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  #21  
Old 01-04-2019, 06:25 PM
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NEVADA

Quote:
Nevada High Court Orders State Retirement System to Release Records
State Supreme Court denies Nevada PERS’s petition for a rehearing.
Spoiler:
The Nevada Supreme Court has denied a petition to rehear an October decision that ordered the Nevada Public Employees Retirement System (PERS) to disclose the benefits of state employees.

In October, the Court ruled 4-3 in favor of the Nevada Policy Research Institute (NPRI), which filed a public-records request seeking the names, salaries, dates of retirement, years of service, and cost-of-living adjustments (COLA) of public retirees.

“Five years of efforts by Nevada’s Public Employees Retirement System to evade the transparency requirements of state law took a heavy body blow this week,” John Tsarpalas, president of NPRI, wrote in a blog post. “The high court had ordered PERS to provide the data to Nevada Policy,” he added. “The PERS board, however, decided that, rather than comply, it would instead just petition the justices for a rehearing on the same grounds the justices had already rejected.”

The case stems from when the NPRI submitted a public records request to PERS seeking payment records of its government retirees, including retiree names, for fiscal year 2014. Although PERS previously disclosed the requested information to NPRI for 2013, the retirement system refused to disclose the requested information for 2014. It argued that because the raw data for 2014 no longer contained the names of its government retirees, only redacted social security numbers, it had no legal obligation to create a new document to satisfy NPRI’s request.

NPRI filed a petition for a writ of mandamus in district court seeking retiree names, payroll amounts, dates of retirement, years of service, last employer, retirement type, original retirement amount, and COLA increases. A writ of mandamus is an order for a government official to properly fulfill their official duties or correct an abuse of discretion. NPRI asserted that the requested information was not confidential because it was a public record, and easily accessible through an electronic search of the PERS database.

Following an evidentiary hearing, the district court agreed that the requested information was not confidential, and that the risks posed by disclosure did not outweigh the benefits of the public’s interest. It also ruled that PERS had a duty to create a document with the requested information. However, the district court ordered PERS to produce only retiree name, years of service credit, gross pension benefit amount, year of retirement, and last employer.

The NPRI’s case was based on the Nevada Public Records Act, which was intended to “foster democratic principles by providing members of the public with access to inspect and copy public books and records to the extent permitted by law.”

The Act provides that “unless otherwise declared by law to be confidential, all public books and public records of a governmental entity must be open at all times during office hours to inspection by any person.”

In its October ruling, the Nevada Supreme Court cited the 2011 case Reno Newspapers, Inc. v. Gibbons, in which the court said that the public records act’s “provisions must be liberally construed to maximize the public’s right of access,” and that “any limitations or restrictions on [that] access must be narrowly construed.”

The Court said that to allow PERS to prevent the public from inspecting otherwise validly requested government information would contravene the plain language and purpose of the Nevada Public Records Act.

“We conclude that searching PERS’ electronic database for existing and nonconfidential information is not the creation of a new record and therefore affirm the district court’s order in this regard,” said the Court in its October ruling.

However, it also said that because PERS may no longer be able to obtain the requested information as it existed in the 2014 database, it ordered the district court to determine an appropriate way for PERS to comply with the request.


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  #22  
Old 01-05-2019, 06:58 PM
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NEVADA

https://www.pionline.com/article/201...ts-under-wraps

Quote:
Nevada PERS loses bid to keep state employees’ benefits under wraps

Spoiler:
Nevada Public Employees' Retirement System, Carson City, has suffered a setback in its battle with the Nevada Policy Research Institute over a public records request.

The state Supreme Court denied the $41.3 billion pension fund's petition for a rehearing of a decision in October ordering PERS to disclose the benefits of state employees, according to a court order filed Dec. 24.

The Nevada Supreme Court on Oct. 18 had ordered PERS to disclose public employees' names, pay and benefits to the Nevada Policy Research Institute as part of a public records request made in 2015. The institute requested the payment records of state government retirees, including retirees' names, for fiscal year 2014, which it was seeking to post on its TransparentNevada website for public view, according to the court's Oct. 18 ruling. PERS refused to disclose the information, saying the raw data feed that an independent actuary uses to analyze and value the retirement system did not contain the names of its government retirees, only redacted Social Security numbers. The pension fund argued it had no duty to create a document to satisfy the institute's request.

