Monthly Archives: April 2015

City Budget / City Council / Mayor / Pensions

Budget Bits No. 5: Unfunded Pension and Healthcare Liabilities

This is the fifth installment in our series on the 2015-17 budget process, and the last one before the mayor’s budget is released today. Once the proposed budget is released, we will start discussing that document, first with a general summary, then a deeper look. For now, we take a brief look at the oft-discussed subject of pensions.

In any budget process there are many competing interests. Resolving these conflicts and arriving at a balanced budget is more art than science, involves trade-offs, and in the end, always involves prioritization. So what are some of the biggest priorities, aside from police, fire and other core city functions? Pension and retiree health care shortfalls have been the subject of much public attention. They were the subject of a City Auditor’s report about a year ago, a detailed report by the administration to Council in January of last year, and State legislation (the Public Employees’ Pension Reform Act of 2013, or “PEPRA”, more discussion here)  in 2012.

The general sense of the discussion in Oakland has been that

  • The closed police and fire pension plan (“PFRS”) will start requiring very significant annual General Purpose Fund contributions (probably about $34 million and climbing) in 2017-2018,and continuing through 2026;
  • The City’s “Other Post Employment Benefits” (“OPEB”), by which the City pays retirees a fairly modest medical benefit reimbursement is paid on a pay as you go basis. It presently runs just over $20 million per year, and is projected to hit over $35 million in ten years and almost $50 million in less than twenty years.
  • Much like other California municipalities, Oakland faces hundreds of millions of dollars in underfunded pension liabilities for its active employees, and serious State law constraints on steps that would reduce costs.

(more…)

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April 30, 2015
City Budget / City Council / Mayor

BUDGET BITS NO.3 – WHERE DOES OAKLAND’S MONEY COME FROM (Part 2)?

This is the third installment in our series on the 2015-17 budget process, and the second concerning revenue projections in the Five-Year Fiscal Forecast. The mayor’s budget is scheduled to be released on Thursday, so we’re covering this to provide some  context for the budget decisions to be made over the next two months. As we did in the last post, we summarize the Forecast’s discussion of revenue sources, limitations on those sources and projections for revenue.

It isn’t unusual at citizen budget discussions to hear a proposal that wealthier Oaklanders pay taxes at a higher rate. Although this concept is attractive to many – possibly most – people, the suggestion highlights one of many limitations on the City’s ability to levy taxes.  Among those limitations: a California city can’t impose an income tax, or any other tax based on the income or wealth of the people who pay it. Moreover, Proposition 13 limits ad valorem  property taxes. The baseline is 1% of assessed value of property. Beyond that, the City can impose an ad valorem property tax to cover obligations incurred before 1978 (as Oakland does to provide an income stream to partly fund its long-closed Police and Fire Retirement System),  plus an assessment for certain bond measures authorized by two thirds of the voters. The assessed value starts at the sales price of the property, and cannot grow by more than 2% as long as the same owner holds the property.

And much of the baseline property  tax for Oakland properties doesn’t go to the City of Oakland. Although not discussed in the Five Year Financial Forecast, our research has shown that only 26% of the Proposition 13 baseline property tax on Oaklanders goes to the City. Oaklanders’ property tax bills contain a large number of parcel taxes and other special assessments, some supporting police, fire, libraries and other typical city services. Not all of these are city assessments.  Nearly all require a 2/3 vote, and they cannot be based on income levels.  (more…)

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April 28, 2015
City Budget / City Council / Mayor

Oakland Budget Bits No. 1 — The 2015-2017 Budget: What’s Happened So Far, and What Happens Next?

As it has in the past several budget cycles, Make Oakland Better Now! will be providing Oakland residents with tools to help understand the city budget.  In the forthcoming “Oakland Budget Bits” series, we will try to present – as concisely as possible—a guide to the process, the challenges, the priorities and the decisions that evolve as Oakland’s mayor, City Administrator and City Council move toward adoption of the 2015-2017 two-year budget. Here, in Bit No. 1, an introduction to the process. (more…)

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April 24, 2015
City Attorney / City Council / Mayor / Negotiated Settlement Agreement / Oakland Police Department

THE SWANSON REPORT ON POLICE DISCIPLINE: WHAT DOES IT MEAN, AND WHAT HAPPENS NEXT?

Yesterday, attorney Edward Swanson filed his report on what he referred to as a “broken” police disciplinary process to Judge Thelton Henderson. The report is available here, and media reports are here (East Bay Express), here (Oakland Tribune) and here (San Francisco Chronicle).  In this post, we will talk about the background leading up to the investigation and report, where Swanson points his finger (and where he doesn’t), his recommendations, and what they mean for Oakland.

Background

Oakland and its police department have been under Court supervision under the “Negotiated Settlement Agreement” (or “NSA”) in the case of Delphine Allen, et al. v. City of Oakland since January, 2003.  For twelve years, the City has struggled to bring itself into compliance and end Court supervision.  Meanwhile, the Court-appointed monitor, Robert Warshaw, has continued to expand his reach, recommending many departmental changes that go far beyond the language of the NSA. The process of arbitrating police discipline matters arises both out of Section 9.10 of the City Charter (something Swanson did not mention) and the Memorandum of Understanding (or contract) between the City and the Oakland Police Officers Association. The results, although not the process itself, have been under Judge Henderson’s scrutiny for several years. The first time was in September of 2011, when Judge Henderson expressed the belief that something was not right with the arbitration process. An arbitrator had reinstated Officer Hector Jimenez, whom OPD terminated after he shot and killed an unarmed civilian. In response to the judge’s expressed concern, the City assured the Court that it was going to improve its representation and performance in arbitration proceedings. Three years later, an arbitrator ordered reinstatement of Officer Robert Roche, terminated for alleged wrongful use of force during the October, 2011 Occupy Oakland demonstrations. In response, the judge first ordered Warshaw to conduct an investigation, then ordered the City to contract with attorney (and former Judge Henderson law clerk) Edward Swanson. The Court stated that failure of the arbitration / discipline process “undermines the very objectives of the NSA: to promote police integrity … and to enhance the ability of the Oakland Police Department … [to] protect the lives, rights, dignity and property of the community it serves.” (more…)

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April 17, 2015