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  #871  
Old 06-13-2017, 04:21 PM
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KENTUCKY

https://www.winchestersun.com/2017/0...n-plan-crisis/

Quote:
The state pension plan crisis

The KRS Pension Plan gained some notoriety last year when Gov. Matt Bevin came under fire because of budget cuts to state universities.

Unfortunately, the exposure it received was negative, but hopefully, it opened some eyes in the general public.

To summarize, the administrations over the past two decades made some poor decisions that led to a huge gap in the funds our pension plan has in comparison to what it will be required to pay out.

In fact, over this period, the pension plan for state employees alone has gone 85 percent to 14 percent funded.

As stated in the Lexington Herald-Leader, Kentucky’s pension problem resulted from two decades of inadequate contributions from the state, a shortfall the legislature has only addressed in the last few years; weak investment returns and unrealistic assumptions about how many public employees there would be (fewer than predicted), how much they would earn (less than predicted) and how long they would live (longer than predicted).

These improper decisions came from the Paul Patton, Ernie Fletcher and Steve Beshear administrations. If this doesn’t cause concern for you, it should.

.....

In years past, legislators were increasing benefits, yet had no idea how the increased costs would be made up and especially how it would affect us, the taxpayer.

Our current administration has seen this problem and is now getting the right people involved along with meaningful analysis. It is always better to act than react, but now we are at least acting on a past reaction.

As Kentucky Retirement Systems Board of Trustees Chairman John Farriss said, “We have been aggressive in our assumptions for many, many years. Aggressively wrong. This is our opportunity to be conservative, to try to get our retirees paid.”

Political enthusiast Will Collins is a lifelong resident of Kentucky and has called Winchester home for the past 20 years. He can be reached at wrcollins70@gmail.com
http://reason.org/blog/show/kentucky...tum-leap-in-fu

Quote:
Kentucky Takes a Quantum Leap in Funding Policy

Daniel Takash
June 6, 2017, 12:35am

The board of the Kentucky Retirement System (KRS) has taken one of the boldest steps of any pension plan in the country towards improving its funding policy. In May, the KRS board adopted sweeping changes to the actuarial assumptions used to calculate liabilities and determine pension debt payments:

The assumed rate of return was dropped from 7.25% to 5.25% — one of the lowest rates among public plans in the nation.
The real payroll growth assumption was cut to 0% — reflecting the actual historic lack of change in payroll growth over the past decade.
The inflation assumption was cut from 3.25% to 2.3%.
These moves made by one of the worst funded pension plans in the country stand out for their boldness in the face of just incremental changes made states like California or New Jersey. Earlier this year Connecticut dropped its rate from 8% to 6.9%, despite the fact that is only forecasted to earn around 6%. At the time that seemed like a large cut anyway and a decent step towards being realistic. Compared to Kentucky, it seems like child’s play

Simply put, Kentucky has set a new bar for adopting more conservative assumptions to get ahead of the pension crisis unfolding in many states across the U.S.

Unfortunately, some are mistakenly reporting that the change in these assumptions has “increased” the KRS total liability by $2 billion. This claim is based on a misunderstanding of pension accounting. Changing these assumptions only changes the measured value of the liability, or put differently, how much of the true liability is actually recognized on an accounting basis. In a defined benefit plan, the dollar amount to be paid out in promised benefits is fixed (though uncertain, as the compensation and lifespan of members can’t be known exactly). Thus, the liabilities are what they are; all that’s changed in this case is how Kentucky measures the present value its liabilities and how much is recognized.
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  #872  
Old 06-13-2017, 04:32 PM
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OHIO

http://www.dispatch.com/news/2017061...-face-cutbacks

Quote:
Ohio’s public-employee pensions face cutbacks

Public-employee pension funds are big business in Ohio, providing a safety net for 1.75 million people.

There’s a lot riding on them.


Collectively, Ohio’s five public pension funds have $192 billion in assets and last year paid out more than $15 billion in pension benefits and $1.1 billion in health-care benefits. They are not required by law to provide health insurance, but all five do. Whether they will in the future is uncertain.

