"A Crisis is a Terrible Thing to Waste"

By Chelsea Cody
OurLA.org

As I was meandering through the blogosphere this morning catching up on the latest dirt about the state's financial downward spiral (a little light holiday weekend reading) I came across a short item on LAist about people looking to buy California issued IOU's on Craigslist.

I wanted to know more so I went in search of the marketplace in California IOUs. Craigslist had plenty of them, dozens in fact.

While I didn't see any ads selling IOUs (yet) there were a wide variety of people looking to purchase them. Some buyers were looking to collect IOUs for posterity and as souvenirs, others were advertising IOU auctions and the ability to speedily match and connect sellers and buyers.

Most ads offered to buy IOUs at discounted prices, counting on some people's fears that the state will default on its obligation to repay.

Here's a sample: Private investor will pay you CASH now for any State of California IOU's issued to you instead of you waiting for payment due to you. If you need CASH now and can't wait for the state to solve the Budget I will buy your California IOU's and pay you cash. I am in the Los Angeles/Downtown area and only interested in working with LA based individuals. Please reply with your contact info and I will call you. Thank you.

Seeing as California has not issued IOUs since 1992 and that the interest rate on the 29,000 IOUs ($53 million) currently given out is 3.75 percent there is the potential for industrious (or conniving) people to make money if they could get their hands on enough IOUs.

The risk is lessened for buyers because the state, unlike city government, is obligated to guarantee payment. It then becomes a matter of when and how much?

One Craigslist advertiser, Glen Jones, has created a website called BuyMyIOU.com. He believes Californians unable to wait to collect on their IOUs may have to settle for an amount 50-60 percent of the value of their IOUs for payment. He hopes to connect to a lot of people holding the IOUs and to become a broker between buyers and sellers if he can get enough volume going.

"How'd I come up with this idea?  I was just reading about the interest rate the state was offering to have people hold these warrants/IOUs and thought about what type of incentives it would take for people to /make a trading market/ in these instruments," he said.

"II then thought it would be pretty cool to hold on to one of these docs.  I'm a professional economist and simply want one of these as a primary historical document. Not really expecting to get anything out of this other than a piece of paper."
 
This is one of the truly remarkable things about America; there is a market for everything, even -- or perhaps, particularly -- during times of crisis.

As California faces a growing  $24.3 billion deficit and as lawmakers continue to argue with the Governor over how to best shore up the state's finances (be that through cutting state programs or raising taxes on oil and tobacco products) this "fiscal emergency" means that State offices will be closed three days a month and that the state will continue to issue IOUs.

Many of which will be sold off for a fraction of what they are worth, as many banks will no longer be accepting IOUs come July 10.

Although the state will begin to cash IOUs Oct. 2 the online IOU market may very well be booming by then.

After all, people can't pay their bills, salaries or buy groceries with IOUs.




Thumbnail image for moua.jpgHere's the deal (Union-mou-Letter_of_Agreement_2009-06-26_TA[1].pdf) your elected city officials have cut to protect union jobs no matter what the cost to the public, and to the future of the city.

It's eight pages of giveaways and promises to protect union jobs without regard to the public interest. (The ninth page, the last, is missing and may contain even more damaging information).

The goal is to reduce the city's payroll by $320 million but there is no financial analysis yet provided that shows this deal will actually achieve that in the short term or that the huge costs built into it over the long term can ever be afforded.

On paper, the savings is achieved by enhancing pensions of 2,400 senior city workers to get them to retire, and deferring cost-of-living but not other raises for two years with commitments to make them whole with bonuses in the following years. It ensures they don't lose a cent through layoffs or furloughs, and most of all saves city officials from the task of making hard decisions on what services we can afford, the basics, and what we have to eliminate.

City Hall, after all, for too long has been a jobs program, not a services program. That's why it costs so much and does so little. There's no workplace discipline. Nobody gets held accountable for performance. It's all politicized and the public interest counts for nothing.

