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3,000 retired educators take home six-figure pensions - (www.ocregister.com) Retired Capistrano Unified School District Superintendent James A. Fleming could face jail if convicted on a felony indictment charging him with using school resources to track his political enemies. But that won't stop his public pensions from rolling in. Fleming collects $141,331 a year in California state teacher retirement funds, on top of the $64,068 pension he collects from working 27 years in Florida. Even if convicted on the 2007 charges, both his pensions will remain untouched. Fleming is one of 3,090 educators in the California State Teachers' Retirement System who make at least $100,000 a year in taxpayer-guaranteed public pensions, according to a CalSTRS database obtained under the state Public Records Act. Most of the highly paid pensioners are superintendents and other district administrators. And some are pulling salaries from other jobs or pensions in other states. In contrast, the average STRS pension is just $36,252, according to June 2008 figures, the most recent available. Of the 196,000 retirees, only 1.6 percent receive $100,000 or more, but they account for 5 percent of the $8 billion yearly payout. The average retiree in 2008 had 29 years of service. "It definitely makes me wonder where the public gets the notion this is a windfall (for teachers)," said Kimberly Claytor, president of the Newport-Mesa Federation of Teachers. "Every educator I've known who is getting a STRS pension has spent decades – decades – providing services to children." Large public pensions have come under fire in recent months as state and local governments sag under the weight of runaway spending and a tanking economy. Like the California Public Employees’ Retirement System, the teachers’ retirement system is running into trouble as workers retire to larger pensions that are increasingly difficult to fund. While the average state teachers’ system pensioner collects $36,252, educators retiring last year did so to an average pension of $51,948. Officials calculate that the system will face a $23 billion funding gap by 2039. The Orange County Employees Retirement System faces similar pressures, but it is unclear exactly what is happening there because officials have refused to release their pension data to The Register. In July, a judge in Contra Costa County ruled that the retirement data in that county must be released in the name of government transparency. But OCERS insists that the same law and the judge’s ruling do not apply to Orange County. Los Angeles has the largest number of retired educators in the "$100,000-plus club," at 942. Orange County follows with 384 -- including a superintendent pushed out of her job without public explanation and another whose district amounted to just four schools. The teachers' retirement system is funded by the educators, the school districts they work for and by the state as well as investments. However, the teachers' system is different than others such as CalPERS in one important way – it cannot unilaterally raise the rates charged to districts to generate more money. And there is no mechanism to unilaterally charge the state to pick up the slack. Laws would need to be enacted to get the system more funds if the $23 billion budget gap materalizes as projected. "In this economic climate it is not feasible (to ask for more money)," said STRS spokeswoman Sherry Reser. "We're working at picking out a time in the future." Marcia Fritz, an official with the California Foundation for Fiscal Responsibility, a pension reform group, called STRS "unsustainable" because of the way it is set up. "They expect the state to bail them out," Fritz said. Pensions protected from criminal convictions: Retired educators defend their pensions, saying they sacrificed better paying private jobs for retirement security. Jake Abbott, who earns a pension of $103,868 as a former Fresno superintendent, said generous retirements are a way of encouraging good executives to take often tenuous jobs that may last years --- or merely months -- depending on the mood of the school board. "Often times they don't last very long. There has to be some incentive to take this volatile position," said Abbott, who now runs an Orange County executive search firm specializing in education. "Why would you take a job if you don't have at least some hope?" Indeed, generous retirements are a way to keep valuable leaders and employees happy. Consider James C. Enochs, the highest paid pensioner in the STRS system, at $285,460. Enochs was superintendent for 20 years at the Modesto City School District and an educator for half a century. A high school in Modesto bears his name. However, controversial – and sometimes convicted – officials also have benefitted from generous pensions. In California, state and federal constitutions protect the pension as a binding