Although the funds have been mostly reliable and financially sound for decades, recent economic downturns, soaring health-care and prescription-drug costs, and the increased longevity of retirees have taken a toll. Several of the funds are reducing or eliminating cost-of-living adjustments, cutting subsidies and increasing health-care premiums.


The five funds are the Ohio Public Employees Retirement System (public workers); State Teachers Retirement System (teachers); School Employees Retirement System (school-bus drivers, cafeteria workers, janitors, secretaries); Ohio Police & Fire Pension Fund (municipal police officers and firefighters); and the Highway Patrol Retirement System (state troopers). The Ohio General Assembly has oversight of all five through the Ohio Retirement Study Council.

The big question: How long can the pension funds hold out financially in this economic climate? A study released in December by the Mercatus Center at George Mason University painted a gloomy picture.

“Ohio’s four largest public pension plans are severely underfunded based on traditional metrics of pension solvency, and they are only guaranteed to be able to finance their promised obligations for roughly the next decade without additional taxpayer contributions,” economists Erick Elder and David Mitchell wrote.

“However, the funding ratio does not take into consideration the investment risk associated with pension-plan assets; even if Ohio’s pensions were fully funded today, they would still only have a fifty-fifty chance of being able to fulfill their promises in the year 2045.”

......
Ohio Public Employees Retirement System

With 1 million active members and retirees, this is the largest public pension fund in Ohio and the 12th-largest public retirement system in the nation. It affects about 1 in 12 Ohioans and has 3,680 public employers in the system.

Changes began in 2012 when the General Assembly approved cost-cutting measures.

OPERS spokesman Todd Hutchins said the changes keep the health-care package intact “for the foreseeable future.” Hutchins said the fund is 80 percent funded for the future, falling within the 30-year requirement under state law for paying off pension liabilities.

Some of the changes, however, will make it harder for younger retirees and spouses of retirees. New retirees will pay about $219.33 in monthly health premiums, more than six times what retires paid last year. The fund is also ending both premium payments and reimbursement of some Medicare expenses for the spouses of members.
......
State Teachers Retirement System


Like other public employees, retired teachers face big changes in their benefits. As of July 1, the system will temporarily eliminate all new cost-of-living increases in pensions to “preserve the fiscal integrity of the system.” Spokesman Nick Treneff said the situation will be re-evaluated in five years.

The system previously reduced the annual increase to 2 percent from 3 percent.

Treneff said the decision to eliminate the COLA resulted from three factors: lower-than-expected returns on investments, a larger-than-expected payout in pension benefits, and new mortality statistics showing that retirees are living longer, thus increasing the fund’s financial liability.

“Health care isn’t a requirement, but we know members value it,” Treneff said “To have good coverage is essential to the life of retirees. We don’t divert any money to health care from employee contributions.”
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  #873  
Old 06-13-2017, 04:46 PM
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FLORIDA

http://reason.org/blog/show/florida-...d-contribution

Quote:
Florida to Default New Hires to Defined Contribution Retirement Plan Option
Leonard Gilroy and Spence Purnell
June 7, 2017, 6:30am

When you're deep in a hole you want to get out of, at a minimum it’s best to stop adding more shovels to dig the hole deeper. The Florida legislature recently took a powerful step towards reducing the shovels in its underfunded defined benefit pension plan.

The Florida Retirement System currently has $24.9 billion in unfunded pension liabilities (debt) that will be borne by taxpayers over the coming decades, and absent major reform, the state’s pension debt is likely to continue growing. While the legislature chose not to overhaul the retirement benefit design or deal with the pension debt problem head on this session, it did the next best thing by enacting a policy that will default all new state employees (except those in the “special risk” category) into Florida's optional defined contribution retirement plan, called the FRS Investment Plan .

Under previous law, each new hire into a job covered by FRS was defaulted into the FRS Pension Plan—a DB plan—and had to voluntarily choose the FRS-IP if they wanted a DC retirement plan instead As of June 2016, about 18% of the system’s total active membership had voluntarily selected the FRS-IP option over the pension plan. Under the new law, new hires will be defaulted into the FRS-IP, but could still choose to opt out and into the DB pension plan.

