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  #1321  
Old 09-28-2017, 01:44 PM
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Mary Pat Campbell
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CALIFORNIA
OROVILLE
https://calocalelectedofficials.org/...local-budgets/
Quote:
City finance director says Oroville faces specter of bankruptcy
Spoiler:
SACRAMENTO – Most Californians are aware of the near-calamity at the tallest earthen dam in the nation, which sits east of the Butte County city of Oroville. More than 188,000 residents were evacuated in February after a large portion of the main spillway threatened to give way amid heavy rains. Talk of “Oroville” often centers on an infrastructure crisis and even global warming, as officials discuss ways to protect that city – and others – from catastrophe.

But a major dam’s eroded spillway isn’t the only thing threatening to collapse around the 19,000-population city. During a public hearing at a California Public Employees’ Retirement System (CalPERS) committee meeting this month, Oroville Finance Director Ruth Wright warned about the city’s rapidly collapsing financial situation.

Thanks in large part to growing pension costs, Wright said, “We’ve been saying the ‘bankruptcy’ word, which is not very popular.”

Wright was at the Sacramento meeting with several other city officials from across the state to support a senator’s request that CalPERS provide additional actuarial data regarding pension costs. (See her comments here at about 30:00.) Sen. John Moorlach, R-Orange County, wanted to know what the savings would be if pensioners had cost-of-living adjustments temporarily capped and if some employees were moved to a less-generous pension tier.

The impetus: Cities of all sizes and financial conditions are facing rapidly growing pension costs. CalPERS continues to increase the rates that cities have to pay into the pension fund, which is leading to cuts in services and layoffs of city employees.

“In the last two years, we’ve reduced our workforce by one-third,” Wright said. “This is how we balanced our budget, it’s how we’re currently operating, and it’s not operating well, let me tell you.” She said the city just negotiated a 10-percent salary reduction in the city’s police officers’ bargaining unit, “which is very, very hard, very sad.”

“Our future projections show that our rates are going to double in seven years and we don’t know how we’re going to face that,” Wright added. “In three to four years, our cash flow is going to be gone. We don’t even know how we’re going to operate past four years.”

Other California cities have gone bankrupt in recent years, including San Bernardino, Stockton and Vallejo. Some others have threatened the “b” word, but have avoided actual bankruptcy. Cities aren’t totally the victims here. Many of them dramatically expanded pension benefits, without accounting for what it would mean. But at least they now are sounding the alarm, as pension costs consume larger portions of their budgets.

Until the state Legislature addresses the expanding pension debt, more cities are going to face the dismal situation that Oroville’s finance director described at the hearing. More cities are not just going to be saying – but declaring – the “b” word.
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Old 09-28-2017, 01:44 PM
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CONNECTICUT

http://www.courant.com/opinion/op-ed...927-story.html
Quote:
Legislating Connecticut Pension Reform Legal, Necessary

Spoiler:
Union officials incorrectly claim that the Republican budget — which recently passed both chambers of the legislature with bipartisan support — is illegal.

They claim it is illegal because it reforms state employee pension benefits after 2027, when the current contract expires.

Rather than setting pension benefits through collective bargaining, the budget says, pension benefits will be set by law. That is how 46 other states set their pension benefits, including all our neighboring states.

So the question is: Can lawmakers change collective bargaining laws? Put another way, can the people's elected representatives — who are put into office specifically to write the laws for Connecticut — change collective bargaining laws?

Yes, they can.

House Speaker Joe Aresimowicz, a full-time employee of the American Federation of State, County and Municipal Employees, and House Majority Leader Matthew Ritter asked Attorney General George Jepsen for an opinion on labor reforms made in the Republican budget.

Jepsen declined to get into the specific budget proposals, but his opinion said that in extreme circumstances, lawmakers can even alter provisions of collective bargaining agreements while they are still in force. So if even existing agreements can sometimes be altered by lawmakers, how can it possibly be illegal to change the procedure by which future agreements are put in place?

The unions have made it clear that they will take the state to court if this budget becomes law (though Gov. Dannel P. Malloy has promised to veto it). A legal challenge is not an idle threat. Just about any time states makes changes to government union-related laws, they are dragged into costly litigation.
The list is long — in the past few years, unions have sued in Rhode Island, Illinois, New Jersey, Michigan and Missouri — just to name a few.

But threats of a lawsuit should not keep our lawmakers from reforming state law to restore a more balanced bargaining position between Connecticut and its government unions.

For years, public sector unions in Connecticut have succeeded in passing laws that grant them special status.

Public sector union contracts, for example, can override state law. Whole sections of state law are rewritten by contract. Then, these contracts don't have to be voted on by the legislature — they are "deemed approved" if they just sit on the legislative calendar for 30 days.

Another carve out: At the local level, if an elected municipal board votes down a union contract, it is then subject to decisions made by an arbitrator, with zero recourse no matter what mandate that arbitrator imposes.

This is not how it's done in other states. In other states, unions do not get to rewrite state law, have their contracts escape legislative scrutiny or override local elected officials.

They also don't have 30-year contracts, which is how long the state employee benefits contract will have existed assuming it does — finally — come to an end in 2027.
For context, this contract was first agreed to by then Gov. John Rowland and the unions in 1997. The unions have agreed to reopen the contract since 1997. But because the state has to ask the unions for permission to renegotiate, state officials come to the bargaining table already at a serious disadvantage.

Connecticut's laws privilege public-sector unions over ordinary citizens. During budget negotiations, a number of the proposals to save the state money were rejected because they contradict union contracts at the state or local level.

The results of this privilege are clear. Census figures show that the average state employee in Connecticut earns $10,000 more a year than state employees in Massachusetts, and $5,000 more a year than state employees in New York.

By paying wages similar to Massachusetts, Connecticut could save $500 million a year — or $250 million a year if we paid wages similar to New York.

And that's just pay. Public employee benefits in Connecticut are also better than benefits offered in many other states, and are better than those for most private-sector union employees.

It takes courage to confront the public-sector unions' power. But it's time. Because, after all, just how much power should the unions have to determine how our state is run?

Suzanne Bates is policy director at the Yankee Institute for Public Policy, a free-market think tank.

HARTFORD

http://www.wfsb.com/story/36465270/h...ial-bankruptcy

Quote:
Hartford pension recipients are right to be worried about potential bankruptcy
Spoiler:
As the debate over a Connecticut state budget continues, one of the big questions is what to do about Hartford.

The city is asking for $40 million in additional state aid. It said if it doesn't get it, bankruptcy is almost certain.

All week, the I-Team has been exploring what that will mean if it happens.

It spoke with a pair of retirees in Detroit who've been through it and they said people relying on a Hartford city pension are right to be worried.

Hartford Mayor Luke Bronin said his city will run out of money this fall unless state aid arrives.

One of the things the bankruptcy court will do is figure out everyone the city owes money to and all will take a hit.

That includes retirees.

In Detroit, the I-Team looked at how the city resolved the largest municipal bankruptcy case in history. Now, the city is booming.

While many officials said it was good to get it over and done with, one major warning came from retirees who continue to feel the pain every month.

As the first whispers of bankruptcy were heard in greater Detroit, Don Taylor's phone started ringing. Taylor was the president of the Retired Detroit Police and Firefighters Association.

"We hooked up a special hotline because we couldn't handle all the calls," Taylor said.

As the president, he said he knew he had to be ready for his 6,000 members.

First, they were told their pensions and health care would be protected. However, as the size of Detroit's shortfall became clear, some estimates put the reductions for retirees at 40 percent or more.

