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New union contract hikes employee pay and pensions - and saves money, Met says. OC’s not buying it
September 4th, 2009, 6:00 am · 34 Comments · posted by Teri Sforza, Register staff writer
The board of the storied Metropolitan Water District of Southern California - the giant water importer that enables 19 million of us to live in a desert - will vote Sept. 15 on a new union contract that would hike employee pay and pensions.
The new five-year contract, which would run through June 2014 (new-met-union-contract), could hike pay up to 23 percent over its life if the economy goes swimmingly. Raises would be smaller - 11 percent or so - over the five years if the economy is just OK; and raises could stall at 2 percent if the economy goes into “deflation” (though there would be no salary cuts, the contract specifies.)
It would also hike the pension formula for retirees by 25 percent, as we’ve reported before. That would cost some $70 million over the long haul, and comes at a curious time, when Met’s investments in the California Public Employees’ Retirement System have tanked at least $400 million.
As generous public pensions have become a hot-button issue, this proposal has generated outrage. Reps from some local cities and water districts (who buy water from Met, and then sell it to you) are voicing their opposition. Some of our more spirited readers are barraging Met with emails and phone calls to register their displeasure. And now - brace yourselves, Met phone bank operators - the call to arms has gone out from none other than KFI 640 AM’s John & Ken Show. (That Met’s water rates just went up 19 percent, and are slated to rise another 12 percent in about a year, only enflames passions.)
Met, suddenly embattled, is circulating a defense of the contract to its member agencies in advance of the Sept. 15 vote (mwd-contract-highlights). The memo is heavy on adjectives, calling the proposed contract ”a smart, prudent deal,” “groundbreaking,” “innovative” and “inventive. ” And hey! The deal will actually save $21 million over five years through “employee concessions,” it says. What’s not to like?
HUH?
This was rather hard for us to wrap our minds around, so we were gratified to finally catch up with Met General Manager Jeff Kightlinger on Thursday. How, we asked, can Met possibly save money on a contract whose permanent pension hike is expected to cost $70 million over its life?
Perhaps the key is not to look at the pension hike over the cost of its life.
Kightlinger (right) said that the (permanent) retirement enhancement will cost Met $9 million more per year. The unions, in exchange, came in with (five years’ worth of) “givebacks” totaling roughly $13 million a year. Thus the net savings of $21 million over the contract’s five-year life.
Those “givebacks” include:
- Elimination of annual payouts for unused sick leave and vacation;
- Elimination of one paid holiday and one personal leave day;
- Reductions to Met’s 401(k) matching contributions;
- Greater employee contributions towards retiree medical costs.
(Yes, Met employees get 401K matching contributions as well as a guaranteed pensions.)
TWO TIERS
Met stands to gain much more than the $21 million ”if the status quo is held,” Kightlinger said. Why? Because the contract ushers in a two-tiered retirement system (of the type that the governor has championed, and that some experts say is nearly worthless at saving money).
Right now, Met foots the bill not only for the employer’s contribution to CalPERS, but pays the employee’s contribution as well. Sweet!
This contract will require existing employees to pay 2 percent to fund their own retirements; and will require new employees to pay the entire 8 percent employee contribution, Kightlinger said.
As the average age of Met’s work force is 49.5, “over the next 10 to 15 years we will see significant turnover, maybe two-thirds of our work force, and those new employees will be paying that full 8 percent,” Kightlinger said.
And that, he said, will help fund the district’s underfunded retirement obligations. “This arrangement, rather than hurting, will strengthen us over the next 15 years.”
Yes. But…um…do forgive us for getting stuck here. Met’s $400 million loss in CalPERS? What about that?
OH. THAT.
“
The PERS issue is a true problem,” Kightlinger said. “An absolute issue that will mean greater employee and employer contributions to keep PERS whole. This particular deal, actually, leaves Met in a better position than without that deal. But it doesn’t solve this issue. It’s not intended to.
“I understand the concern with PERS and the psychological issue of, ‘Gee, we’re raising our benefits in a tough economic climate.’ But the reality is, with gains made in the two-teir system, Met is financially better off with this deal than without it.”
Met has about 2,000 employees. It is America’s largest provider of treated drinking water, delivering water to the aforementioned 19 million customers in Los Angeles, Orange, Riverside, San Bernardino, San Diego and Ventura counties.
OH, PLEASE.
Folks in Orange County are refusing to drink the Kool-Aid.
“Conceptually the risks to the Metropolitan Water District over the long term financially appear to far exceed any short term negotiating gain,” Kevin Hunt, general manager of the Municipal Water District of Orange County (which holds four seats on Met’s board of directors) told us recently. 