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A state district court in Carson City ruled in January 2017 that PERS did have a duty to create a document with the requested information.

"I think it's a necessary decision to ensure that the public has the right to access government records about the information regarding how their tax dollars are being spent," said Robert Fellner, policy director at the Nevada Policy Research Institute, of the state Supreme Court decision denying a rehearing. "It seems fundamentally incompatible with democracy to suggest that taxpayers don't have a right to know how their money is being spent."

"It was a very close decision," said Chris Nielsen, general counsel for PERS, adding that three judges sided with the pension fund and four did not. "Nevada PERS has always taken the position that ... more than anything we want clarity about what is confidential and what is not."

The pension fund argued before the Nevada Supreme Court that the district court erred by requiring disclosure because the information was confidential and the risks posed by disclosure outweighed the benefits of the public's interest in access to records.

The Nevada Supreme Court disagreed. "We hold that where the requested information merely requires searching a database for existing information, is readily accessible and not confidential, and the alleged risks posed by disclosure do not outweigh the benefits of the public's interest in access to the records, the (Nevada Public Records) Act mandates that PERS disclose the information," it said in its opinion.

The state Supreme Court also ordered the district court to determine an appropriate way for PERS to comply with the request as the pension fund may no longer be able to produce the information as it existed when the public records request was made.

"Now we're going to have to go back to district court and district court will have to decide whether certain categories are confidential or whether PERS can actually reproduce a document that is 4 or 5 years old now," Mr. Nielsen said.


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  #23  
Old 01-06-2019, 05:31 PM
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ARKANSAS

Quote:
Arkansas Public Employees Retirement System trustees to interview candidates for executive director job

Spoiler:
The trustees for the Arkansas Public Employees Retirement System will interview state budget administrator Duncan Baird, system chief investment officer Carlos Borromeo and actuary Jody Carreiro for the system's permanent executive director job on Tuesday.

The trustees' three-member selection committee on Friday decided who the trustees will interview. The committee met for several minutes in a private executive session to review the qualifications of eight candidates and select the finalists.

Thirty-nine candidates applied for the job. The committee on Wednesday cut the field down to eight candidates by striking those the committee decided didn't meet the minimum qualifications.

After Friday's meeting, board Chairman Candace Franks said she and trustees Larry Walther and Darryl Bassett selected Baird, Borromeo and Carreiro instead of the other five candidates for interviews because "that was our consensus pursuant of the discussion of the candidates."

She said the trustees will decide who is the best candidate after they conduct interviews Tuesday. She hopes the new executive director can start work soon after he is chosen.

Franks is the state bank commissioner, while Walther is the director of the state Department of Finance and Administration and Bassett is the director of the state Department of Workforce Services. They were appointed to their state jobs by Gov. Asa Hutchinson.

The five other candidates included B.G. Dickey, Bank OZK portfolio manager and executive vice president; Andrew Richards, former partner of BKD LLP accounting firm of Little Rock; Timothy Viezer, chief investment officer for the Employees Retirement System of the Sewerage & Water Board of New Orleans; James Wilbanks, executive director of the Mendocino County Employees Retirement System in Ukiah, Calif.; and Brian Lee, technical director of the Defense Information Systems Agency in Maryland.

The Arkansas Public Employees Retirement System is state government's second-largest retirement agency. It has more than $8 billion in investments and more than 75,000 working and retired members. The salary range for the executive director job is between $149,862 and $181,500 per year.

Baird's salary is $123,918 a year, while Borromeo's current salary is $101,847 a year, according to the Arkansas Transparency website.

Carreiro's highest salary at Osborn Carreiro & Associates, where he has worked for three decades, is $140,000 a year, according to his job application.

A month ago, then-Executive Director Gail Stone announced her plan to retire, effective Monday, after the trustees met in a closed executive session on performance matters. Then-board Chairman David Morris said he and Walther, who is the board's vice chairman, gave Stone the option to retire but didn't threaten to fire her. Stone, who had worked for the agency since 1990 and was executive director since July 2001, has said she didn't think she had any option beyond retiring.

Baird has worked for Gov. Asa Hutchinson's administration since January 2015. He started out as the budget director and was promoted to budget administrator at the state Department of Finance and Administration in June 2015.

