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  #1491  
Old 08-15-2019, 09:33 AM
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Mary Pat Campbell
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CALIFORNIA
LACERA
GOVERNANCE

https://www.ai-cio.com/news/no-limos...oards-travels/

Quote:
No More Limos for LACERA Board’s Travels
Board votes to mandate additional restrictions on travel permissions after current practices draw scrutiny.

Spoiler:
After receiving criticism for the board’s relatively luxurious travel policies, the Los Angeles County Employees’ Retirement System sought to revise its rules governing such activities to implement additional layers of approval before members hop on a plane.

Last month, the Board of Supervisors voted to conduct a sweeping audit of its administrative expenses after an investigation deemed its “spending on education and travel…[is] significantly more than its peer organizations,” Supervisor Mark Ridley-Thomas said.

“Because LACERA’s travel expenses are charged against investment earnings, the Board of Supervisors has a vested interest in ensuring LACERA’s continued fiduciary responsibility to our workforce,” Supervisor Hilda L. Solis said in prepared remarks.

A review by the Los Angeles Times found that international excursions to a list of cities, including Abu Dhabi, Tokyo, Hong Kong, and Paris, have racked up more than $1.3 million in expenses since 2015.

This week’s revisions imposed additional limits on the number and cost of travel, and implemented a number of “control and compliance standards to ensure that enforceable procedures exist and that the proper paperwork is submitted for travel approvals and expenses to document that the policy is being followed consistently and transparently.”

These restrictions include reducing the number of permitted “educational conferences” for board members to four per fiscal year, down from eight in the current policy for members of a single board, and six per fiscal year for members of both boards within LACERA, down from 12 in the current policy. Only one international conference is permitted by any one member during a fiscal year.

Additionally, the revisions imposed that board members cannot use luxurious ground transportation such as limousines and executive cars, unless the costs of these services are comparable to that of taxis services such as Uber and Lyft.

An additional layer of review and approval for reimbursements related to professionals was tasked to the board’s executive assistants.

The board recently fired Chief Executive Officer Lou Lazatin for undisclosed reasons. She held the position for approximately eight months.


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  #1492  
Old 08-15-2019, 09:36 AM
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https://www.washingtontimes.com/news...ted-say-resea/

Quote:
Threat of unfunded liabilities overrated, say researchers

Spoiler:
The doomsday scenario of “unfunded liabilities” emptying state and local pension funds is overrated, according to new research.

Unfunded liabilities associated with public retirement costs are now estimated to be in the trillions and economists at the Brookings Institution admit the cumulative debt “is often a huge and scary number.”

But, they argue, the overall concerns ignore how stable such debt is when viewed long-term.

“There’s an assumption that fully funding pensions is the right thing to do,” said Louise Sheiner, policy director of the Hutchins Center on Fiscal and Monetary Policy at Brookings. “Most of the work in this area has been about calculating how unfunded these plans are [and] that’s led to a lot of concern that these plans are in a huge crisis.”

A recently released paper by Ms. Sheiner and co-authors Byron F. Lutz of the Federal Reserve Board and Jamie Lenney of the Bank of England urges leaders of state and local government pension funds to step back and see unfunded liabilities in the context of the massive debts that public financing systems often can absorb.




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“The way we look at it, an unfunded pension liability is similar to a government having debt, and a government’s debt is sustainable so long as its size relative to the economy isn’t continuously increasing,” they wrote.

Several states including Illinois, New Jersey, and Kentucky, however, recently have dealt with significant pension crises, with officials scrambling to pay more to cover unfunded public employees’ retirement costs. Lawmakers in those states have proposed tax increases and limiting pension benefits in response to unfunded liabilities.

Earlier this year, the American Legislative Exchange Council estimated that the average state pension plan is funded at just 35%, with unfunded liabilities of state-administered pension plans totaling nearly $6 trillion. ALEC researchers surveyed more than 290 state-administered public pension plans, studying assets and liabilities over a five-year period.

Analysts say the overarching issue stretches back to the Great Recession of 2009, which drained as much as 20% of the value of some state funds.

