Lloyd White Defends Pension Debt Increase
Beaumont City Councilman Lloyd White thinks that Vehicles and Office Furniture can be Recorded as ‘Capital Assets’. Wow.
On January 9, 2018 I wrote an article regarding the City of Beaumont’s increased Pension Debt recorded on their 2016 Audited Financial Statements: https://patch.com/california/b…
Beaumont City Councilman Lloyd White wrote a letter to the Editor of the Patch to inform the Patch that White wrote a response to the post about Pensions. In the past White posted on the Patch himself, but stopped because he doesn’t want to promote a Community Newspaper, so I’m not going to promote Lloyd White by giving the links to his website.
I’m not a politician, I’m an Independent Auditor. I shouldn’t be anyone’s enemy. It’s a big problem that White is acting like the Employee Pension Debt is something that can just be ignored or called ‘fake news’.
Below are sentences White picked from my Article on the City’s Pension Debt and his response:
My statement: “Since Parton’s arrival in Beaumont he’s purchased a lot of ‘bling’. Beaumont Staff and Council are spending money on new vehicles, office furniture, computers, trips, and of course the parties.”
White’s Reply: “The FY2018 budget included a line item “Capital Expenses” for various funds and departments. That budget line item was developed for replacement of long overdue fleet vehicles and information technology equipment, as well as some furniture and fixtures. The travel expenses were also budgeted, including costs for attendance at the annual League of California Cities conference. The City of Beaumont has had no “parties”. There has been an employee benefits fair held in December, and a service recognition lunch will be served this week. Both in City hall, only at lunch time, and are not extravagant by any stretch.”
Translation: Lloyd White thinks that vehicles and office furniture can be recorded as ‘Capital Assets’.
Definition of Capital Expenditures: Capital expenditure, or CapEx, are funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment. CapEx is often used to undertake new projects or investments by the firm. This type of financial outlay is also made by companies to maintain or increase the scope of their operations. Capital expenditures can include everything from repairing a roof to building, to purchasing a piece of equipment, or building a brand new factory.
Items such as vehicles, office furniture, and computers are classified as “Machinery and Equipment’ because they are moveable. Capital Assets are NOT moveable structures.
It’s a big problem that people are sitting on Boards and Councils and approving multi-million dollar budgets without having any understanding of what they are ‘approving’.
My statement: “The ‘plan’ … is to continue to steal money out of the Pensions and run up the Pension Debt, then throw the Pension Debt into a Bankruptcy.”
White’s Reply: “There has been no plan to enter into Bankruptcy. The City of Beaumont has begun the financial recovery process, thus avoiding even the consideration of bankruptcy.”
Why deny it; the entire point of bringing in Bob Deis was to take Beaumont down the same road they took Stockton and San Bernardino, which was to file bankruptcy. What they didn’t count on was that aside from the pension, Beaumont didn’t have debt like the other Cities because Beaumont didn’t build any infrastructure that would run up bills to vendors.
My statement: “But what people in the private sector might not realize is that Beaumont City Employees don’t pay in any Social Security Insurance – SSI. They are dependent on a pension from the City. Some government agencies in California offered marvelous pension packets to their employees; so marvelous that the agency could opt-out of paying in SSI. The problem is that they never paid the Pensions into the System.”
White’s Reply: “CalPers pension and Social Security are two different retirement plans, and there has been confusion in the past bla bla bla ..
“The employees pay in their portion of CalPers through a withholding of their pay. The City then has an obligation of a matching contribution. Those contributions are added together and made by the City on a regular basis to CalPers.”
“As Melana Taylor discussed with the Finance Committee at length, the liability recognized on the audited financial statements relates to the actuarially determined future liability of the plan. CalPers does not require payment based on that calculation. bla bla bla
White said it himself; “The employees pay in their portion of CalPers through a withholding of their pay. The City then has an obligation of a matching contribution. Those contributions are added together and made by the City on a regular basis to CalPers.”
Money was deducted from the City Employees’ paychecks. The City was supposed to pay matching funds and transfer the money to CalPERS, but the Debt is because the City didn’t pay in the money.
In 2011 the Beaumont went the ENTIRE YEAR without paying into CalPERS. The City didn’t pay the matching funds or what they deducted from the Employees’ paychecks.
The City of Beaumont Employees are dependent on CalPERS because they do not pay into SSI. It should be a priority of the City to pay additional money into their retirement system to reduce the Debt so that the Employee Pensions are secure.
You’ll notice that Lloyd White doesn’t claim ‘fake news’ that the City’s Pension Debt increased by $634,818 to $13.8 Million. That’s a fact that can’t be twisted. The Debt is written in the 2016 Audited Financial Statements.
Beaumont City Employee Pension Debt is increasing and a sitting Councilman is spinning it to justify the increased debt.