Slightly more colorful was new MWDOC board member Jeff Thomas (right), a bond manager by trade who has a much better-than-average grasp of finance. “You kind of have to scratch your head and wonder, ‘What are they thinking?’” said Thomas.
“These temporary givebacks saying ‘we’ll balance it’ look good on paper, and employees are giving back things I know are important to them. But the givebacks are temporary, and what they’re getting is a permanent fix to their pension that’s going to give them a lifetime benefit that can never be undone. It’s like getting the camel’s nose under the tent, before you know it the camel’s in there sleeping with you.
“We’re in an economy where people are being laid off, furloughed, losing their homes, worried about how to make ends meet. And Met is raising their water rates 31 percent over two years, asking them to conserve, and then asking for a 25 percent raise in benefits. What person in their right mind would agree to that?
“I will not support them on this. I believe it will result in the ire of our voters. I’m worried about people coming out with pitchforks.”
UNITED FRONT?
Behind the scenes, Orange County officials are trying to convince their brethren in San Diego and Los Angeles counties to stand with them on Sept. 15, and send the negotiators back to the drawing board on the pension hike.
San Diego officials declined comment, but are reportedly considering it. Los Angeles officials didn’t get back to us by deadline, but reportedly support the contract as is.
It was just a couple of weeks ago that Ron Seeling, the CalPERS chief actuary, tried to give everyone a reality check.
“I don’t want to sugarcoat anything,” he said, according to a story in the Capitol Weekly. “We are facing decades without significant turnarounds in assets, decades of - what I, my personal words, nobody else’s - unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan (police and firefighters) … unsustainable pension costs. We’ve got to find some other solutions.”
Forgive us, but hiking pension formulas is probably not what Seeling had in mind.
And as Met’s own expert told Met’s own executive committee last week, “Losses in CalPERS will result in increased contributions down the road. Eventually, you’ve got to pay for this.”
Anyone care to venture a guess on who “you” is?
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34 Comments
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It would be approaching criminality for the Board to approve the contract as is.
SoCoDave says:
It would be approaching criminality for the Board to approve the contract as is.
==============
You think the board gives a ****? It’s not their money. They don’t care-we have seen this going on now for ove a decade-and it keeps getting worse-yet these clowns keep raising gov pensions and pay and benefits-while we are in a friggen depression.
Similar pension grabs almost bankrupted San Diego. Once a pension benefit / increase is granted, it cannot be taken away. Public Pensions are the next great threat to our state’s budget.
http://www.beyondthemargin.net/2009/03/rising-unemployment.html
What kind of boneheads are running the Metropolitan Water District? They are raising our water rates yet at the same time are proposing tremendous pay and pension hikes when the economy of our nation remains in shambles. Get rid of the these morons!
Start sending emails and making calls, folks. Absurdity has reached even new heights. Read above. The General Manager is actually trying to convince you that an increase of 25% in the CalPERS based pension benefits for his swine employees is actually going to save you money. This is Orwell speak, folks. You people get your piddly 401-k that has been decimated since October 2008 and these people want a GOVERNMENT GUARANTEED pension hike of 25%. Don’t just sit there. Contact all your elected reps and the MET to complain about this trough feeder proposal while you struggle to pay your bills!
Here’s Kightlinger’s email: officeofthegeneralmanager2@mwdh2o.com
This has got to stop, my current water bill is $32 in water, $3.70 for RTS, and ASM-ASSMNT $23. Also a nice little note was tucked inside reminding me of the rate increase I will see next month. What does a tapped out resident need to do? If we blast them will emails, blow up the phones lines does it matter to these Nazi Water Board members, or is it Met? If Im not mistaken aren’t these the same guys who screw us out of electing the replacements for seats on the board?
So lets not burn down any buidlings or houses just because they are screwing us, lets go knock on their doors who are they and where do they live?
Has anyone seen the monstrosity in Fountain Valley. 20 years ago we had a wall surrounding that place. Now brand new landscaping and buildings that I am sure house beautiful offices and a huge rate increase. Nice.
“There is no worse heresy than the fact that the office sanctifies the holder of it”
John Dalberg-Acton
They empower themselves just because they hold the office.
25% pay increase, 25% increase in pension, 20% increase in water rates, all while we ration water - this is OBSCENE !!!!
These union pensions have already strangled California unto virtual bankruptcy. These lazy slob government employees and their obscene pay and pensions is exactly why government has no business running ANY business.
Do they not realize there is 10+ % unemployment in California and our national economy is swirling the bowl ? Probably not, because these slobs feel entitled to every last penny earned by honest taxpayors.
Those “givebacks” are just laughable!!!
This looks almost as good as the Orange County Sheriffs dept. pension plan.
These unions and their thug members/admins need to go! SIEU, AFL-CIO, they are all thugs. Without their unions most of them would not be able to qualify for a job flipping fast-food burgers.
