Canan Tasci, Staff Writer
Created: 02/03/2012 01:29:27 PM PST

CHINO – As tears were shed and pleas were made, Chino Valley Unified School District board members approved $19.6 million in budget reductions.

In a 4 to 1 vote board members accepted more than 26 district reductions or eliminations that were proposed by the superintendent, which included 23 full-time high school counselors, transportation for students in grades 7-12, 10 high school assistant principals, a district secretary, a grounds worker and a number of grant-supported programs.

Board member James Na voted against the cuts at the meeting.

The reductions were made so the district could remain fiscally solvent. The cuts will be in effect in the 2012-13 and continue into the 2013-14 school year.

“One can only imagine the shock and dismay that is felt throughout our district today,” said Superintendent Wayne Joseph in a statement. “I can tell you that although our board members felt compelled to enact the cut list, there is deep sadness within every one of them for having to do so. At times, the `right’ thing to do is not necessarily the most `popular’ thing to do.”

When Gov. Jerry Brown presented his budget proposal for 2012-13 fiscal year he indicated the state is $9.2 billion in the hole.

The governor has proposed up to $10.3 billion in financial solutions, with one proposal built on the assumption Brown’s tax initiative will be approved by state voters in November General Election.

If the tax $6.9 billion initiative passes K-12 school districts will be spared from any additional cuts to their next school year.

However, the San Bernardino County Office of Education has required school districts to prepare a plan to address the budget shortfall in the event the tax initiative does not pass.

“Right now the district made it clear they believe that we can do without nurses, counselors and music teachers,” said Justine Cunningham, president of Associated Chino Teachers.

To read entire story, click here.

PolitiCal
On politics in the Golden State
February 3, 2012 | 11:28 am

Gov. Jerry Brown has courted a coalition of business and labor groups to back his November initiative that would raise taxes on sales and upper incomes. Now, some on the left are lashing out at the governor’s plan, and his early donors, reaffirming their intent to place a competing tax measure on the ballot this fall.

The governor has said repeatedly he wants his initiative to be the only tax-increase proposal before voters in November. But thus far, he has been unable to get some of his fellow Democrats to step aside.

Civil rights attorney Molly Munger continues to fund her proposal to hike income taxes across the board to raise more money for schools. Another initiative backed by the California Federation of Teachers, which would raise taxes on upper incomes exclusively, received new public backing from the California Nurses Assn. this week, and backers of that plan blasted Brown’s proposal in an email to supporters.

To read entire story, click here.

The Orange County Employee’s Retirement System ended 2011 with an investment return of 0.74 percent — that’s 7 percent less than projected.

But OCERS officials, though concerned, say it is too early to panic. For one thing, says CEO Steve Delaney, the 20-year average is 7.9 percent on investments, right where the system needs to be.

Also, OCERS makes enough on contributions to pay for current retirements, Delaney said. With an $8.8 billion portfolio, the system won’t need to start dipping into investments for another 10 years or so, he said.

OCERS wasn’t the only retirement system that made a poor showing last year. The California Public Employees Retirement System earned 1.1 percent last year, while the California State Teachers Retirement System earned 2.3 percent.

“We continue to feel the effects of the most precarious markets in decades,” said CalSTRS chief executive officer Jack Ehnes, in a statement. “The funding shortfall can be managed, but the governor and the Legislature must develop a specific funding plan, as only they have the authority to do so.”

Pension reformers looked at the the poor showings as evidence that retirement systems will ultimately tank, leaving the debt on the backs of taxpayers.

To read entire story, click here.

8.3% ?

Friday, February 3, 2012 – 09:00 a.m.

Hooray! The U.S. unemployment rate fell to 8.3% in January, with the economy adding 243,000 jobs.

But it took a lot of gaming of the numbers to get there.

For each of the past several months the Bureau of Labor Statistics has been shrinking the active workforce.

In essence the real unemployment rate hasn’t really improved.

The labor force participation rate fell to a 30-year low of 63.7%.

The January rate is a nice campaign sound bite for President Barack Obama, but nothing more.

By Dale Kasler
dkasler@sacbee.com
Published: Friday, Feb. 3, 2012 – 12:00 am | Page 6B

By lowering its investment forecast by another quarter point, CalSTRS made a bow toward economic reality – but also may have complicated efforts to shore up its finances.

The teachers’ retirement board agreed Thursday to reduce CalSTRS’ official investment forecast to 7.5 percent, down from 7.75 percent. It was the second cut in 14 months, after the $144 billion fund left the forecast untouched for 15 years.

In a volatile investment climate, following a year in which CalSTRS’ portfolio earned just 2.3 percent, board members took their consultants’ advice and went with the lower number.

“I think it’s best that we be conservative,” said Terry McGuire, representing board member and state Controller John Chiang.

The board of the California State Teachers’ Retirement System voted 9-1 to reduce the forecast. The lone dissent came from Pedro Reyes of the Department of Finance. The higher forecast “is not unreasonable,” he argued. “Let’s stay where we are right now, (and) visit this in another year.”

By cutting investment projections, the board instantly ballooned CalSTRS’ funding gap – the estimated shortfall of assets available to meet the pension fund’s long-term needs. The gap will grow by nearly $6 billion, or roughly 10 percent.

That could create problems in the Legislature, which must OK changes in how CalSTRS is funded.

CalSTRS gets around $5.6 billion a year from the state, school districts and teachers. The pension fund had already calculated that it needed another $4 billion a year to eventually get healthy. With the lower investment forecast, those needs grow by another $500 million a year.

While CalSTRS is pushing for more money, many Republicans want to erase funding shortfalls for public pensions by reducing benefits. Democratic Gov. Jerry Brown wants to give newly hired employees a combination traditional pension and a 401(k)-style program.

Read more here: http://www.sacbee.com/2012/02/03/4235828/calstrs-gap-rises-as-return-forecast.html#mi_rss=Business#storylink=cpy

Joe Nelson, Staff Writer
Posted: 02/01/2012 02:01:30 PM PST

The labor union representing roughly 11,000 San Bernardino County employees announced Wednesday it will support another union’s effort to reduce county supervisors’ jobs to part-time.

Paula Ready, president of the San Bernardino Public Employees Association (SBPEA), said in a statement that the union’s board of directors had voted unanimously to support the San Bernardino County Safety Employees Benefit Association (SEBA) in its push to slash county supervisor salaries to $60,000 a year and their district budgets from $1.5 million to $250,000.

The unions are accusing the board of foisting its duties onto county Chief Executive Officer Greg Devereaux and voters.

Though the board has cut its meeting schedule in half, it still reviews the same number of agenda items, only now more items are going on the agenda, county spokesman David Wert said.

He said the unions are aware of this and their arguments are ill-informed.

“The unions are close enough to the county’s operations to know those meetings are only a small portion of what board members do,” Wert said.

