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  #961  
Old 06-02-2015, 05:07 PM
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NEVADA

http://www.reviewjournal.com/news/ne...l-next-session

Quote:
Nevada PERS pension reform put off until next session
By SEAN WHALEY
LAS VEGAS REVIEW-JOURNAL CAPITAL BUREAU
CARSON CITY — Faced with wildly divergent estimates of the cost of moving Nevada’s current public employee pension system to a defined contribution plan for new workers, a state lawmaker said Saturday he is abandoning the effort this session.

Instead, Assemblyman Randy Kirner, R-Reno, said he is seeking to further study the issue in the coming interim with an eye to making changes in the 2017 session.

Kirner, who proposed a change from the current defined benefit plan to a new hybrid retirement plan for public employees that would rely more on a defined contribution element, said the true financial costs of such a change would be clarified in such a study.

The current plan provides a guaranteed pension amount for most state and municipal employees in Nevada based primarily on years of service and salary level. Kirner wants to move the system for new workers to more of a 401(k)-type plan where employees make their own investment decisions and there is no taxpayer liability.

Kirner argued the costs to move to his hybrid plan as outlined in Assembly Bill 190 would be minimal, while the Public Employees Retirement System administration said it would cost the state and local governments tens of millions of dollars more a year in increased contribution costs to the existing retirement plan.

Kirner said that while he believes his estimate is accurate, the issue could be independently answered in a study to allow for a potential change in the 2017 session. To become a reality, the study would have to be approved by the full Legislature by Monday’s adjournment. AB190 is in the Ways and Means Committee.

Kirner has been advocating for a change to the current system to begin addressing a long-term unfunded liability that by one calculation totals $12.5 billion. He said the unfunded liability should be a concern to lawmakers and taxpayers.

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  #962  
Old 06-02-2015, 05:08 PM
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JACKSONVILLE, FLORIDA

http://jacksonville.com/news/metro/2...rent-gulliford

Quote:
A long-standing battle between citizen activist Curtis Lee and the Jacksonville Police and Fire Fund over public records is about to enter Round 2.
Again.

The fund’s board of trustees voted unanimously Thursday to file an intention to appeal a circuit court judge’s March decision that sided with Lee and declared the so-called 30-year pension agreement between the city and pension fund void.

In his lawsuit, Lee said that the pension fund and the city negotiated pension benefits behind closed doors, action contrary to the state’s Government in the Sunshine Law.

The deadline to file the intention to appeal is at 5 p.m. Friday.

The fund left open the possibility that it would withdraw its intention to appeal if the city and the pension fund agree to the recent pension-reform plan proposed by City Councilman Bill Gulliford.

Gulliford met with fund manager John Keane on Wednesday and the pair will meet again Friday to try to agree on that package.

A great deal is riding on this latest pension proposal — one among a long list of attempts to achieve a pension deal between the city and pension fund.

For one, mayor-elect Lenny Curry promised to hire more than 140 police officers, who, under the current plan being floated by Gulliford, will be asked to pay more money to participate in the retirement plan and will have considerably fewer benefits than current employees — effectively slowing the hemorrhaging of the pension fund.

Now there is the matter of ending costly litigation between Lee and the pension fund.

Records show that the pension fund has spent at least $450,000 fighting Lee in a separate case, a case now awaiting a ruling by the Florida Supreme Court over public records.

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  #963  
Old 06-02-2015, 05:09 PM
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MARIN COUNTY, CALIFORNIA

http://www.utsandiego.com/news/2015/...slators-marin/

Quote:
As Stanford University scholar David Crane wrote this week in the Capitol Weekly, “As the stock market reaches record levels, little is heard any more from public officials who used to blame market declines for rising pension costs.” Those pension costs keep rising — and keep sucking more funds out of classrooms and local government agencies even in good economic times. The main point in his article revolves around the words, “little is heard.”

In 1999, legislators passed SB 400, which retroactively increased pensions for the California Highway Patrol — and encouraged public-safety agencies across the state to follow. “Though that act amounted to the single greatest issuance of debt in state history, public officials chose an accounting method that supported a claim that the retroactive increases wouldn’t ‘cost a dime,’” he added.

How can state officials continue to use dubious accounting methods today, designed mainly to underplay the size of the pension debt?

