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  #101  
Old 01-17-2019, 09:39 AM
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Mary Pat Campbell
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CALIFORNIA

https://medium.com/@DavidGCrane/accr...t-ddc7c2cbac3c

Quote:
Accretion of Discount

Spoiler:
Those of you interested in state, local and school district pension obligations should add an esoteric phrase to your vocabularies: “Accretion of Discount.”

As explained by Investopedia: “Accretion of discount is the increase in the value of a discounted instrument as time passes and the maturity date looms closer. The value of the instrument will accrete (grow) at the interest rate implied by the discounted issuance price, the value at maturity and the term to maturity.”

In the case of public pensions, “discounted instrument” = pension liabilities. Eg, assume a government obligates itself to make a $100 pension payment in 20 years. To report a present value of that obligation when created, the future payment of $100 must be “discounted.” Once established, the obligation will grow at the discount rate. The higher the discount rate, the greater the discount. The greater the discount, the greater the accretion.

Let’s say the government chooses a 7.5 percent discount rate. Discounted at that rate, $100 due in 20 years has a present value of $24. The discount — $100 minus $24, or $76 — will accrete over the succeeding 20 years. One year later, the liability will accrete to $25. After five years, $34. After ten years, $49. After 15 years, $70. Finally, at 20 years, the liability has fully accreted to $100. That growth is automatic. It’s built in up front by the discount. Also, changing the discount rate during the 20 year period wouldn’t change the end result — that must always be $100. It would just change the pace at which the $100 is accreted.

To see accretion in action, take a look at these figures from CalPERS:



Liabilities (second column) grew an astounding 76 percent in nine years, from $248 billion to $436 billion. That translates into a compounded annual growth rate of 8.11 percent, close to CalPERS’s discount rates during that period. Lengthening life spans also contribute to liability growth but nothing compared to the growth from accreting a huge discount.

CalPERS is slowly lowering its discount rate to 7 percent but it doesn’t make much difference at this stage. That’s because its plan is increasingly mature and its assets are so much smaller than liabilities. Assets of $298 billion cannot keep up with liabilities of $436 billion accreting at 7 percent, much less 8 percent. Even if $436 billion of liabilities accrete at “only” 7 percent, $298 billion of assets must grow at more than 10 percent just to keep the unfunded liability (the difference between liabilities and assets) from growing.


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  #102  
Old 01-18-2019, 10:55 AM
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CALIFORNIA

https://www.hoover.org/news/reforms-...-pension-costs

Quote:
Reforms Urged To Control Exploding California Pension Costs

Spoiler:
The public pension nightmare for California will only worsen unless serious reforms are adopted, a Hoover scholar says.

Joshua Rauh, a senior fellow at the Hoover Institution and a professor of finance at the Stanford Graduate School of Business, suggests that governments in California need to either offer more modest pension benefits—and fund those much more conservatively—or start putting public employees into defined contribution plans.

An economist, Rauh studies corporate investment, business taxation, government pension liabilities, and investment management. He recently wrote about California’s pension situation for a Hoover Institution white paper and discussed the subject in a PolicyEd video.

Rauh was recently interviewed about the issue.

How critical is the pension situation in California?

Rauh: The gap between what public pension funds in California have saved up for public employee pensions and the value of what is owed to public employees is $769 billion, or more than $60,000 per California household [see our Interactive Map].

It is as though each household is carrying around a credit card balance of $60,000 that is growing each year. At some point in the future, the government will make us pay, because the public employee pensions must be paid. How will the government make us pay? Either through higher taxes or through the cutting of core public services.

Think about the essential public services that citizens pay for through taxes and fees—like safety and education. Going forward, we'll have fewer resources available to pay for those actual services, because taxpayer money will increasingly be burdened with paying the pensions of the people who performed those jobs in the past.

Another way to see the problem is that as of now, around 10 percent of all public revenue generated in the state of California and its municipalities goes to fund public employee pensions. That sounds like a lot, but the real problem is that even this amount is not adequate to stabilize the $60,000-per-household debt to the public employees! A contribution rate that would keep the debt from rising would amount to more than 21 percent of every dollar of public revenue generated within the state of California.

Why are assumptions about future pension returns often highly uncertain?

Rauh: They used to be much more certain, because pension funds used to invest primarily in safe securities such as government bonds. US Treasury bonds in the 1990s could generate 6–7 percent per year returns with a high degree of safety. Now they generate less than 3 percent per year. State and local governments have responded to this change over time by shifting their asset allocation increasingly to riskier securities—the stock market for one, but also alternative assets such as private equity, venture capital, real estate, and hedge funds. Overall, around 75 percent of every dollar in public pension fund portfolios is invested in one of these risky asset classes. While the pension funds typically assume they're going to earn around 7.5 percent per year in these investments, the fact is that the returns that might be earned on these securities are highly uncertain, even over long periods of time.

Some people say, "Everything will be fine—the stock market and professional investors always do well enough over the long term." That's not what the principles of finance say. We know that in eras where the stock market has done well, it is because those returns were compensation for risk—for the possibility of bad outcomes that we got lucky and avoided. Right now, pension funds are taking a great deal of risk in order to keep their return targets up. There's no guarantee that it will go well, and in fact the funds are more likely to fall substantially short of their targets than to achieve them.

What should the state and other entities in California do to realistically solve and reform their pension problems?

Rauh: "Realistically" is a difficult word because this problem is so blocked by political special interests and public employee unions. That said, I like to think about what I would advise a friend who has racked up $60,000 of credit card debt that keeps growing every year because he's investing in risky assets that aren't generating the returns he's hoping for. I would tell my friend that the first thing he needs to do is stop the behavior that is leading to the growth in the credit card debt. In this case, that behavior is promising public employees pensions without setting aside sufficient funds to pay for them, and hoping that the stock market or private equity investments will bail everyone out. That has to stop.

So, on a forward-looking basis, governments need to either begin promising more modest pension benefits that they fund much more conservatively or, failing that, they need to put public employees into defined contribution plans, which are more like the benefits private economy employees have. This won't make the $769 billion debt go away, but it will stop it from growing, and for a state like California it is the explosive growth of this debt that should be more frightening than its absolute level.

Is pension reform under way or being considered in California?