Do the math …
Say an employee starts his/her career at MET at $60,000. Over a 20 year career with an annual 3% increase in salary, he/she ends his career at $108,000. Over that same time period, he/she has contributed $116,000 towards his/her PERS retirement.
At the current 2% formula, he/she will get $925,000 in retirement if he/she lives another 20 years. At the proposed 2.5% formula, the retirement payout over 20 years is $1.2 million.
BOTTOMLINE - you’re contributing $116K but getting $1 million in retirement.
NOTE, after you retire, you’re not contributing anymore. PERS will go bankrupt at this rate. Da.
WAKE UP EVERYBODY.
Do Da Math says:
September 4, 2009 at 5:49 pmDo the math …
Say an employee starts his/her career at MET at $60,000. Over a 20 year career with an annual 3% increase in salary, he/she ends his career at $108,000. Over that same time period, he/she has contributed $116,000 towards his/her PERS retirement.
At the current 2% formula, he/she will get $925,000 in retirement if he/she lives another 20 years. At the proposed 2.5% formula, the retirement payout over 20 years is $1.2 million.
BOTTOMLINE - you’re contributing $116K but getting $1 million in retirement.
===============================
The problem with your math is the gov employee is NOT contributing ANYTHING towards their pension-it is picked up, 100%, by MET. So that even that paltry $116K was not contributed.
Safety has the same deal.
“a smart, prudent deal,” “groundbreaking,” “innovative” and “inventive. ”
In the news business back in the days of hot type and manual typewriters, all that as called “glittering generalities”! In other words, meaningless.
Nothing about this in the print media in LA, or San Diego. But then again they are already so hosed by pension debt, what is little thing like a pension spike for a small water agency…..
If you call 19,000,000 customers small I’m just wondering what you call big. This doesn’t just effect OC but almost every water customer in Southern Cal.
For all those that think water utility employees are incompetent burger flippers, by all means go down to mexico and sample the water there. You get what you pay for. If you want the infrastructure of a developed 1st world country, you have to pay enough to attract competent people. No one is getting rich working for a water district, all this outrage is ridiculous.
Water Guy says:
For all those that think water utility employees are incompetent burger flippers, by all means go down to mexico and sample the water there. You get what you pay for.
====================
Well, we’re not getting what “we pay for” you you GED burger flippers, with the brain power of circus chimps, now are we.
.
.
.
If you want the infrastructure of a developed 1st world country, you have to pay enough to attract competent people.
===========================
You are GED dorks-you deserve minimum wage-you would have trouble geting work as one of those guys that stand out front of a furniture store twirling a sign around.
Johnny how dare you!!!
Im appalled & disgusted by your comments.
What gives you the right to make these disparaging comments???
An apology is in order NOW!!!
Apologize to ALL the burger flippers & sign twirlers immediately!
WHAT DID THEY EVAR DO TO HURT YOU?
never ending fight for freedom says:
Johnny how dare you!!!
Im appalled & disgusted by your comments.
What gives you the right to make these disparaging comments???
An apology is in order NOW!!!
Apologize to ALL the burger flippers & sign twirlers immediately
======================
LOL…that was a little bit over the top. No more name calling from me.
“Infrastructure” like these, Cities, Counties and State attract persons that are usually less than desireable in the Private or a going for one thing and one thing only. A complete lifespan of benefits and packages. The quality of most ot the employees, Field and Lab are not what would one classify as stellar or top-notch, those folks get hired by large private firms or research facilities and are paid accordingly. Basically what you have in Water Districts is a group of individuals that would fit nicely in any environment that has long-term pemanent benefits, tenure, multi-level management and union protection…kinda of like the Post Office. Do your 30, don’t shoot anyone and retire with a real nice package. The Freebies, Benefits and other similar Golden Parachutes need to stop and stop now. When ‘Boards’ and other Utilities become completely transparent, all the numbers are shown on certified spread sheets, everything is on the up and up…well then lets look at some form of incentive or adjustment in benefits and/or compensation….till then……well enjoy what you have.
You know folks, You can’t fight City Hall is the old saying. These people on the Boards and Unions don’t care about us, just their own greed.
Let’s see…a rate hike for all water users, and now they want a pay hikes and pension increases. Too coincidental. This is nothing but a planned scheme to funnel money to the unions.
GREED!
Take whatever you can whenever you can is their theme as they continue to jack up our bills while stuffing their pockets.
These self-promoting scamsters care for ONLY one thing: THEMSELVES!
Shameful and disgusting behavior!!!
Who among the employed doesn’t already get what amounts to a 3% annual raise? The federal minimum wage just went up by 10% in July.
