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  #2031  
Old 12-31-2018, 07:23 AM
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AURORA, ILLINOIS

https://www.chicagotribune.com/subur...223-story.html

Quote:
New Aurora pay plans don't address perks tied to millions in up-front pension costs for the city

Spoiler:
Aurora’s new pay plans for some city employees continue to allow executives to receive severance payments and others to cash out stockpiled sick days upon retirement, two perks that are among those linked to the millions of dollars the city has paid in recent years in up-front pension costs.

The 2019 pay plans recently approved by alderman for executives and some other employees, included some changes, including some that the city’s chief financial officer anticipated would save Aurora money.

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As for the severance packages and sick day banks, Aurora Chief Financial Officer Martin Lyons said those were likely to be discussed in the future.

“I still commit to you that it’s going to be something, I think, is going to be looked at in, I think, 2020,” he said.

A Beacon-News investigation published in August detailed how those payouts and other retirement perks have cost the city in the form of extra pension contributions. When compensation boosts a municipal employee’s wages by more than 6 percent in the years used to calculate a pension, Aurora is required to immediately pay off the extra pension cost, rather than paying for it over decades.

The investigation found Aurora had made nearly $2.4 million in up-front payments to the state’s municipal pension fund since 2013. The city is not the only one in Illinois to continue to make such payments, despite a state law intended to hold municipalities responsible for compensation boosts for municipal employees and offset added pension costs by requiring the payments.

Lyons said at the time the benefits that can drive up pension costs are in some cases governed by union contracts and are often necessary to recruit high-quality employees. The city was looking to reduce the up-front pension payments — called accelerated payments — but it was an ongoing process, he said.

Some of the benefits are tied to the city’s labor contracts, and the city was focused during negotiations on areas unrelated to pensions, such as health care costs, he had said.

Health care costs were among the changes included in the recently-approved 2019 pay plans. Executives and other employees will now cover a higher percentage of their health care premium, which Lyons said should mean lower health coverage costs for the city.

But the 2019 plans did not change other perks for employees leaving the city. They continue to allow retiring executives to receive one week of pay for every two years of employment as a city executive, up to 15 years. Executives hired before 2014 are eligible for additional separation pay.

Other city employees can stockpile and cash out nearly 100 days worth of unused sick time when they leave the city.

The city funds these perks out of a dedicated pot of money, so a department doesn’t have to dig into its budget or hold off on hiring a new employee to fund a retiring employee’s separation benefits, Lyons said.

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Still, they can lead to accelerated payments.

At least one other Illinois city has made changes to limit accelerated payments. Rock Island used to pay comp time in a retiring employee’s last paycheck, a city official previously told the Beacon-News. Now, she said, the amount of compensatory time Rock Island employees can store up is limited, and payouts are delayed until the window of time to count them toward a pension has passed.


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Old 12-31-2018, 02:45 PM
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ILLINOIS

https://www.wirepoints.com/illinois-...ut-not-really/

Quote:
Illinois Auditor General pension report: Everything's fine (but not really)
Spoiler:
Official reports on the health of Illinois’ pension plans consistently understate the depth of the state’s crisis. Based on unrealistic assumptions, those reports have been long used by politicians to mislead the public.

But a recent Illinois Auditor General report based on work by the actuarial firm Cheiron doesn’t read like something authorized by Springfield politicians. It criticizes much of the state’s pension reporting methodology while making valid recommendations to fix them.

The report matters because it echoes some of what groups like Wirepoints have been calling for: realistic reporting that tells the truth about the depth of Illinois’ pension crisis. Illinois politicians will never truly address the crisis as long as they can paper over it with their own numbers.



The report is the result of a 2012 law that requires the Auditor General to review the assumptions and valuations prepared by the actuaries of the five state-run pension plans. Cheiron, an actuary, was hired as the auditor and this year’s report is the latest version. Think of it as an audit of the 2018 actuarial reports.

Cheiron found the actuaries’ assumptions for 2018 as “generally reasonable” – meaning the fund actuaries didn’t do anything out of line with what the state calls for. But read the study and you’ll see they critique many of the state laws that let politicians kick the can into the future.

Here’s what worries the Auditor General:

Targeted funding ratios are too low. Currently, the state’s funding laws call for the pension plans to be 90 percent funded by 2045. That means by not targeting 100 percent, the state is systematically underfunding its plans year after year.

Cheiron recommends “that the funding method be changed to fully fund plan benefits and… should target 100% of the actuarial accrued liability…”

Interestingly, Cheiron’s call for a 100 percent funding target is in direct contradiction to a “reform” scheme being pushed by the Center for Tax and Budget Accountability and considered by Gov.-elect J.B. Pritzker. The CTBA plan would leave the Illinois pensions just 70 percent funded in 2045, far less than the 100 percent the Auditor General calls for.

It takes too long to pay down unfunded liabilities. Cheiron doesn’t call it kicking the can, but it criticizes the long period set by the state for paying down its pension debts. Cheiron finds that Illinois laws push repayment of the shortfalls “further into the future” than other public plans do.

Cheiron and the state actuaries appropriately propose shorter repayment periods. TRS and its actuary, for example, call for a 20-year repayment period, down from the state’s mandated 27-year period. SURS and SERS also make recommendations to shorten the repayment period.

