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  #431  
Old 03-05-2019, 10:34 AM
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NEW JERSEY

https://www.politico.com/states/new-...verhaul-881180
Quote:
Sweeney ready to move forward with pension, health benefits overhaul

Spoiler:
TRENTON — Senate President Steve Sweeney is moving forward with major proposals to slash the state’s costs for pensions and health benefits, an effort that‘s already triggered a fight with public sector unions and will likely add more tension to this year’s budget negotiations with Gov. Phil Murphy.

Sweeney has spent the past few months traveling the state, pitching proposals from his “Path to Progress” report to local officials and editorial boards and at town halls. Written by a 25-member panel of economic and fiscal policy experts, the report, released in August, includes dozens of recommendations for how to curb the cost of government in New Jersey, an issue Sweeney has championed for years.


Staffers for the Senate Democrats are writing legislation on two major recommendations and plan to introduce them during the upcoming budget negotiations. One bill would switch newly-hired public employees or those with just a few years on the job into a pension plan that more closely resembles a 401(k). The other would reduce the state’s share of health care costs. They estimate the proposals could save hundreds of millions of dollars in the short term, and billions over the long haul.

Sweeney declined to say how the proposals might impact the budget process. He said he’s waiting to see Murphy’s spending plan, which will be unveiled Tuesday.

But the Senate president has drawn a line in the sand, declaring that action needs to be taken to rein in pension and health care costs and that the days of raising taxes to place a Band-Aid on the state’s finances are over.

“I’m not supporting a budget that includes new taxes without a solution,” Sweeney said in an interview. “It has never been a solution when you only raise taxes. It only delays the inevitable.”

Sweeney and Murphy clashed over tax policy last spring and it’s likely they could do so again this year.
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Selling Sweeney’s cost-cutting proposals to Murphy, a fierce ally of labor, will be difficult. The state’s public sector unions have begun mounting an offensive, and their workers packed Sweeney’s most recent town hall to voice their outrage. The governor has maintained the unions' position: Any changes to workers’ pensions or health care benefits should be negotiated at the bargaining table and not through legislation.

What’s not in dispute is that the state is struggling to afford its pension obligations. Past administrations sweetened benefits without increasing contributions and kept deferring pension payments. New Jersey’s pension and retiree health benefit liabilities are estimated to be $151.5 billion, or four times the size of the state’s annual budget.

That price tag is only expected to grow, and Sweeney has stressed it will continue to eat away at the budget if drastic action is not taken. Maintaining the status quo, he said, is not an option.

“We are not screaming ‘fire’ and it‘s false,” Sweeney said when he unveiled the Path to Progress report. “We will not be able to fund the programs we care about. We will cover government and nothing else.”

Murphy’s office did not immediately respond to a request for comment.

The unions argue changes should not be made on the backs of workers, particularly since the state is to blame for the mess it's in. Not only has the state deferred pension payments for so many years but, the unions say, New Jersey wouldn’t be in this hole without a recent series of tax cuts and the tax incentive programs for businesses that ballooned under former Gov. Chris Christie.

Hetty Rosenstein, New Jersey director of the Communications Workers of America, said Sweeney’s proposals ignore the fact there's been a "massive giveaway" to the wealthy.

"To once again go back to your piņata, public employees — it's not only erroneous, it‘s a deliberate distraction from what took place, a complicity with Chris Christie for eight years and the looting of state revenues," said Rosenstein, whose union represents tens of thousands of public workers.

Shifting the costs of health care onto state workers is not a viable solution, she said.

"Health care is very expensive in the state of New Jersey and it’s really important we figure out how to lower the cost ... for everybody," she said. "[Cost-shifting] is a really stupid way to evaluate this. It's incredibly simplistic and all it does is shift cost to workers, it doesn't do anything about price gouging."

Simmering tensions between Sweeney and public workers came to a boil during a town hall last month in Union County. CWA workers shouted down the Senate president, and at one point a fight almost broke out.

“You’re wrong!” workers shouted as Sweeney tried to go through his presentation.

“No one is going to shut me up,” Sweeney, an official with the International Association of Ironworkers, told the crowd. “You can follow me wherever you want, it’s okay. But listen, you’re not going to stop the dialogue in trying to fix what’s wrong with New Jersey right now. We can’t afford what we have.”

Assembly Speaker Craig Coughlin has expressed a willingness to work to curtail the cost of government.

“Speaker Coughlin believes in the importance of discussions surrounding economic prosperity and ensuring government, at all levels, runs as efficiently and effectively as possible,” Liza Acevedo, the speaker’s spokesperson, said in a statement.

Below is a summary of the major proposals contained in the Path to Progress report that would overhaul pension and health benefits. They include switching workers to a hybrid pension plan, switching from platinum to gold health care plans, and leveraging state assets to reduce the state’s unfunded pension liability.

HYBRID PENSION PLAN

This proposal would change retirement benefits for new workers or those with just a few years of service, a switch Senate Democrats estimate could save tens of billions of dollars over the next 30 years.

The idea would be to shift workers from the state’s pension plan to a so-called hybrid plan in which a portion of a worker’s salary would be pensionable, while the rest would go into a 401(k)-style account. Sweeney staffers expect to design the proposal so that the first $40,000 of a person’s income would be pensionable, and the remainder would go into the 401(k) plan.

Under the current pension plan, a worker is guaranteed a fixed payout based on their salary and years of service. This new plan would guarantee a lower set payout, while the rest of a amount in the 401(k)-style account fluctuating depending on changes in the market.

