Public Pension System

Santa-Rosa-CA-1876-600In the early 1900s, the concept of “retirement” was unknown to most people. People essentially worked until they no longer could, due to illness, enfeeblement or death. In the first half of that century, retirement plans and public pensions began to surface as a light at the end of the tunnel. They provided a means to give workers an opportunity to stop working before they were forced to as a result of the end of their life being imminent.

Initially, plans were simple and low-risk. They provided a steady accrual of low-interest earnings with very high reliability. As the years went by, people actually retired, leaving the active workforce. Unfortunately, giving people this opportunity, in retrospect earlier than it mathematically made sense to, began putting strains on reserves. This also coincided with a growing level of competency and innovations in the world of health care. People were retiring younger and living longer. To have sufficient funds to meet the needs of the pension system, investments into retirement plans had to become more aggressive. This, in turn, created the need to take larger risks on those investments.

The maturation of public plans, growing public payrolls, and benefit enhancements have led to a meteoric rise in pension liabilities. The federal government maintains data on public-pension assets and liabilities going back to 1945. Comparing historical data on pension liabilities to the national gross domestic product gives a decent measure of the size of promised benefits relative to taxpayers’ overall ability to pay.

In 1960, state and local pension liabilities totaled approximately 12.6% of GDP. By 1990, the ratio had nearly doubled to 22.2% of GDP. Then, between 1990 and 2017, the ratio nearly doubled again, growing to approximately 42% of GDP. The total value of retirement benefits already earned by public workers is higher today than it has ever been.
Looking ahead, we are seeing another wave of frightfully decreasing returns in those plans with people still wanting to retire early and living even longer. The California Public Employees’ Retirement System (CalPERS) is the nation’s largest public pension fund, serving over two-million public employees. It is the second largest purchaser of health care in the United States. Since 2017, CalPERS has seen a dramatic drop in their returns. In 2017, they came in at 11.2%, in 2018 they were at 8.6%, and in 2019 the had dropped to 6.7%. Projections are hinting at negative returns very soon if changes aren’t made.

Downtown Santa Rosa CA Photo by Rob Martel Photography

Downtown Santa Rosa CA Photo by Rob Martel Photography

I don’t believe that just taking pensions away is the right move. I think the benefits given in public employment are one of the major draws to a life of public service. The reasoning behind the creation of the pension system was a good one and still is. Providing people with a retirement plan is a wonderful benefit that should not be eliminated. The people that have these plans are our neighbors, protectors, and friends. Still, change must happen. We cannot keep going forward like we are and just cross our fingers that things will get better, that the risks pensions plans have taken with investments will pay off now and for the indefinite future. We must fix this now, before we are in the hole and more obligations cannot be met. People have come to rely on receiving these monies, we can’t just say, “Sorry, we’re all out”. At the same time, we can’t keep making promises we know we won’t be able to keep.

Senior employee workingThere are various examples of states changing retirement ages and employment longevity requirements. I think we need to look at these other plans and see how they are working out. We are not the only State running into these issues and others have already begun trying potential solutions. We need to start studying what some of these other states are doing and how it is working out. If their monetary obligations are able to me made, what long term projections look like and how employees are faring. Any such change, whether it be an increased employment longevity requirement, retirement age, or amount of the benefit, the employee is not going to like. Of course they will prefer the greater amount with less requirements early. Unfortunately, that is simply not sustainable. After so many years discussing these issues, I doubt this will be a surprise to anyone.

We need to go back to smaller expectations. We need to make safer investments, accepting the trade-off of lower returns on investments versus the other option of being forced to do away with them altogether because we simply ran out of money.

Homelessness:

According to a Point-In-Time homeless count, as of June 2019, there were 2,951 homeless people in this county. A 3% drop from 2,996 in 2018. While the homeless population grew 4% from 2017 to 2019, it is 35% lower than in 2011. This, despite multiple wildfires. That’s because over the past two years, the County has been able to house 3,100 people.

 

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Wastewater:
Santa Rosa has been a leader in the use of recycled wastewater for over 40 years. We have one of the largest recycled water systems in the world! About 98% of the City’s recycled water is used to irrigate approximately 6,400 acres of agricultural lands and public and private urban landscaping, with more than 12.6 million gallons per day being recycled for the Geysers Recharge Project to generate enough electricity for 100,000 households.

The Laguna Treatment Plant is a wonderful and state-of-art facility here (with a fantastic tour!) that collects wastewater from Santa Rosa, as well as partnering cities and districts, through more than 500 miles of underground pipes. The wastewater goes through a three-step process of treatment prior to disinfection, storage, and reclamation.