State contributions are too small. Cheiron is also right to point out that the state doesn’t even put in what’s called the “tread water” contribution amount – the amount needed to prevent the pension shortfalls from simply getting worse. Think of the tread water amount as the minimum payment necessary on your credit card to keep the unpaid balance from growing.

Cheiron estimates that the state needs to put in some $2.5 billion more than statutorily required in 2019 just to ensure things don’t get worse next year – never mind how much more is needed to actually pay down the state’s billions in unfunded obligations.

Investments are getting riskier. While Cheiron did not make firm recommendations to lower the pension plans’ overly ambitious interest rate assumptions (it did recommend TRS lower its rates to 6.75 percent but then acceded to a 7 percent rate), it did acknowledge that the pension funds are taking on more risk to meet their investment targets.



With targets of nearly 7 percent and bond rates near historical lows, investment strategies have necessarily become riskier. And if those investments don’t work out, the plans will become even more unstable.

The interest rate assumptions matter. The state reports the unfunded liability at just $134 billion using assumed investment rates of nearly 7 percent. But Moody’s, which uses market rates that are more realistic, puts the state’s shortfall at $234 billion – $100 billion more than Illinois’ politicians say it is.

Solvency worries. Cheiron is worried about the health of the state’s pensions funds: “If there is a significant market downturn, the unfunded actuarial liability and the required State contribution rate could both increase significantly, putting the sustainability of the systems further into question.”



Wirepoints has made that argument for some time, raising concerns about the solvency of the pension fund for lawmakers (GARS), the three major Chicago funds covering municipal, fire and police employees, as well as dozens of downstate police and fire funds. They are all at funding levels below 30 percent and face the real risk of virtual insolvency.

Add it all up

Illinoisans deserve to know the true cost of Illinois’ pension debacle. And pensioners should understand just how real the risk of insolvency is.

Cheiron’s recommendations to the Auditor General are at least the start of a more honest conversation. When you add up all of the firm’s suggestions – and use more realistic interest rate assumptions – Illinois’ dire straits becomes far more obvious. The state alone has built up more than $300 billion in retirement debts. Illinoisans can’t bear that burden without reforms, starting with a constitutional amendment, that allow the state to reduce the existing debt pile.

To be clear, the Auditor General has no power to enforce what Cheiron recommends. But its report, combined with increasing pressure from the rating agencies, the bond market and the stock market, will eventually bring about change.

Whether that change comes in the form of reforms or insolvency is entirely up to Illinois lawmakers.



https://www.ilnews.org/news/state_po...a.html#new_tab

Quote:
State must pay $845 million more to pension systems next year, report finds
Spoiler:
A new report on Illinois underfunded pension systems says the state needs to put more money into the benefits programs before they become unsustainable and consume an even larger share of the state's tax revenue.

The state will be required to contribute $9.39 billion to six pension funds in fiscal 2020, about $845 million more than the previous year, according to the report.

In addition to being underfunded, the state's pension systems are susceptible to a volatile stock market, the report found. Two public finance watchdogs said the report underscores the need for changes moving forward, including some changes that won’t be popular.


“It’s definitely wonky and often times very difficult for ordinary citizens to understand, but we’re talking about hundreds of billions of dollars and how do we actually calculate that and what do we assume when we are coming up with the expectations which have massive implications for Illinois taxpayers in general,” Truth In Accounting Research Director Bill Bergman said.

The Illinois Auditor General released its annual State Actuary's Report on Thursday. The report has been required since 2012. The state contracted with Cheiron, an actuarial consulting firm, to serve as the State Actuary to review assumptions, issue reports to pension boards and identify recommended changes.

“The funded ratio of the retirement systems ranged from 47.9 percent to 15.3 percent, based on the actuarial value of assets as a ratio to the actuarial liability,” the report said. “If there is a significant market downturn, the unfunded actuarial liability and the required State contribution rate could both increase significantly, putting the sustainability of the systems further into question.”

Cheiron also "noted that the systems are, or will be, experiencing negative cash flows which may impact the interest rate returns that are realized."

The state’s Teachers, State Universities and General Assembly retirement systems are already seeing negative cash flows while the State Employee and Judges retirement systems are projected to have negative cash flows in the near future, the report said.

“Contributions should ramp up as quickly as possible to a level that is expected to prevent the unfunded actuarial accrued liability from growing,” the report said. “Continuing the practice of underfunding the systems increases the risk of needing even larger contributions in the future that may make the systems unsustainable.”

The report should serve as a warning call as it seeks more state money sooner for the growing pension liability, said Ted Dabrowski, president of the financial analysis website Wirepoints.


“If billions more a year have to go into pensions, you're talking about huge cuts to everything else, whether it’s education or health care or roads,” Dabrowski said. “It creates a real spiral, a death spiral problem because people are already tired of paying taxes. They’d have to pay a ton more.”

Dabrowski said he expects to see the state's tax base erode if policymakers only look at increasing taxes. He said the state’s continued out-migration with most recent numbers showing people leaving the state at a faster pace over the past five years. The most recent U.S. Census Data showed Illinois lost 45,000 people from 2017 to 2018.

The report deemed the actuary's estimated rate of return on investments “reasonable,” but Bergman questioned that conclusion, noting that those assumptions often lead to the state shorting the pension funds and increasing the pension debt.

Bergman said by budgeting pension funding with an assumed rate of return, not a risk-free discount rate, taxpayers are increasingly on the hook to fill the gap if investment returns don’t meet the estimates.

