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  #461  
Old 04-03-2017, 03:44 PM
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OKLAHOMA

https://nondoc.com/2017/03/28/pensio...homa-teachers/

Quote:
Pensions key to recruiting, retaining Oklahoma teachers

Oklahoma lawmakers are being told that the guarantee of a well-funded pension system will help solve the state’s teacher shortage issues.

With the release of a new report, Retirement Security for Oklahoma Teachers Still Overlooked (embedded below), teachers from across the state gathered at the Oklahoma State Capitol today to explain how important their own pensions have been toward keeping them in their jobs.

They also explained why attacks on pensions by lawmakers ultimately hurt recruitment efforts of new Oklahoma teachers.

Defined benefit pensions save districts money

Oklahoma is experiencing a severe teacher shortage. School districts across the state reported more than 500 teaching vacancies at the beginning of the current school year, despite eliminating more than 1,500 teaching positions since the last school year.

According to the Oklahoma State School Boards Association, half of all elementary schools will increase class sizes above 23 students, which is beyond the state maximum of 20. Other teachers have reported class sizes reaching the 30s.

Many pinpoint the issue as one of recruitment: Oklahoma’s average teacher salary ranks among the lowest in the country, higher than only two other states. The average teacher salary in Oklahoma in 2015-2016 was just under $45,000, far below the national average of $58,000. The ability to offer retirement security — via a defined benefit pension — is an attractive and necessary tool for quality teacher recruitment.
the report:
https://docs.google.com/viewerng/vie...port.pdf&hl=en

Quote:
Retirement Security for Oklahoma
Teachers Still Overlooked
National Public Pension Coalition
Keep Oklahoma’s Promises

By Tyler Bond March 2017
Remember the name Tyler Bond.

Quote:
....How then should schools attract more teachers
and get them to stay? One longstanding tool of
workforce recruitment and retention is offering a
defined benefit pension to ensure retirement
security for teachers and other school
employees. Academic research indicates that
pensions help schools retain high-quality
employees.16 By reducing teacher turnover,
defined benefit pensions save school districts
money.17 A 2011 report found that Oklahoma
saved almost $3 million in reduced teacher
turnover costs.18 National surveys reveal that
two-thirds of American workers would be willing
to forego salary increases in order to earn a defined benefit pension and a secure retirement.19 Many
teachers have been willing to accept lower salaries during their working years in exchange for the
guarantee of a secure retirement. However, this is another area where Oklahoma falls short compared
to Texas and other neighboring states.


In Oklahoma, the average annual pension benefit for teachers is $20,242.20 In Texas, it is $24,144.21 This
may not seem like a significant amount, but for a senior living on a fixed income and potentially facing
unexpected medical costs, that $4,000 difference matters. Furthermore, in Oklahoma, both employers
and employees contribute more to the defined benefit pension plan than they do in Texas.22

For several years now, Oklahoma’s public pensions have been under attack by anti-pension ideologues.
In May 2014, the Oklahoma legislature passed HB 2630, which forced Oklahoma state employees, but
not teachers, into a defined contribution 401(k)-style plan. This took effect for new hires beginning
November 1, 2015. Michigan enacted a similar change to its retirement plan for state employees in
1997. The Michigan Office of Retirement Services reported in January 2017 that, twenty years after
making the change, the median account balance in the 401(k)-style plan is $37,260. For Michigan state
workers who are at least 60 years old and who have worked for the state for at least 15 years, the news
is actually worse. The median account balance for that group is only $36,000, hardly enough to finance a
secure retirement.
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  #462  
Old 04-03-2017, 03:52 PM
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...because Tyler gets around

CALIFORNIA

https://californianewswire.com/natio...in-california/

Quote:
National Public Pension Coalition: Why Pensions Matter Report Reveals Need for Pensions in California

SACRAMENTO, Calif. /California Newswire/ — This week, the National Public Pension Coalition released a new report titled “Why Pensions Matter,” a comprehensive examination of the origins and importance of public pensions. The report examines how public pensions have developed over time, as well as the ways in which pensions help to combat a growing retirement crisis in California and throughout the U.S.

This report emphasizes that the need for public pensions is not new, and, in fact, dates back to the New Deal era as states sought out ways to provide a secure retirement for their public employees. Today, hardworking public employees must be afforded the same benefits.