Workers, however, would be guaranteed a 4 percent minimum return from this account to protect them against a severe downturn in the market.

A dozen states offer a hybrid pension plan, according to Pew Research Center.

Some workers — such as police and firefighters, who are in a separate pension system — would be exempt.

HEALTH CARE BENEFITS

Sweeney also wants to shift workers from what is the now equivalent of a platinum-level plan on the Affordable Care Act exchange to a gold-level plan, a switch his staffers estimate could save the state hundreds of millions of dollars each year.

The network would stay the same, but it hasn’t been determined how much more of the cost workers would have to shoulder.

Senate Democrats say that government and public employee premiums cover 97 percent of the tab for health care. If the plan switches, the state’s share and employee premiums would drop substantially, covering to 80 percent to 86 percent, they say.

The Murphy administration reached a deal last year with several public sector unions that will save the state and local governments some $500 million in coming years by making a number of changes to health care benefits.

It was an agreement Steven Baker, spokesperson for the New Jersey Education Association, cited as an example of the kind of progress the state can make when working with organized labor.

“The key here is that we are at the table. We are leaders in coming up with innovative ways to save money and protect the quality of benefits,” he said.

The state is also auditing the health plans, an effort that’s expected to generate more than $70 million in savings this fiscal year. In December, a task force charged by Murphy with evaluating the state’s health benefits programs recommended that the state exert more control over outside benefit managers and sign shorter contracts to ensure it can adapt quickly to innovation.

ASSET TRANSFER

Sweeney also wants to identify state assets that could be leveraged to reduce New Jersey’s unfunded pension liability, but he won’t need legislation to get the governor involved.

In February, the Murphy administration issued a request for proposals, seeking a financial adviser to do just that. The revenue would be used to support the pension system and pay down the state's pension bonds. The Treasury said the process is in its early exploratory phase.

Among the proposals in the task force's report was assigning the New Jersey Turnpike Authority as an asset of the state pension system. Adding the Turnpike and its toll revenue to the books of the retirement funds could reduce the system's unfunded liability by an estimated $15 billion to $18 billion, the report's authors estimate.


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  #432  
Old 03-05-2019, 11:00 AM
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SOA research

https://www.soa.org/research-reports...nsion-indices/

Quote:
U.S. Public Pension Plan Contribution Analysis
This study compares pension plan contributions to benchmarks that represent contribution levels needed to reduce unfunded liabilities of state-based and large-city public pension plans in the U.S. Key observations over 2003–2017 include (refer to the report for further explanation):

Most of the plans studied received insufficient contributions to reduce their unfunded liabilities. In 2003, while still feeling the impact of the dot-com market crash, 55% of plans received insufficient contributions to reduce their unfunded liabilities. After reeling from 2008 market crash, the percentage of such plans peaked at 84% in 2011 before falling to about 63% for 2016 and 2017.
Some plans received insufficient contributions to reduce unfunded liabilities measured as a dollar amount but received sufficient contributions to reduce unfunded liabilities measured as a percent of payroll. The percentage of plans in this group increased from 36% in 2003 to 77% in 2017.
However, of plans whose contributions did not reduce unfunded liabilities as a dollar amount, more than half also fell short of the plans’ Actuarially Determined Contributions or other target contributions.
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  #433  
Old 03-05-2019, 02:59 PM
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NEVADA

https://www.npri.org/commentary/fals...eid=e84d9f3637

Quote:
Falsehoods, misinformation dominate PERS Secrecy Bill hearing

Spoiler:
Last Friday, the Senate Government Affairs Committee held a hearing for the PERS Secrecy Bill (SB224).

The bill would overturn existing Nevada law by making secret the names of those who draw tax-funded public pensions. Proponents claim that making names secret is necessary to protect retirees from harm, despite four separate Nevada courts determining that there is no evidence to support that claim.

Bill sponsor Senator Julia Ratti and proponents dominated the hearings by asserting that SB224 is needed to protect retirees from the harm that would come from disclosing home address, social security number, birth certificate and myriad other forms of truly sensitive information. But all of that information is already confidential under existing law.

All SB224 actually does is make secret the names of those drawing tax-funded public pensions.

Sen. Ratti also asserted that the public has no right to this information because PERS is “like a private retirement account,” that is not funded by tax dollars.

But as PERS reminded the Legislature when it informed them of the need to raise rates earlier this year, PERS relies exclusively on tax dollars to make up its funding shortfalls.

If Ratti’s description of PERS were accurate, the system would not be capable of generating an unfunded liability. But as Moody’s Investors Services recently found, Nevada has some of the largest unfunded liabilities in the nation. Clark County School District, for example, ranked 2nd highest nationwide for pension debt as a percentage of revenue in their most recent survey:



The existence of unfunded liabilities reflects the fact that PERS is not like a private retirement account. Rather than making payments from a fixed pot of money, PERS benefits are guaranteed at a set amount to be paid for life. PERS collects contributions to fund part of the estimated cost, while hoping that investment returns generate enough profit to pay for the rest. When that doesn’t happen, the System generates an unfunded liability, which currently stands at over $13 billion.

Because the public is responsible for paying down the entirety of this shortfall, they have a legitimate right to pension payout data. Paying down that shortfall is why PERS has increased rates by nearly 50 percent over the past decade, while benefits have been cut for new hires.

