Charles D. Bernstein
444 Oak Court
Menlo Park, CA 94025
650-325-3365

February 27, 2007

City Council
City of Menlo Park
701 Laurel Street
Menlo Park, CA 94025-2483

Re.: Retirement Benefit Increase

Dear Members:

The proposed 35% increase in Menlo Park retirement benefits is outrageous and unwarranted. Please do not approve this change.

As a member of the recent Budget Advisory Committee, I believe that the increase is excessive on its face and is potentially disastrous for the city in the long run: it bolsters what is a faulty and discredited retirement vehicle that exists only in dying companies or in the public sector where management is lax and oversight has a conflict of interest or is missing altogether. The “defined benefit pension plan”—whereby the city must guarantee the performance of the stock market—was one of the two primary causes of the city’s recent financial problems (the other being loss of sales tax revenue). The current plan causes instability in the predictability of the city’s future obligations, which in turn threatens the ability to fund future services.

The numbers presented in the staff reports are incomplete: they relate to the impact on current compensation or derive from the vendor who is an advocate for and beneficiary of the increased benefits. There is no independent evaluation. There is no assessment of the risk of a stock market decline as we saw in the recent past and how that would affect the contributions by the city. (Indeed, there has never been an accounting by the city of how the increased contributions to CalPERS nearly bankrupted the city in the last several years.) There is no analysis of how upcoming accounting rules changes for this increase will affect the city’s budget and our ability to fund services in the future. With this change, we are effectively mortgaging our future to look fiscally responsible in the present, but we have no idea what we are really doing and what effect these changes will have on our future.

It is unacceptable that the unions would insist on this “enhancement” and our council would cave in to their demands. Though I was not a supporter of the previous council, I applaud the fact that they resisted the unions’ unreasonable
 
demands. For the sake of the residents, the council should be transforming the retirement plan into a Social Security plan similar to what the rest of us must accept. Making things even worse, the proposed changes are incorporated in a contract that has been increased from the normal two-year term to three years.

I have railed long and hard against the influence of developer money on right-leaning council members. Thus, I feel compelled to raise the same objection to the influence of union money on left-leaning members. That the potential settlement was negotiated in secret meetings without the benefit of public exposure or input is at the very least troubling. That this would all have originally appeared as a consent item on February 13 suggests corruption. Suggesting that money has bought votes is always a strong charge, but the unions’ nasty and inflammatory participation in the last election smacks of inappropriate influence in the past and possibly in the future. I say this as a public supporter of and contributor to the same candidates that the unions supported.

The mayor’s public statement that we are getting a “better deal” reminds of the auto mall hucksters on weekend television. Show the public the numbers and let us determine what kind of deal it is! In the meantime, please do not approve what appears to be a dangerous and unjustified giveaway.

Yours truly,

Charles D. Bernstein
650-424-1155 (w)
cbernstein@headsup.org

CDB/ms
Received on Tue Feb 27 17:44:21 2007