To read entire story, click here

By Dale Kasler
dkasler@sacbee.com
Published: Wednesday, Feb. 1, 2012 – 12:00 am | Page 6B

CalSTRS is thinking of cutting its investment forecast for the second time in barely a year, a move that acknowledges the increased financial strain on the pension fund.

The teachers’ retirement board on Thursday will consider a recommendation from its actuarial consultant to cut the forecast by a quarter point, to 7.5 percent.

The consultant, Milliman Inc., told the board the current forecast “exceeds the expected long-term return.”

Pension funds are reluctant to adjust their investment forecasts. After months of hand-wringing, the California State Teachers’ Retirement System cut its forecast by a quarter point in December 2010 – the first adjustment in 15 years.

Now it might do so again, just a week after CalSTRS revealed that its earnings for calendar 2011 came to just 2.3 percent.

The timing is coincidental, pension officials said. The latest recommendation is part of a typical review that takes place every four years, said Ed Derman, CalSTRS’ deputy chief executive.

What happened in 2010 was unusual, and was a reaction to the extraordinary losses suffered in the 2008 market crash, he said.

To read entire story, click here.

Riverside County officials have gone to court in an effort to stop a one-day strike by health care professionals.

BY RICHARD K. De ATLEY
STAFF WRITER
rdeatley@pe.com

Published: 30 January 2012 11:33 AM

A judge Monday barred 248 health-care workers from joining a one-day strike by members of Riverside County’s second-largest union.

After a daylong hearing, Judge John Vineyard issued a temporary restraining order against all but 17 members of a group of 265 workers whose jobs the county argued were vital. Vineyard ordered the majority not to take part in the one-day walkout by members of Service Employees International Union Local 721.

The SEIU local represents 5,800 county workers. It is not certain how many will strike today, but union officials have said they expect thousands to take part in the protests in front of the County Administrative Center on Lemon Street in Riverside.

Those ordered to stay on the job today include nurses in Riverside County Regional Medical Center’s medical and surgical units as well as its emergency department, critical and progressive care units, pediatric units and psychiatric unit, as well as nurses working at jail facilities.

“A strike is not worth somebody becoming dead or somebody being seriously injured,” Riverside County Counsel Pamela Walls argued during the all-day hearing.

County officials on Jan. 24 appealed to the California Public Employment Relations Board to take action against the union regarding the health-care workers, and the state agency filed its lawsuit on Friday.

The county sought to keep the nurses — many of whom will get an 8 percent raise starting next month — on the job.

Vineyard said 17 members of the challenged group — including clinical lab scientists and operating room scrub techs — could join the strike.

An attorney for the union said the county had provided Vineyard with skimpy evidence to back its arguments that the 265 contested health workers had to stay on the job, especially after 11 days’ warning of the strike.

To read entire story, click here.

Monday, January 30, 2012
By Ed Mendel

The nation’s two largest public pension funds last week reported slim annual investment earnings, CalPERS 1.1 percent and CalSTRS 2.3 percent, as experts continue to say hitting their long-term earnings target, 7.75 percent, will be difficult.

While CalPERS reported weak earnings in 2011, a prominent private-sector investment manager, Robert Arnott of Research Affiliates, told the board last week he thinks the most they can expect from stocks and bonds next decade is 4 percent.

Another major investor, Laurence Fink of BlackRock, told the CalPERS board during a similar educational session in 2009 that during the next 15 years: “You’ll be lucky to get 6 percent on your portfolios, maybe 5 percent.”

A Wall Street Journal columnist, Jason Zweig, said last week Warren Buffet’s Berkshire Hathaway pension fund projects a return of 7.1 percent. He said William Bernstein of Efficient Frontier Advisors expects roughly 6.5 percent from stocks.

Consultant Girard Miller said in Governing magazine this month, while discussing 12 basic public pension issues, that earnings “closer to 7 percent” are more realistic until global debt is reduced.

The California Public Employees Retirement System board decided last March to leave its earning assumption unchanged at 7.75 percent, despite a recommendation by actuaries to lower the forecast to 7.5 percent.

Even a small drop in the earnings forecast could boost the annual employer payment to the pension fund. CalPERS, which may revisit the forecast in March, is not turning a deaf ear to the experts.

“Like all talented investment managers, and Rob Arnott is one of the most talented, he laid out a problem—in a low return environment conventional approaches to asset management are likely to disappoint—and a solution—invest unconventionally,” the CalPERS chief investment officer, Joe Dear, said by e-mail when asked for a comment.

“He did not say we can’t earn our target rate of return. He said to do that we’ll have to have an investment strategy that is different. Much of what he suggested, such as fundamental indexing, and higher exposures to emerging markets, we are already doing. The low return environment makes achieving our return objective more difficult, but not impossible.”

Why experts think this is a “low return environment” was explained by Pension Consulting Alliance, a CalPERS and CalSTRS adviser, in a report in October to the Rhode Island state pension fund, which was overhauled by legislation in November.

“Factors that provided a tailwind in the past are expected to present a headwind,” said the PCA report by Allan Emkin.

Low interest rates (the 10-year U.S. Treasury bond yield dropped from more than 8 percent in 1990 to about 2 percent now) means that the bond portion of investment portfolios will have lower yields.

Large government and private-sector debts run up in recent years means debt repayment can crowd out purchases and projects, limiting economic growth and potentially lowering stock returns.

Population trends in developed economies such as the United States, Europe and Japan (getting older and growing slower) mean their economic growth is likely to be slower, potentially lowering stock returns.

Under Rhode Island investment policy, the report shows a 50.3 percent probability of exceeding a 6.75 percent annual return during the next decade, the highest in a range decreasing to a low of a 36.9 percent chance of exceeding 8 percent.

To read entire story, click here.

Executive Editor Frank Pine
Posted: 01/28/2012 05:38:39 PM PST

San Bernardino County’s Board of Supervisors asked county lawyers last week to draft language for a ballot measure that would give voters the final say on increases to pension benefits for public employees.

Supervisors Janice Rutherford, Gary Ovitt and Josie Gonzales voted yea with supervisors Brad Mitzelfelt and Neil Derry voting nay.

Gonzales and Mitzelfelt both expressed at least a little ambivalence, saying they wanted to wait and see the final language of the ballot measure before committing.

We didn’t quote Derry in our story, but he was the first person to comment on it once it was posted on our website, and the nuance of his nay is significant.

Derry: “This wasn’t pension reform. It was a feel-good measure that would have had zero impact on current employee pensions and would create a significant roadblock to negotiating pension reductions in the future. How is it `reform’ if the pensions aren’t being changed?”

Mere hours after the board made its decision Tuesday, the head of the county’s most powerful union – the Safety Employees Benefit Association – announced it would fund an initiative to cut supervisors’ pay by reducing their employment status to part time.

