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  #1  
Old 01-02-2017, 09:41 AM
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Default Public Pensions Watch 2017

New year, new thread!

All the prior public pensions watch threads in the spoiler:



and some pension- and public finance-related threads that may be of interest




I like to watch.
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Old 01-02-2017, 09:43 AM
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CALPERS
CALIFORNIA

https://calpensions.com/2017/01/02/c...ficult-to-see/

Quote:
CalPERS reports make debt, cost difficult to see
New annual CalPERS reports no longer prominently display the pension debt of local governments as a percentage of pay, making it more difficult for the public to easily see the full employer pension cost.

An example of how the debt can get lost in the shuffle of the new policy happened last month when the California Public Employees Retirement System dropped its long-term earnings forecast from 7.5 percent to 7 percent.

To help fill the funding gap created by lower investment earnings, the annual rates paid to CalPERS by state and local government employers will gradually increase over the next eight years.

A California State Association of Counties report to its members about the new rate increase only included the CalPERS sample of higher employer rates for the “normal cost,” the amount paid for the pension earned during a year.

Not mentioned in the county report was the additional rate increase for the rapidly growing pension debt or “unfunded liability” from previous years, mostly caused by investment earnings (expected to pay two-thirds of future pensions) that were less than the forecast.

For many employers, the current CalPERS rate for the unfunded liability is higher than the rate for the normal cost. The need to pay down the unfunded liability, which grew to $139 billion this year, is the reason for the new round of CalPERS rate increases.

What tends to obscure or mask the debt in the new CalPERS reports is a change in the way rates are set and reported. The “normal cost” rate is still a percentage of pay. But now the unfunded liability rate is a dollar amount.

Instead of a total rate shown as a percentage of pay, a presentation to the CalPERS board last month and a CalPERS news release both showed the average rate increase for employers in two separate parts, each reported in a different way.

The average normal cost rate increase was reported in the traditional way as 1 percent to 3 percent of pay for most miscellaneous employees, 2 percent to 5 percent of pay for safety employees that include police and firefighters.

In addition, the CalPERS news release said, many employers “will see a 30 to 40 percent increase in their current unfunded accrued liability payments.” That’s the new way of reporting the pension debt using a dollar amount, not the percentage of pay.

county report:
http://www.counties.org/csac-bulleti...ed-rate-return

presentation to Calpers board:
https://www.calpers.ca.gov/docs/boar...item-09-01.pdf

Calpers news release on discount rate:
https://www.calpers.ca.gov/page/news...-discount-rate
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Old 01-02-2017, 11:48 AM
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HOUSTON, TEXAS
FIREFIGHTERS

http://www.houstonchronicle.com/news...d-10830032.php

Quote:
Pension reform plan has some concerned
Retirees worried that proposed cuts won't leave them enough to live on

......
That has Jerry Stansel concerned about Houston's pension reform proposal, which Mayor Sylvester Turner hopes the Legislature will pass early next year.

Much of the proposal's $2.5 billion in benefit cuts would come from reducing or ending retirees' guaranteed annual cost of living adjustments (COLAs). Public safety retirees' increases instead would be linked to inflation, as Social Security payments are. Municipal retirees would get 1 percent increases.

"That's the only way she's been able to keep up with the cost of living increases over the years since dad's been gone," Jerry Stansel said of the compounding 3 percent COLAs his mother receives. "She'll be losing money every year if they take that away. I don't know how long we'll be able to sustain her over there at the retirement place."

A series of benefit increases, mostly between 1997 and 2001, spurred Houston's pension mess. Costs spiked rather than increasing slightly, as flawed studies had predicted, and the city has since struggled to keep up with its pension payments.

Today, many public safety employees with more than 30 years on the job retire with $1 million in cash in a deferred retirement account, and many longtime firefighters, for example, then collect pensions worth more than 90 percent of their pre-retirement salaries.

'Going to hurt them'

But Billie Stansel and hundreds of other beneficiaries rely on pensions awarded under less generous rules. In the mid-1990s, firefighters retiring after three decades got an average annual pension of roughly $34,000, about 80 percent of their final salaries.

"The pre-'97 people had nothing to do with this," said Nick Salem, president of the Houston Retired Firefighters Association. "If you take this COLA away from them, you're really going to hurt them."
......
Craig Mason, an actuary who served 10 years as the city's chief pension expert, said the typical 1990s retiree collects a solid pension and should not face hardship under the reform plan.