The mayor, fatigued by his lackluster inaugural address, has headed off to party in South Africa for nine days, instead of getting down to work as the steward of the city's affairs and putting his efforts into revitalizing our neighborhoods and making sure we get the basic services needed to create economic opportunity and rebuild LA's vanishing middle class.

This document, for all its gobbledygook, is a bill of indictment on the failure of leadership.

It is an appendix to the city budget which was balanced on paper by raiding bond money and special funds, transfering millions of dollars in general fund costs to the DWP which is raising rates with impunity and requiring residents and businesses to pay the full cost for services that should be, and have been provided with tax dollars.

You can read for yourselves how the city is promising it won't contract for any outside services if city workers can do the job no matter what the cost difference; how city workers will fill open jobs at the harbor, airport and DWP (all are exempt from budget cuts) whether they're qualified or not; how assets will be sold, money borrowed on credit cards and federal stimulus money stolen to protect city workers from layoffs and furloughs.

It doesn't end there.

This sweetheart deal actually guarantees the unions will get 25 percent of any new revenue source of more than $40 million and that in the event of a catastrophe that costs the city $100 million or more, only one third of the cost will be borne by the unions.

In other words, your elected officials have tied their own hands in dealing with this ongoing budget crisis for years to come and as this passage makes clear, they are on the same side of the bargaining table as the unions, leaving the public out completely.

"In reaching this agreement, the Coalition of LA City Unions has stepped forward ahead of all others and demonstrated its commitment to the long-term sustainabilty of the City workforce and the services its workers provide," the agreement says. "The City acknowledges the sacrifice and initiative taken by the Coalition and will use the Mutual Gains process to address concerns that Coalition members are treat equitably for the life of this agreement."

Page 3 of the document is the most telling as it shows the length city officials will go to avoid actually downsizing city government and learning to live within the means available:

mou3.png



You might have noticed the mayor in his inaugural address promised to give us all jobs, clean the environment, get traffic moving, get rid of gangs and crime and educate our children.

He said nothing about actually running the $7 billion enterprise called city government or the airports, harbor or DWP -- the job he was elected to do. And he certainly didn't offer a clue as to how he was going to pay for all those monumental good works he promised, let alone balance the city budget or pay for the sweetheart early retirement deal he's offered the unions.

It's only day two of the new world order that he, Controller Wendy Greuel, City Attorney Carmen Trutanich and the City Council pledged to bring us so let's start with an easy one since they all swore to give us transparency and accountability: Show us the money.

They balanced the city budget on paper with a proposal to sweeten the pensions of 2,400 senior city workers without spelling out how much it would cost for buyouts now, how much it will add to pension costs in years to come, how much it will mean in higher salary costs to promote people into those positions left vacant by early retirements.

In fact, it's so full of holes that the union the City Hall political machine hates -- Robert Aquino's Engineers and Architects Assn. -- already has gone to court to block the deal.

And the person who plays a key role in managing the early retirement deal -- LACERS Pension Fund General Manager Sally Choi -- has told city workers that even she doesn't have a clue.

"Like you, we are still awaiting answers to questions...We do not know at this time what the final terms of the Retirement Incentive Program will be, when exactly it will take effect, and who it will impact," Choi wrote city workers on Wednesday. "However, I can tell you that as soon as we have any information, we will share it with you so that you can process your retirement and plan for your future."

Choi went on to outline seven
"What We Know" points:
  • The City Council approved the concept of an Early Retirement Incentive Program (ERIP) on Friday, June 26, 2009, but details of the program are not finalized yet
  • The City Council also adopted a motion that states LACERS Members who retire after June 29, 2009 and before July 1, 2010 that are eligible for the ERIP shall receive all incentives and benefits under the retirement incentive program
  • LACERS only knows some of the proposed details regarding eligibility requirements, but we do not yet know the full scope of the program or how it will be administered
  • LACERS does not know at this time whether a retirement incentive program will ultimately be adopted by Council or the number of people, classifications, and bargaining units that will be allowed to retire under the program; and which, if any, Members will be affected by the motion.  For example, some classifications may be capped (limited number in class would be able to retire under a retirement incentive program).  Until the final provisions have been adopted, LACERS will not know the details of how the retirement incentive program will be applied
  • The final approval process may take months as the retirement incentive program presumably will need to be approved by unions and LACERS members before it goes back to the City Council for final approval and adoption
  • The 45-day opt-in period for the retirement incentive program will not start until after the program has been adopted by City Council by ordinance
  • If Members are considering retirement before formal Council adoption and clarification of the retirement incentive program, LACERS will be asking them to sign an acknowledgement that they are retiring without knowing whether the retirement incentive program will apply to them and that they are assuming that risk.
I know it's asking a lot of you all but actually to read Choi's "What We Know" points. They should have been called "What We Don't Know" since she doesn't really know anything about the details of the deal.