According to Dave Low, Chairman of Californians for Retirement Security: “In the last few years, there’s only been one side of the public pensions story told in California,” says Dave Low, Chairman of Californians for Retirement Security, a 1.6 million member group of public employees and retirees. “This report reveals the reasons why Californians should value public pension funds in the face of America’s retirement crisis.”

To read the Why Pensions Matter report, click here (PDF): https://protectpensions.org/files/20...ons-Matter.pdf

https://protectpensions.org/files/20...ons-Matter.pdf

Quote:
WHY PENSIONS MATTER
The history of defined benefit pension plans
in the United States of America
BY TYLER BOND
MARCH 2017

NATIONAL PUBLIC
PENSION COALITION
HMMMM


I wonder if he did these for other states?
https://protectpensions.org/
Oh, I see a list of states in one of the menus.


And then I found this:
https://protectpensions.org/news/pen...united-states/

Quote:
WHY PENSIONS MATTER REPORT REVEALS NEED FOR PENSIONS ACROSS THE UNITED STATES
March 29, 2017

Washington, DC – This week, the National Public Pension Coalition released a new report titled Why Pensions Matter, a comprehensive examination of the origins and importance of public pensions. The report examines how public pensions have developed over time, as well as the ways in which pensions help to combat a growing retirement crisis throughout the United States.

This report emphasizes that the need for public pensions is not new, and, in fact, dates back to the New Deal era as states sought out ways to provide a secure retirement for their public employees. Today, hardworking public employees must be afforded the same benefits.

According to Bailey Childers, Executive Director of the National Public Pension Coalition:

“All Americans should be able to retire with dignity and pensions are the best way to do that. Unfortunately, pensions have come under attack from special interests across the country, threatening the retirement security of our teachers, firefighters, nurses, and other public employees. The history of pensions should remind us why they’re valuable and why we should keep them.”

From Tyler Bond of the National Public Pension Coalition and author of the report:

“In outlining the origins and benefits of public pensions, this report emphasizes the necessity of pensions in today’s economy. Public servants who have dedicated years of their lives to serving our communities should not be losing sleep over retirement security. Public pensions for teachers, firefighters, police officers, and other civilian public servants are the secure and sensible way to keep these hardworking individuals from financial ruin when they can no longer work. The history of pensions is largely understudied, and as a result, largely misunderstood. This report reveals the reasons why state governments should value public pension funds in the face of America’s retirement crisis.”



To read the Why Pensions Matter report, click here.
Here's the generic (non-CA-focused) one:

https://protectpensions.org/files/20...tter-FINAL.pdf

Oooh, I ended up redirected to here:
http://www.truthaboutjohnarnold.com/

Quote:

About


As an executive at Enron, John Arnold walked away with an $8 million bonus at the same time that the company’s collapse decimated the retirement savings of rank and file employees. Meanwhile, the New York Times reported that Enron’s collapse sank $1.5 billion in public pension assets, negavitvely impacting the retirements of teachers, firefighters, and countless other public employees.

After his tenure at Enron, John Arnold amassed a fortune as a hedge fund manager on Wall Street, becoming the nation’s second youngest billionaire. Today, Arnold is leveraging his fortune to bend public policy to his will. According to his own disclosures, he has spent up to $50 million on a nationwide campaign to gut public pension benefits. He has financed every facet of anti-pension movement, including tainted research, political advocacy organizations, ballot initiatives, journalism, and the campaign coffers of anti-pension politicians.

The Truth About John Arnold is a project sponsored by the National Public Pension Coalition and Californians for Retirement Security. It is a roadmap that shows just how far one billionaire has gone to decimate retirement security for millions of public servants all over the country. Arnold spends through a number of channels, including his private foundation and political PAC, Action Now. All information was drawn from public disclosures on the Laura and John Arnold Foundation website, Arnold’s personal website, various 990’s and news stories.
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Old 04-03-2017, 03:53 PM
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And here is more about John Arnold:
http://www.governing.com/topics/mgmt...-pensions.html

Quote:
John Arnold: The Most Hated Man in PensionLand
The billionaire philanthropist has vowed to secure retirement for public employees. So why do so many public employees despise him?

BY LIZ FARMER | APRIL 2017

John Arnold wasn’t a pension guy.