For his members, Taylor said that might not be survivable.

"Once you retire you learn to live on the income you have coming in and any reduction in that is very difficult for any retiree to replace," he said. "Most people don't hire somebody at 70 or 80 years old and get back into the job market at that time."

"I could have gone elsewhere and made a whole lot more money but I was concerned about the City of Detroit and the fact that I did have a pension," said William Davis, Detroit Active & Retired Employees Association.
…..
Davis said the people in Hartford should be nervous.

"You need to be nervous. You need to be aware of what's going on," Davis said. "Don't believe the suits when they come in and tell you it's going to be all right. It wasn't [for me]."

In the end, the certainty of a settlement won the day.

Members voted to approve the concessions.

One union leader even printed buttons that said "you can't eat principles" as a response to those who said they'd vote "no" on principle.

Thursday, the I-Team's Capital City in Crisis series continues with a look at the suburbs and what they can expect if Hartford does file for bankruptcy.

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Old 09-28-2017, 01:45 PM
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FLORIDA
TAMPA
https://www.ai-cio.com/news/tampa-re...d-rate-return/
Quote:
Tampa Retirement Fund Lowers Assumed Rate of Return
Reduction to be phased in over five years.
Spoiler:
The city of Tampa’s General Employees’ Retirement Fund has voted to lower its assumed rate of return to 7.5% from 8%, according to recently released minutes from its August board of trustees meeting.

The board agreed to phase in the reduction. As of January 1, 2018, the rate of return will be set at 7.9%, after which it will be lowered an additional 10 basis points per year over the next five years until it reaches 7.5%.

Aon Hewitt had been hired to provide a quantitative analysis on reducing the actuarial rate of return assumption, and the impact various scenarios would have on the unfunded liability, funded ratio of the pension fund, and projected employer contributions. Representatives from the company reviewed multiple scenarios with the board concerning the impact of lowering the assumed rate of return in a single year, versus phasing the reduction.

One of the reasons cited for phasing in the reduction was because increased contributions in the upcoming years would be difficult for the city from a budgetary standpoint.

The decision to lower the rate of return assumption came just after the fund reported a one-year return of 15.26% gross of fees, and 14.65% net of fees as of June 30. As of July 31, the total fund value stood at approximately $705.6 million, which was up approximately $10 million from the previous month. Through July 31, the fund is up 12.09% gross of fees on a fiscal year to date basis. Over the five-year period ending July 31, 2017, the fund is up 9.8% gross of fees annualized compared to the policy index of 9.1% for the same time period. The current funded ratio of the fund is 89%.

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Old 09-28-2017, 01:45 PM
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MICHIGAN
DEARBORN
CRIMINAL OFFICIAL
http://www.wxyz.com/news/region/wayn...aught-stealing
Quote:
Former Dearborn city clerk still gets pension, despite being caught stealing
Spoiler:
DEARBORN, Mich. (WXYZ) - Caught red handed, new video obtained exclusively by 7 Action News shows Michigan State Police busting the former Dearborn clerk stealing cash from city hall.
Despite her taking hundreds, we've discovered the city is still paying Kathleen Buda a sizable pension.
…..
MSP conducted a thorough investigation, that led to the former clerk's career coming to an end.
City Council President Pro Tem Thomas P. Tafelski says this was a clear sign a system of checks and balances was broken.
"It's a problem and so it needs to be addressed. The public needs to know what's going on," says Tafelski.
People we talked to are even more shocked to learn the city still pays Kathleen Buda more than $3,300 a month in pension.
Randa Abdulhadi, another citizen of Dearborn says she finds that to be totally inappropriate given what took place.
"Stealing is stealing. Regardless of the situation. I don't think she should receive a pension," she says.
MSP strategically placed the hidden camera inside the former clerk's office after getting complaints back in 2015. Only 7 Action News was there in December of that year, as troopers raided the clerk's office.
Shortly after in January 2016, Buda retired from the job that paid her $72,555 a year. She had worked for the city for more than 20 years.
"When something like this goes out, it puts the city in a bad light no matter who it is," says Tafelski.
He says the city law department required Buda still be paid roughly $11,000 in unused time off. Then, in court on June 22nd this year, Buda pled no contest to felony embezzlement, as part of a plea deal to avoid prison time.
She was sentenced July 21st to 2 years probation and a small restitution of roughly $1,600. Her monthly pension was only reduced by roughly $50 by the court.
Peter Henning, a highly respected former federal prosecutor and Law Professor at Wayne State University explains, "What the rule is in this state, is that it's only from the date of your first criminal act that you start losing your pension benefit."
Henning adds it might be the law, but may also be unfair to taxpayers.
"You earn your pension because of work over a long period of time, but how long was she also dipping into the till? These are the people that have to be the most accountable," says Henning.
We called and emailed Buda for a response to our story, but she refused comment. She also would not open the door after we visited her at home.
The city's Mayor, Jack O' Reilly Jr. also declined to do an interview about the city's plans to prevent further abuse.

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Old 09-28-2017, 01:45 PM
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RHODE ISLAND
DISABILITY
http://ripr.org/post/raimondo-vetoes...towns#stream/0

Quote:
Raimondo Vetoes Firefighter Disability Pension Bill; Says It Would Hurt Cities And Towns' Finances

Spoiler:
Rhode Island Governor Gina Raimondo has vetoed a bill making it easier for firefighters to get disability pensions, saying it would reverse fiscal progress made by the state's cities and towns.

The bill would create a presumption that any firefighter unable to do their work due to stroke or heart disease is presumed to have gotten that ailment as part of their work. That would enable firefighters to get tax-free disability pensions at two-thirds of their salary.

Supporters say that almost 40 states offer the heart ailment presumption to firefighters, and that the benefit is justified based on the dangerous aspects of their work. Lawmakers passed the measure during a special legislative session on September 19.

The bill, sponsored by Sen. Frank Lombardi (D-Cranston), cleared both chambers by large margins. A companion House bill sponsored by Rep. Robert Craven (D-North Kingstown) did not get a vote in the Senate.
In her veto message, Raimondo said the bill would cause “an extraordinary departure from current practice.” She noted how General Treasurer Seth Magaziner has said the measure would increase the unfunded liability for the Municipal Employees' Retirement System (MERS) by $4 million. (Magaziner called on lawmakers to not pass the bill.)

"In addition," Raimondo said in her veto message, "this change will also increase costs for municipalities outside MERS, which have approximately the same number of firefighters as MERS municipalities -- and as a result, total pension cost growth at the local level could approach $3 million per year were this bill to become law."

Raimondo goes on to say the presumption for heart ailments leading to disability pensions would move "Rhode Island in the opposite direction" from the kind of tools municipalities need "to control costs, maintain sound fiscal footing and balance budgets without the need to raise taxes on homeowners and businesses."