In truth, nobody knows -- not the Council when it approved it, or the union bosses, or the bureaucrats or the workers who are supposed to vote on it. Certainly not the public who will pay for it.

The terms of this deal are so vague that Choi has warned city workers who decide to retire in the next two months of the approval process will have to sign a waiver acknowledging "they are retiring without knowing whether the retirement incentive program will apply to them and that they are assuming that risk."

This is no way to run a city.

We all have a right, a necessity, to know all the costs and terms of this deal before the Council acted on it and made it a done-deal before the details were actually defined.

This is only Day Two of the New World Order promised us by our newly-elected city offiicials. Let's blame the old regime that put the deal together even though the characters are almost entirely the same. Let's believe for a minute that they didn't know then what they know now.

The question then is: When are they going to come clean about it?


Put aside your skepticism, forgive the past and move forward -- that's my advice for the start of the next four years of city government.

But never forget what they've done to you and our LA and take their inauguration day.promises as gospel.  Hold them to their words.

The mayor's speech outlined his achievements -- as he measures them -- in jobs, environment, public transit, cimgreen energy, transportation, public safety -- and set them as his priorities for his second term.

Astonishingly, as commentator Shirley Bebitch Jeffe notes at the end of the video, he makes only an oblique reference to the city budget catastrophe he's overseen -- something he blamed on forces beyond his control. And he promised to hit residents hard with DWP rate increases to pay for his green energy at any cost program and to subsidize companies' utility costs to get them to locate here.



In her speech after being sworn in as City Controller, Wendy Greuel echoed the themes of her predecessor, Laura Chick, by pledging to be an independent watchdog on how the public's money is spent.

In a strong, straightforward speech, Greuel acknowledged the serious money problems facing the city now and in coming years and promised her first project will be to provide the public with a clear and detailed picture of city finances.

Those are big promises and you can be sure the public will be watching.

chick-governing.jpg For her part, Chick is making a splash in Sacramento as Inspector General overseeing spending of billions of dollars in federal stimulus money. She's on the cover of a national magazine, Governing.

I'm quoted as saying, "She was something like a Joan of Arc standing in the way and calling attention to the greater excesses of the system. At City Hall they hate her guts. But out in the community, she's never been more popular."

In a dramatic last-minute shift, Councilman Jose Huizar proposed a "prenuptial agreement" that would require the Autry National Center to renovate the Southwest Museum in Mt. Washington and operate it as a living museum as part of its lease agreement with the city for its planned expansion in Griffith Park.

It wasn't clear that Huizar's Solomon-like "splitting the baby" proposal fully pleased either of the warring parties.
huizar.jpg
The Autry took over the Southwest and its vast collection of artifacts of the Old West in 2003 at a time when the city's oldest museum was in disrepair and had suffered years of mismanagement  It has spent $7 million on repairs to the century-old facility and promised to restore it but refused to enter into a binding agreement.

Eastside activists have waged an intense campaign to block the Autry's 79,,000 square-foot expansion that would more than double the size of its Griffith Park museum and demanded that the Southwest be fully restored  and operated as the main site for display of the collection of 250,000 artifacts.

On Tuesday afternoon before an overflow crowd in the City Council chambers, the years-long fight came to a head before the five-member Board of Referred Powers.