Union president Laren Leichliter said the SEBA announcement was not intended to intimidate supervisors and noted that signature gatherers were collecting names the Thursday before the pension item was placed on the supervisors’ agenda.

His quote: “All our elected officials, according to them they’re all overpaid, so we’re just trying to assist them in their progression of trying to save county residents money,” Leichliter said.

Maybe that’s the case, but the timing is pretty suspect and it’s hard to see this as anything other than the latest example of the rough-and-tumble politics of San Bernardino County in particular and California in general.

The real issue here, however, appears to be the county’s ongoing contract negotiations with SEBA. As the county struggles to close daunting budget shortfalls, those negotiations have been anything but smooth.

In December, the county threatened to impose a 14 percent reduction in pay and benefits on SEBA’s Specialized Peace Officers bargaining unit, which includes probation officers, coroner investigators and welfare-fraud investigators.

To avoid that, the unit approved a contract with a 7 percent cut in benefits and a reduction in annual merit raises from 5 percent to 2.5 percent.

To read entire column, click here.

Dan Walters

By Dan Walters
Published: Sunday, Jan. 29, 2012 – 12:00 am | Page 3A

The big news in Stanislaus County these days is that a big Internet retailer – almost certainly Amazon – will establish a huge distribution center in Patterson that would employ at least 1,500 workers.

Meanwhile, California new car sales reached nearly 1.3 million vehicles last year, a 9.9 percent improvement over 2010, and the state’s unemployment rate dipped in December to 11.1 percent, down 1.4 percentage points from the previous December, with at least a quarter-million more working.

Are they signals that California’s economy, clobbered by the worst recession since the Great Depression, is on the mend? “Indeed,” says Beacon Economics’ Chris Thornberg, “virtually all major economic indicators have been trending positively for the state, and the nation overall. The recovery is real.”

But there’s a lot of uncertainty about recovery’s rapidity and sustainability.

Gov. Jerry Brown concedes that recovery is slower than the administration thought it would be last year – which explains why state revenues are falling short of last year’s rosy assumptions.

“The employment bounceback from this very severe recession has been so weak that the state’s job level will not reach its pre-recession level until 2016,” his new budget says. “This slow jobs recovery, due in part to a housing market that remains mired in a slump, continues to take its toll on state revenues.”

The Legislature’s budget analyst, Mac Taylor, is slightly more optimistic than Brown about the economy but markedly less optimistic about revenues because they depend more on high-income taxpayers’ investment earnings than the general economy.

A quarter-million – or more – new jobs in the last year is certainly good news but it’s not incompatible with a fairly slow recovery.

To read entire story, click here.

Residential developers will remember the past year as the third-slowest in California history – and the slowest ever in terms of permits for new single-family homes.

Golden State developers are finding a better market for apartments and other multi-family living options than new homes.

And among those who are in the market for new homes, bigger is not necessarily better.

“I think everything is shifting to smaller lot sizes and smaller homes. Everything is driven by affordability,” said Jeff Simonetti, vice president of government affairs for the Baldy View chapter of the Building Industry Association.

The new data is from the California Building Industry Association. Its tally of building permits issued for new houses, apartments, condos and townhomes, the trade group reports the 47,015 permits granted last year amounted to the third-smallest on record.

The California BIA’s numbers go back to 1954.

The years 2010 and 2009 are the only years when California governments issued fewer permits.

The nadir came in 2009, when permitting authorities approved 36,421 new residential units of all types.

But when permits for single-family homes are considered in isolation from apartments and other multi-family projects, last year was the slowest ever for single-family homes.

California developers received permission to build a mere 21,420 houses last year, down 16 percent from 2010.

By contrast, multifamily permits jumped 33 percent to 25,595 new permits.

“We continue to see strong demand for rental communities, and many people choose to rent for lifestyle reasons as well as for mobility,” said Randall Lewis, executive vice president of the Upland-based Lewis Group of Cos.

Lewis Group develops land for merchant builders and also builds apartment complexes.

For now, Lewis is more optimistic on the apartment side of its residential business. He is not expecting a significant uptick in new housing sales until late this year.

To read entire story, click here.

California Gov. Jerry Brown presents his proposed state budget, which needs tax hikes to balance. (Lezlie Sterling / MCT / January 5, 2012)

By Marc Lifsher
January 25, 2012, 10:43 a.m.

California’s combination of business, sales, income and other taxes ranks it close to the bottom of the 50 states for being business-friendly, according to an index put out by a conservative Washington think tank.

California placed 48th, ahead of only New York at 49th place and New Jersey at 50th, said a report released Wednesday by the Tax Foundation.

The findings are likely to become an issue in a campaign by California Gov. Jerry Brown to put an initiative on the November ballot to temporarily raise the state sales tax and the individual income tax for people who make over $250,000 a year. Brown wants the money to pay down state debt, boost school spending and balance the budget.

Gil Duran, a Brown spokesman, dismissed the Tax Foundation findings as politically motivated.

“This is a partisan group funded by conservative foundations and its assertions must be taken with a grain of salt,” he said. “California added 230,000 jobs in 2011 and personal income grew by $100 billion — far outpacing the nation. Our state is attracting business and investment from around the world.”

According to the foundation, the top 10 states with business-friendly taxes were Wyoming, South Dakota, Nevada, Alaska, Florida, New Hampshire, Washington, Montana, Texas and Utah, the report said. Many of them made it to the top tier because they don’t collect a major tax, such as on corporate income.

“Even in our global economy, a state’s stiffest and most direct competition often comes from other states,” said Tax Foundation economist Mark Robyn. “State lawmakers need to be aware of how their states’ business climates match up to their immediate neighbors and to other states in their region.”

To read entire story, click here.

It falls short of the 7.75% average that actuaries say CalPERS needs to meet obligations. Calendar-year results are just indicators — the public pension fund’s fiscal year ends in June.

By Marc Lifsher, Los Angeles Times
January 24, 2012

Reporting from Sacramento— The nation’s largest public pension fund, the California Public Employees’ Retirement System, posted a 1.1% return on its investment portfolio in 2011, Chief Investment Officer Joseph Dear told his board.

The 2011 performance was well below the estimated average annual return of 7.75% that the fund’s actuaries say is needed to meet current and future obligations to its members.

The $229.5-billion CalPERS provides retirement and other benefits for 1.6 million state and local government employees and their families.

CalPERS’ annual investment results, whose volatility has echoed that of the overall markets, have become the focal point in an ongoing debate about looming pension fund liabilities and the ability of future generations of taxpayers to continue financing them. Gov. Jerry Brown has said he wants to overhaul state and local government pension programs, but whether he and the Legislature have the political wherewithal to do so in an election year remains unclear.

