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Old 01-12-2018, 05:53 PM
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Mary Pat Campbell
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NEW YORK

DOUBLE DIPPING
http://www.syracuse.com/crime/index....my_family.html

Quote:
DA Fitzpatrick: Double dipping on pension and salary is 'protecting my family'
Spoiler:
Syracuse, NY -- Onondaga County District Attorney William Fitzpatrick explained why he filed for retirement, allowing him to collect a pension while continuing to work.

"The term double dipping is inciteful, but I'm actually protecting my family," the DA said during a brief interview.

Fitzpatrick, 65, filed for retirement Dec. 31, 2017 but returned to work a day later and is currently in the middle of prosecuting a cold-case murder trial.

Fitzpatrick said his reason for double dipping is to protect spousal benefits.

He described what would happen if he hadn't filed for retirement: "If I died today, my wife wouldn't get my pension," Fitzpatrick said of the alternative.

Once his pension is established, his wife, Court of Claims Judge Diane Fitzpatrick, would receive benefits if Fitzpatrick were to die.

Fitzpatrick said he was looking out for his wife "who has withstood 37 years of middle of the night phone calls and visits to crime scene and death threats and multiple trial preparations."

There's another huge benefit for "retiring" as soon as he could: Fitzpatrick will take home a yearly pension that's probably north of $100,000 a year on top of his $182,500 salary. That could push his total compensation to close to $300,000 a year or more.



Spousal benefits is the same reason that state Senator John DeFrancisco, R-Syracuse, gave in 2014 for reversing his previous stance against double dipping and taking a pension.

"If I did not file and died while in office, my wife of 46 years would not receive my valuable retirement that I have earned over the last 37 years," DeFrancisco told Syracuse.com in 2014.

Fitzpatrick did not say exactly how much his pension was forecast to be. The state Comptroller's Office said it could take months to crunch all the numbers.

For his part, Fitzpatrick doesn't seem interested in actually retiring yet: he spoke briefly as he was leaving court during the second day of testimony in a 33-year-old cold case trial.

Fitzpatrick has served two years of his seventh term, making him one of the longest-serving DA's in the state.
LAWSUIT AND DIVESTMENT

https://www.reuters.com/article/uk-u...-idUSKBN1EZ2BG

Quote:
New York sues fossil fuel majors, plans divestment from pension funds
Spoiler:
NEW YORK (Reuters) - New York City on Wednesday filed a multibillion dollar lawsuit against five top fossil fuel companies, citing their “contributions to global warming,” as it unveiled a plan to cut fossil fuel investments from its $189 billion public pension funds over the next five years.

The companies are BP Plc, Chevron Corp, ConocoPhillips, Exxon Mobil Corp and Royal Dutch Shell Plc.

New York’s goal of eliminating about $5 billion in securities of nearly 200 oil companies, would be among the biggest public pension divestments from fossil fuels to date, the city said in a statement.

“Safeguarding the retirement of our city’s police officers, teachers, firefighters and city workers is our top priority, and we believe that their financial future is linked to the sustainability of the planet,” city Comptroller Scott Stringer said in the statement.

“Our announcement sends a message to the world that a brighter economy rests on being green,” said Stringer, a trustee of New York’s five pension funds.
https://www.seattletimes.com/busines...-fossil-fuels/

Quote:
NYC sues, divests from oil firms over climate change
Spoiler:
NEW YORK (AP) — New York City is taking on the oil industry on two fronts, announcing a lawsuit Wednesday that blames the top five oil companies for contributing to global warming and saying the city will sell off billions in fossil fuel investments from the city’s pension funds.

Democratic Mayor Bill de Blasio received immediate blowback from some of the companies, while winning praise from environmentalists and others.


“We’re bringing the fight against climate change straight to the fossil fuel companies that knew about its effects and intentionally misled the public to protect their profits,” the mayor said. “As climate change continues to worsen, it’s up to the fossil fuel companies whose greed put us in this position to shoulder the cost of making New York safer and more resilient.”

The city alleges the fossil fuel industry was aware for decades that burning fuel was impacting climate change.

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The defendants in the city’s federal lawsuit are BP, Chevron, ConocoPhillips, Exxon Mobil and Royal Dutch Shell. Three of the companies shot back against the mayor’s accusations, while two others — ConocoPhillips and BP — declined to enter the fray.

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“Reducing greenhouse gas emissions is a global issue and requires global participation and actions,” said Exxon Mobil’s Scott Silvestri. “Lawsuits of this kind — filed by trial attorneys against an industry that provides products we all rely upon to power the economy and enable our domestic life — simply do not do that.”

Chevron spokesman Braden Reddall called the lawsuit meritless and said the litigation will do nothing to address climate change. Curtis Smith, a Shell spokesman, said the courts are not the venue to address climate change.

New York’s lawsuit, filed in federal court follows similar litigation filed by San Francisco, Oakland, and Santa Cruz in California.

Also Wednesday, de Blasio and Comptroller Scott Stringer said they intend to divest the city’s five pension funds of roughly $5 billion in fossil fuel investments out of its total of $189 billion. They say the divestment is the largest of any municipality in the U.S. to date.

“Safeguarding the retirement of our city’s police officers, teachers and firefighters is our top priority, and we believe that their financial future is linked to the sustainability of the planet,” Stringer said.

Clara Vondrich of the DivestInvest campaign says the city joins a movement that started about six years ago. She says hundreds of institutional investors managing assets of over $5.5 trillion have taken their money out of fossil fuel investments.

Last month, Democratic New York Gov. Andrew Cuomo announced plans to have the state pension funds also divest from fossil fuel investments. He and state Comptroller Thomas DiNapoli are creating an advisory committee to examine the way to proceed with divestment.

In November, Norway’s central bank urged the Norwegian government to consider divesting oil and gas company shares held in the $1 trillion oil fund.

Vondrich said other cities and entities selling off fossil fuel interests have included Berlin and Washington, D.C.; insurance companies Swiss Re, Axa and Allianz; and educational institutions such as the University of Oxford in Great Britain, Stanford University in California and Trinity College in Ireland.

Philanthropies have included the Wallace Global Fund and the Rockefeller Brothers Fund, notable because the late John D. Rockefeller grew his wealth as an oil baron.

Kyle Isakower, vice president of the American Petroleum Institute, has previously said that divestment is a “tactic of misinformed activists” that is “incompatible with job creation, affordable energy, and economic prosperity.” The industry group’s New York executive director, Karen Moreau, accused him of hurting pension holders in “a disgraceful way to score cheap political points.”


Linda Kelly, senior vice president and general counsel of the National Association of Manufacturers, a trade group, called the lawsuit a stunt.

“Ironically, this attack on energy manufacturers comes at a time that New Yorkers have depended on natural gas and heating oil to carry them through the recent extreme cold,” she said. “The mayor’s announcement may raise his profile, but it will do nothing to address climate change and will ultimately fail.”

Longtime environmental activist Bill McKibben called the actions by the city “one of a handful of the most important developments” in the past 30 years. “The mightiest city on the planet has now sort of walked into a real fight with the richest and most irresponsible industry on the planet,” he said.
https://cei.org/blog/dangerous-postu...ion-divestment

Quote:
The Dangerous Posturing of New York's Fossil Fuel Pension Divestment
Spoiler:
The real measure of future taxation is the projected level of government spending. That simple truth makes filling the funding gaps of public employee pension funds crucial for states’ and municipalities fiscal health—as well as for the well-being of taxpayers who rely on the public services their taxes are supposed to pay for. Every tax dollar diverted to cover a pension shortfall is a dollar diverted away from road maintenance or school construction.

Unfortunately, some state and local officials are pursuing policies that expose taxpayers’ exposure to the liability of pension shortfalls—while putting public employees’ retirement security at risk—to push some social or political agenda. Now the political leadership of the nation’s largest city is engaging in such reckless political posturing.

On January 10th, New York Mayor Bill de Blasio and Comptroller Scott Stringer announced that the city is divesting from fossil fuel energy firms, while suing some of the nation’s largest oil companies over their alleged “contribution” to global warming. New Yorkers, who are already highly taxed, should be wary.

Many public pension funds are defined benefit plans, which pay a fixed amount to retirees. In several states, courts treat pension obligations as ironclad contracts, rather than government benefits, and thus render them essentially non-negotiable; state and local governments must pick up whatever portion of pension payouts that investment returns don’t cover.

That means that any investment returns forgone because of de Blasio’s and Stringer’s climate crusade will fall squarely on the shoulders of Empire State taxpayers. The forgone gains are bound to be large, and New York can ill afford them.

A new report by the American Council for Capital Formation (ACCF) paints a grim picture:

The city’s five public employee pension funds—the New York City Employees’ Retirement System, Teachers’ Retirement System, Police Pension Fund, Fire Department Pension Fund, and Board of Education Retirement System—have an average funding ration of 62 percent, well below the national average of 72 percent.
The city’s annual contribution to the pension funds has increased from $1.4 billion in 2002 to $9.3 billion in fiscal year 2017.
Pension payouts are on track to soon overtake social services as the city’s second-largest spending category, taking up 80 cents of every dollar raised by the city’s personal income tax.
The five pension funds have consistently underperformed the market since Stinger assumed the comptroller’s office in 2014.
For a preview of what greater environmental activism would mean for the pension funds’ overall performance, the study’s author, Tim Doyle, vice president of policy and general counsel at ACCF, looked at the 12 percent of the New York City pension funds’ assets invested in what is known as a Developed Environmental asset class. He notes:

For each of the specific New York City Pension Funds invested in this Developed Environmental Activist asset class, the return on these investments has underperformed the overall fund return over the last three calendar years full data is available. Yet despite the underperformance of this asset class compared to the funds’ overall returns, New York City Pension Funds have increased their investments in its assets since 2015 (the oldest data available).

Clearly, no single policy solution will address a funding gap this large, but a good first step is for city officials to stop narrowing the pension funds’ investment opportunities as de Blasio and Stringer now propose.

