"It's a big deal, I think it's a really big deal," says Ken Churchill, a pension reform activist who also an analyst for the highly regarded California Policy Center.
Unfunded public pension debt in California is now estimated to exceed $1.4 trillion, having increased by 40% in the last two years since the California Legislature refuses to address the issue due to strong ties to the state's public employee unions, according to data obtained by Stanford University.
Even the left-leaning LA Times has declared that there is a "public pension crisis" in California and has called into question the fraudulent expansion of overly generous and unaffordable public employee pension benefits in California.
Churchill stumbled onto the statewide scandal while researching Sonoma County, where he currently lives. And he has the documentation to back it up, click here to download Churchill's documents PART 1, and click here to download Part 2 of Churchill's documents.
"It was the [Sonoma County] Retirement Board that changed the formula in total violation of the law," Churchill said.
"In my opinion, since 2004, Sonoma County has been paying the average retiree $15,000 more per year than they should have," Churchill states.
Churchill says he has done everything he could to bring attention to the matter but most public officials show little or no concern regarding the issue. Specifically, most local public officials believe their hands are tied because the California Legislature refuses to overturn the "California rule" in the state's constitution.
In 1999, the California Public Employees Retirement System (Calpers) successfully got the California Legislature to pass SB 400 (Ortiz), which dramatically expanded public pension benefits for state employees.
Former Mayor of San Jose turned pension reformer Chuck Reed has referred to this act as the "biggest financial fraud in the history of the state" because it has cost state taxpayers hundreds of billions of dollars, yet Calpers failed to disclose its true costs.
After the passage of SB 400, most local governments in California, including Sonoma County, followed Calpers recommendations to dramatically expand pension benefits to allow for early retirement and dramatically expanded pension benefit increases.
Churchill has closely examined the history of the issue in Sonoma County and several other localities and found that none of them followed the law in enacting the expanded benefits.
Specifically, section 7507 of the California Government Code requires public agencies to notify the public of such changes but Sonoma County and other public agencies chose to enact the changes through means hidden from the public view.
"I can't see how any public agency in California followed the law," Churchill said, who has researched this issue in several localities including Sonoma County, Marin County, Mendocino County, and the City of Santa Rosa, and found that public officials systematically disregarded the law in expanding benefits without notifying the public, as required by state law.
Churchill places much of the blame on Calpers who should have notified the public agencies of the need to inform the public prior to the expansion of benefits.
"I think they realized later that these things didn't happen," Churchill said, citing a 2009 letter from Calpers that discussed the need for public notifications long after the benefits were enacted.
"So the public had no way of knowing what was happening," Churchill concludes. Churchill agrees that the passage of SB 400 and these subsequent illegal expansions of public pension benefits represents the "biggest financial fraud in the history of the state."
"I have done everything I can to bring attention to the matter," Churchill said. But apparently if those who make and enforce the laws won't act their is not much that citizens and taxpayers can do except for bring an outside lawsuit which costs hundreds of thousands of dollars.
That is exactly what one citizen in Marin County has done, named David Brown. The suit is scheduled to be heard later this month in state superior court regarding illegal action taken by the Marin County Board of Supervisors to enact similar expansions to what occurred in Sonoma County.
In both counties, grand juries investigated the matter and found that the public agencies had indeed broke the law, but outside law firms were retained by the agencies to essentially "buy a legal opinion" to find that it was OK due to a supposed loophole in the state law.
Furthermore, attorney's hired by both Marin and Sonoma counties argued that the public agencies did enough to follow the law, and that the word "shall" notify the public was actually advisory, and not mandatory. Churchill said this is based on flawed legal logic, and represents a complete disregard for state law.
For those who are interested in researching this matter further, here are some accompanying documents:
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