Rauh: Our previous governor, Jerry Brown, knew that pensions were a big problem. In 2011, the first year of his second turn as governor, he proposed a 12-point pension overhaul. The California State Legislature passed some of these points, particularly those that affect new hires. These new members of the workforce will face higher retirement ages, and there will be more sharing of costs between them and their municipal employers. Unfortunately, the true pension costs are far higher than the costs as reflected in current budgets, which is the part that would be shared. It’s like my offering to share costs with you in advance of your taking me out to dinner at a very fine restaurant—but my contribution is based only on the expected cost of a hamburger at a fast-food joint.

Other points in Governor Brown’s plan were passed but are currently being litigated, such as the limitations against pension spiking—the practice under which some public employees artificially inflate compensation in the years before retirement in order to set themselves up for a higher lifetime payment on the taxpayer dime. Believe it or not, many public employees assert that they have a right to such practices.

These employees contend that the body of precedent informally called the California Rule gives public employees a right to whatever benefit was available to them on their initial day of employment, including the right to manipulate the compensation that determines their lifetime pension benefit. Recent appeals court decisions have upheld employees’ right to spike, but the California Supreme Court has now taken up the issue.

While these attempts are better than nothing, they fall far short of what is needed to stop the looming fiscal crisis that faces the state.


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  #103  
Old 01-18-2019, 11:29 AM
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CHICAGO, ILLINOIS

https://budgetblog.ctbaonline.org/ch...t-cab30326b9c8

Quote:
Chicago’s pension crisis isn’t really about pensions — it’s about debt
Four out of five dollars of the city’s 2019 contribution are for benefits earned, but not paid for, in prior years

Spoiler:
No matter who the next mayor of Chicago is, one thing is certain: Before they can increase spending on neighborhood investments, public transit, schools, or any other priority, they will have to address the city’s pension debt.

As it stands, the city owes some $28 billion to the systems that pay retirement benefits to school teachers, police officers, firefighters, and other city workers — and its required contributions to those systems are scheduled to increase by over a billion dollars over the next four years, taking up more than twenty percent of the entire city budget. What can be done? And what’s to blame for this problem to begin with?


Source: Actuarial valuation reports
Borrowing, not benefit levels, makes the current path dangerous
One theory suggests that public retirement benefits are just too generous to be sustainable. In particular, many observers and elected officials have called out a decades-old decision to grant retired public employees a three percent annual increase in their retirement benefits in order to keep up with inflation. (In 2010, the state changed this rule, so that all public workers hired since 2011 receive a cost of living adjustment of one-half the rate of inflation, capped at three percent.) In a December speech, outgoing Chicago mayor Rahm Emanuel proposed the city reduce its payments by passing a constitutional amendment roll back the three percent cost of living adjustment and cut retirement benefits.

But a closer look reveals that benefits themselves are not the driving force behind Chicago’s pension debt crisis. Rather, pension borrowing — a failure to fully pay for benefits earned in prior years — has led to a situation in which the city is not only paying for newly earned benefits in each year, but billions of dollars of benefits earned but not paid for in prior years, as well as the interest on those unpaid-for benefits.

The scale of the debt problem is so severe that it accounts for over a billion dollars in 2019, or nearly 10 percent of the entire city budget. In other words, if Chicago were only paying for newly earned benefits in 2019, it would be able to roll back all of the $589 million in property tax increases enacted over the past four years, then cut property taxes by another $400 million — and still balance the budget.

The chart below shows just how dramatic the pension debt issue is. Like the one above, it shows how much Chicago is projected to have to pay to its retirements funds. But this one divides those payments into two parts: the “normal cost,” the estimated cost of retirement benefits earned in that year; and debt payments, which represent money the city owes the pension systems for benefits earned in previous years.


Source: Actuarial valuation reports
If Chicago’s pension payments were unsustainably high because its benefit levels were unsustainably high, you would expect the city to have a very high normal cost. Debt payments might make things worse, but a benefits-driven crisis would lead to normal costs so high they could not be accommodated without painful tax increases or deep spending cuts.

But that is not what we see. In 2019, Chicago’s pension payments added up to about $1.3 billion. Just $250 million of that, however, is the normal cost — the cost of new pension benefits earned this year. The rest, over $1 billion, is a debt payment on benefits earned in prior years. Just as importantly, the city’s normal cost is hardly projected to increase at all over the coming decades. In other words, without the debt payments, there is no crisis.

How did Chicago become so indebted?
By far the largest reason for Chicago’s level of pension debt is that the city has simply failed to pay what it owes.


Source: Commission on Government Forecasting and Accountability
Between 2007 and 2016, the most recent year for which data is available from the state Commission on Government Forecasting and Accountability, Chicago’s pension funds’ “unfunded liability” — the difference between the amount of money the funds need to pay all of the retirement benefits that have already been earned and the amount of money they actually have — has grown from about $12 billion to over $28 billion. Of that $16 billion in new debt, fully 58 percent of it, or $9.3 billion, is a direct result of city underfunding. The second largest category, at 23 percent or $3.7 billion, is poor investment returns, largely from the Great Recession. Another 20 percent, or $3.2 billion, is a result of changes in the assumptions the pension funds make in calculating how much money they need. (The most important of these changes have been reductions in the assumed rate of investment returns.)

Changes to salary and benefits levels, on the other hand, have actually reduced the unfunded liability by nearly $500 million, or about three percent.

You can see the extent to which Chicago has underfunded its pensions in the chart below, which compares the city’s actual payments to payments based on actuarial math. As in the projected payments chart above, the vast majority of that actuarial requirement is debt service on previously earned benefits.


Source: Chicago Annual Financial Analysis, 2017 and 2018
Why would the city so dramatically underfund its pensions? The answer is that “borrowing” from pension funds can appeal to elected officials for the same reason borrowing from other sources does: It allows the city to spend more money without asking residents to pay higher taxes. Essentially, Chicago has been borrowing from pension funds in order to pay for other priorities while keeping taxes artificially low. But as the debt payments on that pension borrowing have grown, the city has historically proven unwilling to pay them in full either, creating a spiral of rising costs. (Full actuarially based payments are scheduled to begin in 2020 for the Police and Fire pension systems, and in 2022 for the Municipal and Laborers pension systems.)

Ways ahead
How to deal with the debt the city has accumulated is a difficult question. But it must be dealt with. The state Supreme Court has made clear that already-earned pension benefits cannot be cut under the Illinois Constitution, nor should policymakers look to solve the issue by threatening the retirement security of workers. Other ways for the city to address the backlog, including pension obligation bonds, may have merit if done carefully and responsibly. And at the state level, CTBA has suggested a reamortization plan that would bump up payments today to save tens of billions in debt interest payments in future years. CTBA will continue to look at the City of Chicago’s pension situation, but recognizing the nature of the problem is an important first step.