He served as a Republican state representative from Lowell from 2009-15 and served as co-chairman of the Joint Budget Committee for the last two of those years, after working for Arvest Asset Management from 2004-09, according to his application.

Besides listing Hutchinson as a reference, Baird also listed former House Speaker Davy Carter, now of Jonesboro and an executive for Centennial Bank; former Sen. David Sanders, R-Little Rock, who works for Winrock International; lobbyist Rett Hatcher, who is a former aide to Hutchinson and former deputy director for the Arkansas Teacher Retirement System; and Dalton Smith of Magnolia.

Baird had applied for the Arkansas Teacher Retirement System's executive director post before that system's trustees voted Oct. 31 to promote the associate director of operations, Clint Rhoden. Rhoden's predecessor, George Hopkins, announced in October his intention to retire after serving in the job since December 2008. Hopkins, a former Democratic state senator from Malvern, retired Nov. 16.

Borromeo has served as the chief investment officer for the Public Employees Retirement System since 2010. His previous experience includes work at Stephens Inc.; Am South Capital Markets of Nashville, Tenn.; Yamaichia International America of New York; and the Federal Home Loan Bank System in Reston, Va., according to his application. His listed references include John Fujiware of Janus Investors in Denver; Christopher Farley of Tinton Falls, N.J.; and Ben Kaminow of Demarest, N.J.

Carreiro, who has a contract with the state Legislature, has been an actuary at Osborn, Carreiro & Associates since 1988, according to his application. He listed Arkansas Municipal League Executive Director Mark Hayes and Little Rock Human Resources Department Director Stacey Witherell of Little Rock as references.

Besides Franks, Walther and Bassett, the system's other trustees include Sebastian County Judge David Hudson; former Sen. Steve Faris, D-Central; Gary Carnahan; state Auditor Andrea Lea, a Republican from Russellville; and state Treasurer Dennis Milligan, a Republican from Benton. The board has a vacancy.


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  #24  
Old 01-06-2019, 05:33 PM
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CALIFORNIA

https://www.pasadenastarnews.com/201...scal-oblivion/

Quote:
Jerry Brown’s warning of ‘fiscal oblivion’

Spoiler:
One of the biggest issues to face governments across California over the next several years will be the problem of rising public-sector pension costs.

It shouldn’t be a revelation that all levels of government in California have long struggled with rising pension obligations.

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From school districts to municipalities to the state, pension obligations have continued to engulf larger and larger portions of public budgets.

A report from the Stanford Institute for Economic Policy Research published in October 2017 notes that whereas the state contributed a combined $1.6 billion to the California Public Employees’ Retirement System and California State Teachers Retirement System in 2002-03, that figure will hit somewhere between $16 billion and $19.6 billion by 2029-30.

As a share of the state’s operating expenditures, state pension contributions will have risen in that time from 2.1 percent in 2002-03 to between 9.3 percent and 11.4 percent by 2029-30.

Practically, that necessarily means there’s less money available for services that California taxpayers expect to get for their high state taxes.

School districts, cities and counties face similar challenges. Once other means have been exhausted, rising pension costs forces them to choose between cutting services and raising taxes.

This is why many have already turned to increasing taxes as a means of sustaining even baseline levels of services — and why that trend is likely to continue for some time.

It is this state of affairs that outgoing Gov. Jerry Brown recently talked about with The Sacramento Bee. Brown has rightly stuck up for taxpayers in defense of modest pension reforms he helped enact against a legal challenge by Cal Fire Local 2881.


The union is pushing to reinstate a bizarre perk known as air time done away with by the 2012 pension reform law. Under the practice, public employees could purchase pension credits for years they didn’t work, which in turn boosted their pension benefits.

This practice not only perverted the purpose of pension benefits, which are to reward public sector workers for actually working for the public, but contributed to the pension obligation imbalance the state is dealing with today.

The union argues that eliminating the practice violates the so-called California Rule, which limits the ability of governments to modify pension benefits without making up for modifications in some other way.

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Brown counters that tying the hands of governments to modify pension obligations is “a one-way ratchet to fiscal oblivion.”
“These are very valuable pensions, very generous,” Brown said. “But they’ve got to be managed and there will be modifications. You have to be able to modify some of the benefit structures that were put in place without fully taking into account the cost.”

