Alan Tandy

Bakersfield City Manager Alan Tandy 

Bakersfield residents were sharply divided when the city announced it planned to use some Measure N funds to change the way it pays for its pension system, but city officials say the move is sound financial practice.

“It’s an immediate opportunity to have an immediate impact on the city’s budget in a positive way,” said Assistant City Manager Chris Huot, adding that the city expected to save more than $800,000 in the first year, which could then be spent on other city services.

In total, the change is expected to save the city $8.7 million over seven years.

In order to achieve the savings, the city plans to switch from paying for CalPERS on a monthly basis to paying for it once a year.

That will eliminate a 7.5 percent interest rate the CalPERS system charges municipalities that pay on a monthly basis.

“When it came to pass that we could save $8.7 million in addition to reduced PERS costs, we were achieving two or three goals that we had in place anyway,” said City Manager Alan Tandy, who noted the city would still be able to pay for the 100 police officers it promised to hire with revenue from the sales tax, along with achieving the other goals the city planned for the sales tax increase.

But the city does not currently have enough money in its cash reserves to make the estimated $20.8 million payment. So the City Manager’s Office plans to inject $12 million from the sales tax revenue into the city’s cash reserves, which have been depleted since 2008.

“Putting more money in the general fund reserves in all likelihood would have been recommended as a component of this program irrespective of the savings that we can realize,” Tandy said.

The city will then use the savings to help bolster the cash reserves, which currently stands at $13.1 million, and help pay for additional city services not covered by the 1 percent sales tax increase, Tandy said.

However, the move to provide any Measure N funding to CalPERS stirred up fear shared by many in Bakersfield that the city would not use the money as promised.

“I thought voting for this measure would have increased jobs for our city, including police and fire,” Pam Simpson said on Facebook. “Very disappointed as most voters will be.”

City officials say the plan to hire police officers and firefighters, along with increasing economic development and homelessness efforts is still in effect.

Tandy said less than 15 percent of Measure N funds would go to CalPERS in the early years the city sees revenue from the tax increase.

He said the city could still inject Measure N money into its cash reserves and meet the goals it told the public during last year's election.

In March, the city will present its plan for the Measure N funds to the newly appointed oversight committee. In May, the city council vote on the city’s plan for next fiscal year’s budget.

You can reach Sam Morgen at 661-395-7415 or smorgen@bakersfield.com. You may also follow him on Twitter @smorgenTBC.

(15) comments

Fram Smith

Would a ballot measure to repeal Measure N need a simple majority? Does the city council need a ballot measure to raise sales taxes or have we already vested that authority to them? Questions in search of answers.

clsoca

Once the repeal measure qualifies to be placed on the ballot, only a majority is required to repeal. Whats interesting is not many signatures are needed to place the repeal on the ballot due to low voter turn out. Please remember, the two groups looking to repeal the measure, are basing their repeal campaign solely on the LIE.

Fram Smith

A lot of handringing here. So people doing the job as city council members years ago, for $100 a month, make better fiduciary choices than city council members in general law cities, who do the job full time with real pay. Ok, if you say so. And
" someone" would have been able to negotiate a better pension deal for taxpayers. Ok, if you say so.
Most reasonable people would be scratching their head when reading such ideas- which is what I am currently doing.
Yes, we were lied to. But if you think we would be better off without the 1 cent sales tax increase, than ask your council person what would have been cut without it.

clsoca

Granted, re-negotiating labor contracts is the more difficult route but the correct route for long term financial health of Bakersfiedl. Our city leaders instead pursued the easier lazy route of outright lying to the taxpayers to raise taxes. The state re-negotiated pensions for public employees, therefore there is no legitimate reason the city should no do the same with the exception of pure laziness. And by-the-way its a conflict-of-interest anyhow for Tandy to be involved in the city's CalPers bailout efforts since he will personally and financially benefit by the CalPers bailout with his lofty CalPers pension for life. But it doesn't matter anyhow, the talk around town is to repeal Measure N which is very likely and a slam dunk.