"While I believe that the Autry is acting in good faith when it says it is committed to renovating the Southwest Museum, I think the community deserves to have a binding commitment in writing to ensure that they and future generations enjoy one of Los Angeles most treasured
cultural institutions," said Huizar, who represents the area.

The board -- Janice Hahn, Ed Reyes, Bernard Parks, Bill Rosendahl and Tony Cardenas -- gave Huizar four weeks to negotiate the agreement with a firm timeline for the Southwest's
reopening.

Here's a report from the meeting by OurLA.org writer Chris Rowe, a West Hills Neighborhood Council member:
Thumbnail image for southwest.jpg
At the start of the meeting, it was announced that Councilmember Huizar wanted to speak first. And the feeling from the "Friends of the Southwest" was one of fear. Would this Councilmember ask his colleagues to support the Autry.
 
In a surprise to everyone present (Friends of the Southwest), and the mood was one of disbelief, Huizar spoke about a document signed by the Autry that promised to protect both museums. He stated that he wanted a " Prenuptial Agreement" -- a very finely crafted document that was airtight that would protect the Southwest Museum and its contents from being taken by the Autry for the purposes of creating the grander "Autry National Center" at Griffith Park.
 
The Autry's representatives stated that this hearing had only to do with the EIR for the Autry  - and nothing to do with the Southwest Museum. They believe that what the future of the Autry is will have no negative impact on the Southwest Museum at all.
 
Brenda Levin, the architect for the expansion of the Autry gave a beautiful presentation of the renderings of the future museum in Griffith Park. Levin spoke about how this beautiful modern museum of glass would blend with the landscape and incorporate the most modern of designs that fit the concept of "Green Building". As she spoke about how this glass structure was more natural -- I was thinking: "How much more natural can you be than the adobe of the Southwest?"
 
VICA's president Stuart Waldman and many friends of the Autry spoke in favor of the expansion at the Griffith Park site.
 
Native Americans -- including Rudy Ortega Jr. of the Tataviam tribe -- favored the Autry. At least five representatives from different Native American groups said the Autry would be a place where more small children would learn about their Native American cultures and the history of these people and the missions in the area.
 
Daniel Wright of the Friends of the Southwest spoke about the need to protect the Southwest Collection -- to keep it at the Southwest intact. He said Levin had created a rendering of an expansion of the Southwest on its current site prior to being hired to design the expanded  Autry. A great deal of fuss had been made about the many projects that Llevin had designed throughout the City.
"We're not going to allow an election to impede the future, to impede what we have to do in the city."  -- Mayor Antonio Villaraigosa, June 29, 2009, on his commitment to go ahead with the solar energy plan owned and installed by the DWP despite voter rejection of Measure B.

Since I'm so obsessed with the goings-on at City Hall and my dream that we the people can actually bring about some semblance of democracy and make things better for everyone, the end of the city's fiscal year seems a good time to take stock of the last 12 months.

What a year it was! The people of the city showed signs of awakening and scored a long series of victories against the City Hall machine even as our elected officials showed just how shameless and arrogant they are.

They gave 6 percent raises to city workers, cut costly sweetheart deals with the rich and ran up spectacular deficits but proved themselves too weak and corrupt to take any effective steps to protect the future of the city.

But it was the mayor, in the closing hours of the fiscal year, who symbolized best City Hall's contempt for the public and the public interest. After the community rose up and defeated Measure B in March, he and other city officials promised an open dialogue on solar energy policy with business-labor-activist coalition but as he said Monday election outcomes don't matter, nor do promises.

If these were truly public servants instead of pretenders to royalty, they would wear sack cloth and crawl on their knees to the steps of City Hall's South Lawn on Wednesday for swearing in and inaugural ceremonies.

They would beg for our forgiveness and swear on the Bible to change their wicked ways. Instead, they will magnify their meager achievements and ignore the enormity of their failures even as the searing winds of change blow across the city.
 
Blogging LA: July 1,2008 - June 30, 2009


July: My year began July 1 with Chapter One of the "whodunit" about who's killing my neighborhood, a mystery that has grown to 15 chapters about how the city dealt with the illegal conversion of a modest single-family home in my neighborhood into a three-unit apartment building. It took most of the year to get the house more or less restored to building codes but the culprits have run circles around the legal system and will probably get off with a slap on the wrist.