He’s right.

Of course, modifications to pensions already promised should be modest. By that measure, eliminating a nonsensical perk like air time purchasing is completely sensible.

While the case is still pending before the California Supreme Court, Californians should root for a reasonable interpretation of the California Rule that enables sensible changes to be made.

Such a decision alone of course won’t be enough to completely handle the pension problem. This is a problem that will have to be handled at various levels of government for many years to come.


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Old 01-07-2019, 10:11 AM
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https://protectpensions.org/2019/01/...blic-pensions/

Quote:
2019: THE YEAR AHEAD FOR PUBLIC PENSIONS

Spoiler:
A new year is upon us and state legislatures will begin their new legislative sessions as early as this week in some states. Following last year’s midterm elections, we expect this year will be a very active year for state legislatures. In many states, lawmakers will be considering bills affecting public pensions. Today we look ahead to some of the states that may act on public pensions this year.

We begin, as we often do, with Kentucky. Following the Kentucky Supreme Court’s decision striking down SB 151 as unconstitutional and Governor Bevin’s failed 23 hour special legislative session, the path forward seems uncertain. In recent years, the Kentucky General Assembly has been doing its job and fully funding its contributions to the state’s pension plans. After suffering a string of defeats in their attempts to gut pensions, Governor Bevin and Republican leaders in the General Assembly could choose to simply fund their pension contributions and focus on passing legislation dealing with other matters of public concern. This is an election year for Governor Bevin, however, and, given his blatant hostility to public pensions, he may insist on attempting to pass another pension-gutting bill in order to score a political victory ahead of his re-election campaign. Only time will tell, but the legislative session in Kentucky begins on Monday, so we should know soon which path the state will choose.

There may be fresh attacks on public pensions in Iowa and Texas in 2019. Public employees, retirees, and their allies in Iowa have long suspected that Republican politicians plan to gut the Iowa Public Employees Retirement System (IPERS). Following the re-election of Republican Governor Kim Reynolds, this seems a distinct possibility, given the attacks on public employees and their collective bargaining rights in recent years. In Texas, the state legislature needs to increase its contributions to the statewide pension plans. For years, the state legislature has contributed the lowest possible amount to the pension plans, according to the provisions of the state constitution. However, after political pressure to lower the assumed rate of return for the statewide pension plans, the state must do more than the bare minimum to assure retirement security for future generations of public employees. Expect to see some state legislators push to gut the statewide pension plans rather than act responsibly and improve funding of the plans.

In other states, public employees, retirees, and their allies will take a positive, proactive approach and fight to strengthen retirement security. In New Hampshire, Oklahoma, and Wyoming, public employees are preparing to fight for Cost of Living Adjustments (COLAs). Last year, bills to grant COLAs in New Hampshire and Oklahoma ended up as one-time stipends for certain retirees. Expect to see new pushes this year for true, meaningful COLAs for all retired public employees in these states. It has been more than a decade now since retired public employees in New Hampshire, Oklahoma, or Wyoming have received a COLA – something that is long overdue.


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  #26  
Old 01-07-2019, 10:41 AM
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CALIFORNIA
CALPERS

https://www.ai-cio.com/news/calpers-...organizations/

Quote:
CalPERS Discloses Names of Potential Candidates to Run New Private Equity Organizations
Two former Silver Lake officials could have a future at the CalPERS-backed investment organizations.


Spoiler:
Officials of the California Public Employees’ Retirement System have talked to a co-founder of private equity firm Silver Lake and a second former fund executive from the firm as potential candidates to run the two investment teams at its planned $20 billion new private equity program.

CalPERS spokeswoman Megan White said in an email to CIO that David Roux, a co-founder of Silicon Valley-based Silver Lake, and Adam Grosser, who oversaw Silver Lake’s Kraftwerk fund, are among candidates that CalPERS has talked with to lead its private equity direct-investing efforts.

White stressed that no decision on hiring has been made and that a “fair number” of other candidates are also having conversations with CalPERS.

The CalPERS investment committee has not yet approved the new private equity organizations—a likely decision to move forward is expected in February or March—but negotiations have been occurring with potential investment teams for at least six months.