A report released last month by the Marin County Civil Grand Jury provides a stark look at how such increases were quietly foisted on the public — and perhaps why the problem continues today. Many observers argue that what happened in that suburban Bay Area county was not an aberration. Simply put, Marin officials took extraordinary measures to hide what they were doing from the public, allegedly in violation of the state’s disclosure rules.

According to the report, the county’s governments increased pension benefits 38 times between 2001 and 2006. Each time, agencies were supposed to provide public notice about the proposed changes, obtain actuarial reports detailing the future costs of the benefit hikes, and detail the degree to which the increases will affect the funds’ financial conditions.

“The grand jury found that the public employers appear to have violated these requirements in a variety of ways — providing little, if any, notice to the citizens of Marin County that they would be responsible in the future for hundreds of millions of dollars in pension costs,” according to the report.

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  #964  
Old 06-02-2015, 06:14 PM
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SAGINAW COUNTY, MICHIGAN

http://www.mlive.com/news/saginaw/in...licy_sets.html

Quote:
SAGINAW, MI — Saginaw County has a $136 million problem.

The number represents the unfunded liability tied to retiree healthcare costs that has been looming over the heads of county leaders for years.

The Saginaw County Board of Commissioners took a step toward addressing the problem Tuesday, May 19, when the board approved a new policy that will automatically set aside budget savings for that purpose.

Saginaw County Controller Robert Belleman explained that, previously, any surplus realized at the end of the county's fiscal year was divided between two areas:

1/3: To General Fund reserves
2/3: To the Public Improvement Fund

The new policy further divides any surplus funds:

1/3: To General Fund reserves
1/3: To the Public Improvement fund
1/3: To the "Other Post-Employment Benefits" (OPEB) fund

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  #965  
Old 06-03-2015, 04:09 PM
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EXPECTED RETURNS

http://www.ai-cio.com/channel/RISK-M...-Always-Wrong/

Quote:
Raj Aggarwal and John Goodell, of the University of Akron, Ohio, made the observations in a working paper published by the Federal Reserve Bank of Cleveland, titled “Determinants of Expected Returns at Public Defined Benefit Pension Plans”.

Focusing on US public pensions, the authors contended that some funds used much higher expected returns to model their liabilities than others, despite being bound by broadly similar rules on accounting and investment. Overshooting on return forecasts had been a factor in the poor funding levels across public sector pensions in the US, they added.

“Culture influences return estimates directly through the propensity to tolerate risk and through its influence on transactions costs,” Aggarwal and Goodell wrote. “Culture also influences future return estimates indirectly through its interaction with institutional environments.”

Specifically, they cited individualism—a cultural bias towards the power of the individual rather than a larger group—and masculinity. For the latter, Aggarwal and Goodell described it as “greater competitiveness [which] increases the return expectation of pension funds because there will be less societal concern for any undermining of fund viability that might result from an inflated expected rate of return.”

The authors added that in an “imperfect environment, the responses and actions of contracting parties will depend on factors such as the ethical, social, and cultural environments as well as on institutional features like regulatory, disclosure and legal frameworks.”

Should I point and laugh at these guys?

Look, dudes, it's real simple: they go for higher discount rates because it makes the liability look smaller. If they think they can get away with it, they keep that higher rate.

You're welcome.

Let's check out the paper:
http://papers.ssrn.com/sol3/papers.c...act_id=2609449

Quote:
Determinants of Expected Returns at Public Defined-Benefit Pension Plans


Raj Aggarwal
University of Akron - Department of Finance

John W. Goodell
University of Akron - Department of Finance, College of Business Administration

May 22, 2015

FRB of Cleveland Working Paper No. 15-8

Abstract:
Estimated expected returns are important for pension plans, as they influence many plan characteristics including required asset levels, annual contributions, and the extent of plan under- or over funding. Yet, there seems to be little prior literature on the factors influencing these estimated future returns. In an attempt to fill this gap, this paper presents the results of a panel analysis of data on the determinants of such returns used by US public defined-benefit (DB) pension plans for the period 2001-2011. As expected, we find that real return estimates by DB public pension funds are positively related to fund size, fund age, international asset diversification, state income, and corruption levels. However, more interestingly and importantly, we document that real return estimates by public US DB pension funds are positively related to cultural measures of individualism and masculinity, and negatively related to uncertainty avoidance. These results should be of much interest not only to scholars and pension beneficiaries, but also to fund managers, other capital market participants, and policymakers.

