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  #181  
Old 02-08-2017, 03:56 PM
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OMAHA, NEBRASKA
POLICE AND FIRE

http://www.kmtv.com/news/local-news/...t-pension-bill

Quote:
Omaha fire and police union against pension bill

LINCOLN, Neb. (KMTV) - A change to the retirement plans of Omaha fire and police could be underway.

Senator Mark Kolterman is proposing an overhaul, LB 30, to the retirement plans of police officers and firefighters in Omaha and Lincoln.

The Omaha fire and police unions spoke out against this measure at the Capitol on Tuesday.

“It creates many more problems than it solves,” said OPOA President Sgt. John Wells.

Wells said LB 30, to get rid of the forces’ traditional defined benefit pension system to a cash-balance system would hit the department hard affecting recruiting and essentially your public safety.

“You have to have manpower to respond in order to effectively combat crime, especially violent crime and our crime rate will go through the roof,” said Wells.

Wells says other cities like San Jose, California have adopted this proposal and its department saw over 650 police officers leave the department within 6 years, because the cash-balance plan works like a 401-K and you can leave and keep your pension

“Anybody who can leave Omaha will, as far as a police officer because you are going to go somewhere where the benefits are competitive,” said Wells.

The fire union worries about the cost this could have on their department.

“It’s expensive to run folks through these training academies and to get them trained up, to have them leave and take that training to another city,” said fire union president Steve LeClair.

However the Platte Institute says Omaha has seen its funding levels fall from almost 100-percent funded to less than half funded and the city’s pension debt stands at almost 2-billion dollars. Sen. Kolterman during the hearing stated this plan protects the taxpayers from a volatile market.

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Old 02-08-2017, 03:56 PM
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JACKSONVILLE, FLORIDA

http://jacksonville.com/news/2017-02...s-pension-debt

Quote:
City officials hope to roll back faster payments on pension debt

Officials in Mayor Lenny Curry’s administration revealed on Monday that they want to roll back a major pillar of a hard-won 2015 reform agreement that requires City Hall to more quickly pay off its staggering pension debt.

Curry’s negotiators had previously signaled that they were targeting the 2015 reform law for removal, but they were mum on the full reasons why. It’s now clear they want to unshackle the city from a requirement that it make accelerated payments on its pension debt by spending $350 million over a 13-year period above and beyond the minimum required by state law. That provision was considered at the time to be a tough but responsible sacrifice by taxpayers to fixing a long-standing problem.

The revelation was made in a collective bargaining session Monday with the local Fraternal Order of Police. Curry is hoping his team can convince union officials to permanently close the police and firefighter pension plan to future employees. He instead wants to place new hires in a 401(k)-style plan that the public-safety unions have resisted so far.

The two sides made fragile progress Monday.

For the first time, police union leaders indicated that they could accept a 401(k)-style plan for future employees. But that is contingent upon a significant city concession: The pension benefits for current employees — and the terms of the proposed 401(k) plans for new hires — must be effectively guaranteed for life. City officials were not ready to go that far.

.....
FASTER DEBT PAYMENTS

The city presented the police union with a proposal that called for eliminating the additional payments City Hall and the Police and Fire Pension Fund had agreed to make on the pension debt. The proposal crafted by Curry’s office characterized that requirement as little more than a “placeholder” until a longer-term solution to the debt problem was found.

That is not how city leaders characterized the agreement when it became law in 2015. Instead, the accord, which is monitored and enforced by a federal court, was believed to have been a major step toward reforming Jacksonville’s troubled employee retirement system. The requirement to more quickly pay down pension debt was inserted deliberately and was based on a philosophy that the sooner debt is paid off, the less burden taxpayers carry over time.

Curry, however, believes he found a long-term solution that changes the game.

Voters approved a referendum over the summer that would dedicate the proceeds of a half-cent sales tax to paying down the city’s $2.85 billion pension debt. Unlocking that revenue and applying it to the full pension debt first requires the city to close its three existing pension plans to new hires.