Two weeks later, the Saving LA Project staged a rally at City Hall for a "New Spirit for LA" and to protest the endless string of rate, fee and tax hikes, sweetheart deals with unions, developers and contractors and the failure of our elected officials to solve the severe problems in our city and in our schools.

AUGUST: The dog days of August saw the introduction of Bruno, the LA Watchdog as he savagely attacked my swimming pool when the filter motor started up. There also were a lot of hot topics that needed watching: Southwest Museum, Home Depot in Sunland-Tujunga, South Central Farm, City Attorney Rocky Delgadillo's refusal to allow public scrutiny of his office, higher speed limits on surface streets, new planning rules that let developers get away with murdering neighborhoods.



SEPTEMBER: The deadly Metrolink train crash in Chatsworth in September exposed just how incompetent our officials are and a HUD audit exposed a piece of the scandal in the Housing Authority of the City of LA  Then there was another sweetheart deal for billionaire Phil Anscutz and my prediction of looming economic catatastrophe.

OCTOBER: One judge slams city's lack of transparency as illegal, another finds the DWP stole $160 million a year from ratepayers, first hint of scandal in city pension funds, mayor takes baby steps to deal with giant budget deficit -- City Hall's failings grow more apparent even as the community mobilizes to fight for reform.

DWP Commission President Nick Patsaouras takes up the call for a Ratepayer Advocate and quits when the mayor nixes the proposal. Planning Commission President Jane Usher lays out how to fix digital billboard fiasco and will quit soon enough over mayoral opposition to smart growth and healthy neighborhoods. The community even moves toward a victory to protect Griffith Park from development.

Editor's Note: If you support retaining the Southwest Museum as a a living museum, you can help by going to the Friends of the Southwest Museum's website  and joining their email and fax campaign.



Of all the dozens of city issues I've learned a lot about in the last year or so, the one that befuddles me the most is the Battle of the Museums -- Autry vs. Southwest.

As things stand, we have a really mediocre facility in the Autry in Griffith Park and a rundown facility in the Mt. Washingon/Glassell Park area that represents the oldest museum in LA, a landmark on the Eastside.

For all I've paid attention to the arguments on both sides, I can't understand why we can't have two wonderful museums dedicated to the artifacts and history of the Old West. The Southwest Museum's vast collection -- now owned by the Autry -- could sustain both museums as valuable community assets if there was the will and the money.

southwest.jpgThe showdown in this long war comes Tuesday at 3 p.m. in Room 350 before City Hall's Board of Referred Powers with both sides mounting intense campaigns by fax and email and mobilizing their supporters to attend.

It is a foregone conclusion that the board -- Janice Hahn, Ed Reyes, Tony Cardenas, Bill Rosendahl and Bernard Parks -- will green light the Autry's doubling its size and the Southwest Museum will get fixed up on the cheap and used as little more than classrooms.

I just don't get it.

The city's cultural and political leadership valued the Southwest and its collection so little they allowed the building to deteriorate and the collection to be looted until it reached the point that the Autry came in as the white-hatted hero with promises to restore it as a living museum.

But that isn't what happened. After the takeover of the Southwest, the Autry started making plans to operate only one museum, not two as promised.

It's a question of money, or the lack of it. Autry32.jpgThe "Singing Cowboy" died at his Studio City home in 1998, leaving an estate worth hundreds of millions of dollars to his widow Jackie.

Despite promises the Autry Museum will eventually inherit a good chunk of the estate when Jackie dies, it has operated on a relative shoestring for many years and it's far from clear it has the money to expand the facility.

The questions I keep wondering about are these:

* If the Autry now can raise the huge sums needed to expand, why can't it raise the much smaller amount needed to restore and operate the Southwest?

* If the city's leaders think there is so much value in a first-rate museum celebrating the Old West, why did they neglect the Southwest for so long, why have they not come forward with money?

