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Old 02-17-2017, 05:21 PM
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NEW JERSEY
CRIMINAL RETIREES

http://www.app.com/story/news/invest...ions/97904124/

Quote:
NJ Dems stop push to strip crooks of pensions

TRENTON - Twice in two weeks, Republican state Sen. Jennifer Beck's push to strip convicted public officials and employees of their government pensions was thwarted by Democrats in floor-vote battle.

At two consecutive Senate voting sessions, Beck, R-Monmouth, attempted to push her pension bill past a committee hearing and onto the floor of the state Senate for a full vote. Citing an Asbury Park Press investigation last year that revealed more than 40 convicted criminals were collecting more than a million dollars in taxpayer-funded retirement checks, Beck said the bill needed to be voted on to save taxpayers money.

Each time Beck’s efforts were rejected in a party-line vote of 20-15. An opponent of the bill, state Sen. Jim Whelan, D-Atlantic, who is holding her bill in the committee he chairs, derided Beck’s efforts as “grandstanding.”

Republicans are outnumbered by Democrats 24-16 in the Senate.

On the floor of the Senate Tuesday, Beck told her fellow senators that, "Some have been convicted of federal criminal charges, have spent time in jail, and yet our taxpayers are still funding their pensions."

Beck told the Press afterward that “If you were convicted and went to jail because you were swindling taxpayers, we then should not be forced to fund you in your later years with our hard-earned money.”

Whelan expressed skepticism.

“I get the feel-good part: let’s be tough on public officials who are corrupt,” Whelan told the Press. “I get that. We all feel good. But what’s the net result?”

Whelan explained how allowing a corrupt official to keep their pension is a bargaining chip used by prosecutors. Whelan is the chair of the State Government committee responsible for reviewing Beck's bill, S-1557. He hasn't posted her bill for a hearing and said he wouldn't.

“I’ve talked to a number of prosecutors and frankly having the leverage for enabling someone to keep their pension so that you do a plea or more likely they turn and become helpful in an investigation, you’re taking away that prosecutorial discretion,” Whelan said.
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Old 02-17-2017, 05:23 PM
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HOUSTON, TEXAS

http://www.chron.com/neighborhood/ki...n-10938799.php

Quote:
Houston pension plan debated at meeting in Kingwood

Houston businessman, lawyer and 2015 mayoral candidate Bill King and Councilman Dave Martin debated the city's proposed pension reform plan during the Feb. 13 Lake Houston Pachyderm Club meeting at Amedeo's Italian Restaurant in Kingwood.
The proposed pension plan is intended to address the city's mounting pension crisis, which has amassed a debt totaling $8 billion in unfunded pension obligations.
The plan proposes a 30-year fixed payment plan to eliminate the debt. Included in the plan are city employee concessions of approximately $2.5 billion, as well as $1 billion in pension obligation bonds. Additionally, the city would limit the amount that could be spent on pensions annually.
The plan must be passed into law through the Texas Legislature in order to take effect.
While Martin believes the plan presents a necessary compromise to solve the city's pension crisis, King believes the plan to be fundamentally flawed.
"The fundamental problem, in my opinion, is that governments and the city of Houston are trying to hold onto these defined benefit pension plans," King said.
Instead, King said the city should offer defined contribution plans. As opposed to a pension, examples of defined contribution plans include 401Ks and IRAs.
"The problem with defined benefit plans is that we have to know how much money today to set aside to pay you that benefit 30 or 40 years from now," King said. "What do you need to know to know how much money you need to set aside today? You need to know what interest rates are going to be over the next 30 to 40 years. You need to know what the inflation rate's going to be over the next 30 to 40 years. You need to know what life expectancies are going to be 60 or 70 years from now. You need to know how much that person's going to be making at the end of 30 or 40 years. These are all things that are fundamentally unknowable."

http://www.houstonchronicle.com/news...n-10939070.php

Quote:
Turner decries 'poison pill' added to pension reform effort
Mayor says adding referendum will kill pension reforms, force layoffs

A state lawmaker carrying Houston's pension reform bill says her version of the proposal will require a public referendum on a $1 billion cash infusion central to the negotiations, an idea Mayor Sylvester Turner called a "poison pill" that could derail the reforms and force "massive" layoffs.

The requirement that voters have a say on the $1 billion in pension obligation bonds is the brainchild of Sen. Paul Bettencourt, R-Houston. Fellow Houston Republican Sen. Joan Huffman, who is carrying the reforms in the higher chamber, said she understands the mayor's frustration but said her bill - which still is being drafted - will not pass without the provision.