The importance of this policy shift boils down to risk. Public sector DB pension plans are exposed to major volatility in employer contribution rates when experience differs from expectations across a range of economic assumptions, such as the assumed rate of return on investments, mortality rates, payroll growth and more.

By extension, every single new hire the state brings into the workforce that stays in the pension system brings long-term liabilities with them that will be exposed to those same underperformance risks.

By contrast, there are no new long-term liabilities to consider with DC plans for new hires. When the employer makes their DC contribution, their obligation to the employee is fulfilled. Of course, switching to a DC plan won’t eliminate the debt accrued in the legacy DB plan—which needs to be paid off no matter what plan new hires are defaulted into—but it will at least prevent any more debt from accruing as far as new hires go.

Thus, the new DC default policy—assuming that it prompts a spike in FRS-IP participation, as expected—would reduce the financial risk to the state and taxpayers gradually and automatically over time as more new workers enter the DC plan, which by definition has no possibility of accruing unfunded liabilities and is not exposed to the same assumption problems as traditional pensions.

At the same time, the policy preserved the ability of new employees to elect to take a traditional pension benefit if they choose. From the taxpayer perspective—those that will be paying off FRS's current $24.9 billion in pension debt over the coming decadesvit is not unreasonable to ask that new employees be automatically enrolled in the less risky of the state’s two retirement options.



http://reason.org/blog/show/florida-...ion-investment

Quote:
Even Their Actuary Thinks Florida's Pension Investment Return Assumption is Wrong
Spence Purnell
June 8, 2017, 8:00am

In the latest Florida Retirement System actuarial valuation report, the expected investment rate of return was lowered from 7.65% down to 7.60% in recognition that the system’s previous investment return assumption was too optimistic. Unfortunately, while it is a small step in the right direction, the downwardly adjusted 7.60% rate is still too high to stem the consistent pattern of overly optimistic assumptions identified by my Reason colleague Anthony Randazzo last fall.

To put Florida's tiny change in perspective—earlier this year Kentucky changed its assumed return from 7.25% to 5.25%, and Connecticut lowered its assumed return from 8% to 6.9%. Next to these, Florida's change looks at best meaningless, or at worst irresponsible. And it turns out Florida's actuarial advisors agree.

The FRS plan actuaries at Milliman (one of the largest actuarial advisors to public plans in the country) wrote in their annual letter accompanying the most recent actual valuation:
Quote:
The investment return assumption, which was set by the 2016 FRS Actuarial Assumptions Conference, is a prescribed assumption as defined by Actuarial Standard of Practice No. 27 (ASOP 27). The prescribed assumption conflicts with our professional judgment regarding what would constitute a reasonable assumption as defined by ASOP 27.
While this may seem like pretty dry stuff, in actuarial speak it's a pretty sick burn. The actuaries for the plan are effectively saying: "Just so everyone knows, they gave us these clothes to wear and we are modeling them for you. But even we can see these clothes have no taste."

Actuaries call this a "qualifying statement," and professional codes of conduct and ethics guidelines require them to publish statements when their clients (like a public pension fund) give them assumptions to use that they think are unreasonable. By pointing out that they think 7.6% is unreasonable, the plan actuaries are covering themselves and announcing that they’ve been trying to warn the FRS board, but that FRS isn’t listening to their view that the assumed return should be less than 7.6%.
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  #874  
Old 06-14-2017, 03:45 PM
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NEW JERSEY
LOTTERY TO FUND PENSIONS

http://www.news12.com/story/35657092...s-to-lawmakers

Quote:
Plan to link lottery revenue to pensions goes to lawmakers
Posted: Jun 13, 2017 5:57 PM EDT
Updated: Jun 13, 2017 5:57 PM EDT
TRENTON -
A plan to link revenue from the New Jersey State Lottery to the pension fund is heading to state lawmakers.

Gov. Chris Christie has for months promoted the idea of handing control of the state lottery's assets to the pension funds as a way to guarantee cash flows into the funds and to reduce unfunded liabilities.