During the 2011 calendar year, CalPERS lost 7.95% on its public equity investments, lost 2.29% on its hedge fund investments, earned 12.38% on bonds and earned 9.92% on real estate.

To read entire story, click here.

Dan Walters

Published: Monday, Jan. 23, 2012 – 12:00 am | Page 3A

Whenever someone suggests that California’s public employee pension systems need reform, civil service unions react dismissively, often with attacks on the credentials or even the morals of critics.

When, for example, a Public Policy Institute of California poll found strong support – even among public workers themselves – for Gov. Jerry Brown’s middle-of-the-road pension reform plan, the union-backed Californians for Retirement Security reacted thusly:

“These poll results are not surprising. They amount to more fallout from a sustained and unrelenting misinformation campaign being fed to Californians,” and continued: “Millions of public servants in California are doing their jobs and planning their futures with the promise of retirement security made to them. Even they are being peppered, however, with misleading and disproportionate examples of the tiny fraction of six-figure pensions and isolated cases of abuse. Pensions equal less than 3 percent of this state’s beleaguered budget, while California corporations swim in profits and are dodging contributing tens of billions to state coffers through a slew of tax breaks.”

A day after that poll was published, a research team based at Stanford University and headed by former Democratic Assemblyman Joe Nation released an updated analysis of state and local pension funds, concluding that they are hundreds of billions of dollars underfunded, and unless reformed, will seriously erode future financing of schools, health care and other services.

The reaction from Californians for Retirement Security was even more scathing, to wit:

To read entire column, click here.

George Skelton

By George Skelton, Capitol Journal
January 23, 2012

It’s the norm in January: After the governor proposes a new budget and delivers his State of the State address, legislators slide into hibernation until spring.

Oh, there’s some rustling around in the dens — a few committee hearings, brief floor sessions — but no strenuous activity, no risk taking until May, when deadlines sprout and the governor revises his budget proposal.

Not every year follows that pattern — last March, the governor and the Legislature made sharp spending cuts — but winter 2012 has all the signs of the rhythmic long nap.

So it’s not surprising that there seems to be a look of lethargy among legislators concerning the sensitive issue of public employee pensions.

We’re being told to be patient. Pension reform will happen. This year.

“It has to,” says Senate President Pro Tem Darrell Steinberg (D-Sacramento). “And it will. The public expects it, first of all.”

And, the Democratic leader adds, “it’s going to be an important part of convincing the voters that we’ve done everything reasonable we can to help deal with costs.

“Sometimes an issue is used as a wedge for political purposes, but it’s a legitimate issue nevertheless. It’s amazing how political the issue of public pensions has become.”

Not really.

Over the last decade or two, companies butchered pension plans while many governments boosted theirs outrageously. That led to inevitable outcries of unfairness by private-sector taxpayers. Also, government pension plans face unfunded liabilities reaching into the hundreds of billions, depending on the study. So that’s a time bomb ticking for taxpayers.

The nonpartisan Field Poll reported last month that an increasing number of California voters are viewing state and local government pensions as “too generous” — 41%, compared with 32% two years ago.

Another nonpartisan poll, by the Public Policy Institute of California, found that even government workers — nearly two-thirds of them — think that they should contribute more to their pension systems and that new hires should be provided only 401(k)-type plans.

Actually, through collective bargaining, state and local pension plans are starting to be rolled back for future hires, and current employees are contributing more to their retirements.

But practically everyone in the Capitol knows a major overhaul is needed because the current system is not sustainable fiscally or politically.

“There’s a desire to do it and get it over with,” Steinberg says. “But it’s going to take several months of sustained work to drill down below the ideology and easy sound bites and to actually analyze what the various options mean…. I’d like to get this done before the budget.”

The constitutional deadline for the Legislature to pass a balanced budget is June 15.

Gov. Jerry Brown has proposed a 12-point pension overhaul, but seems to be telling legislators to take their time — a dangerous suggestion in Sacramento.

To read entire column, click here.

By Ed Mendel
Monday, January 23, 2012

A new advisory panel, following a move by CalPERS last year, recommends that public pensions take a small step that touches on a big issue: What happens if pension fund earnings fall below the forecast?

Investment earnings are expected to provide two-thirds or more of the money needed to pay pensions in future decades. Critics say earnings forecasts, 7.75 percent a year for CalPERS and CalSTRS, are too optimistic and conceal massive taxpayer debt.

To make more pension information public, the first report of an actuarial panel recommends, among other things, that retirement systems add a “sensitivity analysis,” which is likely to show what happens if earnings miss their target in the next few years.

It’s not a long-term forecast like a Stanford graduate student study two years ago. Using a lower risk-free bond rate advocated by some economists, 4.1 percent, the study showed how state pension debt ballooned from the reported $55 billion to $500 billion.

Pension debt has become a political issue cited by reform advocates, who say public pensions must be overhauled to prevent the growing cost from eating up money needed for basic government services.

A short-term “sensitivity analysis” is intended to be practical, a way to help state and local governments know how much their annual pension costs may vary in the next few budget cycles if investment earnings or other factors miss their target.

For the first time, the annual California Public Employees Retirement System actuarial report last fall on state and non-teaching school pensions included a sensitivity analysis.

The report showed how employer contributions could vary if, all other factors remaining unchanged, earnings during three fiscal year are above or below the target by a little or a lot.

For example, if earnings hit the target of 7.75 percent the employer contribution in fiscal 2015-16 for most state workers would be 19.5 percent of pay. (The employee contribution, 8 percent of pay, is bargained with labor and presumably unchanged.)

But if total investment earnings this fiscal year and the next two fiscal years show a loss, minus 3.64 percent, the employer contribution in 2015-16 would increase by about half to 28.9 percent of pay.

Falling short of the 7.75 percent target with earnings of 2.93 percent would increase the 2015-16 contribution to 22.6 percent of pay. Exceeding the target with earnings of 19.02 percent would produce little change, dropping the rate to 18 percent.

The sensitivity analysis may not be the long-term debt calculation sought by reformers. But it does clearly show the risk of how a double-dip recession, and another plunge in the stock market, could drive up government costs.

The California Actuarial Advisory Panel, with eight members appointed by public officeholders and agencies, was created by legislation recommended by the California Public Employee Post-Employment Benefits Commission four years ago.

“There is no single clearinghouse for funding policies and practices from around the state and country which can be used to evaluate the actuarial assumptions, crediting rates, or proposed actions of a particular retirement system,” the commission said.

Actuaries have a key role in setting the annual payment that state and local governments must make to pension funds. During a push to cut pension costs, former Gov. Pete Wilson obtained legislation giving lawmakers control of the CalPERS actuary.

A labor-backed initiative, Proposition 162 in 1992, returned control of the actuary to the CalPERS board, while also giving all public pension boards control of their administration and pension funds to prevent Wilson-like “raids” on “surpluses.”