Pension plan officials back in 2018 were given approval by the investment committee to begin negotiations to find investment leaders for the two proposed organizations.

One organization, called Horizon, would take buy-and-hold stakes in established companies, and the other, Innovation, would invest in late-stage venture capital companies in the technology, healthcare, and biotechnology sectors.

Silver Lake is known for its investments in technology companies and has assets under management of around $45.5 billion. Telsa Founder and CEO Elon Musk named Silver Lake as a funding source in his failed attempt to take the automaker private last year.

The company also helped take Dell Computer private back in 2013.

Roux co-founded Silver Lake in 1999 and served as its chairman and co-CEO. He moved away from day-to-day operations in 2010 and is no longer with the firm.

Roux currently serves as chairman of Jackson Labs, an independent biomedical research institute. He is also an independent trustee on the board of the Boston Scientific Corp., a director of the National Audubon Society, and a trustee of the Environmental Defense Fund.

Roux is being considered to lead the Horizon team. Grosser, who is being considered to lead the Innovation Team, was group head and managing director of the Silver Lake Kraftwerk fund, which specializes in investing in clean-tech companies.

“Silver Lake Kraftwerk has been focused on providing growth capital to technology and tech-enabled businesses driving efficiency across the operations, energy, and resources industries,” Silver Lake’s website says of the fund.

The website says Grosse, as of 2019, has transitioned to a senior advisor for the fund. He is not listed as a Silver Lake employee on the company’s website.

The Innovation team would also invest $10 billion over the next 10 years with its focus on late-stage venture companies.

White said it is just a coincidence that both Roux and Grosser have worked at Silver Lake.

CalPERS and Silver Lake have strong connections. Not only has the $345.6 billion CalPERS, the largest US fund, invested in several Silver Lake Funds, it also bought a 9.9% stake in the company back in 2008. The stake has since been sold.

CalPERS officials have said publicly that the success of Horizon and Innovation will depend on top investment talent running the teams.

John Cole, a CalPERS senior investment official, told the CalPERS investment committee on Dec. 17 that time was of the essence in getting the private equity plan approved because of the danger of top talent walking away.

“The kind of talent we need always has options,” Cole said, noting the competitive nature of hiring top investment teams.

Most of CalPERS’s 13-member investment committee support the two new private equity organizations but several have serious questions about their structure. CalPERS will fund Horizon and Innovation, but the general partners running the investment organizations will be in charge of investment decisions, bypassing entirely the CalPERS investment committee.

The two organizations would also not be subject to public disclosure rules, such as compensation levels of investment leaders and staff. CalPERS officials have acknowledged that top management in the new organizations could receive millions of dollars in compensation per year.

CalPERS officials see the new private equity investment organization as a way to expand its private equity asset class. CalPERS’s traditional $28 billion private equity organization is shrinking as the competition among institutional investors toughens to invest in co-mingled funds as limited partners.

CalPERS’s traditional private equity program would not be affected by the new investment organizations. Private equity is the pension plan’s best-producing asset class both short-term and long-term. Results as of March 31, 2018, show a 16.1% return for the preceding 12 months.


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Old 01-07-2019, 10:42 AM
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FLORIDA

https://www.ai-cio.com/news/florida-...uture-returns/
Quote:
Florida Retirement System Audit Forecasts Diminishing Future Returns
Managers, auditors split on 2019 rate of returns, which are less than the previous two years.


Spoiler:
The Florida Retirement System performed well in 2018, but despite that, the reported figures suggest there are some choppy waters ahead.

The pension fund, which covers state, county, schools, and other government workers, saw an 8.9% return on investments in fiscal 2018. It now has $161 billion in assets under management, and is 84.3% funded, according to a Thursday report from the state Auditor General’s office.

The fund is inching closer to its pre-crisis days, when it was fully funded. The 2008 cataclysm heavily impacted its assets, as well as those of many other pension plans in the nation. However, there are a few signs in the current report that there could be some tough times on the horizon.

For one, managers and auditors are not on the same page when it comes to 2019’s return expectations, which are forecasted to be much lower than the returns seen over the previous two years (8.9% last year and 13.7% in 2017). The managers say the fund will return 7.4%, but the auditors think 7% is more likely.