A bipartisan bill to make the change was introduced in the state Legislature this week, about two weeks before lawmakers are required to pass the budget for the upcoming budget year.

Gov. Christie's administration has said it will generate an average of more than $1 billion each year for the pension funds.

One municipal bond analyst says she's not sure how much the move would boost the pension funds' health.

http://www.seattletimes.com/business...-nj-lawmakers/

Quote:
Christie betting that lottery can bail out troubled pensions
by GEOFF MULVIHILL, AP
19 hours ago
The idea of linking the lottery to pensions has been around for years, but legislation backed by the Republican governor was introduced this week to make the lottery the property of the pension system for 30 years.

Analysts and advocates say the deal — an arrangement that would be unique to New Jersey — probably won't hurt, but there's not a consensus on how much it might help.

.....
State Sen. Paul Sarlo, a Democrat sponsoring the legislation, called it an "intriguing" proposal that deserves to be debated. He said there's a long-term benefit under the administration's projections. "The next governor will have the huge benefit after five years of being able to reduce the pension payment," he said.

Here's how the measure that will now be debated by the state's Democratic-controlled Legislature would work:
___
THE CLEAR BENEFIT — AND COST
There's a consensus that the lottery deal would give the state a guaranteed stream of money coming in to make a portion of its pension contributions.

That income — a projected average of more than $1 billion annually — is a bit more than one-fifth of the $5 billion the state would have to annually contribute to fully fund the pension funds.

Christie's budget proposal for the fiscal year that starts July 1 calls for about $2.5 billion in pension contributions — which would be a record.

But the lottery revenue isn't found money: It is currently used to help pay for institutions including the state's universities, psychiatric hospitals and a home for disabled soldiers. The state would still need to pay for those programs; officials say the move would not increase costs for taxpayers.

The state hired a private company in 2013 to handle lottery sales and marketing, but the firm has missed its revenue targets.


ADDRESSING THE UNFUNDED LIABILITY

The state treasurer’s office is promoting a second benefit of the lottery deal. This is the part Washburn and others are skeptical about.

Christie’s administration says the value of the lottery, assessed at $13.5 billion, could be used to offset the unfunded liabilities in the pension funds.

The administration says that would immediately shrink the gap — which it pegs at $49 billion, but some other calculations say could be as high as $136 billion.

Using the state’s evaluation of those unfunded liabilities of $49 billion, that would shrink the gap significantly and immediately. Under accounting rules, it would mean the state could recalculate how much it needs to pay into the fund to meet its obligations. That could mean the state would need to contribute less each year. A better pension position could result in a better bond rating for the state, allowing it to get more favorable borrowing rates.

Hetty Rosenstein, the New Jersey director of Communications Workers of America, the biggest union of state government workers, said she isn’t taking a position on the idea because she doubts it would reduce the liability anywhere but on paper. “At the end of the day, you can’t pay out pieces of the lottery,” she said.

my comment on this idea:
http://stump.marypat.org/article/734...-lottery-money

and I went looking to see how NJ Lottery Revenues fare
http://stump.marypat.org/article/733...t-data-sources



Dollars are in $millions.
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  #875  
Old 06-14-2017, 03:49 PM
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MASSACHUSETTS
CRIMINAL OFFICIAL

http://www.patriotledger.com/news/20...s-city-pension

Quote:
Hearing will determine fate of Corliss’ city pension

Corliss was convicted on Monday of 11 federal felony counts.

QUINCY – A hearing before the city retirement board will determine whether police Lt. Thomas Corliss will be able to keep his city pension following his conviction Monday on federal fraud charges.

Ultimately, the hearing before the Quincy Retirement Board will seek to answer the question of whether the crimes were committed in connection with his duties as a city employee, board chair George McCray said on Tuesday.


On Monday, a jury in U.S. District Court in Boston convicted Corliss of 10 federal felony counts of mail fraud and one of embezzlement. Police Chief Paul Keenan said that the process will begin imminently to fire Corliss, who has remained with the department on unpaid leave since shortly after his indictment in August 2016.