Curry has viewed that as an opportunity to get Jacksonville out of the pension business all together — a first among major cities.

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Old 02-08-2017, 03:57 PM
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MICHIGAN

http://www.crainsdetroit.com/article...pension-reform

Quote:
Snyder creates task force to address pension reform

Gov. Rick Snyder on Monday announced the formation of the Task Force on Responsible Retirement Reform for Local Government to address unfunded long-term liabilities for retirees and municipalities.

The group is made up of more than 20 experts who represent labor and management, investment managers, insurance and finance professionals, and legislators to provide recommendations on reforming pension and health care by spring.

The effort comes as the state attempts to shift workers away from pensions.

More than 330 municipalities offer either retiree health care or a retiree defined benefit pension plan, with some providing both. There is approximately $10 billion in total unfunded health care liabilities and $4 billion in unfunded pension liabilities, a news release stated.

"My goal for this task force is to have collaboration among legislators, state and local government officials, and employee representatives to ensure the financial stability and effective delivery of local government services for the coming decades," Snyder said in the statement. "As we discuss this growing financial problem across the state it is imperative that we also keep retirees in mind who rely on these programs."

A complete list of task force members can be seen here.

http://www.michigan.gov/documents/sn...t_550713_7.pdf

Spoiler:
Task Force Members:
 Judy Allen is the Director of Legislative Affairs for the Michigan Township Association.
She previously served as Director of Government and Community Services of Oakland
Schools and has chaired the Michigan State Liquor Control Commission.
 David J. Breen retired as Managing Partner at PricewaterhouseCoopers LLP after over
40 years with the firm. He is a certified public accountant and holds a bachelor’s degree
in accounting from Wayne State University. He will serve as co-chair.
 Ben Carter is Executive Vice President and Interim Leader of East Group Operations for
Trinity Health. Prior to joining Trinity Health, Carter served as Executive Vice President
and Chief Operating Officer of the Detroit Medical Center. He is a member of the
American Institute of Certified Public Accountants, the Michigan Association of Certified
Public Accountants and the Healthcare Financial Management Association. He holds
bachelor’s and master’s degrees in business administration from the University of
Michigan. He will serve as co-chair.
 Nick Ciaramitro is the Director of Legislation and Public Policy at Michigan AFSCME
Council 25. He was previously an Assistant Prosecuting Attorney for Macomb County
and a Michigan state representative. He holds a bachelor’s degree from the University of
Detroit Mercy and a J.D. from Wayne State University.
 Mark Cook is Vice President of Governmental Affairs for Blue Cross Blue Shield of
Michigan. He holds a bachelor’s degree from Central Michigan University and a master’s
degree from Western Michigan University.
 Steve Currie became Michigan Association of Counties's fourth executive director since
1968 on Jan. 1, 2017. Currie had served as MAC's deputy director since 2011. As
deputy director, Currie led MAC’s daily operations, plus has spurred new initiatives such
as CoPro+, a collaborative purchasing program for public entities. Currie also led a new
program where MAC is assisting Wayne County with modernizing its procurement
efforts. Prior to joining MAC, Currie was operations manager at Comfort Research in
Grand Rapids. He graduated from Hope College with a degree in business
administration and also has an MBA from Michigan State University.
 Bob Daddow is the Deputy County Executive of Oakland County. He is a SMART board
member, Chairman of the Great Lakes Water Authority Board of Directors, former ViceChairman
of the Michigan Municipal Services Authority, and a former member of the
Board of Scholars - Mackinac Center for Public Policy. Daddow is a certified public
accountant and holds bachelor’s and master’s degrees in business administration from
Central Michigan University.
 Chris DeRose is Chief Executive Officer for the Municipal Employees’ Retirement
System. He previously served as the CEO of the Ohio Public Employees’ Retirement
System, CEO of the State of Michigan’s Office of Retirement Services and most recently