Number of Pages in PDF File: 47

Keywords: public pensions, defined benefit pensions, estimated returns, public policy, pension underfunding, finance and culture

JEL Classification: H3; H4; H6; I00; J3

They fricking only used ten years.

FFS THAT'S NO TIME AT ALL

I have got to find out how they determined the fund managers were more into individuality or masculinity.

page 11 of the report:
Quote:
A widely used set of four dimensions to measure culture are attributed to Hofstede (1991): individualism or the tendency to believe in and take individual responsibility, masculinity or the extent to which male and female roles are clearly differentiated, uncertainty avoidance or the inability to be comfortable with ambiguity, and power distance or the importance of hierarchy. These dimensions of culture are widely accepted and have been used in over five hundred social science and business scholarly studies (Kirkman, Lowe, and Gibson, 2006). These cultural dimensions have been shown to influence many financial decisions.
Okay, and how was this measured

Quote:
Our use of the gender pay gap as a measure for differentiation of gender roles is also consistent with the gender pay gap stemming from a crowding effect as the two genders fit into differing occupational assignments ..... There seems to be no direct index corresponding to masculinity for US states, but fortunately data on gender pay gaps are available for US states. We select the Males/Females pay ratio as the measure of the Hofstede cultural dimension of masculinity. This variable is constructed as 1 minus ratio of women’s pay to men’s pay with data taken from the 2012 American Community Survey as reported by “The Geography of the Males/Females Ratio Pay Gap: Women’s Earnings by State” by Meghan Casserly (www.forbes.com; 9/19/2013).
ugh. fine. Let's go to the referenced article:


http://www.forbes.com/sites/meghanca...ings-by-state/



Notice something? Like how there's not a huge amount of variation in the ratios?

The lowest I can see is 64 in Wyoming, and the highest is 85 in Nevada. Almost all of the states are sitting on 76-79. If one is using that as the basis of correlation, there will be problems.

Let's go to the graphs!



You better believe I'm getting a blog post out of this. I find this research to be offensive via the godawful abuse of statistics. I don't care your correlation is "significant". Those are mere blobs. There is no discernable correlation whatsoever.
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  #966  
Old 06-03-2015, 04:16 PM
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Go to the last page for the correlation coefficients.

It's a big ole 0.07 for masculinity.

Uncertainty avoidance has a more discernable correlation at 0.2, so I will see how they measure that -- and there's a very large correlation between uncertainty avoidance and masculinity in their correlation matrix - as in -0.68 -- so I wonder if they're reusing some data in that measure.


OMG THIS IS HOW THEY MEASURE UNCERTAINTY AVOIDANCE:

Quote:
Percent of population
foreign born lessens
uncertainty avoidance
someone needs to go slap those people. looks like they're both professors of finance at the University of Akron. Somebody in Ohio go do that for me, there's a dear
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  #967  
Old 06-03-2015, 04:16 PM
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Sometimes I'm too easily offended, but damn
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  #968  
Old 06-03-2015, 10:55 PM
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DENVER PUBLIC SCHOOLS, COLORADO

http://co.chalkbeat.org/2015/06/03/d.../#.VW-9U89VhBe

Quote:
Denver Public Schools officials plan to set a new organization-wide minimum wage and increase stipends for teachers in high-needs schools next year using funds that would otherwise have been earmarked for pensions.

A bill that reduces the amount the district contributes each year to PERA, the state’s pension fund, was signed into law today. The new law frees up approximately $20 million per year.

DPS had previously contributed to PERA at a higher rate than other districts in the state and as a result has a retirement fund that is more fully funded than the rest of the state. (Read this Denver Post story for more on Denver Public Schools and PERA.)
okay, let's check out that Denver Post story

http://www.denverpost.com/news/ci_28...me-dc-politics

Quote:
Intense negotiations are underway at the state Capitol to try to revive a Denver Public Schools pension bill that critics claim was killed by Republicans because of former DPS Superintendent Michael Bennet's Senate re-election bid.

House Bill 1251 is important for DPS because it would allow the district to quit paying around $23 million more a year into the state pension fund than other school districts.