The billionaire financier, who made a fortune in the stock market before retiring at 38, hadn’t ever really been interested in public retirement plans. But in early 2009, just months into the global financial crisis, Arnold began seeing a flurry of news articles about public pension funds collectively losing billions in the stock market crash. Assets had plummeted, causing unfunded liabilities to shoot up. Cash-strapped governments couldn’t afford to fix the shortfall, and the longer they delayed putting more money in their pensions, the worse the problem would get. In short, it was a policy nightmare.

Arnold became intrigued. “The fact that you could go in one year from having a system that was well-funded to having a major gap -- that affected me,” he says. He started digging and found a book called Plunder: How Public Employee Unions Are Raiding Treasuries, Controlling Our Lives and Bankrupting the Nation, by conservative writer Steven Greenhut. As the title suggests, the book is an anti-union take on public pensions that details the misdeeds of the system’s bad actors -- public employees who game the system and wind up with pensions that are equal to or better than what their working salaries had been. Reading that book, says the now-43-year-old Arnold, “just made me mad.”

.....
As he learned more about the challenges plaguing public pensions, Arnold started donating money to help study possible reforms. Initially, his foundation doled out relatively small grants of less than $200,000 to think tanks and nonprofits. Then in 2012, it awarded nearly $5 million over three years to the Pew Charitable Trusts to support its Public Sector Retirement Systems project. In total, the foundation has given $9.7 million to Pew to study pensions through 2019. All told, the Arnold Foundation has now directed nearly $28 million to fund pension policy research. John and Laura have also personally donated millions more to pro-reform political candidates and ballot initiatives, such as a failed 2014 measure in Phoenix that would have moved city workers to 401(k)-style plans. The measure was backed by $1 million from the Action Now Initiative, which is bankrolled by Arnold.

All of that has made Arnold public enemy No. 1 among lots of government workers and union leaders, many of whom see any threat to change pensions -- no matter how small -- as something to be feared and fought. “When people hear of an effort to get rid of pensions,” says Bailey Childers of the National Public Pension Coalition (NPPC), which is supported by unions, “the source is almost always John Arnold.”

For those who despise Arnold, it’s easy to paint him in an unflattering light. He made his first billions as a trader for the energy firm Enron. After the company imploded in bankruptcy and scandal in 2002, Arnold walked away unscathed. (He himself was never accused of any wrongdoing.) He then started a hedge fund that became one of the most successful energy trading funds in history, even as America was plunging toward the Great Recession. Along the way, Arnold, who lives in Houston, bought a place in the city’s tony River Oaks neighborhood, a three-acre plot that included a turreted red brick home built in the 1920s by two famous Houston architects -- a rare cultural and architectural gem in a sprawling city with few historic preservation protections. It soon became clear Arnold intended to raze the home and replace it with a sleek modern house. Residents protested in front of the property; preservationists met with Arnold but say he was indifferent and condescending. He ultimately tore the house down.

Sometimes the vilification of Arnold can get personal. A recent video produced by the NPPC shows a man sitting poolside, sipping a tropical drink. “John Arnold may have retired in his 30s,” the announcer quips. “But the rest of us can’t. And we won’t be able to retire at all unless we fight back against his efforts.” In 2013, the progressive-leaning Institute for America’s Future released a report called The Plot Against Pensions: The Pew–Arnold campaign to undermine America’s retirement security -- and leave taxpayers with the bill. It accused the Arnold Foundation of being “run by conservative political operatives and funded by an Enron billionaire.” The same year, Rolling Stone’s Matt Taibbi described Arnold as “a dickishly ubiquitous young right-wing kingmaker” and “a lipless, eager little jerk with the jug-eared face of a Division III women’s basketball coach.”
....uh, wtf. I mean, I know Matt Taibbi is a dick, but what did Division III women’s basketball coaches do to him?

Quote:
....
Sometimes the foundation and unions actually find themselves on the same side. In Arizona last year, for example, voters approved a ballot measure that reduced cost-of-living payments to retired police and firefighters; the measure had received support from both the foundation and organized labor. More often, however, the foundation’s money assists groups that want to press through with plan changes after union negotiations have failed. In San Jose, former Mayor Chuck Reed said city officials negotiated for months with the city’s 11 unions, even bringing in state mediation services. (Reed now works for the advocacy group Retirement Security Initiative, which receives Arnold funding.) “When we got down to it, there were three or four of them that were almost to the point of getting to an agreement, but they didn’t want to be the first and be out in front of crossing other unions,” he says. “So ultimately they never agreed to anything.”