as the Vice President for Client Experience at OptumInsight. He holds a bachelor’s
degree from Kalamazoo College and a master’s degree from Western Michigan
University.
 Mark Docherty is the President of the Michigan Professional Firefighters Union. He holds
an associate’s degree from Macomb Community College and a bachelor’s degree from
St. Clair County Community College.
 Ken Grabowski is the Legislative Director of Police Officers Association of Michigan, he
is a member of the Executive Board and a Business Agent. He also is a member of the
Council on Law Enforcement and Reinvention.
 Dave Hiller is the Executive Director of the Michigan Fraternal Order of Police. Before
taking his current positon, he spent 44 years with the Grosse Pointe Park Police
Department.
 Tony Minghine is the Associate Director & COO of the Michigan Municipal League. He is
a member of the Michigan Society of Association Executives, the Governmental Finance
Officers Association, and Michigan Governmental Finance Officers Association. He is a
graduate of Wayne State University.
 Mike Sauger is President of the Michigan Association of Police Organizations. He has
worked for the Warren Police Department since 1998 and currently serves as Vice
President of the Michigan Fraternal Order of Police.
 Mary Schulz is the Associate Director for the MSU Extension Center for Local
Government, Finance and Policy. Prior to that she served as project director for the
Michigan Local Government Benchmarking Consortium. She holds a bachelor’s degree
in Economics and a master’s degree in Agricultural Economics from Michigan State
University.
 Michael VanOverbeke is a founding partner of VanOverbeke, Michaud & Timmony P.C.
and a member of the Michigan Association of Public Employee Retirement Systems. He
holds a bachelor’s degree from Wayne state University and a J.D. from the Detroit
College of Law.
 Paula Zelenko is the Mayor of Burton. She was a member of the Burton city council from
1991 – 2000 and 2008 – 2010. From 2001 – 2006 she was a Michigan state
Representative. She is a graduate of the Ross Medical Education Center, Parker
Chiropractic Schools.
Legislative Representation:
 Rep. Tom Albert represents the 86th House District. He is certified as a Chartered
Alternative Investment Analyst. He holds a bachelor’s degree from the University of
Michigan and an MBA from Michigan State University.
 Rep. Andy Schor is in his third term representing the 68th House District. He holds a
bachelor’s degree from the University of Michigan.
 Sen. Jim Stamas is the senator for the 36th Senate District and was elected to be the
Assistant Majority Floor Leader. He holds an associate’s degree in business
management from Delta College and a bachelor’s degree in business administration
from Northwood University.
 Senator Rebecca Warren is the senator for the 18th Senate District. She holds a
bachelor’s degree from the University of Michigan.
Ex-officio:
 Nick Khouri Treasurer of Michigan
 Pat McPharlin Director of the Michigan Department of Insurance and Financial Services
 John Walsh Director of Strategic Policy for Governor Snyder
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  #184  
Old 02-08-2017, 04:00 PM
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RHODE ISLAND

http://www.forbes.com/sites/edwardsi.../#78429df81e39

Quote:
Red Flags Pepper Rhode Island Pension's Losing Investment In Governor's Venture Fund

There are more red flags surrounding the Rhode Island state pension’s losing investment in a venture fund managed by, and sold to, the pension by current Governor Gina Raimondo than at the Beijing Olympics opening ceremony. Ten years into the fund's life, its performance results remain a mystery.

I’m reminded of the immortal line from the first James Bond film, Dr. No, when Connery, cigarette drooping from his lower lip, casually informs an attempted assassin that he's out of bullets with, "That’s a Smith and Wesson. And you've had your six," before shooting him in the heart.

Current Treasurer and chief pension fiduciary Seth Magaziner should be saying to the Governor, “That’s a venture fund. And you’ve had your ten.”

Magaziner is no James Bond.


.....
The state's investment in Raimondo's Point Judith fund posted a negative 2.9 percent return through December 31, 2016, according to the most recent performance figures from the Treasury.

To make matters worse, in late 2016 Point Judith notified the Treasury that it intended to exercise the first of two, one-year options on the state's investment, extending the life of the fund.

