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The Chickens Come Home To Roost (Video) |
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PENSIONS & THE ROAD TO BANKRUPTCY
By Michael Cohen
Pensions expert Alexander Rublacava told an Emergency BudgetLA meeting on Saturday that without pension reform Los Angeles is headed for bankruptcy. [LINK]
Rublacava was ahead of his time in 2006 when he called for pension
reform. His dire predictions were dismissed by the City's then CAO
Fujioka, Rob Wilcox, Deputy City Controller and others.
LA pensions are of the defined benefit type. That means that the taxpayers have to dig into their pockets to an unlimited extent to literally guarantee the retirement benefits of pensioners.
Rublacava told the group:
• For the equivalent of less than one year’s pay City employees upon retirement, many times in their 40's or 50's, far before social security retirement age, can draw, 65% to 75% and in some cases 95% to 100% of their salaries with cost of living adjustments for the rest of their lives.
• They also can be eligible to receive free health care coverage valued at about $1,000 per year. Health care coverage that the employee never contributed to during their career.
• Multiple, redundant pension commissions for the city's pensions should be consolidated, he said, saving the City between $20 million to $40 million a year.
• LA needs to balance the responsibility and risk with the pensioners and the taxpayers. Presently the pension commissions have no responsibility to the greater city good.
• Investments, made by the pension commissions, which may promise a high return turn can turn sour with the tax payer on the hook again.
• LA has the most generous benefits for its employees. Exceeding the federal government and most county and municipal governments.
Without pension reform, the Tyrannosaurus Rex in the room, Rublacava predicts the City will be in Chapter 9 bankruptcy in 1 to 2 years.
Anything else done to reduce the deficit is akin to rearranging the deck chairs on the Titanic
(Michael Cohen is a videographer for CityWatch.)
• Rublacava Video Link
CityWatch
Vol 8 Issue 9
Pub: Feb 2, 2010
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