NPRI presented legislative testimony at the hearing, which explains more about the importance of this information. You can read that testimony by clicking here.


https://www.npri.org/commentary/sb224-testimony/
Quote:
SB224 Testimony
Robert Fellner

SB224 Testimony – Senate Government Affairs Committee

March 1, 2019 1:00 pm
Spoiler:
My name is Robert Fellner, and I am the policy director for the Nevada Policy Research Institute.

We were encouraged to hear Governor Sisolak highlight the importance of transparency in his State of the State Address. Nevada has a long history of broad, bipartisan support when it comes to the issue of transparency in government and it is one of our primary areas of focus at the Institute.

We were therefore dismayed to see that the first public records bill of the session would make our government less transparent and accountable by making secret the names of those who receive tax-funded public pensions.

The good news is that the problem this bill seeks to fix has already been solved.

Specifically, bill sponsor Senator Ratti has described this bill as being necessary to protect pieces of truly sensitive information such as “passport number; address of ex-spouses, including those in law enforcement; [and] birth certificates.”[1]

Thankfully, all of that information is, and has always been, confidential under existing law.

The only information that is currently public is recipient name, pension amount, last government employer, years of service, year of retirement and pension type.

Thus, SB224’s only change is to make secret the names of those receiving a public pension.

Proponents claim that disclosing names would put retirees at risk. It is important to remember that government agencies already have the ability to withhold information if disclosure would result in harm to employees.

This is precisely the argument PERS made to four separate courts over the past eight years. All four of those courts, however, found there is simply no evidence that disclosing the name, pension amount and related information would cause harm to retirees.

The Legislature should not deny Nevadans their fundamental right to see how their tax dollars are being spent based on a claim that we now know is simply not true.

While providing no legitimate benefit, the proposed secrecy would greatly harm the public interest. PERS costs are up nearly 70 percent over the past ten years, and will hit an all-time high of $2 billion this year. Taxpayers are responsible for most of this cost, and as such are entitled to information about how the system works.

SB224 would make it almost impossible for the public to identify potential cases of corruption, abuse or conflicts of interest.

For example, many lawmakers receive PERS benefits. In fact, two of SB224’s three primary sponsors are each drawing PERS benefits of over $100,000 a year.

Passing SB224 would allow lawmakers to directly profit from the changes they make to PERS, while keeping the public completely in the dark.

Sadly, such abuses of power have already occurred. In 1989, two former Nevada legislators, David Nicholas and Robert Craddock, successfully lobbied for a 300 percent increase to the pensions of retired lawmakers like themselves. While that egregious enhancement was repealed 6 months later, the legislators-turned-lobbyists still ended up increasing their lifetime pensions by over $500,000, in what one Nevada Supreme Court Justice described as an, “unprecedented raid on the public treasury.”

By shrouding in secrecy the names and pension amounts of future PERS members, SB224 would only invite similar abuses by making them that much harder to detect.

As the Nevada Supreme Court recently found, the name and pension payout data “is limited in scope and helps promote government transparency and accountability by allowing the public access to information that could reveal, for example, if an individual is abusing retirement benefits.”

California openly champions the very type of transparency that SB224 would outlaw in Nevada. After a tip to their fraud hotline resulted in the system recovering over $200,000, CalPERS released a statement praising “the great value of the public’s assistance in CalPERS’ efforts to protect the state pension system from fraud, waste, and abuse.”

Another example of the importance of disclosing names was highlighted after NBC Los Angeles uncovered a police officer who was drawing a disability pension from one city while working full-time as a police officer for a second agency.[2] This type of abuse will be impossible to detect if SB224 becomes law and makes secret the names of those drawing tax-funded public pensions.

Because this information is so important, numerous states have already embraced transparency on this issue.

I have included links to the online pension databases for 20 states nationwide, which includes states such as California, Connecticut, Illinois, Rhode Island, New Jersey and New York.

If publishing name and pension amount would actually cause harm to government retirees, these states, which are home to the most powerful government unions in the nation, would be the last to disclose this information. Yet they, and numerous others do, and the alleged harms have simply never materialized, further demonstrating that there is no problem for SB224 to fix.

In fact, when Connecticut’s state Comptroller launched his own pension website last year, he had the full support of the state’s largest government union. Daniel Livingston, chief negotiator for the state union applauded the website saying that, “the data on Open Pensions demonstrates what we have said all along.” In other words, even government unions recognize the value of having accurate and accessible pension data.

Independent, national experts like the nonprofit Identity Theft Resource Center agree, finding that name and pension amount “is not considered to be sensitive personal identifying information.” (emphasis mine.)

We should all be relieved that the problems SB224 seeks to fix do not exist. The problems it would create, however, are very real.

Because this bill would shroud in secrecy information critical to ensuring the health and integrity of a system that consumes over $2 billion annually, this committee should oppose SB224.

Thank you for your time and I am happy to answer any questions you may have.

[1] Remarks By Senator Julia Ratti, Assembly Committee On Health And Human Services, May 3, 2017

[2] Why We Need to Know Who Gets What Pension, Joe Matthews of NBC Los Angeles, online at: https://www.nbclosangeles.com/blogs/...133342928.html


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  #434  
Old 03-05-2019, 03:02 PM
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ESG

https://www.pionline.com/article/201...05#cci_r=73393

Quote:
Investor coalition pushes power companies to decarbonize

Spoiler:
A coalition of large institutional investors with a combined $1.8 trillion in combined assets is demanding that the 20 largest U.S. publicly traded electricity generators work toward net-zero carbon emissions and commit to doing so within six months.