"It is a billion-dollar bond, and though it's not new debt - it's debt that the city owes to both the police pension fund and to the municipal pension fund - I can understand how the voters would want to have a voice in the issuance of the bonds," Huffman said. "To get it out of the Senate, it's a necessary addition to the bill."

Turner's reform plan, despite ongoing wariness from the firefighters' pension fund, emerged from a year of negotiations in Houston with broad support from civic think-tanks, business leaders and pension experts, as well as a 16-1 endorsement from City Council.

This is arguably the first significant hurdle Turner has faced in selling the proposal in Austin. It also is the second sign in a week of the tension between local officials' proposals and state lawmakers' opinions on them; Sen. John Whitmire, D-Houston, has filed a bill that would require Harris County to hold a referendum on a $105 million proposal to save the Astrodome by building 1,400 parking spaces in it.

......
McGee stressed the pension bonds are a political necessity, not a mathematical one. The city owes the money and would be obligated in the reform proposal to pay it one way or another, making annual debt payments on the bonds or annual payments into the pension funds.

Huffman echoed that.

"Anybody would like their money up front - we all would, and maybe it will work out that way - but it doesn't have to work out that way for the plan to work," she said.

Despite the heightened tensions, Turner, Huffman, McGee, Gamaldi and Rep. Dan Flynn, a North Texas Republican who chairs the House pensions committee and is carrying the Houston reforms in that chamber, said they remain optimistic the proposal will pass. Flynn, in a brief statement, did not say whether he supports the referendum rule.

Rep. Jim Murphy, a Houston Republican who has offered pension reform bills in each of the last few sessions, sounded a note of caution on the idea.

"The voting part sounds good but could be easily misunderstood. I think we need to be really cautious in terms of what we put forth in measures to the voters," he said. "But we've got some time to educate folks about this process, both in the city of Houston and here in the Legislature."
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Old 02-17-2017, 05:27 PM
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DALLAS POLICE AND FIRE
TEXAS

http://www.dallasnews.com/news/dalla...settle-lawsuit

Quote:
Dallas Police and Fire Pension, former real estate advisers settle lawsuit

The failing Dallas Police and Fire Pension System has reached a settlement in a lawsuit against its former real estate advisers, whom pension officials had accused of leading the retirement fund astray.
CDK Realty Advisors and the pension system both agreed to drop all claims and counterclaims with prejudice, according to court records filed Tuesday. The only explanation given in the court record is that they "have now resolved their differences."
Stuart Reynolds, an attorney for CDK, declined to comment Wednesday. Pension officials were not immediately available for comment.

A lawsuit had been set for trial before a judge in March. The pension system and its attorneys have also been battling litigation from four City Council members, Mayor Mike Rawlings, a former contract auditor and active and retired police and firefighters.
Those cases have existential concern. The retirement fund is now set to become insolvent within the next decade because of major losses and overvaluations — mostly from real estate — and generous benefits guaranteed by the system.

http://www.dallasnews.com/opinion/co...l-cuts-pension

Quote:
Dallas, stand behind your police as city hall cuts our pension
FILED UNDER

To the citizens of Dallas: I know it is really confusing to read all the hoopla surrounding the Police and Fire Pension issue. What is really going on? How did this come about? Whose side are we to believe? After all, you pay taxes, you did all you were asked to do, right?
I'm speaking for myself here, but there are thousands of police officers and fire fighters in the same situation I am. I, too, pay my taxes. I, too, did all I was asked to do. Our pension is like your Social Security. We pay in with the promise and commitment to have a payout when we retire. We are not eligible for Social Security from our employment with the city.
.....
The city of Dallas told me they would reward me with a retirement, and even offered an investment opportunity to keep me on the job. I listened and did that, too. Trust is a wonderful thing, isn't it?

Well, it appears the city does not want to uphold its side of the bargain. And why should they? I upheld my promise and served for 32 years, but I am retired now, it feels like it's time to forget about the pledge to me and all those who are no longer serving actively. So here is the new city plan, as I see it: Let's convince the citizens of Dallas that those retirees really don't deserve what they have earned. Let's call them greedy and selfish. Let's tell the citizens of Dallas that all we really want is to save the officers from themselves and start a new pension for the ones who are still working. And to make it more believable, let's ask previous city leaders to get behind us. (After all, they didn't do what they promised either, and they wouldn't dare oppose this move, lest they'd be thought responsible for not doing their duty while at the helm.)
.....
I have faith in your ability to see through all the political hay being made. Do this one thing for us: STAND BEHIND US! Make sure the city keeps their end of the bargain. The "Save the Pension" propaganda put out by the city would keep us out in the cold.
Mia Sullivan is a retired Dallas police officer living in Canton. She wrote this column for The Dallas Morning News. Email: miasullivan@yahoo.com

http://www.dmagazine.com/frontburner...sion-director/

Quote:
Retired Firefighters Respond to Laura Miller’s Take on the Pension Director
She says Richard Tettamant 'hid results.' The Dallas Retired Fire Fighters Association begs to differ (sorta).