Many workers retiring in the 1990s got pensions worth about half their final salaries if they left after 20 years, or 80 percent if they left after 30 years.

After two decades of compounding 3 percent COLAs, Mason said, those initial benefit checks would be about 75 percent higher today. Inflation, according to the Bureau of Labor Statistics, has increased costs about 50 percent in that time.

"It's certainly not as generous as the people who retired after that," Mason said, "but the people who retired after that, the benefits are just unreasonably generous."

......
'Retain their dignity'

Houston is not unique in this finding: A National Association of State Retirement Administrators study found that 30 states have changed COLAs for retirees, workers or future hires in the last seven years.

For Houston's fire pension retirees and beneficiaries, the reform plan would match their COLAs to those granted by the Social Security Administration, whose payments will rise 0.3 percent in 2017. Pre-1997 beneficiaries, however, would be assured an increase of at least 1 percent for the first three years.

Fire pension board chairman David Keller said that exception shows his board is sensitive to the roughly 640 recipients drawing pensions under pre-1997 rules.

"We placed a high value on protecting the oldest guys as best we could," Keller said. "We want to make sure they still retain their dignity in their retirement. This definitely changes what they thought they had coming, and that makes it a little more challenging for people that may not be equipped for that."

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Old 01-02-2017, 11:49 AM
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MICHIGAN

http://www.mlive.com/news/index.ssf/...r_priorit.html

Quote:
Incoming House Speaker prioritizes teacher pension, prison mental health changes

....
As Speaker, one of his top priorities is changing the teacher pension system. The Senate considered putting new teachers fully into a 401(k)-style system during lame duck, but ended up dropping the issue before session ended.

Leonard wants to pick it up, because he says 36 percent of payroll from school districts is going into the pension system. Under a similar 401(k)-style plan for state employees, he said, the cost is about 7 percent of payroll.

"This is not about spending less on education. This is about getting more money into the classroom," he said.

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Old 01-02-2017, 12:53 PM
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DALLAS POLICE AND FIRE
TEXAS

http://www.dallasnews.com/opinion/ed...-investigation

Quote:
Former police, fire pension managers should face criminal investigation

Mayor Mike Rawlings is right to ask for a state criminal investigation into shady practices by the Dallas Police and Fire Pension System's prior management.
The fund is on the verge of a potentially catastrophic collapse that could leave public safety workers, taxpayers and the City of Dallas on the hook for billions of dollars. And the reason stems from abuses under the former administrator Richard Tettamant, who was ousted in 2014. (Stunningly, Tettamant is still working in investments in the DFW area, according to his LinkedIn page.) The fund's former managers bet heavily on risky investments such as luxury homes in Hawaii, a resort and vineyard in California and Dallas' Museum Tower itself, and promised its hardworking police and fire employees unrealistic returns while enjoying lavish perks.
Those returns didn't materialize, saddling the retirement fund's new managers with $2 billion to $5 billion in unfunded liabilities. Frightened police officers and firefighters began a run on the fund, pulling more than $500 million out of it in recent weeks at a pace that would have drained the fund's cash to dangerous levels.

.....
The state probe - the Texas Rangers have confirmed they'll investigate - may be the second into alleged criminal acts. The FBI, which doesn't confirm or deny the existence of investigations, raided earlier this year the offices of CDK Realty Advisors, which worked closely with the pension fund's previous administration and worked out of the pension system's building.

The city of Dallas contends it is not legally responsible for the actions of the pension fund's former managers, in part, because the city doesn't control the fund, which was set up decades ago by the Texas Legislature. But the city is on the hook nonetheless; a failure of the fund would betray promises made to current and retired public safety workers and would make it much more difficult for the city to recruit new police officers and firefighters.
Too many people are at risk and those who put them there need to be called to account for their actions.
https://mishtalk.com/2016/12/31/crim...ension-fiasco/

Quote:
Criminal Witch Hunt

I am not here to defend the investment schemes of the fund managers. And I certainly take exception to alleged lavish perks. But this case is going nowhere.

If one wants to place blame, then blame rests squarely on the shoulders of the legislature that authorized the plan and established the absurd pension assumptions.

Perks did not cause the pension plan to be ridiculously underfunded. Rather, ridiculous plan assumptions steered the managers into risky assets.