Earlier this year Virginia’s pension fund admitted it is in a worse position to handle a similar market meltdown than it was before the Great Recession. This, despite Wall Street’s current 10-year bull market and pension reforms made by state lawmakers.

One of the nation’s biggest public funds, Virginia’s system serves about 705,000 current and past state employees, school teachers and city and county public sector workers.

In an interview earlier this year, Virginia Secretary of Finance Aubrey Layne said, “If we were to go through what we did in ‘08 and ‘09, we’re screwed. I don’t know what else to say.”

Last month, the Richmond Times-Dispatch reported that the fund is expected to lower its expected rate return from 7% to 6.75% or 6.5%.

Such a drop could potentially increase employer contribution costs by more than $200 million a year, eat into government budgets for other services, or trigger tax hikes.

On Wednesday, Maryland’s State Retirement and Pension System said its portfolio returned 6.46% on investments for the last fiscal year, falling short of an anticipated 7.45% return.

But according to the Brookings report, the worst is over because the 2008 market crash and drop in the value of retirement funds uniquely coincided with the start of baby boomer retirements.


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  #1493  
Old 08-16-2019, 10:21 AM
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Mary Pat Campbell
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HAWAII

https://www.ai-cio.com/news/hawaii-e...st-benchmarks/
Quote:
Hawaii ERS Blasts Past Its Benchmarks
Pension fund returns 5.8%, a whole point-plus more than the goal.


Spoiler:
The Hawaii Employees Retirement System (Hawaii ERS) beat its fiscal benchmark for the year ended June 30, bucking a trend as other public pension funds have missed their fiscal targets.

The $16.7 billion plan returned 5.83% in the period, 118 basis points above its 4.65% benchmark, confirmed Elizabeth Burton, Hawaii ERS’ chief investment officer.

“We are pleased to have outperformed our fund benchmark given the volatility over the past year, particularly toward the end of calendar year 2018 and earlier this spring,” she told CIO. “We are underwriting our port actively and proactively sourcing investment opportunities to prepare for future uncertainty and volatility.”

The fund also bested its three-, five-, and 10-year goals as well, returning 9.07%, 6.06%, and 9.2% over those timelines. Benchmarks for the trials were 8.08%, 5.3%, and 8.9%.

Fiscal 2019 results came from a combination of gross and net returns, but the numbers for how well each individual asset class did were unavailable as of press time. Hawaii ERS’ target allocation is 68% broad growth portfolio, 16% crisis risk offset, with the remaining 16% to be split between principle protection and real return portfolios.

The Hawaii plan returned 7.85% for the previous fiscal year, largely from alternatives and low-volatility equities. Asset mixes during that period were 74.68% broad growth, 12.86% crisis risk offset, 8.27% principle protection, and 3% real return, according to the fund’s Q2 2018 report. The rest was in opportunities and other assets.

Burton came aboard the fund last October.

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  #1494  
Old 08-16-2019, 10:22 AM
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OREGON

https://pamplinmedia.com/pt/10-opini...problems-worse
Quote:
My View: Ballot measures would make PERS problems worse
Bridget Early Thursday, August 15, 2019
These proposed ballot initiatives will only do harm to the pension system and the people who are counting on it for a secure retirement.
Spoiler:
Recently, a corporate-backed group in Oregon, PERS Solutions, took the first step in getting anti-worker initiatives on the November 2020 ballot. Even after retirements were cut in the 2019 legislature, these initiatives would stop pensions altogether, breaking the promises made to teachers and other public employees, and replace them with risky defined contribution-style retirement plans. Oregonians should soundly reject these ballot measures, after hard lessons have been learned in other communities who similarly undertook such a massive and expensive upheavals to their retirement systems only to reverse course and reinstate their pensions for public employees.

Here's why: these communities learned that eliminating pensions did not reduce the unfunded liability and in fact, caused costs to increase for taxpayers. This is similar to the analysis that Oregon's PERS provided to lawmakers last year and is why the legislative committee tasked with addressing the PERS unfunded liability did not move forward with a defined contribution plan.