The coalition is led by New York City Comptroller Scott Stringer, on behalf of the $63.8 billion New York City Employees' Retirement System, the $71.5 billion Teachers Retirement System of the City of New York and the $6 billion New York City Board of Education Retirement System. The climate crisis "is an imminent threat not only to our planet, but to pensions systems, and ultimately, our beneficiaries," Mr. Stringer said in a statement Thursday.

"This initiative makes clear that mobilizing for the planet goes hand-in-hand with protecting our pensions, and we need these commitments now," Mr. Stringer said.

RELATED COVERAGE
Glencore agrees to investor demands for climate change actionCourt dismisses ERISA suit over Exxon Mobil climate change disclosureESG investing soars globally, Opimas report says
According to the coalition, having the 20 largest electricity generators in the U.S. decarbonize would erase nearly half of the power sector's carbon emissions and set the course for a sustainable power grid.

Citing a recent Intergovernmental Panel on Climate Change report, the investors said in a statement, "We are on track to climate disaster, and we have just a decade to avert the worst of it."

In addition to the New York City pensions, the 20 signatories to the statement include the $354.7 billion California Public Employees' Retirement System, Sacramento, and the $34 billion Connecticut Retirement Plans and Trust Funds, Hartford.

They are also asking the utilities to implement four key governance reforms before issuing their 2020 proxy statements to achieve the net-zero target:

Identify the board member responsible for overseeing execution of the net-zero transition.
Publish a detailed transition plan to achieve net-zero emissions from electricity generation no later than 2050.
Incorporate transition milestones into executive compensation metrics.
Disclose how political, lobbying and trade association activities will be aligned with the net-zero commitment.
Coalition member New York State Comptroller Thomas P. DiNapoli credited the Climate Majority Project for providing a detailed plan to help the utility sector transition to net-zero emissions, which helps the New York State Common Retirement Fund push portfolio companies address climate risk and set lower emissions targets.


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  #435  
Old 03-06-2019, 09:04 AM
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https://www.watchdog.org/illinois/wa...social#new_tab
Quote:
Warren Buffett calls state's public pension debt a 'disaster'

Spoiler:
Legendary investor Warren Buffett said he wouldn’t “walk into liabilities” by expanding in states like Illinois or New Jersey, which carry billions of dollars in pension debt.

In an interview with CNBC, the Oracle of Omaha was asked about how he sees unfunded pension liabilities affecting the economy in the next ten years.

“In the public sector, you know, it's a disaster,” he said. “...if I were relocating into some state that had a huge unfunded pension plan, I'm walking into liabilities.”

He told CNBC anchor Becky Quick that kind of debt creates uncertainty about how politicians would go about paying for it.

“I'll be here for the life of the pension plan and they will come after corporations, they'll come after individuals. They're going to have to raise a lot of money,” he said.

Buffett didn't directly refer to Illinois or New Jersey, saying only “praise by name, criticize by category.”

Conservative estimates put Illinois’ unfunded pension liability at $135 billion, more than nearly any other state in the country. That’s not including the future cost of retiree healthcare, estimated to cost more than $50 billion.

Buffett’s investment firm, Berkshire Hathaway, owned a small portion of Chicago-based Archer Daniels Midland but sold that stake off in 2013.

Berkshire Hathaway does own other companies in Illinois, notably the Marmon Group, a holdings company based in Chicago that was founded by Gov. J.B. Pritzker’s uncles.

Warren Buffett's son, Howard Warren, worked for ADM in the 1990s and was later appointed sheriff of Macon County. His term in that office ended last November.


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Old 03-06-2019, 01:46 PM
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MASSACHUSETTS
MBTA

https://pioneerinstitute.org/news/wh...n-liabilities/

Quote:
Whistleblowers Were Proven Right: MBTARF Was Underreporting Its Unfunded Pension Liabilities
Spoiler:
In a new brief, Pioneer shows that whistleblowers’ 2015 claim that the MBTA Retirement Fund (MBTARF) had been underreporting its unfunded pension liabilities has proven to have been accurate. In their study, Boston University Professor Mark T. Williams and Bernie Madoff whistleblower Harry Markopo*los outlined three specific ways in which the T pension fund was underreporting its liability. Pioneer’s scorecard shows that they were right on all three counts, adding up to a total of $280 million in underreported pension liability.

At the time, MBTARF vigorously refuted the validity of the findings. Spokesman Steve Crawford said, “The fund stands by its reported investment returns and by its asset and liability calculations,” and that “MBTA retirees and beneficiaries can be confident that their futures are secure.” But a new Pioneer brief presents in-depth analysis of MBTARF’s subsequent financial disclosures that demonstrate the accuracy of Williams’ and Markopolos’s claims.

As Pioneer recommended in its recent public statement on the fare hike proposal, the MBTA must commit to reforms to its pension fund that will ensure its sustainability for T employees and reduce the financial burden on riders and taxpayers. As Mark Williams noted in a Boston Globe op-ed in January 2019, the MBTA’s contribution to MBTARF was $40 million a decade ago; by the time of the next fare increase, that amount will rise to $140 million. In a recent editorial, The Boston Globe cited the T’s projection that the unfunded liability would reach $1.5 billion, and echoed a Pioneer recommendation to shift control of the T’s pension system to the state’s well-run Pension Reserves Investment Trust. In reports and op-eds published since at least 2013, Pioneer has raised concerns about the MBTARF’s growing and unsustainable pension liability, and offered reform proposals that include, in addition to transferring T employees to the state pension fund, a legislative cap on employer contributions to the pension fund, a new pension benefit structure for all current MBTARF members, and hiring an independent actuary and auditor to conduct an independent review of the fund.