The importance of actuary control was seen in a major state pension increase, SB 400 in 1999. The trendsetting benefits now called “too rich” and “unsustainable” by some are being rolled back for new hires and blamed for soaring pension costs.

CalPERS, the SB 400 sponsor, told legislators the increased pensions would be paid for by a surplus, investment earnings and inflating pension fund assets, leaving state pension costs unchanged for a decade, said a legislative bill analysis.

To read entire column, click here.

Sandra Emerson, Staff Writer
Created: 01/21/2012 05:12:56 PM PST

UPLAND – The city may expect another budget deficit in the next fiscal year, with expenditures continuing to grow more quickly than revenues, according to estimates by City Manager Stephen Dunn.

Dunn outlined several of the city’s challenges in 2012 during a special City Council meeting Saturday at the Carnegie Library.

Dunn estimated revenue increases to be $2.3 million, with $2.75 million in expenditure increases, resulting in a $430,000 deficit for the 2012-13 fiscal year.

However, Dunn said the revenue projections may be realistically the gap could be closer to $1 million

“Next fiscal year we’re seeing a $430,000 deficit and we haven’t done anything yet and again that is very impressive revenue projections,” Dunn said. “The deficit is probably closer to $1 million.”

The city’s total revenues are $93.6 million, with $36 million in general fund money.

The increases in revenues include property and sales tax, a gain of about $800,000 from the elimination of the Redevelopment Agency on Feb. 1 and a 10 percent increase in remaining general funds.

Payroll costs will increase by $1.6 million, of which $1.1 million is attributed to the contract with the Police Association. The rest is in pension costs.

“So we have a lot of challenges here and as I said went over fact that the expenses are going to out pace revenues for the next few years,” Dunn said. “We do have obligations from our police group and we have other groups we’re in negotiations with and I will say it’s common knowledge that those groups are all looking at what the police got and saying ‘you had the money for them why don’t you have the money for us?’ And that’s a very valid argument.”

The general fund will absorb $1.1 million in personnel costs previously funded by the Redevelopment Agency, which will be dissolved on Feb. 1.

Dunn also included a possible $50,000 in increased utility costs if Southern California Edison raises its rats by 5 percent.

Legal costs, other post employment benefits for retirees and vehicle replacement costs are expected to go up by an unknown amount.

“The good part I see about this is we’re recognizing these problems. We’re not burying our heads in the sand and saying everything is great and not doing certain things,” said Councilman Brendan Brandt. “We’ve already taken reorganization plans and the city manager has also laid out some not rosy scenarios for us, but I think they’re what I’d call realistic scenarios for us and I look forward to the next year and I do see an end to some of the litigation.”

The city will lose $12.8 million in Redevelopment funding when the Redevelopment Agency is dissolved.

To read entire story, click here.

By Andrew Edwards, Staff Writer
Created: 01/20/2012 10:52:09 AM PST

The Inland Empire’s unemployment rate fell to 12.2 percent last month as employers in San Bernardino and Riverside counties added 5,200 non farm jobs, state officials reported Friday.

The region’s unemployment rate was at 12.5 percent in November, according to the state’s Employment Development Department.

The state’s numbers showed similar improvements for job markets in the Los Angeles area and California as a whole. Although unemployment remains well above pre-recession levels, unemployment rates have trended downward since the past summer.

“You have to be positive about this,” said economist Brad Kemp of Beacon Economics.

Kemp said he expects the employment situation to improve throughout the year, with private employers adding workers and a decrease in government downsizing.

The most significant obstacles to quicker job growth, in his opinion, are a surplus of homes that is preventing a comeback for the construction industry and high levels of political animosity.

Kemp has often said business owners are reluctant to hire or make other long-term decisions when Democrats and Republicans would rather fight than compromise on taxes and other fiscal matters.

“Let’s face it, we’re not going to get a stable political environment until at least after November,” he said.

But Kemp and others at Beacon are not predicting a near-term increase in unemployment.

In San Bernardino and Riverside counties combined, the unemployment rate has fallen since July, Beacon’s analysis of the state’s numbers show.

The Los Angeles area’s jobless rate has fallen since October and the state’s nonemployment rate has improved since September.

In Los Angeles County, the December unemployment rate stood at 11.8 percent, down by 0.1 point from the previous months.

California recorded an 11.1 percent jobless rate, down from 11.3 percent in November.

The state’s employers expanded added 10,700 nonfarm jobs to their payrolls last month, and the labor force also increased by 36,400 Californians to include 18.2 million Californians who had jobs or were looking for jobs last month.

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Published: 20 January 2012 04:08 PM

December was an excellent month for the job market in Inland Southern California, and the typical seasonal opportunities in stores, restaurants and movie theaters had very little to do with it.

There were almost 23,000 San Bernardino and Riverside county residents on payrolls last month than were working a year earlier, a level the region has not seen in 2 ½ years, the state Employment Development Department reported Friday. It was the fifth consecutive month of job growth, and the pace of the expansion has accelerated in each of those months.

Unemployment was estimated at 12.2 percent in December, down from 12.5 percent the previous month and a sharp decrease from the peak of 15.1 percent in the summer of 2010.

“This is the best report we’ve gotten since the start of the recession,” Chapman University economist Esmael Adibi said. “The recovery seems to have some legs, and job creation is creeping along.”

There were an estimated 1,158,000 Inland residents on payrolls in December, up from 1,102,000 six months ago. Payroll employment had been as high as 1.3 million before the worst recession in modern history began to devastate the Inland economy more than four years ago.

Statewide the unemployment level fell to 11.1 percent from 11.3 percent in November. The figures for the state are adjusted to account for expected seasonal fluctuations, while data for counties are not adjusted.

Local unemployment numbers usually decline in December because of one of those seasonal shadings. Many job-hunters settle for two-month tenures at retail or service establishments that need extra staff for the holidays. There was some growth in those sectors this year, according to the report, but it was only marginal.

What the state’s report did show is growth in a much wider reach of job sectors when compared to December 2010, some of it substantial.

Jobs from the area’s distribution and logistic sector are up about 5 percent from a year ago. Smaller increases were noticed in the manufacturing and construction sectors.

Opportunities for office workers, mostly support staff, were up sharply last month. Other increases were seen in the health-care and government sectors.

One of the few sectors still losing jobs was financial services, which is tied to a lack of new construction. Redlands-based economist John Husing said it might be another two years before the construction industry becomes a serious economic factor in the Inland area again.

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California Gov. Jerry Brown talks about his budget during a press conference in Sacramento. (Lezlie Sterling//MCT / January 5, 2012)

NEWS ANALYSIS

By Anthony York, Los Angeles Times
January 18, 2012

Reporting from Sacramento— In his State of the State address in Sacramento on Wednesday, Gov. Jerry Brown is expected to attempt a risky balancing act: reconciling his well-crafted image as a penny pincher with one he aspires to as a builder in the mold of his father, former Gov. Pat Brown.