.....
Cadman said the issue is projected insolvencies with the Colorado Public Employees' Retirement Association — an issue he has warned about for years. PERA is only 64 percent fully funded.

.....
Bennet's financial dealings at DPS were an issue in his 2010 Senate primary. "Exotic Deals Put Denver Schools Deeper in Debt," read a headline in The New York Times. Republicans have said they plan to revisit the issue on the campaign trail next year.

Bennet spokesman Adam Bozzi said Thursday that the senator believes "any legislation like this should be considered on its merits," and the "last thing we should be doing is playing politics with our kids' education."

DPS for decades had its own pension system outside PERA, but in 2009 it joined the state system. Before that, DPS teachers who moved to jobs elsewhere in the state would forfeit their pensions, as would teachers from across the state who took jobs with DPS. The district received bipartisan support for the merger after it shored up its pension liability by selling $750 million in bonds to eliminate a $400 million shortfall and refinanced a $300 million debt at a lower interest rate — the deal Bennet was criticized for.

Because Denver was new to PERA and the pension agency could not accurately predict its liabilities, it asked the legislature to require Denver to pay around $23 million annually. The law required the situation be evaluated in five years, and the DPS rate be adjusted accordingly.

DPS is 86 percent fully funded compared with 64 percent for other school districts. The evaluation determined it is so far ahead in funding its pension obligations that it should pay 1 percent less than the other districts. DPS in House Bill 1251 settled for paying the same.

Okay, look y'all. None of those pensions are fully-funded.

It was bad enough when people were saying it was good enough to be at 80%, but if their argument is that they should be allowed to be as crappily-funded as the other Colorado systems....

...I guess yay when all y'all get your pensions whacked.

woo.
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  #969  
Old 06-03-2015, 11:30 PM
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Is it still in the ASOP that that interest rates and funding level don't matter for public plans, because of the state's ability to bring in unlimited taxes.
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Old 06-03-2015, 11:31 PM
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CHICAGO, ILLINOIS

http://www.marketwatch.com/story/chi...age-2015-06-03

Quote:
Chicago has six pension plans. Four are sponsored directly by the city and two are sponsored by “sister agencies” -- the Chicago Board of Education and the Chicago Park District. (Moody’s also downgraded the Chicago Board of Education from Baa3 to Ba3 and the Chicago Park District from Baa1 to Ba1.) In 2013, these six plans were 40 percent funded and had a combined unfunded liability of $30 billion (see table).

Status of Chicago Pensions, 2013

Funded Status (percent)

Unfunded liability (billions)

City-sponsored funds
Chicago Municipal Employees Annuity and Benefit Fund 37% $8.7
Chicago Laborers and Retirement Board Employees’ Annuity and Benefit Fund 56% $1.0
Chicago Policemen’s Annuity and Benefit Fund 38% $7.2
Chicago Firemen’s Annuity and Benefit Fund 24% $3.1
“Sister-agency” funds
Chicago Public School Teachers’ Pension and Retirement Fund 49% $9.6
Park Employees’ Annuity and Benefit Fund 45% $0.5
Sources: Public Plans Database; and various plan actuarial valuations.
One explanation for the poor financial status of Chicago’s pensions is that the city’s plans are governed by Illinois state law, which sets the funding rules for the pension plans of its largest cities and counties. Up until 2015, the statute defined the employer rates for these plans as a multiple of the employee contribution. The resulting employer contributions have fallen far short of actuarially required amounts. Beginning in 2015, the statute set the employer rate actuarially, except for Park Employees, such that the plans will be 90 percent funded by 2055 (2040 for the Police and Fire Funds). Under the statute, Teachers’ plans for the largest cities and counties have always been “actuarially funded.”

.....
The options, at this point, seem limited. It is unlikely that Illinois voters will change the non-impairment clause in the constitution, and, given the Supreme Court decision, public employees have little incentive to compromise on benefit cuts. That means Chicago most likely will have to pay off $30 billion in unfunded liabilities. These funds can come from cutting all other government spending to the bone or by raising taxes.

Of the largest 25 cities, Chicago was #9 in combined property and sales tax revenues as a percentage of personal income in 2012. Paying off the $30 billion in unfunded liabilities would raise the tax burden by about 40 percent. Such an increase would make Chicago #3 behind Baltimore and New York, which are already funding their pensions.

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