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  #104  
Old 01-18-2019, 05:16 PM
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CHICAGO, ILLINOIS

https://www.chicagotribune.com/news/...y.html#new_tab

Quote:
Editorial: Mayoral forum, Part 2: Taming Chicago’s pension beast

Spoiler:
If you’re the mayor of cash-strapped Chicago and need $270 million ASAP to fill a city pension hole, where do you find the money? There’s no one right answer to that math problem, but among the candidates seeking office on Feb. 26, there’s one politically unpopular response: further raising property taxes.

On Wednesday, five more mayoral hopefuls met with the Tribune Editorial Board in a livestreamed forum: Dorothy Brown, Bob Fioretti, John Kozlar, Susana Mendoza and Paul Vallas.



We put our pension question to each, knowing how pols on the campaign trail in Illinois hate to discuss the bleak state of pensions because it’s a no-happy-talk zone. Raising additional revenue is hard. That’s why previous administrations in Springfield and City Hall took “pension holidays,” which sound lovely but involved recklessly skipping annual contributions. They were costly short-term fixes that explain why Illinois, Chicago and so many other local governments are in such deep trouble today.

WATCH: Stream the second mayoral endorsement session. »

All the Wednesday candidates acknowledged Chicago’s precarious situation by offering a variety of ideas for new sources of quick revenue. They couldn’t suggest money from a Chicago casino because it wouldn’t be open soon enough. Interestingly, none of the candidates mentioned an immediate residential property tax increase, apparently recognizing homeowners are taxed out. We’ll see what the next mayor does after he or she takes office.

Here’s a summary of the candidates’ responses:

Former Ald. Bob Fioretti: A commuter tax, involving a 1 percent payroll levy on non-residents who work in Chicago, would yield about $300 million, he said. “It’s people from Indiana, Wisconsin, the suburbs, who come in here and make their money here and spend it in their community,” Fioretti explained. He acknowledged a commuter tax got a razzing from this page after it was mentioned as a potential revenue source by Bill Daley. (We said it would drive away businesses.) Fioretti said ending the ban on video poker would bring in $70 million. He could get to $400 million by cutting $25 million from the budget. Fioretti does not support the city extending its indebtedness by doing another huge bond deal.

John Kozlar: He doesn’t want to sell bonds or raise taxes. “I’m a believer in the reallocation of resources,” he said. He suggests cutting overtime pay and bonuses for workers. He said he could take about $380 million out of that $481 million expense. “Have everybody work together,” he said.

Illinois Comptroller Susana Mendoza: “Anyone who says that the bonding deal is completely off the table is just not being realistic,” she said. The details of such a deal, proposed last year by Mayor Rahm Emanuel, aren’t clear. The idea: Raise $10 billion by selling bonds to help shore up the pension funds. In theory, investment returns from the funds would be large and steady enough to pay the interest on the bonds. Among the known risks: What happens if markets tank and the city struggles to pay bondholders?

Cook County Circuit Court Clerk Dorothy Brown: A financial transaction tax would involve taking a small cut on the buying and selling of financial assets including stocks, bonds and derivatives via the Chicago markets. “It’s time to have a discussion with the Chicago Mercantile Exchange as well as the Chicago Board Options Exchange about how can they can become good corporate citizens,” Brown said. She also wants to see Chicago create its own lottery.

Former Chicago Public Schools CEO Paul Vallas: There are ways to make city operations more efficient and, for example, make sure city departments secure all the revenue they are entitled to, Vallas said. His bigger idea is to identify expiring TIF districts and use property tax money from those sources to fund a bond sale. “You would be cashing in on the TIF windfall early,” he said.

Take it as a good sign that candidates are willing to talk about how to raise revenue. Not all of these proposals are feasible, legal and likely to produce the money Chicago will require for its pensions. The mayor who has to come up with an extra $270 million in 2020 will have to come up with nearly $1 billion in extra pension funding by 2023.

The pension beast threatens the stability of city government — and the resources of city taxpayers. How Chicago’s next mayor attacks the beast will, for better or worse, help shape Chicago’s livability and its people’s prosperity.

Voters, it will be on you to decide which of more than a dozen candidates you’ll entrust with Chicago’s shaky finances.


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  #105  
Old 01-18-2019, 05:16 PM
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SAN DIEGO, CALIFORNIA

https://www.sandiegouniontribune.com...117-story.html
Quote:
‘13th check’ bonus for retired city employees hits record again

Spoiler:
More than $6.7 million went to retired San Diego city employees at the end of November in the form of a “13th check,” setting yet another record for the holiday bonus program.

The payments, which go beyond city pensioners’ usual 12 monthly payments, ranged from $17 to $2,023 each.

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The San Diego City Employees’ Retirement System, or SDCERS, reports that more than 9,700 eligible recipients — another record high for the three-decade-old benefit— received a check that averaged $687 per person.


The “13th check” program was launched in 1980, when pension fund investments were doing well and city retirees had struggled through years of inflation. It has become a source of conflict as the city’s pension system faces a $3.1 billion shortfall in promised payments, which remains a taxpayer burden and has led to City Hall budget crises in the past.

According to Susan Youngflesh, associate general counsel, 13th-check payments are made only when pension fund investments meet certain earnings thresholds compared to agency expenses.

“When there’s sufficient earnings, members get this calculated benefit,” said Jim Baross, president of the City of San Diego Retired Employees Association. “It’s certainly helpful around the holidays. Some years we don’t get it, and that’s a hardship for folks.”

Checks have gone out every year since 1984 except for 2003, 2009 and 2012.

Daniel Kronemyer, an attorney and property manager in Carmel Valley who has followed the city’s pension deficit and other problems closely, said employee retirement costs are at the center of most problems in San Diego.

“It hobbles everything. San Diego cannot build schools and fix infrastructure because most of the money is going into the pension system,” Kronemyer said. “It sucks up every resource, every extra bit of money that our local government has.”

According to a 2004 review by the city’s Pension Reform Committee, the 13th check policy was awarding bonuses that were higher than some recipients’ benefits over the course of an entire year. City officials scrambled to place a cap on how much each person could receive, and the change resulted in a legal battle and subsequent settlement of nearly $10 million.

For those members who retired sometime after June 30, 1985, the cap on the 13th check is $30 for every year of service, so someone with 30 years of service would get a 13th check for $900. The cap goes up to $75 per year of service for workers who retired earlier and therefore have less generous monthly benefits.

