REVIEW--Over the next month, CityWatch will run a series of articles on the Los Angeles City Employees’ Retirement System (“LACERS”), a $17.7 billion fund created in 1937 to prefund pension and post-retirement medical benefits for the City’s current and retired civilian employees.
Today, LACERS has over 46,000 members, including 20,000 retired members and beneficiaries and over 26,000 active employees.
These articles reflect an insider’s knowledge of LACERS as they are authored by Tom Moutes (photo left), the department’s retired General Manager. The articles are objective and well written, addressed to ordinary Angelenos without relying on industry jargon that can be exceptionally confusing.
Nevertheless, he is not bashful in outlining the financial issues facing LACERS as indicated by his opening sentence.
“In 2001, the Los Angeles Ci ty Employees’ Retirement System or LACERS was 100.4% funded, it had a surplus of $557.7 million (no unfunded liability), and its annual contribution from the City was approximately $70 million. In 2019 LACERS is 73.1% funded, its unfunded liability is $6.5 billion and its most recent annual contribution from the City was $676.7 million.”
Moutes first article stresses that the City’s elected officials need to be realistic about the serious financial issues facing LACERS and the City because they cannot continue to kick the can down the road. (The series, The Truth about LACERS, begins Thursday, March 17 … only in CityWatch.)
In his final article, he lists recommendations for the Mayor and City Council as well as the Controller, the City’s unions, LACERS’ Board of Administration, City employees and retirees, and Angelenos.
In between, he addresses the need for qualified and independent Board members who are not beholden to Mayor, the absolute fiduciary duty of the Board members and employees to LACERS’ members, the ever increasing annual contributions that will crowd out basic services, the unfunded liability that continues to increase and will be a burden on future generations (intergenerational equity), the attempts to raid the fund for pet projects, and the politics surrounding the investment rate assumption.
“It is crucial that these conversations start right away. Delaying will only find both the not well-funded LACERS and the structural deficit prone City in worse financial condition and with fewer choices, especially when the inevitable recession hits.”
These articles a must read for our elected officials (and their staffs) and any Angeleno who is concerned about the City’s budget and finances, the Structural Deficit, the Service Deficit, and Intergenerational Theft.
These articles also apply to the $23 billion Los Angeles Fire and Police Pension Plan and its 27,000 members, especially regarding the political issues such as transparency, board member qualifications, interference with investment decisions (pet projects) and the determination of the investment rate assumptions, and independent oversight.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council. He is a Neighborhood Council Budget Advocate. He can be reached at: email@example.com.) (The series, The Truth about LACERS, begins Thursday, March 17 … only in CityWatch.)