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Old 10-02-2017, 06:05 PM
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EMPLOYEE CONTRIBUTIONS

http://www.grsconsulting.com/nasra-u...nsion-plans-2/
Quote:
NASRA Updates Issue Brief on Employee Contributions to Public Pension Plans


Spoiler:

In September 2017, the National Association of State Retirement Administrators (NASRA) updated its issue brief, Employee Contributions to Public Pension Plans. The brief analyzes employee contribution plan designs, policies and recent trends.
As discussed in the brief, nearly all state and local government employees are required to contribute to the cost of their retirement benefits, with employee contributions typically ranging between 4% and 8% of an employee’s salary. In addition, the report indicates that 25%-30% of state and local government employees do not participate in Social Security. In many cases, those who do not participate in Social Security have a higher pension benefit and higher required contributions as compared with those who do participate in Social Security. The median contribution rates have increased to 6% of pay for employees who participate in Social Security and remain steady at 8.0% for those employees who do not participate in Social Security.
According to the brief, since 2009, more than 35 state governments increased their employee contribution rates. Moreover, an increasing number of states are exposing employee contributions to risk either by: 1) linking employee contribution rates to the pension plan’s investment return; or 2) establishing a hybrid or 401(k)-type plan, thereby transferring the related investment risk from the employer to the employee.
Other recent trends in employee contributions include:
• Maintaining a variable employee contribution rate based on the pension plan’s actuarial condition; and
• Increasing employee contribution rates when labor agreements are negotiated.
The legality of increasing employee contributions varies by state. In some states, courts have ruled that legislative efforts to increase employee contributions are a violation of the state constitution or contractual rights. However, in other states, higher employee contributions have either withstood or have not been subject to legal challenges.
The brief also includes an appendix of employee contribution rates for 120 individual statewide retirement plans and identifies whether or not plan members have Social Security coverage.
The issue brief is available here.


http://www.nasra.org/files/Issue%20B...ntribBrief.pdf
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Old 10-02-2017, 06:05 PM
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CALIFORNIA


LOS ANGELES
DISCOUNT RATE
https://www.ai-cio.com/news/los-ange...rn-assumption/

Quote:
Los Angeles Pension System Cuts Rate of Return Assumption
LACERS lowers investment guidance to 7.25% from 7.5%.

Spoiler:

The Los Angeles City Employees’ Retirement System (LACERS) board has unanimously voted to cut its assumed rate of return to 7.25% from 7.5%, the system announced at its most recent board meeting.

In addition to cutting the assumed rate of return, the LACERS board also adopted an inflation assumption of 3.00%, an inflation component of the salary increase assumption of 3.00%, and a payroll increase assumption of 3.50%. It also adopted a credit rate for employee contribution of 3.00%, and a real across-the-board pay increase component of the salary increase assumption of 0.50%.

The new investment rate assumption is expected to add $38 million in retirement costs to the city of Los Angeles’ general fund budget, and comes amid public concerns over the city’s growing pension burden, according to the Los Angeles Times.

LACERS’s consultant, Segal Consulting, recommended that the investment rate assumption be lowered to 7.00%, and suggested the 7.25% rate as an alternative assumption. The LACERS staff supported the 7.25% alternative, but under the stipulation that another review of the economic assumptions is completed in 2018, after the board adopts a new asset allocation.

The investment return assumption is comprised of two primary components: inflation and real rate of investment return, with adjustments for investment expenses and risk.

The LACERS board had been debating how much to lower the investment returns over the past couple of months. While Segal’s preferred rate was the lower 7%, that reportedly would have added $51 million to $84 million to the city budget next year, depending on the inflation assumption chosen by the board.

Board member Michael Wilkinson, a representative for retired city workers, advocated the lower 7% recommendations, saying it would be “dangerous” for the agency to rely on a higher, less-realistic number, according to the Times.

The LACERS move follows a reduction in the assumed rate of return for the Los Angeles Fire and Police Pensions (LAFPP). In June, the Fire and Police Pension Commissioners approved the plan’s actuary recommendation to lower the investment return assumption to 7.25% from 7.50%. Segal, which is also the LAFPP’s actuary, said the investment return assumption reduction was needed, primarily due to a continued decline in inflation over the past two decades. The assumption was previously lowered to 7.50% from 7.75% in 2014.

The lower investment return assumptions for both LACERS and the LAFPP will add $170 million in retirement costs to Los Angeles’ budget next year, city analysts say, according to the Times.


MARIN COUNTY
http://www.marinij.com/opinion/20171...pension-reform

Quote:
Marin Voice: We are paying the price for lack of public pension reform

Spoiler:
Most large public agencies have risk management departments. They either don’t understand defined-benefit pension plans or choose to ignore the huge risks of public pensions that have been designed with absolutely no regard for cost containment.

We are just starting to see the results of this complete and total ignorance of basic defined benefit pension principles.

These include required taxpayer contributions increasing by huge amounts each year, public entities such as the county making additional taxpayer contributions above what is required to reduce unfunded liabilities, and tax increases everywhere to provide the needed revenue for the seemingly endless contribution appetite of virtually all public pension plans.

The Tax Reform Act of 2006 addressed private union and single-employer defined-benefit pension issues and provided a framework for the sustainability of private pension plans. Public pension officials have failed to address pension reform in any meaningful way.

Following are some of the main reasons for the huge risks of the public pension system:

• Final salary plans. The private union pension plans that I administer are career-average plans — participants accrue a benefit each year that is added to their prior benefit accruals. If a participant has a large increase in benefit accruals at the end of his or her career, it affects his benefit accruals for those years only, not his or her whole benefit.

Final-salary public plans, where the participant’s whole benefit is based on his or her highest three-year-average compensation, can create huge increases in benefits and huge unfunded liabilities for participants at the end of their careers. Final-salary pension plans are extremely risky from a cost standpoint.

• Aggressive assumptions. Public plans have used assumptions that are far too aggressive. This creates negotiated benefits far too high and if those assumptions are not met, then there should be a means other than just increasing taxpayer contributions to address the inevitable resulting unfunded liabilities.

Legislators have failed to address this issue and the results are huge increases in taxpayer contributions. Our local public officials have failed to endorse any meaningful pension reform.

• Benefit increases. Compounding both of the above was the complete irresponsibility of our public officials in the early 2000s to grant benefit increases, probably illegally, in the range of 30 percent to 40 percent to all participants.

So, let me get this straight, use aggressive investment return assumptions and then spend all of the gains from the stock market run-up in the ’90s and expect taxpayers to make these plans whole when the future unfunded liabilities inevitably happen?
The lack of fiscal responsibility and disregard for risk is incredible.

Let’s look at the Marin County Employees Retirement Association. The county pension has many pensioners with over $100,000 annual pensions and these are “rich” pensions. By “rich” I mean that they have annual cost-of-living increases and provide the surviving spouse with a 60 percent survivor annuity at no additional cost to the pensioner.

The taxpayer annual cost is 26 percent of payroll and the county contributed an additional $94 million last year to help reduce its pension unfunded liability.

The city of San Rafael has a 61 percent of payroll required taxpayer contribution and the Novato Fire District has a 48 percent of payroll required taxpayer contribution.

These taxpayer numbers are offensive. It is no wonder that, in spite of huge increases in property tax revenue, the county still needs additional money for basic services.

CalPERS, CalSTRS and MCERA have recently reduced their still too high discount rates. Lowered investment assumptions require additional pension contributions, which means more money out of your pocket.

There is a direct link between those decreased assumption rates and the staggering tax, rate and fee increases that we experience regularly.

Increases in bridge tolls, school tax measures, Marin Municipal Water District rates, UC tuition, parcel taxes and bonds are in large part due to the increase in required pension contributions.

The regressive stae gasoline tax revenue will be used to fund $100,000-plus “rich” annual pensions for public employees.

It is unfair to taxpayers. We should hold all of our public officials and representatives accountable for this self-serving fiscal incompetence.

Bob Bunnell of Novato is a pension compliance manager for private companies that manage union pension plans. He is a member of Citizens for Sustainable Pension Plans, Marin’s public pension reform organization.



