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  #451  
Old 03-08-2019, 08:52 AM
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Mary Pat Campbell
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Quote:
Originally Posted by campbell View Post
https://www.usnews.com/news/best-sta...fter-criticism
Quote:
Felon Appointed to Pension Board Steps Down After Criticism
A convicted felon who was appointed to a Rhode Island town's pension committee has resigned before the Town Council could vote on whether or not to remove him.

Spoiler:
WEST WARWICK, R.I. (AP) A convicted felon who was appointed to a Rhode Island town's pension committee has resigned before the Town Council could vote on whether or not to remove him.

Jerry Leite tells WPRI-TV he resigned from West Warwick's pension board to keep "the best interests of the town in mind." He said he wanted to resign before the Town Council could set a precedent by voting him out.

Leite was appointed to the pension committee by a 4-1 vote Feb. 5.

The appointment drew criticism from the West Warwick Police Union.

Leite was sentenced to three years of probation and ordered to pay $1,152 in restitution after pleading no contest to a 2001 felony embezzlement charge. He allegedly stole from charity named for a slain Providence officer.


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  #452  
Old 03-08-2019, 08:53 AM
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NORTHERN IRELAND
ESG
DIVESTMENT

https://www.belfasttelegraph.co.uk/n...-37883393.html

Quote:
Northern Ireland public sector pension cash funds tobacco firms and arms trade

Spoiler:
A major pension fund for public sector workers here has millions of pounds tied up in controversial investments.

The Northern Ireland Local Government Pension Scheme has shareholdings in the tobacco industry, the arms trade and companies heavily criticised for not paying enough tax. Money is also invested in firms linked to fracking and alcohol.

Read More

John Simpson: Members must push management for an ethical and social investment policy
In some cases, shareholdings appear to directly conflict with some of the members' core aims.

For example, the decision to invest tens of millions in tobacco companies may sit uncomfortably with staff at the Northern Ireland Hospice, who are members of the scheme.

The hospice said it had not been told of the investment.

The scheme is managed by the Northern Ireland Local Government Officers' Superannuation Committee (NILGOSC).

Comprising around half the public sector workforce - including councillors, teachers and the Fire and Rescue Service - it manages the pensions for 118,000 people across around 200 organisations.

NILGOSC said its main duty is to act in the best interests of the scheme beneficiaries.

Analysis of the committee's equity holdings shows investments totalling more than 2.2 billion in around 600 companies. The investments range from 73m in Amazon.com to 36,000 in Ecosynthetix, a renewable chemicals company. A further 4bn is tied up in pooled funds.

However, some of the investments will be controversial.

NILGOSC has pumped 40.2m into British American Tobacco, the international company behind Dunhill and Lucky Strike cigarettes, with a further 1.3m going to Philip Morris International, which makes Marlboro and other leading brands.

The hospice, whose members' pensions are looked after by NILGOSC, said "there has been no communication from NILGOSC regarding where they invest their funds".

The fund also invests in some multinational companies with interests in shale gas exploration.

Its holdings include energy giants BP (31.1m), gas firm Centrica (10.4m), mining firms Rio Tinto (6.3m) and BHP Billiton (5.7m), and oil company Exxon Mobil (4.7m).

Local environmentalists called on NILGOSC to take its money out of these firms.

Green Party Ards and North Down councillor Rachel Woods has her pension managed by NILGOSC. She said having it invested with companies exacerbating climate breakdown is disturbing.

Ms Woods said: "We've been lobbying for pensions scheme managers to end their involvement with fossil fuel industries for some time. I've also met with trade unions to discuss this matter. Workers should have full disclosure and be given a say on how their pensions are invested."

Friends of the Earth's James Orr said NILGOSC "will be on the wrong side of history" if it does not divest from the fossil fuels industry.

In the 12 months to March 31 last year, NILGOSC had holdings worth 2.9m in Britain's biggest arms company BAE Systems, which has provided equipment to the United States for the wars in Iraq and Afghanistan.

Meanwhile, two of the world's biggest aerospace and defence firms, which have produced technology used in the Syria conflict, are on the NILGOSC list.