Details of the speech are closely guarded. Brown’s aides say he wrote it himself and even his most trusted advisors haven’t seen it. But they expect the remarks to expand on themes the governor has sounded in recent weeks, calling for fiscal austerity while at the same time urging that billions be invested in public works.

Brown has continued to demand that lawmakers cut deeply into the state’s social safety net. He has simultaneously embraced an ambitious high-speed rail program whose price tag has ballooned since 2006, when voters agreed to pay for it. He has said Californians will have to choose between billions in new taxes next fall and cuts in public school funds — but he also has advocated for a new multibillion-dollar water bond.

Brown will have to defend such long-term investments even as he pegs the budget deficit at more than $9 billion and state unemployment remains high. His administration says that’s not a contradiction.

“We built the Golden Gate Bridge and Central Valley Water Project during the Great Depression,” his spokesman, Gil Duran, said Tuesday. “We’re not trying to build the pyramids here. We’re trying to build the water and transportation infrastructure we need to guide us through the 21st century.”

To make his case Wednesday, the governor must persuade Californians that state finances remain precarious enough to require higher taxes but have stabilized enough to allow major public projects. He is expected to strike a markedly different tone from a year ago, when he urged bipartisan cooperation in the Capitol to address the state’s fiscal crisis.

After failing to break Sacramento’s persistent gridlock and gain Republican support for a tax increase to balance the budget, Brown and his fellow Democrats are preparing to turn to voters directly, planning to gather signatures for a November ballot measure that would temporarily raise levies on sales and upper incomes.

Immediately after the speech, Brown will take his message on the road with appearances in Los Angeles and Burbank on Wednesday and in Irvine and San Diego on Thursday.

To read entire story, click here.

Published: Tuesday, 17 Jan 2012 | 7:06 AM ET
By: Reuters

Rating agency Fitch said on Tuesday that Greece would default on its debt, although it said that such a default was likely to take place in an orderly manner.

“It is going to happen. Greece is insolvent so it will default,” Edward Parker, Managing Director for Fitch’s Sovereign and Supranational Group in Europe, the Middle East and Africa told Reuters on the sidelines of a conference in the Swedish capital. “So in that sense it shouldn’t be a surprise to anyone.”

The Fitch comments come after Moritz Kraemer, head of Standard & Poor’s rating agency’s European sovereign ratings unit, said on Monday Greece would default shortly on its debt obligations.

Parker said that Fitch believed that even a voluntary agreement by private investors to take a haircut on Greek debt would constitute a default.

To read entire story, click here.

January 17, 2012 – 6:38 p.m.
By David Oakley

Portugal is trading in default territory after investors offloaded the country’s bonds this week amid rising fears of contagion. Worries are mounting that the private sector and Greece will fail to agree a restructuring package for Athens’ debt.

Many investors were also forced to sell Portuguese bonds after Standard & Poor’s downgraded the country to junk on Friday. Other funds sold Portuguese debt after Lisbon was removed from Citigroup’s European Bond Index, which these investors track, because of its fall to junk status.

All three main credit rating agencies, S&P, Moody’s, and Fitch, rate Portugal as junk, below investment grade. In the eurozone, only Greece is also rated junk by all the agencies.

The markets are pricing in a 65 per cent chance that Portugal will default over the next five years, according to credit default swaps as these instruments, which protect investors from default, leapt to record highs this week.

Portuguese bond prices have slumped to levels considered by many investors to be in default territory. Bond prices for benchmark 10-year debt were trading at 52 per cent of par, recovering from levels below 50 per cent on Monday.

Portuguese 10-year bond yields, which have an inverse relationship with prices, jumped to euro-era highs of 14.40 per cent on Monday. They eased back to 14.12 per cent on Tuesday. Before the S&P two-notch downgrade late on Friday, yields were trading at 12.45 per cent.

Elisabeth Afseth, fixed-income analyst at Investec Capital Markets, said: “The growing worry that Greece will default is now hitting Portugal because of contagion fears. If Greece defaults, then the worry is so will Portugal. We have seen how quickly this crisis can spread.”

Fitch, the rating agency, warned on Tuesday that Greece was likely to default in March when Athens is due to pay €14.5bn in bonds.

To read entire story, click here.

Published: Tuesday, 17 Jan 2012 | 1:05 PM ET
By: AP

The largest banks must show how they would break up their assets if they were in danger of failing, under a rule approved Tuesday.

The Federal Deposit Insurance Corp voted to require banks with $50 billion or more in assets to submit so-called living wills. Seven banks with more than $250 billion in assets will have to show their plans by July. The other 30 affected by the rule have until 2013.

The FDIC also proposed a separate rule that would require banks with more than $10 billion in assets to conduct annual stress tests.

The tests show how each bank is positioned to handle worsening economic conditions, such as increasing unemployment and falling home prices. The regulator put the rule out for public comment and is expected to finalize it by July. It will affect roughly 190 banks.

Both rules were mandated under the 2010 financial overhaul.

By requiring banks to have living wills, the government is trying to reduce the need for another Wall Street bailout like the one that took place during the 2008 financial crisis. The 37 banks
affected by the rule hold roughly $4.1 trillion in insured deposits, or about 61 percent of U.S. insured deposits as of Sept. 30, 2011.

The largest include JPMorgan Chase [JPM  34.91    -1.01  (-2.81%)   ], Bank of America [BAC  6.48    -0.13  (-1.97%)   ], Citibank [C  28.215    -2.525  (-8.21%)   ], Wells Fargo [WFC  29.825    0.215  (+0.73%)   ], U.S. Bank, PNC [PNC  61.24    -0.49  (-0.79%)   ] and Bank of New York Mellon [BK  21.27    -0.18  (-0.84%)   ].

To read entire story, click here.

BY DUANE W. GANG
STAFF WRITER
dgang@pe.com

Published: 15 January 2012 08:45 PM

Since 2008, Riverside County supervisors have doled out more than $11million to hundreds of community groups, but the funding could be in jeopardy as the county continues to face daunting financial challenges.

The money comes from an account called the Community Improvement Designation Fund, which is divided evenly among the five supervisors and used to pay for neighborhood projects, fund nonprofits and bolster other government agencies.

So far this fiscal year, the largest expenditures have included $40,000 to the Mary S. Roberts Pet Adoption Center in Riverside, $40,000 to the Boys and Girls Club of the Coachella Valley, $12,500 to the Riverside County Regional Medical Center Foundation and $10,000 to the 2012 Race for Humanity, county records show.