BENEFIT INCREASES
SONOMA COUNTY
http://www.pressdemocrat.com/news/74...its?artslide=0

Quote:
Lawsuit targets enhanced pension benefits for Sonoma County government employees

Spoiler:
A new lawsuit seeks to roll back generous pension benefits granted to Sonoma County government employees more than a decade ago that are blamed for spiraling debt and eating away at funding for basic services.

The suit filed by retired Santa Rosa attorney George Luke accuses elected officials and other county leaders of conflict of interest for approving increases in 2003 that benefited them directly and of failing to disclose long-term pension costs to taxpayers, now estimated at more than $99 million a year for the county.

It asks Sonoma County Superior Court Judge Rene Chouteau to declare the increases “illegal” and prohibit the county from making payments to fund them. It names as defendants the Board of Supervisors, the county administrator, the auditor-controller-treasurer tax collector, the human resources director and the Sonoma County Employees’ Retirement Association and its chief administrator.

“When everyone who is supposed to represent the interest of the taxpayer has their hand in his pocket, his only recourse is to seek the protection of the courts whose solemn duty is to require compliance with the law,” Luke wrote in his suit filed Aug. 28.

The legal challenge — which could affect thousands of current and retired county employees — comes amid continuing controversy statewide about pension benefits granted years ago that have threatened the financial well-being of local governments and strained their ability to pay for things like road repair and the hiring of more sheriff’s deputies.

Earlier this year, Sonoma County annual pension costs were projected to hit $146 million by 2023, a 700 percent increase since 2000. County debt from past pension bonds and long-term unfunded obligations tied to the retirement system total about $778 million, equivalent to 49 percent of the county’s annual budget.


Although reforms have been enacted over the past five years at the state and local level mandating lower benefits for new employees, critics continue to sound alarms over pension costs. A similar case pending before the California Supreme Court that arose in nearby Marin County seeks to overturn the so-called “California Rule” guaranteeing workers get the pension that was in place at the time they were hired. The legal challenge was previously struck down by two lower court judges who deemed it was filed too late or did not include employee unions. They did not rule on the merits.

Supervisors Shirlee Zane and David Rabbitt, who've been active on pension reform since joining the board in 2009 and 2011, respectively, did not respond to interview requests on Friday and instead issued a joint, written statement.

“While we share the desire for a sustainable pension system, this lawsuit is without merit and a waste of taxpayer dollars given results in Marin cases, public independent analysis of law following 2012 grand jury report, and new separate analysis of counsel,” the statement said. “Efforts to achieve policy changes should really be directed to the state Legislature.”

Luke’s suit targets the way benefits were adopted. It says the Board of Supervisors failed to comply with state law requiring it to conduct an actuarial analysis of the costs of new pension benefits and publish the findings two weeks before any vote. The allegation was raised in a past county grand jury report about procedural mistakes and was formally acknowledged by a new group of elected supervisors in 2012.
The suit also accuses the highest paid county officials, including the supervisors and retirement system executives, of failing to recuse themselves from the process and not disclosing any personal gain to the public.

County officials and union leaders at the time agreed on the benefit increases to settle a class-action lawsuit brought by employees in 2002 demanding retroactive pay increases to match those in other counties.
…..
Further, Colantuono said the suit is barred by the statute of limitations, which he said protects thousands of employees who made career decisions based on expectations of a certain level of salary and benefits.

Luke argues there is no defense based on timing because taxpayer costs are calculated annually.

The county disagrees.

Colantuono said a realistic solution must be statewide because any county that goes it alone will find it difficult to recruit and retain qualified employees who will simply go where the benefits are higher.

…..
If Luke’s suit is successful, it would be the first in the state. The county could renegotiate contracts but it would likely face lawsuits from employee unions.



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Old 10-02-2017, 06:06 PM
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CONNECTICUT
BUDGET

https://www.ai-cio.com/news/conn-gov...sion-concerns/
Quote:
Conn. Gov Vetoes Budget over Pension Concerns
Gov. Dannel Malloy said the budget would eliminate hundreds of millions of dollars in pension fund contributions.
Spoiler:

Connecticut Gov. Dannel Malloy has vetoed the $40.7 billion biennial budget passed by the state’s general assembly, saying it “adopts changes to the state’s pension plans that are both financially and legally unsound.”

Malloy said the proposed budget attempts to shirk the state’s pension fund obligations by eliminating $144 million in pension contributions this fiscal year, $177.8 million next year, and hundreds of millions of dollars in the following years “solely by seeking to limit the state’s authority to enter into future agreements over pension benefits,” Malloy said in his veto letter. “This budget grabs ‘savings’ today on the false promise of change a decade from now, a promise that cannot be made because no legislature can unilaterally bind a future legislature.”

The Democratic governor said the bill, which was supported by Republican lawmakers, makes unilateral changes to vested pension benefits, and would risk a constitutional challenge, as well as exposure to potential litigation, and hundreds of millions of dollars of liability.

“The state is already paying hundreds of millions in penalties for a similarly foolhardy approach taken by a previous governor,” wrote Malloy, adding that “the potential financial consequences of this maneuver increase exponentially when used as the basis to avoid meeting our obligations to fund our pensions.”

Malloy argued that prior administrations and legislatures have consistently underfunded the state’s pension obligations, which he said has amassed an unfunded debt obligation that has “increasingly stymied our ability to make the key investments necessary to strengthen and grow our economy.”

He also said the budget diverts teachers’ pension contributions to the general fund, but without offering a solution to reform funding for the teachers’ pension system. This could leave “future taxpayers at the precipice of a fiscal cliff that could reach as high as $6 billion,” he wrote. “The diversion of the teachers’ retirement contributions from the teachers’ retirement fund creates significant potential tax consequences for the employees and jeopardizes the tax status of the entire retirement fund.”

Malloy urged both parties to work together to negotiate a new budget, and warned that failure to reach a deal soon could risk federal approval for $343.9 million in increased provider tax revenue, and $366.5 million in federal Medicaid reimbursement, which he said are critical to balancing the budget and increasing reimbursements to providers.

“This budget is unbalanced, unsustainable, and unwise,” said Malloy. “Through these fiscally irresponsible changes, this budget would fail to move the state closer to fully funding our pension obligations, a stated goal of legislative leaders in both parties.”




http://www.nationalreview.com/articl...ions-democrats
Quote:
A Modest Blow for Fiscal Responsibility in Connecticut
The GOP overcomes the Democrat–union axis to stop runaway public-employee pensions — eventually.
Spoiler:
Sometimes there’s a fine line between kicking the can down the road and gradually phasing in difficult change. Not this year, not in Connecticut. The difference is a chasm. The sweetheart deal that Governor Malloy and his fellow Democrats in the General Assembly cut with state employee unions, the so-called SEBAC agreement, is protected by contract for a full decade — leaving meaningful reforms waaay down the road. The contract is the mother of all can-kicks.

Nevertheless, after the deal was struck, Republicans didn’t give up. They included in their own budget proposal several reforms starting after the expiration of the contract. Lo and behold, the GOP’s budget passed both houses of the Democrat-controlled Assembly.

Why in the world did Democrats in the deep-blue state of Connecticut vote for a GOP budget? Well, when the SEBAC contract came up for a vote in the Connecticut senate early last August, three fiscally conservative Democrats held out and voted yes only after receiving assurances from senate Democratic leadership that a twelve-point list of fiscal reforms would be instituted. Then, in the recent budget go-round, the Democrats included only three of the reforms in their budget, while the Republicans incorporated ten of the twelve. So the “threesome” voted for the GOP budget, which passed the senate by 21–15.