Better management and weighing of risks is also needed. “Despite evidence of poor performance,” Doyle notes, “it took until 2012 for New York City to reduce its assumed annual rate of return from 8 percent to 7 percent.” That’s a step in the right direction, but it may still be too high to accurately reflect the true funding gap. Preferable would be a risk-free rate of below 4 percent, such as that of a 10- to 20-year Treasury bond.

Another constructive reform would be to appoint actuaries and professional managers to pension fund boards. Currently, as Doyle notes, the pension boards are “comprised of elected and appointed officials and union representatives,” who are likely to face incentives to downplay the funding gap, in order to avoid alarming taxpayers over the potential tax liability or union members over the soundness of their retirement.

For more on public pension reform, see here and here.
https://www.timesunion.com/news/arti...e-12491490.php

Quote:
Divestment from fossil fuels debated for state pension fund
NYC pledges to divest, others have sold off fossil fuel-related assets
Spoiler:
ALBANY — State Comptroller Tom DiNapoli cautioned again this week that the financial interests of the state pension fund must be weighed when considering divestment from fossil fuels.

DiNapoli's comments follow Gov. Andrew Cuomo's suggestion in his State of the State last week that he and DiNapoli work together to divest the $192.4 billion New York State Common Retirement Fund from fossil fuels. Cuomo wants the fund to cease making new investments in entities with "significant fossil fuel-related activities" and will create an advisory panel to develop a "de-carbonization roadmap" to support clean energy investments.

"I understand what's behind the divestment movement, and I'm very sympathetic to it," DiNapoli told reporters following an event at the Times Union's Hearst Media Center in Colonie on Tuesday. "We believe climate change is real, climate risk is an issue that the pension fund should deal with. We have been dealing with it. But just divesting I don't think is going to put any of these companies out of business."

The comptroller asserted that he isn't allowing himself to be pushed into divesting, either.

"I'm an independently elected official," he said during the event. "I have a particular independence when it comes to managing the pension fund, and that will not be compromised."

DiNapoli outlined a few complexities to divestment, including the time it would take.

For comparison, when the fund divested from companies doing business with Sudan and Iran, DiNapoli said it took two years to fully pull out about $90 million. In terms of fossil fuel investments, the pension fund currently has $1 billion invested in Exxon Mobil alone.

Also, DiNapoli noted, the fund invests in part in index funds, which can include fossil fuel-related investments along with investments in other companies/industries. By the same token, DiNapoli created a $2 billion index to shift investments to lower emitters.

If New York were to move toward divestment from fossil fuels, it wouldn't be alone.

Notably, the California State Legislature passed a law in 2015 to require the public employees and teacher's retirement funds to divest from coal. As of August, the state Public Employees' Retirement System reported that it was almost entirely withdrawn from coal investments, which were valued between $100 million and $200 million when the law passed, according to Reuters.

That state's public employee pension fund is valued at $355.5 billion, the largest in the nation.

On a far smaller scale, Washington, D.C., sold off its $6.4 million in direct fossil fuel holdings in recent years. Those holdings represented less than 1 percent of the fund's total value, according to Inside Climate News.

New York City pension officials announced Wednesday that they will sell off fossil fuel investments.

But while even a former chairman of Shell, Mark-Stuart, has said fossil fuel divestment and reinvestment in clean energy makes sense, some question if total divestment is a prudent strategy.

DiNapoli has held that being an investor gives the state a voice in the fossil-fuel company board room, as it did when the fund and Church of England pressured Exxon to accept a shareholder resolution requesting that the company analyze how implementing the Paris Agreement will affect its business.

Divestment in general can be risky business. The investment management firm Wilshire Associates found in a 2016 analysis that the California public employees pension fund missed $7.8 billion in potential earnings because of various divestment activities dating back decades, the Sacramento Bee reported.

Still, there are those who say divestment from fossil fuels not only checks the social responsibility box, it also has become a matter of fiduciary responsibility.

Arabella Advisors, an investment advisory firm focused on helping clients impact social issues, concluded in a 2016 analysis that bankruptcies filed recently by large coal companies and drops in profitability of top oil and gas companies "reflect an increasing vulnerability in fossil fuel business models that divestment can potentially exacerbate."

"The incompatibility of the prevailing fossil fuel business model with globally agreed-upon carbon limits, and the increasingly poor market performance of many former fossil leaders, such as ExxonMobil, will only hasten the financial exit from fossil fuels and the move to invest in clean energy," the analysis states.
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Old 01-12-2018, 05:54 PM
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TRUMBULL, CONNECTICUT

https://www.ctpost.com/local/article...d-12492147.php

Quote:
Trumbull Town Council repeals pension board limitation
Spoiler:
TRUMBULL — More people are now eligible to serve on the town police and pension boards — including those who receive a town pension.

The Town Council, in a move that drew criticism as well as praise, this week repealed a law that prevented people who received pensions or their family members from serving on the pension board and Police Commission. Those who serve on the commission also serve on the pension board.

“I really think it’s unethical and immoral that anyone or anyone’s immediate family would serve on a commission to evaluate and manage the pensions of themselves,” said former Town Council member Joe Pifko, who objected to the change. “That’s just — it’s just ridiculous.”

Supporters of the change said the town’s Code of Ethics required people who might be asked to vote on a pension that concerned them or a family member to recuse themselves.

“Any police commissioner who is invested in a pension that changes should and does recuse himself or herself if that comes to a vote,” said Lisa Labella, who previously served on the police commission and was recently re-appointed.


First Selectman Vicki Tesoro echoed her stance.

“I think it’s simply not fair to deny former officers the opportunity to bring their experience to bear,” Tesoro said.

In other action, the town council agreed not to vote on repealing a law — unanimously approved in November — that barred former town employees who were receiving retirement benefits from being re-hired or appointed into positions with the town.


The resolution was sent back to the Legislative and Administrative committee for more information.

At the time, the law was approved on the grounds that it was unfair for taxpayers to pay both retirement benefits and a salary or other fees to a person on the town payroll — “double dipping,” as supporters of the law called it.

The law re-surfaced on the Town Council agenda after Tesoro appointed Dan Schopick as town attorney, a role he held in 1987, from 1989 to 1999 and from 2001 to 2009. Schopick was appointed on Dec. 4 to the position, and he is allowed to serve up to 90 before the law as it stands bars him from the job.

Under the previous administration, town attorneys were not considered town employees, but they were considered employees in administrations prior to Tim Herbst’s.

Tesoro called the ordinance “fundamentally unfair” and said it was targeted at certain members of the community when it was passed in November, noting that it was odd that it was passed two days after the election by a lame duck Town Council.

“It prevents the town from bringing back individuals with skills and expertise because they earned a pension in earlier employment. They earned that pension and they deserve to receive it,” Tesoro said. “We’re barring employees from bringing back specific knowledge to a position that would shorten the learning curve ... if a former employee’s not hired, someone else will be hired to receive that salary and the person being barred will still be receiving the pension.”

A few people spoke out against repealing the law during the public hearing, including former candidate for first selectman and former Board of Education member Paul S. Lavoie. Lavoie said Trumbull Democrats griped about double dipping when former athletic director Michael Herbst retired and came back to fill his role on a temporary basis while the Board of Education was searching for a replacement. The law in question does not apply to the Board of Education.

“If in 2014, you believe this was double dipping, then in 2017 (sic), it’s double dipping and you should vote that way as well and you should reject the repeal of this ordinance,” Lavoie said.

Edna Colucci, who represents District 2, said she originally voted for the ordinance when it was passed because she wanted to prevent double dipping, but that the resolution should be reworked and have a better version on the table before the law was repealed.

“I think repealing is jumping the gun, especially because we all agreed unanimously that this was good law to put into place in the first place,” Colucci said. “If there’s something to be changed, to be made better, I’m not against that at all.”
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Old 01-12-2018, 05:54 PM
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LA VERNE, CALIFORNIA

https://www.sgvtribune.com/2018/01/1...irement-costs/

Quote:
La Verne may pursue pension bonds as one of a number of strategies to address employee retirement costs

Spoiler:
LA VERNE >> City administrators in La Verne will pursue multiple strategies – some meant to cut costs while others are designed to generate revenue – as part of a plan to pay off nearly $50 million in employee pension costs.

La Verne City Council members, who met in a day-long special meeting Thursday at University of La Verne, listened to presentations given by City Manager Bob Russi and various department heads on the various options available, some of which can be set in motion relatively quickly and others which require greater study before they can be pursued.

At the top of the list of tactics, to address what is referred to as the city’s unfunded actuarial liability, would be the sale of pension obligation bonds.

“Pension obligation bonds are not adding liability. They are refinancing a liability we already have,” Russi said at the end of the meeting.

La Verne, like many other cities across the state, is looking for ways to fund employees retirement costs. Since 2007 the California Public Employees Retirement System, or CalPERS, has been changing the manner in which it calculates the amount cities must pay to cover employees’ retirement costs, according to a city staff report on the city’s retirement system.

Based on a CalPERS report, the city estimates costs growing an average of $625,000 a year for the next six years, the staff report reads. Costs are expected to peak in the 2032-2033 fiscal year when annual costs are expected to exceed $11 million.

Projected revenue growth and city reserves will not provide enough to meet the expenses, the report said.

CalPERS has developed a 30-year payment plan for the unfunded liability that would include an interest rate of 7 to 7.5 percent.

By selling pension obligation bonds, the city can secure the money to pay off the pension costs in one lump sum and pay off the debt over the same 30-year-period at a lower interest rate of about 4.5 percent, depending on the bond market, according to the staff report.


That brings the city’s debt down to somewhere between $3 million and $3.5 million annually, Russi said.

The city’s general fund, which covers most expenses including employee wages and services such as library services and public safety, could absorb about $1.5 million of that debt but the city must still come up with the balance, Russi said.



City department heads have spent the last six months developing a series of options that could help achieve that goal. Among the shorter term options is the implementation of an annual business fire inspection fee, contracting out street sweeping, temporarily suspending general fund contributions to the city’s capital improvement program and possibly selling a piece of property acquired decades ago for construction of a reservoir.