Will a final accounting of the Point Judith investment be delayed until after the next election? Politicization of pension performance reporting?

“Clearly they haven't been our best performer," current state Treasurer Seth Magaziner said in an interview in November.

Magaziner further conceded such small investments don't make much sense for the pension system, as the potential returns don't match the demands on staff to monitor them.

"I would not do an investment of that size today," Magaziner reportedly said.

What Kid Magaziner isn’t saying is how much the Raimondo investment would be worth if sold today—assuming it could be sold.

Raimondo and her inexperienced successor Magaziner have obscured Point Judith performance for years.

....
Nevertheless, Treasurer Raimondo has made numerous public statements regarding the performance of the Point Judith II fund, as well as released summary performance figures which are strikingly divergent.

22 Percent Return: In an April 5, 2013 interview, Treasurer Raimondo stated that the Point Judith II investment was reviewed for ERSRI by the pension’s private equity consultant at that time. Further, the performance of Point Judith at that time was, according to the Treasurer, top quartile in 2007.

“It’s a strong performer. They’ve produced strong returns. It’s still a little bit early. Those kinds of firms have a 10-year investment life cycle, so they’re maybe halfway through the cycle,” she said.

Treasurer Raimondo went on to state, “As I suspected they have solid performance, a realized return of 22% – so a 22% realized return, but again, they’re halfway through the fund. Early returns are strong, but like any of these private equity holdings, you have to wait until the fund is done to see how they’ve performed.”

Wait ten years and then you'll see just how well my firm manages money, promised Raimondo.

12 Percent Return: On April 9, 2013 it was reported that the Treasurer’s spokeswoman provided a correction saying the Point Judith II fund “has a 12% return; 22% is the amount that has been cashed in.”

Obviously, there is a massive difference between a 22 and 12 percent return.

10.9 Percent Return: In a May 2, 2013 interview, the Treasurer’s office stated that the Point Judith II had an annualized rate of return of 10.9 percent as of June 2012.

6.2 Percent Return: On October 10, 2013, the Treasurer’s office stated Point Judith II had an annualized internal rate of return of 6.2 percent.

4 Percent Return: In response to our request for complete information regarding the Point Judith II fund, we received from Raimondo severely limited performance information which simply stated quarterly capital account values and internal rates of return.

....
-16.7 Percent Return: On July 12, 2013, summary data provided by the Treasurer to GOLOCAL PROV revealed that “in the four-year period the performance of the fund has been weak.”The cumulative rate of return of the fund was calculated to be -16.7 percent by an expert commentator.

In conclusion, as a result of Treasurer Raimondo’s refusal to disclose all of the material information regarding Point Judith Capital and the Point Judith II fund she formerly managed and marketed to the state pension, choosing instead to disclose limited unverified information which is wildly inconsistent, it is impossible for the general public, participants and taxpayers to assess her and the firm’s investment capabilities, as well as whether the state pension should have ever invested, or should remain invested, in the Point Judith II fund.

.....
In closing, recall Raimondo’s words in 2013 about the performance of her own fund:

“These kinds of firms have a 10-year investment life cycle.”

“You have to wait until the fund is done to see how they’ve performed.”

Apparently, with regard to the investment performance of this politically-charged investment, Rhode Islanders are going to have to wait a year or two longer.

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Old 02-08-2017, 04:03 PM
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CRIMINAL PENSIONERS

CHICAGO, ILLINOIS

http://chicago.suntimes.com/news/for...anted-pension/

Quote:
Former city worker, convicted in Hired Truck, granted pension

A former city worker who admitted to bilking taxpayers out of more than $1 million in the Hired Truck program is entitled to his pension, a Cook County judge ruled, overturning an earlier retirement board decision.

Attorneys for the Laborer’s and Retirement Board Employees’ Annuity Fund of Chicago are appealing the ruling.

Richard Coveliers, a former city sewer worker, and another clouted former city worker, Michael Harjung, secretly owned a trucking company that did work for the city and passed bribes on to former First Deputy Water Commissioner Donald Tomczak to secure business.