Lockheed Martin, which makes guided missiles, rockets and fighter jets, has received 3.6m, while Northrop Grumman, which builds bombers and drones, received 2.9m.

Some 5.1m is invested in missile and weapons manufacturer Boeing, while Rolls Royce, which produces military aircraft engines, has also received investments totalling 2.4m.

Andrew Smith of Campaign Against Arms Trade says public money should be invested in the public good and not to boost arms companies which fuel and profit from war and conflict.

"Local authorities should strive to have a positive global footprint and lead by example. NILGOSC should end these investments and instead set a positive precedent by adopting an ethical investment policy," he added.

Around 3.7m is invested in Diageo, a leading producer of spirits and beer, and 1.8m in Heineken.

Among the top 20 international firms the fund invests in are Amazon (73m), Facebook (49.9m), Netflix (29.3m) and Google parent company Alphabet (23.7m), which is worth a combined 176m.

Several of these companies have come under fire over how much tax they pay in the UK.

NILGOSC said: "NILGOSC's overriding obligation is to act in the best interests of the scheme beneficiaries."

It said the body invests in a wide range of asset types across the world and appoints fund managers who select the stocks for their particular mandate.

It added the fund is currently invested in, locally and globally, manufacturers of electric vehicles, wind power, solar power, hydropower, biomass and energy conservation.

It said: "NILGOSC has instructed its active fund managers to take account of environmental, social and corporate governance (ESG) considerations provided the primary financial obligation is not compromised and will ensure that the fund managers it appoints are capable of appropriately considering ESG issues when making investment choices.

"NILGOSC shares concerns over climate change and carbon issues and works at both a fund and an industry level to further climate action."


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  #453  
Old 03-08-2019, 08:54 AM
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RHODE ISLAND

https://www.forbes.com/sites/edwards.../#789ff0ea4d53
Quote:
Rhode Island State Pension May Never Be Able To Exit Gina Raimondo Loser

Spoiler:
Can Rhode Island ever exit the dismally performing investment sold to the state pension in 2006, by former General Treasurer, current Governor Gina Raimondo before she entered politics? Probably not – unless 80% of the investors in the fund (including friends and family of Raimondo)—someday agree to end it. Don’t be surprised if the final accounting of this investment is delayed until Raimondo safely exits Rhode Island politics.

As I wrote last month, recently the state pension was told by Raimondo’s Point Judith Capital that it will have to remain in the floundering investment for a thirteenth straight year, even though the state’s initial $5 million, 10-year commitment had long expired.

The pension was scheduled to exit Raimondo’s fund in 2016 but the firm, supposedly exercising its discretion under a secret agreement the state supposedly signed, unilaterally extended the life of the investment in 2017 and again in 2018.


In late 2018, General Treasurer Seth Magaziner surprised pension stakeholders by announcing a new reason for delaying termination of the investment yet another year. Magaziner disclosed, for the first time, the 2006 secret agreement the pension signed with Point Judith allowed Raimondo's fund to hold onto state money another year if 80 percent of investors agree.

The very fact that an investment, shrouded in secrecy and foisted on the state pension by the now-Governor, has continued to lose money for the pension and pay money to Raimondo for the past thirteen years—with no end in sight—should demand enhanced disclosure and public scrutiny, in my opinion.

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Thankfully, according to Magaziner, his "Transparent Treasury initiative has made the Rhode Island pension system a national leader in pension transparency." The Prince of Transparency should welcome probing questions, right?

So, for the past month I have been asking Treasurer Magaziner’s office questions about the most recent extension of the life of the Raimondo fund. Magaziner’s spokesman, Evan England, has failed to answer almost all my questions. Let's call it the "not-so-transparent treasury."

