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1 <br />CLK-Crystel Tuifua <br />From:publiccomment <br />Subject:FW: June 24th Mtg -Public Comment <br /> <br />From: "Todd Freeman" <todd@freemanwp.com> <br />To: "publiccomment" <publiccomment@redwoodcity.org> <br />Sent: Monday, June 24, 2024 11:52:04 AM <br />Subject: Upcoming budget discussions June 24th Mtg <br /> <br />In respect of your ongoing budget discussions and upcoming conversations <br />with the representatives of your safety and regular city employees I am concerned that <br />few if any of the current city council members truly understand the difference between <br />the CalPERS defined benefit pension and the typical 401(k), 403(b) or 457 plan. <br /> <br />Notwithstanding the current significant employee and employer contributions to CalPERS, <br />the responsibility for funding to the benefit formula is the city's and it's residents. <br /> <br />What that means is that if CalPERS performance fails to meet their expectations, expectations <br />which are increasingly born of political convenience and not actual reality, the city will be on the hook <br />for a figure I'm not sure any of you can even begin to contemplate. <br /> <br />Effectively Redwood City has accepted ALL of the market risk of their employees pensions. <br /> <br />Considering the very real expectation for continued massive deficit spending, money printing and <br />inflation <br />in the years to come you are placing the city in an absolutely untenable situation in years to come. <br /> <br />Consider, with the lone exception of Kaiser, there is perhaps not a single Redwood City business <br />that <br />has a defined benefit pension plan. This is NOT because they don't value their employees, but <br />because unlike the <br />predictable nature of social security and the fixed nature of defined contribution plan contributions be <br />they matched, <br />escalating or static, a defined benefit plan has a completely OPEN ENDED and EFFECTIVELY <br />UNLIMITED OBLIGATION <br />to funding the plan. <br /> <br />Consider also that every city employee is a beneficiary of this plan, and I'm quite sure it's difficult to <br />walk away from something THIS <br />generous but from a purely fiduciary standpoint the city manager needs to consider alternatives or at <br />minimum a hybrid. <br /> <br />I would encourage you strongly to consider using some of that "found" money you constantly discuss <br />to figure out a way <br />to transition out of CalPERS and into something that is actually sustainable for the long run and not <br />just your modest tenures