Longer-term options include adding a franchise fee to waster hauler contracts and reducing tree trimming maintenance contracts. Another possibility could involve working with neighboring cities to establish a regional public safety communications center which would reduce public safety dispatch costs.

The city’s strategy would also involve beginning to set aside dollars that could be used to cover future increases in pension costs, which Russi said, would very well result should CalPERS make additional changes in its pension cost calculations.

Mark Alvarado, a consultant who has been working with Russi to develop a strategy to address the pension expenses, told council members the city could be ready to go to the bond market in about four months.

But Russi said the goal would be to have sold the bond before the end of the current fiscal year, which ends June 30 and have the pension debt paid by July 1.

Councilman Tim Hepburn said the idea of refinancing the retirement debt over 30 years doesn’t appeal to him “but it’s the best alternative.”

Councilman Muir Davis said securing a bond provides a lower interest rate to work with and offers some certainty in addressing costs.

“It gives us a nice level playing field,” he said. “I think this is a wise idea.”

Russi said a plan with all the idea discussed will be put in writing and presented to the City Council next month for approval.
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Old 01-12-2018, 05:57 PM
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KENTUCKY

http://www.kentuckynewera.com/news/a...3a8e92f01.html
Quote:
Kentucky pension reform bill's funding method may kick 'kids in the teeth,' critics say


Spoiler:
FRANKFORT, Ky. – An emerging concern over the pension reform bill about to be filed in the General Assembly is that it may call for increased funding for the plans by hundreds of millions of dollars more than necessary.

Those who voice this concern say the funding approach strongly endorsed by Gov. Matt Bevin and fellow Republicans who control the House and Senate will force much deeper cuts to public schools and other priorities in the state budget.

“People who hold this position are going to be accused of kicking the can down the road again on pensions. But it’s a question of how much and how quickly we need to put more money into pensions,” said Jason Bailey, executive director of the Kentucky Center for Economic Policy in Berea. “My concern is we will be kicking kids in the teeth if we do the kind of budget cuts” that would be required under the new pension funding approach.

Eric Kennedy, director of governmental relations for the Kentucky School Boards Association, said that without a big boost in revenue through tax reform the new funding method — called "level dollar" funding — is likely to result in draconian cuts at public schools. He said the method would lead to school funding that is “unbearable in every classroom and unacceptable to every business owner that depends on us to educate tomorrow’s workforce.”

Level dollar funding was strongly endorsed by the consultant to the Bevin administration as crucial to correcting the problems that helped create Kentucky's massive retirement system debts that are now officially listed at $43.8 billion.

John Chilton, budget director for the Bevin administration, has said this approach is vital to take an immediate bite out of that debt. Chilton declined to be interviewed.

But House Majority Leader Jonathan Shell, R-Lancaster, said, “We’ve not put the level of funding that we probably should have in those funds. … It’s time we make sure we implement the funding that is necessary, across the board. And we feel that 'level dollar’ does that.”

But Bailey has been arguing for months that while much more money is needed in pension funding, the level dollar approach would require hundreds of millions of dollars more than necessary to make solid progress in paying down the debt.

Moreover, Bailey said most of the new money under level dollar funding will go to the Teachers’ Retirement System rather than the worst-funded state pension plan, the plan for those in non-hazardous occupations. It covers most state workers.

Without new revenue, and unless lawmakers decide to phase in the new funding approach, Bailey said the move is an "overreaction to past underfunding that would set up unprecedented budget cuts.”

He said it "will massively front-load the costs of paying down liabilities while asking relatively little of the budget two and three decades from now.”

Bevin and Republican leaders released a pension bill in the fall that called for certain benefit cuts, a gradual transition from traditional benefit plans to 401(k)-like plans, and level dollar funding. But the bill never won enough support among House Republicans, and Bevin’s hope to pass pension reform at a 2017 special legislative session was deferred. Now Republican legislative leaders hope to pass a revised bill early in the regular session.

The revised bill that addresses concerns about benefit cuts is likely to be filed this week. And on Jan. 16, Bevin will propose a state budget for the two-year period beginning July 1. Both are expected to call for the new pension funding approach.

The governor has warned that the budget will include deep spending cuts so that spending matches available revenue. “I think you’re going to see a realistic budget, one that for the first time in a long time encapsulates the true cost of doing business in Kentucky. And it won’t be as pretty as people would like,” Bevin said last week in an interview with Kentucky Today, a Bevin-friendly online publication of the Kentucky Baptist Convention.

Traditionally, the state’s annual required contributions to its pension plans are calculated by actuaries as a percentage of the state’s payroll. Most states use this approach, which anticipates that government contributions grow year-to-year as government payroll and revenues grow.

But the level dollar approach is like a home mortgage payment, requiring the state to pay the same amount per year for each of the next 30 years as it pays benefits while paying down the debt in the retirement plans.

This method is necessary, advocates say, because government payroll growth is weak or flat. But it requires much bigger payments than the current funding method during the early years.

Bailey said some significant funding increase is needed for the main pension plan, the one that covers non-hazardous occupations. It is the worst-funded pension plan in America with only 13.6 percent of the money it needs to pay its obligations.

But he said he believes the current funding method is a responsible one that moves the plans toward recovery if assumptions used by actuaries are reasonable and the legislature fully funds what actuaries say is required. He said Bevin and the legislature took an important step two years ago by boosting state pension funding by more than $500 million per year.

Level dollar funding, he said, will particularly require more state funding than is necessary for the Teachers’ Retirement System.

Bailey said the teachers' system situation improved last year and now reports it is 56.4 percent funded. Its actuary has said an increase of $104 million is needed next year under the current funding method. But a recent presentation by the Legislative Research Commission staff said the level-dollar approach will require $392 million more next year the plan, in addition to the $104 million.

“With the big stride in the last budget, we are well on our way already,” Bailey said. “… Simply slashing K-12 education, making higher education even less affordable and reducing access to services for the most vulnerable is not a viable option.

Brent McKim, president of the Jefferson County Teachers Association, said that “paying under the level dollar approach would be great for the pension plan, but I can’t justify paying more than what is necessary given the other needs we have in a very dire state budget.”


http://www.messenger-inquirer.com/ne...77bb90825.html
Quote:
2018 county budgets reveal first state pension effects
Spoiler:
County officials said they are seeing the first implications of added government employee pension responsibilities with the 2018 Daviess County Sheriff’s Office and County Clerk’s Office budgets.

Judge Executive Al Mattingly said the budgets approved Thursday at a special called Daviess Fiscal Court meeting showed evidence of something he has been saying since added obligations for pensions were announced last fall.

“This is just the beginning; every member of CERS and KERS, will see that increase,” Mattingly said. “It’s just as I said in my State of the County address; the money is there to fix the problem, it’s just in your and my pocket.”

The 2018 Sheriff’s Office budget will be $5.2 million with an additional $180,000 requested for pension obligations and a $250,000 contingency in the event it needs assistance.

Mattingly said the Fiscal Court thought it was best to include a $250,000 contingency because of the work and cost involved with amending budgets later if the need arose.

The Sheriff’s Office will take on 51.7 percent pension compensation in July at the beginning of the state’s fiscal year. The retirement rate for hazardous duty employees had previously declined each year from 37.6 percent in 2012 to 31.55 percent last year.

The Sheriff’s Office pension obligation will actually be higher in the 2019 budget because the law enforcement agencies budget – along with the County Clerk’s Office – is based on a calendar year. $300,000 will be required to meet the Sheriff’s Office pension obligation next year.

“Our budget faces significant challenges in 2018 due to increased health insurance and pension funding costs,” Daviess County Sheriff Keith Cain said.

Cain told the Fiscal Court the Sheriff’s Office expected very little increase in operational expenses, but would see a large increase in health insurance. Health insurance costs totaled $640,000 in 2017 – a $50,000 increase from 2016 – and could increase even more this year since the insurance underwriters decided not to fund excess carrier reimbursements.

The 2018 budget for the Daviess County Clerk’s Office was approved at $2.03 million.

As a government office with a regular stream of revenue, the clerk’s office is in a different position than the sheriff’s office but will also be seeing a large spike in its pension obligation.

David “Oz” Osborne, Daviess County Clerk, said the office would increase from a 19.18 percent contribution to 23.63 percent this year and will move to 28.05 percent next year.


“The albatross around everyone’s neck is the pension responsibility,” Osborne said. “What digs at me is the people in the (County Employee Retirement System) have been putting up what we were required for years.”

In 2017, the county clerk’s office took in $25 million in vehicle registration fees and other taxes. It paid $15 million to the state, $2 million to Fiscal Court, and $5.1 million to tax districts like city and county schools. It spent $1.7 million of it’s $1.9 million budget.

“I feel like we have been good stewards of the taxpayers money and been an efficient revenue generator,” Osborne said.

When Osborne leaves office in November, the over $300,000 in reserve he has built in the last four years will be given to the Fiscal Court.

Daviess County Commissioner Charlie Castlen said even fiscal wins like excess reserves are taking a beating under added pension obligations.

“While the clerk has money in his budget, the reality is the $300,000 he said he would turn over would be more if he didn’t have to pay for added pensions,” Castlen said.
https://www.amnews.com/2018/01/11/da...sion-payments/

Quote:
Danville’s budget could be strained by increased pension payments

Spoiler:
Danville may owe in the neighborhood of $700,000 in additional pension payments next fiscal year, which will place a big strain on the city’s budget, City Manager Ron Scott said this week.

Scott warned city commissioners at their first meeting of 2018 that the larger payments due to the County Employees Retirement System (CERS) could get in the way of other city priorities.

“We are going to have, I think, a challenge, unless we get some additional revenue sources in terms of meeting all of the required or desired expenditures in the year ahead,” Scott said. “This is going to be probably the tightest budget year that we have had largely because of that imposition of the $700,000-plus annual pension contribution — and that’s the revised downward calculation.”