In response to the following questions:

When did the pension become aware of the most recent (2019) extension?
What evidence does the pension possess documenting that 80% of investors in the fund voted to extend?
Who are the other investors in the fund?
How many of the other investors are, like Raimondo, insiders of the fund?
Do the agreements the state entered into with Point Judith permit additional extensions of the life of the fund? If so, how many extensions are permitted and under what circumstances?
Did the pension vote against extension of the life of the Point Judith fund or simply abstain from voting?
Do the terms of the limited partnership agreement permit additional extensions of the life of the fund under any circumstances, including but not limited to with approval of 80% of partners?
What was the projected liquidation value of the investment at 12/31/18, had termination and liquidation been demanded by the limited partners?
What was the projected liquidation value of the investment at 12/31/18, had termination and liquidation been demanded by the limited partners?
The Treasurer’s office has merely responded:

We did not support the amendment, but enough limited partners to amend the contract did.
It is our policy and practice to disclose key information about the state’s investments to the public. The only exception is in instances where we are duty-bound, as fiduciaries, to maintain the confidentiality of information that could cause material harm (emphasis added) to the fund and, by extension, our members.
Wow! The Treasurer is “duty-bound” to keep secret the Governor’s deal with the state pension? Disclosure would cause “material harm” to state workers?

How exactly would pension participants—state workers whose Cost of Living Adjustments (COLAs) were cut to pay fees to Raimondo’s former investment firm— be harmed by exposure/disclosure?

As one of the nation's leading experts on pension fiduciary duties, I fail to see how, once the Treasurer has already disclosed the life of the Point Judith fund could be extended for yet another year with 80% investor approval, disclosing whether additional extensions are permitted could possibly cause material harm to the fund or its participants.

By the way, it is my understanding from speaking with experts who regularly draft limited partnership agreements, with 80% investor approval, it is likely the fund could continue, and pay fees, forever to Raimondo. Magaziner ain't sayin.

I wrote to Magaziner’s flack,

“Help me, if you can, understand the Treasurer's reasoning. Indeed, in my expert opinion, there is a compelling case that the Treasurer's profound lack of transparency regarding this failing, politically-charged, dark money investment is utterly unjustifiable. To my knowledge, the Raimondo investment is unique. There is no other investment in the state's portfolio that was sold to it by the current Governor, former Treasurer."

Stakeholders deserve an answer to when, if ever, the pension can exit this loser.


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  #454  
Old 03-08-2019, 08:57 AM
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KANSAS

https://reason.org/commentary/kansas...rm-costs-debt/

Quote:
Kansas Pension Proposal Would Add Long-Term Costs, Debt
Dreamstime.com
COMMENTARY
Kansas Pension Proposal Would Add Long-Term Costs, Debt
Gov. Kelly’s plan could also further exacerbate the fiscal impact of the system's overly optimistic investement assumptions.
Spoiler:
Kansas Gov. Laura Kelly’s budget proposal includes an element seeking to reduce Kansas’ annual pension payments by reamortizing pension debt payments out further into the future. While this might lower pension contributions in the near term, extending the pension debt further into the future would in effect cost the state an additional $7.4 billion over the next 30 years. Worse, the plan’s funded ratio would remain below 80 percent until 2037 (11 years longer than currently projected) and wouldn’t reach 100 percent until 2047 (an additional 14 years).

This is unfortunate, because the Kansas Public Employees Retirement System (KPERS) has shown some signs of recovery from its recession lows, improving from 56 percent funded in 2012 to 68 percent in 2017. While this is notable and commendable progress, the system is still far from stable and is still well below its pre-recession peak of being 88.6 percent funded in 2000. Likewise, the current funded ratio is well below the 100 percent target recommended by the American Academy of Actuaries’ Pension Practice Council and the Government Finance Officers Association.

From 2012 to 2017, the unfunded actuarial liability fell by $1.34 billion, primarily due to strong investment returns exceeding the system’s current assumptions. This progress is good but also shouldn’t be met with complacency, as the continuance of these gains is far from guaranteed.

Currently, the plan has an assumed rate of return of 7.75 percent compared to a national average of 7.4 percent for similar public plans, suggesting that KPERS’ current return assumptions may be overly optimistic in regards to national norms and the emerging “new normal” consensus among major investment managers.