On Tuesday afternoon, McCray said the hearing will begin shortly shortly after Corliss’ termination is made final. He said that the five-member retirement board will hear the case and will follow the rules laid down by state law and the Massachusetts Public Employee Retirement Administration Commission.

“If you’re convicted of a felony and it’s found to be connected to your duties as a city employee, the state will instruct us ... to forfeit your pension,” he said, explaining the rules.

Corliss, a Hanover resident who had commanded the Quincy Police Department’s special-operations motorcycle unit and SWAT team, was convicted of “double dipping” – overlapping shifts, details and overtime training sessions en route to stealing more than $5,000.

.....
McCray said that the process of deciding whether to deny an employee his pension is somewhat lengthy by design.

“This is serious business ... not only for him, but his family,” McCray said. “We really bend over backward to be sure that all the I’s are dotted and the T’s are crossed before the decision is made.”

He said that the last time the board revoked someone’s pension was in the case of Ralph Maher, the former chief plumbing inspector for the city. Maher pleaded guilty to breaking into city hall in December 2001 to steal his personnel files.



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Old 06-14-2017, 03:51 PM
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SAN DIEGO, CALIFORNIA

http://www.sandiegouniontribune.com/...613-story.html

Quote:
San Diego says ruling that vindicated pension reform was sound

City Attorney Mara Elliott says the state Supreme Court shouldn’t overturn April’s appellate court ruling upholding San Diego’s 2012 pension cutbacks because citizens’ initiatives aren’t subject to collective bargaining rules.

Elliott makes the argument in a 25-page response to an appeal of the ruling filed last month by the city’s labor unions. That appeal urges the Supreme Court to overturn the ruling based on contentions it threatens to disrupt labor-management relations across California.

The central issue is whether the city was obligated to negotiate with labor unions over the pension reform proposal, which voters approved in June 2012.

The city says it wasn’t obligated because the proposal was a citizens’ initiative. The unions say the city was obligated because then-Mayor Jerry Sanders supported the proposal and helped negotiate it.

The unions have until next week to submit a rebuttal to the city’s response. The Supreme Court will then have 60 days to decide whether to review the case and possibly overturn it.

If the ruling is overturned, San Diego could be forced to spend millions creating retroactive pensions for more than 3,000 workers hired since 2012. Proposition B replaced guaranteed pensions with 401(k)-style retirement plans for all newly-hired city employees except police officers.

The Supreme Court could also take the less aggressive step of “de-publishing” the appellate ruling, which would eliminate its status as a precedent that may conflict with many other rulings.

Elliott argues the appellate ruling should remain in place because it correctly declared that citizens’ initiatives aren’t subject to many otherwise applicable procedural requirements, such as a state law requiring leaders of a government agency to confer with labor groups about anything that would impact wages, hours or working conditions.
....
The unions say that discretion should rest with the state’s Public Employment Relations Board, which previously ruled the city violated the law by not negotiating with the unions before the initiative went forward.


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Old 06-15-2017, 09:05 PM
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Originally Posted by E. Blackadder View Post
Best chance for Illinois citizens to get a pension has been lost. Powerball and MegaMillions have exited the state. Article cites budget snafu, fails to note that significant lotto winners aren't being paid off.
Without any numbers to back up my opinion, having the lottery leave the state is probably a net positive. It's the poor who get snookered into buying all of these tickets and it's even worse to think that pensions would be built on these funds.