Along with the 11-figure payout, the settlement nixed the 13th check — and several other costly benefits — for workers hired after June 30, 2005, but the total payout has continued to climb in recent years, as more people hired before that date retire and live longer.

“Life expectancy is going up. The liability stretches further and further as our population increases in age and longevity,” Kronemyer said. “This is not something that is going to go away.”

According to a review of city pension data, the total cost of this year’s 13th check is nearly a 30 percent increase from payouts in 2010.

Critics have said the money spent on 13th checks should have been reinvested to help offset the city’s pension obligation.

As of 2011, a total of $73.5 million had been spent cumulatively on the 13th-check program. A U-T Watchdog analysis at the time found the sum would have grown to $200 million if it were invested, based on the fund’s investment returns over the 30-year period.

As of today, some $115.3 million has been spent on the program.

SDCERS’ actuarial reports show the pension system’s deficit has grown by more than $1 billion in the past five years, though some increase can be attributed to recent changes in how pension debt is calculated.

In an effort to more accurately project the city’s pension debt, the San Diego pension board in 2016 and 2017 adjusted the life expectancy assumptions for pension-eligible employees and made the pension system’s projected investment returns less optimistic.

The new policies are part of a comprehensive plan to avoid repeating the pension under-funding schemes from the early 2000’s that earned San Diego the nickname of “Enron by the Sea.”

Advocates of the program say the bonus helps a lot of older retirees who struggle to make ends meet.

“There are [city retirees] who are not getting enough to live off of,” Baross said. “For those members, this supplemental amount is a real benefit. They need it and, in a sense, they earned it.”

Former San Diego fire captain Norman Roy received one of the largest 13th checks last year. According to Transparent California, an open-government group that publishes salary and pension data online, Roy’s pension payments in 2017 totaled $30,600. He worked for the city for 28 years and retired in 1980.

Roy did not return calls and messages seeking comment.

Another large check went to Ramiro Castorena, a former police sergeant who served the city for nearly three decades. Data show his total pension was $43,100 in 2017. According to an obituary, published by the San Diego Union-Tribune, Castorena passed away in October.

Melanie Peter, a senior paralegal at SDCERS, said 13th check payments are made in November to all living members on the payroll in October. Castorena was not paid directly, Peter said in an email; his beneficiary received the bonus.

At the same time, data show several retirees make $300,000 or more in pensions, and dozens make $100,000-plus.


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  #106  
Old 01-24-2019, 02:01 PM
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Mary Pat Campbell
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CHICAGO, ILLINOIS

http://www.substancenews.net/article...ection=Article

Quote:
Chicago Teachers Union failed to pay staff pension payments in 2018 and 2017

Spoiler:
In an accidental investigation of the Chicago Teachers Union (CTU) finances, Substance News has uncovered through Freedom of Information Act (FOIA) requests that pension payments to the Chicago Teachers Pension Fund (CTPF) for CTU staff were untimely and not paid. Tips from multiple sources in early November 2018, claimed that the CTU did not pay pension payments for staff working at the CTU offices. In early January 2019, the allegations were confirmed by document requests.

Dec. 14, 2018, CTPF letter to CTU.In the pages of emails and information from the CTPF FOIA documents, it was confirmed that the CTU was sent multiple notices and invoices for outstanding Statutory Penalties, Liquidated Damages and Interest Due on Untimely Payroll Records and Pension Contribution Payments for 2018.

On December 14, 2018, the CTU was sent a letter from the CTPF Chief Financial Officer, Alise White that it owed $40,382.94, due immediately for the determination of statutory penalties, including fees, liquidated damages, and interest, on untimely payroll records and pension payment submissions. The letter goes on to state that:

Enclosed is a bill for statutory penalties, liquidated damages, and interest on contributions owed due to Chicago Teachers Union’s untimely submission of payroll records and pension contribution payments to the Chicago Teachers’ Pension Fund, as required under Section 17-132 of the Illinois Pension Code. .

Dec. 14, 2018, invoiceThis was not a one-time or one-off incident. The CTU was sent multiple emails demanding payment. In an email sent by CTPF Chief Financial Officer, Alise White to 10 recipients stating:

We have reached out to the individuals that you have listed below multiple times and have not received a response regarding CTU statutory penalties outstanding. As it stands the penalties outstanding are about to go into demand status with our legal department. Please advise.

(Sent: Wednesday, December 19, 2018 3:46 PM)

Dec. 1, 2017, CTPF letter to CTU.Another email showed that CTU was notified and sent an invoice in the previous fiscal year 2017 for the same Bill for Statutory Penalties. On December 1, 2017, the CTU was sent a letter from the CTPF Chief Financial Officer, Alise White that it owed $6,185.87, due immediately for the determination of statutory penalties, including fees, liquidated damages, and interest, on untimely payroll records and pension payment submissions.

The email sent to Jackson Potter, then CTU Chief of Staff, and Jim Gillmeister, then CTU CFO, stated:

Good morning Mr. Potter-


Assessed late fee invoice on untimely contribution was mailed to your office on 12/1/2017. As of date, we have not received a response. We wanted to confirm you received the invoice. An electronic copy is attached for reference.


Thank you,


Accounting Department

Dec. 1, 2017, invoice.(Sent: Thursday, January 4, 2018 10:16 AM)

A few pension trustees, off-the-record for fear of reprisals, confirmed that the CTU eventually paid what was due for the staff pension payments, except in the case of the December 14, 2018, invoice where the current CTU CFO, Kathy Catalano, was requesting a waiver of the fees, liquidated damages, and interest (Sent: Friday, December 21, 2018 11:28 AM)

Substance News sent CTU President Jesse Sharkey an inquiry into this matter with specific questions, but he has yet to provide any statement at the time of the writing of this article.

There are more communications between the CTU and CTPF in the FOIA documents that discussed unrelated pension concerns by CTPF. Substance News will consider these matters in the coming days. Due to privacy concerns, Substance News wants to confirm the status and implications of the other information it has obtained from the CTPF.

[Dr. John Kugler works full time as a CTU Field Representative and pays into the CTPF. He is also the elected Teamsters Local 743 Shop Steward for the field representatives working at the CTU. He can be contacted by email @ kuglerjohn@hotmail.com ]


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Old 01-24-2019, 02:25 PM
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CALIFORNIA
CALPERS

https://www.ai-cio.com/news/calpers-...yer-resigning/
Quote:
CalPERS Former No. 2 Investment Official Hires Employment Lawyer After Resigning
Elisabeth Bourqui hires lawyer who represents workers in their disputes with employers, including wrongful termination cases.