The math around the assumed rate of return is not just an issue for the state pensions, Bergman said it also affects local police and fire funds as well.

The report said that on the state’s targeted funding goal of 90 percent by 2045 was inadequate.

“This contribution level does not conform to generally accepted actuarial principles and practices,” the report said. “Generally accepted actuarial funding methods target the accumulation of assets equal to 100 percent of the actuarial accrued liability, not 90 percent.”


Dabrowski said it was refreshing to see that recognition. He also said it’s further evidence that a proposal from the Center for Tax and Budget Accountability is the wrong plan.

The Center for Tax and Budget Accountability proposed in May moving the goal posts for funding the state's pensions "from a target of a 90 percent funded ratio in [fiscal year] 2045 to a target of between 70 and 80 percent.”

“Those proposals by the [Center for Tax and Budget Accountability] should be dismissed, disregarded and thrown away because I think Cheiron was spot on that 100 percent funding is where we need to be headed if we really want these pension funds to be healthy,” Dabrowski said.

Earlier this month, credit rating agency Fitch also flagged the Center for Tax and Budget Accountability's plan as a potential concern.

Gov.-elect J.B. Pritzker has advocated for state resources put in up front, somewhat mirroring the center's plan. Pritzker picked a member of the center to serve on his budget transition team.

Dabrowski said the solution is to change the state constitution to reduce the debt owed to state workers.

“The debt is so large that there’s no way to just raise taxes or borrow some money,” he said. “Those days are over. It’s so badly funded and the promises are so large.”


He said unions should come to the table to reduce the debt or pensions could become insolvent.

Pritzker, along with other Democrats and union groups, have been opposed to the idea of changing the pension protection clause in the state's constitution. They have mostly advocated for changing the state constitution's flat tax provision to a progressive tax to increase how much the state collects from income taxes.

The Commission on Government Forecasting and Accountability earlier this month pegged the state’s five pension funds with a combined $134 billion of unfunded liabilities and an average funded ratio of 40.2 percent. That doesn’t include other post-employment benefits, or OPEBs.

Pew Charitable Trusts put out a report this month based off 2016 data that put the total liability of OPEB in Illinois at $53.4 billion with a -0.2 percent funded ratio, the worst in the country. Truth In Accounting pegs the unfunded retiree health care costs at $52.5 billion based on 2017 data. Wirepoints pegs the cost OPEBs at $72.6 billion. That's on top of the $134 billion in pension debt.

Major credit-rating agencies say the state’s unfunded liabilities is one of the biggest reasons the state has the worst credit rating in the nation, a notch above junk status with a negative outlook.


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Old 12-31-2018, 03:09 PM
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CALIFORNIA
CALSTRS

https://www.ai-cio.com/news/calstrs-...s-hope-future/

Quote:
CalSTRS Funding Report Offers Hope for the Future
While system is on track to full funding by 2046, investment volatility could throw a wrench into the process.


Spoiler:
Battered by a huge investment loss during the financial crisis, the California State Teachers’ Retirement System (CalSTRS) was on the path to running out of money by 2046.

The state legislature stepped in in 2014 in a funding rescue plan for the second-largest US pension plan. It doubled contributions from school districts over seven years and gave the CalSTRS board the authority to double state contributions over the long term, in a plan aimed at increasing the pension’s funding ratio to 100% by 2046.

A November report says the $219.3 billion CalSTRS is moving in the right direction to reach full funding and that there is an approximate 70% chance the system could achieve it by 2046. However, the report says the largest risk to CalSTRS achieving 100% funding is investment volatility.

It notes that frequent low returns or a major shock in one year to the pension system could put CalSTRS off track.

“Following the financial market crash in 2008–09, the funded status of the system dropped by more than 30% in a single year, resulting in the need for the funding plan to avoid a future depletion in assets,” the report said. “CalSTRS remains at risk if another investment return ‘shock’ were to occur in the future.”

The report said the impact of a decline will also depend greatly on the timing as the ratio between the number of teachers on the payroll and retirees collecting benefits decrease.

“As the system continues to mature, investment declines will be harder to absorb the later they occur in the duration of the funding plan,” it said.

The report is a prelude to a formal report to be presented to California legislators in July 2019. The report is required every five years as part of the legislature passing a bill back in 2014 that gave CalSTRS more funding, including the ability to increase state contributions to the pension system.

The CalSTRS 2018 funding levels and risks report said the rate-setting authority given CalSTRS officials to raise the state’s contribution “has considerably improved CalSTRS funding trajectory but significant risks remain in funding the system.”

In May 2018, the CalSTRS board exercised its authority under the funding plan for the second year in a row to increase the state’s contribution rate by the maximum allowed 0.5% of payroll. The state now contributes more than 9% of the combined payroll of teachers in California covered by CalSTRS, but that rate could more than double over the next 26 years given the CalSTRS board’s power to raise the state rate.

CalSTRS is 65.5% funded as of June 30, but the report noted that the funding level increased from 64% from the year prior because of the 9% return CalSTRS realized in the 2017-2018 fiscal year. CalSTRS anticipates a 7% return on an annualized basis.

Rising financial markets have been kind to CalSTRS the last several years. On a three-year-basis ended June 30, the system earned a 7.8% net return, and on a five-year basis, 9.2%. Longer term, returns have been more disappointing: 6.3% for the 10-year period and 6.5% over the 20-year period.