KPERS’ history of asset allocation appears to show the plan taking on more risk to achieve higher returns, likely driven by the need to keep up with its increasingly optimistic return assumption. The fund currently allocates less than 12 percent of its assets to risk-free fixed-income and has plans to increase allocations in real estate and alternative investments, which can be less transparent and are often associated with more risk.

KPERS’ discount rate of 7.75 percent may also be problematic. Unlike the assumed rate of return— also 7.75 percent (see more here)—the discount rate helps determine the present value of promised pension liabilities. A 2018 Milliman Public Pension Study of the 100 largest U.S. public pension plans found average discount rates fell from 7.5 percent in 2017 to 7.25 percent in 2018. Furthermore, KPERS’ current discount rate is also misaligned with the implied risk premium of the national average discount rate as determined by federal and/or municipal bond yields.

Despite recent investment gains, KPERS has struggled to return to pre-recession norms. The plan’s delicate position is far too fragile to risk delaying the current path to full funding. The assumed rate of return and discount rate are arguably too high, which would indicate the fund is substantially underestimating the current unfunded actuarial liability and thus, the true costs of providing retirement benefits.

By extending the length of time to pay off the state’s pension debts, Gov. Kelly’s proposed reamortization of KPERS unfunded pension liabilities would further exacerbate the fiscal impact of these overly optimistic assumptions in the future.

Additionally, economic analysts are becoming increasingly concerned that recession risks are rising. If anything, KPERS pension managers and state policymakers should be more aggressive with funding policy at this time, not less. Public workers in Kansas are depending on elected leaders to get this right, so it’s time to work harder towards ensuring that pension promises made are promises kept.


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  #455  
Old 03-08-2019, 08:58 AM
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PHOENIX, ARIZONA

https://www2.kjzz.org/content/801521...phoenix-ballot

Quote:
Pension Initiative To Appear On Phoenix Ballot
Spoiler:
The Phoenix City Clerk has determined there are enough valid signatures on an initiative submitted by a political committee called Responsible Budgets.

The group — supported by Councilman Sal DiCiccio — wants to end taxpayer supported pensions for elected officials. It also wants to keep the city’s budget from growing faster than population and inflation and require extra revenue go to paying down pension debt. That debt, also called its unfunded liability, is about $4 billion and its money Phoenix owes its current and future retirees.

The city council must set an election date which should be Aug. 27, 2019, which is the date already set for another initiative to use light rail expansion money on other projects. The ballot wording for both initiatives must still be determined.


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  #456  
Old 03-08-2019, 01:56 PM
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NEW YORK

https://www.ai-cio.com/news/new-york...ard-diversity/
Quote:
New York State Comptroller Calls Out 4 More Companies on Board Diversity
Common Retirement Fund has now filed shareholder demands against 33 businesses.


Spoiler:
Gaming and Leisure Properties, New Residential Investment Corp., Sinclair Broadcast Group, and Trip Advisor are the latest batch of companies to feel New York State Comptroller Thomas P. DiNapoli’s wrath over what he sees as a lack of diversity.

DiNapoli, the sole trustee of the state’s $207.4 billion Common Retirement Fund, has filed shareholder proposals against the four businesses, demanding they improve the diversity on their boards.

“Research has shown that companies with diverse boards perform better,” DiNapoli said, adding that they otherwise face a competitive disadvantage. “And when companies fail to address shareholder concerns over lack of diversity, they demonstrate a lack of accountability.”

The four companies he named are part of a growing list, now 33, that the comptroller accuses of board diversity shortfalls.

As a paradigm, he cited BlackRock’s suggestion of a two-women minimum for boards. The Common Retirement Fund chief said he is “encouraged by signs of progress,” with women filling nearly one-third of new director openings in 2017, but dismayed as women and people of color account for “approximately 20% and 10.6% of S&P 1500 directorships, respectively.”

To DiNapoli, each board of directors should have a diversity progress report for shareholders by September. The New York fund specified inclusion across all areas, adding women and people of color in each candidate pool for new director nominees, and an update on how the companies are recognizing qualified women and people of color for their boards.