In hindsight, it’s easy to say the fund should have thrown it all at Google, Apple, etc. Care to make the same case going forward?

Taxpayers on the Hook?

Taxpayers should not be on the hook for this mess. The promises were bound to fail from the get go.

The fault for this mess is squarely in the hands of politicians, not those running the fund.

Nearly every public pension plan in the nation is severely underfunded. There is nothing special about Dallas.

However, politicians will never point the finger at themselves. So the witch hunt is on.
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Old 01-02-2017, 12:53 PM
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ILLINOIS

https://ilnews.org/11529/state-assoc...tate-pensions/

Quote:
State association employees not entitled to state pensions


One of Illinois’ new laws for the new year clarifies the definition of a public employee with regard to pensions.

Illinois owes hundreds of billions of dollars for public pensions – for everyone from school teachers to local firefighters.

But a new law that takes effect in the new year makes it clear that people who work for state associations aren’t eligible to receive pensions.

The 2017 law states people who work at the Illinois Association of Park Districts or the Illinois Association for Supervision and Curriculum Development and at other such entities aren’t entitled to pensions for their time there.

State Rep. Jeanne Ives, R-Wheaton, said taxpayers can accept paying for retirements for teachers or snow plow drivers. However, taxpayers shouldn’t be forced to pay for lobbyists’ pensions.

“These associations are nothing more than lobbying organizations,” Ives said. “They’re designed to extract more tax dollars from the public.”

Ives said lawmakers talked about closing the loophole for association pensions more than five years ago, in 2011, but it took six years to pass legislation.

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Old 01-02-2017, 12:55 PM
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ILLINOIS
CRIMINAL RETIREE

http://chicago.suntimes.com/news/wat...idow-collects/

Quote:
WATCHDOGS: Crooked pol’s pension take was $2M; now widow collects

In the 1980s, the FBI enlisted the help of an undercover mole to ensnare crooked Chicago politicians “dumb enough to listen to him,” according to one account.

Among those charged was then-Cook County Circuit Court Clerk Morgan Finley, accused of accepting $25,000 in bribes from the operative so a company could get a leg up on a government contract to collect parking-ticket fines.

Sentencing Finley in 1989 to 10 years in prison for racketeering and attempted extortion, a federal judge told him, “What an honor it was to hold your office, but you made it a monument” to “corruption.”

The lengthy sentence also took into account allegations Finley threatened an FBI agent while the trial was going on.

Despite going to prison, Finley’s government pension checks kept coming for decades, until his death in September at 91. Altogether, he collected nearly $2 million over the years, according to pension fund records obtained by the Chicago Sun-Times.

And the pension checks continue, though at a reduced rate, even after his death: His widow gets survivor’s benefits starting at around $5,500 a month, pension records show.

After Finley was charged in 1987, the longtime Bridgeport resident who was an ally of the first Mayor Daley didn’t seek reelection. He left office in late 1988.

Almost immediately, he began collecting two pensions. One was for his years in county government. The other covered his eight years in the Illinois Legislature — which Finley departed in the mid-1960s, according to allegations aired at his trial, after being suspected of trying to shake down a lobbyist in exchange for a vote, though he was never charged with that.

Both pensions were boosted by a “reciprocal” arrangement: Finley’s service with the county enhanced his legislative pension, and his service in the Legislature boosted his county pension.

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Old 01-02-2017, 03:33 PM
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EL MONTE, CALIFORNIA
CALPERS
SUPPLEMENTAL PENSIONS

http://www.latimes.com/projects/la-m...onte-pensions/

Quote:
When city retirement pays better than the job
One in four El Monte residents lives in poverty. Yet taxpayers pay a steep price to fund bonus pensions and other perks for city workers.


.....
Actually, Mussenden has two pensions. He’s part of a coterie of former El Monte civil servants who receive one taxpayer-funded pension through the California Public Employees’ Retirement System (CalPERS) — and a second through a “supplemental” plan approved by the city council in 2000.

The extra pensions, along with other sweeteners granted to El Monte employees over the years, have created one of the heaviest public pension burdens of any city in California, a Los Angeles Times investigation found.

El Monte’s retirement costs totaled $16.5 million this year. That’s equal to 28% of the city’s general fund. Among California’s 10 largest cities, only San Jose paid as much toward retirement costs relative to its general fund. Los Angeles spends 20% of its general fund on retirement costs.