As a result, unions feel railroaded by the kinds of overhauls backed by Arnold. Although the foundation’s partners like Pew and Reason say they want input from all stakeholders when they are consulting on pensions, public employee buy-in isn’t a requirement. “Obviously labor organizations are an essential part,” says Pew’s Greg Mennis. “We just try to focus on the fact of the numbers … to bring the analysis to light and educate stakeholders what it means.”


Disclosure: I'm not getting any of that sweet sweet Arnold lucre.
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  #464  
Old 04-03-2017, 04:52 PM
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NEW JERSEY

http://www.njspotlight.com/stories/1...9151-398618645

Quote:
BETTING ON NJ LOTTERY TO HELP BAIL OUT PUBLIC-EMPLOYEE PENSION SYSTEM
JOHN REITMEYER | APRIL 3, 2017
Diverting $1 billion in lottery revenue is a fix, not a solution, some experts warn, and it raises a question: How would the state budget make up for funds that are redirected?

Gov. Chris Christie piqued the interest of state lawmakers when he first suggested during his annual budget address several week ago that proceeds from the profitable New Jersey Lottery could be used to help prop up the state’s grossly underfunded public-employee pension system.

But the governor didn’t fully explain how his proposal — which would likely require the passage of new legislation — would work. Also left unclear is how the state would make up for the nearly $1 billion in lottery revenue that’s been flowing into the annual budget each year after jackpots are paid out.

This week, lawmakers should get a much better sense of just how serious Christie, a second-term Republican in last full year in office, is about the lottery proposal. State Treasurer Ford Scudder is set to appear before both the Assembly and Senate budget committees to discuss the governor’s fiscal year 2018 spending plan with them for the first time. Scudder’s appearance before the Assembly Budget Committee is scheduled for Wednesday; he’s set to go before the Senate Budget and Appropriations Committee on Thursday.

And as lawmakers on those committees await a more thorough explanation of the lottery proposal, there’s a new sense of urgency about the deteriorating condition of the pension system thanks to another state credit-rating downgrade. Pension-funding struggles were a key issue highlighted by Moody’s Investors Service in a one-step debt-grade reduction announced last week.

.....
By all accounts, the lottery system has been a huge success, both for the state budget and those who win jackpots. The comprehensive audit of the 2016 fiscal-year state budget indicates a total of $987 million was transferred from the lottery into the budget, while $2 billion was also paid out as prizes to lottery winners. Christie’s detailed spending plan for fiscal year 2018 estimates even more revenue will come into the budget from the lottery, projecting a full $1 billion.
.....
Christie went on to say he sees lottery proceeds being used to cover pension contributions to “eligible pension plans,” a nod to the fact that the pension system actually is made up of individual retirement plans for different groups of workers, including teachers, judges, and police officers and firefighters. Some of those individual funds are in better shape than others, especially since the state has been struggling for years to cover its own employer pension contributions, as well as those for teachers, which the state has for decades been responsible for.

While officials from the Department of Treasury have said legislation would be needed to redirect lottery revenues to the pension system, it likely wouldn’t take much to use those revenues to support the retirement fund for teachers. The state has traditionally allowed income-tax revenue — which is constitutionally dedicated to paying for property tax relief — to be used to cover retired-teacher pension costs since every dollar the state pays means those funds don’t have to be raised through property taxes by a local school district. Legal arguments could also likely be made that the individual pension plans themselves are “state institutions.”

This is a dumb idea.

The lottery cash is already being used for something. Moving that cash to the pensions means they have to decide to cut something else. Which they would have to do if they simply said "we're putting more cash in the pensions".

Jeez.
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Old 04-04-2017, 12:04 PM
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NJ budget proposals are always so nonsense-laden. It doesn't help that most journalists are mathematically illiterate.
Every freakin year they announce some mythical multi-billion dollar "hole that needs to be filled" and then magically the governor and legislature "close the gap."
Meanwhile that hole is some number they pulled out of their ass not based on last year's budget, but on what the budget would be if basically everything ever proposed were fully funded - e.g. if they went out and bought houses for every last person on the waiting list for placement, and cleared out decades-long backlogs in one year.
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Old 04-04-2017, 02:58 PM
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CALIFORNIA

https://medium.com/@DavidGCrane/cali...s-1d48cd09def8

Quote:
California’s K-12 Pension Cost Crisis
Exacting toll on arts, CS, teacher raises, training, staffing