Other elements of the fund’s corporate diversity plan include proxy voting policy to oppose all incumbent board members at companies with no women directors. It has voted accordingly at 616 companies to date. In the case of businesses with only one woman on a board, the fund votes against the nominating committee members, which has happened at 450 companies so far.

DiNapoli wrote to more than 200 companies in the Russell 3000 Index that had no women directors in September. The letter warranted an explanation as to how the corporations would respond to investors inquiring the lack of diversity. Just 10 of the companies that responded have added at least one woman to their boards to date.

“We’ve put our portfolio companies on notice that we want them to be responsive and adopt best practices when it comes to the composition of their boards,” DiNapoli said.

The comptroller could not be reached for comment.

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Old 03-08-2019, 01:57 PM
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CALIFORNIA

https://www.sandiegouniontribune.com...htmlstory.html

Quote:
Lyles: Unfunded debt threatens states

Spoiler:
Too many of today’s conversations regarding government focus on social rather than economic issues related to good governance. If America is to survive for the long haul, the most important crisis Americans must resolve is that of pervasive fiscal irresponsibility and improper management of government.


Dick Lyles
The crisis is primarily the result of continuously rising levels of unfunded debt. The most dangerous unfunded debt occurs as unfunded pension liabilities incurred by state governments. These debts are growing. The problem is not being addressed adequately by most states.

Hoping to change this, the Government Accounting Standards Board implemented new rules in 2015 requiring states to report unfunded obligations on their balance sheets as a warning. Subsequent reports reveal that, on average, long-term liabilities have increased. The warnings have gone largely unheeded.

California’s current unfunded debt is around $400 billion and increasing. Democrat Governor Gavin Newsom and the Democrat-controlled legislature seem not to care. Although California is not listed as the state with the worst fiscal health (that distinction goes to Illinois), according to the latest Mercatus Center Report of State Fiscal Ratings, California ranks very near the bottom, ranking 43rd among the 50 states.

The Mercatus Center report also reveals that the top five healthiest states are all run by Republicans and have histories of conservative leadership while, with only one exception, the states with the poorest fiscal performance are run by Democrats. These are irrefutable facts.

Should we be concerned about the poor fiscal health of the blue states? In a nutshell, the answer is a resounding, “Yes!”

The impending catastrophe is much more imminent than any of the potential consequences we might experience in the decades to come from global warming or climate change. It is possible we might see the first American state fall into insolvency in less than a decade — depending upon what actions we take now.

Illinois is the “canary in the mine,” insofar as the toxicity of blue state insanity is concerned. Depending upon the decisions Illinois state leaders make during the next few years, Illinois could go belly up in as soon as six years, and most likely within the next 10 years. Illinois politicians and voters (like those in California) are doing nothing to signal they will likely solve their problems before catastrophe strikes.

Although California’s ratios are slightly better than Illinois, which moves the state a bit higher in the rankings of fiscal health, the actual numbers involved are staggering. Additionally, the numbers don’t take into account the fact that many tax-paying individuals and businesses are leaving the state while many non-taxpaying citizens are moving in — both legally and illegally.

A recent survey of residents of San Francisco revealed that more than 60 percent of them are planning to move away within the next five years. Their reasons are myriad, but most stem from the failed policies of former Mayor Gavin Newsom. Now he’s California’s governor. If that doesn’t scare you, it should.

It’s very likely that during the next few years California’s fiscal health will decline even further. Whether the indicators place California lower in the rankings or cause it to be ranked worse than Illinois is irrelevant. The difference between being ranked number 43 or number 50 is irrelevant if your condition is terminal in both cases.

Of more relevance is the fact that our quality of life and the lifestyle we enjoy as Californians is in jeopardy. The policies of blue state insanity aren’t working anywhere, especially here in California. We’re overdue for a wake-up call. It is time to start changing direction today before it is too late.


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  #458  
Old 03-08-2019, 02:19 PM
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ILLINOIS

https://www.chicagobusiness.com/joe-...ension-funding

Quote:
Union watchdogs don’t bark on pension funding
Organized labor ought to be more concerned than anybody about stabilizing state pension funds. So why do union leaders keep acquiescing as pols kick the funding can down the road?

