Lodinews.com

default avatar
Welcome to the site! Login or Signup below.
|
||
Logout|My Dashboard

Can Lodi get a jump on a $17 million obligation?

Print
Font Size:
Default font size
Larger font size

Posted: Friday, May 17, 2013 3:39 pm

Last July I wrote a blog item commending the city of Lodi for steering clear of the underfunded retirement health benefit mess that Stockton fell into.

Then last past week, I learned the city has a $17 million unfunded benefit for retirees, some of which is for health benefits. Did I get the story wrong?

More likely, I fell into the trap that lies ready to snap on the ankle of anyone who tracks government spending: oversimplification.

Before I attempt to untangle this, let me add that the city brass urged the city council to set aside about a million dollars to reduce the $17 million. The council tied 2-2 and so didn't take its staff's advice.

I'll get back to that tie vote, but first, here are a few things I learned from deputy city managaer Jordan Ayers.

• The health benefit some city of Lodi retirees get applies to people hired after 1995, not those who retired after ’95. I didn’t say that back in July, but I thought it and that explains why I was surprised that the unfunded liability is as high as $17 million. Lot's of people might still get a health benefit.

• It's worth noting that some Lodi officials (my sources are Ayers and city attorney Steve Schwabauer) believe Stockton's unfunded retirement liability is in the neighborhood of $500 million — half a billion. Compared to Lodi’s, that’s an overwhelming debt.

• The $17 million is tied to the city’s duty to give retirees a benefit for their unused sick leave. Ayers said all the city’s employee contracts handle this the same way and all give pre-’95 employees a choice of four options for “using” their sick days when they retire.

• All four options convert the sick days to a fixed dollar amount. The three options that allow using the dollars to lower health insurance costs have been negotiated out of the Lodi's employment contracts and any city employee hired after ’95 can only convert the dollars to modestly higher pension payments.

• The $17 million is an estimate of the total of what all future retirees' unused sick pay benefit will come to as the present workforce reaches retirement. An estimate is an estimate.

• It’s a liability that will go on the books in the future, but there’s value in setting aside some of the money today so it doesn’t jump up and surprise future city councils.

• There is also value in giving taxpayers value for their taxes today instead of putting tax money aside for a future benefit.

That’s what the debate was about Wednesday night: What should be done with a little extra cash? Spend it today or set it aside.

I think the council should vote again and I’d urge Bob Johnson to join Mounce and Hansen and put the money aside.

Why?

Lodi, like all governments, have plenty of debt. Borrowing money is the opposite of saving for tomorrow. We've spent millions today in hopes that tomorrow will work out.

As the economy recovers, money to restore city services cut in the recession will probably come with it.

But more surely, there’ll be another rainy day.

More about

More about

More about

Rules of Conduct

  • 1 Use your real name. You must register with your full first and last name before you can comment. (And don’t pretend you’re someone else.)
  • 2 Keep it clean. Please avoid obscene, vulgar, lewd, racist or sexually oriented language.
  • 3 Don’t threaten. Threats of harming another person will not be tolerated.
  • 4 Be truthful. Don't lie about anyone or anything. Don't post unsubstantiated allegations, rumors or gossip that could harm the reputation of a person, company or organization.
  • 5 Be nice. No racism, sexism or any sort of -ism that is degrading to another person.
  • 6 Stay on topic. Make sure your comments are about the story. Don’t insult each other.
  • 7 Tell us if the discussion is getting out of hand. Use the ‘Report’ link on each comment to let us know of abusive posts.
  • 8 Share what you know, and ask about what you don't.
  • 9 Don’t be a troll.
  • 10 Don’t reveal personal information about other commenters. You may reveal your own personal information, but we advise you not to do so.
  • 11 We reserve the right, at our discretion, to monitor, delete or choose not to post any comment. This may include removing or monitoring posts that we believe violate the spirit or letter of these rules, or that we otherwise determine at our discretion needs to be monitored, not posted, or deleted.

Welcome to the discussion.

Popular Stories

Poll

Loading…

Featured Events

Mailing List

Subscribe to a mailing list to have daily news sent directly to your inbox.

  • Breaking News

    Would you like to receive breaking news alerts? Sign up now!

  • News Updates

    Would you like to receive our daily news headlines? Sign up now!

  • Sports Updates

    Would you like to receive our daily sports headlines? Sign up now!

Manage Your Lists