CalSTRS officials insist the 7% return is realistic over the long term while critics have contended that CalSTRS and other pension plans have overly optimistic return expectations, which will lead to new financial crises.

Investment returns make up around two-thirds of the benefits paid to CalSTRS retirees, so low returns below the expected 7% annually would be a problem, especially as the ratio between active teachers and retirees declines.

CalSTRS, like other retirement systems across the US, is facing declining enrollees making contributions as baby boomers retire. Back in 1971, CalSTRS had six active members to every retiree, now it has 1.5 active members to each retiree, the report said. This means that even with investment income, CalSTRS payments to retirees exceeded inflows by $3 billion in the June 30 fiscal year.

The report says CalSTRS has not been forced to sell assets because investment returns have covered the gap.

Investment volatility could change CalSTRS’s funding level quickly, the report said.

“It would take only one or two years of lower-than-expected returns in the near term to push the funded status below 60% or even below 50%,” it said.

Could CalSTRS still run out of money at some point in the future, even with the funding plan?

The report said that the risk has been reduced considerably over the last few years with the adoption of the funding plan. “However, that risk has not been completely eliminated and may never be fully eliminated as a result of the maturity level of the system, investment volatility, and the board’s limited rate-setting ability,” it said.


I cannot find this supposed study.
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Old 12-31-2018, 03:14 PM
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ILLINOIS

http://www.norwichbulletin.com/opini...f-pensions-now

Quote:
Take care of pensions now

Spoiler:
Anyone who’s paid attention to Connecticut politics in the last few decades has seen the outsize role that pensions have played in discussion on why the state is in such a fiscal mess. It was recently reported by MSN.com that only three states in the nation are in worse shape than Connecticut with regard to unfunded pension liabilities. Pension plans should be funded at 80 percent or greater. Connecticut’s State Employees’ Retirement System (SERS) is only funded at 36.9 percent according to the Office of Policy and Management. While it’s largely accepted that many of these problems have roots going back nearly a century, this issue will have major repercussions for future generations if we don’t take care of pensions now.
Research from the Boston College Center for Retirement Research (CRR) noted in a November 2015 report that lack of pre-funding to be a major component to the shortfalls we see in funding today. Both SERS and the Teachers’ Retirement System (TRS) “have promised benefits to their members since 1939. But the benefits provided by SERS and TRS were not pre-funded until 1971 and 1982, respectively,” the report says.
It goes on to say that “the many years of unfunded benefits accrued over that period saddled both systems with unfunded liabilities that today account for nearly $9.3 billion of the combined $26 billion unfunded liability.“
The rest of the shortfall, all $17 billion of it, comes from “inadequate contributions, low investment returns relative to expectations, and negative actuarial experience”— misfires from that past that have overestimated returns or didn’t factor in possible recessions.
How does the state begin to fix a problem that has compounded every year that it has gone unfunded or under-funded? Suggestions by the CRR included lowering the long-term assumed investment return and shifting payments and full-funding dates away from their legacy definitions. On the latter suggestion, it is worth a look at alternative solutions; in reality, it is these legacy definitions that got us here in the first place.
Most importantly, the report suggests that to “address the costs associated with years of unfunded benefits [Connecticut should] separately finance — over a long time horizon — the liabilities associated with members hired prior to the pre-funding.”
Jean-Pierre Aubry, Associate Director of State and Local Research for CRR, put a fine point on this problem during the Connecticut Conference of Municipalities’ (CCM) June meeting. Aubry showed that Massachusetts spends about 82 percent of their pension costs on legacy costs, because “most reforms have focused on new hires due to legal protections for current employees.”
These reforms for new hires — lower benefits, mandatory hybrid plans — have potential drawbacks. For instance, Aubry suggested that these reforms could limit the recruiting ability of governments. One such change in the state has a local Police Department publicly advocating for a change back to a traditional pension plan.
When it comes to pensions, the ability to hire and retain good employees is only one of the cogs in this wheel. The sheer numbers, the billions of dollars that will be spent to plug a hole created in the past, are enough to question the fiscal future of the state.
It’s hard to look at the inbound/outbound rate of the state, especially of millennials who have decided to move elsewhere in droves, and think that moving costs down the line is an especially good idea.
Getting the fiscal health of our state back on track and keeping it there will be a signal to businesses and residents both current and prospective. We can no longer kick this can down the road. We must address this problem now.



Robert Congdon is Preston’s First Selectman and a member of the Connecticut Conference of Municipalities Board of Directors.


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Old 12-31-2018, 03:25 PM
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VENTURA COUNTY, CALIFORNIA

https://www.vcstar.com/story/news/20...es/2318432002/

Quote:
Ventura County pension system funded at highest level in 10 years

Spoiler:
The Ventura County pension plan was almost 88 percent funded as of the end of the last fiscal year, the highest level in a decade.

While the goal is 100 percent, county officials were pleased with the figure reported by actuaries this month for the $5.4 billion plan that provides retirement benefits to more than 6,700 people.

County Executive Officer Mike Powers called the funding level “very strong,” comparing it with the 71 percent reported for the California Public Employees’ Retirement System that covers city and state employees.

He tied the result to a number of factors including a shortened schedule for paying off the unfunded liability, 15 years instead of 30. Also, he said, the investment earnings of 8.8 percent exceeded the expected rate of return of 7.5 percent, the number of employees has stabilized and employee raises were lower than anticipated.