* Where's Hollywood? Don't the studios have a stake in promoting the Cowboy and Indians story anymore, in actually contributing to the city's cultural life instead of running away elsewhere to make movies on the cheap?

For my money, this conflict epitomizes the cultural poverty of the city and the lack of political will to create great institutions like Disney Hall and and preserve local institutions as well like the Southwest Museum.

City Hall could not start down that happy trail towards a greater LA on Tuesday by supporting the two-museum solution but don't bet on it.
Editor's Note: This is the full version of an opinion piece that appeared in the Daily News.

By Danielle Elliott with
Michael Several
Community Correspondents

Paul Koretz was formally declared the winner of the Council District 5 runoff election on Tuesday - a victory that was not surprising except for the slim margin he won by over community activist David Vahedi.

Koretz was backed by the city's power structure: koretz1.jpgMayor Antonio Villaraigosa, County Supervisory Yaroslavsky, two local Congressmen, the Board of Realtors and several city unions and others who stand to profit from his time on the Council. He had name recognition, serving 12 years in the State Assembly and as Mayor of West Hollywood.  And he outspent his opponent approximately 3 to 1.

But he didn't win the hearts and minds of nearly half his constituents, particularly homeowners and residents active in trying to make our neighborhoods better.

There were also voter irregularities. Normal polling places were changed at the last minute without notification. Voters were told they were not on the voting role and were not offered provisional ballots. Sixteen precincts were required to vote by mail only and the voters that tried to find a poll to vote only to be turned away.

The closeness of the election says something about the liberal Democratic district and the tenor of the City.

The east side where I live is a mix of residential and commercial - the goal of modern urban planning philosophy.

But city policy, despite the oft-repeated Smart Growth mantra, is causing dramatic changes in the neighborhood.

Little of the new commercial is for the local residents. You don't see the small markets selling fruits and vegetables and staples or hardware stores or shoe repairs.

They have been displaced by businesses that target people who live outside the area such as restaurants, bars and trendy boutiques, exotic plant shops, and incense and candle stores. These aren't neighborhood mom and pops. They are owned by outsiders hoping to catch some of the gold from the oversized Grove, Beverly Center and Beverly Connection.

They don't have the same stake in the neighborhood and attract customers from other areas whose cars clog our streets and take up the limited parking that's available.

This invasion has given rise to strengthened home owners associations.  And it was here that Vahedi had his support.  The closeness of the election is a testament to the strength of the home owners associations as a political force.

They are voluntary organizations, community based, that are a bridge between people and their government. They are a countervailing force to the influence that money and connections distort public policy. They are seen by developers and government officials as anti-growth, insular and indifferent to the greater good.

But it is not development that residents oppose. It is the nature of the development and corruption of the development process that angers and frustrates the community.

A voice for disenfranchised residents who are true stakeholders in their communities and leadership in a City Council more committed to political theatre than good public policy is what the people who voted for David Vahedi wanted.

In his June 5, 2009, LATimes blog article Supervisor Zev Yaroslavsky wrongly called this resident backlash "Anti-Development Sentiment".  The readily accepted NIMBY terminology disguises the true sentiment of the resident stakeholder----Anti-Corruption Sentiment. There has been an imbalance in which special interests have used their financial resources to get their way.

The city has created a master plan to control development but routinely grants variances to its own rules  for those with political and financial clout, the same people who funded Koretz' campaign as they did his predecessor Jack Weiss'.

That's why residents are angry. There are too many liquor licenses, too many large high density buildings being permitted without sufficient infrastructure and not enough parking or attention to what the community wants.

With such a narrow victory, Koretz does not have a mandate to lead. Like Weiss before him, Koretz could continue down the path he has followed and hope to stay in office with the money and support of outside interests.

But he should take note of the trend. Weiss almost faced a recall and a neighborhood activist almost won the May 19 runoff.

The community is getting stronger and hopefully Koretz will reach out to homeowners and community activists and make use part of his team to balance his leadership and fulfill his campaign promise of standing up to special interests.