Scott explained after the meeting that the City of Danville is paying in the vicinity of $1.38 million to CERS this year. Those funds go to pay for the pensions and health care plans of retirees and current employees who are on a pension plan. That amount is determined by taking a percentage of the total salaries paid by the city.

The most recent decision from the Kentucky Retirement Systems board ups those percentages substantially, meaning Danville expects to owe an additional $262,765 for nonhazardous-duty retirement plans and an extra $419,548 for hazardous-duty retirement plans. Those total an extra $682,313, “which would be closer to $700,000 if payroll is adjusted next fiscal year,” Scott said.

The new, “overly aggressive” rates chosen by the board are not necessary for governments like Danville that use CERS, Scott argued, because “actuarial studies point to the fact that the CERS is relatively well-funded and is already — without any additional increase in contributions being required — on a path of solvency.”

The new rates from the board are expected to bring in an additional $108 million in new contributions to CERS from Kentucky cities, Scott said, citing an article from the Kentucky League of Cities.

Scott also noted Danville is required to contribute to CERS based on its entire payroll, even though new employees hired since Jan. 1, 2014, are no longer eligible to be part of CERS. Instead, newer employees are enrolled in “defined contribution” retirement plans that guarantee an annual benefit of 4 percent but don’t provide guaranteed retirement benefits for life like a pension.

“Unless the … pension contribution rates for next fiscal year are modified to be less aggressive — and/or new revenue sources are granted to cities … perhaps the restaurant tax … many cities throughout Kentucky are going to have difficulty in varying magnitudes in making the required pension contributions next year,” Scott said Tuesday.

Currently, only certain classes of city in Kentucky are allowed to implement local sales taxes on restaurant bills. Danville officials have expressed interest in supporting efforts to expand the law in this area so that Danville could also implement a restaurant tax.

At a November retreat meeting of the city commission, it was estimated that adding a 3-percent restaurant tax in Danville could bring in around $1.5 million for the City of Danville and $400,000 for the local Convention and Visitors Bureau. Danville would have to spend those funds for “economic development” purposes, but that could still relieve budgetary pressure by freeing up general fund money currently spent in economic development categories.

During Monday’s commission meeting, Mayor Mike Perros asked if the extra cost for pensions was going to get in the way of other things Danville planned to accomplish.

In 2017, the city passed a pair of tax increases on payroll and net profits taxes in order to fund a lengthy list of projects and upgrades, including replacement of a bridge no longer rated for fire trucks to cross; replacing the crumbling downtown fire station; purchase of a new ladder fire truck in order to maintain the city’s ISO insurance rating; and implementation of energy-savings upgrades. The tax increases are projected to bring in around $2.2 million in new revenue annually.

“So those things that we were hoping to do, and the reason that we took the step to pass tax increases last year — those things now go away?” Perros asked.

“We can fund and hopefully continue to fund hopefully some of those,” Scott answered. “… One of those, as you might recall, was the desire to more adequately staff our 911 center.”

“But the bottom line is this proposed pension assessment … basically sets us back to where we were a couple years ago,” Perros said.

“Well, in terms of flexibility of revenue, I would say it does,” Scott said. “We certainly have more revenue … it’s not all gloom and doom, but when anybody is handed a three-quarters-of-a-million-dollar additional assessment in addition to what we’re already paying, it’s a sobering thought in terms of how we best deal with that.”

Scott said further complicating the matter is the fact that legislation has been introduced for this year’s general assembly to consider that “talk about repealing some existing authorities that we have as cities to levy some user taxes.”

“We’re going to have to, I think, make an effective case that for Kentucky to succeed, its communities must succeed,” Scott said.

Residents’ input sought

Danville officials want input from city residents on their priorities and desires as they begin to work on a budget for the next fiscal year, Scott said.

He encouraged people to visit the city’s website, danvilleky.org, and click on “citizen survey” to participate in a survey.

So far, 168 Danville residents have filled out the survey, which Scott called a “good beginning” but said it’s not as many responses as the city wants.

“We want to use the results of that survey to consider as we get into our budget process,” Scott said.

The city will also hold at least one public meeting for the purpose of public input on the budget planning, but the survey will provide a “backdrop” of information on what local residents think, he said.

“We’d like to have that information in before we get too deeply into the budget preparation process.”

SO YOU KNOW

The Kentucky Retirement Systems board is requiring increased payments to the County Employees Retirement System (CERS) in the 2018-19 fiscal year. Area cities are expected to owe the following amounts in addition to what they already pay for nonhazardous-duty and hazardous-duty pensions and health care plans:

Crab Orchard — $5,873 (nonhazardous, $5,873; hazardous, $0)

Danville — $682,313 (nonhazardous, $262,765; hazardous, $419,548)

Harrodsburg — $318,222 (nonhazardous, $228,195; hazardous, $90,027)

Junction City — $17,893 (nonhazardous, $17,893; hazardous, $0)

Lancaster — $88,416 (nonhazardous, $42,629; hazardous, $45,787)

Liberty — $65,580 (nonhazardous, $65,580; hazardous, $0)

Perryville — $10,052 (nonhazardous, $5,039; hazardous, $5,013)

Stanford — $60,503 (nonhazardous, $5,383; hazardous, $55,120)
https://wfpl.org/new-pension-proposa...udget-address/
Quote:
New Pension Proposal Unlikely Ahead Of Bevin’s Budget Address
Spoiler:
A month ago, Republican leaders of the state legislature said they hoped to pass major changes to the state’s pension systems within the first two weeks of the legislative session.

The first two weeks are now in the books and a new pension bill isn’t in sight ahead of Gov. Matt Bevin’s State of the Commonwealth and Budget address on Tuesday evening.

House Speaker Pro Tem David Osborne said Republican legislative leaders are still working on a proposal and he’s not sure when it will be unveiled.

“We had our first meeting with the Senate last night to discuss the information that we have gotten back on the bills that are out there. We are going to meet with them again this afternoon,” Osborne told reporters on Thursday.

Kentucky’s retirement systems are among the worst funded in the nation due to years of underfunding, demographic changes and poor returns on investments in the state’s pension funds.

Bevin and GOP leaders of the House and Senate proposed a bill in October that would scale back benefits to future and some current employees.

The measure would have put almost all future and some current state workers into 401(k)-style retirement plans and tweaked benefits of current retirees in a few other ways.

But the proposal was met with widespread backlash from state workers, especially teachers.

Lawmakers have backed away from some parts of the original proposal, saying they’ll scale back some provisions that would affect current workers.

On Thursday, Osborne wouldn’t say how much the bill has changed except to say “it’s traveled.”

“Throughout this entire process — getting a pension bill is a difficult process,” Osborne said. “I still 100 percent expect us to get a good pension bill that will ensure the solvency of our pension systems and get us back from the brink of financial disaster.”

During this year’s legislative session lawmakers also have to craft a two-year state budget, which Bevin has warned will include major cuts across most of state government in order to devote more money to the pension systems.

During an interview on KET this week, Bevin said K-12 education funding called SEEK will not be cut and that his priorities will be “education, infrastructure, law enforcement and taking care of the most vulnerable among us.”

Bevin will deliver his proposal for the budget on Tuesday at 7 p.m. EST and broadcast statewide on KET.
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Old 01-12-2018, 05:57 PM
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SAN DIEGO, CALIFORNIA

https://www.teacherpensions.org/blog...-school-budget

Quote:
Thanks to Rising Benefit Costs, San Diego Needs Your Help Cutting Its School Budget
Spoiler:
This afternoon, I spotted a tweet from a San Diego parent:

There's something particularly wrenching about being asked what services should be cut at your kid's school to pay for increased employee pension & healthcare costs, when most working parents don't have pensions. https://t.co/Vs6uMojuSt cc @sdschools

— Ashley Lewis (@AshleyJPL) January 12, 2018


I followed the link to the survey, and a message from the San Diego Unified School District said it was seeking input on how to resolve a growing budget shortfall due to "increases in costs outside of the district’s immediate control, such as healthcare costs, utilities expenses, and state retirement contributions that are all expected to rise for the foreseeable future."

In the pension world we call this "crowd out." Benefit costs are slowly crowding out the discretionary money available for states, districts, and schools to spend on other priorities. San Diego is now seeking input on what to prioritize in its cuts. Here's it's proposed list:

Reduce centrally funded professional development opportunities not related to mandated activities. ($1-$5M) Explanation: If a professional development service is legally required, it would not be reduced.
Reduce substitute and hourly costs by optimizing staff schedules, training, and professional development. ($1-$500k) For example, reducing professional development offered during school hours when substitutes may be required.
Reduce some central office funded positions from 12-month to 11-month and/or 11-month to 10-month. ($1-$500K)
Reduce custodial services. ($1-$7M)
Reduce landscape services to schools. ($1-$500k)
Reduce non-mandated health services in areas where alternative services can be provided. ($1-$9m)
Reduce centralized support of parent education and outreach. ($1-$2M)
Reduce/eliminate non-mandated transportation. ($1-$2M) Example: If a child is transported as part of their special education services or other federal mandates, their service would be maintained.
Realign school bell schedules to maximize efficiencies within transportation. ($1-$250k)
Reduce central support of career technical education programs. ($1-$1M)
Reduce school police support services to schools, classrooms, staff, and the community. ($1-$1M)
Reduce non-mandated mental health services in areas where alternative services can be provided to students. ($1-$4M)
Reduce support for non-mandated services within special education programs. ($1-$5M)
Reduce central office IT support to services to schools, classrooms, staff, and the community. ($1-$200k)
Reduce/eliminate early childhood education (preschool) in areas where alternative services can be provided to students. ($1-$8M)
Reduce or eliminate music and art in schools. ($1-$4.5M)
Reduce library hours or close libraries. ($0-$1M)
Reduce centrally funded counseling services. ($1-$2M)
We've written before about how this is a national trend, how rising pension costs are only just beginning to hit California schools, and how these trends are projected to affect Los Angeles. Our sober policy analyses have attemped to raise the alarm about how rising pension costs are affecting teachers and students, but perhaps nothing presents it in starker fashion than seeing the potential cuts to school district services. Unless policymakers act, these sorts of difficult discussions are likely to play out all over the country.
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TRAVERSE CITY, MICHIGAN

http://www.record-eagle.com/news/loc...e108e3b12.html

Quote:
City faces $29.8M pension debt
Treasurer, commissioners not worried despite sticker shock
Spoiler:
TRAVERSE CITY — Owing $29.8 million in pension debt seems like a staggering burden, especially for Traverse City.

