approving it.

Ever since that time the City has been in a financial mess, shutting the Library on many days, giving away our City Museum, cutting the number of police from 30 to 20, eliminating the Recreation Department, neglecting watering trees, neglecting potholes, neglecting sewer replacement required by court agreements, and on and on.

As of today the whole Cal-Pers pension mess, of which this is a large portion, is going to cost Pacific Grove taxpayers some 45 million dollars (an estimate a few months ago was 78 million), several times the City’s annual budget of $16 million – 20 million dollars.

After 3 years of badgering by Concerned Citizens, led by John Moore and Dan Davis, the Council agreed to appoint a subcommittee to look into this a few months ago. The subcommittee met many times and was aghast at what they found and so they wrote a report.

Last evening the subcommittee explained the report and suggested the 2002 ordinance authorizing the (“3% at age 50”) excess retirements be rescinded. Councilman Cuneo made a marvelous clear presentation using an analogy of failing to disclose problems when buying a home – and how that can invalidate a contract.

A parade of Concerned Citizens supported them including four former council people Dan Davis, Lisa Bennett, Terrence Zito, and Susan Nilmeier. They were joined by John Moore, Vince Tuminello, Jeff Becom, Sally Aberg, Diana Dennis and myself “Leadership is not about doing the easy thing, its about doing the right thing.”

The only advocate for ignoring this expensive law violation was Council candidate Casey Lucius. She was joined by those who directly financially benefit from the illegally huge pensions — the Police Officers Association (who threatened a lawsuit), recently retired PG Police Chief Dairus Engles and Steve Gorman, a local businessman who is apparently a PG Reserve Police Officer.

The Police Officers Association (POA) was criticized by several speakers including Councilman Dan Miller for threatening the City instead of standing up for the law and for trying to help the city solve the problem.

After a reasonable discussion the Pacific Grove City Council unanimously took a step forward to correcting a great wrong.

Led by Ken Cuneo they unanimously agreed to accept the report, send it to Cal-Pers (the pension agency) and to meet with the Police Associations and other employee groups to discuss the problem and then bring this back for further action in about a month.

Commentary:
For context this took place at the end of an eight year Mayorship of Sandy Koffman where employee raises were on almost every agenda and always granted. After 8 years, most people who were concerned about excessive employee pay, including (now Councilman) Dan Miller and the Heregott sisters Pat and Sally had realized the Koffman Council was never going to reject an employee raise, so they can be excused for missing this hidden time bomb.

Mayor Carmelita Garcia has worked to get this problem fixed for at least 3 years, since 2009, when she had Councilwoman Lisa Bennett’s support.

Councilman Ken Cuneo had a commendable reversal in his position on this issue from a year ago when he tried to ignore it with “a previous council looked into it and dismissed it.” This time he led the discussion and the motion, improving it 3 times with helpful suggestions from other council people.

The City Attorney David Laredo and current City Manager Frutchey who have both fought against having the Council look at this issue, tried to inject themselves in the process to “merely answer questions raised by the report.”

Their un-credible biased answers will likely be trumped by the response from CalPers who is legally responsible for correcting this expensive mistake.

Councilmen Kampe and Huitt espoused the remarkable position – they won’t vote to rescind the illegally granted pensions until they know the consequences.

That means they are only willing to correct an illegal act – if there aren’t consequences.

How odd, I thought laws had to be followed – no matter what the consequences.

So apparently if Kampe and Huitt were running the IRS which overcharged you by a thousand dollars (1), before they’d refund your money – they’d have to see if the IRS needed the money for anything.

Well, there will be financial consequences, the police and fire dept staff who have improperly benefited from this will not get as much retirement money. However, it is next to impossible for me to feel much sympathy for people getting more than $100,000 per year in retirement – that you and I have to write checks for – every year.

There are also positive financial consequences that the City will not have to pay tens of millions in excess retirement money. This could be big enough to let Pacific Grove avoid bankruptcy. There’s even a remote chance (very remote) you might get a tax refund.

It was a surreal moment to hear the Police representative not merely telling the Council to ignore a law that was broken, but that our Police would sue us, the City of Pacific Grove, if the Council tried to correct the serious violation of law.

The person most responsible for this mess, former City Manager Ross Hubbard – is long gone. Hubbard didn’t even attend the Council meeting that fateful eve in 2002 – trying to keep his fingerprints off it? If so, it worked for 10 years.

I wonder if the statute of limitations is still running . . . Could Hubbard and his insurance company be liable for this ? I suspect the Police Officer’s Association will want to know . . .

In the meantime, we all owe the Council appreciation, particularly Mayor Garcia, Dan Miller, Ken Cuneo and Rudy Fisher. Alan Cohen seconded the motion. You might thank them personally for helping steer Pacific Grove back towards a healthy track.

Stay tuned.

Notes:
(1) The thousand dollars is my very rough seat-of-the-pants estimate what each homeowner (and indirectly each renter) has paid in property taxes for excess police and fire retirement benefits since 2002. It could be more, its not likely far less. We should get a better idea when we get CalPers response.

Further reading:

Results and Recommendation, Fact Finding CalPERS (Pacific Grove City Council) Subcommittee (Large file ~10 megabytes)

How City Bankruptcy Benefits Pacific Grove Residents