Spoiler:
Public-sector unions in Illinois do a halfway decent job for their members on pensions.

The half they do well involves securing generous pension promises from politicians who need union votes. Political clout and aggressive litigation by unions have all but ensured that benefit cuts won’t be part of any solution to Illinois’ pension funding crisis.

Where unions fall short is making sure state employee pension funds will have enough money to honor those promises. They’ve acquiesced as successive governors and legislative leaders created the funding crisis by shortchanging pension plans by tens of billions over three decades. As unions point out in debates over benefit levels, a big chunk of the state’s $130 billion pension funding gap can be traced to the state’s failure to make actuarially required contributions.

Yet we’ve heard not a peep of protest from public-sector unions as newly elected Gov. J.B. Pritzker carries on the can-kicking tradition of his predecessors. His proposed budget would shave $878 million from the annual state pension contribution in fiscal 2020 and further weaken employee retirement plans by giving the state an extra seven years to meet its funding target of 90 percent.


Pritzker’s plan adds more risk to pension funds that have only 40 percent of the money they need to meet future payment obligations to retirees. Reducing current contributions and extending the “ramp” to full funding allows the gap to grow, because the pension plans will have fewer assets generating returns. What’s more, Pritzker’s longer-term ideas for funding pensions hinge on vague plans to transfer state-owned assets and a graduated income tax that couldn’t be enacted without supermajority approval of a constitutional amendment by legislators and voters—a lengthy and uncertain process.

Financial experts say Illinois should contribute more to the pension funds now, not less. The Civic Committee of the Commercial Club of Chicago—not exactly a mouthpiece for organized labor—called publicly for dramatic increases in pension funding. The Chicago business group proposed pumping an extra $2 billion a year into pensions, funded by new taxes on services and retirement income.

ADVERTISING

No such proposals have come from unions, which ought to be more concerned than anybody about stabilizing state pension funds so retired members get the benefits they were promised. Yet unions aren’t demanding billions in additional state contributions or proposing new revenue sources to fund pensions. Instead, they’re going along with a plan that increases the risk that pensioners won’t get paid. And that risk is real. Already, some state pension plans have had to sell off investments to raise money for current payments.

In response to my questions, four big state employee unions generally praised Pritzker for committing to full payment of promised benefits and vowed to scrutinize his funding proposals.

“We will work with the governor and members of the General Assembly to ensure that any pension funding proposal does not underfund the pension systems,” Illinois Education Association President Kathi Griffin said in a statement.

Her pledge would inspire more confidence if unions hadn’t let previous governors off the funding hook. IEA, along with the Service Employees International Union and the Illinois Federation of Teachers, signed off on former Gov. Rod Blagojevich’s two-year “holiday” from pension contributions. Unions also stood by in the 1990s when then-Gov. Jim Edgar and legislators hatched a funding schedule that kept state contributions artificially low for 15 years.

If unions had used their political muscle against those schemes, their members’ retirement plans would be in better shape today. It’s time they found their voice on pension funding.


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  #459  
Old 03-09-2019, 11:23 AM
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WISCONSIN

https://www.forbes.com/sites/ebauer/...w#72b3897340d4
Quote:
"Go North, Young Man" - To The Wisconsin Public Pension System

Spoiler:
To parapharase Horace Greeley in his Manifest Destiny exhortation, but for those seeking out well-funded public pension plans, it's time to go north -- northwards from Illinois, that is, to the greener pastures of the Wisconsin Retirement System.

Let's start with some charts: first, the funded ratio. (This and the following charts come from data extracted from PublicPlansData.org, which includes the years 2001 through 2017, as well as the Wisconsin 2017 actuarial report. For Illinois, the three major public plans for with the state bears funding responsibility are combined and, where applicable, weighted averages calculated; for Wisconsin, the WRS already includes the three categories of state employees, teachers, and university employees, as well as most municipal employees except for those of Milwaukee city and county.)