Five Democrats in the house of representatives followed suit, and the GOP budget passed the Democrat-controlled house by 78–72. Governor Malloy has vetoed the measure, arguing, amongst other things, that enactment of the reforms constitutes a SEBAC contract violation, even though the reforms take effect only after the expiration of the SEBAC agreement. Malloy & Co. say the budget risks an employee-union lawsuit.
So what happens now? Perhaps more Democrats will defect and the Assembly will override Malloy. If the Assembly Democratic leadership wants to block an override and pass their own budget, they’d better keep the reforms and bring the threesome back into the fold (along with their house colleagues). But wait, that runs the purported risk of a union lawsuit. On the other hand, can they pass a budget without the reforms — can they bully the threesome and the house fivesome into backing down, or buy them off somehow?

Even though the reforms take effect ten years hence, their impact is worth $322 million in savings today, according to actuarial analysis. Even though they will be realized only in years 11 through 30 of the actuarial time horizon, they impact the schedule of payments over the whole 30-year horizon, resulting in the $322 million reduction in the state’s required contribution to the pension fund over the fiscal 2018–fiscal 2019 biennium.
…..
What are the key reforms? First, the GOP budget bill eliminates overtime spiking, i.e., calculating pensions based on overtime earned in the years immediately prior to retirement, as opposed to average overtime over a full career. Spiking allows soon-to-retire employees to log extensive overtime hours in order to inflate their pensions. Second, the GOP budget requires state employees to contribute to their own pensions at the nationwide average for public employees, presently about 7 percent of salary/wages (versus 2–4 percent under SEBAC).
Third, it eliminates cost-of-living-adjustments (COLAs) for post-2027 retirees until the pension fund reaches 80 percent (presently, Connecticut is only about 35 percent funded). Fourth, for employees with salaries near and above the Social Security “tax and benefit base” ceiling ($127,200 annual earnings), it eliminates a pension supplement that “makes up” for “lost” Social Security benefits near and above the ceiling. Finally, the GOP budget mandates that future labor contracts not have a term of more than four years.

These reforms introduce basic fairness. Overtime spiking is a notorious abuse. Two other reforms bring Connecticut employees in line with national averages. The fourth simply applies to the state’s retirement program the same needs-based philosophy that governs the federal Social Security retirement program. Indeed, even after these pension reforms, Connecticut state employees will still have far more generous pension and health-care benefits than most workers in the private sector, where pensions have all but vanished and health-care costs have skyrocketed.

If these reforms are included in the ultimate budget, we’ll see if the employee unions file a lawsuit. It would be a court fight worth having. If they are not included and the “threesome” caves and votes for the budget anyway, well, so much for political courage — indeed, voters may wonder whether “fiscally conservative” means anything at all when describing Democrats.

Read more at: http://www.nationalreview.com/articl...ions-democrats

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ILLINOIS
CHICAGO POLICE
http://www.pionline.com/article/2017...f-funds-search
Quote:
Chicago Policemen’s plan chooses 5 finalists for hedge fund-of-funds search



Spoiler:
Chicago Policemen's Annuity & Benefit Fund selected five finalists in its search for hedge funds-of-funds managers to run between $50 million and $70 million in customized long/short equity portfolios.

EnTrustPermal, J.P. Morgan Asset Management (JPM), PAAMCO Prisma, Pluscios Management and UBS Hedge Fund Solutions will present their strategies to the $2.7 billion pension fund's investment committee at an Oct. 23 meeting, said Aoifinn Devitt, chief investment officer, in an email.
Ms. Devitt said the mandate calls for a concentrated portfolio of long/short equity hedge funds and that one or two firms will be hired.



TEACHERS
http://www.pjstar.com/news/20170930/...g-but-not-soon

Quote:
New state employee pension plan coming, but not soon


Spoiler:
SPRINGFIELD — Part of the deal that ended the budget impasse in July called for creation of a new pension plan for many of those covered by state-funded pension plans.

But it’s going to be a while before that new pension plan is up and running. The head of the largest state-funded system, the Teachers’ Retirement System — the pension system for teachers outside of the city of Chicago — said it won’t be in place before the end of the state’s current fiscal year June 30.

TRS executive director Dick Ingram said the law authorizing the new system only directs that it be implemented “as soon as possible.” For TRS, that’s more than a year away.

“Our operating assumption is the earliest date we will be able to implement Tier 3 would be July 1, 2019,” Ingram said.

It’s not a matter of setting up the hybrid plan itself, Ingram said, but the fact that the system will have to produce monthly reports of earnings and contributions for members, not just annual reports as it does now.

“That will take us some time to put into place,” Ingram said. “That’s a major rewrite of our system.”

The new Tier 3 plan will apply mainly to newly hired employees who are members of TRS and the State Universities Retirement System. Judges and lawmakers — who have their own retirement systems — will not be part of Tier 3. Also, most jobs covered by the State Employees Retirement System are not affected. People already in the Tier 1 plans are not affected.

SERS said the Tier 3 plan would apply only to jobs where a person does not get Social Security benefits in addition to a state pension. Tim Blair, executive secretary of the State Retirement Systems, said that would be only about 2,400 of the roughly 61,000 active members SERS has at any time.

Currently, members of the various systems are part of a defined benefit plan. Both the employer and employee make contributions to it, and retirement benefits are based on a preset formula that includes length of service and the final average salary a person earned.

That will still be a part of Tier 3, although at a greatly reduced amount. For TRS, Ingram estimated the defined benefit portion under Tier 3 will be worth about half of what it is now, although detailed actuarial work hasn’t been done.
The rest of a person’s retirement benefits would come from a defined contribution plan that is commonly known as a 401(k)-style plan. Again, both the employer and employee contribute to it, but the final benefit depends on how much is saved and how much investment income those savings make.
There is also a provision in the bill that allows people now part of the Tier 2 system to elect to take the Tier 3 plan. Ingram said that the Internal Revenue Service has to sign off on the concept, which hasn’t happened yet. He also said people in Tier 2 have to carefully weigh if it is to their advantage to make the move.
“We’re very early in the process, but some of our rough early models would indicate in most circumstances a Tier 2 member would be better off staying in Tier 2,” he said.
There are a number of unresolved issues about creating the Tier 3 system that Ingram said he hopes can be cleared up with legislation during the upcoming veto session. As an example, he said it isn’t clear how to handle the pension of someone who has several years in the Tier 2 system and then elects to go into Tier 3, assuming the state gets permission to implement that.
“There were a lot of things that got overlooked in the process of drafting this bill,” he said.
One issue the creation of the Tier 3 system doesn’t address is dealing with the massive pension debt. A major part of that debt is years of underfunding of the systems by previous governors and General Assemblies.
The Center for Tax and Budget Accountability recently issued a report on an analysis SURS did on how the Tier 3 plan will affect the university retirement system. The organization concluded that Tier 3 “still leaves Illinois well short of resolving its pension debt problems in a meaningful way.” CTBA has long called for the state to re-amortize its pension debt to ease the pressure on the state budget.
“The reality is, the real fiscal issue is, the financial issue of trying to fix the pension funding problem is all related to Tier 1,” Ingram added. “It’s the unfunded liability related to Tier 1 members. It still exists and there’s nothing in this legislation that gets to that.”




http://www.wirepoints.com/phony-budg...fully-exposed/
Quote:
Phony budget savings of $500 million from pension change now fully exposed


Spoiler:
The JouralStar reported yesterday that the new Tier 3 pension plan can’t be implemented before next fiscal year for TRS, the state teacher’s pension which represents over 60% of the state pension system. Tier 3 is for newly hired workers in TRS and SURS and for their Tier 2 workers who opt in.