Spoiler:
The former No. 2 official in the investment office of the California Public Employees’ Retirement System has hired an employment lawyer who specializes in wrongful termination and other employment discrimination cases.

Elisabeth Bourqui, who was the system’s chief operating investment officer (COIO) until her sudden resignation two weeks ago, was a surprise visitor Tuesday at the pension plan’s semiannual retreat meeting in Rohnert Park, California.

She sat quietly in a middle row of a hotel ballroom as Ben Meng, the pension plan’s new chief investment officer, detailed his investment visions for the largest US pension organization.

Sitting next to Bourqui was Elisa Stewart, a partner in the Emeryville, California, law firm of Stewart & Musell, which specializes in employment law issues for workers.

The firm’s website says it handles wrongful termination, sexual harassment, and age discrimination cases, among other employment issues.

Bourqui introduced Stewart to a reporter during a break at the CalPERS meeting.

“This is my lawyer,” she told the reporter. She would not answer any other questions as to why she had left CalPERS just seven months after she moved from Zurich, Switzerland, to the Sacramento area to take the CalPERS job.

Meng announced Bourqui’s departure in a staff memo on January 7, just five days after he assumed the investment leadership of the largest US retirement system.

It is not clear if Meng requested Bourqui’s resignation so he could place his own candidate in the spot, or whether she was having a conflict with CalPERS CEO Marcie Frost. CalPERS spokesman Wayne David said he could not discuss Bourqui leaving because it was a personnel matter. CalPERS officials announced in April that Bourqui had been selected to become the COIO after a global search. Bourqui led the investment office’s business and operations functions, including managing investment compliance, operational risk, and audit-related functions.

She was also a key advisor on investment policy.

“Elisabeth brings a tremendous depth of global experience to CalPERS,” said Ted Eliopoulos, CalPERS’s then CIO, in a statement at the time of her appointment. “Elisabeth will strengthen our efforts to innovate, and to integrate business practices across our global investment platform. She will also be instrumental in the implementation of business strategies particularly in private equity and asset allocation.”

CalPERS sources have questioned if Bourqui’s detailed presentations on the potential investment returns but also risks of CalPERS’s planned direct investment-style private program in closed session meetings upset Frost, a big advocate of the program.

Most CalPERS investment officials had been telling board members in closed sessions the advantages of the program in terms of helping the system’s investment returns. Boruqui did so too, but she also expressed what she felt some of the risks of the program are, including potential millions of dollars in start-up costs.

Bourqui started on May 14. The same day, CalPERS officials announced that CIO Ted Eliopoulos would be leaving by the end of 2018 because of family matters. It is unclear if Bourqui was informed of his decision before taking the job. Eliopoulos left in November.

Bourqui had applied for the CIO job, which was ultimately given to Meng in September.

She was a frequent speaker at CalPERS investment committee meetings, offering details on investment issues and policies.

Bourqui had been head of pension assets and liabilities management at ABB Group prior to joining CalPERS. Before ABB, Bourqui worked as an investment consultant in Canada for Mercer, specializing in public and private pension funds.

Bourqui replaced Wylie Tollette in the CalPERS spot. Tollette left CalPERS in January 2018 to rejoin money manager Franklin Templeton Investments.


https://www.nakedcapitalism.com/2019...complaint.html
Quote:
Marcie Frost’s Reign of Error: Second Star CalPERS Employee Fired in a Month; Ouster Backfires as We Publicize Complaint
Spoiler:
Two CalPERS insiders informed us that Justin Harwell, then the manager heading CalPERS’ Information Security Office, was terminated last Friday, or as one put it, “was walked out Friday afternoon.”

Consistent with his bio on LinkedIn, Harwell, who joined CalPERS in late 2017, was seen as having a strong background in information security and came from the private sector. Like star hire Elisabeth Bourqui, who was brought in as CalPERS Chief Operating Investment Officer, Harwell was unceremoniously defenestrated. The fact that CalPERS is terminating highly qualified staffers, apparently for political reasons, will only increase the institution’s already considerable dysfunction and incompetence.

CalPERS has apparently scheduled 9:00 AM meeting on Tuesday to tell relevant staffers about Harwell’s sudden departure. We sincerely doubt they were to be told anything approaching the truth.

Harwell had complained about being required to hire a staff member in a manner at odds with proper procedures. When that employee posed additional problems, Harwell escalated the matter, including to Doug Hoffner, the deputy executive officer of Operations & Technology and Matt Jacobs, the general counsel. As one source put it, “They told Harwell to suck it up.”

Harwell took out his frustration by posting an anonymous review on the jobs site Glassdoor:



As you can see, Harwell did not cover his tracks.

Because CalPERS invests more time in managing PR than managing its operations, CalPERS took notice of the review what looks like close to immediately. You’ll see the screenshot shows it as having been up only three days. One has to wonder, given the huge volume of reviews up at Glassdoor, if anyone outside CalPERS saw it.1

Harwell was called in and asked if he was the author of the Glassdoor review. He admitted he was. He was instructed to remove it and he did. One source says he was fired within two hours of that meeting.

By being so vindictive, CalPERS has now made the review and the culture of cronyism and cover-ups vastly more visible than it would have been. A more mature leader would have gotten Harwell to trash the review, let things cool a little bit, and then told him that his future at CalPERS wasn’t very bright and he’d be wise to look for a new job.

But we’ve been told by people who worked with Frost for the better part of a decade in Washington that she was petty and vengeful, and she looks to be showing her true colors at CalPERS. She will find out that CalPERS is too important an institution to run like a junior high school clique. No one with better options will work for someone who isn’t terribly competent and is abusive on top of it. If Frost’s growing file folder of bad press clips don’t do her in, CalPERS’ faltering performance eventually will.

____

1 Of course, in the World According to Marcie Frost, even if no one outside CalPERS saw the negative review, the mere fact that CaLPERS employees saw it would be deemed harmful because it would undermine the actively-cultivated myth that everyone at CalPERS loves working for Marcie, and more important, that she really is doing a good job.


https://www.nakedcapitalism.com/2019...nt-lawyer.html
Quote:
CalPERS’ Story About Sudden “Resignation” of Star Hire Elisabeth Bourqui Falls Apart as Bourqui Comes to Board Meeting With Heavyweight Employment Lawyer
Spoiler:
On Tuesday, we learned that CalPERS’ former Chief Operating Investment Officer, Elisabeth Bourqui, who resigned suddenly in early January, attended the CalPERS offsite in Rohnert Park, with heavyweight employment lawyer Elisa Stewart of Stewart & Musell at her side in the morning (Bourqui’s husband joined her in the afternoon). Bourqui declined to speak to the press and public but was giving her card to interested board members.