Last fiscal year, the largest amounts went to other government agencies, including more than $250,000 to the Riverside Community College District that came at the request of Supervisor Bob Buster and another $125,000 at the request of Supervisor John Tavaglione.

Supervisors said the fund is an important tool to help support worthy causes. But the county is facing an estimated $80 million budget gap for next fiscal year, and officials continue to face pressure to save money wherever they can. Two supervisor candidates contend the fund is used to bolster board members politically and that more oversight is needed.

In 2008, total spending from the fund totaled nearly $5 million — $1 million for each supervisor — but the amount was cut in half the following year. Spending ticked up slightly, to nearly $3 million, in fiscal 2010-2011, county records show.

FACING SCRUTINY

Supervisor Marion Ashley said Friday the community improvement fund is important and should be maintained. But he said the fund will face scrutiny.

“There is going to be a lot of pressure to scale it back more,” he said. “It is going to be under pressure to just survive.”

Buster, along with Supervisors Jeff Stone and John Benoit, also said in recent interviews the program is valuable. Supervisor John Tavaglione could not be reached for comment.

Benoit said the fund is how he supports food kitchens, homeless shelters and other community groups that are struggling.

“The impact of doing away with that (fund) would be felt severely,” he said. “I would not support that.”

Stone said that he backs many nonprofits that, without the support, would not be able to provide important services to residents. If those nonprofits weren’t around, Stone said the county would have to assume even more responsibility.

To read entire story, click here.

By Kevin Yamamura
kyamamura@sacbee.com
Published: Monday, Jan. 16, 2012 – 12:00 am | Page 1A

As unemployed Californians struggle to find work, Gov. Jerry Brown has proposed strict rules for parents on welfare: Get a job in two years or lose nearly half of cash aid along with training and child care.

“This is not nice stuff, but that’s what it takes to balance the budget,” Brown said earlier this month when he released his plan, which would halve the current welfare-to-work time limit.

The governor’s welfare cuts would lop nearly $1 billion off the state’s $9.2 billion general fund deficit. He would prioritize employment as California faces federal penalties for having too many parents who do not work 30 hours a week.

Those who study poverty say Brown’s proposal is harsh because even well-qualified workers can’t find jobs in this economy. They contend that parents who max out on welfare benefits are the least equipped to join the workforce.

“These are the families with the least work history, the least education, and states are saying, ‘We don’t want to deal with you, we’re going to cut you off,’ ” said Liz Schott, a senior fellow with the Center on Budget and Policy Priorities.

The California Work Opportunity and Responsibility to Kids (CalWORKs) program has become an annual budget target because it has fewer state and federal protections than other public programs and less voter support.

Former Gov. Arnold Schwarzenegger proposed eliminating CalWORKs until he and Democrats settled on a 2009 deal that cut the time limit from five years to four and imposed stricter sanctions.

Last year, Brown and lawmakers repealed some of the Schwarzenegger measures. But they kept the four-year time limit for adults and cut grants by 8 percent, dropping the monthly maximum from $694 to $638 for a family of three. It is lower than the $663 that California offered the same family in 1988.

“To think that in 2012, I as a single working mom would be expected to live off of income at a rate we paid in the 1980s is almost comical,” said Assemblywoman Holly J. Mitchell, D-Los Angeles, who heads the budget subcommittee that oversees health and welfare programs. “Ultimately, low-income working families and children are going to suffer.”

Legislative Democrats say they are in no rush to pass another round of welfare cuts. Some lawmakers and advocates question how serious the governor is, seeing his plan as an austerity offering to voters as he asks for higher taxes.

But it is one of the few Brown proposals that Republicans applaud.

“We’ve created a culture of dependency that destroys human nature,” said Assemblyman Brian Jones, R-Santee. “When that happens, people lose the desire to continue finding work because they’ve given up. I believe human nature thrives when it has something productive to do.”

Tia Gilmore, 25, said she lost her position in October working as a cook at a Virginia hotel, where she moved after previously living in Sacramento. She and her 4-year-old son returned home to live with her mom in October.

Gilmore receives $490 a month in CalWORKs aid and $266 in CalFresh food benefits, as well as child care for her son. She learned how to write a résumé and answer interview questions Friday during a county job training session in south Sacramento.

She feared Brown’s plan would not provide enough time to attend school. “A lot of people here are still struggling and on the verge of being homeless,” she said, “because it’s not enough money and they can’t find jobs.”

To read entire story, click here.

Signs point to Facebook going public in 2012. If Mark Zuckerberg’s social network has a successful IPO, it could mean hundreds of millions of dollars in taxes get pumped into California’s coffers. (David Paul Morris, Bloomberg / September 22, 2011)

By Anthony York, Los Angeles Times
January 15, 2012, 9:42 p.m.

Reporting from Sacramento— The future of California’s public schools, universities and health programs could be linked partly to the fictional town of FarmVille.

The popular virtual world is the creation of Zynga, a San Francisco online game company that raised $1 billion in an initial public stock offering last year. Because California receives much of its income from capital gains taxes, such moves by businesses like Zynga can mean hundreds of millions of dollars for state coffers.

More California technology companies are poised to go public this year — including a widely expected $10-billion offering from Facebook — than at any time since the dot-com boom, experts say. Their success could relieve state officials of the need to cut state services more deeply in the budget year that begins in July, but Gov. Jerry Brown and his fellow Democrats are already squaring off over whether to count on the fruits of those transactions.

Some Democratic lawmakers, as well as some economists, have said Brown’s newly proposed budget underestimates the strength of California’s economic recovery, much of which is being driven by record profits in the technology sector and the surge in new public offerings. Officials in Brown’s Department of Finance say they did not factor in a potential tax spike in the next fiscal year from, for example, a Facebook IPO.

“We haven’t affixed a value to it yet, so it’s not part of our forecast,” spokesman H.D. Palmer said.

But the legislators, who note that it’s not unheard of for a single company to boost the state’s budget, are hoping Facebook will do for California what Google’s IPO did in the last decade. Capital gains tax receipts from stock sales rose to $54 billion in 2005, from $39.7 billion in 2004, the year Google went public, according to Franchise Tax Board figures, although it is unclear how much was due to Google.

“The state’s revenues soared from the ‘Google effect,’ ” said Sen. Lois Wolk (D-Davis), chairwoman of the Senate Governance and Finance Committee. “I expect we will see a surge in state revenue from the Facebook IPO in 2012.”

The nonpartisan Legislative Analyst’s Office concurred last week in a review of the governor’s proposed budget. State revenue forecasts “need to be adjusted to account for the possibility of hundreds of millions of dollars of additional revenues related to the Facebook IPO,” the analysis said.

There’s a lag between the moment a company goes public and the state’s receipt of any tax windfall. Executives and other employees often receive stock or options that typically cannot be cashed in until weeks or months after the IPO. But when the shares are sold, the state takes about a 10% cut of the profits.