Before 2005 my knowledge of defined benefit pension plans was limited to experience with a small business I joined in 1979 that offered a DB plan. I was pleased with the opportunity for tax-deferred compounding but also skeptical about the ability of a small business to pay future benefits. So I worried about adequate pre-funding and later became a plan trustee until I retired in 2003. When I joined the board of the California State Teachers’ Retirement System in 2005, I assumed adequate pre-funding was its goal. But then I learned four things:

Retired teachers are assured their pensions regardless of CalSTRS's pre-funded status.

The board is controlled by members who represent groups that do not suffer the consequences of inadequate pre-funding.

The board was reporting the present value of pension liabilities using a discount rate tied to its investment return assumption rather than to the creditworthiness of the obligor. That means liabilities were being hidden when created, as explained here.

The board was basing pension contributions on an unrealistic assumed rate of return on assets. That portended a large future increase in pension costs, as explained here.

Spoiler:





Quote:
Retirement security is a worthy objective and DB plans can work just fine in providing that security when they are properly governed. However, mis-aligned incentives all too often prevent proper governance. Because school and state employees collect their pensions regardless of pre-funded status, their representatives in control of pension fund boards have incentives to use improper discount rates to hide liabilities when they are created (because that way observers don’t see the true size of pensions being promised) and unrealistic investment return assumptions to keep contributions low in the short term (because that saves employees money and shifts more costs to citizens). Politicians fall into the same trap because they prefer to push costs to the future, after they’ve left office. This is why California’s legislature must propose reforms for voter approval to put citizens in charge of pension governance. They have all the risk.
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Old 04-04-2017, 03:17 PM
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ILLINOIS
http://chicago.suntimes.com/politics...ban-elections/

Quote:
Trump, pensions, jobs all issues in Tuesday’s suburban elections

Donald Trump and Bernie Sanders never got a chance to go head to head in the race for the White House, but southwest suburban Bolingbrook voters will get to weigh in on a battle between champions of the two.

And Orland Park voters can decide whether their mayor is worth a $110,000 raise — denounced by a challenger as a “pension grab,” a charge the incumbent dismisses as “misinformation.”

.....
In southwest suburban Orland Park, Mayor Dan McLaughlin — in office since 1993 — faces off against business owner Keith Pekau in a race that’s seen $200,000 in campaign ads and mailers to oust the incumbent by the Dan Proft led-Liberty Principles PAC. Gov. Bruce Rauner is one of the three top contributors to the political action committee, which ran a multitude of ads last year to support Republicans in legislative races. But Rauner political aides note Rauner hasn’t given to the PAC since June 2016, and that his money is not going to fund the municipal election.

McLaughlin is campaigning on what he calls a record of 23 straight years of balanced budgets; refunding $36 million in local property taxes to homeowners in the 12 of the last 15 years and $500 million in infrastructure improvements without raising taxes.

But he’s under fire by some for the village board’s decision last year to up the mayoral salary from $40,000 to $150,000, thus upping his pension — while making the position full-time. McLaughlin abstained from the vote. The move to expand the mayor’s duties was made in lieu of hiring an additional assistant village manager and economic development director.

McLaughlin noted it’s not really a “pension grab” because he has no current plans to retire, and he stressed that making the job full-time creates completely different responsibilities. He said he plans to quit his current job should he win re-election. And he said the “pension grab” accusation comes as the suburb has seen a growth in new homes and businesses, Double A1 and Double A+ bond ratings from Standard and Poor’s and Moody’s and being labeled one of the safest communities in the state — leaving his opponent with not much else to criticize.

“Once I stop working, just like every employee, the village stops paying me. Any pension comes out of the Illinois Municipal Retirement Fund, which happens to be one of the most funded and best run pensions in the state. And that’s why it’s become a little bit of a tough issue,” McLaughlin said. “It’s just misinformation. Telling people that the taxpayers are going to have to come up with $2 million for my pension is not true, and he’s made some other claims that have made the campaign very divisive.”

He also noted that turning the mayor’s position into a full-time one had been talked about for years, and escalated after an efficiency expert recommended it.

Pekau on Monday said he’d opt out of receiving a pension should he win.