But the article didn’t connect the dots and missed the real impact.

The new state budget, recently passed along with the Tier 3 changes, assumed $500 million dollars in savings from the change this year. That clearly won’t happen (though some minor changes may be realized if SURS can implement the changes this year).

The Better Government Association wrote a piece a couple weeks ago questioning whether the savings would materialize, and we wrote about that in our earlier quicktake: “Oh, come on. The budget with the Tier 3 changes was passed six days after the new fiscal year had already started. It takes no pension expert to know that complex changes can’t be implemented immediately.”

The biggest lesson here is one you should already know: Don’t believe anything about savings from a pension reform proposal until some credible professional analyzes and scores it.

Blame both Rauner and the General Assembly for the lie.

And don’t expect the changes to save $500 million next year, either. We need more data to say for sure but that, too, looks grossly inflated to me.

–Mark Glennon is founder of Wirepoints. Opinions expressed are his own.




McHENRY COUNTY
IMRF
http://www.dailyherald.com/news/2017...cials-#new_tab
Quote:
Franks proposes eliminating pensions for McHenry County elected officials


Spoiler:
McHenry County Board members are considering a proposal to eliminate pensions for future countywide elected officials -- a move Chairman Jack Franks says would encourage healthier turnover and save the county "millions."

The board passed a measure nearly two decades ago allowing elected county leaders to participate in the Illinois Municipal Retirement Fund, as long as they put in 1,000 hours per year.


While preparing the salaries and benefits portion of next year's proposed budget, however, Franks said he found a "perfect opportunity" to cut county expenses in the long-run. His proposal would end IMRF eligibility for the board chairman and eight other elected officials: state's attorney, coroner, clerk, circuit clerk, auditor, recorder, treasurer and sheriff.

The move would not be effective until the end of their terms.

"I've always said there can be no sacred cows when it comes to bringing our nightmarish property taxes under control," Franks said. "I promised taxpayers that I would demolish the status quo."

County board members opted out of the pension fund last year amid an IMRF investigation into whether they met the 1,000-hour requirement. The probe was sparked by inquiries from Franks, a state representative at the time.

In this case, Franks said he is not questioning whether countywide officials work enough hours. Rather, he says, retirement benefits intended for public employees should not apply to politicians.

"People elected to serve the public should not be eligible for perks that the public is not," Franks said.

The board's human services committee is expected to discuss the measure Wednesday. If approved, the proposal likely would be considered by the full county board in mid-October.

Board member John Jung, chairman of the human resources committee, said eliminating pensions for elected leaders seems to be a logical progression, especially with the county board's recent push to lower property taxes.

In addition to saving money, he said, the measure also could dissuade officials from staying in office term after term, as was the case with several recent retirees.

Recent retirees include Phyllis Walters, who served three decades as recorder before retiring last year. She receives an annual pension of $78,207, plus a $24,967 survivor benefit, according to IMRF records. Also, Lou Bianchi, state's attorney for 12 years, dropped his 2016 re-election bid. He now collects a $33,777 annual pension.

"I don't think these jobs were ever meant to be careers," Jung said. "Everybody talks about term limits, and without the pension, I don't think you have to worry about that."

Eliminating the pension wouldn't have stopped Walters from seeking re-election, she said, but it was "certainly a good benefit." She maxed out her pension benefits during her stint as recorder and still ran for office the following term.



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KENTUCKY
CRISIS

http://www.wdrb.com/story/36496296/p...pension-crisis
Quote:
Public workers rally to bring awareness to Kentucky pension crisis


Spoiler:
LOUISVILLE, Ky. (WDRB) - Dozens of public workers rallied to bring awareness to the pension crisis in Kentucky at Central Park in Louisville Sunday evening.

Teachers, police officers, and other public workers held up signs that read 'Stop corporate welfare and fund my pension.' They want to see a solid, sustainable pension system, something they say is a critical tool for public services.

"Most state and local governments in the state as an employer, it's difficult to pay folks a good salary on the front end, so for a long time the benefit package on the back end has really been there to balance that out," police officer Nicolai Jilek said.

Without a solid pension plan, public workers say it will be hard to attract good employees and to retain them.

Thousands of other public service employees who have contributed to their retirement under Kentucky’s pension systems are fearful as lawmakers consider a number of cost-saving measures aimed at shoring up the plans, which are estimated to be nearly $60 billion in the hole after years of inadequate state funding.

Copyright 2017 WDRB Media. All rights reserved.



http://www.whas11.com/news/local/ken...plan/480031744
Quote:
Kentucky public workers rally for pension plan

Spoiler:
LOUISVILLE, Ky. (WHAS11) -- Public workers, retirees and their families joined together Sunday afternoon in Central Park looking toward an uncertain future, rallying for their pension plans waving signs reading "A Kentucky Pension is a Kentucky Promise."

"They promised us a pension plan. That's what we want. That's what we expect and we won't accept anything less," Sue Foster, one of the rally organizers, said. "It's not just a Jefferson County problem. It's not just a JCPS problem or a metro government problem. This is a state problem."

Kentucky's pension system is considered one of the worst-funded systems in the country. The Kentucky Retirement System said the primary state pension fund it operates has less than 14 percent of the funds needed for the coming years.

"We would like to be able to retire after putting our time in and be able to have a decent retirement and we feel that we've earned that," Nicolai Jilek, a legislative agent with the Kentucky State FOP and a police officer, said. "We work hard."

Lawmakers have talked about developing a new pension fund package that many of these workers are looking to with a worried eye. An independent consultant hired by Governor Matt Bevin recommended sweeping changes to address the issues concerning the pension system and its large amount of unfunded liability, which could force most current and future employees into a 401k-style retirement plan, something the workers said is not acceptable to them.

"If future employees, that's all their offered in their retirement benefit is a 401k, then I'm really concerned about the recruitment and retention of good employees that are going to be providing those services for my family moving forward," Jilek said.

"That's a major part of the benefit package that draws you to the system," Foster, who also serves as the president of JCAESP-AFSCME Local 4011, which represents more than 4,000 JCPS workers, said. "I can tell you as a 24-year employee, that's the one thing that has kept me with this system."

"I'm not a villain," Beth Vachon, a retired elementary school teacher, said. "I have been promised these things and have made financial decisions based on that."

According to the workers, they've played by the rules by putting money from their paychecks into their pension plans. Now they want the government to uphold its end of the bargain. Some workers speculate there could be movement from the legislature regarding pension reform in the coming weeks, and they said they will be watching their elected officials closely as they try to fix the pension problem. Foster said the workers are ready to mobilize to go to Frankfort if and when Gov. Bevin calls for a special session to discuss pension reform.

"That's the bottom line," Foster said. "We go to Frankfort in November of 2017. We go to the polls in 2018."

2017 WHAS-TV





http://www.kentucky.com/opinion/op-e...176237886.html

Quote:
No immortality in pension system; workers pulling the plug

Spoiler:
F.M. Esfandiary, futurist philosopher and chronic optimist, said immortality could be achieved by replacing worn-out organs with synthetic substitutes.

He died of cancer of the pancreas — a body part for which no substitute has been created and which Esfandiary denounced just prior to his death as “a stupid, dumb, wretched organ.”

If the Commonwealth of Kentucky dies or has to take the bankruptcy law, will it be because of our dumb stupid wretched organ: the old-age pension system? Where we gonna get $43 billion which our political class bestowed on itself for somebody to pay down the road?
We are about down the road. State workers are running out of Frankfort like guineas, grabbing what corn can be cracked as soon as possible.
I-64 is clogged off with white SUVs as legislators run home to become judges so that their pensions will triple after one term.