Last Friday, I put up a post taking former mayor Laura Miller to task. The way I see it, her current public advocacy for a pension fix stands in sharp relief to her lack of action on the matter when she was mayor. For four years, she failed to appoint two of the four pension board members that she could have. I also find it interesting that her lawyer husband is now billing hours to the city of Dallas as he works on a lawsuit filed against the pension board. Read the post for more detail, if you’re not yet up to speed.

Well, today I got a press release from the Dallas Retired Fire Fighters Association in which they respond to something that Miller told me in that first post. She said, “Obviously, if we had known back then that the police and fire pension fund administrator was making poor investment decisions and hiding the results from everyone, we would have done something about it.” She was talking about Richard Tettamant. I’ve written a lot about Tettamant in this space, and Eric Celeste wrote about him in the January issue of D Magazine. Let’s just say that we, as an organization, are not fans of what Tettamant did with the roughly $100 million that the city gave him every year to invest, and we are eager to see if anything comes of the FBI’s visit to the pension offices.

In that sense, I agree with Miller. I’ve asked her for comment on this press release. I’ll update this post if I hear from her. But let me point out one thing. She referred to “hiding results from everyone.” I take that to mean Tettamant and his lieutenants didn’t accurately portray the value of the riskier investments that the pension was making (mainly real estate). But the Retired Fire Fighters Association, in its press release, refers to “this claim of hiding any pension board activities.” That’s not the same thing.
http://www.dmagazine.com/frontburner...-pension-mess/

Quote:
Laura Miller Profits From the Pension Mess
Her husband is being paid by the city of Dallas to sue the Pension Board.

Last night, Tanya Eiserer broke a story on WFAA Channel 8 about Laura Miller and the seats on the Police and Fire Pension Board that she left unfilled when she was mayor. We learned back in November that the City Council members who were appointed to the pension board simply didn’t show up to their jobs for about two decades, while the pension was making bad investments. Now we know why the seats at the pension board were empty: no one had even been appointed to fill them. So it’s interesting that former mayors Ron Kirk, Laura Miller, and Tom Leppert would now step up as the public faces of a group, Taxpayers for a Fair Pension, whose goal is to limit taxpayer exposure to any pension fix. As mayors, they were asleep at the switch, but now they want to get involved. And it’s really interesting that one of the lawyers who is suing the pension on behalf of four council members and the mayor is none other than Steve Wolens, Laura Miller’s husband. Here’s what Miller has to say for herself:
First, the numbers. Kelly Gottschalk, executive director of the pension, told Eiserer that during Miller’s tenure as mayor, from 2002 to 2007, there were 187 board meetings. With four possible appointees, that’s 748 opportunities for Miller to have someone present, keeping an eye on things. Of those 748 opportunities, someone was there just 52 times. Gottschalk told me that one of Miller’s seats was vacant in 2002, and two were vacant from 2003 to 2007.

For four years, Miller left two board seats open. That’s astounding — especially for someone who is now taking such a public stance on what should be done to fix the mess and WHOSE HUSBAND IS BEING PAID TO SUE THE PENSION.

......
First, a 32 percent return is exactly the sort of thing that should have raised eyebrows. The average return for defined benefit plans in 2003 was about 20 percent. A smart appointee sitting in one of those empty seats at the pension board might have asked how the fund was generating such high returns.

Second, Miller said that stuff about black and white and gray in 1999, before she became mayor. I misremembered the timing. In fact, her husband was worrying about her vision as early as 1998.

And, third, speaking of Miller’s husband, Councilman Scott Griggs confirmed this morning that Steve Wolens and his associates at McKool Smith are being paid to sue the pension by the city of Dallas.
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Old 02-17-2017, 05:27 PM
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SOUTH CAROLINA

http://www.thestate.com/news/politic...133163804.html

Quote:
SC pension fix with 9% cap for public workers heads to House
The S.C. House’s budget panel unanimously approved a proposed solution Thursday to the state’s ailing pension system, which is roughly $20 billion in debt.

The full S.C. House could consider the plan as soon as next week.

The plan would raise the amount deducted from the paychecks of public-sector workers for their retirement to 9 percent of their wages, up from 8.7 percent, and cap it at that level.