Recall that Bourqui’s sudden departure didn’t smell right. CalPERS made no announcement; members of the press found out via employees leaking the e-mail sent by the new Chief Investment Officer, Ben Meng. As we wrote then:

The fact that Bourqui left without any transition or advance warning means it is well nigh certain that she had a dispute with Marcie Frost. Recall that the departures of the head of private equity, Real Desrochers, the former Chief Operating Investment Officer Wylie Tollette, and Chief Investment Officer Ted Eloupoulos were all announced in advance.

Initial reports indicated that Bourqui was well liked and well respected by employees, so it seems inconceivable that her performance was sub-par. It seems pretty clear what the real issue was. As one said:

There is no way this is not about private equity.

By contrast, when Bourqui’s predecessor, Wylie Tollette, left, CalPERS issued the usual sort of press release, explaining why he was leaving, describing his accomplishments, including CEO Marcie Frost heaping a full paragraph of praise on him. Even in less friendly departures, the norm for an executive is a press release, with a terse explanation of the reason for leaving (“for personal reasons” or “to spend time with their family” is code for a defenestration). The lack of any official statement whatsoever suggests the circumstances of the exodus were so ugly that the employer wasn’t willing to spend the time to negotiate a minimal statement. 1

Even though the Ben Meng e-mail of January 7 started, “Elisabeth Bourqui has submitted her resignation as CalPERS Chief Operating Investment Officer (COIO) effective today,” tellingly, CEO Marcie Frost was using a different formulation to stakeholders on Tuesday: “I didn’t fire her.”

Bourqui’s remarkable public appearance sends a strong message that she didn’t regard her departure as voluntary and intends to Do Something about that. And Frost’s statement is awfully convenient. It leaves open the question as to whether someone else fired Bourqui, or whether she technically wasn’t fired, but was “rejected on probation,” which the term of art for how California civil service employees who have not finished the one-year probationary period are terminated.2

Bourqui had been at CalPERS for only eight months. Since she was on probation, her protection from dismissal is limited. If she were to appeal to the State Personnel Board, she would have the burden of proof. Normally the grounds for contesting a release from probation are discrimination, fraud….and retaliation. A source told us that Bouqui had raised serious issues about the private equity plan, and via a second channel, we understand that Bourqui objected to Frost and other senior staff members about how they were pushing the board to adopt the plan.

Bourqui was one of three presenters on the private equity plan in closed board meeting in November:



As we mentioned earlier, not only did Bourqui supervise risk modeling at ABB Group, Zurich-based engineering powerhouse that by virtue of operating in 100 countries had extremely complex exposures, but she also headed the Canadian pension fund practice for Mercer, which means she would have been familiar with how Canadian pension funds had successfully built up their private equity capabilities. It isn’t hard to imagine that Bourqui would have used her scarce face time before the board to raise concerns about the scheme, and that that would have enraged Frost, who has been hell bent to get the plan approved without the board doing an adequate job of kicking the tires.

Reporter Randy Diamond has gotten intel similar to ours. From Chief Investment Officer:

CalPERS sources have questioned if Bourqui’s detailed presentations on the potential investment returns but also risks of CalPERS’s planned direct investment-style private program in closed session meetings upset Frost, a big advocate of the program.

Most CalPERS investment officials had been telling board members in closed sessions the advantages of the program in terms of helping the system’s investment returns. Boruqui did so too, but she also expressed what she felt some of the risks of the program are, including potential millions of dollars in start-up costs.

As an aside, notice that CalPERS employees are reporting on closed session discussions to Diamond. Even though close session discussions are held in secret and supposed to remain secret, staff members see fit to publicize them without getting the required authorization on a regular basis. Here we see dissident staff members leaking. Yet CalPERS routinely tries to blame these unwelcome disclosures on board member who are not part of the power faction, when Diamond makes crystal clear his sources were employees, not board members.

But…you might be saying….what if Bourqui really did resign? It’s not so clear cut. California recognizes that there is such a thing as resigning under duress, which in California is called “constructive dismissal” and is categorized in the California Civil Jury instructions as a sub-set of the law on “wrongful termination”. A primer from Shouse Law Group gives an overview. Key sections:

The law of wrongful constructive termination (also known as wrongful constructive discharge) in California provides that you can sue an employer for wrongful termination even if you resigned rather than being fired.

In order to successfully sue an employer for wrongful constructive termination, you need to be able to show two things:

1. Your employer, through acts of workplace retaliation, intentionally or knowingly created working conditions for you that were intolerable, so that you would have no choice but to resign; and

2. Your employer did not have the right to fire you outright–and so if s/he had, you would have had a valid wrongful termination case against him/her.

From an attorney who spent his entire career working for California government bodies:

The law is pretty well-established, although it can often be challenging to prove-up. Employers have always used the strategy of forcing employees to quit, rather than firing them, in hopes of avoiding a wrongful termination suit. However, the courts have long recognized that if an employer knowingly and intentionally subjects an employee to working conditions that a reasonable person would consider to be so intolerable that they would resign, it is effectively a dismissal of the employee.

An important, although not essential, element of proof would be that the intolerable working conditions were imposed as retaliation for conduct of the employee, especially whistle-blowing. Evidence of favorable performance reviews leading up to the imposition of retaliatory intolerable working conditions also makes a stronger case. Intolerable working conditions can include imposing hours where an employee can no longer pick her children up from school, or placing a senior manager in a menial position. It’s simply a “reasonable person” standard and can include, demotion, failure to promote, threats to report an employee to ICE, refusal to provide professional development and training, denial of time-off, or denial of access to resources necessary to the performance of one’s job (like access to databases or records).

The grounds for Wrongful Termination go beyond whistle-blowing, and can include Wrongful Termination in Violation of Public Policy — such as refusing to perform an illegal act, performing an obligation required by law (such as jury service), exercising a legal right or privilege (like insisting on a lunch break), or reporting a violation of law (other than whistle-blowing).