In 1991, lawmakers in West Virginia faced a tough situation. After years of underfunding the West Virginia Teachers Retirement System (TRS), lawmakers closed the pension system and moved all newly-hired teachers to a 401(k)-style retirement plan. After 14 years and more lawmaker underfunding, TRS funding status dropped to 25 percent. The state also conducted a study on teacher preparedness for retirement, finding that teachers were not saving enough to retire with dignity. With all of this information, lawmakers decided to reopen a pension-based TRS to current and future teachers, the funding status of the plan rose, and now teachers are able to retire with security.

Kentucky, Michigan, and Alaska all experimented with 401(k) systems and they didn't work. Pension stability was reduced, and there were massive reductions in skilled workers, putting public services at risk. The loss of secure pensions is especially problematic for first responders, who put their lives on the line for their community every day.

A D V E R T I S I N G | Continue reading below

Palm Beach, Florida, has been deemed a "cautionary tale" for other public employers. City leaders moved all current and future police officers and firefighters to a hybrid-style retirement plan, causing major issues with recruitment and retention. Officers and firefighters retired, leaving massive gaps in staffing and resulting in millions of dollars of new costs to recruit and train new public safety personnel. After four years, Palm Beach recognized the mistake and reinstated secure pensions.

Additionally, these proposed ballot measures do not reduce the unfunded liability for people who have already retired. Not only will the unfunded liability of PERS worsen with the proposed plan, but the retirement security of public employees will be harmed. First, 401(k)s put workers at the whims of the market. Unlike pension plans, which pool assets, workers are individually responsible for fluctuations in the market.

Second, 401(k)s do not provide an adequate retirement income. In fact, according to Fidelity, the median 401(k) balance in America is just over $24,000 total, which is clearly not enough to retire on. Pensions on the other hand provide a median benefit of $17,576 every single year someone is retired.

Additionally, as pointed out by analysis by Oregon PERS agency, 401(k)s tend to have higher fees and far less regulation than pension funds. Those fees go right from workers' wallets into the pockets of Wall Street investors.

PERS is currently funded at 80 percent, one of the best funded pension systems in the nation. This is due to reforms put in place in 2003 and 2013 that continue to stabilize the system. PERS members just took another cut in 2019. Enough is enough. These proposed ballot initiatives will only do harm to the pension system and the people who are counting on it for a secure retirement. Oregonians should learn lessons from other states and say no to ballot measures that will increase taxpayer costs and reduce retirement security.

Bridget Early is executive director of the National Public Pension Coalition, which is based in Washington, D.C. She can be reached at admin@protectpensions.org.


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  #1495  
Old 08-16-2019, 10:22 AM
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Mary Pat Campbell
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NEW JERSEY

https://www.njspotlight.com/stories/...t-says-report/
Quote:
PLUG PENSION HOLE BY CURBING TRADITIONAL PLAN? IT MAY NOT BE BEST STRATEGY
JOHN REITMEYER | AUGUST 14, 2019
Closing their so-called defined benefit plans to new workers has not worked out well in four states that tried it

Spoiler:
Closing a traditional pension plan to new workers has yet to fix pension-funding problems in several states where it’s been tried, according to a new report that takes a close look at reform efforts across the nation.

Instead, the report from the National Institute on Retirement Security, a nonpartisan and nonprofit research organization, found that costs often increased. In some cases, the authors noted, the states had trouble recruiting and retaining workers without being able to offer them a so-called defined-benefit retirement plan, one in which payments are based on salary and length of service and not investment results.

The NIRS report — which used Alaska, Kentucky, Michigan and West Virginia as case studies — also highlighted how important it was for government employers to adequately fund their workers’ retirement plans.

“Responsible funding of pension plans is key to managing legacy costs associated with these plans,” the report said. “The experience of these states shows that changing benefits for future hires does not address an existing funding shortfall.”

New Jersey has one of the nation’s worst-funded public-worker retirement systems. It’s also one of the states where some lawmakers have backed the idea of moving at least some employees out of traditional retirement plans to address the pension deficit.

