The Observation Deck

As reported in the latest Observer, Council is moving toward increasing pay from $7,000 to $13,000 per year. It is the first increase in a very long time.

I have no particular objection, but I wonder how others feel.

I think maintaining salaries of public officials at a realistic level is important.
At one extreme, if all public service is without pay then only those in the upper income strata can afford or think about an elected office thereby making the pool of those who can serve artificially small.
But by maintaining a reasonable (as compared to other cities or comparable private market skills) salary those whose earning potential would otherwise be adversely affected can entertain the possibility of running and serving in elected office.
This, then, theoretically widens the pool of potential candidates which in turn would benefit the electorate with a greater choice.

Stan Austin

Mike, Stan, all....
I strongly agree a pay raise for City Council members is in order. Council salaries have lagged to the point where this action is more appropriately titled "pay maintenance" rather than a pay increase.

Since the last pay increase over 30 years ago...prior to Bernie Kosar's quarterbacking reign with the Browns, many circumstances have changed.
Among the most important circumstances are changes at OPERS (Ohio Public Employees Retirement System).

OPERS is solvent and its future funding is secure. However, one of the reasons for OPERS' solvency is that it's leadership has remained pro-active in making tough, but necessary pension changes. Among those recent changes was the increase in monthly earnings in order to qualify for full service credit.



This from the OPERS web site:

Minimum earnable salary
Beginning Jan. 1, 2014, members must earn at least $600 per month to earn the full service credit toward pensions for that month. If a member earns less than $600 in a month, the amount of service credit will be prorated
in the exact percentage of the salary earned. For instance, if a member earns $400, he or she will earn 67 percent credit for the month.
Earning credit for health care eligibility differs from the minimum earnable salary for pensions. Beginning Jan. 1, 2014, contributing service credit for health care will be accumulated if the member earns at least $1,000
per month. Health care eligibility based on the minimum earnable salary will not be prorated. Before the changes brought by pension legislation, an OPERS member had to earn a minimum monthly salary
of $250 to receive one full month of OPERS credit for pension benefits and health-care coverage. This $250 threshold was established in 1985.
Credit earned before January 2014 will not be affected by this change.


The current $7,000 per year Council salary was adapted in order to allow Council members to maintain the ability to earn retirement service. As the salary threshold has been increased, (see above) failure to raise Council's salary would in effect, reduce a long established benefit.

In the spirit of full disclosure, I am a paid Board member of PERI (Public Employee Retirees, Inc.) an Ohio pension advocacy organization with over 50,000 statewide members. Many of OPERS' recent benefit changes I support and some I disagree.

In summary, the City has been fortunate to have been served by high caliber officials for many years. But in order to retain and attract quality individuals, basic and regular benefits need to be provided. Adjusting the Council salaries to 2014 standards and regulations is essential to that end.

It amazes me, but it is not at all surprising, that public employee pension plans are allowed to consider themselves "solvent" when they are able to pay only 80% of their future obligations. In OPERS case, 81%. Whew! And that only by assuming that plan assets will safely earn 8% a year on average for the next 26 years (in OPERS case) without fail, barely complying with the 30-year standard. Please Tom tell me where I can safely earn 8% on my 401K! Like you get, by fiat. The numbers are completely gamed, thanks in part to the loose standards of GASB.

The fact is, the five Ohio public employee pension systems, when a reasonable rate of return are assumed, are so far in the hole that they will never be paid, unless the federal government prints even more money and sends it here. Not a chance. We're like $25,000 per capita in the hole. Per real taxpayer maybe $200,000 apiece. The 2012 changes to Ohio's five public employee pension plans were too little too late. And what about the retiree healthcare component? Don't even see that mentioned, as it is even more severely underfunded, and future healthcare costs are impossible to predict.

None of which bears on the issue of council pay. I think council members deserve to be paid much more generously. The councilpeople I know work hard on our behalf. But I just don't like someone coming on here with an air of authority blowing smoke up our butts.