“If we keep going at this rate it will be fully funded in 2038,” he said.

EARLIER: Ventura County pension board eyes new world: surplus

The funding figure is defined as the ratio of a pension plan’s assets to its liabilities, with 100 percent or more being enough to cover all liabilities. It is considered one measure of the health of pension plans, but not the only one. And some county trustees aren’t celebrating the mark of 87.8 percent just yet, given the state of the stock market.


“I think we’re making prudent decisions, but we’re at the will of the market,” said Art Goulet, a trustee for the pension system, officially called the Ventura County Employees’ Retirement Association or VCERA.

The 9,000-employee Ventura County government is by far the largest employer in the plan, but the plan also covers employees of the Ventura County Regional Sanitation District, the Ventura County Air Pollution Control District and the Ventura County Superior Court, not including judges.

The funding level in the plan with more than 18,000 members has peaked and plunged over a quarter century, county figures show.

The plan showed a surplus in the late 1990s and early 2000s, with assets exceeding liabilities by more than $350 million at one point. But the rate fell to 78 percent funding by 2012. Liabilities exceeded assets by close to $1 billion that year.

In between those dates, the financial markets fell, a major recession struck and litigation led to a large expansion in the types of income that count for pensions. The pension system allowed the Ventura County government to reduce contributions from 1998 to 2004 because investment gains were so high. That practice, which some union officials said contributed to the large unfunded liability, became known as taking a “pension holiday.”


The funding ratio rose by 10 percentage points from the 2011-12 fiscal year to last fiscal year and has run in the low to high 80 percent range over the last five. Liabilities totaled $6.1 billion and assets were valued at $5.4 billion at the end of the fiscal year, leaving an unfunded liability of $747 million.

Of the $747 million to be paid off, most of the debt is tied to changes in assumptions about the expected rate of return and demographic factors such as longevity of retirees. Only about 8 percent is based on actual returns on investments, Goulet said.

Economist Sung Won Sohn said the funding rate of almost 88 percent in the county plan is “pretty high.”

“One of the reasons the funded ratio is so high is because of the booming stock market over the last 10 years,” he said.

The funding level stands at 85 percent for a system covering city employees in Los Angeles, said Sohn, a retired CSU Channel Islands professor who is chairman of the Los Angeles system’s investment committee.

The stock market is going through turbulence now, Sohn said.

The Dow Jones Industrial Average fell from 26,952 in October to 23,138 on Thursday, down 14 percent.

Sohn doubted the funding ratio for the Ventura County plan would be as large now as it was on June 30, the date of the actuarial valuation.

MORE: County’s new voting system promises more speed, security

“Obviously, the funding ratio will go down,” Sohn said. “I wouldn’t be surprised if it goes down to the low 70s and early 80s if the stock market continues to go down.”

Bill Wilson, a longtime trustee on the Ventura County pension board, said negative returns on investments are likely for the first half of this fiscal year.

“The first six months of this year have been horrible in the market,” he said.

How big of a funding ratio is enough is subject to debate. Some say 80 percent. Others want 100 percent.

Pension plans should have a strategy to attain or maintain a funded status of 100 percent or greater over a reasonable period of time, says the Pension Practice Council of the American Academy of Actuaries. Still, an evaluation of funding progress should not be reduced to a single measure or benchmark at a point in time, the council said.
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Old 12-31-2018, 03:58 PM
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KENTUCKY
http://kentuckytoday.com/stories/leg...n-crisis,16956
Quote:
Legislators must address Kentucky's pension crisis

Spoiler:
When I ran for Governor in 2015, I launched a seven-point plan outlining my vision for moving Kentucky forward, entitled the “Blueprint For A Better Kentucky.” The plan was ambitious and unapologetic in its call to change government, grow our economy and enact policies that would modernize education, healthcare and our tax code. Above all, however, I noted that no matter what we accomplish in any of these areas, our long-term success runs the risk of being undermined if we do not address the single greatest threat facing Kentucky’s financial future, our public employee pension crisis.


Never has the pension crisis been more dire for our state. In less than five years, one of our largest pension systems (KERS Non-Hazardous), is projected to run out of money and collapse. This will affect the financial stability and credit rating of Kentucky and will leave us unable to deliver on the promises we made to all our hardworking police officers, teachers, firefighters and other state employees, regardless of which pension plan they happen to be in. While we’ve made the unpopular budget cuts needed to fully fund the pensions, recent declines in the financial markets threaten our fragile pension system further, and remind us that even in a strong economy, we cannot allow the financial foundation of our state to rest solely on the shifting sands of the stock market.


The passage of Senate Bill 151 (SB 151) was an important first step by the General Assembly (also known as the legislature) to address a problem that has been shamefully and irresponsibly ignored by past legislators and governors. It was also a meaningful attempt to save our failing pension plans for past, current and future workers. While some of our pensions have undergone modest structural reforms over the years, the Teachers Retirement System (KTRS) has never been meaningfully addressed.


Sadly, the Supreme Court took a specious, political stance and invalidated SB 151 based upon the legislative process used by the General Assembly, rather than considering SB 151’s merits. In doing so, the Supreme Court not only dismantled meaningful reform for our pension systems, but also ignored the fact that the Kentucky General Assembly (and most other legislatures in America) used the same legislative process every year for decades to pass other bills.


