Milestones
By Miles H. Barber

As that great philosopher Pogo said, “We have met the enemy and it is us.”

Our growing pension liability is best reflected in one of the world’s oldest cultures, Greece. Running a close second is Italy then Portugal and Spain.

These countries are teetering on the edge of bankruptcy and are providing a lesson of run-away salaries, benefits and pensions for public workers.

History is a great teacher and when history is ignored, the same mistakes are destined to be committed again.

What we are experiencing here in California and in Santa Clara is a growing pension liability for public employees that cannot be sustained.

Now, let’s be clear, this is not about finding fault, this is about accepting responsibility.

Yes, we have made the mistake of thinking the era of milk and honey could be fed upon indefinitely. We have come to realize that was a myth and we are now confronted by a new paradigm. The new reality is; there is no possible way to sustain a pension liability that is growing at a rate that is faster than taxpayers’ ability to feed it.

First to recognize this was our own fire department, which voluntarily came forward and offered to take a salary reduction. However, there has not been a ground swell of support by other bargaining units to gracefully accept reductions.

The Santa Clara Police Department pointed to the law that prohibits union members from taking a reduction in salary and benefits by mandate. They reluctantly accepted two weeks of additional unpaid furlough time in lieu of volunteering any reductions.

Now, here is the issue. The State pension program (CalPERS) to which our employees belong, originally created their retirement plan based on solid actuarial calculations. It worked very well for decades with billions in reserve for future distributions.

In 2000, the CalPERS board opted to increase benefits by an incredible 25% without adjusting the contribution requirements and in spite of the chief actuary’s objection. This was a mistake that we are not supposed to pay for.

However, the City of Santa Clara is obligated to pay a large percentage of the now annually assessed increased pension contribution. The City is us.

For 2011-12, our City Manager and Council used (OAF) other account funds to balance the budget. Since our Council had already spent the $23 million in reserves on salary increases for our City employees back in 2007, 2008 and 2009, there was nothing left in reserves.

We have had to raid the capital improvement account, the library account and the maintenance account to balance the budget.

Next year we are looking down the barrel of a Howitzer. While revenues have been creeping upward, bargaining units will be returning to the contract table to get their share of the milk and honey.

Since the projection for 2012-13 is a City deficit of $4.1million, it’s going to be a tough year for employees who expect more.

And, if you put your actuary hat on for a minute, it doesn’t look good for the next five years even if the economy does a full rebound. Welcome to Greece Santa Clara.

Miles Barber can be reached at Scweekly2011@yahoo.com