Meanwhile, S.C. House budget writers are considering putting an added $160 million into the pension system. That money, from the state’s $8 billion general fund budget, would pay up to half of the higher contributions that public-sector employers — including cities, counties and schools — will have to pay into the pension system.

If the pension system bailout plan is approved, those public-sector employers, financed by taxpayers, would start paying 13.6 percent of each employee’s pay toward their retirement costs starting on July 1. That rate — now 11.6 percent — would increase to 18.6 percent over the next six years.

Lawmakers propose to pay the full added costs of employer contributions for state agencies in the budget.

Read more here: http://www.thestate.com/news/politic...#storylink=cpy
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Old 02-20-2017, 01:47 PM
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80 PERCENT
100 PERCENT
WHO CARES?

I may have linked to this before. I'm still pissed off about it.

http://haasinstitute.berkeley.edu/si..._-_publish.pdf

Quote:
Funding Public
Pensions
Is full pension funding a misguided goal?
BY TOM SGOUROS

.....
ABSTRACT
Public pension systems across the United States are, and have been, in crisis. But, to a larger extent than is widely acknowledged, the crisis is the result of the accounting rules governing both these plans and the governments that sponsor them. These rules are designed to insure against risks that public pensions systems do not face, while simultaneously failing to insure against the risks they do face. The rules also encourage “reforms” that frequently do not improve the financial situation of a given pension system. This is not just deplorable, but a recipe for making a bad situation worse—precisely what we’ve seen over the past few decades. A hybrid accounting system
could provide a more accurate picture of a system’s financial health while reducing the waste of overfunding. It could relieve unnecessary financial pressures on thousands of governments across the nation while still preserving the integrity of their pension systems.
I'm pretty sure there's not much pension overfunding going on.

but let's check out this hybrid accounting idea

but wait - what's this

Quote:

Actuarial: Full funding is not required to pay all pension debts

The drive to full funding cannot be justified actuarially, either. Though the details depend on
actuarial characteristics of the employee and retiree population, many, if not most, defined-benefit
pension systems can operate forever at far less than full funding. A retired teacher in Chicago
who passed away in 2014 after a long and happy retirement had every penny of her pension paid
by a system far below full funding, and yet all her pension checks cleared. A system at 70 percent
funding can likely pay all its obligations in a given year, and if at the end of that year it is at
70.1 percent, who is to say this cannot be repeated the following year if the actuarial facts on the
ground do not change significantly? Social Security operated at what amounted to a few percentage
points of full funding in its trust fund for two generations and only a very few pension plans
are funded at levels so low.31

To put it more rigorously, the normal cost to a pension plan accumulated within a calendar year
is the present value of the additional benefits accrued by all the employees in that year. If the
contributions to the fund (employer and employee contributions, as well as investment income)
are adequate to offset the normal cost and inflation, then the unfunded liability of a plan will
not change from one year to the next.32 If the unfunded liability does not change one year to the
next, the fund can operate indefinitely with that same unfunded liability.

A pension fund must pay 100 percent of its debts. But it need not pay them a moment before
they are actually due, and since a pension plan is constantly receiving new contributions, the
fund itself need not be the only source of payments. As a result, even if all the debts are paid, at
any one time, the fund itself may be at some level well below 100 percent funding.
Recall the example above. Perhaps I took a $1,000 loan from you, promising in return to pay you
$19.72 per week for a year. If I have only $600 in the bank, then I have an unfunded liability of
$400. If I also have some source of income of just $7.96 per week, I will be able to pay 100 percent
of this debt, down to the penny, out of the combination of my income and my savings. Every step
of the way, my funding ratio—the ratio of my assets to the present value of my remaining debt—
will be 60 percent or less. (See figure on page 13.)

This is a toy example and tracks the debt to only a single party. A pension system might have
debts owed to tens of thousands of members or more, all owed on their own schedule. The debt
estimates are also subject to considerable uncertainty, since the demographic mix of employees
and retirees changes over time, too. The principle, however, is the same. So long as there is
another source of income, the ratio between the fund and the present value of the debt has little
to do with how much of that debt is ultimately repaid. An active pension system has three sources
of income: (1) the contributions from the employer, (2) from the employees, and (3) from the
returns on investment. Belaboring a point of arithmetic like this seems a waste of time, but the
implication that the funding ratio has some relevance to the full repayment of the pension debt is
not only a staple of public pension criticism, 33 but is enshrined in official policy statements from
bond-rating agencies, actuaries, and the National Association of State Retirement Administrators.34