Additionally, the fund now has had more retirees than contributing members since 2015, and that number is only increasing. This will keep increasing its unfunded liability, now at $29 billion.

“The long-term financial health of all retirement plans is dependent upon several key items: future investment returns, contributions, and future benefit payments,” said the report. “Accordingly, collecting employer and employee contributions as well as earning the assumed long-term rate of return on its investments are essential components of the division’s funding plan to accumulate the assets needed to finance future retirement benefits.”

According to the report, the fund’s target allocations were 54% global equity, 18% fixed income, 11% real estate, 10% private equity, 6% strategic investments, and 1% cash.

The Auditor General’s office could not be reached for comment.

Ash Williams, the Florida State Investment Board’s executive director and chief investment officer, was also unable to be reached for comment. The Florida Retirement System is one of the four pension funds overseen by the board.


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Old 01-07-2019, 11:34 AM
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NEW YORK

https://www.newsday.com/news/region-...ket-1.25530532

Quote:
Volatile Wall Street sparks concern over public pensions, taxes

Spoiler:
ALBANY — The last time the stock market was roiled by the volatility that it has been experiencing recently was the beginning of the 2008 recession, which left the massive state pension system bruised and turning to local property taxes to make up for losses.

Some experts fear that unless the current stock market settles, local governments, schools and their taxpayers could face another increase in employer contributions such as the 37 percent hike ordered in 2010 by the state comptroller to offset stock market losses. That translated to $400 million more from taxpayers statewide in 2012 alone to the state pension fund.

The state constitution guarantees that the pension of a public sector worker can’t be reduced or taken away and so taxpayers must help make up any losses. That differs from private-sector workers with company-provided pensions, which can be reduced or eliminated by employers.

The Dow Jones Industrial Average hit 15 historic highs during 2018 fueled by an economic recovery that turned into an expansion and by President Donald Trump’s tax cuts for corporations and most middle-class families. But high times turned chaotic: The Standard & Poor’s 500 index was down 9 percent in December, the worst December since the Great Depression in the 1930s, and the Dow ended the year down 5.6 percent, the worst performance since 2008. On Thursday, for example, the Dow fell 660 points; on Friday it rose nearly 747 points.

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In addition to concerns about the state pension system, thousands of public workers who also chose to invest in an additional supplementary retirement account called the state Deferred Compensation Plan could lose money because it doesn’t compensate for Wall Street losses. Workers who take out these accounts, which are similar to 401(k) accounts for private sector workers, defer some of their wages until they retire, when they presumably would be taxed at a lower rate.

“People are very anxious," Jerry Laricchiuta, president of the Civil Service Employees Association said about workers in the Deferred Compensation Plan. "Some of these people actually depend on their deferred compensation as the main tool of their retirement . . . This is what they've been saving up for . . . It really comes down to when you choose to retire. How’s the market doing? Did it just kill you? Did you just lose $20,000 or did you just gain $20,000?”

In Nassau County alone, there are 9,750 participants with $1.258 billion in assets at the end of December 2016, according to recent financial statements. The state couldn't provide comparable Suffolk numbers.

For now, state and local government and school district officials are watching the up-and-down market carefully.

The last spike in local government and school district contributions to the pension fund generated more pressure to raise local property taxes, lay off workers and cut services such as parks in towns and programs in schools. Local officials say the state’s 2 percent cap on the increase in property taxes reduces their options unless they get voters to override the cap.

Whether that pain is likely to be repeated, however, won’t be known until March 31, the end of the state fiscal year. And experts agree the stock market could rebound and stabilize over the next three months.

“Daily, monthly, and even quarterly fluctuations can be nullified by the valuation on March 31,” said David J. Friefel, director of state studies for the independent Citizens Budget Commission. “Likewise, because contribution rates are based on the five-year average rate of return, impacts of changing contribution rates will be gradual, but felt over a long period of time.”

The view from Wall Street was similar.

“The most significant question for any pension fund when it comes to their assets is what is the value of the assets on the [end] of the fiscal year,” said Douglas Offerman, senior director at Fitch Ratings, a Wall Street bond-rating agency.

E.J. McMahon of the fiscally conservative Empire Center think tank, said short-term volatility will have minimal effect, but “a prolonged slump, or a much sharper stock market drop — say, losses of 10 percent more in next three months, persisting through June — would probably lead to renewed increases in taxpayer costs within the next year or two.”