Sweeney has pushed hard to change pension
Leading the latest push in New Jersey is longtime Senate President Steve Sweeney (D-Gloucester). Among other reforms, Sweeney has backed the proposal of a nonpartisan fiscal policy group he empaneled to establish a new, hybrid retirement system for new workers and those with less than five years of service.

Under that plan, teachers and other government workers — but not police officers, firefighters and judges — would start to receive a defined-benefit pension on only up to $40,000 of salary. For any additional earnings, the affected workers would be enrolled in a hybrid “cash-balance” savings plan that would not require a matching contribution from the state. The plan would guarantee a 4-percent annual return for workers, and also offer a chance to do better based on how general pension-fund investments perform. Workers would also be required to continue making their full contributions into the retirement system, a feature that is specifically designed to avoid the funding problems experienced in other states that have gone away from a traditional plan.

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Public-worker union officials have contended the changes would erode retirement security while doing little to address the pension system’s already huge unfunded liability — more than $100 billion, according to some estimates.

They have also accused Sweeney of using the pension-reform proposal as a distraction after he signed off on major tax breaks enacted during former Gov. Chris Christie’s tenure that significantly reduced the state’s revenue stream — just as a new effort was being made to ramp up state pension contributions in response to the growing deficit in state retirement funds.

Sweeney maintains the reforms, coupled with proposed changes to employee healthcare plans, would save the state and local governments billions of dollars in coming decades. He’s also threatening to put the proposed benefit changes before voters next year as a constitutional amendment if Gov. Phil Murphy — a union ally who favors increased pension funding and negotiated healthcare savings — stands in the way.

Murphy has increased state pension payments incrementally in recent years, but he’s also continued the longstanding tradition of only partially funding the state’s annual pension contribution as he’s also boosted spending on K-12 education, mass transit, community college tuition assistance and other areas.

Not much success elsewhere
According to the NIRS report, Kentucky, when faced with its own severe pension-funding challenges, moved new employees into a hybrid system in 2014. But that change will not “meaningfully impact” the state’s pension-plan payments for decades because of the state’s already huge “legacy costs,” the report said.

“As an alternative strategy, the state might have been better served by incentivizing those near retirement to work a few additional years and to delay benefit payments from a solvency-challenged system, instead of focusing on policies that would take decades to impact plan cash flows,” the report said.

The authors gave credit to Kentucky policymakers for sticking with a plan to boost state pension contributions. But they also noted one of the state’s five funds saw its funded ratio plummet from 23 percent to 13 percent even after the benefit change was enacted.

“The state cannot cut its way out of its funding problems by continuing to reduce retirement benefits for public employees,” the report said.

Recruitment efforts are hurt
The changes made in Alaska, Michigan and West Virginia all predate Kentucky’s more recent reforms, and all three opted to move employees from defined-benefit into investment-results-based plans, also known as defined-contribution retirement plans. Yet despite closing its traditional plan in 1997, Michigan is still struggling with a significant unfunded pension liability, the report said.

“Meanwhile, the financial security of its public employees is at risk, as the defined contribution plan that replaced the (traditional) pension plan will provide far less income in retirement.”

Alaska closed its defined-benefit pension plans for teachers and other government workers in 2005, and the report’s authors cited evidence that not offering employees a defined-benefit retirement plan has been hurting efforts to recruit workers. They also noted that the state’s rural geography plays a role in thwarting recruitment efforts.

“The lack of a defined benefit pension plan and competitive benefits in general is often directly cited as a major reason why Alaska struggles to recruit teachers, state troopers, and other public employees,” the report said.

Meanwhile, in West Virginia, policymakers decided to reopen the pension plan for teachers in 2005, and it has resulted in funding improvements as new members have joined the plan and begun making contributions that help offset its liabilities, the report said.

“Importantly, West Virginia committed to full funding after reopening the plan,” the report said. “That commitment, combined with the contributions of new members and positive investment returns, have allowed the plan to slash its unfunded liability.”


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