Once indicted, Coveliers eventually cooperated with investigators and pleaded guilty to mail fraud. He was sentenced to five months in prison and he remains on the city’s Do Not Hire List.

Coveliers was banned from doing business with the city while employed by a city department, so he put the trucking firm in his sister’s name.

In May 2016, Coveliers filed a lawsuit against the retirement fund, arguing the board wrongly denied his application for a pension because “the acts forming the basis for plaintiff’s felony conviction in no way arose out of or in connection with his city employment.”

Coveliers further argued that the board violated its own rules and allowed into evidence “several court documents that were neither under oath nor certified as required by Illinois Law.”

On Dec. 21, 2016, Judge Sophia Hall ruled in favor of Coveliers, reserving the pension board’s decision denying him benefits.
.....
In January 2004, a Chicago Sun-Times investigation revealed the city’s $40 million Hired Truck Program was churning with waste and fraud.

The newspaper found that private trucking companies were getting paid by the city but often doing little or no work. One trucking firm owner admitted that he had to tuck bribes into a Christmas card to a city official to keep getting work in the Hired Truck Program.

Federal investigators, spurred by the Sun-Times series, found such bribery of city officials widespread.

In all, 49 people were charged in the case, 33 of them city employees, including Mayor Richard M. Daley’s patronage director, Robert Sorich. Nick “The Stick” LoCoco, a mob bookie, decided which trucking companies got city work.

Of the 49 people charged in the Hired Truck Scandal, LoCoco was the only one who escaped conviction – dying in December 2004 from head injuries after being thrown from a horse.

PENNSYLVANIA

http://citizensvoice.com/news/former...plea-1.2150582

Quote:
Former Coughlin administrator will keep his pension despite guilty plea

Former Coughlin High School principal Frank Michaels did not lose his $5,157 per month pension by pleading guilty to a felony count of child endangerment, according to a spokeswoman for the state Public School Employees’ Retirement System.

Michaels did not commit a forfeitable offense under the pension forfeiture law, PSERS Press Secretary Evelyn Tatkovski Williams said.

Michaels, 68, of Forty Fort, was charged with perjury, false swearing and child endangerment for lying under oath during the 2015 student sex trial of former Coughlin teacher Stephen Stahl. In exchange for Michaels’ guilty plea on the child endangerment charge last September, the other counts were dismissed.

In November, Michaels was sentenced to three years in the Intermediate Punishment Program, with the first nine months on house arrest, and he resigned last month from Forty Fort Borough Council.

....Michael’s monthly pension amount is based on more than 35 years of service, records show. He retired in 2005.

Stahl’s offense was also not one falling under the pension forfeiture law, Williams said.

Sex crimes committed by a public school employee against a student will result in pension forfeiture, Williams said. But corruption of minors and child endangerment are not on the list of crimes specified in the pension forfeiture law.

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Old 02-08-2017, 04:03 PM
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RICHMOND, CALIFORNIA

http://www.latimes.com/projects/la-l...mond-pensions/

Quote:
Cutting jobs, street repairs, library books to keep up with pension costs
Generous retirement benefits for public safety employees could help push the Bay Area city of Richmond into bankruptcy

hen the state auditor gauged the fiscal health of California cities in 2015, this port community on the eastern shore of San Francisco Bay made a short list of six distressed municipalities at risk of bankruptcy.

Richmond has cut about 200 jobs — roughly 20% of its workforce — since 2008. Its credit rating is at junk status. And in November, voters rejected a tax increase that city leaders had hoped would help close a chronic budget deficit.

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“I don’t think there’s any chance we can avoid it,” said former City Councilman Vinay Pimple, referring to bankruptcy.

A major cause of Richmond’s problems: relentless growth in pension costs.

Payments for employee pensions, pension-related debt and retiree healthcare have climbed from $25 million to $44 million in the last five years, outpacing all other expenses.

By 2021, retirement expenses could exceed $70 million — 41% of the city’s general fund.