“It’s a pretty critical time,” said Greg Mennis, director of public sector retirement systems project at the Pew Charitable Trusts that evaluates state pension systems. “Most experts are forecasting lower economic growth than we’ve seen in the past . . . the exposure is as high as it’s ever been.”

“It’s true the New York state funds are some of the best funded state pension funds in the country,” Mennis said of the fund managed by Comptroller Thomas DiNapoli. “But at the same time, the investment strategy of about 50 percent or more in stocks means that, like most other funds, they are going to have to navigate market volatility.”

Later this year, DiNapoli will have to set the employer pension payments paid by local governments for 2021, after lowering rates in 2018 and holding them flat for 2019 and 2020.

The state comptroller’s office expects to report a big drop off in stock investments in its quarterly report in February. But a bad quarter doesn’t mean a bad year and the office remains hopeful the pension’s diversified revenue — including real estate and less volatile bonds — will steady.

“The volatility came as something of a surprise along with the continued duration of the volatility,” DiNapoli said in an interview. He said while market downturns often precede a recession, that’s not always the case. He said about 55 percent to 60 percent of the pension is now invested in stocks.

“Where we stand today, this is not ’08 or ’09,” DiNapoli said, referring to the beginning of the most recent recession. “Will it be by March? I hope not. But right now, we aren’t talking about a year like that.”

DiNapoli said federal policy and Trump’s tweets and other public statements are part of what is driving the market, but noted that if the Trump administration settles on accord with China, Wall Street might settle down.

“The unpredictability of what comes out of the White House certainly continues the volatility of what we are seeing and seems to be driving the psychology right now,” DiNapoli said. “But we go into this in a position of strength . . . we have full confidence in our asset allocation.”


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Old 01-07-2019, 11:35 AM
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CONNECTICUT

https://www.theday.com/columnists/20...-much-methinks
Quote:
Malloy doth praise himself too much, methinks

Spoiler:
Outgoing Gov. Dannel P. Malloy has been busy in his waning days. As ever, he has been polishing his record and boasting of his accomplishments — on an epic scale. His “Malloy-Wyman Record” is a massive 283-page document, providing a distorted and inaccurate account, certainly concerning the enormous expenditures devoted to the care and feeding of the state workforce.

For example, Malloy claims credit for imposing painful wage freezes for five of his eight years in office, conveniently skipping the increases he negotiated for each of the upcoming two fiscal years. He owns these increases. They will add about a half billion dollars to future budgets. Moreover, a raise every other year is certainly not a hardship, especially when they push state worker pay even farther above wages in most other states and above the level of pay in much of Connecticut’s private sector.

Since pay is the base upon which most benefits are calculated, the benefits picture isn’t pretty either, as even “The Malloy-Wyman Record” concedes: “Connecticut has two of the worst funded pension systems in the country.” Note the use of the present tense, “has” – even now, after eight years of Malloy’s efforts.

Having essentially admitted failure, Malloy makes excuses, employing a half-truth that the underfunding results from years of insufficient contributions by the state to the pension funds before he took office. He states proudly that he paid the required amount.

Past inadequate state funding did contribute to the problem, but so did the over-generousness of the benefits.

So what results did Malloy achieve? Did he chip away at those unfunded liabilities?

No. Things got much worse. The unfunded liabilities of both the state employee pension fund (SERS) and the teacher pension fund (TRS) increased dramatically, SERS from about $12 billion immediately before Malloy took office to $21 billion last June, and TRS from about $9 billion to $13 billion. Malloy owns this backsliding.

What happened? Malloy converted active workers into retirees on a huge scale without first scaling back their over-generous pension benefits or requiring meaningful employee contributions to the pension funds before retirement. Retirees now outnumber active state employees 51,000 to 49,000, according to last June’s SERS valuation report. Before Malloy, retirees numbered only 42,000 compared to 50,000 active workers.

Consequently, aggregate retirement benefits have soared from $1.3 billion in fiscal 2010 before Malloy’s arrival to $1.9 billion last fiscal year.