Pekau said the financial support from Proft definitely helps: “It doesn’t surprise me that an outside group got involved because these pension grabs are affecting everyone, and Orland Park taxpayers pay the brunt.”

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Old 04-04-2017, 03:40 PM
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MIDDLETOWN, NEW JERSEY

http://www.app.com/story/news/educat...fees/99741286/

Quote:
Legal bills are the cherry on top of Middletown school's pension debt

Middletown Township Public Schools spent more than $43,000 on an unsuccessful court fight to avoid a $3.8-million pension debt.
The debt sprung from an unauthorized early-retirement program from 2007.
The district is paying its first lump sum to the teachers' pension this year.
That payment is one of the reasons the average school tax bill in town would go up by $217 under the proposed budget.
This is part of the APP's comprehensive coverage — see the video above — of how your towns and schools are spending your taxes.
This year, and every year through 2021-2022 school year, Middletown Schools will be paying $763,000 in reimbursement to a teachers' pension fund for an early retirement program that was never authorized.

Since March 2014, the district has also spent $43,183 in legal fees fighting the pension assessment in court, according to bills obtained by the Asbury Park Press through a public records request.

The money was spent on a legal battle that the school system repeatedly lost, culminating in the Supreme Court of New Jersey declining to hear their last-chance appeal.
.....
But the legal bills are only a fraction of the assessment that the district had been seeking to avoid: The total pension bill is for $3.8 million, which works out to about $27 per year — or $134 total — for the typical homeowner over the next five years.

In October 2007, the school board agreed to offer sick-time payouts of up to $40,000 to tenured or near-tenured staff, hoping to entice these higher-paid employees into early retirement, according to court documents.

Dawn Diorio, Laura Agin, Carolyn Sue Self, Kevin Ryan, Patricia Walsh, Rose Stallmeyer, Sherry Gevarter, Minnuies and Caminiti made up the board at that time. The measure was passed unanimously.


But there was one problem: the state Treasury Department hadn't signed off on the board's arrangement with the Middletown Township Education Association, the local teachers' union.

Almost a year later, pension division informed the board that it would not approve the program. Forty-one staff members had already taken the district up on the offer by that point.

In February 2014, the district received a bill for $5.4 million, although the division would ultimately forgive the interest that had accumulated and only demand the district repay $3.8 million in added benefit costs.

This is where the litigation costs began. The school board subsequently lost its arguments in front of the Teachers' Pension and Annuity Fund trustees and state appellate court judges. The state Supreme Court closed the final door when it refused last month to hear the case.

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Old 04-04-2017, 03:42 PM
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DALLAS POLICE AND FIRE
TEXAS

http://www.nbcdfw.com/news/local/Con...418025553.html

Quote:
Confrontation in Austin Over Dallas Police and Fire Pension Crisis

City leaders opposed latest pension deal

Dallas city leaders confronted police and fire employees and retirees Monday at a Texas House Pension Committee hearing on proposed solutions to their failing pension fund.
The Dallas Police and Fire Pension Fund is around $6 billion short on future obligations and could be insolvent in less than 10 years.


Police and Fire retirees rallied in the Texas Capital Rotunda Monday before lining up for the afternoon hearing in a packed meeting room.
.....
For now House Bill 3158 preserves retiree benefits but eliminates future cost of living increases until the fund is more secure.
“The guys working today, we’re taking a cut. We know that. I’m willingly taking a cut to my pension to save the overall fund,” said Dallas Firefighters Association President Jim McDade.

The bill also switches Deferred Retirement Option Plan (DROP) accounts to annuities paid over time, eliminating the option of large lump sum withdrawals that put the fund in even worse shape last year. Interest on DROP accounts is also eliminated. In the past, DROP participants were promised interest as high as 10% when the fund’s investments could not produce such returns.
Dallas Mayor Mike Rawlings and Former Mayor Tom Leppert opposed the bill, saying it is too hard on taxpayers.


“The citizens, the taxpayers, had nothing to do with the failure of this fund,” Mayor Rawlings said.
HB 3158 would increase the taxpayer contribution from the current 27.5% of employee pay to at least 34.5%. The current annual sum of $124 million would rise to $134 million with an additional $11 million added on top of that.


“The City of Dallas throughout the last decade fully funded its obligation to the pension,” Former Mayor Leppert said.
The city leaders also complained that HB 3158 reduces city membership on the pension board to just 5 of 10 with the other 5 coming from employees and retirees. An 11th member would be selected by both groups.