Richmond is a stark example of how pension costs are causing fiscal stress in cities across California. Four municipalities — Vallejo, Stockton, San Bernardino and Mammoth Lakes — have filed for bankruptcy protection since 2008. Others are on the brink.


Quote:
....
Richmond is a racially diverse, working-class city of 110,000 whose largest employer is a massive Chevron oil refinery. Like many California municipalities, Richmond dug a financial hole for itself by granting generous retirement benefits to police and firefighters on the assumption that pension fund investments would grow fast enough to cover the cost.

That optimism proved unfounded, and now the bill is coming due.

Richmond Makes Cuts To Services As Pension Costs For Public-Sector Workers Mount


Listen to a report by Capital Public Radio.

Read the story
City Manager Bill Lindsay insists that Richmond can avoid going off a cliff. Last year, financial consultants mapped a path to stability for the city by 2021 — but at a considerable cost in public services.

The city cut 11 positions, reduced after-school and senior classes, eliminated neighborhood clean-ups to tackle illegal trash dumping, and trimmed spending on new library books — saving $12 million total.

City officials also negotiated a four-year contract with firefighters that freezes salaries and requires firefighters to pay $4,800 a year each toward retirement healthcare. Until then, the benefit was fully funded by taxpayers.

“I’ve seen some of my good friends go through it in Vallejo and Stockton, and what we found out during those [bankruptcies] is that your union contracts aren’t necessarily guaranteed,” said Jim Russey, president of Richmond Firefighters Local 188.

Richmond’s consultants said the city had to find $15 million more in new revenue or budget cuts by 2021. Lindsay said the city has been looking hard for additional savings, and the police union recently agreed to have its members contribute toward retirement healthcare.
....
In a way, Richmond is a preview of what California cities face in the years ahead. According to CalPERS, there were two active workers for every retiree in its system in 2001. Today, there are 1.3 workers for each retiree. In the next 10 or 20 years, there will be as few as 0.6 workers for each retiree collecting a pension.

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Old 02-08-2017, 04:07 PM
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RETURNS

ASSUMPTIONS

http://www.cnbc.com/2017/02/06/us-pe...eet-those.html

Quote:
US pension funds are slashing their forecasts...and some don't even think they'll meet those

U.S. public pensionfunds are cutting their expectations for investment returns over the next 30 years or more, but some do not expect to meet even the new targets over the coming decade.

After a long period of low interest rates, forecasts by investment analysts show the next 10 years will probably bring slower market growth, leading to reduced expectations for the $3.7 trillion of public pension assets.

But public pensions are wary of lowering their expected return rates, or the discount rate, too quickly because doing so would drastically increase costs for state and local governments and their employees, whose contributions form the funds.

Instead, the funds say they plan to make up for lower returns expected in the coming decade over the next 30 years or more.

"Pension funds are in an extraordinarily difficult political situation," said Don Boyd, fiscal studies director at the Rockefeller Institute of Government.

If they protect their portfolios by moving assets into safer, lower-return investments, he said, "they will have to drastically increase the cost for local governments. They are reluctant to do that."

The CaliforniaPublic Employees' Retirement System, the largest U.S. public pension fund, anticipates annual returns of 6.2 percent over the next decade.

However, CalPERS still expects its long-term return to align more closely with a discount rate that it plans to reduce to 7 percent by 2020, because it anticipates returns will jump to 7.83 percent in the decades to follow.

Such a forecast in the short term could spell declining fund conditions, a rise in unfunded liabilities and increased costs for government employers and workers.

CalPERS is not alone. The OhioPublic Employees Retirement System expects an average 6.76 percent return over the next five to seven years, short of its 7.5 percent discount rate. But the fund anticipates returns will climb to 7.85 percent over a 30-year period.

Los Angeles Fire and Police Pensions expects compound returns of 6.33 percent over the next decade, considerably below its 7.5 percent discount rate. The fund believes the compound return "will rise over the long-term as interest rates move back up," said General Manager Ray Ciranna.