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Old 03-06-2019, 05:24 PM
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CALIFORNIA

https://lao.ca.gov/Publications/Report/3957
Quote:
The Governor’s Proposed Supplemental Pension Payment to CalPERS
Spoiler:

Background
State Has Hundreds of Funds. State revenues and expenditures are managed through hundreds of separate funds. There are three major types of funds. They are: (1) the General Fund, which is the state’s main operating account; (2) other state funds, which includes special funds, bond funds, and other “nongovernmental cost funds” (such as trust funds); and (3) federal funds.

State Makes Annual Pension Contributions. The state provides pension benefits to retired state employees through the California Public Employees’ Retirement System pension system. CalPERS state pensions are funded by three sources: investment gains, employer contributions from the state, and employee contributions. The state’s contributions have been rising (due to actuarial assumption changes and lower-than-assumed investment returns) and are expected to continue to rise over the next several years. Specifically, the state’s CalPERS pension contributions are expected to increase by more than 25 percent between now and 2023‑24.

Employer Contributions Paid From Each Fund. State employee salaries are paid by the General Fund or other funds, depending on the employees’ work. Employee benefits—like pensions—are paid by the same fund as the employees’ salaries. Employer contributions to CalPERS are based on payroll. Some funds—like the Motor Vehicle Account (MVA)—primarily support operations performed by state employees (such as registering vehicles), and therefore have relatively high associated state pension costs. Other funds primarily pass funding through to local governments and therefore do not support many state employees and as such have low state pension costs.

CalPERS Has Five State Pension Plans. Depending on their job, state employees earn pension benefits under one of five CalPERS plans. These five plans are: Miscellaneous, Industrial, Safety, Peace Officer/Firefighter, and Highway Patrol. For example, the Safety plan includes state employees who are employed in law enforcement, fire suppression, and public safety, but are not designated peace officers or firefighters. (This includes, for example, employees at state prisons who come into regular contact with inmates but who are not correctional officers.) Each of these plans is funded by a different set of funds. For example, the General Fund pays most of the costs associated with Peace Officers and Firefighters because the General Fund is the major source of funds for the California Department of Forestry and Fire Protection and the California Department of Corrections and Rehabilitation, which employ these workers. Conversely, the MVA is the major source of funds for employees enrolled in the Highway Patrol plan. The Miscellaneous plan—the largest state pension plan—receives contributions from many different fund sources, of which the General Fund and federal funds are the largest. Figure 1 summarizes the largest funding sources for each CalPERS plan. (This figure uses 2016‑17 data from a statewide drill and is more accurate than the annual Department of Finance [DOF] pension contribution display, which is only for informational purposes.)
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Old 03-06-2019, 05:25 PM
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CALIFORNIA

https://www.mercurynews.com/2019/03/...m-ducks-issue/
Quote:
Borenstein: Supreme Court punts on pension rule; Newsom ducks
California’s new governor won’t say whether he will carry on Jerry Brown’s court fight to protect 2012 changes

Spoiler:
In a much-anticipated ruling, the California Supreme Court on Monday upheld former Gov. Jerry Brown’s elimination of a costly pension perk for state and local government employees.

But the high court punted on the core question of whether the state’s unaffordable and excessively generous retirement compensation plans can be altered.

With the fight on the bigger issue temporarily postponed, Gov. Gavin Newsom needs to step up to represent taxpayers now that Jerry Brown’s gubernatorial term is over. Newsom should stop ducking the question of whether he will carry on Brown’s court battle.

It’s time for the new governor to put the public interest and fiscal preservation of the state and, especially, local government ahead of his loyalties to public employee labor unions.

There are five more pension cases currently pending before the high court, meaning the justices will probably eventually get to the core issue. The next case in line — stemming from a dispute involving public employees of Alameda, Contra Costa and Merced counties — could force the issue.

All six cases challenge Brown’s 2012 pension law changes, which trimmed back benefits for new employees and altered some rules for benefits of then-existing workers. At issue in most of the cases is whether the changes for then-existing employees violated contractual promises protected by the state and federal constitutions.

In a string of cases dating back more than six decades, the state Supreme Court has ruled that most pension benefits enjoy such constitutional protections. The decisions have been dubbed the “California Rule” because their breadth is greater than in most other states.

Under the California Rule, it’s widely assumed that the rate at which workers earn future pension benefits cannot be reduced, even if they’re too costly to taxpayers. Pension reformers, including Brown, have been urging the justices to use the current cases to reconsider the rigidity of the California Rule.

But, in its first decision, on Monday, the Supreme Court avoided addressing that bigger issue. Instead, in a case involving purchase of extra years of service credit, justices unanimously concluded that public employees never had a contractual right to the perk.


The calculation of the amount of public employees’ annual pension is generally based on their salary in the final one or three years of work, age at retirement and years on the job, which is known as service credit.

A 2003 state law allowed public workers in the California Public Employees’ Retirement Association to purchase up to five years of service credit, even though they didn’t actually provide additional work.

Employees were supposed to pay an amount that, after investment returns, would cover the future cost of the additional benefits when they retired. The problem was that CalPERS underestimated the future cost and taxpayers were stuck making up the resulting shortfall.

Brown recognized the absurdity of this benefit and stopped offering it as part of the 2012 changes. State firefighters sued, claiming the governor and Legislature were taking away a constitutionally protected contractual promise.

Not so, said the high court.

The reason: There was no contractual promise to continue offering the benefit. It was an optional benefit that the state offered and was free to rescind.