RIP Illinois
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Old 06-15-2017, 10:23 PM
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I did put that stuff in my Illinois debt watch thread, but here, have a blog post:

http://stump.marypat.org/article/757...ns-to-withdraw
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Old 06-17-2017, 10:00 AM
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CALIFORNIA
PENSION OBLIGATION BONDS

https://medium.com/@DavidGCrane/cali...t-2b9153f0674f

Quote:
California Elects Not to Pay Down Pension Debt
Yet Governor Brown promises savings

In a June 11 essay I suggested the state pay down pension debt rather than adopt Governor Brown’s proposal to borrow to boost pension contributions. A pay-down would lock in savings for citizens.
But Governor Brown and the legislature chose to stick with his original proposal to borrow floating rate from a special fund and bet that a state pension fund (CalPERS) can grow the proceeds at a higher rate. If that’s what actually happens, the state would indeed save future pension expense. But it’s not certain to happen. Still, the governor promises savings. In his May Revised Budget, he writes: “Over the next two decades, this supplemental payment will save an estimated $11 billion . . ..” State Treasurer Chiang went even further, sending out an email entitled “$11 billion saved.” But neither assertion is true and both assertions would be prohibited if made in securities markets.
Brown’s leveraged bet is a bad idea for all kinds of reasons, as explained here and here. It’s like using “teaser” rate loans to bet on houses. But now that it’s going to happen, the state should at least swap the floating rate loan into a fixed rate loan so that citizens are not subject to loan rate risk.
Brown has set a terrible precedent. No doubt his gambit — ie, use special citizen funds without citizen approval to make investment bets— will be noticed by other elected officials.
http://www.citywatchla.com/index.php...xt-puerto-rico

Quote:
Borrowing to Fund Pensions Could Make California the Next Puerto Rico

Last month, the Commonwealth of Puerto Rico filed for bankruptcy in federal court. The island’s government is unable to service $70 billion in bonds and almost $50 billion in pension debt. The bankruptcy filing – the largest ever by a U.S. government unit – was just the latest chapter in a fiscal crisis decades in the making.

In 2008, Puerto Rico opted to plug a hole in its retirement system funding by issuing Pension Obligation Bonds (POBs). The Commonwealth borrowed $3 billion from bond investors to contribute to its Employees Retirement System (ERS), Puerto Rico’s analog to CalPERS.

Puerto Rico’s timing could not have been much worse. Between early 2008 and early 2009, the Dow Jones Industrial Average declined by about 50%.

ERS disclosures do not allow us to see precisely how poorly the investments purchased with the POB money performed, but we do know that the total value of the system’s assets fell from $5.77 billion on June 30, 2008 to $5.07 billion on June 30, 2009 – a decline of about 15%. One saving grace for ERS is that a lot of its assets were held in cash or cash equivalents. That is usually a bad practice for a pension fund investing for the long term, but it worked in this case.

During the same fiscal year, CalPERS suffered a loss of 24%. Had the state borrowed $6 billion (the amount recently proposed by Brown) to invest in CalPERS in June 2008, almost $1.5 billion of that would have been wiped out. It would take several years of above-average returns to make up for such a large loss.

Given this history, a reasonable question to ask is whether a 2008-style market crash could happen again in the near future. Since 2009, an eight-year bull market has more than trebled stock valuations, increasing the risk of a major drop. In 2016, our own Ed Ring argued that stock prices were quite high by historical standards, and that it was reasonable to expect a 47% correction.

Since Ring’s piece appeared, the market has continued to rally, largely in response to Donald Trump’s election. The market seems to be expecting tax cuts and deregulatory policies that will stimulate growth. But with the Trump administration facing stiff resistance from Democrats, some Republicans and just about all of the mainstream media, it is increasingly possible that the anticipated policies will never materialize.

Whether it is a Trump administration meltdown, a collapse of the Silicon Valley bubble or a shock from overseas, history suggests that some event will trigger a downturn sooner rather than later. Even Jerry Brown seems worried. In his May 11 budget press conference, the governor told reporters, “We’ve got ongoing pressures from Washington and the economic recovery – it’s not going to last forever. In California, we don’t live in [a] fixed world of straight-line revenues that keep rising and never go down.”

Brown’s comments refer to the state’s revenue volatility. California’s tax system is heavily dependent on revenue from capital gains taxes as well as personal income taxes on high earners, whose salaries rise and fall with the market. As a result, the state’s revenue swings widely with the economy. This is also the case with some expenditures, like public assistance, unemployment benefits and, especially, Medi-Cal.