Given the possibility of such a ruling, I began dialogue with the leadership of the General Assembly in the days before the Supreme Court issued its opinion. Together, in multiple face-to-face and telephone meetings, we discussed a plan to avoid further financial uncertainty and damage to Kentucky’s credit rating in the event that SB 151 was struck down.


Despite what many in the media and general public incorrectly believe, as Governor, I do not have authority under the Kentucky Constitution to draft, sponsor or pass the legislation necessary to address our failing pension system. The General Assembly is the only branch of government with the constitutional authority to stop the financial bleeding and save our pension plans for current and future generations. I made it crystal clear, however, as my talks with legislative leadership progressed throughout the weekend prior to the special session, that the executive branch stood ready to assist any legislative effort that would move pension reform forward.


It was with this mutually acknowledged understanding of responsibilities, that I convened the General Assembly into a special session the following Monday. The legislation read in the House chamber that first evening, House Bill 1 (HB 1), was a trimmed down version of SB 151; the very bill passed earlier this year by the same legislators. While some legislators wanted to add to what was passed in SB 151, this was not done. The first bill actually introduced in the special session, was drafted by legislative staff based on specific input from legislative leadership, after multiple conversations on the topic. HB 1 simply removed the provisions of SB 151 that were most likely to be challenged in court, which would only result in many wasted months of further litigation. Credit rating agencies such as S&P and Moody’s have recognized that the uncertainty of litigation surrounding reforms to the Commonwealth’s pension systems itself threatens Kentucky’s credit rating. HB 1 would have allowed the General Assembly to once again take a small, first step toward saving the pension system, and its multiple pension plans, without a cloud of litigation.


HB 1 did not fail to pass through the General Assembly in the special session due to a lack of planning but, rather, due to a lack of legislative will. The weak excuse that there was not enough understanding among legislators about the contents of HB 1, diminishes the sole power and responsibility that the General Assembly possesses to control the legislative process. Such excuses also reflect poorly on the legislative leadership’s ability to communicate with their own members. I believe the leadership is better than such excuses would imply. The General Assembly alone is responsible for drafting bills, amending legislative language and passing laws and is the only branch of government with the full constitutional authority and ability to hasten or slow the process to accommodate the needs of its members.


In light of these significant constitutional powers afforded to our legislative branch, Kentucky taxpayers should rightfully be offended by the hollow excuse that the General Assembly adjourned simply because of the minor differences between HB 1 and SB 151.


In a letter dated Dec. 18, the morning after the special session began, my General Counsel Steve Pitt, sent every legislator a letter stating that while our administration was confident in the legal right of the legislature to pass SB 151, the slimmed down version known as HB 1, would lessen the chance of litigation that could slow down meaningful reforms. It should be noted, that it was Steve Pitt and his team who defended in court (on behalf of the legislators who chose not to defend themselves), the legislative process used by the General Assembly in the passage of SB 151. The letter clearly stated that the decision about whether or not to pass an identical version of SB 151 or the slimmed down HB 1, rested entirely with the General Assembly. If SB 151 truly had more support among legislators, it was their sole prerogative and responsibility to introduce and pass that same exact bill back into law. Instead, they chose to continue kicking the proverbial pension can down the road.


While I am disappointed that the General Assembly did not have the ability to pass needed pension reforms in 2018, it was not for lack of multiple opportunities given to them to do so. The pension crisis is now looming larger than ever and yet, I remain optimistic that the legislature will do the job that only they can do to start fixing this problem in 2019. Our elected representatives in the General Assembly must address the pension crisis before Kentucky’s retirees, workers, businesses and taxpayers face further financial harm. The problem will not go away if it is ignored.


In conclusion, and contrary to the myth perpetuated by many members of the media and legislature, the special session was not abruptly called with no warning to, or input from, the legislative leaders. The exact opposite is true. HB 1 was not a surprise to those who were elected to lead on this issue. The only surprise was the lack of legislative ability to solve the problem during a 2018 special session. I am expectantly hopeful that the General Assembly will return to Frankfort in January with a renewed sense of purpose to address the pension crisis, because continued waffling, punting and excuses are not going to fix anything. It will take the right combination of knowledge, courage and leadership by a majority of the 138 men and women with the responsibility to save our pensions.


As I have since I first published my “Blueprint For A Better Kentucky,” I continue to stand ready and wiling to work with our legislators to save our pension system and move Kentucky forward together. For the sake of all that we love, we must not fail.


Matt Bevin is governor of Kentucky.



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Old 12-31-2018, 03:59 PM
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MISSISSIPPI

https://www.miamiherald.com/news/bus...223688715.html

Quote:
Pension system asks AG for clarity on pensions for lawmakers

Spoiler:
Mississippi's public pension system on Friday asked Attorney General Jim Hood to clarify his earlier opinion that retired public employees can collect their pensions while serving in the Legislature.

The board of the Public Employees' Retirement System of Mississippi had voted earlier this month to ask for the clarification after Hood issued his original opinion on Nov. 29. The opinion indicates the retirement system should overturn its longtime rule that elected offices are full-time positions and people in those offices could not receive salaries and pension benefits simultaneously.

Those who support the change say they believe it will open the door for retired teachers and others knowledgeable about state government to run for legislative posts.