UPDATE: Mayor Antonio Villaraigosa will hold a 3:30 p.m. press conference with union leaders on the deal with city unions. His press release () calls it a "MAYOR-DEAL.doc
landmark agreement (that) will save $500 million over two years 
without layoffs through early retirements and raise deferrals" but
no mention of what it will cost taxpayers.
 
Meeting behind closed doors, the City Council gave to unanimous agreement to give 2,400 city workers as young as 55 sweetened benefits if they retire early.

The vote was no surprise and requires the agreement of all six unions that make up the Coalition of Unions with 22,000 members. A similar deal is likely to be offered to police, firefighters and other city workers but not the DWP, which is expanding instead of shrinking despite the economic crisis.

"We can't afford not to do it," Councilwoman Janice Hahn told the Times after the vote.

Added Councilman Richard Alarcon: "We're doing our best to save city services."

The deal requires deferring cost-of-living pay raises for two years but requires the city make up the lost money plus a bonus in the following years. It also calls for unions to up their contributions to their pension fund from 6 to 6.75 -- far below Social Security contributions for far better benefits -- to fund the early retirement costs but doesn't impose the increase for two years and ends it in 2026.

The Times reported there are serious financial and legal questions about the deal.

Gary Toebben, president and CEO of the LA Chamber of Commerce, has called for a thorough financial analysis of the plan.

"The public deserves a very thorough briefing when the council gets out of their closed-door session about what impact this will have on the budget over the next five years," he said today. "Because, ultimately, the taxpayer will end up paying the bill. They're not in the room. But they'll end up paying the bill."

Still, the Chamber later issued a statement saying it "applauds Mayor Villaraigosa, the City Council and public employees union leaders for their hard work and dedication during these lengthy and difficult contract negotiations. Saving 500 million dollars will be very helpful during this period of economic downturn."

The Engineers and Architects Union, under siege from the SEIU which is backed by the mayor, issued a similar call and questioned where the plan would withstand a court challenge.

"The [early retirement plan] that they're proposing is not legal," said Bob Aquino, EAA executive director, which represents roughly 7,800 city workers not included in the negotiations told the Times.

Editor's Note: Read the plan the City Council will vote on today to sweeten the package for 2,400 city workers to get them to retire early. It gives the unions until 2026 to repay the pension and other costs by raising their contributions from 6 to 6.75 percent during that period. The deferred wage increase element similarly will make city workers whole within five years. Will this really solve the city's budget and pension fund crisis?