Comparative funded status, based on data from https://publicplansdata.org/public-p...rowse-data/OWN WORK

Yes, that's correct. The Wisconsin funded ratio hovers at or just barely below 100% for this entire period. What's more, regular readers will recall that in my analysis of Chicago's main pension plan, I did the math to demonstrate that even if the city had made the contributions as calculated by its actuaries during this time frame, they would have been insufficient to have kept the plan funded, and even so, would have increased dramatically. Is Wisconsin keeping its plan funded only by means of unsustainably-increasing contributions? Let's compare:

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Comparison of actual contributions based on https://publicplansdata.org/public-p...e/browse-data/ dataOWN WORK

To be sure, the scale required for Illinois' contributions makes interpreting Wisconsin's contributions difficult. For reference, Illinois' contributions increased from $1.4 billion in 2001 to $7.6 billion in 2017, a 450% increase. Wisconsin's contributions increased from $411 million to $1.0 billion in the same time frame, an increase of 150%.

The Public Plans Data site also provides payroll data, which means we can view change over time in the contributions as a percentage of total payroll. That's easier seen as a table.


data from https://publicplansdata.org/public-p...rowse-data/OWN WORK

Finally, the Wisconsin actuaries are not hoodwinking us by means of artificially-high valuation interest rates; during this time period, the weighted-average Illinois discount rate dropped from 8.5% to 7.3% (it is now somewhat lower in the plans' most recent valuations), and the Wisconsin plan's rate was consistently lower, from 8.0% to 7.2%. (Remember that lower discount rates result in higher liabilities and relatively lower funded ratios.)

So what is the secret sauce to Wisconsin's full funding?

A small piece of the puzzle is the much-restrained growth in benefits during this timeframe:


Average benefit per retiree (weighted average for Illinois' 3 main plans), from https://publicplansdata.org/public-p...e/browse-data/ dataOWN WORK

The much larger piece of the explanation, though, is this: Wisconsin's public pension system, unique among not just public pensions but among any defined benefit pension in the United States, is designed to share risks between participants and the state, through two key mechanisms.

First, the contribution each year is recalculated as needed to keep the plan properly funded, and that contribution equally split between workers and the state.

Second, unlike Illinois' retirees, who are guaranteed a 3% benefit increase each year, no matter what, Wisconsin's cost-of-living adjustments are dependent on favorable investment returns, and, far more crucially, retirees' benefits are similarly reduced in down years. The gains and losses are smoothed on a five-year basis to reduce the impact any given year, but, despite fears by many retirement experts that, when it comes down to it, plan administrators would chicken out on benefit reductions, in Wisconsin, these benefit reductions really have been applied just as consistently as the benefit increases. What's more, the adjustments take into account not just investment returns but also mortality improvements and other plan experience/assumption impacts.

(For more information, see "Wisconsin's fully funded pension system is one of a kind" from 2016 at the Milwaukee Journal-Sentinel as well as Mary Pat Campbell's analysis on her blog last summer; also, note that the Wisconsin actuarial valuation, as do all plans valued in accordance with actuarial standards of practice, already assumes future improvements in life expectancy over time; benefit adjustments reflect the degree to which actual mortality matches this expected improvement over time.)

Of course, the increasing plan contributions during this time frame, from 4.1% to 7.3% of pay, suggest that it's not all magic. And as the Journal-Sentinel reports, lawmakers succumbed to the temptation to boost benefits in 1999, and, as Campbell reports, they then resorted to a Pension Obligation Bond and its "beat the stock market" gamble, to fill a budget hole, which, again per the J-S, has worked out in their favor.

Nonetheless, in my article earlier this week on the Aspen Institute's report on non-employer retirement plans, I wrote that they sought the "holy grail of retirement policy" -- risk pooling as a replacement for the risk protection that employer-sponsored retirement plans had formerly provided. If we want to analyze prospects of risk pooling, collective defined contribution, defined ambition -- however we wish to label this sort of plan, there is no better place to start than the Wisconsin Retirement System .