Source: Confrontation in Austin Over Dallas Police and Fire Pension Crisis | NBC 5 Dallas-Fort Worth http://www.nbcdfw.com/news/local/Con...#ixzz4dJ8dj313
Follow us: @nbcdfw on Twitter | NBCDFW on Facebook
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Old 04-04-2017, 03:47 PM
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http://www.marketwatch.com/story/the...pen-2017-04-03

Quote:
The reason underfunded pensions are a disaster waiting to happen

While most corporate employers shifted from pension plans to 401(k)s after the latter’s creation in the early 1980s, governments still offer pensions to many employees.

And those pensions have left retirees and taxpayers in a bind that has fueled political battles while continuing to en rich investment consultants and managers: Too-optimistic estimates of market return, which determine how much governments must pay to fund the balance, have left many plans massively underfunded even as the advisers who managed them received huge fees.

What’s left? A disaster waiting to happen.

The money to pay future retirement benefits to government workers such as firefighters, policemen, and teachers comes from two sources: contributions made by governments to the funds — that is, by taxpayers — and investment growth. The more the funds’ investments grow, the less taxpayers must contribute.

To ensure that there will be enough money to pay retirees’ benefits later, money must be contributed now. How much depends on future investment returns.

Thus, the assumed future rate of return on investment is very important. The higher the assumption, the less taxpayers must contribute.

Most developed countries, including the U.K., Canada, the Netherlands, Sweden, and France assume a conservative return, as on government bonds. Their pension plans are very well-funded.

In the U.S., the assumption is not at all conservative. U.S. funds assume an average return of 7.6%. If they were to assume the return on a low-risk U.S. government bond, it would be only 2.5% or 3%.

That is why a study performed by the Pension Task Force of the Actuarial Standards Board led to the conclusion that U.S. government pensions are underfunded by $5 trillion. Put another way, if those pension funds tried to buy annuities from insurance companies to fund the future benefits they have promised, they would be short $5 trillion.

Wait, did the ASB do that?

Oh, I guess they did:
http://www.actuarialstandardsboard.o...orceReport.pdf

[sorry, I had genuinely forgotten... or never noticed it to begin with. Too many of the actuarial orgs coming up with their competing reports/studies]

