PORT HUENEME GAMBLES ON FUNDS IN THE MARKET
Desperate times bring desperate measures and the results are usually disastrous. The City Council of Port Hueneme voted 3-1 to hire privately held Public Agency Retirement Services (PARS) that will more aggressively invest in the stock market to help offset skyrocketing pension costs for the city.
The Ventura County Taxpayers Association opposed the move, saying it fixed nothing and put residents at higher risk of volatile market.
According to the agreement, Port Hueneme will invest an initial $2 million, with $1 million coming from the economic contingency reserve (part of the general fund reserve) and $1 million coming from enterprise funds reserves. PARS is charging 0.38 percent to 0.55 percent, depending on the size of the fund, according to a staff report.
On the initial $2 million, PARS would charge up to $132,000 a year.
Enterprise funds, which include water and wastewater, are funded through fees and under state law must reflect the cost of service. Butler said since employees of those departments have pensions, the allocation is appropriate.
David Grau, of the taxpayer group, questioned that. “It sets a very bad and potentially dangerous precedent if elected officials are allowed to take money out of funds dedicated to water and wastewater and turn it into (paying) pension benefits, specifically the unfunded liability,”
Should the city’s investments do well; the city will pay CalPERS less out of pocket for retirement costs. Should the investments lose money, taxpayers make up the difference. CalPERS is the California Public Employees’ Retirement System.
Grau told the council that diverting money from needed reserves to fund pensions wasn’t solving any problem. “Markets have significant risk. These reserves are intended to provide needed funds for contingencies and therefore should have the least amount of risk,” he said.
Grau questioned whether the council would be violating its fiduciary responsibility by dipping into reserves in the hope the market would pay for past promises.
Hensley voted against it, noting objections made by the taxpayers group and saying he wanted more information. He also said the council should have shopped around to see what other operations were charging and offering.