EARLY RETIREMENT INCENTIVE PROGRAM (ERIP) MANAGEMENT PROPOSAL 6/25/09


1. The goal of ERIP is to separate 2,400 employees from City service as quickly as possible.
2. Benefit enhancements as provided on June 22,2009
(see attached). Add $15K to Scenario E.
3. Accumulated Sick and Vacation time will be paid out over two separate tax years.
4. Employees shall only have the retirement option to select ERIP during the window period (the
choice to select the standard LACERS retirement shall not be allowed during the ERIP window
period).
5. Window period of 45 days.
6. Management shall determine the order of the retirement dates for employees electing to retire
during the window period.
7. After all employees who enroll for the ERIP have retired through the program, the LACERS'
actuary shall determine the total cost of the ERIP by calculating the difference between the
increase in the Unfunded Actuarial Accrued Liability (UAAL) and the decrease in the Normal
Cost (based on the actual employees retiring from ERIP and including the backfill assumptions
provided by the actuary). This cost shall be an obligation of the Unions.
8. The additional cash components of ERIP shall be an obligation of the Unions.
9. Payment for the two obligations identified in items 7 and 8 above will commence on
July 1, 2011 and end on June 30, 2026 or until the sum of the obligations identified in items 7
and 8 are fully paid, whichever comes first. The payment shall consist of an increase in the
active employee retirement contribution rate of three-quarters (3/4) of one percent (0.75%).
10. The employee contribution rate for employees hired prior to 1983 (i.e. defrayal group) shall be
adjusted to 6% upon ratification of this agreement. Commensurate with item 9 above,
employees in the defrayal group (similar to all other employees) shall have their retirement
contribution increased from 6% to 6.75% on July 1, 2011. Savings from the elimination of
defrayal shall be credited towards the target savings figure (in items 7 and 8 above).
11. Once the City has recouped all costs associated with the ERIP as identified in items 7 and 8
above, the retirement contribution rate will be reduced by 0.75% to 6% for all employees.
12. As part of its Normal Cost calculation, the LACERS' actuary will provide an update on the cost
(identified in items 7 and 8 above) and savings (identified in items 9 and 10 above) so that
contribution rates may be adjusted accordingly to account for shortages and surpluses
collected towards the payment of the ERIP. The actuarial updates shall not occur later than
October 1, 2016, and October 1, 2021. The City and Unions will meet at least once annually
after the release of the actuary's report to assess the progress on eliminating the obligation.
13. Certain classifications will be excluded and/or capped at 20% (see attached lists).
14. Each Union shall conduct its own membership vote. Ratification by each bargaining unit must
be completed and the CAO notified in writing of ratification within three weeks of Council
approval. Units representing a majority of the LACERS members must ratify all of theEARLY
provisions of the retirement package. Compliance with this provision will be based on the
Wages and Count for full-time employees dated November 17, 2008.
15. An Early Retirement Incentive Program that is cost-neutral to the City is a critical element
of the parties' collaborative partial solution to the City's long-term economic viability.
Therefore, the parties agree that should there be a successful legal challenge to either
mechanism (end of defrayal or increased employee contributions) designed to ensure cost
neutrality, the parties will meet under the Mutual Gains process to discuss and agree on
alternative measures to ensure cost neutrality. Should the parties fail to agree on
alternative measures that will ensure cost neutrality within 60 days of the City's exhaustion
of all appeal options in the state court system against a successful legal challenge, the
City may invoke established bargaining practices to ensure cost neutrality as envisioned in
this agreement, i.e., payment of the actual incremental cost of the ERIP and any refund of
previous payments toward this goal required under the successful legal challenge.

"HELP SAVE LA"

Join the movement to take back City Hall. Get involved in your local community groups or come to the Saving LA Project Town Hall on Saturday June 13 at 1 p.m. at the Hollywood City Hall, 6501 Fountain Ave., Hollywood. City Hall has created a huge budget deficit and shown no willingness to take effective steps to reign in spending. Instead, we face severe service cuts and big increases in DWP and other rates and fees. Don't be a bystander. Get involved and help save LA. >

Support OurLA.org

Mainstream news media are shrinking every day and the era of Community Journalism is getting stronger. OurLA.org -- a community-based online newspaper for the 21st century -- is now in beta test mode and gearing up for launch. Our LA is a tax-deductible non-profit that belongs to the community and depends on your efforts as citizen journalists as well as professional journalists. It brings together the content of local websites and bloggers, professional journalists and experts, into a single comprehensive LA news site. Email me at ronkaye@ourla.org if you want to volunteer or let me know about community websites in your area. You can register at www.ourla.org or make a tax-deductible contributions by sending a check to Community Partners for the benefit of OurLA.org to Community Partners, 1000 N. Alameda St. Suite 240, Los Angeles 90012 or by credit card at http://www.communitypartners.org/donate.html

About Ron

Ron Kaye is the former editor of the Los Angeles Daily News where he spent 23 years helping to make the newspaper the voice of the San Fernando Valley and fighting for a city government that serves the people and not special interests. Twice in recent years, Los Angeles Magazine listed Kaye among the city’s most influential people, specifically in the area of politics. Kaye has been variously described in the media as the “accidental anarchist,” “the Patrick Henry of the San Fernando Valley” and a “passionate populist.” He is now committed to carrying on his crusade for a greater Los Angeles as an ordinary citizen. Previously, Ron worked at the Los Angeles Herald Examiner, Associated Press, Cleveland Plain Dealer and The Australian as well as papers in Fairbanks, Alaska and Yakima, Wash. He also wrote for Newsweek magazine, The Guardian in London and the National Enquirer.
You can email me at ron@ronkayela.com