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Old 03-09-2019, 11:24 AM
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KENTUCKY

https://amp.kentucky.com/news/politi...mpression=true

Quote:
‘Pension relief’ bills could save local agencies, at a high cost to Kentucky taxpayers

Spoiler:
Kentucky lawmakers face a tough choice this winter as they try to ease the huge pension costs facing regional state universities, local health departments, mental health nonprofits, rape crisis centers and other publicly funded institutions that are technically outside state government.

The officials running these places say they need help in order to keep serving Kentuckians.

“Without a (pension contribution) reprieve, 42 county health departments stand to close their doors in the next 12 months, and an additional 22 are likely to in the next 24 months,” said Allison Adams, president of the Kentucky Health Departments Association.

In response, several “pension relief” bills working their way through the legislative process would cap at 49 percent of payroll the level at which these institutions must pay into the Kentucky Retirement Systems. Lawmakers approved a 49 percent cap for the same institutions last year, even as the pension contribution rate for state government has soared to 84 percent, up from 39 percent a decade ago.

In letters to KRS last month, actuarial advisers warned that this pattern of generosity means that state government — supported by state taxpayers — will have to make up the considerable difference, starting with an additional $121 million in Fiscal Year 2021. To keep the other institutions at 49 percent, state government should be prepared to contribute 96 percent of its payroll to pension costs, the advisers said.


Another measure, House Bill 358, would let the regional universities immediately exit KRS by no longer enrolling new employees and paying off their pension liabilities on a 25-year installment plan rather than one lump sum. KRS’ advisers warned this “will result in substantial sustainability risk as other employers lobby for the enactment of similar type legislation to reduce their pension cost.”

Kentucky faces a total public pension shortfall of $37 billion. Every dollar of pension relief granted to an outside entity is a dollar the state’s General Fund must make up, at the cost of something else state government needed to do, said state Senate budget chairman Chris McDaniel.

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State Sen. Chris McDaniel
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On Tuesday, McDaniel’s committee gutted most of the language from House Bill 268, a budget measure that included pension-relief language, among other items. Although McDaniel acknowledged that pension relief is likely to make it into law this winter one way or another, he pledged that this would be the last time.

“To freeze (the pension rates) this year will have to involve a fix, because I’m simply not for continuing to kick this can down the road,” said McDaniel, R-Latonia. “The whole reason we got the pension system into the problem we have right now is people kicked the can down the road for decades and didn’t make decisions. The time to make those decisions is now.”


McDaniel said one answer, in his opinion, would involve the other institutions finding additional revenue on their own or reducing their future pension liabilities by placing new employees in defined-contribution retirement accounts. Several mental health nonprofits already have made that switch so new employees are no longer enrolled and accruing liabilities in KRS, McDaniel said.

“I hope to keep working with them to find the best solution for their path forward,” McDaniel said.

For health departments, which have 2,474 employees enrolled in KRS, the ideal solution would be lawmakers dedicating one or more new revenue sources to cover pension costs for the public institutions that need relief, said Adams, who also is public health director at the Buffalo Trace District Health Department in Maysville.

But it’s possible the health departments will be forced into their more pragmatic Plan B, which is slashing their staffs by 35 percent, Adams said. Currently, payroll size is what determines pension contributions, so a smaller staff means an agency owes less, she said.

“It’s not much of a solution, and it’s not really a win for the entire pension system, because it would mean fewer people paying in. But it would reduce our liability,” Adams said.

“And obviously, for our communities, a lot of things will fall through the cracks,” she continued. “Response time will slow. Inspections will take longer to complete. Ultimately, as our health departments can’t do all of the work they once did, the responsibility falls back on the Cabinet for Health and Family Services by statute.”

For state employees nervous about the security of their retirements, however, continued pension relief seems like a well-intentioned effort that could leave them the last occupants of a sinking lifeboat, said Jim Carroll, spokesman for Kentucky Government Retirees, a Facebook advocacy group.

“It’s not sustainable,” Carroll said. “This just makes a bad situation worse. Someone has to pay that ARC (actuarial required contribution), and if the quasi-public agencies don’t have to do it, then it’s all going to fall on the state. The system can’t afford for anyone to walk away from their obligations.”


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