A 2008 report issued by the Congressional Government Accountability Office (GAO) agreed with
the assessment offered here:

“Most public pension plans report having sufficient assets to pay for retiree
benefits over the next several decades. Many experts and officials to whom we
spoke consider a funded ratio of 80 percent to be sufficient for public plans
for a couple of reasons. First, it is unlikely that public entities will go out of
business or cease operations as can happen with private sector employers, and
state and local governments can spread the costs of unfunded liabilities over a
period of up to 30 years under current GASB standards.”35
what a well-timed report from the GAO, eh?


but back to that hybrid accounting idea

Quote:
POTENTIAL SOLUTIONS: DIFFERENT ACCOUNTING
FOR DIFFERENT QUESTIONS

If this article were merely a plea for less demanding pension funding requirements, that would
be a difficult argument to sustain in the face of the facts. But though a central argument here is
that 100 percent funding is hardly necessary to keep pension checks from bouncing, it is equally
troubling that the abstract nature of pension funds also permits governments to ignore already
existing funding requirements. The impacts on the current budget are always years away, making
it easy to shave a little in the current year, which becomes a little more the following year, more
the next, and so on. In a similar fashion, accounting rules that make clear a system’s strengths
include the ongoing stream of payments from future employees would be preferable to rules that
envision a system that might close tomorrow. Finding a form of funding and accounting practice
that encourages adequate funding is a valuable goal—and is precisely the goal sought by the
GASB in their 2012 revision—but one where the current rules fall short due to the many problems
outlined here.

Alternate accounting rules are possible. Unfunded liabilities and funding ratios are not the only
kind of planning values available. For example, instead of estimating a funding ratio, the Social
Security trustees predict the year in which that fund will run out of money, given current trends.
If, each year, the date advances, the system is in good shape. If it does not, there is cause for
concern. This is simply another way to do the accounting for a pension plan, with advantages and
disadvantages compared to the traditional method. It is worse at allocating the cost to any individual
plan member, but it is arguably much better at respecting the fundamental philosophy of
aggregated security behind a traditional pension plan.69

A pay-as-you-go system is also a different method of accounting. Like the depletion-year method
it has positive and negative features. It does a poor job of predicting how much money ought to
be put aside for future years, the original reason this practice was largely abandoned. However, a
pay-as-you-go system will provide instantaneous budgetary feedback to pension changes. That is,
changes enacted to make a system more generous will be immediately reflected in increased costs
to the current budget (rather than the pension system budget) and a reduction in payments to the
system will immediately be reflected in pension checks bouncing. These are the sorts of effects
that, in a practical sense, constrain the actions of politicians, unlike vague promises that a bond
rating might be threatened, or that a big tax increase will be necessary a decade or two hence.
A hybrid system, combining the better aspects of pay-as-you-go and the GASB-approved systems
would appear to be possible, perhaps by developing a formula that would keep a certain amount
of the annual retiree payments for a pension system as part of the sponsoring government’s
annual budget. This must be done not simply by recalculating the necessary contribution to the
pension fund, but by arranging government finances so the pension checks to retirees will not
clear unless such an appropriation is made. The linkage between policy and outcome must be immediate
and clear in order to have an effect on policy. Under the status quo, the linkage is neither.

For example, a government could seek to “monetize” the stream of payments made by its employees
into the pension fund as a way to make clear that these payments are an important asset of
the fund. A revenue bond backed by the premiums paid into the fund in future years could be
bought annually from the government in exchange for a portion of the benefits paid to retirees
in the current year. The bond itself would be an asset of the pension fund, offsetting its liability.
Funding Public Pensions • haasinstitute.berkeley.edu • 25

The bond could be rated or have some small piece of it sold to another party to establish its value.
Under such an arrangement, the government, rather than the pension fund, would be responsible
for issuing benefit checks. The fund would pay the government for the next year’s bond,
retaining enough to maintain or increase its funding level. The government would use the funds
received to pay retirees, along with its employer share premiums. The debt to the retirees is of the
government, while the pension plan incurs a debt to that government.

Under such a system, an abrupt change in benefits would have a direct impact on the government’s
current budget. Were a mayor to promise large pension increases to the firefighters, part
of the first installment would be paid directly from the city budget the very next year. Similarly,
a reduction in premium payments would affect the value of the bonds, with an impact on the
balance sheet of both the pension fund and whatever other agency might hold them. If the state
owned some of the bonds in its cash pool, a governor who cut pension payments would see the
value of the bonds drop, creating a loss to the state’s own balance, as well as that of the pension
fund. Unlike the current system, the consequences of these decisions would be immediate.
Such an accounting change could not remove political considerations from pension management.
Whatever forces exist to keep the compensation of government employees from being
cut—applied by organized labor or the job market—would remain, and a change in accounting
could hardly do away with political pressure to hold down or cut budgets. But the consequences
of policy decisions would be clearer and sooner, with much less opportunity for decision makers
to shrug away responsibility for highly contingent events years hence.