That figure is more than double the city's general fund expenditures from July 2016 through June 2017 of $13,739,286. Auditor Douglas Vredeveld told city commissioners at a recent meeting they'll need to spend more to pay down the city's pension debt.

But city Treasurer Bill Twietmeyer said the deficit is shrinking, and the city is easily making its annual payments on the debt. He's not concerned by the large figure, and city commissioners aren't worried either.

"Where I would be really concerned is if we had another big downturn in the financial markets," Twietmeyer said. "That would be problematic."

Two Wall Street wipeouts helped put Traverse City and many other municipalities in their current situation, Twietmeyer said. The city's police and firefighter retirement account was 120 percent funded in the late 1990s, slumping to 57.2 percent in 2012. Its Michigan Municipal Employees' Retirement System account was nearly 100 percent funded before the economic downturns.

Assets in both the city's MERS and police and fire pension accounts now cover about 63 percent of their long-term liabilities, Twietmeyer said. That percentage still is sliding for MERS, but trending upward for police and fire pensions.

"And so the general trend now is, OK, we bottomed out and now we're headed upwards," he said. "The trend is actually a good thing, because that shows you that you're headed in a positive direction."

The city's position for its MERS account should begin to tick up within a year or two, Twietmeyer said.

Traverse City in 2017 paid $1.8 million toward its police and fire pension debt — covered entirely by a dedicated millage — and $1.1 million for its MERS debt, Twietmeyer said.

Both payments have steadily grown over the years, Twietmeyer said. The city paid $1.1 million for police and fire pensions in 2010, and MERS projections show that payment should grow to $2 million by 2023.

"That can all change, because these retirement systems are quite fluid," he said.

But trims to city employees' pension benefit multipliers, one in 2009 and another in 2014, should keep the city's pension liabilities from ballooning, Twietmeyer said. Those changes take some time to have an effect.

Traverse City's pension situation cannot be compared to Grand Traverse County's, Twietmeyer said. The county closed its pension system nearly 20 years ago, curbing contributions into it. Market crashes created a cash flow problem when investment returns dwindled.

Commissioner Tim Werner said he trusts Twietmeyer's judgement, although future commissioners must keep an eye on the situation.

"If he's not worried about it, nobody should worry about it," Werner said. "Nobody accuses him of being profligate with money."

Mayor Jim Carruthers said he was surprised to hear the big number, especially in light of the changes past city leaders made to address the issue. But he doesn't believe the city is headed for disaster.

"I don't think we're that far off base," he said.

FUND BALANCE TARGET

Traverse City's operating fund balance as of June 30 represents 12 percent of that fund's expenditures for the year, audit documents show.

That's three percentage points and about $450,000 shy of the city's new goal of a 15 to 20 percent fund balance, Twietmeyer said.

City commissioners adopted the policy in December, opting to measure the operating fund balance instead of that of the general fund.

The operating fund is a subset of the general fund, Twietmeyer said. Accounting standards require the city to lump several other funds in when describing the general fund — the city Opera House fund, for example.

"A lot of those are kept track of separately, but for reporting purposes, they are consolidated into one generalized category," he said.

But city leaders are unlikely to transfer money out of those funds to spend on other needs, Twietmeyer said.

Commissioner Richard Lewis, a strong proponent of the fund balance policy, said the current level wasn't a surprise to him. But there's work to do as city leaders begin to think about the 2018-19 budget.

"We're going to have to sit there and come up with a game plan or program about how we're going to have to move the general fund back to a 15 percent fund balance," he said.
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Old 01-12-2018, 06:00 PM
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CALIFORNIA
BENEFIT CUTS

http://reason.com/blog/2018/01/11/go...t-let-californ

Quote:
Gov. Jerry Brown: Courts Must Let California Slash its Public-Sector Pensions
Upcoming state supreme court case may be a game-changer if it reverses "California Rule" holding pension promises inviolate
Spoiler:
Let us now praise California's Gov. Jerry Brown, who is calling for reductions in gold-plated, unsustainable public-sector pensions in the nation's most-populous state.

Decades ago, Brown was mocked as "Governor Moonbeam" (by Mike Royko) and as a "Zen fascist" who would slaughter "un-cool" residents with "organic poison gas" (the Dead Kennedys). He was a hippie, get it, who slept on a futon, fooled around with rock-star sexpot Linda Ronstadt, and even signed off on a heterodox official portrait (see right). Horrors!

When he took office for the first time, Reason even had the temerity to praise Brown, who assumed office immediately after Ronald Reagan (who increased spending by a whopping 12.2 percent per year!), by writing in 1975:

Jerry Brown is moving in the right direction. He supports many statist measures, but he is still more libertarian than the average politician, and much more than any recent Governor of California. He is more fiscally conservative than many so-called conservative leaders, and yet is a good liberal on civil liberties questions. One thing that Brown has learned from politics that can be a lesson for everyone is his analysis of government: "Government isn't a religion. It shouldn't be treated as such. It's not God, it's humans, fallible people, feathering their nests most of the time." Let us hope that the people of California can learn something from the maverick Governor.

Man, 1975 was a loooong time ago, and suffice it to say that Brown didn't really deliver on libertarianism during his first stint as governor. Or in his second, either, where he has increased spending and became obsessed with a truly useless, criminally expensive high-speed rail project whose only contribution to humanity so far has been to inspire the second season of HBO's True Detective. His second term ends in a year and because of term limits, he can't run again. As he exits, Steve Greenhut noted last month in these pages, "Brown is taking on the public-sector unions he has spent his career empowering." Finally.

Since 1955, something called the "California Rule" has stood in the way of meaningful pension reform. The rule basically holds that public-sector employees at all levels of government had an inviolable right to the pension benefits that existed on the day they were hired. For decades, California's politicians bought votes by promising ever-better and ever-greater pension benefits that would kick in down the road after they were safely out of office, eventually creating a system that only has "68 percent of assets needed to cover its liabilities. For the fiscal year beginning in July, the state's contribution to Calpers [the nation's largest public-sector pension] is double what it was in fiscal 2009."

Absent the ability to alter pensions, states and localities have to devote more and more of their taxes to simply covering the costs of retired workers. Worse still, they often raise taxes to cover rising costs, typically at the expense of providing basic services such as police and road maintenance. In California and over a dozen other states, courts have ruled that pensions and future benefits such as health care can't be touched, forcing taxpayers alone to shoulder the burden. (The city of Bell, California is a microcosm of where this madness leads.)

But that may well change, as much out of fiscal necessity as anything else. In the Golden State, three court cases are unfolding that strike at the heart of the "California Rule." Depending on how they are resolved, the cases may give the state and local governments the right to change payouts during economic downturns as long as the lowered benefits are still considered "reasonable."

From BloombergPolitics:

Brown said he has a "hunch" the courts would "modify" the so-called California rule, which holds that benefits promised to public employees can't be rolled back. The state's Supreme Court is set to hear a case in which lower courts ruled that reductions to pensions are permissible if the payments remain "reasonable" for workers.

"There is more flexibility than there is currently assumed by those who discuss the California rule," Brown said during a briefing on the budget in Sacramento. He said that in the next recession, the governor "will have the option of considering pension cutbacks for the first time."...

"In the next downturn, when things look pretty dire, that would be one of the items on the chopping block," Brown said.

It's more than a little crazy to be hoping for a downturn so that a state can reset public-sector pensions that threaten its fiscal future. It shouldn't have to come to that and it doesn't have to. Changing from defined-benefit plans to defined-contribution plans will solve much of the problem in a way that won't put pensioners out on the street or punish taxpayers with higher taxes and lower services (go here for a sensible public-sector pension reform plan, put together by analysts at Reason Foundation's research policy).

But until more governors follow Moonbeam's example, more legislatures change their practices, and more courts rule against all the various forms of the "California Rule," things will remain dire.
https://www.mercurynews.com/2018/01/...ension-reform/

Quote:
Borenstein: Brown suffers major setback on pension reform
Spoiler:
Gov. Jerry Brown suffered a significant legal setback this week when a state appeals court dealt a blow to hopes for meaningful pension reform in California.

The decision after five years of litigation over pension spiking could undermine key portions of legislation the governor signed in 2012 to end such abuses and help shore up retirement systems across the state.

The good news is that the decision, issued by a three-justice panel in San Francisco, probably won’t be the final word on the issue. The state Supreme Court had already agreed to hear appeals of two other cases stemming from the 2012 legislation and is expected to take the latest one too.

Each case confronts the question of how much the state can alter retirement benefits without violating past promises to workers. In the two other cases, separate panels of the same appeals court in San Francisco had upheld implementations of Brown’s legislation.

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Monday’s ruling broke that momentum, showing that the road to meaningful reform is fraught with legal obstacles.

The ruling blocked a lower court decision that had stopped some of the state’s worst pension spiking in Alameda, Merced and especially Contra Costa counties. Workers there had been able to count large payments for unused leave time as income to inflate their final-year salaries on which their pensions were calculated.

Under a legal doctrine known as the California Rule, pension attorneys across the state have said that once public employees start working, their retirement benefits can never be trimmed, even for benefits they haven’t yet earned. The unalterable benefit level was considered a constitutionally protected “vested right.”


For example, a police officer who accepted the job when it included a pension equal to 3 percent of top salary for every year worked would be entitled to accrue benefits using that formula for his or her entire career.

But the costs of current benefit levels in California are strangling local government budgets and are forecast to continue rising. Without the ability to lower the rate of future pension accruals for existing employees, local governments will be forced to raise taxes or forego more public services.