So if we have a recession and bear market, the state will lose money on its CalPERS investment just as it starts running large deficits. And that could pose an additional problem. While Puerto Rico’s pension borrowing took the form of bonds, Brown is planning to borrow California’s $6 billion CalPERS payment from the Pooled Money Investment Account. PMIA holds short-term funds for the state, as well as cities, counties, and other local entities. On its face, borrowing from PMIA is a lot smarter than issuing POBs because the interest cost is much lower.

But in previous recessions, California’s General Fund has had to borrow from PMIA. During Fiscal Year 2009-2010, the General Fund owed PMIA a daily average of $9.6 billion. By lending money to CalPERS, PMIA may find itself unable to provide General Fund loans, just when they are needed the most.

Finally, while the rate on PMIA loans is very low right now, it is also variable. Although we have now had an extended period of short-term interest rates, many of us remember very different circumstances. In Fiscal Year 1981-82, PMIA’s short-term assets earned 12% interest as the Federal Reserve battled inflation. At the time, stock prices were also falling sharply, so borrowing money at variable rates to invest in CalPERS back then would have produced especially disastrous results.

Back in Puerto Rico, borrowing to fund pensions has been a failure. The government is now demanding that both bondholders and retired workers take a haircut. The Employee Retirement System reported a funded ratio of less than 2% last year. Current retirees will have to be paid from employer contributions, while new hires and current employees will be migrated to a defined-contribution plan.

Admittedly California has advantages over Puerto Rico, and some of the worst-case scenarios discussed here are improbable. But proper risk management requires us to consider the improbable. Rather than rushing into this transaction, lawmakers would do well to take the Legislative Analyst’s Office advice to slow down and carefully consider the implications.



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Old 06-17-2017, 10:19 AM
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SWITZERLAND
DIVESTMENT

https://www.ai-cio.com/news/swiss-st...-weapon-firms/

Quote:
Swiss State Pension Publica Divests from Weapon Firms

Swiss state pension fund Publica said it will divest from five weapons companies in response to an ongoing campaign by the Swiss Association for Responsible Investments (SVVK – ASIR) to blacklist 15 international arms manufacturers.

According to Swiss public radio, the CHF37 billion ($38 billion) Publica, Switzerland’s biggest pension fund, is selling off its stakes in five arms manufacturers from its investment portfolio. However, the fund wouldn’t specify which firms would be affected.

The 15 companies blacklisted by SVVK – ASIR are from India, Israel, Romania, Russia, South Korea, and the US, and include firms such as General Dynamics, Lockheed Martin, Hanwha, and Poongsan. The organization accuses the firms of making products that violate Swiss law and internationally recognized conventions, such as the Ottawa Convention, which bans anti-personnel mines, and the Oslo Convention regarding cluster munitions.

“We want to ensure that the assets that we have invested in at Publica do not violate Swiss laws and norms or international treaties,” Patrick Uelfeti, Publica’s head of portfolio management, told Swiss public radio.

Publica oversees 20 pensions plans serving 63,000 active members and 43,000 beneficiaries. In September 2016, the government revealed that federal investments in arms manufacturers totaled CHF110 million ($113 million), or 0.3% of Publica’s total assets.

Earlier this year, Swiss pacifist group ‘Switzerland Without an Army’ initiated a campaign to ban the financing of companies that produce weapons. The group has until October 11, 2018, to gather signatures from 100,000 Swiss to trigger a nationwide vote on the subject.

The SVVK-ASIR says it bases its divestment recommendations on Swiss laws and international conventions. Manufacturers of anti-personnel mines, cluster munitions, and biological and chemical weapons are explicitly prohibited according to the laws.

However, SVVK-ASIR does not recommend excluding all arms companies because Switzerland has its own army to safeguard its sovereignty. The Swiss Army relies on the use of conventional weapons to carry out its activities, said the group, and some of the weapons are made by Swiss companies. SVVK-ASIR said it only objects to manufacturers who infringe upon Switzerland’s Federal Act on War Material. The act aims to control the manufacture and transfer of war material and related technology, while maintaining an industrial capacity in Switzerland that it adapted to the requirements of its national defense.

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