And the profits can have ripple effects. “The money made from these IPOs is used for other things, some of them taxable — like real estate, for example,” said Brad Williams, a former numbers cruncher for the legislative analyst.

To read entire story, click here.

With the $100-billion project at a critical juncture, the governor puts his people in key positions.

By Ralph Vartabedian and Dan Weikel, Los Angeles Times
January 14, 2012

A surprise shake-up of senior leaders at California’s bullet-train agency this week was partly Gov. Jerry Brown’s response to a growing crisis of confidence and credibility in recent months that has threatened the political viability of the project.

As criticism of the project has intensified, Brown has moved to exert more direct control, installing two representatives on the board of the California High Speed Rail Authority and, on Thursday, playing at least a peripheral role in replacing the authority’s chief executive, Roelof van Ark. Several state government sources said Van Ark, an engineering manager and high-speed rail expert, had become personally frustrated and lost the confidence of some key legislators.

Brown is under pressure from unions, engineering firms, big-city mayors and the Obama administration to stabilize and press ahead on a nearly $100-billion project that would be the biggest in California’s lofty history of extraordinary public works gambles. With so much at stake, Brown is putting his own people in charge, although their ability to quickly reverse the damage of a wave of negative outside reviews of the project remains unclear.

Van Ark is leaving in two months, giving the governor and the state’s High Speed Rail Authority board little time to find a qualified replacement at one of the most crucial junctures in the project’s history. In coming months, the rail agency must complete two crucial environmental reviews, obtain complex permits, persuade the Legislature to approve $2.7 billion in borrowing to start construction, begin buying land along the route and hire contractors to start work. All the while, the agency will have to fend off lawsuits and respond to increasingly skeptical groups of lawmakers in Sacramento and Washington.

It would be a formidable agenda even with experienced, stable leadership. Some knowledgeable observers say other managers, concerned about Van Ark’s treatment, could head for the exits soon. As it is, the rail authority is getting along with 28 employees, about half its authorized positions.

Amid the turmoil at the top, the project’s planning is proceeding at the hands of about 500 employees of contractors, led by New York City-based engineering giant Parsons Brinkerhoff, a firm that helped bankroll the 2008 bond proposal passed by voters.

“One of the questions that needs to be answered is what is the goal here,” said state Sen. Joe Simitian (D-Palo Alto), who has some oversight responsibilities for the project. “There needs to be someone who can exercise more rigor in the process. Instead, it seems like the agency has lurched from ad hoc decision to ad hoc decision in the past three years.”

The task of leading, at least for now, is falling to Dan Richard, a retired utility executive, former Bay Area transit official and longtime Brown political associate. Richard, whom the governor placed on the board last year, is expected to take over as chairman in February, replacing Thomas Umberg, an Orange County attorney who announced that he was giving up the leadership post the same day Van Ark disclosed his departure.

Richard, who served as a young legal advisor in Brown’s first gubernatorial administration in the 1970s, had already become a de facto project spokesman.

To read entire story, click here.

When former Gov. Arnold Schwarzenegger tried to repeal a state law requiring animal shelters to keep dogs and cats longer before euthanizing them, outrage from animal lovers was so overwhelming he was forced to drop the idea.

Eight years later, Gov. Jerry Brown is proposing to repeal provisions of the same law. But this time – owing to improved shelter conditions and to years of tough budget conditioning – hardly anyone has complained.

The shelter requirement, temporarily suspended in 2009, is one of about 30 local government mandates Brown is proposing to repeal in state budget legislation, greatly reducing the number of directives for which local agencies may claim reimbursement from the state.

The savings is not insignificant. The Democratic governor is counting on saving about $729 million by suspending or repealing various mandates, and about $100 million more by deferring payments the state already owes.

In all, the mandate repeals make up nearly a fifth of the spending cuts in Brown’s proposal. The repeal of the animal shelter mandate alone is expected to save the state more than $46 million next fiscal year.

In many cases, the mandates have been suspended for years, and in most cases – including at animal shelters, officials say – local agencies still provide the same services, anyway.

Among the mandates Brown is seeking to repeal are requirements that local agencies conduct autopsies on infants who die unexpectedly, take missing person reports and provide emergency workers portable masks and airway assemblies to use while administering CPR.

“Some of these things, to be honest with you, are so old that they don’t make sense in a modern environment,” said Jean Hurst, a lobbyist for the California State Association of Counties. “I mean, CPR masks? Who would send out their firefighters or cops without CPR masks?”

Temporarily suspending local mandates is a years-old budget tool. But Brown, who was governor before when voters first required the state in 1979 to reimburse local agencies for the cost of certain state-mandated programs, is proposing to permanently repeal more than in previous years.

The administration’s goal is to “change the overall structure to make it more efficient and get away from the current claiming process that’s time-intensive and costly for everyone to operate,” state Finance Director Ana Matosantos said at a California Chamber of Commerce luncheon Thursday.

Brown said in Elk Grove on Friday that local government “ought to have as much authority as possible.”

“Every time the state issues a mandate, then we’ve got to have some kind of a policeman, a bureaucrat, an enforcer, an auditor, somebody else who checks up on the rules,” he said. “And I would like to see more accountability at the local level, and then with the appropriate oversight by the state.”

He said, “So it’s a matter of balance, and I’m trying to rewrite an imbalance.”

To read entire story, click here.

Gas prices are starting the year at the highest point ever because of high oil prices and brisk fuel exports.

By Ronald D. White, Los Angeles Times
January 14, 2012

Get ready to pay $4 a gallon or more for gasoline this spring, with possible records close to $5 over the Memorial Day weekend, analysts said.

“Motorists who drive a SUV may want to consider calling their banking institution and obtain a credit-limit increase so they can afford this summer’s fuel expenses,” quipped Patrick DeHaan, senior petroleum analyst for GasBuddy.com.

Look for a springtime U.S. average of $4.05 for a gallon of self-serve regular gasoline, said Tom Kloza, chief oil analyst for the Oil Price Information Service. The New Jersey company provides daily fuel-price averages for the AAA Fuel Gauge Report using credit card receipts from more than 100,000 retail outlets across the U.S.

That would fall short of the inflation-adjusted record of $4.114 reached in the summer of 2008, according to Energy Department statistics.

California’s average would be higher than the U.S. average, Kloza said, adding that he didn’t expect it to hit the state’s record of $4.588 a gallon.

Gasoline prices are starting the year at the highest point ever because of high oil prices and brisk fuel exports.

In New York futures trading Friday, West Texas Intermediate crude fell 49 cents to $98.61 a barrel. Much of the oil the U.S. imports is based on the price of Brent North Sea crude, which was trading at $110.38 a barrel in London. Other sources of U.S. crude are also more expensive, Kloza said.

To read entire story, click here.