contract, even in the face of criminal prosecution. Becky Bauer, an activist in the Capistrano district, can't understand why James Fleming – whose office was raided by law enforcement investigators -- will still get his pension if convicted. "There is something wrong with that picture," Bauer said. "Is the motive to paying high pensions to attract the best and the brightest? In Fleming's case, we got the greediest." Fleming was collecting $348,307 in total compensation two years before his 2006 retirement, among the highest of any government official in Orange County. But most of his career had been spent outside California, so Fleming negotiated with the Capistrano district, which agreed to buy him five more years than the 15 he earned here. The district also agreed to cover his medical expenses in retirement, although he did not work the required 20 years. During his tenure in the Capistrano district, Fleming and some members of the school board were accused of violating open meeting laws and retaliating against opponents. Fleming's career came to an early end after a former aide turned over to the Orange County Register copies of an "enemies list," containing names of critics, their children and the schools they attended. Through his attorney, Fleming declined comment about his pension. Golden parachutes for problem educators: Forced retirement can also be used as a "golden parachute," ending the tenure of school leaders who are seen as problems. In late 2006, the Ocean View School District board was unhappy with the performance of Superintendent Karen Colby and met with her in closed session. After the confidential meeting Colby, who was already on administrative leave, chose to retire. The STRS database shows that Colby receives a pension of $134,515 a year. She could not be reached for comment. Another member of the "100,000-plus" club, former Orange Unified School District Superintendent Thomas Godley collects $210,211 a year. He was the budget chief for Newport-Mesa Unified when a finance worker siphoned $3.7 million to buy such things as full-length fur coats in 1992. Godley was one of several officials who received a vote of no confidence from Newport-Mesa teachers, although board members did not hold him responsible for the theft. Godley later became superintendent of Grossmont High School District in 1997, where he received another vote of no confidence from teachers at war with the school board. In an interview, Godley stressed that all superintendents are magnets for controversy or dissent, especially when employees are dissatisfied during contract negotiations. He added that school superintendents typically manage large organizations with large budgets and much at stake. "You take the same administrator with the same responsibility and that person would make more money in the private sector," Godley said. "And the trade off is good health benefits and good pensions. They give up high salaries for that." Not every superintendent runs a large organization. Former Laguna Beach Unified Superintendent Theresa Daem earns the eighth highest pension in the STRS system, at $235,224 a year – after retiring from a four-school district with just 3,700 students. By comparison, the next highest earner, Jack W. McLaughlin, at $239,907, ran a district with 46 elementary and high schools. “I’m just very lucky, to be honest with you. I paid into the system for 37 years and I ended up well paid in Laguna Beach,” said Daem, who worked nine years in Laguna.
Philly stays open, averting crisis - (cnn.money.com) Disaster averted. Philadelphia will not have to impose draconian budget cuts that would have closed its libraries, playgrounds and court system, as well as laid off 3,000 public employees. State lawmakers on Thursday approved the city's request to raise its sales tax by 1 percentage point and defer pension payments in order to balance its budget. Gov. Edward Rendell is expected to sign the measure. "All of the devastating consequences of Plan C will be avoided," said Mayor Michael Nutter, referring to his emergency proposal. The mayor was set to start sending out pink slips on Friday and had already announced the service changes would begin Oct. 2. Philadelphians, however, will not escape unscathed. They will now pay an 8% sales tax, as well as deal with city services reduced in prior budget cuts. The city first started cutting services in November, when the mayor announced Philadelphia was facing a $108 million deficit for the fiscal year, which ended June 30. Officials had to slice into the $4 billion budget, requiring non-union city workers to take furlough days, suspending scheduled business and wage tax cuts, removing equipment from some fire stations, reducing police overtime and cutting 800 mostly vacant positions. Philadelphia closed another $1.4 billion hole in its five-year spending plan this spring in part by raising fees and eliminating another 250 positions.
