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Call 911: Fire & Police Pension Plan is Dying |
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LA Watchdog
By Jack Humphreville
Despite the cloud of scandal hanging over the Fire & Police Pension Plan and the 23.5% loss ($3.4 billion) in the market value of its investment assets, the Board of Fire and Police Pensions Commissioners has quietly changed the arcane rules that will permit the City to decrease its cash contribution by $230 million next year.
This failure to properly fund the Pension Plan weakens its long term financial viability, endangering the retirements of its 26,000 members and their families.
For the year ended June 30, 2009, the unfunded liability of the Pension Plans increased 3.3 times, from under $1.8 billion to about $5.9 billion, a $4.1 billion increase. The unfunded portion increased from 11% to 35% based on market value. This means that the value of the assets needs to increase by 54% just to equal the value of the Total Future Benefits as of June 30. Of course, the increase will have to be substantially more since the benefits are increasing every year, such as the 4.6% last year.
In addition to these unsound financial decisions, the Fire & Police Pension Plan is involved in the ever widening “pay to play” scandal involving public pension plans. Two Mayor Villaraigosa appointments, investment manager Elliott Broidy and union leader Sean Harrigan, resigned when it surfaced that they had been served with subpoenas by the Securities & Exchange Commission.
And on Thursday, Villaraigosa campaign contributor Broidy pleaded guilty in a New York State court to corruption and felony bribery charges, forfeited $18 million, and agreed to cooperate with the authorities, including the Securities and Exchange Commission and the FBI.
The Commissioners need to rescind their grossly negligent decision to expand the Market Value Corridor and lengthen the “smoothing” period.
The Commissioners must demand that the City make the necessary payments so as not to weaken even further the Pension Plan. Alternatively, the members should replace their current representatives.
Do not let City Hall’s financial cancer, its profligate ways, and questionable ethics spread to the Fire & Police Pension Plan.
(Jack Humphreville is the President of the DWP Advocacy Committee and the Ratepayer Advocate for the Greater Wilshire Neighborhood Council. Humphreville is the publisher of the Recycler -- www.recycler.com . He can be reached at
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) ◘
CityWatch
Vol 7 Issue 100
Pub: Dec 8, 2009
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