Ballots are in

The ballots are now in your hands and it is up to you to decide who will best represent your interest as county supervisor.

You know my very real concern about our current employee pension program.  Immediate reform is required to create a pension system that is sustainable for this and future generations.  Making the pension sustainable, will greatly aid us in balancing the county budget and preserve county services, such a libraries, park recreation, hospital care, protection and safety without going back to the tax payer for increased taxes and fees..

I have come out of retirement and gotten involved in this election to address this unpopular but serious issue.  I am not a career politician but “business as usual” is failing us. If you elect me I will commit to you my efforts, that your government is accountable to you the taxpayers.

What Bill has to say...

 This is what Bill Gates has to say about the state budgets. Also follow his discussion at  http://www.thegatesnotes.com/ted

"This time, I wanted to share some of what I’ve been learning about state budgets. I got interested in them because states supply most of the money for public education in the United States. What I’ve been learning, though, is that states are under increasingly intense budget pressure, and not just because of the aftereffects of the economic recession, although that has made things worse.
There are long-term problems with state budgets that a return to economic growth won’t solve. Health-care costs and pension obligations are projected to grow at rates that look to be completely unsustainable, unless something is done. But so far, many states aren’t doing much to deal with their fundamental problems. Instead they’re building budgets on tricks – selling off assets, creative accounting – and fictions, like assuming that pension fund investments will produce much higher gains than anyone should reasonably expect.
Eventually they’ll have to make some hard decisions about priorities, and I’m worried that education will suffer, even more than it is suffering already because of budget cuts. The issues are complicated and obscured by the complexities of accounting, so most people don’t fully understand what’s going on. More people need to investigate their state’s budget and get involved in helping to make the right choices. My TED talk is sort of a call to action for citizens, taxpayers, parents, everyone.
I hope you’ll explore the Gates Notes site to learn more about this and the other TED talks that I’m involved in. Check back for additional TED-related content that we’ll be posting as it becomes available."

Tags: North America

Take 2...

 I was invited to a television interview, I was more than a little nervous with my very first TV appearance.  But this is what I was trying to put across to the viewing audience.

The county’s pension system is not a popular subject; but it is on everyone’s mind. I have made it the forefront of my campaign because myself and so many other residents are concerned for the economic health of our County.  How did county government get in this position, two words come to mind “irrational exuberance” that started in early 2000 with the real estate boom.

As the tax revenues skyrocketed from $140,015,672 in 2000 to $362,277,471 in 2011  (even after the downturn) representing a 158% increase. The county in early 2000 went into a hiring spree adding 1,400 employees making San Mateo County the 4^th largest employer in the county. The salaries and benefits increased from $282,827,065 to $747,544,055 a 164% increase and the cost per employee form $76,275 to $137,467 an 80% increase.  The county’s pension unfunded liability increased exponentially with investments losing value due to the falling market and the bursting of the real estate bubble.

So what was done so as not to declare bankruptcy? 

• The losses were spread over a 5 year period
• The employer (San Mateo county) contributions were raised from 23% in 2008 to 34% in 2009 and beyond and we expect an increase to 41%; however, it is strange that employee contributions went down .03% by 2010.

And while future obligations are calculated at 7.75%, the past five year returns stand at 1.14%, now that is “irrational exuberance”.

This is a serious situation and we cannot bury our heads in the sand, we need to face reality on this unpopular subject, otherwise our children and grandchildren will be saddled with debt.  We need to reevaluate and “fix” the defined benefit system now and make county pension sustainable.

ELECT DEMETRIOS NIKAS
SAN MATEO COUNTY SUPERVISOR
THE ONLY ISSUE-BASED CANDIDATE

APRIL, 2011 ELECTION

• San Mateo County will hold a special election that ends May 3rd to fill the seat of a departed County Supervisor.
• The election will be by MAIL-IN-BALLOT ONLY. The ballots will arrive during the first week of  April.

