Inside Source sat down with the former Mayor of Lafayette for a video interview that offers a telling look at the benefits of not being a CalPERs agencies---zero pension debt, manageable spending, and local control over your own budget costs.
Grodin is the former Mayor of the City of Lafayette, California, a medium sized city located in the East Bay Area--perhaps the envy of most Bay Area residents for its commitment to a small, limited, but highly efficient government.
Grodin says that not becoming a CalPERs agency has "really paid off in the long-run" because of the large unfunded liabilities and huge pension costs that CalPERs public agencies face.
When is the last time your heard a local public official say that they do not have a problem with uncontrollable spending and they truly live within their means? I've been studying local governments for the last six years, and talking to Mrs. Grodin was like a vacation from the fiscal nightmare that most public agencies are facing in California.
Lafayette is truly a model for limited government and perhaps one of only a handful of governments that I have found through my research that does not have a major pension problem.
Grodin says the city contracts out for most public services including garbage, police, fire, garbage, and animal control. This saves dollars for the most part because they are not locked into paying the high rates for benefit costs required by CalPERs and other public agencies.
The city does face significant cost increases by contracting with the Alameda County Sheriff's Office for law enforcement services, but that is even manageable in the context of the city's total budget.
Grodin says the city does offer a 401k type plan to its employees which really appeals to younger workers for its portability.
The city maintains about 60% of annual General Fund in reserves, Grodin says, and has zero unfunded pension and employee compensation-related debt.
The city also does not currently have collective bargaining, but all its employees seem to be content since they look after their employees in the City of Lafayette.
The city even keeps capital costs down by renting its office space in a privately managed building, which has also served to control the size of government because they have limited space in which they could potentially grow into.
This interview provides an intriguing look at what California government could be like in the absence of the huge debts and spending pressures created by CalPERS and other poorly managed local public pension funds. It managed to restore my faith in local government and government that is closest to the people.