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Thursday, September 7, 2017
How retirees suffer after cities go Broke
HERE’S HOW LOYALTON RETIREES ARE DOING AFTER SEEING THEIR PENSIONS SLASHED
It’s time to check in with the retirees of Loyalton, California which recently became the first to see their pensions slashed by CalPERS because of the city’s inability to pay.
“I’m scared to do anything. I’m scared to spend much money,” said John Cussins who oversaw the town’s water and sewer systems for 21 years. “I guess worst comes to worst, we’d even have to sell our property and try to go to some low-income housing deal.”
Cussins used to receive $2,500 a month. Now he has to make do with $1,000.
Cussins and Loyalton’s three other retirees are not alone. On July 1, CalPERS slashed pensions for the East San Gabriel Valley Human Services Consortium by 63%. Retirees of the Niland Sanitary District could be next.
Though their trajectories differed, all of these municipalities got to where they are in part because of the large termination fee CalPERS levies against governments that leave the system. During Stockton’s bankruptcy case, the judge called this termination fee a “golden handcuff” and “poison pill” that keeps cities in the system even when they’d rather leave.
“It’s a joke,” said former Villa Park Mayor Rick Barnett. “You’re trapped.”
Things could soon get worse for Loyalton’s former employees.
Loyalton City Council members told CalPERS officials in November that the city would directly reimburse retirees for the pension money they lost — $5,000 a month for all four retirees combined.
But that promise may be short-lived. The City Council has been providing those supplemental payments since CalPERS sliced the city retirees’ pensions, and it has voted to continue those payments until November. After that, the payments may be reduced — or cut off entirely…
“I don’t know where we’re going to get the money unless we start selling crap off,” [Mayor Mark Marin] said. “What’ll end up happening is that we won’t be able to pay our obligation and the retirees will come back with a lawsuit. The only way they’re going to get any money is if they take property. It’s a Catch-22.”
Marin now says the city should have just remained in the CalPERS system. It would have been cheaper that way.
For the four Loyalton retirees caught in the middle, there are bitter feelings about the way the city has handled everything.
“The City Council went overboard. They got all this money back from the insurance and started spending everything. Then, later on, they cut our retirement,” said former City Hall office manager Patsy Jardin. The council “promised me it wouldn’t cut my retirement,” Jardin added. “They promised me.”
Loyalton’s mayor acknowledges that the city should have never made promises it couldn’t keep, starting with the approval of generous pension benefits it would be unable to endure down the line. But he sees the entire ordeal as part of a larger, statewide problem -- of a pension system that is fundamentally unsustainable.
“There are people who made $200,000 a year and they’re drawing $200,000 in retirement,” Marin said. “How’s that going to work?”