While the 2012 legislative changes generally worked around the California Rule by reducing benefits for new workers, they did alter some pension-padding practices that benefited existing workers. It’s those reforms that are at issue in the three cases.

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One provision eliminated “airtime,” which had allowed employees to increase their pensions by purchasing additional years of service credit at what turned out to be discount rates. Another set of provisions ended pension spiking.

Labor unions contend that, just as their pension benefit formulas cannot be reduced under the California Rule, so too were the airtime and spiking practices unalterable if they resulted in reductions in retirement pay.

The appellate courts ruled in 2016 decisions in an airtime case involving state firefighters and a Marin County spiking case that vested rights are not absolute.

So long as pension modifications are “reasonable,” the court panels said, they do not violate workers’ constitutional rights. Public employees do not have “an immutable entitlement to the most optimal formula of calculating the pension.”

Those rulings gave reformers hope that meaningful alterations to future pension accruals were also possible. But then came Monday’s ruling, involving the spiking cases in Alameda, Contra Costa and Merced counties.

While agreeing that there are limits to the California Rule, the justices in that case set a much tougher standard for changes than the appellate panel in the similar Marin County case.

Related Articles
Borenstein: CalPERS about to bury taxpayers, cities, counties in more debt
In the latest decision, the justices ruled that pension benefit adjustments require “compelling” evidence that they are necessary and a showing that the pension system would otherwise have difficulty meeting its financial obligations.
The justices also said that state pension law did not permit the pension spiking that had been allowed in the three counties. But they said it was nevertheless binding because the county pension systems had agreed to permit it as part of legal settlements with the unions nearly two decades ago.

A Brown spokesman said the administration is “closely reviewing the decision and considering next steps.” Anything short of a full-throated appeal to the state Supreme Court would be a concession of defeat.
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Old 01-15-2018, 11:58 AM
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NEW JERSEY

https://nypost.com/2018/01/13/looks-...-pension-fund/

Quote:
Looks like time’s up for New Jersey’s pension fund
Spoiler:
When Phil Murphy becomes New Jersey’s 56th governor on Tuesday, he’ll face a stark choice: Ship all new tax dollars to the state pension fund and freeze all other outlays — or sit back and watch the fund head to collapse.

That’s the alarming bottom line in a new Manhattan Institute report by Steven Malanga and Josh McGee. Indeed, even with a virtually frozen budget, a healthy economy, a bullish stock market and tax hikes, it may simply be too late to save the fund.

SEE ALSO
New Jersey's pension nightmare
New Jersey's pension nightmare
“New Jersey’s pension system may have already reached an unfixable tipping point,” the report notes. That echoes the thoughts of a financial analyst who warned, back in 2015, “You can’t grow your way” out of so vast a hole, even with higher investments. “It’s almost mathematically impossible to close the [funding] gap.”
The nightmare has been long in the making. The authors describe a “tale of elected officials willing to grant retirement benefits to workers without having the money to pay for them” and labor groups pushing for (and getting) “enhancements” even when there was no funding for them.

Jersey’s system guarantees government employees juicy benefits — whether or not the economy lags, tax revenues dip and pension-fund investments fall short. Few private-sector employees enjoy such guarantees; their bosses contribute to their 401(k) plans, but those fluctuate with the stock market.

As a result, the Garden State now boasts America’s most underwater pension fund, with a mind-blowing $124 billion in debt, Standard & Poor’s notes. Assets cover just 30 percent of what’s needed for future obligations, well below the 40 percent mark the Rockefeller Institute of Government deems “crisis” level.

California is also struggling with pension costs, though it’s 68 percent funded. A state court there shocked everyone by saying benefits could be rolled back as long as payments are “reasonable” (though an appeals court later pushed back on that).

Compounding the problem, Murphy is labor’s darling and so unlikely to curb pension perks, let alone push for anything like a switch to 401(k)s. Instead, he’s vowed $1.3 billion in tax hikes, though he already committed some of the new revenue.

Besides, even if he spent it all on the pension fund, he’d still need billions more to climb out of the hole.

One way or another, Jersey will soon face a painful day of reckoning.
https://burypensions.wordpress.com/2...ate-crowd-out/

Quote:
Garden State Crowd-Out
Spoiler:
The Manhattan Institute released a report this week warning that:

[a]bsent some unexpectedly robust acceleration of the economy, it is highly unlikely that New Jersey will generate enough new revenues to meet its pension commitments without severely hobbling the rest of the state’s budget. At the same time, allowing its pension system to continue to accumulate debt by not contributing adequately to it will push New Jersey toward a potentially catastrophic failure of its government pensions.

It then goes into some history with these highlights:

Such contributions were well beyond the state’s ability to pay—so it didn’t (page 7)
....
Moody’s observed: “The lottery transfer does not change the state’s weak, albeit steeply rising, pension contribution schedule…. [T]here remains considerable risk that the state will be unable to afford rapidly growing pension contributions.” (page 8)


https://www.manhattan-institute.org/...-SMJM-0118.pdf

Quote:
GARDEN STATE CROWD-OUT
How New Jersey’s Pension Crisis Threatens
the State Budget
Spoiler:
.....
Executive Summary
New Jersey is generally acknowledged to have one of America’s worst-funded
government-worker pension systems. An April 2017 report by the Pew Charitable
Trusts found that the state’s public-employee pension systems had the lowest
funded ratio of any state.1
A recent Standard & Poor’s report estimated New Jersey’s net
pension liability—the amount it owes workers and retirees in excess of its assets—to be
$124 billion2 and put the state’s pension funding status at just 30% of the money that it
needs to pay future obligations.
How New Jersey got to this point is a tale of elected officials willing to grant retirement benefits to workers without
having the money to pay for them, as well as a tale of public-employee groups negotiating benefit enhancements
even when it was clear that there was no funding source for them. When state leaders, urged on by voters, attempted
to address this problem with reform legislation in 2010 and 2011, the new plans employed questionable
accounting standards that painted an overly optimistic picture of the future of the state’s pension system. A weak
national economic rebound, which has constrained the recovery of state and local tax collections, has also made
it difficult for New Jersey to stick to a schedule of fixing its pension system by increasing contributions to it.
Since 2014, it has become clear that New Jersey needs a new strategy to address its pension problems. A commission
created that year recommended further cost-saving reforms, but political opposition stymied the proposals.
With the state’s pension debt continuing to grow, in 2017 New Jersey set out yet another plan to begin paying off
its enormous pension debt. But adhering even to this latest plan will be enormously challenging:
As this report demonstrates, to stay on pace to reach the new plan’s required yearly contributions into the pension
system by 2023, state government must increase the revenue that it dedicates to its pension system by more than
threefold. At that point, pension payments could equal 12%–15% of New Jersey’s budget.
Based on the historical growth of New Jersey’s revenues, rising pension payments alone will likely consume virtually
all the state’s additional tax collections over the next five years, even under an optimistic scenario where tax collections
accelerate. That would leave little money for increasing funding of local schools, higher education, municipal
services, or property-tax relief.
If the economy were to experience even a mild recession, the resulting slowdown in tax collections would likely
mean that New Jersey would fall short by at least an additional $3.5 billion in meeting its pension obligations, sparking
a more substantial rise in new pension debt.
After years of relying on unrealistic investment assumptions, New Jersey recently cut its projected rate of investment
returns to a more realistic 7%. Even so, this is higher than forecasts made by independent experts for pension fund
performance over the next five to 10 years. If the outside experts are correct, the investment returns on the state’s
pension portfolio will fall significantly short, requiring New Jersey to dedicate further tax revenues to its pension system
or allow additional new debt to pile up—a dangerous situation because the system’s funding levels are already
so low that some pension experts fear that fixing a system this poorly funded is nearly impossible.
New Jersey’s governor-elect, Phil Murphy, who takes office in January 2018, pledged during the gubernatorial
campaign that the state would fulfill its commitments to the pension fund. Yet he has not described how he would
pay for those commitments. Murphy has proposed $1.3 billion in new taxes, though he has already targeted
some of that money for other new spending initiatives. Most important, Murphy has not pledged to seek further
cost-saving reforms of the type recommended by the New Jersey Pension and Health Benefit Study Commission.
Absent some unexpectedly robust acceleration of the economy, it is highly unlikely that New Jersey will generate
enough new revenues to meet its pension commitments without severely hobbling the rest of the state’s budget.
At the same time, allowing its pension system to continue to accumulate debt by not contributing adequately to
it will push New Jersey toward a potentially catastrophic failure of its government pensions.
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DIVESTMENT
ACTIVIST INVESTING

ILLINOIS
http://www.news-gazette.com/news/loc...vestments.html

Quote:
Biss calls for state pension funds to divest 'dirty energy' investments
Spoiler:
CHAMPAIGN — State Sen. Daniel Biss on Friday criticized hotel heir J.B. Pritzker, the front-runner in the Democratic gubernatorial race, for being an investor in a pipeline company that built the controversial Dakota Access Pipeline from North Dakota to southern Illinois.

Biss, in Champaign-Urbana to campaign with state Rep. Carol Ammons of Urbana, also displayed his environmental bona fides by calling attention to his support for maintaining the Mahomet Aquifer and by calling for Illinois pension funds to divest from investments in fossil fuel.

The Evanston Democrat said that Pritzker's partnership interest in Energy Transfer Partners, the company that built and is a part-owner of the nearly 1,900-mile Dakota Access Pipeline, "is a striking fact for someone who claims to be running on a pro-environment platform."

"It just shocks me. It's an issue that is so emotional for so many of us and touches on basic questions of environmental protection and safety of water and sanctity of native lands," Biss said.

"I was really surprised, and I thought it was something that people ought to know about," Biss said.



He also said he believes "Illinois should divest its pension funds from investments in dirty energy."

"First, because it's the right thing to do. Because it stops our public dollars from investing in activity that is disruptive, and also because I think it's the right investment.

"Over time, I think we're going to find that the clean-energy economy is taking off and that it's going to be a mistake for the returns and assets to the pension funds to be invested in a old, dirty energy economy."

His plan would cover fossil fuel, he said, and not nuclear energy.