Spoiler:
This report is the product of the Pension Task Force (PTF) – a group appointed by the Actuarial
Standards Board (ASB) to consider the standards implications of many proposals for change related to
public pension plans that the ASB has received over the past few years. (The actual charge from the ASB
to the PTF is presented in this report.) The PTF’s goal for this report is to give the ASB the benefit of its
thinking and deliberation regarding those proposals. This report was not written for other audiences
but the PTF would be comfortable with additional dissemination, should the ASB decide to do so.
It should be noted that the statements, representations, and expressions of opinions or views in this
report are attributable only to PTF members and should not be construed as representing the views of
their employers or the Actuarial Standards Board.
This report makes a number of suggestions for change in pension standards for ASB consideration. The
PTF uses the term “suggestions” here deliberately, recognizing that what the ASB chooses to do with
this report is entirely up to them. The PTF understands that the ASB may not accept all of its
suggestions.
During its review, the PTF observed many proposals in the PTF background material related to risk and
risk disclosure. The ASB Pension Committee has been working on developing an actuarial standard of
practice (ASOP) on risk, and has been aware of many of the concepts suggested. Given the ongoing
work by the Pension Committee to develop a new, initial standard on risk assessment and disclosure,
and given the volume of other very important issues raised in the background material, the PTF decided
not to focus on risk assessment and disclosure for this report, with the concurrence of the ASB.
(Although the PTF believes that some of its suggestions would be helpful from a risk assessment and
disclosure standpoint in addition to addressing other concerns). Despite that scoping decision, the PTF
wishes to make clear that it views the development of a standard on the assessment and disclosure of
risk as critically important.
The major emphasis for the PTF was on pension valuations done for funding purposes. The PTF notes
that accounting standards for pension accounting are set by accountants. Actuarial standards may
provide guidance on how an actuary should work within those accounting standards, but they do not
change those accounting standards. Valuation measures used for pension funding are the purview of
actuaries.
Executive Summary
The PTF reviewed many proposals for change in standards from a variety of sources including:
Responses to the 2014 ASB Request for Comments (RFC) on the ASOPs and Public Pension Plan Funding
and Accounting, the 2015 ASB public hearing on public pension issues, and many other sources (see
Appendix 2). Based on its review, the PTF suggests the following potential changes for consideration by
the ASB. The PTF suggests that these potential changes apply to all defined benefit pension plans, both
public sector and private sector, with two exceptions noted below.
Suggestions affecting all pension work:
• Calculation and disclosure of a solvency value.
• Improved management of assumptions:
4
o Disclosure of the basis of each significant assumption (e.g., experience study or other) and, if
study-based, the date of the study.
o That the actuary should consider whether techniques such as experience studies or
gain/loss analysis are warranted when setting demographic assumptions.
o Determination and disclosure of the length of time since a significant assumption was last
analyzed and the availability of credible data.
o Calculation and disclosure of a partial gain and loss analysis.
• Clarification of existing guidance regarding assumptions:
o Clarification that the requirement to “disclose the information and analysis used in
selecting” each assumption1 includes disclosing why the actuary thinks the assumption is
reasonable.
o Clarification that phase-in of assumptions is only allowed if the assumption actually used is
itself reasonable.
• Additional guidance regarding methods:
o That the actuary consider benefit security, intergenerational equity, and contribution
stability and predictability – and the balance among these three – when selecting a
contribution allocation procedure.
2
o Specific reference to direct rate smoothing with general guidance that is consistent with
that for asset smoothing.
o Extension of the concept to disclose the information and analysis used in selecting each
assumption3 to the selection of aspects of the method that have a significant effect on the
measurement.
Suggestions affecting pension work that does not include federally mandated assumptions or methods:
• Calculation and disclosure of contribution requirements and funded status associated with a
reasonable (to be defined in standard) actuarially determined contribution. Such reasonable
actuarially determined contribution defined as meeting the following requirements:
o meeting the existing requirements of ASOP Nos. 4, 27, and 35;
o that if an actuarial cost method is used, each member’s normal cost must be based on the
benefit structure applicable to that member;
o that amortization payments must either be greater than the nominal interest on the
unfunded liability, or pay off the unfunded liability within a reasonable time period (with the
determination of reasonability taking specified considerations into account).
• That the actuary provide an opinion statement about the reasonableness and consistency of
significant individual assumptions, the assumptions in the aggregate, and the combination of the
assumptions and methods, including the interaction of any smoothing techniques used, taken
together.
Suggestions that are applicable only in certain situations:
• Disclosure of the justification for using pension mortality tables (or variations on such tables)
that substantially pre-date more recent published pension mortality tables.
1 Section 4.1.2 in both ASOP No. 27 and ASOP No. 35
2 Addition to factors for consideration in ASOP No. 4, section 3.14
3 Section 4.1.2 in both ASOP No. 27 and ASOP No. 35
5
• Extension of the requirement to disclose situations where current funding policy/practice is
expected to result in plan exhaustion4 to require a qualitative estimate of when assets will be
exhausted.
• Disclosure of the implicit amortization period in fixed-rate contribution situations under the
current funding policy.
• Disclosure of any situation where the contribution requirement is less than the normal cost plus
interest on the unfunded accrued liability calculated using the market value of assets, and how
long before the contribution requirement is expected to exceed that amount.
• Disclosure of a historical scorecard comparing actual contributions to recommended
contributions if this information is available to the actuary and there is a history of significant
underfunding.


Back to the Marketwatch piece:

Quote:
The reasons are plainly political. Lowering the assumed rate of return would result in an immediate requirement for taxpayers to as much as triple their contributions to these pension funds — or for the promised benefits to be curtailed. (That’s illegal, according to some state constitutions.)

Neither Republican nor Democratic politicians want either of these things to happen, though perhaps for different reasons. So they “kick the can down the road.”

The return assumption remains high. The consultants and investment managers continue, against all evidence, to allow their pension fund clients to believe — or to pretend to believe — they can achieve these returns.

Where’s this headed? If, in the future, many government pension funds fail all at once to have sufficient funds to pay their retirees, the burden will suddenly fall on state governments — and ultimately on the federal government.

I don't see why the federal government. They didn't do diddly for Detroit. They're barely doing anything for Puerto Rico. It's not like they're going to do much for bankrupt states.
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