Since it was never a contractual promise, it wasn’t constitutionally protected. Hence, there was no need to address the California Rule question of whether pensions generally should be so stringently protected.

The high court got it right. But, legally, this was an easy call. It was the low-hanging fruit.

The next case, from Alameda, Contra Costa and Merced counties, challenges provisions of the 2012 law that limit the counting of pay at termination — for items such as unused vacation and sick leave — in pension calculations.

In each instance, there was an agreement between the county and the employees to count that pay. But the lower court judge ruled that the agreements weren’t legal and hence not binding contracts.

The other cases involve the counting of on-call pay as salary in pension calculations; judges who were elected before the 2012 law took effect and want the higher benefits even though they didn’t start work until after the new rules kicked in; and two cases involving workers who lost benefits under the new law because they were convicted of job-related felonies.

In each case, Brown made reasonable and much-needed changes to state pension law. If those changes can’t stand, there’s little hope of more meaningful, and desperately needed, reform. It’s time for Newsom to get on board.
https://www.forbes.com/sites/ebauer/...Y#4636173b6a6b

Quote:
California Public Pension Reformers Win A Battle, Not The War
Spoiler:
In the news earlier this week, to cite the L.A. Times headline, "California Supreme Court curbs a pension benefit but preserves ‘California Rule’."

The court unanimously ruled that the state validly removed a benefit that allowed state workers to "buy" additional pension accruals by making lump sum contributions to the plan. As a Retirement Security Initiative explainer reports,

"Air time" is the practice of purchasing years of service credit without actually working those years. For a lump sum payment, an employee could purchase up to 5 years of service credit. This meant that an employee with 15 years of credit could purchase five additional years and then retire with the pension benefits generally due an employee with 20 years of service, for the rest of their life. This meant that employees could receive significantly higher pension benefits without doing the work.

"Air time" was supposed to be self-funded, the lump sum payment was to cover the cost of the additional benefits and be of no burden to taxpayers. Unfortunately, due to some incorrect assumptions and math, the lump sum paid by employees was far less than the actual cost of the benefits thereby putting an additional burden on the pension plan and taxpayers.

Recognizing the significant advantage to employees that could afford to make the lump sum payment, CalFIRE chose to file suit in an attempt to retain the opportunity for its members to purchase "Air time."


As it happens, though, the Court's decision (link via EdSource) was very narrow:

We conclude that the opportunity to purchase ARS credit was not a right protected by the contract clause. There is no indication in the statute conferring the opportunity to purchase ARS credit that the Legislature intended to create contractual rights. Further, unlike core pension rights, the opportunity to purchase ARS credit was not granted to public employees as deferred compensation for their work.

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So what does this mean?

As context, the California Rule refers to California case law which has established the idea that pension benefits are contractually guaranteed from the first day of their employment. A National Public Pension Coalition explainer, "What is the California Rule and Why Does It Matter?" lists 12 other states which follow the California Rule; 21 other states deem public pensions to be contractual rights, but without the same extensive guarantees California provides, in particular, with respect to future accruals (see this analysis, as provided by TeacherPensions.org).

(Illinois, it turns out, is one of only two states with an explicit protection of both past and future accruals written into the state's constitution; the other is New York.)

Was it reasonable of the Court to have narrowly tailored its decision in this way? The decision focuses extensively on the fact that this was a benefit that was not contingent in any way on actual work being done, unlike the usual pension accruals, in which benefits are earned based on years of service. Much as I'd love to cheerlead any ruling that enables pension reform, it certainly makes it clear how expansive the California Rule is, that the Court felt obliged to proceed in this narrow way.

At the same time, the Court is expected to be deciding soon on further cases involving pension "spiking." The L.A. Times describes these cases:

A similar case before the court involves “pension spiking.” A three-judge Court of Appeal panel decided in 2016 that Marin County had the right to bar workers from spiking their pensions.
Pension spiking occurs when an employee’s pay is inflated during the period on which retirement is based — usually at the end of a worker’s career.

This can be done by cashing in years of accumulated vacation or sick pay or volunteering for extra duties just before retirement.

In some cases, spiking has created pensions higher than the workers’ salaries.

The Court of Appeal in that case ruled that public retirement plans were not “immutable,” and could be reduced. The law merely requires government to provide a “reasonable” pension, the intermediate court said.

That decision was a major departure from the California Rule.

By distinguishing the air time and pension-spiking cases from pension precedents, the court could pursue a middle ground, allowing government to reduce some pension costs but still leaving protections for workers in place.

It is hard to see, though, how the California Supreme Court could apply the principle it created with respect to "air time," differentiating between "deferred compensation" and benefits unrelated to work done, in the case of spiking -- vacation and sick time, after all, have been earned over years of employment, and the accrual rates applied to final pay were likewise accrued by means of the individual's employment.

At the same time, the extreme protections provided by Illinois have unintended consequences that not even their participants are happy with. Illinois, paralyzed by its constitutional protection of past and future pension benefits, including all their ancillary benefits (that is, their fixed 3% annual increases), sought some modest relief from escalating liabilities by, first, requiring that local school districts cover the costs of the impact on pensions of any final-pay increases in excess of 6% in its first anti-spiking bill in 2005; then tightened the requirements further in 2018 by penalizing local school districts whenever near-retirement raises exceeded 3%. And, again, because the Illinois constitution bars the state from limiting future accruals in any way, the most the state can do is pass the costs on to local school districts -- and, at least according to the Illinois teacher's union, "The 3 percent salary limit is currently being applied to active IEA TRS and SURS members regardless of how close they are to retirement" -- so they are calling on their membership to support bills repealing the cap. Surely Illinois teachers would be better off with common-sense pension reforms than with salary increases being limited in this way!

