Curtis Lee: How to cut PFPF costs by $3 - 15 million/yr

[Patricia M. McBride]

Curtis Lee is a concerned taxpayer and a watch dog/activist in relation to the police and fire pensions.  He has done a mountain of work and research on this issue.  He has been literally a tireless advocate for the needed changes in the pension and those who handle the pension.  Curtis is a retired attorney who managed a pension fund himself, so he is an expert on this issue.  Curtis has asked anyone who is interested in becoming involved in this issue to please write to the council or if you have any questions about this issue, please call him at Curt Lee, 594 - 6192

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CTDC etc - Please see my recent email to City Council, below, about how John Keane of the PFPF, yet again, seeks to benefit the PFPF at the expense of everyone else.    The background fact is this - the latest PFPF actuarial valuation caused the PFPF's annual expense - paid for by the City, and thus by taxpayers - to jump by about $42 million/yr.   Much of this increase is not necessary, and further, can be fixed.   I hope all of you join me in complaining about this.    Taxpayers should not be locked into these high contribution levels for the next 3 years (fiscal years 2013, 2014 and 2015), simply based on the decisions of Mr. Keane, who clearly has one objective - to prise the most money possible out of the City, which in part is for his personal benefit. 

Council Members etc. - I had written a letter dated 7/13/12 to you on this topic, but my suggestions appear not to have been noticed, and so I will try again.   This is the shorter version.

In my more than 17 years of dealing with actuaries and actuarial valuations, I learned that the "Garbage In, Garbage Out" cliche applies to actuarial valuations as well.   The actuarial valuation for the Police and Fire Pension Fund (PFPF), provided to us by John Keane in June 2012, is flawed in 3 major ways, at a minimum.

(1) The cost/expense assumption is padded.   It is at $2.2 million/yr, and should be more like $1.6 million/yr, at best.

(2) The salary increase assumption is horribly padded.    5% salary increases/yr are assumed.    This is preposterous.    Even given some step increases and promotions, 2% is a more reasonable assumption.

(3) The payroll increase assumption is horribly padded.    4.5% increases/yr are assumed.    This too is preposterous.   Given reductions in force, 1% is more like it.

 

If these 3 things were changed, the fiscal 2013 , 2014 and 2015 PFPF costs could be reduced by $3 - 15 million per year (my estimate).   

 

Who padded the valuation?   John Keane, of course.   Why?   He wants more money for the PFPF -  taxpayers, libraries, and everyone else be damned.

 

The solution - do another valuation through the PFPF's existing actuary, if the PFPF is amenable, as it should be.   If the PFPF resists, the 30 year agreement allows the City to do its own valuation.    Then the City's actuary and the PFPF actuary, if differences still cannot be worked out, "put the decision" to a third actuary.   This is akin to arbitration.   Even if this process must be used, it is worth the candle as the costs at stake are so large.

 

Please call if you have questions.    Curt Lee, 594 - 6192