There is much detail to be added here, and this suggestion is only one possibility. It is merely a
sketch of a possible system, intended to demonstrate that there are other ways to configure the
relationship between pension fund, retirees, employees, and the government that may create
clearer and better feedback and therefore better incentives for the various parties.
Yes, I would definitely like to see "drop-dead" projections.
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Old 02-20-2017, 01:50 PM
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http://www.thefiscaltimes.com/Column...equality-Worse

Quote:
How Public Employee Pensions Make Income Inequality Worse

Despite the stock market’s strong performance, public employee pension systems remain well below full funding and pressure on government budgets is building. Get ready for another round of battles over public employee benefits.

This month, UC Berkeley’s Haas Institute, a progressive research center, has stepped into the maelstrom, arguing that the problem is overblown. In a policy brief, analyst Tom Sgouros argues correctly points out that a pension plan need not be fully funded to continue making payments over long periods of time, and even questions whether 100 percent funding is an appropriate objective.

While Sgouros and like-minded public finance experts make some valid points, they may be surprised to learn that public employee pensions are becoming a driver of income inequality.

.....
Suggestions that the nation is facing a wave of pension-driven municipal bankruptcies are overheated. We have not seen a major city bankruptcy since mid-2013, and it is not clear that the few bona fide government financial crises that have occurred over the last decade were primarily the result of pension underfunding. Flat or declining revenue and a failure to maintain adequate general fund reserves better explain fiscal emergencies that confronted Vallejo, Stockton, San Bernardino, Detroit and Puerto Rico in recent years. Pension obligations come due over an extended time frame and at highly predictable rates, so it is hard to imagine them triggering an emergency without one or more other factors coming into play.

Fiscal hawks like me are prone to exaggerate the pension funding crisis for a variety of reasons. Many of us have accounting and financial management backgrounds, which engender a strong preference for balanced books. The fact that politicians make pension promises without setting aside enough funds to cover them under conservative assumptions is morally offensive. For us, witnessing that type of behavior is akin to an environmentalist seeing a smoke stack belching out greenhouse gases. Like the environmentalist anxious to draw public attention to climate change, we want the public to share our concerns about fiscal unsustainability — and can sometimes omit necessary nuance from our arguments.

.....
Pensions and Income Inequality
Although progressives may be right that the sky isn’t falling, they may be surprised to learn about the impact that certain pensions have on income inequality. In California, over 50,000 public sector retirees are receiving annual pension benefits in excess of $100,000 — and in many cases, way over $100,000. In a new video, California Policy Center profiles four retirees receiving up to $350,000 annually.

These high-income beneficiaries are not the clerks, caregivers and bus drivers typically represented by unions like AFSCME and SEIU. Instead, they are retired managers, academics, physicians and public safety officers. Among the retired police and fire officers, many put in 30 years of service earning retirement credits at a rate of 3 percent per year. This entitles them to retire at 90 percent of final compensation, which is often “spiked” through last-minute promotions and payouts for unused sick and vacation time. The average California Highway Patrol officer who has retired since 1999 receives $96,270 per year and more than 1,000 CHP retirees collect over $100,000 annually.

......
Policy Options
Reformers and progressives may be able to agree on policies that rein in the biggest pension payouts, as a matter of fairness and to free up public funds for other uses. But changes designed to contain windfall pension benefits are difficult to implement in states that have adopted the California Rule, which protects public sector workers from reductions in retirement benefits.

One option that may get around this restriction is to impose a surtax on retirement benefits exceeding a certain level. For example, a state could tax retirement benefits over $100,000 at a rate of 25 percent, and benefits over $200,000 at a marginal rate of 50 percent. Such a tax would not impact anyone receiving a pension of $100,000 or less. If enacted, this policy would have to survive a California Rule court challenge and address the risk of retirees moving out of state to avoid the tax.

Another idea is to implement some form of risk sharing for benefits above a certain level. One problem with most defined-benefit plans is that taxpayers are on the hook when pension assets don’t grow at the sometimes lofty rates assumed. It may be fair to provide this type of security to public employees at lower income levels, but, at some point, funding this guarantee becomes regressive: with low-income city residents paying extra sales taxes to guarantee large pension payouts.