Teachers might as well retire. Many of them were crushed by the recent pronouncement by the Great Leader that the matters they taught were of no consequence — yea, even harmful — to children.

Kids need to learn more practical things, like whether or not pension plans are promises, and if they are, who has to keep them. Pensions are not much of a promise in the coal industry.

Blaming its administrators for the weakness of the Kentucky Retirement System is like blaming Oliver for not having enough gruel. Decisions about pensions and investments and such are political ones, under the supposed watch of a board. The General Assembly overloaded the wagon. It is not fair to blame the mule.

Somebody needs to figure out how to get the state some money quick. They have about sold off those used Crown Victorias. For reasons we cannot explain, snake oil did not revive the coal industry, so we do not have the severance tax to misuse any longer.

We could have pay-per-view of Wildcats basketball games on television and a public auction of tickets. Only corporations would be at games but, hey, they are just people, too.

Or we, as a state or commonwealth — and I cannot remember the difference, but calling us a commonwealth is like the one guy in the room who answers “present” — could build our own roads and bridges with state workers, own our own blacktop plants and quarries, and run our own nursing homes.

Now that kind of stuff would save enough money to pay pensions, but you would have to sneak and do it.

Anybody who ran for office by going against road contractors and nursing-home owners will end up no more than a lobbyist, or even a lowly English teacher.

Reach Larry Webster, a Pikeville lawyer, at websterlawrencer@bellsouth.net.




That was beautifully incoherent. Dear lord.

http://www.rcnky.com/articles/2017/0...lem-keene-says
Quote:
Listen: Casinos Could Help Solve Pension Problem, Keene Says



Spoiler:
It's no secret that Kentucky faces a steep hill to climb to address it's pension crisis.
The state will need to find more than $5 billion over the next two years, it was recently announced - and about 40 percent of that will be put on the back of local governments.
But the answer could be staring Kentucky right in the face - from across the river in Cincinnati and Indiana.

Rep. Dennis Keene (D-Wilder) filed a bill, along with Rep. Rick Rand (D-Bedford), that would open up four casinos across the state and allow slot machines at horse racing tracks.
The revenue would solve the pension crisis, Keene said.
Keene joined The River City News publisher Michael Monks for an in-depth conversation about this topic on WNKR's Northern Kentucky Focus. You can listen to it in full here:





http://www.amnews.com/2017/09/28/tea...o-do-the-same/
Quote:
Teachers paid for their pensions; Kentucky failed to do the same

Spoiler:
By TIM ABRAMS

Ky. Retired Teachers Association

Bob Martin’s Sept. 21 column, “Kentucky’s pension problem stems from defined benefits system,” is poorly researched and obviously failed to examine the fiscal history and performance of our pension systems.

Mr. Martin claims that pension systems, by nature, are unsustainable retirement programs and that this is the reason for our current woes. Yet, for more than 60 years, Kentucky’s pensions were fully funded and fiscally healthy. A combination of poor actuarial assumptions and a lack of contributions by our State Government from 2004 to 2016 created this “mountain” of unfunded pension liabilities.

Yet, since establishing the Teachers Retirement System (TRS), teachers have contributed roughly 10 percent of their salary every year — no missed payments. Even with aggressive actuarial assumptions, the commonwealth didn’t even make those payments.

The State of Kentucky essentially borrowed money needed for the pensions to fund other priority projects and programs. I encourage Mr. Martin to actually read the PFM report.

Mr. Martin incorrectly claims that switching to a 401(k) defined contribution plan will basically solve our pension issues. However, three states that converted to a 401(k) defined contribution plan — Michigan, Alaska and West Virginia — all saw dramatic increases in their unfunded liabilities. When payments stop coming from new teachers and are directed into a 401(k), the problem gets worse.

Mr. Martin also presumes that you can get much more sophisticated investments under a 401(k) plan. The reality is your investment choices are limited and administrative costs more expensive. According to the National Institute on Retirement Security, Pensions deliver retirement income 48 percent cheaper than traditional 401(k) plans. Economies of scale means pension plans can invest in a much broader array of investments whereas a defined contribution plan offers limited fund investments. The TRS has averaged 8.1-percent return on investment for the last 30 years and is nationally recognized for its practices.

Pension plans are not sustainable if one of the parties — in this case, the state of Kentucky — refuses to contribute its required amount to the pension plan.

After 13 years of abdicating its fiduciary responsibility to the more than 51,000 retired teachers, now Frankfort wants teachers to bail them out by writing off its debt. While Frankfort is able to deliver almost $800 million in corporate tax incentives since 2012, they don’t have money to pay their debts.

We already had to deal with a massive bailout in 2008 — we need to teach Frankfort that they have to pay their debt like everyone else.

Tim Abrams is executive director elect of the Kentucky Retired Teachers Association.


http://www.kentucky.com/opinion/op-e...176200821.html

Quote:
On pension woes, first freeze the tax breaks


Spoiler:
What lessons can the rest of the country learn from the Bluegrass state regarding pensions?

Consider: Kentucky has a budget of $11 billion per fiscal year. Tax breaks are $13 billion per fiscal year. The pension shortfall is estimated at $33 billion, primarily because the state legislature under both Republican and Democratic leadership did not pay the agreed-upon share. The employees have paid in their share.

A fair solution would be to suspend the tax breaks for three years, saving $39 billion. That would pay the $33 billion shortfall in the pension plans and leave $6 billion to make up for all the underfunding to state agencies in the past decade. With the current budget shortfall projected at $200 million, it would put Kentucky back on its feet.

However, the governor hired a consultant, PFM Group, and naturally the consultant said the solution is to force future employees into 401(k) plans that often fail to provide secure retirements, and cut into benefits that employees have earned.
The average government retiree earns $16,161 a year and the average teacher retiree earns $36,244 a year, according to the Courier-Journal. These amounts do not equal living off the fat of the land.

State employees are key members of the middle class; they are fundamental to the economy. They don’t make a lot of money, but the work is steady and they traditionally have good benefits to make up for that lack of a high salary. They drive the economy because they have to spend to support their families.

There is no upside to driving down their pensions because we need them during retirement to drive the economy and they have earned the right to be comfortable after their work lives are over. It would be a mistake to imitate private-sector compensation methods. Most private-sector employees are under-compensated.

So what happens when pensions are not properly funded? For one thing, the bond rating of the state goes down, as it did in July. Then, naturally, people who describe themselves as conservative claim that state employee pensions are taking money away from education.

They never say that Kentucky is short of money because the wealthy and corporations have not paid their fair share. Or that tax breaks are so massive that the state has been cutting and cutting the budget for a decade.

Here are other steps Kentucky should take:

1. Ensure the legislature makes its actuarially required contribution to the pension plans.

2. Revise the corporate and personal income tax so that the wealthy and corporations pay their fair share.

3. Get completely rid of the tax breaks.

4. Take the best-funded judicial and legislative pension plans and combine them with the three most poorly funded plans. It is wrong that legislators and judges have better funded plans than other state employees.

5. Recognize that defined-benefit pensions — which pay a retiree a set amount based on pay and the number of years worked — are key to maintaining a healthy economy.

There are lessons to learn from every state, even Kentucky.

K.A. Owens of Louisville is a community organizer, public speaker and writer.





