{"id":2100,"date":"2011-10-16T16:27:55","date_gmt":"2011-10-16T16:27:55","guid":{"rendered":"http:\/\/daviddilworth.com\/pol\/?p=2100"},"modified":"2012-03-14T07:06:21","modified_gmt":"2012-03-14T07:06:21","slug":"city-bankruptcy-benefits-pacific-grove-residents","status":"publish","type":"post","link":"https:\/\/daviddilworth.com\/pol\/city-bankruptcy-benefits-pacific-grove-residents\/","title":{"rendered":"How City Bankruptcy Benefits Pacific Grove Residents"},"content":{"rendered":"

How City Bankruptcy Benefits Pacific Grove Residents
\n<\/strong>
by John M. Moore for Pacific Grove Taxpayers Association<\/center><\/p>\n

How could Pacific Grove’s Pension payout improve if City files for Chapter 9 Municipal Bankruptcy ?<\/center><\/p>\n

What follows is my analysis and opinion of the payout the City should request in its proposed Chapter 9 Plan (Municipal Bankruptcy under Federal law<\/a>), for both current Pacific Grove retirees and for those who have worked for Pacific Grove and are not yet retired.<\/p>\n

100 Million Needed<\/u><\/p>\n

Pacific Grove’s Pension plan is supposed to have about 100 million dollars in it. <\/p>\n

Only 42 Million Available<\/u><\/p>\n

Based on the Calpers 2010 estimate, I believe the City\u2019 Pension plan has a current deficit of about 40 million dollars. <\/p>\n

In addition the City owes about $18 million in principal for the 2006 pension bonds, for a total deficit of $58 million, leaving a net of 42 million dollars to pay for 100 million dollars of pension promises.
\n
\nSo the City is in a position to pay 42 cents on the dollar to those drawing Pacific Grove pensions and for the pensions earned to date by those who have worked for Pacific Grove, but are not yet retired.<\/p>\n

Court Could Halve Pacific Grove’s Pension Debt<\/u>
\nRhode Island’s Central Falls Chapter 9 Municipal Bankruptcy is reducing pensions for retirees and future retirees by more than 50%. So the rules have changed dramatically, and now it is easier to view the carnage that our past city managers and city attorneys have created.<\/p>\n

If I was in charge of filing the Chap. 9, I would propose to the court that pensions be amended for both the 3@50 (retired at 50 years of age and getting 3% per year employed1<\/sup>) retirees and for future 3@50 retirees so the city only pays 42% based on a 2@50 formula. All pensions should also have a $ 90,000 limit for determining the 42%. <\/p>\n

Pacific Grove’s Extraordinary Pension Not Legal<\/u><\/p>\n

Pacific Grove’s 3@50 was never legally enacted and city employees earning less than $90,000 have suffered from the cost for 3@50 (which only benefits sworn safety employees). The $ 90,000 limit is necessary to bolster the pensions of the lesser paid, as reasonable.<\/p>\n

I have prepared the evidence that indicates that in 2002,the attempt to enact the 50% increase in pensions for fire and police was done illegally. If that attempt is ruled void, there is a possibility that Pacific Grove retirees and employees could receive substantially all of the 2@50 and 2@55 pensions promised and earned by each of them. All that is required, is for the city council to authorize a competent law firm to petition the court to declare 3@50 void.<\/p>\n

If the city begins paying off the deficits by the austerity measures I have recommended, the payouts would increase annually. If austerity measures are not put in place the 42% payout will decline annually; rapidly in my view.<\/p>\n

By profession, training and experience, I am the ultimate realist. I do not have a personal selfish interest by publishing my opinions about Pacific Groves’ financial demise. I do it because the pension mess is so unfair to property owners and to Pacific Groves’ children.<\/p>\n

And I remind all of you that Calpers and the government employee unions are trying to close the Chapter 9 door for California cities.<\/p>\n

Notes:
\n1. “Chapter 9”<\/a> is the section of the Bankruptcy laws that applies to cities.<\/p>\n

2. “3@50” means An employee retired at 50 years of age gets 3% per year employed. If they were employed for 20 years they get 60 percent (3 times 20 = 60%) of their highest salary. “3@50” has a cap at 100 percent of their highest salary.
\nHowever, if a Pacific Grove employee had a 2@55 deal (former City Managers) there is no limit at 100 percent. Thus if they were employed for 40 years they could get 120 percent of their highest salary.<\/p>\n

3. Calpers = California Public Employees’ Retirement System<\/a><\/p>\n

<\/strong><\/p>\n

(Editor’s note: This author, a retired attorney, is entirely responsible for the accuracy of the data presented here. While I do not necessarily agree with all of this article, I do welcome informed discussion of this topic.)<\/p>\n","protected":false},"excerpt":{"rendered":"

How City Bankruptcy Benefits Pacific Grove Residents by John M. Moore for Pacific Grove Taxpayers Association How could Pacific Grove’s Pension payout improve if City files for Chapter 9 Municipal Bankruptcy ? What follows is my analysis and opinion of … Continue reading →<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":13,"footnotes":"","_links_to":"","_links_to_target":""},"categories":[],"tags":[],"class_list":["post-2100","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/daviddilworth.com\/pol\/wp-json\/wp\/v2\/posts\/2100","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/daviddilworth.com\/pol\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/daviddilworth.com\/pol\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/daviddilworth.com\/pol\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/daviddilworth.com\/pol\/wp-json\/wp\/v2\/comments?post=2100"}],"version-history":[{"count":38,"href":"https:\/\/daviddilworth.com\/pol\/wp-json\/wp\/v2\/posts\/2100\/revisions"}],"predecessor-version":[{"id":3248,"href":"https:\/\/daviddilworth.com\/pol\/wp-json\/wp\/v2\/posts\/2100\/revisions\/3248"}],"wp:attachment":[{"href":"https:\/\/daviddilworth.com\/pol\/wp-json\/wp\/v2\/media?parent=2100"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/daviddilworth.com\/pol\/wp-json\/wp\/v2\/categories?post=2100"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/daviddilworth.com\/pol\/wp-json\/wp\/v2\/tags?post=2100"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}