....
At the time, CalPERS board member J.J. Jelincic proposed reducing expectations further to align the discount rate more closely with advisers' forecasts. "6.25 is the reality," Jelincic said at a December meeting.

But the board worried that the costs of such a move would require even higher contributions from California governments and workers.

Cities are already warning of the impending strain.

Scotts Valley, a small city outside of Santa Cruz, expects its annual pension costs to jump by nearly 75 percent over three years under CalPERS' new discount rate. By 2021, the city's annual pension contributions will reach $2.8 million, about 16.3 percent of the city's total budget, up from $1.5 million, or 9.6 percent, today.

"Even though I personally would like to see a lower assumption," CalPERS board member Dana Hollinger said in December, "I realize it would be too much of a strain on budgets."

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Old 02-08-2017, 04:08 PM
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NEW YORK
RETURNS

http://blog.timesunion.com/capitol/a...third-quarter/

Quote:
Pension fund returns were 1.1 percent in third quarter

The state retirement pension fund saw a 1.11 percent return in the third quarter of 2016, Comptroller Tom DiNapoli said Monday.

Estimated at $186 billion, the third quarter results represent a dropoff from the earlier returns of 2, then 3.51 percent during the earlier quarters. They are also below the approximately 7 percent returns that many public pension funds assume — a number that has come under question lately.

Here are the details:

The New York State Common Retirement Fund’s (CRF) overall return in the third quarter of state fiscal year 2016-2017 was 1.11 percent for the three-month period ending Dec. 31, 2016, with an estimated value of $186 billion, according to New York State Comptroller Thomas P. DiNapoli.

“The state pension fund enjoyed a solid third quarter and, barring a significant downturn, is headed for a successful year. We continue to focus on prudent, long-term management of investments to make sure our assets match our liabilities,” DiNapoli said. “Not long after I became Comptroller, the global financial crisis reduced our pension fund’s value to $108.9 billion. Despite volatility in the markets, my staff and I have rebuilt and strengthened the state pension fund to what it is today – a highly diversified fund with its highest ever estimated value.”

The CRF’s estimated value reflects benefits paid out during the quarter. The CRF ended its first quarter on June 30, 2016 with an overall return of 2 percent for the three-month period and an estimated value of $181 billion. Its second quarter closed on Sept. 30, 2016 with an overall return of 3.51 percent and an estimated value of $184.5 billion, the second highest estimated value in its history. Quarterly returns reflect the estimated performance for the three-month period, not the cumulative year-to-date return on investments.

The CRF’s audited value was $178.6 billion as of March 31, 2016, which is the end of the state fiscal year.

As of Dec. 31, 2016, the CRF has 38.5 percent of its assets invested in publicly traded domestic equities and 15.6 percent in international public equities. The remaining Fund assets by allocation are invested in cash, bonds and mortgages (26.8 percent), private equity (7.7 percent), real estate (6.8 percent), absolute return strategies (3.2 percent) and opportunistic and real assets (1.4 percent).

DiNapoli initiated quarterly performance reporting by the CRF in 2009 as part of his on-going efforts to increase accountability and transparency.

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Old 02-08-2017, 04:08 PM
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Mary Pat Campbell
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ILLINOIS

http://capitolfax.com/2017/02/06/abo...form-proposal/

Quote:
About that pension reform proposal…
Monday, Feb 6, 2017

* I asked longtime commenters and pension experts RNUG and Arthur Andersen to take a look at the Illinois Policy Institute’s latest pension proposal.