I suspect that Bourqui is going to have quite a good case, because while Marcie Frost and Matt Jacobs are a couple of bullies, they appear to lack knowledge and experience of the subtleties of employment law. Her lawyer has quite a successful practice, and it’s doubtful that she would make a move like showing up at the off-site if she didn’t think that she has a very strong hand.

Another factor that would give Bourqui leverage is that if she were to file a State Personnel Board appeal, that document is a public record, and her hearing would also be public.

As I read the hearing procedures, if the two parties do not reach an agreement in a settlement conference, they are then scheduled for an evidentiary hearing. Bourqui would be able to do discovery and subpoena witnesses and documents. If Bourqui believes her stance on the private equity scheme was the reason she was pushed out, she would wind up reviewing her objections and why she felt she had a professional and potentially a fiduciary duty to make those views heard. Bourqui could also seek to depose board members and have the judge consider any relevant closed session information under seal. It’s hard to imagine that Frost would want this controversy to go public. If she has any sense, CalPERS will settle pronto. But selfishly, I’d love to see this go a few rounds. It’s time Frost took some body blows for her incompetence and vengefulness.

_____

1 One employee e-mailed us to report that “She was ‘walked’ out of the building early this morning.” If that is true, that would be gratuitously nasty as well as consistent with the idea that Bourqui was fired.

2 To be more precise, the probationary period for Bourqui’s position was one year. However, but some lower level civil service positions have a 6 month probationary periods.


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Old 01-25-2019, 09:46 AM
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CALIFORNIA
CALSTRS
https://www.ai-cio.com/news/calstrs-...o-investments/
Quote:
CalSTRS Wants to Double Co-Investments
Co-investments only make up around 5% of the CalSTRS private equity portfolio but additional investments may help build up the overall private equity program.


Spoiler:
The investment staff of the California State Teachers’ Retirement System wants to double the number of co-investments in the system’s approximate $18 billion private equity program in the next two to five years, adding 15 new staffers and possibly opening an office in San Francisco to handle the additional investments.

The West Sacramento-based pension’s plan to build its private equity program is contained in agenda material for its January 30 investment committee meeting. The investment committee is being asked to approve CalSTRS’s strategic direction in efforts to expand the private equity program, the pension system’s best-producing asset class over the short and long term.

CalSTRS’s overall private equity returns for the one-year period ending March 31 totaled 15.5%, the largest return of any asset class.

CalSTRS currently has 8.1% of its overall portfolio devoted to private equity, but its long-term target is 13%.

CalSTRS investment officials see co-investments as a way to get to that target. Co-investments only account for a small part of the plan’s private equity portfolio, around 5%, said a September report from the Meketa Investment Group, which serves as a CalSTRS investment consultant.

The new January 30 plan said that over the last two calendar years, the CalSTRS private equity program has made new commitments of approximately $6 billion to $7 billion a year with co-investments representing approximately 8% to 9% of total new commitments.

The plan says private equity’s current team of 23 professionals, 18 who specialize in investments and five operational personnel, are at capacity for the current investment pace and that an additional 15 hires are needed to at least double co-investments.

CalSTRS paid more than $500 million in management and profit-sharing fees to its private equity general managers in calendar year 2017, the most recent data available. The CalSTRS plan says that “increasing co-invest represents the most immediate, largest, and greatest opportunity to reduce costs and increase investment returns.”

Under co-investments, CalSTRS and other pension plans are offered additional stakes in portfolio companies acquired by private equity firms, often at little or no additional fees. This is usually in addition to the pension plan’s investment as a limited partner in a co-mingled fund with a general partner.

Officials of the $214.9 billion CalSTRS see co-investments as a possible entry point to make direct investments in private equity at a later point without external managers.

CalSTRS’s approach contrasts with that of its larger Sacramento neighbor, the California Public Employees’ Retirement System (CalPERS), which is proposing to invest $20 billion in additional private equity funds through two direct-style investment vehicles. One vehicle, called Innovation, would take stakes in late-stage companies in the venture capital cycle. The other vehicle, known as Horizon, would take buy-and-hold stakes in established companies. CalPERS currently has around $28 billion invested in private equity.

The CalSTRS plan says the competition for high-quality co-investment professionals “makes it advisable to budget for a higher average salary for such professionals” than existing personnel. It does not state, however, what the new staffers should be paid.

The plan also says that private equity investment staff to be hired for the expanded co-investment program “would be significantly enhanced by being located in a major financial center.”

It says that while public asset classes are largely research-oriented, private asset classes are more relationship-oriented.

“In major financial centers, investment professionals have more opportunities to interact and form

relationships with other investors, lenders, investment bankers, consultants, advisors, regulators,

lawyers, and operating company executives,” the plan says. “Such an ecosystem is more efficient and is likely to result in a higher level of knowledge, competitiveness, and overall flow of opportunity.”

The plan says San Francisco is an “obvious choice to consider” for the co-investment expansion because there are many general partners located in the Bay Area, including KKR, TPG, and GI. It also said that other major institutional investors, including Singapore’s GIC sovereign wealth fund and the Queensland Investment Corp., have placed private equity professionals in the Bay Area.

CalSTRS is the second-largest US fund by assets, surpassed only by the $345.6 billion CalPERS, which is No. 1.


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DALLAS, TEXAS

https://www.ai-cio.com/news/dallas-p...ize-portfolio/

Quote:
How Dallas Police and Fire Plans to Revitalize Its Portfolio
New CIO Kent Custer describes his team’s approach to transform the pension’s growth engine.


Spoiler:
The Dallas Police and Fire Pension System’s new Chief Investment Officer Kent Custer is working to reinvigorate the $2 billion portfolio he inherited last July.

The strategy recommended by its consultant Meketa and subsequently approved by the board is mostly founded on the principle of increasing the portfolio’s beta to traditional equity while significantly decreasing its private markets holdings.

“We want to improve fund liquidity and shift our growth engine predominantly to the public equity markets,” Custer told CIO.

The total fund’s performance clocked in at -0.4% (2Q18), 1.3% (trailing one-year), and -0.1% (trailing three-year), respectively, according to the most recently issued report dated June 30,, 2018. The fund is less than 50% funded, significant illiquid, and receiving lower than projected contributions, with a roughly equal ratio between active to retired participants.

