Upland’s Public Employee Pension Share To Increase By $1.5M In 2014-15

(November 29)  The city of Upland’s bleak financial outlook has grown even worse after the state’s public employees’ retirement system informed city officials that the pension rate the city can anticipate paying in the upcoming fiscal year will rise by $1.5 million.
Last month, Upland City Manager Stephen Dunn said his city was on the verge of bankruptcy and after having engaged in a series of fiscal gymnastics to balance the current 2013-14 budget, the city will require at least $3.5 million in additional revenue annually to continue to provide city residents and businesses with the same level of service the city is currently providing.
As of last month, Dunn said, the city’s general fund is hard-stretched to cover Upland’s bare operating expenses. Funding for street repairs, equipment and vehicle maintenance,  post-employment benefits, equipment replacement, economic development and solutions to the city’s growing homeless problem has been entirely depleted. The general fund accounts for most of the city’s services. It funds 73 activities related to the basic function of municipal government.  Dunn said.
In October, Dunn said that the only alternative to drastic service cutbacks consisted of revenue enhancement, most specifically a tax that would need to be approved by a majority of the city’s voters. To emphasize his point and support his case, Dunn referenced a 2012 auditor’s opinion from the certified public accounting firm Mayer Hoffman and McCann and Standard and Poor’s intended downgrading of the city’s credit rating. Mayer Hoffman and McCann said there are serious questions with regard to the city’s solvency to the point that in a short while “it will be unable to continue as a going concern.” According to Standard and Poor’s, the city, which has already been downgraded from an AA credit rating to an A+, is in danger of seeing its credit rating eroding even further. A municipality’s credit rating directly impacts the interest rate it must pay when borrowing money.
To balance the city’s current $39 million budget, Dunn said Upland’s entire municipal operation is  borrowing heavily from rapidly evaporating reserves, while relying on income from two of the city’s enterprise funds which remain in the black, its water and sewer service funds.
This sobering assessment was made before the California Public Employees Retirement System, known by its acronym CalPERS, informed Upland that based on its payroll, the city will need to up its annual contributions to the retirement fund pool by a whopping $1.5 million.  Dunn this week told the Sentinel that Upland is currently paying $6.5 million to CalPERS annually, “based upon budeted payroll and the CalPERS rate. That reflects a 36 percent increase for our general employees and a 29 percent increase for our public safety employees. Earlier this year we were informed CalPERS was changing their actuarials and I ran some numbers. That showed we could expect a rate increase of at least $500,000 or as much as $2 million. It turns out it was closer to $2 million,” Dunn said.
Although other cities are being hit with pension rate increases as well, Upland finds itself behind this financial eight ball in no small measure because of the growth of its staff during the last decade as well as concessions made to the city’s employees’ bargaining units during the tenure of former mayor John Pomierski, who was heavily supported by all of the city’s employee unions. Under Pomierski and his hand-picked city manager, Robb Quincey, the city increased salary and benefit packages for employees markedly. Subsequently, Pomierski was indicted by a federal grand jury for his involvement in a political corruption scheme that involved his taking bribes in exchange for using his influence as an elected official to forge backroom deals and arrange favorable outcomes for individuals and businesses with projects or applications being processed at City Hall. Pomierski pleaded guilty and is now serving a sentence in a federal penitentiary. Quincey has been indicted and charged with three felony corruption charges, including unlawful misappropriation of public money, gaining personal benefit from an official contract, and giving false testimony under oath. He has pleaded not guilty and is maintaining his innocence.
This complex of circumstances has led to open expression by some Upland residents that the runaway labor and pension costs that are plaguing Upland are vestiges of the ethos of public trust violations that occurred under Pomierski and Quincey. The implication is that employee contract terms favorable to Upland’s city employees were given to bind those employees to the mayor as part of an understanding and arrangement which allowed Pomierski’s depredations to take place. One outgrowth of that perception is a reluctance on the part of at least some of Upland’s residents to impose on themselves any municipal tax that will be used to pay for the perpetuation of generous pensions for retired city employees.

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