U.S. bolsters mortgage insurance agency - (cnn.money.com) With a growing number of homebuyers depending on government-insured loans, the Obama administration is taking steps to shore up the Federal Housing Administration program. Rising demand and a slower-than-expected rebound in home prices are pushing one of FHA's reserve accounts below the 2% ratio mandated by Congress, said Commissioner David Stevens. The capital reserves are a cushion against expected losses in the program, which has suffered soaring defaults amid the housing collapse. The FHA has skyrocketed in popularity during the mortgage crisis since it backstops banks if borrowers stop paying. Housing experts are growing increasingly concerned about the agency's ability to handle rising numbers of defaults. The drop in reserves, however, will not require a taxpayer-funded infusion into the housing agency, nor an increase in insurance premiums that FHA borrowers pay, Stevens said. The capital reserves, which are determined by an independent auditor and reported to Congress in November, will rise above the minimum threshold within a few years as the housing market recovers. The agency's overall reserves stand at more than $30 billion, a record level thanks to the large influx of premium-paying borrowers, Stevens said. It covers more than 4.4% of its insurance commitments. "To be clear, the fund's reserves are sufficient to cover our future losses, so the FHA will not require taxpayer assistance or new congressional action," Stevens said. Still, the agency is taking a number of steps to reduce the riskiness of the program, which allows borrowers to purchase a home with as little as 3.5% down. It plans to hire its first chief risk officer in its 75-year history and to increase net-worth requirements for approved lenders to $1 million, up from $250,000. Lenders will also be responsible for any losses resulting from fraud on the part of mortgage brokers.
Auto baron hit his own bump in the road - (cnn.money.com) Chrysler exec faces tax, loan troubles/ Lien placed on Deputy CEO Jim Press' home for nearly $1 million in unpaid taxes -- and he's also sued for unpaid loans. A top executive for Chrysler Group, the carmaker that recently went through a government-sponsored bankruptcy, is having more than $1.4 milliion of his own financial headaches. Jim Press, Chrysler's deputy chief executive, has had a lien for $947,409 placed on his home by the Internal Revenue Service, according to records from Oakland County, Mich., clerk's office. The lien against a house in the city of Birmingham, Mich., is for non-payment of 2007 taxes. Press is also being sued for $467,083, plus attorneys' fees, by the Western Federal Credit Union for unpaid loans plus interest and late fees. Western Federal absorbed the Toyota Federal Credit Union and, according to a letter Press wrote to the credit union, asked Press to the pay off the loan. "Due to the turmoil in the automobile industry and uncertainty surrounding our ownership, my request for a bonus payment was denied," Press wrote in a Nov. 11, 2008, letter on Chrysler letterhead. "I am attempting to arrange for a loan against my future bonus with my employer which would allow me to pay this loan off." Press also wrote that he had asked for loans from two banks and attempted to re-finance his home in order to pay off the debt, but was unsuccessful. After that request, Press was given additional time to pay $609,286 he owed the credit union, but made only one payment of $203,000. Press's home is now for sale, according to an online listing posted by a local Sotheby's Internation Realty agency. The asking price for the 6-bedroom, 6-bath "New England style" home is $3.2 million, according to the listing. A call the real estate agent was not immediately returned.
Note greets Sacramento T.G.I. Friday's customers: Restaurant is closed - (www.sacbee.com) Ten T.G.I Friday's restaurant locations in Sacramento and the Pacific Northwest were closed over the weekend, the latest in the persistent toll of business ills blamed on the economy. On Sunday, a sign taped to the inside of the T.G.I. Friday's on Howe Avenue apologized for the "inconvenience this is causing our valued customers." It called the closure temporary. While the note was unsigned, the franchise operation was the second to close in recent days. Last week, 70 Jack in the Box restaurants in Central California were closed as the local franchisee, Kobra Associates Inc., filed for bankruptcy protection in U.S Bankruptcy Court for the Eastern District of California. The Jack in the Box restaurant re-opened Friday afternoon. At the T.G.I. Friday's on Howe, would-be customers were parking their cars in the adjacent parking lot in hope of buying lunch. "Everything keeps closing," said an exasperated Michael Burakowski of Sacramento once he realized the restaurant was not open for business. "We are not getting better." The note posted on entry doors referred customers to a telephone number for more information. A telephone call yielded a voice recording explaining that the "unprecedented downturn in the economy ... has raised insurmountable challenges in keeping up with our corporate and other financial obligations." The recording noted further that the franchisee had worked for more than nine months to resolve differences with T.G.I. Friday's corporate office with no satisfactory resolution."We are committed to exploring alternatives that will allow us to reopen in the very near future," the unidentified representative said in the recorded message.
OTHER STORIES:
Homeowners who 'strategically default' on loans a growing problem - (www.latimes.com) Who is more likely to walk away from a house and a mortgage -- a person with super-prime credit scores or someone with lower scores?
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