City officials try to have it both ways.
They blame their pension woes on the mighty California Public Employees' Retirement System. But when CalPERS tries to do the right thing, as we just saw, cities drag their feet like petulant children.
CalPERS administers pensions for 450 of California's 482 incorporated cities and towns. For years, the nation's largest retirement system has used accounting gimmicks that have kept those municipalities' rates artificially low. As a result, cities have been underfunding the generous benefits they promised workers.
Labor leaders like that because it leaves more money each year for salaries. Similarly, many city council members go along because it pleases unions that fund their campaigns and leaves more discretionary money in annual municipal budgets.
CalPERS has fallen billions of dollars short and needs cities to start paying off their portion of the debt at a more reasonable pace instead of leaving it for our children and grandchildren. It's not only a matter of fairness to future generations; the fiscal integrity of the entire pension fund is at risk.
CalPERS deserves much blame for its years of deceptive accounting. But city officials must own up to their complicity. Any competent city manager or conscientious council member should have seen the problem and set aside more money.
Now city leaders are playing the victim card. The hypocrisy reached absurdity last week as the CalPERS board made much-needed accounting changes that will bring rates closer to where they should be.
Natasha Karl, lobbyist for the League of California Cities, and officials from 28 cities pleaded for delay. "We are concerned," Karl wrote, "that these changes may further jeopardize cities working to achieve financial stability and the unintended consequence may be the risk of making some agencies insolvent."
Yes, cities will face higher rates. But the money goes toward paying off their debts.
The extra funds will provide more security for employees counting on the benefits, reduce the intergenerational debt transfer and lessen the chances of sharp rate increases in bad economic times.
Cities will have plenty of time to prepare.
The rate increases constitute only a small part of their total pension costs and will be phased in over a five-year period that will not even begin until 2015-16.
"Quite frankly," said Ron Bates, city manager of Pico Rivera, "they (CalPERS) are not being aggressive enough."
Bates chairs the city manager's pension reform committee for the League of California Cities. He understands why CalPERS actuary Alan Milligan and CEO Anne Stausboll pushed their board to act.
"They were thinking if they didn't do this ... and we hit another bad patch of time, the biggest retirement system in the country could be in real trouble." Unfortunately, while Bates understands this, Karl was making a different pitch to the CalPERS board, arguing that cities needed more time to vet the plan.
Actually, cities had been provided plenty of opportunity to study the changes. CalPERS staff had been warning about the adjustments since 2011 and had made the details available more than a month ago.
It was time for action. Cities should have applauded the move rather than throwing obstacles in the path. Instead, Karl's delay plea echoed and buttressed the cry by some labor groups that were trying to kill the change.
Delay would have been especially beneficial to labor unions representing 167,000 state employees currently negotiating new contracts. The longer the postponement, the less short-term funds would go toward pension contributions and the more money would appear to be available for raises and benefits.
To his credit, Gov. Jerry Brown's administration pushed for prompt implementation. "We believe it's a matter of pay now or pay more later," said Richard Gillihan, who oversees pension costs in the state Department of Finance. "We believe pay now makes more sense."
A majority of the CalPERS board members voted Wednesday to make the accounting changes. But they ignored the governor and delayed implementation for state government by a year to 2015-16, the same start date planned for cities and other local agencies.
As for city officials across California, they should explain to their constituents why their lobbying organization tried to stall the move.
Contact columnist and editorial writer Daniel Borenstein at 925-943-8248 or firstname.lastname@example.org.