Besides, we’re only talking about 2,000 employees and if you’ve ever looked at the job descriptions in the hope of obtaining employment at any water utility, anywhere in the country, you’ll know that it really is top heavy in NASA type PhD’s.
The concessions these working professionals have agreed to points more to the end of opulence than the continued expansion of such.
It’s all downhill from here and they are just the tip of the iceberg. We will soon join Mexico in terms of opulence if something doesn’t change. A quick re-read of Adam Smith’s “Wealth of Nations” will highlight this situation as there are only three types of economies and an economy in decline is not subject to recovery. Besides, that 3% (23% over 5 as a best case) raise will never compensate for the loss of a sick day and a paid holiday. Take my freedom but give me money, I have I-Phones and caviar to buy. Things I can use while I’m stuck at work.
Even the posts to this board, from fun in the sun California of all places, shows the over focus on money, money, money.
But, as we shall all soon see, in addition to love, money will never buy freedom and on our death beds our regrets will not be that we did not make more money but that we had so little time.
Finally, I leave you with an image of Smeagol, the character from “Lord of the Rings” who lost his freedom over greed as well.
http://www.google.com/imgres?imgurl=http://mix.fresqui.com/files/images/1101779745smeagol.jpg&imgrefurl=http://richarddawkins.net/forum/viewtopic.php%3Ff%3D4%26t%3D85815&h=286&w=358&sz=16&tbnid=Pvw_G5kf5AV9_M:&tbnh=97&tbnw=121&prev=/images%3Fq%3Dsmeagol&hl=en&usg=__Le6v8vPaiWYtS5WBq5-aQbXe_98=&ei=cPKjSpy-LNKTnQfFjI2RBQ&sa=X&oi=image_result&resnum=1&ct=image
Blind Lemon Smeagol says:
Who among the employed doesn’t already get what amounts to a 3% annual raise? The federal minimum wage just went up by 10% in July.
=========================
Are you fro REAL???
Most private sector employees have taken a pay CUT, that is if they even HAVE a job.
The fact is the private sector has not had a RAISE since 2000. So if you clowns in Gov are receiving 3% raises every year then you are now making 30% MORE than the private sector employee during the last 10 years. 30% MORE!
Hey, I have an idea, why don’t you stop whining for once, and be thankful you even have a job, with great benefits and pay no less.
As for the federal minimum wage-when you take a 95% pay cut get to it, then you can start citing it as a reason for a pay increase-until then you need to stop hiding the ball and stay focused on YOUR pay, which is far from minimum wage.
Water Guy: I am sorry to disappoint you, but you guys are not brilliant - the reason our water is better than Mexico is because of the laws that have been put in place to protect us from “bad” water. You guys are just trained to watch the levels of whatever we have in the water to keep it safe to drink. It is called “TRAINED” to do that job. Good grief, most of these employess could not make it in the private sector. I have met some of them and they left the private sector because it was too hard. They told me this job is a sweet deal, and they do not work as hard as they used to.
All these obscene public employee’s pensions amount to nothing more than stealing from the taxpayers.
Once the current LE and FF’S start to retire in about a week the taxpayers are going to be told that there is no money to pave the roads or deliver your water even though we are paying more taxes than any state in the union.
Where can I get my torch and pitchfork?
Time for a reality check for all government employees. We in the private sector, their employers, will not continue to enrich them beyond all reason while we struggle in our own financial lives.
rich ha! i dont think so, but i can say this you! ya you! all chose your line of profession in your life so nobody is to blame but yourself for your shortcomings in life i think that if the shoe was put on your foot you would be doing cartwheels for 25 % increase in your retirement so back off hipocrits! and get your filthy,stinking, holyer than thou hands off my money! f off
this is yet another example of what i call the Kalifonia Kakistocracy Klan (KKK)……the governments are simply incompetent and its unions have not learned if you cook the goose there are no more golden eggs….and exactly why i left
Before you go attacking the MET employees about the rate hikes or trying to make the pensions the reason for the hikes, go ask your local board members (Mr Thomas) about a thing called the rate stabilization fund. The reason for the rate hikes all the sudden after years of no hikes is because people like Mr Thomas robbed that fund to avoid hikes and the bad press they bring. The rate hikes are about that.
Maybe at the same time you ought to ask him about the taxpayer funded trips he takes veiled under the term “Inspection Trip”. Im sure he will have a colorful answer about that.
I think it is important to note that the water rate increases are NOT a result of this change in pension benefits for the employees. For many years we have enjoyed flat water rates due to the MWD representatives using a piggy bank they call the rate stabilization fund. Why didnt they raise the rates incrementally in small amounts over time?
The rate increases are NOT the MWD employees fault or doing, if the employees conceded sufficient benefits to receive the retirement, and MWD management is in agreement, so be it!