I believe Santa Rosa Water Division has an excellent system in place for dealing with wastewater, and I support allowing its current model to continue in their efforts unhindered, with confidence that they will continue to excel and keep up with innovations in the industry.

Economic Recovery:
We need to draw more people to our downtown businesses by taking steps to support those businesses, especially during these truly unique and challenging times. Helping our homeless population is a big step towards accomplishing that. With that will come the public feeling safer using the public parking structures. We also need to promote small business creation throughout the City. We can encourage new, green jobs to come to the area by showing that we, as a city, support businesses trying to survive.

We have some unique areas that are often overlooked because they are not downtown. For example, the live/work complexes on Sebastopol Ave. in the seventh district. This is an area that has spaces for small businesses to open and housing all close to public transportation, yet this area struggles to actually draw businesses and customers. We need to support public transportation and bicycling, making it easier for people to get to the local stores they want to visit. Economic recovery is definitely a priority but it is important to understand that this is inextricably tied to protecting our environment. Tearing down one to try and build up the other will only cause both to fail sooner than we might expect Things like the Go Local campaign are good ideas but need to work to promote businesses in all areas of the City.

Measure Q:

Measure Q would eliminate two existing quarter cent sales taxes and replace them with a single half-cent sales tax. One of those quarter-cent taxes was passed in 2010 as Santa Rosa was coping with the Great Recession and is set to expire in 2027. The other was passed in 2018 and was pitched as necessary to deal with the fallout from the 2017 wildfires. That one is set to expire in 2025. If passed, the half-cent sales tax would be in effect until 2031.

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Alternative Transportation:

I think the city does a good job promoting bicycle use, with dedicated and newly painted bike lanes. However, the city’s bike renting program was not successful. There were too many hoops to jump through and the bikes were locked up in giant cages that were only accessible after people who wanted to use the bikes got a special card from the City and those were only available at certain times. It was so cumbersome, it did not make sense for people to participate in. It must be easier.

Our city has a strong bicycle coalition. I would reach out to them and get their thoughts on a bike rental program, maybe something they oversee, and is coordinated with local bike shops. We also need a better way to track down stolen bikes. Maybe some sort of embedded tracking device with a group dedicated to bicycle retrieval. My family has been hesitant to ride our bicycles to downtown because we are afraid they will be stolen. Promoting bicycle use is not just promoting riding bikes, but also giving people the confidence to trust their bike will be there when they exit the local business or restaurant.

 

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Police Funding:

I believe that the police are currently forced into areas that they are not properly trained for. Most significantly, this includes handling non violent issues with the homeless and mental health issues. Instead, funding should be taken from the police and funneled to mental health professionals who are tasked with working directly with the homeless, one on one, to ensure each person is getting the help and medication he or she needs. There should also be mental health professionals trained to handle situations involving mental health concerns of people who are not homeless. People who know how to safely interact with others who struggle with mental health.

This will free up the police to not only focus on what they are trained to do - public safety, but it will also give them time to walk the streets and get to know people in the community. This will help rebuild trust and real relationships with these people which will ultimately increase community building and trust in the police and in return, the police will have relationships with those in the community resulting in less aggressive responses.

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Public Pension System:

In the early 1900s, the concept of “retirement” was unknown to most. People essentially worked until they no longer could, due to illness, enfeeblement or death. In the first half of that century, retirement plans and public pensions began to surface as a light at the end of the tunnel. They provided a means to give workers a light at the end of the tunnel.

Initially, plans were simple and low-risk. They provided a steady accrual of low-interest earnings with very high reliability. As the years went by, people actually retired, leaving the active workforce and putting strains on reserves. This also coincided with a growing level of competency and innovations in the world of health care. People were retiring younger, and living longer. Investments into retirement plans had to become more aggressive, and created the need to take larger risks on those investments.

The maturation of public plans, growing public payrolls, and benefit enhancements have led to a meteoric rise in pension liabilities. The federal government maintains data on public-pension assets and liabilities going back to 1945. Comparing historical data on pension liabilities to the national gross domestic product gives a decent measure of the size of promised benefits relative to taxpayers' overall ability to pay. In 1960, state and local pension liabilities totaled approximately 12.6% of GDP. By 1990, the ratio had nearly doubled to 22.2% of GDP. Then between 1990 and 2017, the ratio nearly doubled again, growing to approximately 42% of GDP. The total value of retirement benefits already earned by public workers is higher today than it has ever been.

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