A way to address this inequity is to limit the annual service credit pension formula to salaries up to $50,000. For income above that level, member and employer pension contributions would be held in a separate account that grows at the same rate as that earned by the pension system. At retirement, this balance would then be annuitized and paid on top of the guaranteed benefit. This proposal has some similarities to a defined contribution approach, but the money remains in the public employee pension system, avoiding extra fees.

Public employee pensions are unlikely to trigger a tsunami of municipal bankruptcies any time soon, but the need to fund these plans is placing pressure on local government budgets and crowding out other spending priorities. Under the circumstances, it seems fair to ask higher income pension beneficiaries and future beneficiaries to contribute to a solution.

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Old 02-20-2017, 06:09 PM
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80 PERCENT

https://thenevadaindependent.com/art...-system-nevada

Quote:
The Indy Explains: The Public Employees Retirement System of Nevada
BY MICHELLE RINDELS
PUBLISHED FEBRUARY 19TH, 2017 - 2:04 AM

.....
Is having an unfunded liability healthy?

An unfunded liability is common — it happens when the state doesn’t hit its assumptions (projections) on when beneficiaries die, how many leave the fund before they “vest” (are in it long enough to be eligible for benefits), what their salary increases will be and how many active, contributing employees are on the payroll.

There’s a general understanding that a public pension plan that’s at least 80 percent funded is healthy, although the American Academy of Actuaries has cautioned against leaning too much on that figure and recommended everyone aim to attain and maintain a funded ratio of at least 100 percent over a reasonable period of time.

Numerous factors play into the unfunded liability figure. The first is investment returns — pension funds all over the country took a dive when the recession hit. Another is about how accurately actuaries predict how much the fund will have to pay out.

Policy changes also alter PERS’ liability. For example, Leiss said that in the 1980s, PERS’ “funded ratio” dropped to 55 percent. That was because lawmakers decided to institute a plan for post-retirement pay increases.

It came at a time when inflation was much higher than it is today, and lawmakers wanted to ensure employees’ pensions reflected the rising cost of living, even if it increased the fund’s obligations.

The unfunded liability figure represents how much the state would have to pay out if for some reason, the government were to stop all operations at once and need to settle current and future debts to all PERS participants immediately.

Because that situation is unrealistic, and government is expected to go on forever, there’s a range of opinions on how concerned Nevada should be about its unfunded liability. Some Republican lawmakers say it’s not cause for alarm, but needs to be managed so it doesn’t snowball and so debt service doesn’t start taking away too much money from other programs

“I feel comfortable that it’s growing. In my mind that’s too low,” Kieckhefer said about the 74.1 percent funded ratio. “The prospect of unfunded liability for the state for PERS is not necessarily troubling but something you need to address.”

Democratic Senate Majority Leader Aaron Ford said he’s pleased with how PERS is doing and doesn’t support legislation overhauling the system.

“It’s entirely satisfactory,” Ford said of the funded ratio. “I think if you talk to experts in our caucus and experts throughout the state, you’d hear them report on the positive nature of our situation, especially compared to other states.”
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George Will
America’s utterly predictable tsunami of pension problems

https://www.washingtonpost.com/opini...=.793250af4037
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Old 02-23-2017, 10:34 AM
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Quote:
Originally Posted by Chilango View Post
George Will
America’s utterly predictable tsunami of pension problems

https://www.washingtonpost.com/opini...=.793250af4037
some excerpts:

Quote:
Some American disasters come as bolts from the blue — the stock market crash of October 1929, Pearl Harbor, the designated hitter, 9/11. Others are predictable because they arise from arithmetic that is neither hidden nor arcane. Now comes the tsunami of pension problems that will wash over many cities and states.

Dallas has the fastest-growing economy of America’s 13 largest cities but in spite of its glistening commercial towers it represents the skull beneath the skin of American prosperity. According to its mayor, the city is “walking into the fan blades” of pension promises: The fund for retired police and firefighters is $5 billion underfunded. Prompted by projections that the fund will be exhausted within 20 years, retirees last year withdrew $230 million from it in a six-week span. In the entire year, the fund paid out $283 million and the city put in just $115 million. In November, the New York Times reported that the police and fire fund sought a $1.1 billion infusion, a sum “roughly equal to Dallas’s entire general fund budget but not even close to what the pension fund needs to be fully funded.”