After 30 years of a fixed $7,000 salary, Council has agreed to raise salaries. The Ordinance raising the salary to $13,000 after the next election of each Council seat was unanimously recommended for adoption by the Committee of the Whole, which is the committee made up of all members of council. They all agreed to pass it after it reaches its full three readings which will be at the next council meeting.

Council Pay has always interested me.

In Cleveland, just inches away, the pay scale is much different, and it attracts a far
different politician. I have always been a fan of paying council, and the mayor much more.
I believe it would attract a better government.

I would also give council more discretionary spending in their wards.

FWIW

Mayor Tom,

Oh, That Bernie !

Thanks for the OPERS information from their website.

Write more local stuff, it's always a good read.

Checking with flashlights, no smoke.

Tim Liston wrote:None of which bears on the issue of council pay. I think council members deserve to be paid much more generously. The councilpeople I know work hard on our behalf. But I just don't like someone coming on here with an air of authority blowing smoke up our butts.

No one is listening.

I don't have any problem with pay raises for Council members.

However, when council members receive the benefits of a public employee pension there is at least the appearance of a conflict of interest. If council members are asked to replace or reform the current system they are being asked to replace or reform a system that they benefit from.

How bad is it:

Lakewood schools are not even in the top 300 school systems in Ohio but our superintendent receives the top pay:

http://www.cleveland.com/hillcrest/inde ... effre.html

Newspapers won't even report on the DROP program which provides guaranteed 8% returns and lump sum payments in addition to the normal pension.

The optimists think that when the majority of tax receipts are used to pay retirees the system will be reformed. The optimists are wrong.

Bill Call wrote:

Tim Liston wrote:None of which bears on the issue of council pay. I think council members deserve to be paid much more generously. The councilpeople I know work hard on our behalf. But I just don't like someone coming on here with an air of authority blowing smoke up our butts.

No one is listening.

I don't have any problem with pay raises for Council members.

However, when council members receive the benefits of a public employee pension there is at least the appearance of a conflict of interest. If council members are asked to replace or reform the current system they are being asked to replace or reform a system that they benefit from.

How bad is it:

Lakewood schools are not even in the top 300 school systems in Ohio but our superintendent receives the top pay:

http://www.cleveland.com/hillcrest/inde ... effre.html

Newspapers won't even report on the DROP program which provides guaranteed 8% returns and lump sum payments in addition to the normal pension.

The optimists think that when the majority of tax receipts are used to pay retirees the system will be reformed. The optimists are wrong.

Bill

Well the Observer is based on a bunch of stuff the papers won't cover, but you know we are
not afraid to cover. Get off your ass and do it. Last night I found out the 8% number you
threw out for DROP is off by quite a bit.

As far as Superintendents go, I think Jeff Patterson is the best we have had in awhile. I
also believe his team has saved the school more money then they cost when it comes to
building the new schools. Let's pretend his Superintendent of the year means nothing, your
gripe is that of double dipping?

So if Bill Call retires, and gets hired by another company you will refuse the money? Not
take the job, even though you are the most qualified?

In the decade plus I have had the pleasure of knowing you, you have always for some
reason expect others to not take more money offered in contracts. You have said it is
wrong for both the schools and the city hall to honor contracts, and you seem to think
anything agreed to in a contract can be pitched to the side the moment you feel you no
longer WANT TO HONOR the agreement.

As much as I would love to ask council WHY they deserve more money, especially this
and the last council, as I cannot really think of any reason. I personally believe council
needs, not deserves to be paid more in line with Cleveland which I believe is $75,000,
and they should also be given money, again I think in Cleveland it is $300,000 per ward
for what they think their Ward needs, without approval of council, but approval of Finance
and Law Department.

If any of those members have pensions, well enjoy them and thank you for serving again.


FWIW

.

Jim O'Bryan wrote: Last night I found out the 8% number you
threw out for DROP is off by quite a bit.

Thanks for reading. The actual guaranteed return is a variable rate that is just under 3% or so.

This article contains a nice graph showing first year payouts under the DROP program:

http://www.buckeyeinstitute.org/uploads ... l%20Word(1).pdf

The "contracts" you are referring to are not contracts in the traditional sense. They are an agreement between two government entities to increase each others pay and benefits.