The bottom line is that there is no clever way of trimming benefits just a little bit around the edges that will make everyone happy and yet solve all the problems they face, however happy the California Supreme Court may be with itself for making such a clever distinction.


https://reformcalifornia.org/demaio-...ension-crisis/
Quote:
DeMaio Blasts “Flawed” CA Supreme Court Ruling on Pension Crisis

Spoiler:
California Supreme Court Negligently Sidesteps Important Issue to Block Meaningful Pension Reform Leaving Taxpayers Facing Billions in Unfunded Pension Debt

In a widely-anticipated ruling on whether lavish and unsustainable pension benefits for state and local government employees can be reformed or reduced, the California Supreme Court punted the entire issue yet again.

“We’re disappointed that the liberal California Supreme Court once again is serving as a barrier to common-sense reform of unsustainable and indefensible gold-plated government pension payouts,” said Carl DeMaio, Chairman of Reform California.

In the narrow ruling that upheld the elimination of the right to purchase service credits to spike pensions, the justices opted to leave the problematic “California Rule” intact that has been a legal barrier to meaningful reform to unsustainable pension benefits. Specifically the Supreme Court ruling said “We have no occasion in this decision to address, let alone to alter, the continued application of the California Rule,” the court said in the decision. The California Rule has been used repeatedly by politicians and government union bosses to block pension reform.

DeMaio is author of the San Diego Pension Reform Initiative that overwhelmingly passed in 2012 to switch city employees from defined benefit pensions to 401(k) defined contribution accounts. DeMaio is working with a bipartisan coalition to enact statewide pension reform.

A recent study by Stanford University suggests that unfunded debt for California state and local pension and retiree healthcare obligations stands at over $1 trillion. The state’s own official estimates using flawed accounting rules puts the liability at nearly half-a-trillion dollars and rising.

In addition to the debt burden placed on taxpayers, an examination of individual pension payouts to state and local government employees shows extreme abuses in the system resulting in six-figure pensions, million-dollar lump-sum payouts, and hundreds of thousands of retired state and local government officials taking in annual pension allowances that exceed their highest base salaries while working for government.

“These government pension abuses must be reformed or California taxpayers will face a future of higher taxes, fewer services, and bankruptcy in our cities and school districts,” DeMaio concluded.


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Old 03-06-2019, 05:26 PM
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DIVESTMENT

https://www.marketwatch.com/story/po...est-2019-03-05
Quote:
Opinion: Politicians suggest that public pension plans divest
Published: Mar 5, 2019 12:55 p.m. ET

0
The proposal, aimed at protecting Israel, suffers all the flaws of earlier divestiture efforts


Spoiler:
The most recent effort to engage public pension plans in social investing came in legislation sponsored by Sen. Marco Rubio (R-FL), which recently passed the Senate. The relevant section (402) of S.1), a broader bill focusing on U.S. policy in the Middle East, was titled:

“NONPREEMPTION OF MEASURES BY STATE AND LOCAL GOVERNMENTS TO DIVEST FROM ENTITIES THAT ENGAGE IN CERTAIN BOYCOTT, DIVESTMENT, OR SANCTIONS ACTIVITIES TARGETING ISRAEL…”

What this section says is that states and localities have the right to prohibit investment in, divest the stocks of, and restrict contracting with any entity that advocates for sanctions and a boycott of Israel. The legislation was in response to the “boycott, divestment, and sanctions” (BDS) movement that aims to end Israel’s occupation of the Palestinian territories. Apparently more than 25 states have already adopted similar laws, and the federal legislation was aimed at extending the right to the remaining states.

The immediate criticism of the legislation centered on the issue of free speech, but my concern is that politicians are once again using public pension funds to accomplish policy goals. Social investing has a long history going back to opposition in the 1980s against South Africa’s apartheid regime, perennial efforts to divest from tobacco, moves to divest Sudan-linked stocks in 2004 after the genocide, and more recent opposition to gun manufacturers, Iran, and fossil fuels.

Many of these issues have enormous emotional appeal, but strong arguments exist against using public pension plans to accomplish policy goals, much less simply to make us feel better. It should be noted that the issue of divestiture does not arise in the private sector, which is covered by the Employee Retirement Income Security Act (ERISA) of 1974. From the beginning, the U.S. Department of Labor has warned that the exclusion of investment options would be very hard to defend under ERISA’s prudence and loyalty tests. Thus, ERISA fiduciary law has effectively constrained social investing in private sector defined-benefit plans.

Public pension funds are particularly ill-suited vehicles for social investing. First, adding a new criterion to the investment decision will increase the likelihood of lower returns. While the investment teams for many large public funds are first rate, others are much less experienced. Introducing divestment requirements into such an environment will take the manager’s eye off the prize—maximum returns for any given level of risk.

Second, while restricting investments for any single cause would have little impact on the returns of public pension funds, it is the first step down a slippery slope. Divesting a few stocks will have little impact on fund returns; divestiture as standard procedure will sharply increase administrative costs and lead to lower returns.

Finally, the people advocating for divestiture and the stakeholders in the pension fund are not the same people. The advocates for divestiture are either politicians or legislators. The stakeholders are tomorrow’s beneficiaries and/or taxpayers. If divestiture produces losses either through higher administrative costs or lower returns, tomorrow’s taxpayers will have to ante up or future retirees will receive lower benefits. The welfare of these future actors is not well represented in the decision making process.