Nowadays, America’s most persistent public dishonesties are the wildly optimistic but politically convenient expectations for returns on pension fund investments. Last year, when Illinois reduced its expected return on its teachers’ retirement fund from 7.5 percent to 7 percent, this meant a $400 million to $500 million addition to the taxes needed annually for the fund. And expecting 7 percent is probably imprudent. Add to the Illinois example the problems of the 49 other states that have pension debt of at least $19,000 per household and numerous municipalities, and you will understand why many jurisdictions will be considering buyouts, whereby government workers are offered a lump sum in exchange for smaller pension benefits. Last September, in the seventh year of the recovery from the Great Recession, the vice chair of the agency in charge of Oregon’s government workers’ pension system wept when speaking about the state’s unfunded pension promises passing $22 billion.
......
Pensions, including those of private companies, are being buffeted by a perfect storm of challenging events: People are living longer. Economic growth is persistently sluggish. Bond yields have declined dramatically during seven years of near-zero interest rates, which produce higher valuations of equities, lowering the future returns that can be realistically expected. As of last August, the Financial Times reported that pensions run by companies in the S&P 1500 index were underfunded by $562 billion — up $160 billion in just seven months.

The generic problem in the public sector is the moral hazard at the weakly beating heart of what Walter Russell Mead calls the “blue model” of governance — the perverse incentives in the alliance of state and local elected Democrats with public employees’ unions. The former purchase the latter’s support with extravagant promises, the unrealism of which will become apparent years hence, when the promise-makers will have moved on. The latter expect that when the future arrives, the government that made the promises can be compelled by law or political pressure to extract the promised money from the public.

......
The problems of state and local pensions are cumulatively huge. The problems of Social Security and Medicare are each huge, but in 2016 neither candidate addressed them, and today’s White House chief of staff vows that the administration will not “meddle” with either program. Demography, however, is destiny for entitlements, so arithmetic will do the meddling.

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Old 02-26-2017, 05:04 PM
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I've got a biiiiiiig backlog

[twss]

:cracking knuckles:


here i go

Spoiler:
for those who are my fb friends/followers, that's what this post:

i gotta stop having hundreds of tabs open at a time
esp in incognito mode


was about

I've recovered some of those tabs.


PENNSYLVANIA

http://www.pennlive.com/news/2017/02...risk_high.html

Quote:
On pension reform, Pa. lawmakers talk a good game, but it's another state that's swinging for the fences


Redesigning government is cool in Pennsylvania these days.

But there's one makeover that's taken on a third rail of politics quality in many quarters of the state Capitol: Fixing the biggest legislative mistake of the last political generation.

We're talking about trying to unwind that notorious 25 percent increase in pension formulas granted in 2001 to all state and school district employees employed at that time - plus a 50 percent hike for state legislators for good measure.

Pennsylvania has had a couple of false starts on this issue - most recently in 2015, when the state Senate voted 28-19 to attack future benefits for current workers, only to see that drive quickly stall in the state House.

But it was so tantalizing from a fiscal perspective: By one actuarial assessment, the plan could have saved $18 billion in future taxpayer obligations through 2040, or about $800 million a year.

For comparison purposes, the last plan to get serious consideration in the General Assembly at the end of the 2015-16 session was projected to save just $2.6 billion over the next 30 years.

That plan - a consolation prize in terms of savings which made no changes for current workers - did not get final votes in either the House or Senate.


With costs flowing from Pennsylvania's 2001 overreach now annually carving billions of dollars out of state and public school district budgets, pension reform is still on many "to do" lists around Harrisburg.
.....
But Browne also told PennLive this week that at this point renewed pension reform discussions here are not including any talk about current employees.

Not because it's not worth doing.

Rather, because that's what the politics of getting something done seem to dictate at the moment.

Gov. Tom Wolf vetoed a watered-down pension bill that did reach his desk in 2015, citing a lack of immediate cost savings and its emphasis on cutting benefits for future state government and public school employees to pay down the cost of existing pensions.

(Efforts to get comment from the Wolf Administration on an Illinois-like proposal were not successful for this story.)

Subsequent plans with even more limited focuses on future risk-shifting stalled in the House, in part because the Democratic minority there was solidly against it. Majority Republicans couldn't pass those plans on their own because some "labor-sensitive" members wanted to push for things like pension bonds to pay down the systems' debt, while fiscal hawks held out for far more radical reforms.

Democrats, meanwhile, have insisted that any compromise give future employees a good chance at a retirement benefit on par with what current new hires receive, hold current employees completely harmless, and produce a net savings for taxpayers.

So, for the moment at least, Pennsylvania reformers are looking to the future - as in future hires - never mind that these pension plan "unborns" have already been placed on an affordable benefit track here by earlier 2010 reforms.

The problem is it's the current workforce that brings with it that $60 billion retirement tab. Reformers can do all they want to future hires, and that tax-eating obligation stays.

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