Custer and his team intend to fully liquidate the plan’s private infrastructure and private debts holdings, and partially liquidate its holdings in private natural resources, as well as a host of other initiatives to help attain an average 7.25% per year. Meketa’s October 2018 analysis of the impact on the manager roster of implementing the proposed asset allocation includes the following summary:



The system will lower its exposure to private markets through “a natural process driven by fund or asset managers as the underlying assets mature,” Custer told CIO. “Mature assets are being marketed and sold at fair market value. DPFP has adequate liquidity and we don’t anticipate discounted transactions or utilization of the secondary market.”

Custer was named CIO in July 2018. He replaced James A. Perry, who resigned in July 2016 to join Maple Fund Services. Custer previously served as CIO of the College Illinois prepaid tuition program, and as a senior investment officer at the Illinois Teachers’ Retirement System.

Since joining the Dallas team, it’s been “a busy few months with a new board, consultant, and CIO reviewing the fund and implementing a new asset allocation, implementation plan, and investment policy,” Custer said. “Looking forward, I expect and hope that 2019 will be relatively boring.”


Private Markets Portfolio
The DPFP outlined how it expects the private markets portfolio to be transformed over the next several years.

From a portfolio value of $947 million at the end of 2018, the portfolio is expected to decrease to $649 million at the end of 2019, to $356 million, $158 million, and $81 million at the end of each subsequent year, respectively.

Actual sales and distribution activity tallied at the end of 2018 was lower than projected figures from its February 2018 board meeting. “Mostly this is just timing,” Custer told CIO. “It is important to note that these are rough projections and not goals.”

A breakdown of the plan’s private markets activity from its January Private Asset Cash Flow Projection Update report can be seen below:




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KANSAS
AMORTIZATION PERIOD

Quote:
Kansas pension fund leaders condemn Kelly’s ‘terrible,’ ‘unwise’ refinancing proposal

Spoiler:
Kansas Gov. Laura Kelly’s plan to refinance the state’s employee pension system encountered furious opposition on Friday from its leaders, who condemned the proposal as irresponsible.

Kelly’s office defended the plan as necessary to keep future state contributions to the Kansas Public Employees Retirement System (KPERS) affordable.

Her proposal essentially extends the time the state will take to pay off the system’s unfunded liability—the amount of money required to cover all future retirement costs. Kelly said the process, called reamortization, is needed to help prepare state government for a recession and keep contributions “manageable over the long run.”

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It also would also make $145 million a year available to pay for new spending proposed this week by Kelly, which includes additional child welfare caseworkers and corrections officers, education, Medicaid expansion and a raise for state employees.

The state would pay less now and more later. The plan would save the state $770 million over the next five years, according to calculations by KPERS. But over 30 years, Kansas would ultimately have to contribute $7.4 billion more than currently projected.

“This looks to me like a terrible idea,” said Ernie Claudel, a member of the KPERS Board of Trustees. The board voted unanimously Friday to send a letter to Kelly and lawmakers expressing their disapproval.

A Kelly spokeswoman defended the proposal.

“This is not about short-term budget fixes, it’s about long-term fiscal stability. Re-amortization will make $145 million available in the next fiscal year, but more importantly it will make the state’s payment schedule more sustainable next year and into the future,” spokeswoman Ashley All said. “Without it, the state will see its required payments balloon in the coming years which could be devastating.”

But KPERS sees a plan that could make the pension system more vulnerable to an economic downturn, a contention disputed by Kelly.

Under current law, only the KPERS board—chaired by Kelly Arnold, who is also the chairman of the Kansas Republican Party —can make the financial changes that Kelly wants, but the Legislature could change the law to mandate the refinancing.

The changes Kelly is proposing could affect state finances for decades to come.

In the short term, refinancing will shave $145 million a year off the state budget. That helps the state maintain a positive ending balance while providing money to fund education, foster care and other priorities.

But in the long-term, Kansas will end up contributing much more to its pension system, KPERS projections show. Under current law, annual state contributions to the pension system are expected to rise until they hit a peak of $900 million in 2035, but then fall to less than $100 million per year in the decades after. Currently, the state contributes less than $600 million a year.

Kelly’s plan would keep state contributions under $600 million a year through 2031. By 2049, annual contributions would approach nearly $1 billion, according to KPERS.

The system currently has an unfunded liability of more than $6 billion that is expected to start shrinking sometime around 2022. KPERS projects that Kelly’s plan would keep the unfunded liability above $6 billion until 2036.

“It’s not that hard to imagine where we slip into another recession at some point, when things get tighter at some point, and more decisions are made to delay payments,” said Jake LaTurner, the state treasurer and a Republican candidate for U.S. Senate.

LaTurner, who sits on the KPERS board, said it would be “unwise to go down this path.”

Kelly’s administration emphasized that her plan would not affect retirees.

“There are no cuts or negative impact to services” for retirees, Kelly’s budget director, Larry Campbell, said Thursday.

The state’s pension system has been a source of controversy for years. Lawmakers and then-Gov. Sam Brownback passed legislation to overhaul the pension system in 2012, which put KPERS on better financial footing.

Kelley’s measure is not the first that seeks to use the pension system as a tool to help balance the budget. Brownback’s 2017 budget proposal would have increased KPERS costs by $6.5 billion over time. In 2016 and 2017, lawmakers and Brownback ultimately approved reductions or delays to contributions to KPERS valued at more than $355 million.

“Because of decisions made in recent years to use the KPERS fund to help pay for the Brownback tax plan, the state skipped or reduced KPERS payments. This has resulted in the state’s employer contribution obligations to skyrocket next year to $681 million – an increase of over $100 million. This is absolutely not sustainable for our agencies,” All said.

All also said that many states reamortize their pension systems and called it “sound fiscal policy.”

Kelly’s KPERS proposal is encountering significant pushback among Senate Republicans. Sen. Carolyn McGinn, a Sedgwick Republican who chairs the Senate’s budget committee, signed onto a statement with Senate President Susan Wagle and other GOP leaders criticizing the plan.

“We need to now focus our efforts on passing a fiscally sound budget that pays off debts, invests in education, and protects our children and grandchildren’s prosperity,” the joint statement said.

Sen. Tom Hawk, the ranking Democrat on the Senate’s budget committee, said he has some confidence in Kelly’s proposal, given her experience working on budgets during her time as a state senator.

“I’m wondering if all the pushback is … from people who said, ‘Well, we figured this out and we were the heroes and now the governor has another plan and, boy, we don’t want to give up,’” Hawk said. “I think you have to be careful saying there’s only way to solve a problem.”

Lawmakers may take months to decide whether or not to adopt Kelly’s proposal. Final action on the budget may not come until April or later because lawmakers will be waiting for new revenue projections.

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