Just for the record, divestiture is also unlikely to have any impact on the price of the stock of the targeted companies. The action may cause a temporary price drop, but as long as some buyers remain they will swoop in, purchase the stock, and make money. And the buyers are out there. The “Vice Fund,” established in 2002, specializes in only four sectors: alcohol, tobacco, arms, and gambling, and thus stands ready to buy any stocks diverted from standard portfolios.

Many public plans are not well funded, and face real challenges that need to be addressed. Advocating for divestiture is a frivolous diversion.


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Old 03-06-2019, 05:27 PM
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NEW JERSEY
FORFEITURE

https://www.njspotlight.com/stories/...-sex-offenses/
Quote:
PENSION FORFEITURE IN CARDS FOR PUBLIC OFFICIALS WHO COMMIT SEX OFFENSES
JOHN REITMEYER | MARCH 5, 2019
Proposed legislation that was inspired by #MeToo movement predates Brennan case but is overshadowed by it

Spoiler:
State lawmakers are looking to create a tough new penalty for public officials who commit a sexual assault or similar offense in the workplace. The effort comes as a report is still pending from a special legislative panel reviewing an alleged rape that has rocked Gov. Phil Murphy’s administration.

The key feature of legislation that has already been approved by the full Assembly and is now on the move in the Senate is a proposal to take the full pension benefits away from any elected official or public worker who is found guilty of a sexual assault or related offense that somehow involves their official position.

Such an approach generally has been used only to punish officials for offenses related to public corruption.

The pension-forfeiture bill was introduced several months before a member of the Murphy administration came forward last year with claims that a former administration official had sexually assaulted her in 2017. But that case has brought new attention to the issue of sexual assault in Trenton, triggering special investigations by both the governor and a select committee of lawmakers.

Sen. Kristin Corrado, the bill’s prime sponsor and a member of the select committee, said the state needs to send a strong message to discourage public servants from crossing the line.

“This shouldn’t happen and it’s not OK,” said Corrado (R-Passaic) about cases of sexual assault involving public officials.

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Current forfeiture law covers things like bribery
Under current law, elected officials or public workers who commit offenses like bribery and official misconduct are stripped of their taxpayer-funded retirement benefits once they have either been found guilty by a court or have pleaded guilty before a judge. The grounds for pension forfeiture would be expanded to include the offenses of sexual assault, sexual contact and lewdness. But it would not apply to sexual harassment offenses, according to the latest version of the bill, which was recently approved by the Senate state government committee.

kristin corrado
Sen. Kristin Corrado (R-Passaic) said the state needs to send a strong message.
The forfeiture would be enforced when the offense is “related directly to the person's performance” in their public position, according to the bill. But it could also be triggered if the activity involves “circumstances flowing from, the specific public office or employment held by the person.”

The measure, which is likely to come up for a vote in the full Senate in a matter of weeks, was first introduced in April 2018 as lawmakers were responding to the public-awareness campaign concerning sexual-assault fostered by the #MeToo movement. The enhanced public scrutiny has resulted in several high-profile figures losing their jobs or positions, including members of Congress and prominent figures in the media and entertainment industries, such as film producer Harvey Weinstein.

The issue took on new meaning in New Jersey after sexual-assault allegations were leveled against Al Alvarez, a former high-ranking Murphy administration official, in a Wall Street Journal news story in October 2018. In the story, Katie Brennan, a former Murphy campaign volunteer who now serves as the chief of staff at the state Housing and Mortgage Finance Agency, said Alvarez, who went on to become chief of staff at the Schools Development Authority, drove her home and raped her following a gathering of campaign staffers and volunteers in April 2017 in Jersey City.

Alvarez has strongly denied the allegations through an attorney and was never charged with a crime even though two different county prosecutor’s offices investigated Brennan’s claims. He stepped down from his position at the SDA in October 2018, just before the newspaper story was published.

Need to overhaul many state regulations
To be sure, the pension-forfeiture legislation likely wouldn’t apply in the case because the alleged rape occurred well before either was hired by the administration. But Corrado and other sponsors of the bill have stressed the need to overhaul a host of state regulations related to sexual assault as part of a broader effort to discourage such behavior. The select committee is expected to make a series of policy recommendations in a report that will be issued after it finishes hearing from witnesses.

After the scandal broke, Murphy announced that former state Supreme Court Justice Peter Verniero would be conducting an outside investigation on behalf of his administration to determine the circumstances surrounding Alvarez’s hiring. Around the same time, the Legislature approved its own investigation (using a select committee of members from both parties and both houses).

The legislative hearings are ongoing, with lawmakers taking testimony just last week from a legal expert who suggested Murphy’s transition and administration mishandled the case. The lawmakers also took public testimony from Brennan late last year.

Corrado said she initially sponsored the pension-forfeiture bill after hearing about elected officials and other public servants getting in trouble but oftentimes “walking away with a slap on the wrist.” Sitting on the Legislature’s select committee has only made her “more aware” of instances where sexual misconduct is taking place in government, Corrado said.

“I think we have to make (the penalty) substantial,” she said.

Meanwhile, Verniero already detailed the results of his investigation in a report that was released last month. The report said top Murphy aides mishandled the allegations and it second-guessed their decision to keep the matter secret from the governor until just before Brennan came forward publicly. But it didn’t identify who actually hired Alvarez, a mystery that lawmakers also have yet to solve.
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