El Monte’s outsize pension bill weighs heavily on the San Gabriel Valley city of 116,000, where half the residents were born outside the United States and a quarter live below the poverty line.

The idea for the supplemental plan arose in 2000, after the city council granted El Monte police officers the right to retire with up to 90% of their highest salary guaranteed for life.

The state and many other cities had approved similar benefits for public safety officers, part of a wave of pension enhancements adopted when pension funds were flush with cash from a stock market boom.

But it created a gap between El Monte police and the city’s non-uniformed employees: Under CalPERS rules, civilian pensions were capped at two-thirds of final salary.

Then-City Manager Harold O. Johanson and other top administrators thought that was unfair, since they supervised the police department. So they pitched the city council on the supplemental plan.

It would boost civilians’ retirement checks by 50% and put their pensions nearly on a par with police. The city council approved the idea in May 2000, unanimously and without public debate.

.....
El Monte has a history of generous employee benefits — including a four-day work week for civil servants, who put in 10 hours a day and have Fridays off. Liberal pension provisions are another part of that tradition.

Under state law, police are supposed to contribute 9% of their paychecks toward their pensions, and civilian workers 7%. But El Monte covers the employee contribution as well as the employer share, a legacy of collective bargaining agreements dating to the early 1980s.

On top of that, retired El Monte employees receive annual cost of living increases at the high end of what CalPERS allows: up to 4% for police retirees and 5% for civilians, depending on inflation. Most CalPERS pension recipients receive increases of 2% annually.

Benefits that lavish do not come cheap: For every $100 the city paid a police officer in 2016, it had to pay an additional $71 to CalPERS to fund payments to current and future retirees.

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Old 01-02-2017, 05:29 PM
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NORTH RIVERSIDE, ILLINOIS

https://insurancenewsnet.com/oarticl...nding-pensions

Quote:
Illinois Appeals Court Says ‘No Excuse’ For Underfunding Pensions

The Illinois Court of Appeals on Dec. 19 affirmed a circuit court judge's ruling that the village of North Riverside had no excuse for not funding its police and fire pensions adequately over the course of a decade.

The village filed the appeal back in November 2015 after a County Circuit Court judge dismissed North Riverside's lawsuit against the Illinois Department of Insurance, which ordered the village to adequately fund its pension obligations or have its sales tax revenues forcibly reallocated for that purpose.

The decision cleared up one of two matters the village had filed with the Illinois Court of Appeals. The second matter involves a circuit court judge's decision that she did not have jurisdiction to rule whether the village had the right to unilaterally terminate its contract with union firefighters.

North Riverside's failure to fund its pension obligations was at the center of the village's attempt in 2014 to privatize its fire department. When the state's Department of Insurance called officials before it to explain why it had failed to adequately fund pensions between 2000 and 2011, local officials argued that the economic downturn of 2008-09 had devastated sales tax revenues.

The judge at the circuit court level didn't buy that reasoning and neither did the appellate court, which reasoned the village could have chosen to direct funds toward pensions but simply chose not to.

In addition, the appellate court noted, several years during which the village failed to adequately fund pensions came prior to the economic downturn.

"The village, as all government units, has to make choices where to spend money," the appellate court's ruling states. "And here there was evidence that the village spent its money on discretionary endeavors it prioritized more than contributing to the police and firefighter pensions. That is a violation of the Pension Code."
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Old 01-02-2017, 05:31 PM
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HOUSTON, TEXAS

http://www.kurv.com/houston-ends-yea...-pension-woes/

Quote:
Houston Ends Year With First-Ever Deficit Amid Pension Woes

(AP) – An audit shows that Houston is ending the year with a deficit for the first time in the history of the nation’s fourth-largest city.
The Houston Chronicle reports that Mayor Sylvester Turner attributes the $95 million deficit to the continued growth of the city’s pension obligations. Both Dallas and Houston are in deep pension troubles and will ask Texas lawmakers in 2017 to approve reforms.
The new audit puts pension underfunding in Houston at $7.7 billion as of June. That’s nearly double from 2014.
Turner says Houston remains “strong and vibrant” despite the numbers in the city’s annual audit. One reason for a drop in the net worth on paper is that new rules since 2015 require cities to report greater transparency of long-term pension obligations.

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