SAN MATEO COUNTY’S BUDGET DEFICIT IS ESTIMATED TO BE AROUND $150 MILLION

SAN MATEO’S INCONVENIENT TRUTH THE BUDGET CANNOT BE BALANCED UNLESS WE REIGN IN UNSUSTAINABLE PUBLIC PENSIONS

THE CONSEQUENCES IF WE FAIL TO ACT
• Insufficient money for school programs, libraries, road repairs, infrastructure investments, and general services.
• Unrealistic expectations by public workers for ever-increasing pay and benefits.

WHY VOTE FOR DEMETRIOS NIKAS
• Nikas, a private sector retiree, is the ONLY candidate who has made public pension reform his NUMBER ONE issue.
• Four of the six candidates in this race have public sector careers and are waiting to participate in the already unrealistic public pension system. A clear conflict of interest with their fiduciary responsibility to voters.
• Nikas is willing to make change and understands the details of the county budget and pension relationships.

WHAT ARE EXAMPLES OF SOME CORRECTIONS THAT CAN BE MADE?
1. Require a public vote at regularly scheduled elections to approve any pension package.
2. Set a cap at 9% of salary paid by the county for pensions. This is more than is paid by private employers for Social Security.
3. Use the Social Security age levels to determine when public employees would receive full pension payouts. Earlier retirement could be taken with actuarial adjustment to payments, just like Social Security.
4. Place a maximum of $100,000 per year on ANY pension paid by the County. That’s three times  more than the max payout for Social Security. The vast majority of public employees would not be affected. High paid employees can afford to put aside a portion of their own money for even more comfortable retirement, just like the rest of us.
5. Read the executive summary of the just issued (2/24/2011) Little Hoover Commission Report
http://www.lhc.ca.gov/studies/204/Executive%20Summary204.pdf

REASONABLE PUBLIC PENSION PROGRAMS ARE NOT POLITICAL, IT’S SIMPLE MATHEMATICS
• Virtually every public pension program has liabilities greater than assets. In the private sector that forces bankruptcy.
• Our elected officials have NOT been willing to address the issue of pension reform. They “go along to get along”.
• In November, 2010 Menlo Park voted 72 PERCENT to change the city’s pension package for future public employees.
• Now voters need to take action in San Mateo County.

WHAT YOU NEED TO DO
• Look for your ballot in the mail in early April.

• VOTE FOR DEMETRIOS NIKAS and let’s begin to talk about a realistic structure for public pensions.

Why Pension Matters, Vote Demetrios Nikas district 1

 

Local governments use their own estimated rate of return for their investments to discount their liabilities. By projecting unrealistic high rates of return, they minimize their unfunded liabilities on paper.

Let me quote the controllers message from the FINANCIAL HIGHLIGHTS "County of San Mateo, Fiscal Year Ended June 30, 2010" - "Delaying recognition of these "off book" liabilities can only lead to the same type of financial failures currently experienced globally by the business sector".

Of course David Bailey, Chief Executive Officer of "San Mateo County Employees' Retirement Association" has his take, and writes to the Board of retirement (September 22, 2009) "A retirement Board's duty to its participants and their beneficiaries shall take precedence over any other duty." (I do understand that duty). It continues "As you have seen in the 2009 Valuation report, if we continue with the current rate calculation method, the county employer contribution rate will increase from the current average rate of 24% of payroll to an average rate of 34% of payroll. In dollar terms, the current county contribution of approximately $106 million would increase to an estimated $160 million. This is the estimate for the 2010-2011 fiscal year. Additional increases are projected to occur after that."