"We'll be laying out a specific policy over time. You've got to be careful how you do it. It requires real caution because it's a significant change but it certainly would be for all retirement funds," he said.

Biss also portrayed himself as the candidate of progressive Democrats and not of the party bosses, most notably House Speaker Michael Madigan.

"I think we all know that the Democratic establishment, frightened by Rauner's money, has decided that the only solution is Pritzker's money. I think that's a catastrophic mistake," Biss said. "I think it's a mistake when it comes to remembering what the Democratic Party is supposed to be about. I think it's a mistake when it comes to preserving a healthy democracy. And I think it's a mistake when it comes to winning elections.


"If I were Bruce Rauner, what I would most want is to run against another billionaire. What I would most want is to run against a candidate chosen by Madigan. And I think the Democratic Party has an opportunity to choose someone different, to choose someone who presents a contrast, to choose someone who will motivate Democratic voters to turn out."

Rauner would want Pritzker as his opponent, Biss asserted, to depress voter turnout.

"If he can make the fight about 'You're a billionaire'; 'No, you're a billionaire' or 'You've got money offshore,' 'No, you have money offshore'; 'You avoided this tax,' "No, you avoided that tax,' it would be depressing for everyone.

"You've got a preview of that already as the two of them go at it. It's the most depressing thing in the world."

Biss also said the answer to fixing Illinois' pension debt is to eliminate the state's flat income tax, enact a graduated tax and to continue to make pension payments on time.

"I think we have to make the payments. And we have to make them in a way that is actuarially responsible. And we have to do it every year," he said. "That's the core brokenness that got us here — that, for generation after generation, we paid one year and not the next year or we'd futz with the assumption so we pretend that we're paying the right amount when everybody knows that we aren't.

"So we need to have progressive revenue sources to be able to fund our pensions systems properly, and to have a mechanism that we make those payments every year."


http://www.wirepoints.com/illinois-t...ints-original/
Quote:
Illinois Treasurer Shoots Self In Foot Defending Activist Social Investing - Wirepoints Original
Spoiler:
If you’re going to claim that socially responsible investing is the right way to manage money, you might want to check the stock price before bragging about an example. Not Illinois Treasurer Michael Frerichs. He made the case against himself.

Before we get to that example, which is Facebook, here’s the background, and it’s about much more than Facebook. I wrote last week criticizing Frerichs for compromising his investment goals with political ones, which it turned out he’s doing with stock in a number of companies the state doesn’t don’t even own — stock owned by college savers in 529 programs.

Well, he took to Twitter over the weekend to defend himself, claiming “this simple and successful strategy really is about common sense and has been used for decades in the public and private sector.”

He went on to write this: “Facebook is reversing direction and taking action to stop #fakenews. I applaud and thank fellow investors who filed joint shareholder proposals demanding that Facebook work to stop the spread of fake news, election meddling & hate speech.” He earlier wrote three times to Facebook publicly, implicitly threatening divestiture, as one of Facebook’s “institutional investors” (which he actually isn’t).


Source: Yahoo Finance
He was referring to Facebook’s announcement, made after the close of trading on Thursday, of a new policy to address fake news.

You guessed it: The stock got slammed upon opening the next morning and ended down 4.5%. A chart showing the decline is on the right.

In fairness, maybe Facebook’s new policy will work out for shareholders in the long run. Some analysts think so. Nobody knows for sure. Frerichs certainly doesn’t. All we know for certain is the market didn’t like it and an astonishing loss resulted — over $20 billion of shareholder value was wiped out in an instant.

The losers include owners of Illinois 529 college savings accounts for which Frerichs is trustee. If they selected, for example, the large cap growth fund in that program, 4.9% of that money is in Facebook. Even if they selected the S&P 500 index fund, Facebook stock is over 1.8%. Savers in those probably think they are passive index investors, the approach many of us favor. Instead, they deputized Frerichs as social activist on their behalf.

It goes beyond Facebook. Aside from $8 billion of college savings money, Frerichs manages $16 to $20 billion of state and municipal money. He churns the daylights out of it, executing over a trillion dollars of transactions annually (that’s what he told CNBC).

And his social goals permeate his investment philosophy, at least if his website is to be believed.

So, where else are political goals, no, sorry, social goals, influencing Frerichs on the billions he manages that he hasn’t publicized? I asked, but got no answer. I also asked what legal authority he has to include social policy considerations in his investment decisions. And who determines exactly what those considerations are? No answers on those, either.

Frerichs says studies prove a good social agenda gets the best returns, but he’s referring to some studies, which are controversial, on the topic of “ESG investing” (environmental, social and governance). None that I can find encompasses Russian election meddling, fake news or opioid misuse (which is another topic Frerichs has been active on). Sure, companies with honest, transparent governance make better investments. That part of ESG seems quite plausible. But no research could possibly validate blanket authority for a politician to pursue his social issues de jeur.

Most importantly, whether social investing works just isn’t the point. Instead, the point is that nobody signed up for it, especially college savers.

One professional money manager I heard from is Robert Schmansky in Michigan, who is widely published and often criticizes 529 programs in part because they’re subject to just the kind of political games Frerichs is playing. His post on Frerichs, linked here, is particularly good. He told me:

It seems clear that the treasurer is placing social activism with your college funds as the higher priority over increasing its value. His bullying through the pretense of ESG takes political power away from the courts, legislature, executive, voters and those who disagree with him and allows him to threaten almost any company for any reason.

Mr. Frerichs has repeatedly claimed investors won’t be “harmed” by his approach that and he can provide higher returns based on “common sense” and a “simple and successful strategy used for decades.” It’s all political gibberish to provide cover for politics. It doesn’t seem to be about ESG at all. What he’s doing is simply politics to the detriment of the investors and citizens of Illinois.

In other recent news, Illinois Senator Dan Biss, also a candidate for governor, said he thinks Illinois pension funds should start investing along the same lines — by ditching investments in “dirty energy companies.”

It just never ends in Illinois. Please, make it stop.

NEW YORK
http://blog.timesunion.com/capitol/a...-pension-fund/

Quote:
Fossil fuel divestment debated for state pension fund
Spoiler:
State Comptroller Tom DiNapoli cautioned again this week that the financial interests of the state pension fund must be weighed when considering divestment from fossil fuels.


Comptroller Tom DiNapoli. (Paul Buckowski, Times Union)

DiNapoli’s comments follow Gov. Andrew Cuomo’s suggestion in his State of the State last week that he and DiNapoli work together to divest the $192.4 billion New York State Common Retirement Fund from fossil fuels. Cuomo wants the fund to cease making new investments in entities with “significant fossil fuel-related activities” and will create an advisory panel to develop a “de-carbonization roadmap” to support clean energy investments.

“I understand what’s behind the divestment movement, and I’m very sympathetic to it,” DiNapoli told reporters following an event at the Times Union’s Hearst Media Center in Colonie on Tuesday. “We believe climate change is real, climate risk is an issue that the pension fund should deal with. We have been dealing with it. But just divesting I don’t think is going to put any of these companies out of business.”

The comptroller asserted that he isn’t allowing himself to be pushed into divesting, either.


“I’m an independently elected official,” he said during the event. “I have a particular independence when it comes to managing the pension fund, and that will not be compromised.”

DiNapoli outlined a few complexities to divestment, including the time it would take.

For comparison, when the fund divested from companies doing business with Sudan and Iran, DiNapoli said it took two years to fully pull out about $90 million. In terms of fossil fuel investments, the pension fund currently has $1 billion invested in Exxon Mobil alone.


Also, DiNapoli noted, the fund invests in part in index funds, which can include fossil fuel-related investments along with investments in other companies/industries. By the same token, DiNapoli created a $2 billion index to shift investments to lower emitters.

If New York were to move toward divestment from fossil fuels, it wouldn’t be alone.

Notably, the California State Legislature passed a law in 2015 to require the public employees and teacher’s retirement funds to divest from coal. As of August, the state Public Employees’ Retirement System reported that it was almost entirely withdrawn from coal investments, which were valued between $100 million and $200 million when the law passed, according to Reuters.

That state’s public employee pension fund is valued at $355.5 billion, the largest in the nation.

On a far smaller scale, Washington, D.C., sold off its $6.4 million in direct fossil fuel holdings in recent years. Those holdings represented less than 1 percent of the fund’s total value, according to Inside Climate News.

New York City pension officials announced Wednesday that they will sell off fossil fuel investments.

But while even a former chairman of Shell, Mark Moody-Stuart, has said fossil fuel divestment and reinvestment in clean energy makes sense, some question if total divestment is a prudent strategy.

DiNapoli has held that being an investor gives the state a voice in the fossil-fuel company board room, as it did when the fund and Church of England pressured Exxon to accept a shareholder resolution requesting that the company analyze how implementing the Paris Agreement will affect its business.

Divestment in general can be risky business. The investment management firm Wilshire Associates found in a 2016 analysis that the California public employees pension fund missed $7.8 billion in potential earnings because of various divestment activities dating back decades, the Sacramento Bee reported.

Still, there are those who say divestment from fossil fuels not only checks the social responsibility box, it also has become a matter of fiduciary responsibility.

Arabella Advisors, an investment advisory firm focused on helping clients impact social issues, concluded in a 2016 analysis that bankruptcies filed recently by large coal companies and drops in profitability of top oil and gas companies “reflect an increasing vulnerability in fossil fuel business models that divestment can potentially exacerbate.”

“The incompatibility of the prevailing fossil fuel business model with globally agreed-upon carbon limits, and the increasingly poor market performance of many former fossil leaders, such as ExxonMobil, will only hasten the financial exit from fossil fuels and the move to invest in clean energy,” the analysis states.


NEW YORK CITY

https://www.brooklyneagle.com/articl...-bad-shape-and

Quote:
OPINION: New ACCF report finds NYC public pension fund system in bad shape and getting worse
As city leaders use retirees’ pensions to advance political causes, taxpayers may be on the hook for $56 billion shortfall

Spoiler:
On the heels of New York City’s push to divest its investments in fossil fuels, a new report finds politicized investment decisions are a recurring example of the city comptroller advancing social causes over financial results.