It used to frustrate me when I saw people supporting paying top dollar for mediocrity but now I just expect it. I'm not referring to mediocrity of any individuals but to the mediocrity of our institutions.

You should read this but you won't:

http://www.city-journal.org/2014/eon1202sm.html

Bill Call wrote:You should read this but you won't:

http://www.city-journal.org/2014/eon1202sm.html

"It’s worth noting that some other states have benefited from more sensible
court rulings on pension issues. "

Bill

I think this is where the issue is with me.

IF you can get all the parties back to the table to renegotiate, then have at it.

But to go back on contracts signed sealed and delivered decades ago, seems extremely
unfair when the worker upheld his part of the contract. "Oh you lived to long, we screwed
up, you lose your pension."

I have seen far too many people lose what they were promised for profits.

Get rid of the people making the contracts, not the people upholding them.

.

Jim O'Bryan wrote:

But to go back on contracts signed sealed and delivered decades ago, seems extremely
unfair when the worker upheld his part of the contract. "Oh you lived to long, we screwed
up, you lose your pension."

Since I'm schizophrenic on a lot of things I mostly agree. I've had friends lose most or all of there promised pensions and even their credit union balances when their companies went out of business. Our banker lost most of his 401(k) when PNC stole National City Bank.

but...


How can members of council or the Mayor or the State government negotiate changes to a pension program they benefit from?

and

How can they make promises that will bond future generations to servitude? Is it really fair to offer a really great deal to government employees that basically says:

I won't pay anything now but I promise to sentence my grandchildren to perpetual servitude to pay all that you are owed.

Is Cleveland so well-run that we want to emulate it?

I think Cleveland sees the council positions as a full-time job, and they pay accordingly. As full time workers, overpaid considering the talent, at least in my opinion, they are not concerned with the well-being of the city, or even their constituents; they are concerned only with keeping their sinecures, so they will do anything to get reelected. Sounds like Washington, another sink-hole. And anyone with the talent to do well working will never run for council in Cleveland because he would almost certainly have to give up his day job and lose touch with the business world, so he could never go back.

I've always viewed Lakewood council members as part-time workers; people who are involved in the community and willing to put in some time for the community. I wish they would get out of the constituent service business, because it distracts from the time they should be legislating. We have a well-staffed executive branch and people with a problem should take it there, not to 4 council members, a Representative, two Senators and a Bishop. By keeping council a part-time job, I think we would draw a better grade of candidates, as they would be more mature and more experienced than a very young and inexperienced person who might find $75,000 very attractive, certainly more attractive than the typical entry position.

I can support a reasonable increase in salary, which it appears is what is on the table. But I wonder if anyone has studied what benefits council members receive from other sources. I have a very good health plan; if I was elected to council, I wouldn't need health insurance; in fact I turned down the retired workers health plan offered by one of my employers, since you can't use two. And because I get a federal pension, they pay me less than half of what I earned under Social Security (most of us don't realize that payments under Social Security are skewed to the benefit of low earners, so its probably fair that my artificially low earnings warrant me being unskewed). I wonder if there is a similar scheme with state pensions.

I'm confused by the carping about council members negotiating their pensions. With whom do they negotiate? State pensions are set at the state level, and while council members may have a lobbyist arguing on their behalf, they don't vote on those issues, except possibly with their feet.

I agree with Will on this one.

Cleveland Council is a full-time job filled with all the full-time headaches that come from managing a heavily troubled major American city.
The Tamir Rice situation is just the latest example.

Lakewood City Council is a part-time gig that attracts one of two types:
Do-gooders that want to serve the community, or aspiring politicians looking to take the first step on the ladder of power.
The part time salary is enough to attract either of these types.

For me, the larger problem with Council is the amount of money needed to run for office..even at the ward level. Normal, rational people do want to go around begging strangers for money.
This deters a great many potential candidates from running...and I think it contributes to the "insider" appointment game that we have had in recent years.