Op-ed: Tightening the PERS Strings

Unless you've been paying very close attention to the documents released by the city about the 2010-2011 proposed budget, you might not have noticed some information that could affect Redondo Beach residents and others who make their living here or use city services.

Here are two excerpts from one of the related documents:

(1.) "The General Fund Reserve of approximately $6 million would be exhausted in FY 10-11 should actions not be taken to match revenues with expenditures";

(2.) "In FY 11-12, the Public Employees Retirement System (PERS) will increase its assessment to the City approximately $1.5 million to cover their investment losses to pay for the defined benefit program."

The first statement is scary enough but we may have become numb to these kinds of warnings by now. It simply says that the city, like many of us, is in danger of exhausting its savings.

If you're a public employee or retired public employee, you probably know a lot about PERS. Otherwise, you probably don't have any reason to know much about it.

Once upon a time we didn't have much reason to know about places like Kandahar and things like relief wells. Now we do. I predict PERS is one of those things we didn't have a reason to know about, but soon will.

It's a simple economic fact or at least it was, that city, state or federal jobs didn't offer great money. They attracted qualified people by dangling the benefits carrot in front of them. Public employees could expect a reasonable amount of pension money and good medical benefits throughout their retirement. Some benefits packages even included burial.

In essence, cities, towns and states deferred salary to their employees and spread out the payments beyond the employees' working years. Like all deferred debts, those payments have come due.

Every state has an agency devoted to public employee retirement benefits. California has CalPERS. Their public information states, "We provide retirement, health, and related financial programs and benefits to more than 1.6 million public employees, retirees, and their families and more than 3,000 public employers."

CalPERS planned to cover the increasing demands to pay out benefits by investing in assets including real estate and equities… oops.

So when they need more money, they come to cities like Redondo Beach and increase our cost of continued participation. What choice do we have? We can't quit and stop paying the people who taught kids, put out fires and arrested bad guys in decades past.

The city manager offers this suggestion, "Recommended is the designation of $1,500,000 of Vehicle Replacement Fund money for the FY 11-12 PERS payment."

Great, so now those old time cop cars we see rolling along in parades will become our actual police cars?

I don't propose we cut off pensioners. My mother, who's a retired teacher, would revoke my invitation to Thanksgiving dinner if I said such a thing.

Nothing is sacred in a shrinking economy so the target on the back of retirees' benefits is beginning to become much more vivid. As was the case with Kandahar and the relief wells, sometime in the near future we may all get drawn into the PERS battle whether we like it or not.

Harry Munns is a Redondo Beach Harbor commissioner and lives in the city.