Fram Smith

Cities that were about to go bankrupt were able to use that threat to re- negotiate some modest pension reforms during the 2009 great recession. I am uncertain how much leverage that threat could be used today. We can't find qualified people already- so we are going to , at this time, tell all the unions and individuals that all previous pension agreements are going to be re- negotiated? I guess it could happen- when monkeys with wings fly out of Alan Tandy's backside.

Fram Smith

My goodness!
There seems to be a great deal of denial out there in Mr.Tandy's neighborhood. Anyone who thinks the city can " re- negotiation" existing pension obligations is simply confused, mistake, or just dismissive of the facts. There is no way to get out of current contractual pension obligations without the city declaring bankruptcy. Now new contracts are up for negotiations. But we are competing on the open market for many jobs that require certifications, experience, and frequently, college degrees. Yes, it is unfair that we current residents of Bakersfield are now paying for sweet heart deals for the retirement of top wage earners in the city. These deals were negotiated by poorly informed city council members earning $100 a month, decades ago. They rubber stamped deals placed in front of them by previous city managers who had a personal finance interest in everyone getting a good pension deal- including themselves. An unprofessional " volunteer" city council sure doesn't do anything other than what the city attorney and city manager tell them to do.

clsoca

Incorrect again. DPA (Department of Personnel Administration) re-negotiated pensions with state collective bargaining units during the last recession resulting in state workers paying more to fund their pensions. It was called pension reform. Some municipalities have followed this example and reformed how their pensions are funded. Bakersfield city leaders have chosen the easiest path rather the correct one which is re-negotiating.

Nathan

The city council members were not, in my opinion, "poorly informed" when they passed enhanced pensions. They just took the easy road to appease employee groups who strongly supported the new pensions (no surprise here), I don't buy the argument that their part time salary played a role. The County supervisors were paid well and they passed the same pension plan. In fact the then CAO used the City's passing of the new pension as one reason the County should pass the same plan.

This whole financial mess was caused by several hundred state, county, city and special district representatives who utterly failed to fulfill their responsibility to be good stewards of the public's trust. Utter failure.

By the way, not all counties and cities passed the enhanced pension plans. So it wasn't inevitable. It was just a complete failure on the part of local elected leaders.

mrdwm1

Hey! Too many twinkies Blimpie!!!

clsoca

After reading this news piece, I am still amazed at how unplugged our city leaders are from the public at large. The anger is not about the pensions. Its about our city leaders intentionally misleading the public about this measure just so it would pass so they could in turn funnel money to pension debt. Our city leaders flat out lied to us, plain and simple.

JSmith

Can't blame Trump on this one suckers, you voted this on yourselves.
Suckers!

Fram Smith

Yes, Stating the obvious, we knew that the money was to keep the city's credit rating in AAA shape, by infusing funds into our underfunded pension obligations.Well, I knew it because I own a hardcopy of the 2019 Ciy of Bakersfield Budget. I also know how to read and possess reasonably proficient mathematical skills. One plus one still equals two, even in the age of Trump; however, most days Trumpoinians try to tell me it equals three. The same people who ignore the fact that the President of the United States is a pathological liar act outraged when the city council pulls a 3 card monty on us. Remember, the city of bakersfield will meet it's pension obligations, since the only other option is bankruptcy- there is no third way. If Measure N would not of passed we would have had deep cuts in city services- fewer cops, longer respond times, etc. I voted for Measure N knowing that it was for pensions, since I didn't want city services cut below the current substandard funding levels. But , yes Virginia, you were lied to, but it was with the best of intentions.

clsoca

Incorrect. There is a third way. The city leaders need to return to the collective bargaining tables and renegotiate pension benefits that are sustainable.

ISpy

Road to 'what' is is paved with?

Stating the obvious

OK. I apologize for all the smack I talked. Y'all said this would happen and here we are. This is not how the $ was promised to be spent!

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