That brings us to the mid year update from David M. Boesch the County Manager to the board of supervisors dated 02-04-2010  (FY 2009-10 County Budget Update). Retirement Contribution Rates and Unfunded Pension Liability. "Based on the most recent actuarial valuation as of June 30, 2009, the County’s blended annual retirement contribution rate will increase from 23.6% of payroll to 34% of payroll, resulting in increased retirement costs of $45.3 million for all County funds and $36.5 million for the General Fund. The reason for the increase is due to investment losses incurred by SamCERA since the recession began in the fall of 2008. Prior to the onset of the recession, the plan was funded at 79.1%. As of June 30, 2009, the plan was funded at 63.9%. The actuarial accrued liability (AAL) for benefits was $2,987,712,000, and the actuarial value of assets was $1,909,679,000, resulting in an unfunded actuarial accrued liability (UAAL) of $1,078,033,000. At its November 2009 meeting, the Retirement Board voted to continue the current practice of smoothing gains and losses over a five-year period with a 20% corridor. Gains and losses falling outside of the 20% corridor are fully recognized in the determination of the actuarial asset value. The UAAL is amortized over a fifteen year period. Some jurisdictions have changed the methodology to reduce the contributions in the short-term by expanding the corridor or lengthening the smoothing or amortization periods, or some combination thereof. Changing these assumptions has the effect of increasing costs on the back-end of the amortization period. Further, lowering contributions could result in unrealized investment gains at a time when the market is in recovery. Though it results in increased costs in the short-term, the County Manager’s Office concurs and fully supports the actions of the Retirement Board. Assuming a 7.75% earnings rate over the next four fiscal years, the retirement rates are expected to increase to 41.7% of payroll by FY 2014-15 as additional losses are recognized through the smoothing process. By contributing more now, we improve our chances of mitigating future increases."

Where is the problem?
First in order for the county not to go bankrupt an actuarial smoothing was used to spread the cost of the debt over a 5year period.
Second assuming 7.75% rate of return is not realistic, at this time a 4% rate of return would have been more realistic but would make the unfunded liability even greater.
You get the picture!

According to the SamCERA Comprehensive Annual Financial Report for the year ended June 30, 2010 “Over the immediate future, economic growth is likely to be moderate and inflation is projected to stay low. However, it is widely expected that inflation will accelerate longer term due to the large fiscal deficits. This environment is likely to produce nominal investment returns in the 7% to 8% range over the next five to ten years and real returns in the 5% range.”

To give you an idea, this is from an article in THE WALL STREET JOURNAL. For example, a retiree will collect a $100 pension in 20 years. If a plan assumes it can generate 8% return, it has an obligation of $21.45 today. Lower the discount rate to 4%, and the present liability is $45.64. So the plan with $22 in assets would be fully funded at the higher rate and only 50% funded if it takes the 4% view. Guess who pays the difference!

So what is the county to do? Decrease our services, and raise taxes of course with a new name attached to it "fees". In the budget there is a section called DEVELOPMENT OF FEE POLICY. That is incredible. Is this what are we paying into our county for?

Unfortunately I do not have the Labor version of the story, I would be very much interested to know, because if the County was to go bankrupt the retirement would worth only cents to the dollar. I suggest that they ask their leaders what would happen if this unfortunate event occurs.

Los Angeles Visit

During my visit to Los Angeles, on February 20th, I was invited to attend the dinner celebration for the year of the Rabbit at the LOS ANGELES - GUANGZHOU SISTER CITY ASSOCIATION. Sister city associations are a great way to exchange culture, education and commerce. I had the opportunity to wish the new year and meet with the Ambassador/Consul General  Qiu Shaofang.

RUNNING FOR SAN MATEO COUNTY SUPERVISOR DISTRICT 1

In our “democracy by representation,” we vote with the expectation that our elected representative will be our voice. Here in the U.S. we enjoy opportunities and freedoms more than anywhere else in the world, and I want to work together with you to continue to improve the possibilities for prosperity in San Mateo County. Now because of the economic times our government has to become nimble and rise to the occasion and meet those challenges. I will concentrate my efforts for a fiscally responsible county, balance the budget, reform contributions to the pension system, and for effective and dependable infrastructure.

I am a 20-year resident of San Mateo where my wife and I raised two sons (educated in the local public schools), and I have working experience in the aerospace industry (trained pilot and aircraft mechanic), city government, and small business shops. I believe I reflect the desires of my neighbors for competent representation to meet our needs for the future. I want to be your voice and I promise to listen to your opinions and perform with integrity and transparency. It would be an honor and a privilege to serve you.