Wednesday Jul 11 2012
" ... that my child may have peace!"
By: Gabriel Hydrick Special to The News Messenger
One of Lincoln?s great intellectuals and steadfast commentators, Dave Gordon, placed a very good and important question before the City Council on June 26. Gordon asked that the city provide Lincoln residents with more information about the city?s situation with CalPERS ?so that the dummies in the audience like me who think they understand get the information so I can understand the extent of the problem.? I cannot speak for the audience but, from my perspective, there were no dummies in sight. While on the topic of dummies, in good humor and an effort to maintain your attention, I was just this side of a dummy in math class but, if there is anything I learned, it is that even complex math problems can be broken down to simple elements, such as prime numbers. Similar to complex, intimidating math problems, I think the great political questions before us are often made more complicated than need be and can be broken down to their prime numbers or principles whereby solutions materialize. The topic of labor benefits and pensions is complex, sensitive and politically explosive. Within this brief commentary, I will venture to answer Gordon?s request and outline the city?s situation with CalPERS, identify the prime factor of the situation and then place the great question before the citizenry for their consideration and action. First, pertinent background information should be presented. CalPERS or the California Public Employees? Retirement System is an agency within the California executive branch that provides pension plans to more than 1.5 million California public employees including your elected officials. CalPERS invests money, which is then used to pay for the cost of providing benefits to retired employees. Public agencies are required to contribute, depending upon how well the CalPERS investments perform. CalPERS shoots for more than 7 percent return but, in reality, gets just north of 3 percent. Guess who suffers an even greater wound when CalPERS wildly overshoots the target. The citizens. I will sum up our situation by citing two great sources upon which I cannot greatly improve. First, from Lincoln?s fiscal sustainability committee report, ?One rather shocking indicator of the health of the pension funds is the level of what is called ?Unfunded Liabilities.? This is a measure of the shortage of money in the pension pool compared with the amount of money that should currently be in the pool to pay pensions at some time in the future. As of June 30, 2010 the approximate combined (Safety and Miscellaneous plans) Unfunded Liability for the city of Lincoln was approximately $14.7 million. This is an increase of plus 9.5 percent over the previous year.? Second, from the Little Hoover Commission on Public Pensions for Retirement Security, ?California?s pension plans are dangerously underfunded. The result of overly generous benefit promises, wishful thinking and an unwillingness to plan prudently. Unless aggressive reforms are implemented now (by the California Legislature), the problem will get far worse, forcing counties and cities to severely reduce services and layoff employees to meet pension obligations.? This is our situation but if we continue to break the problem down, like prime factors, we can understand the fundamental situation, thereby exposing the solution. This leads me to the prime factor and great political question of this problem. Lincoln provides a defined benefits plan for employees and the nature of this plan is to accumulate debt for future payments. Therefore, the prime factor is debt. The question follows, will we, can we, manage this problem with debt? Debt cannot be politicized. Debt knows no bounds, is a respecter of no person, entity or political party. Debt will take all hostages without remorse. Debt incurred today to satisfy our gluttonous appetite of entitlement charges, binds and burdens our posterity with the steep price of our pleasures, luxuries and ?security.? If these be the prime factor and the question, then the materialized solution simply lies in Thomas Jefferson?s ethical argument that, ?We should consider ourselves unauthorized to saddle posterity with our debts and morally bound to pay them ourselves.? We have the right to bind ourselves but where do we acquire the right, again in the words of Thomas Jefferson, ??to bind the succeeding generation?? Previous generations have established an inheritance for us and we, likewise, must in the words of Thomas Paine, ??let that inheritance descend, with every mark of an honorable conveyance? upon our posterity. Are we to be the first generation to put ourselves before our posterity and have a better future than they? We have control over the situation and therefore I continue to echo the words of Thomas Paine, ?If there must be trouble, let it be in my day that my child may have peace!? The legislature has the power to move the laws but the citizens have the power to move the legislature! Gabriel Hydrick is a Lincoln City Councilman.