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The system has not changes its rules yet. Executive Director Ray Higgins and board members said they're not trying to get Hood to reverse himself. They note that there are a number of unanswered questions about what the pension system should do. The letter asks Hood to answer quickly in part because qualifying for the 2019 legislative election begins on Wednesday and ends March 1.

"We want to move forward in a very expedited manner," Higgins said earlier this month.

The original opinion was sought by state Sen. Sollie Norwood, a Jackson Democrat who previously worked for the state Department of Human Services. Hood's office wrote that lawmakers could get retirement benefits as long as they collected no more than half of a lawmaker's salary and worked no more than 1,040 hours per year on legislative duties, like any other retiree under state law. Hood said he had no problem describing legislating as part-time work in Mississippi since many lawmakers hold full-time jobs in addition to their duties at the state Capitol.

As an alternative to the half time/half pay rule, state law also says retirees who return to work for a state agency can earn up to one-quarter of their previous pay and still collect pensions. The typical lawmaker is paid nearly $40,000 in salary plus an expense allowance that is taxed like income and counted as "earned compensation," according to retirement system figures. Higgins said the system isn't clear if the expense money also has to be counted against the 25 percent threshold. If it is, that means only lawmakers who earned more than $160,000 a year in their old jobs would be eligible to collect both lawmaker pay and a pension.

It's unclear if lawmakers can refuse some of their salaries or expenses, because state law says legislators "shall" be paid for salaries and expenses, a phrasing that makes a paycheck mandatory.

State law also calls for 90 days between when employees retire and when they start collecting pension benefits. Higgins said it's unclear whether that means a sitting lawmaker has to leave the Legislature, or whether they can just forgo legislative pay for 90 days.

Finally, any lawmaker collecting a pension wouldn't be accumulating new pension credit on their legislative salary. But lawmakers also get an extra pension called the Supplemental Legislative Retirement Plan. The credit for the supplemental plan is based on credits for the regular legislative salary. Higgins said the system is unsure if it should award supplemental credits and how to calculate them if it's not awarding regular credit.


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CAMARILLO, CALIFORNIA

https://www.thecamarilloacorn.com/ar...est-brightest/

Quote:
Pensions help attract the best, brightest

Spoiler:
This is in response to the Dec. 14 article “Pension costs paint challenging financial picture for district.”

By my count, the Camarillo Acorn has run eight to 10 articles against public pensions since about 2015 and loses no opportunity to do so—this time teacher pensions for Pleasant Valley School District.


PVSD provides one service to Camarillo: education. The most indispensable component of that service (after students) is teachers. Like classrooms, books, light, heat, computers, electricity, supplies, etc., teachers are part of the cost of education.

Education does not happen absent well-qualified professional teachers. Teachers are required to have a bachelor’s degree and teaching credential, 5½ to 6 years of special professional education. They may have $40,000 to $50,000 of student debt on graduation. Starting salaries are about $40,000 to $45,000.

After 25 or more years, a teacher may receive a $40,000 to $50,000 pension, depending on years of service and final salary. Salaries for other professionals with similar education are $100,000 to $110,000 for electronics engineers, up to $135,000 for accountants, about $100,000 to $105,000 for human resources managers. Competitive salaries, health benefits and retirement benefits are essential to recruit and retain high-performance teachers.

The article states, “Districts with tight reserve funds may have to lay off employees, make cuts to programs, or both to balance their budgets.”

This is the typical fear-mongering against public employee pensions. Camarillo Acorn, how do schools run programs without qualified, professional teachers? California ranked 41st among all states in spending per K-12 student after adjusting for differences in the cost of living in each state from data from the 2015-16 fiscal year.

California schools spent $10,291 per K-12 student that year, or about $1,900 less than the $12,252-per-student cost spent by the nation as a whole. In contrast, California ranks first in prison costs at about $70,000 per prisoner. In the 1960s, California schools were the best in the country. The sad irony is that as California school spending rank has gone down, prison spending has gone up.

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Old 12-31-2018, 04:00 PM
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OHIO

https://www.nbc4i.com/news/local-new...uit/1678226938

Quote:
Judge denies temporary restraining order in retired Ohio first responder pension healthcare suit

Spoiler:
COLUMBUS, Ohio (WCMH) -- A Franklin County judge Friday denied a temporary restraining order in the lawsuit seeking to maintain current healthcare coverage for Ohio's retired first responders that are not yet on Medicare.

Citing chaos and time, the judge denied the restraining order around 3:30 p.m. Friday. The judge says if he would have allowed the temporary restraining order, it would have caused more chaos to the people already enrolled.

RELATED: Retired first responders share frustration, anger about changes to health benefits with trustees

The main argument inside the courtroom was time. The plaintiffs argued that police and fire retirees were only given the details to their new plans on Nov. 1 of this year, and as some of those members searched for their 2019 coverage, they were unhappy with the choices--or lack thereof--available in the new plan.

Another reason the judge sided with the police and fire pension board was because it was unclear how the more than 23,000 retirees already enrolled in plans for 2019 would be affected if the temporary restraining order was put in place.

"We feel the judge made the right decision because an injunction at this point would have caused irreparable harm to our membership, 23,000 are enrolled in new plans," Mary Beth Foley with Ohio Police and Fire Pension Fund said.

"We’re disappointed," countered Joel Campbell, attorney for the plaintiffs in the suit. "I think we were hopeful that the court would be able to make a decision that would enable the 3,000 people you heard about get coverage.”