REFORM

http://www.amnews.com/2017/09/30/ken...t-be-reformed/
Quote:
Kentucky’s pension system must be reformed


Spoiler:
By BOB MARTIN

Contributing columnist

There is a crisis growing in state, municipal, and local budgets; among all states, unfunded pension liabilities total $3.8 trillion (Rauh, 2017), while their reported outstanding debt is $1.1 trillion. Further, at the federal level, Medicaid, Medicare and Social Security’s unfunded liabilities total $127 trillion, coupled with $20 trillion in outstanding federal debt.

You can see the consequences of this kind of debt load by following Puerto Rico’s bankruptcy and the looming crisis in Illinois’ budget.

In a defined benefits program, unfunded liabilities are created when 1) politicians add beneficiaries who do not contribute their fair share to the fund, 2) the government does not make the required contributions to the fund, and/or 3) the government does not accurately estimate benefit costs.

The government is not guaranteeing benefits in defined contribution plans. They just promise to match part of the beneficiary’s contribution to a third party who manages the investments. Since someone else is managing the fund, the government cannot add a beneficiary to someone’s pension nor can they fail to make their contractual contribution or borrow from the fund.

The unfunded liabilities can only be paid for by some combination of faster economic growth, an increase in taxes, more borrowing, the sale of assets, or a dramatic cut in current spending. Unfortunately, lenders may refuse to lend and an increase in taxes will slow economic growth. It is not going to be easy to fix this problem.

Kentucky has the worst unfunded pension problem of all 50 states and it ranks third in pension liabilities as a percent of revenues. Finally, previous legislators bound the current legislature with guarantees that may prevent reform. I’m sure it seemed like a good idea at the time but in the end, it may wreck the state’s economy.

Suppose the state follows “best practices” with respect to their defined benefits pension programs; they may still have unfunded pension liabilities when they fail to properly anticipate the actual costs of the benefits they promised.

The problem is the state is guaranteeing a specific outcome for their employees’ retirement. They can make an educated guess about future costs, but no one knows for sure what those costs will be. The states always have an incentive to underestimate the cost since to do so means less money is withdrawn from state revenues for pensions. Hence, the states will systematically underestimate the cost and liabilities will be underfunded.

The same principles are involved in the unfunded liabilities faced by the federal government: the government makes promises in the form of entitlements and then does not properly fund those obligations. Since the obligations are unfunded, the debt gets passed on to future taxpayers and our children and grandchildren must pick up the tab.

Europe has similar unfunded pension liabilities and their obligations will be coming due at the same time as ours. What will happen as we try to refinance our unfunded liabilities?

Since the federal government has its own debt problems, it cannot act as “lender of last-resort” in this situation. Furthermore, the Fed’s balance sheet is a wreck and it will be of little help.

The governor and the legislature promise current retirees and those close to retirement will have their benefits preserved. It will be important for the state to start the transition to defined contributions retirement by enrolling new hires in defined contributions programs; however, they must make it clear to new hires that their contributions cannot be mixed with the existing retirement funds. The existing retirement funds must be brought up to date with new revenues.

Bob Martin is Emeritus Boles Professor of Economics at Centre College.




http://www.bipps.org/bluegrass-insti...hern-kentucky/
Quote:
Bluegrass Institute Pension Reform Team presentation tonight in Northern Kentucky

Spoiler:
Bluegrass Institute Pension Reform Team leader Dr. William Smith will present “Sound Solutions for Kentucky’s Pension Crisis” at tonight’s meeting of the Northern Kentucky Tea Party at 7 pm at the Holiday Inn at 7905 Freedom Way in Florence.
While much of the discussion about pension policy has centered on legislative funding and investment returns, the Bluegrass Institute is calling policymakers and taxpayers to focus on the underlying cause of the $48 billion unfunded liability plaguing the commonwealth’s retirement systems.
This presentation was made recently to the state’s Public Pension Oversight Board and is drawing interest from around the commonwealth.
For a preview of this presentation and to hear some of the comments made by the Institute’s team at the PPOB, click here.
Q&A will be included as part of the presentation.
Please come and bring someone with you to hear this important presentation.
For more information on scheduling a Bluegrass Institute Pension Reform Team presentation, contact Bluegrass Institute President and CEO Jim Waters at jwaters@freedomkentucky.com or 859.444.5630.



Presentation: http://www.bipps.org/bipps-pension-t...thats-problem/
Powerpoint slides: http://www.bipps.org/wp-content/uplo...4.22.17-2.pptx



PARK HILLS
http://www.rcnky.com/articles/2017/0...ange-financial

Quote:
Facing Steep Increase in Pension Costs, Park Hills is Advised to Change Financial Practices

Spoiler:

A review of the City of Park Hills's budget shows a need to address growing expenses.
David Baker was brought in as a consultant by city council to take a look at the Park Hills finances.
"I found some things that showed that expenses will overtake revenues at some point in the future," said Baker at this week's caucus meeting. "There are two ways to avoid that: increase revenues or decrease spending, or both."
He also recommended that the city create at least a ten-year capital improvement plan to plan adequately for the future.
Baker said he would like the city to change the way it accounts for money, telling council that the 12 special funds are like "buckets of money", and saying he wants to pare those down, making them look a little more like regular governmental divisions of funds. He acknowledged that the city was trying to separate the funds so they could only be used for the purpose they were set up for, but under the governmental definition of Special Revenue, council can put all the money in one fund and still have it earmarked for a specific project.
"That way it puts everything in the general fund where it belongs, and then it has the correct carry-forward," said Baker. "The state says cities have to have a balanced budget, and the funds can't go below zero."
Baker explained that he wanted the city to make adjustments to apply to the budget and to plan for the future. He said that usually a city manager can do all that he is recommending, because they are usually skilled at tracking revenue and expenses, as well as at securing grants. But, he agreed that the city is not at a point where it can support the hiring of a city manager, something council debated earlier this year.
The city can account for all its funds and will be more transparent after implementing the changes, Baker said.

Councilwoman Pam Spoor asked city attorney Todd McMurtry about the contract for Baker, wanting to know if there is an exit clause where either of the parties can terminate the contract with notice, and McMurtry said he would look it over.
Baker said he is a forward-looking person, and he thinks the city should be forward-looking and plan for the future.
Meanwhile, one major concern about the city's finances - its pension contribution - is expected to grow as the state faces a more than $5 billion shortfall across the pension systems over the next two years.
"We have paid into (County Employee Retirement System) everything they told us to pay, on time, but the state is not a good steward for the money," said Mayor Matt Mattone. "This is not a city disaster, but we will bear all the burden of resolving it. It is going to be really painful."
He went on to say that because the legislature did not fund the pension system like they insisted the cities and counties do, their system, KRS, is only about 14 percent funded, whereas the CERS is approximately 70 percent funded.
Mattone told council that everyone in the city who employed in a hazardous duty role, pays approximately 31 percent of their salary into the retirement system, and non-hazardous pays about 18 percent of their salary into retirement. The city currently pays $115,000 per year into the fund. The Kentucky League of Cities has come up with numbers on how the payments will increase, and conservative numbers show the payments will go to $183,000, while other numbers take the payment up to $209,000.
"One the low side our payments will increase $67,000, and on the high side it could be $93,000," said Mattone. "Now I sometimes think they might be trying to scare the bejesus out of us, but the can's been kicked down the road for awhile, and by no fault of our own we are in this mess."
He said the city has to figure out where the money is going to come from, and if the legislature has a special session in October like he thinks they will, a plan to step in the debt relief remedy could roll out next year. Still it is a very heavy burden for the cities to bear, especially on top of the price for the new digital emergency communication radios that the entire Northern Kentucky area is required to purchase.

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