In Volume Two of its “Point of No Returns” series, the American Council for Capital Formation (ACCF) takes a closer look at how the five public-sector pension funds that collectively comprise the New York City Retirement Systems got in the shape they’re in today – and how taxpayers are ultimately the ones who will bail-out the program if it cannot meet its future obligations. The ACCF report also examines the role that politics continues to play in how fund beneficiaries’ money is being invested, and whether too much of the focus of fund managers, board members, and the city comptroller himself is on using pensioners’ money to advance political and social causes – actions that are done at the expense of maximizing returns and doing what’s necessary to improve the system’s underfunded status.

“Divestment is just one example of politics taking precedence over returns for New York City beneficiaries. Fund managers responsible for the pension-fund system of New York City routinely invest in things that have no reasonable expectation to yield acceptable returns for investors,” said Tim Doyle, ACCF’s executive vice president and general counsel, and author of the report. “We concur with previous reports on the role that poor management has played in growing the unfunded gap, as well as how the use of certain accounting tactics has allowed fund managers and the comptroller to shield from public view the true consequences of their mismanagement.”

Today, four out of every five taxpayer-dollars collected by New York City’s personal income tax are spent paying down the city’s public pension fund system’s liabilities, a 567 percent increase over the past 15 years. The city’s budget will soon allocate more spending on pension costs than on social services (excluding education). At the same time, the funds’ liability ratio continues to grow more severe by the day: while “official” reports estimate the funds to be merely $56 billion in the red today, other analyses based on more realistic projections of future returns point to an actual funding gap more than double the official figure.

Fund managers insist that performance expectations drive every investment decision they make, but in the case of the New York City funds, the data simply do not back that up. According to the ACCF report, three of the 10 worst performing NYCERS private equity funds this year were focused on supporting Environment, Social and Governance (ESG) ventures. None of the system’s top 10 performing ones were in the ESG category. Significant fund resources have also been allocated to projects and initiatives that have historically underperformed relative to key benchmarks. For example: 12 percent of the funds’ assets ($22 billion) are invested in a group called the “Developed Environmental Activist” asset class, which has underperformed overall funds’ returns by an average of 600 basis points over the last three calendar years for which full data are available.

On divestment, Scott Stringer, the city comptroller and the funds’ primary custodian, has announced plans to divest New York City's two largest pension funds, New York City Employees' Retirement System and Teachers' Retirement System, irrespective of the potential for weaker fund performance. Just last week, the state of New York’s comptroller, Thomas DiNapoli, said the public pension funds he controls have “no plans” to divest, citing his fiduciary responsibilities to pension holders. An analysis commissioned by the Suffolk County (N.Y.) Association of Municipal Employees found divesting from energy companies could cost the state pension funds more than $3 billion in lost returns over 20 years. Previous economic reports estimate divestment would cost the city up to $1.5 trillion over a 50-year timeframe and up to $120 million annually.

The ACCF report also comes on the heels of a new independent survey released last week by the Chicago-based investor research firm Spectrem Group, which surveyed pension fund beneficiaries on issues related to fund performance and ESG investing. Spectrem found nearly 80 percent of respondents who identified themselves as New York City pension fund beneficiaries believed fund managers should focus exclusively on doing what’s necessary to maximize returns, and not on using their money to promote particular political or social causes. Surprisingly, that was true even when respondents happen to personally support the cause or issue being advanced.

While the New York City retirement systems remains grossly underfunded, the city comptroller continues to devote a disproportionate amount of official resources toward undermining many of the funds’ own portfolio companies through the near-constant filing of various shareholder proposals. In fact, the number of proposals submitted by his office has almost doubled over the past three years, vaulting the New York City Retirement Systems onto the top-10 list of most prolific sponsors of such resolutions anywhere in the country. Very few of these proposals have ever come close to achieving majority support – and most have sought to impose changes on portfolio companies that have very little to do with improving their business or making them more profitable.

ACCF’s report on the New York City funds follows the release of the inaugural paper in its continuing “Point of No Returns” series, which focuses on the California Public Employees Retirement System, or CalPERS. That report is available here; the New York City paper can be accessed here; and additional materials and commentary can be found on ACCFcorpgov.com.

The American Council for Capital Formation is a nonprofit, nonpartisan economic policy organization dedicated to the advocacy of pro-growth tax, energy, environmental, regulatory, trade and economic policies that encourage saving and investment.
https://www.washingtontimes.com/news...ns-from-the-c/

Quote:
Greasy business in the Big Apple
Spoiler:
You might have thought that Michael Bloomberg, with his mercifully futile crusades to protect everyone from their guns and their Big Gulps, would have set a record for grandstanding by a New York City mayor that would stand through the ages. Bill de Blasio, his hulking successor, is giving the diminutive Mr. Bloomberg a real run for his money, or, actually, your money. The Bloomberg grandstand was pushed into the shade.

Having just won another four-year term and sending clear signals that his ambitions aren’t limited to Gracie Mansion, the Democratic mayor revealed last week he has directed the city to file lawsuits against five global energy companies for producing greenhouse gases that changed the climate and caused Hurricane Sandy, nearly destroying Lower Manhattan. As The Times’ Valerie Richardson reported last week, Mr. de Blasio further plans to pull $5 billion in five city employee pension funds out of fossil-fuel shares, where they have been increasing the value of the pension accounts. It’s the largest politically motivated municipal divestment in history.

It’s a classic liberal two-fer: first running to the courts to get policy results that can’t be obtained through honest politicking and the legislative process, and attempting to save the world using other people’s money.

Gotham is following a few liberal California cities that have decided they must take the lead to stop climate change, since the Trump administration and a clear majority of the American people refuse to do so. As a spokesman for Chevron, one of the oil-and-gas giants in Mr. de Blasio’s sights, told The Times, “Reducing greenhouse gas emissions is a global issue that requires global engagement” — and isn’t something that can be solved with junk science emanating from the five boroughs Mr. de Blasio is supposed to be representing.”

There’s something particularly rich about the mayor brandishing the pension weapon against his adversaries. The city’s employee pension funds — which all should recall hold the money that guarantees that cops, firefighters and trash collectors can enjoy their retirement years in health, comfort and dignity — have not been exactly a picture of fiscal stability in recent years. Abruptly reassigning $5 billion in sound investments will be both expensive and disruptive, a violation of the fiduciary duty of the pension funds’ managers to obtain the best return for those who faithfully paid into the pension fund over the decades.

A pro-industry research group warns that the cost of Mr. de Blasio’s little political gambit could rob the funds, worth a combined $189 billion, of as much as an eighth of their value over the next two decades. That figure may be high, but it’s hard to imagine any scenario where the mayor’s raid on the pension funds and his politically correct investment strategy could result in higher returns on the workers’ money.

If Mr. de Blasio really wants to act locally while thinking globally on climate change, he should look to his own office. Jim Dwyer, a columnist for The New York Times, gave his readers a devastating peek into the mayor’s own carbon footprint, as Mr. de Blasio’s 13-vehicle motorcade, including four SUVs and a large service van, pulled up to the New York Public Library last week for a private event. For the entire two hours Mr. de Blasio was inside, the cars and trucks waited outside, their engines idling. This preserved His Honor’s sense of his importance, but the importance of urban environment, not so much.


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Old 01-15-2018, 12:07 PM
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SAN RAMON, CALIFORNIA

https://www.eastbaytimes.com/2018/01...inancial-0119/

Quote:
Report: Employee pension debt aside, San Ramon is financially sound
Spoiler:
SAN RAMON — Even though rising employee pension costs are expected to remain a spectre over this city as they are in many others, a new report says there are plenty of other reasons San Ramon should remain financially strong over the next several years.

This information comes from the city’s “Comprehensive Annual Financial Report” for the July 2016-to-June 2017 period. The report, compiled by the Pleasant Hill-based accounting firm Maze and Associates, was discussed by the City Council on Jan. 9.

The city’s Comprehensive Annual Financial Report for July 2016 to June 2017 says San Ramon has had good economic numbers, and suggests the city is positioned for them to get better. The city has a relatively high median household income level of $151,327, more than twice the state’s average of about $68,000; revenues from property taxes, property transfer taxes, transient occupancy taxes, franchise fees, and licenses and permits are all headed up; and median home values went up 4.1 percent during the 2016-17 fiscal year.

Even with $8.9 million more in pension liabilities during the than during the previous fiscal year, the city’s overall long-term liabilities, at $25.7 million during that 12-month period, went down by $2.1 million from the previous fiscal year, the report says, a reflection of the city paying off the debt faster than accumulating new debt. Also, the available general fund ending balance of $9.9 million turned out to be $2 million higher than estimated in the final city budget.

Total city revenues from July 2016 through June 2017 were $114.3 million, up from about $102 million the previous 12-month period (12 percent gain), according to the Maze and Associates report. Also, it reports the city’s overall expenses of about $96.5 million in 2016-17, up 5.3 percent from the previous year’s $91.67 million. That means the revenue increase of about $12.3 million more than offset the $4.83 million increase in expenses.

This report’s numbers figure to change in the next few years, and because of two primary factors. One is the anticipated mid- to late 2018 opening of the City Center project, its retail sales taxes expected to contribute substantially to the city’s bottom line.

The other, an elephant in the room, is unfunded employee pension liabilities. As have many California cities, San Ramon has struggled with this. About 200 current city employees and about 100 retirees are covered by CalPERS pensions. The $8.9 million deficit figure for 2016-17, the report said, figures to go up.

“We’re in better shape than a lot of public agencies, but I don’t know if that’s the standard you want to hold yourself to,” Councilman Phil O’Loane said. “That’s a low bar.”

Though O’Loane said he feels the city has done a good job in setting aside money wherever possible to help draw down the pension deficit, City Manager Joe Gorton said the city’s real work in this area is still ahead.


“All jurisdiction, including us, will have significant hits monetarily in regard to addressing these pensions,” Gorton said.
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