The Ohio Police and Fire Pension Fund is eliminating its health insurance coverage in 2019; instead, retirees not yet old enough to be covered through Medicare will be given a stipend to help pay for insurance on the private market.

Most concerning for many retirees is that the stipend has to be used through a managed platform company called Aon, with few choices in doctors or hospitals. In Franklin County, for example, Nationwide Children's Hospital and the James Cancer hospital are not covered.


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Old 12-31-2018, 04:06 PM
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DALLAS, TEXAS

https://www.dallasnews.com/news/news...perty-big-loss

Quote:
Dallas Police and Fire Pension System sells Napa County resort property at a big loss

Spoiler:
The Dallas Police and Fire Pension System is finally free from one major piece of its costly plunge into luxury real estate.

Executive Director Kelly Gottschalk said the system recently sold 3,100 acres that includes the historic Aetna Springs Resort in Pope Valley, Calif., to Alchemy Resorts for $22 million.

On paper, the sale — a year and a half in the making — is a financial disaster for the retirement fund. Gottschalk said the system has spent nearly $111 million on the property, which it purchased in 2006.

But the sale means the troubled system will now have some cash to spend on safer bets, she said.

"It's the focus of the board, obviously — and it's been our focus since I got here — to get out of these investments that are really dragging the portfolio down," she said.


The troubled Napa investment was one of many that helped put the fund on a path to insolvency before an overhaul in 2017.

In the 2000s, the fund's former leaders, chasing big returns, sank hundreds of millions of dollars into unusual alternative investments. System officials overvalued many of the properties for years. And they expressed overconfidence: In 2012, the system's comprehensive annual financial report declared in its introduction that the fund's "investment strategy has proved successful."

Kelly Gottschalk
Kelly Gottschalk
It hadn't. After the pension system assigned more realistic valuations to its portfolio, the returns of the past appeared more dismal. And paired with the lucrative benefits the system paid out to police and firefighters over the years — the money was doled out under the pretense of investment success — the system's future looked bleak. By late 2016, the fund was projected to become insolvent within a decade.

Gottschalk, who took the top job in 2015, said the system's "portfolio, as a whole, was very strange for a pension system."

The Aetna Springs resort was among the properties that was emblematic of the fund's unusual decisions before and after the real-estate market tanked in 2008. The system's former leaders, who had gone on many lavish "due diligence" trips across the world, visited Napa County regularly and often stayed in luxury hotels.


The system had banked on redevelopment plans, including a resort with dozens of rooms on the site, to pay off in the long run.

Gottschalk said that she also traveled to see the property and that it was "beautiful," albeit remote. Aetna Springs is far from any amenities and about 35 miles from the city of Napa.

The golf course there was a money loser for the fund, Gottschalk said. And she said that building a resort on the property would have been difficult because of the place's historic nature.

"That looked like it would cost a lot of money," she said.


City Council member Lee Kleinman, who served on the pension fund board from 2013 to 2016 as the financial pressures became clear, said Aetna Springs "was clearly the highlight of the inappropriate purchases."

"Or maybe the low-light of the inappropriate purchases," he said. "They had no business being in that."

Dallas City Council member Lee Kleinman(File Photo/Staff)
Dallas City Council member Lee Kleinman (File Photo/Staff)
Sam Friar, who joined the board in 2011, said the property was "one of those deals that should not have happened in the first place."

"It was a bad decision to buy the thing to begin with," he said.

Gottschalk said the property did get interest: The system received eight written offers. An offer from Alchemy Resorts was much higher than the others, she said. And the final sales price was more than the $18 million value at which the system had written the property down.

The sale is part of the system's efforts to get out of the legacy investments of the past, which have hurt its portfolio.

The pension system isn't completely out of Napa County. The system is still trying to sell its Iron Corral vineyard, which Gottschalk said "is actually a profitable property."


And other woeful investments — raw land outside Boise, Idaho, for example — remain in the portfolio. The board has sued some former advisers and its former attorney over some of the costly decisions made by the past administration.

Sam Friar
Sam Friar
Those decisions led the Legislature in 2017 to overhaul the pension system after brokering a deal among city officials, police and firefighters and retirees. The result is reduced benefits, higher contributions from the city and public safety workers, and a board loaded with investment professionals rather than a majority of police and firefighters.

Current board members have expressed bafflement at past boards' decisions. Friar, a retired firefighter, said he has been impressed by his new colleagues on the board and doesn't believe such missteps will happen again. He said the Napa County property sale ultimately means the system has "to eat a little crow, I guess."

"It's one of those lessons learned — one of those mistakes that nobody should ever make," Friar said. "But we did, and we'll just have to live with it."
https://www.star-telegram.com/news/s...223739905.html
Quote:
Dallas pension fund sells luxury California resort for loss

Spoiler:
A luxury California resort that helped push Dallas' troubled police pension system toward insolvency has been sold for a fraction of the nearly $111 million the city sank into the property.

The Dallas Morning News reported Sunday that the 3,100-acre Napa County resort was recently sold by the public pension fund for $22 million.

The property was among many unusual investments that plunged the Dallas Police and Fire Pension System into financial distress before an overhaul last year.

Former pension fund leaders went on lavish "due diligence" trips across the world, visited Napa County regularly and often stayed in luxury hotels.

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Dallas City Councilman Lee Kleinman previously served on the pension board. He called the resort the "low-light of the inappropriate purchases" made by the fund.


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