Let’s start with RNUG. You can see all of his work by clicking here (that link also includes the group’s full explanation, by the way). But this is his summary…

The Bad (from a taxpayer and / or employee perspective)

1) In terms of fixing the pension underfunding, it is a “kick the can” plan not much different than the Edgar Ramp.
2) It is a Defined Contribution plan that shifts both investment and retirement risk to the employee. Your 401K is all you have; no AAI, and if you invest poorly, no one to bail you out.
3) Most likely, it will force local schools districts to raise local / property taxes.
4) Universities may have to raise tuition.
5) Community colleges will, most likely, have to do a mix of 3 and 4.
6) Encourages employee turnover because there is no significant benefit / reason to stay employed at the State.
The Good (from a taxpayer and / or State perspective):

1) For about 8 – 9 years, State contributions to the pension funds will be lower than under the current Edgar Ramp.
2) It transitions the State out of the Defined Benefit business, reducing the risk to the State. As part of this, it eliminates
any AAI.
3) Encourages employee turnover, which might l;ower salary levels because people will have less longevity.
4) Shifts future liability for all TRS and a portion of SURS from the State to the local entities.
5) If Tier 2 is completely abandoned, removes future risk of Tier 2 violating “Safe Harbor” rules
6) Effectively gets the State out of the pension business by 2047 or so.
* And AA gives us his “first read observations”…

1) They aren’t saving $1 billion in 2018, they’re shifting it from the State to schools and universities. Where we stand today, which ones can afford to pick up that cost?

2) The “extrapolation” of TRS figures to SERS and SURS is seriously flawed. The three funds have very different member bases, salary schedules, and demographics. No actuary would tell you that is a sound method.

3) Fixing Tier 2 has to be done, and sooner rather than later. Their approach is off the mark. The fix for Tier 2 is either reduce the member contribution or increase the benefit. Their plan doesn’t do either one.

4) Their proposed contribution rates are a bad idea. The rates are different for the 3 systems because the benefits are different. Charging an SERS member 8% for a benefit that is lower than the SURS/TRS member is just a different flavor of the Tier 2 problem. On the other hand, the proposed 7 percent employer contribution is too low to cover the current employer’s normal cost, or the employer’s share of currently accruing benefits. Working from memory, I think TRS’ is around 17-18 %, with the employee’s share being 9%, leaving the employer cost around 8-9 percent.

5) It’s settled fact that 401(k) plans are more expensive to administer. (Not a biggie, relatively, but it should be considered.)

6) The SURS experience is instructive. When offered the choice, less than a third of SURS members selected the 401(k)-type benefit option. This option is a popular choice among faculty who don’t expect to spend a career in Illinois, so the “portability” is desirable. I don’t know that this experience is typical among other employee groups-I doubt it.

Conclusion-typical IPI half-baked baloney. About the only positive thing I can find to say about it is that nothing is blatantly unconstitutional.
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  #190  
Old 02-08-2017, 04:09 PM
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Mary Pat Campbell
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MISSOURI

http://www.kansascity.com/opinion/re...130657604.html

Quote:
Eric Schmitt: Underfunded state pensions are Missouri’s crisis on the horizon

Missouri State Treasurer Eric Schmitt
Missouri State Treasurer Eric Schmitt

Missouri’s state budget has taken center stage recently as state leaders work to balance priorities in light of a lagging economy. While I believe it is the right approach to address immediate concerns first, it’s important to remember that our state’s pension system continues to be the single greatest threat to our AAA credit rating. If we wish to safeguard Missouri’s long-term fiscal health, pension reform must be part of the conversation.

Our public employee retirement programs are severely underfunded — a fact that too few decision-makers in Jefferson City are willing to discuss. At the end of the most recent fiscal year, the non-judicial portion of the Missouri State Employees’ Retirement System (MOSERS) was only 64 percent funded, and the MoDOT & Patrol Employees’ Retirement System (MPERS) had fallen to 53 percent. Compare that to the retirement system used by Missouri’s counties and cities, which is currently 95 percent funded.

The MOSERS and MPERS figures are sobering, and the situation is even worse than the numbers imply. The rate of return our state currently assumes is significantly above what most financial experts would agree is reasonable. This means that if the tools we use to measure funding levels were adjusted to reality, they would show an even more drastic situation than the one outlined above.

The bottom line is this: Our state has a serious pension problem, and we need to start talking about how it can be fixed before it’s too late. Without reform, this crisis on the horizon will eventually threaten our ability to meet our most basic obligations toward our schools, roads, health services and much more.

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