Malloy doesn’t talk much about the over-generousness of benefits. This is willful negligence. Before his first inauguration, he received a stunning report on state employee compensation from the Commission on Enhancing Agency Outcomes (CEAO), a precursor of the current Commission on Fiscal Stability and Economic Growth.


The CEAO report showed Connecticut state workers with much higher pay and benefits than its private sector workers, deviating markedly from the national norm of public employees receiving lower pay but higher benefits. Average state employee pay was about $66,000 versus roughly $59,000 in the private sector. The report clocked in state employee benefits at about $40,000 for total average annual compensation of $106,000 versus private sector benefits of $15,000 for average total compensation of $74,000. Malloy knew all this.

Using the same data sources today, state employee pay, benefits and total compensation still exceed those in the private sector – even before the next two years' 3.5 percent wage increases. Other studies have found the same, including that Connecticut state employees fare better than those in most other states do.

Malloy did little to rein in the excesses. Indeed, in April 2014, Malloy told a rally of union workers, "I am your servant." Indeed, he's been in union service, as much public service.

Finally, during the SEBAC 2017 bargaining process last year, Malloy's seventh year in office, he decided to become a reformer and negotiated with unions for a less-costly pension plan for new hires. It delivers lower benefits upon retirement and requires contributions of at least 5 percent of wages to pay the liabilities that accumulated under Malloy for the over-generous benefits of older workers, many of whom weren't required to make any pension fund contributions until last fiscal year and only 2 percent thereafter.

These SEBAC 2017 reforms are simply too little too late. Had they been instituted six years earlier under SEBAC 2011, they would have generated substantial contributions, significantly slowing the growth in unfunded pension liabilities. Instead, Malloy kicked the can down the road, primarily by re-amortizing the state's required pension contributions — that is, lowering them and stretching them out over a longer time period.

Yet the state may be running out of time. This year the legislature commissioned a stress test of the viability of its pension funds. The report warned that the "budget is exposed to potentially unaffordable spikes in required pension contributions in scenarios where investment returns fall short of expectations."

Ominously, the stock market has declined 10 percent since the date of the analysis.

Nobody would say negotiating with union bosses for reduced pay and benefits is easy, but no one should be fooled by The Malloy-Wyman Record into believing that Malloy made even a creditable try. Now, it falls to Malloy's successor to try to rescue a truly dire situation.


http://www.countytimes.com/opinion/d...11c250876.html
Quote:
Don Pesci: Problems Lamont will not solve in the new year

Spoiler:
For decades, the Connecticut General Assembly has been parceling out its constitutional powers to various political entities such as unions. Constitutionally, the legislative branch of our government, the House and Senate in Connecticut’s General Assembly, are supposed to have dominion over getting and spending.

This means that every dollar collected and disbursed by state government should be the province of elected General Assembly members. In most states, the salaries and benefits of unionized state employees are determined by legislatures — and NOT through contractual obligations presented to the legislature by governors colluding with union chiefs to benefit an undemocratic hegemony that such contracts tend to support and enforce.

In addition to depleting the constitutional authority of the General Assembly, such contracts as have been arranged between Connecticut’s governors and unions throw dispute resolutions into the state’s third branch of government, the court system, and decisions made by courts are, by definition, NOT representative choices made by the legislative branch. No governor of recent memory has had the courage to say to a union-friendly General Assembly — the state constitution assigned you, the members of the House and Senate, the obligation of shaping Connecticut’s economic future, and this is a constitutional obligation you should not be renting out to unrepresentative political factions.

According to a September 2018 Truth In Accounting report — which incorporates both assets and liabilities, not just pension debt — Connecticut, regarded as a sinkhole state, “only has $12.1 billion of assets available to pay bills totaling $81.9 billion… Because Connecticut doesn’t have enough money to pay its bills, it has a $69.8 billion financial hole. To fill it, each Connecticut taxpayer would have to send $53,400 to the state.” In addition, “The state is still hiding $10.4 billion of its retiree health care debt. A new accounting standard will be implemented in the 2018 fiscal year which will require states to report this debt on the balance sheet.”

Apparently, elected state officials were treating state debt the way elected federal officials have been accustomed to treating the national debt — now cresting at about 22 trillion dollars. The national debt, British macro-economist John Maynard Keynes had whispered into the ears of politicians, is a debt we owe to ourselves; so no need to fidget about paying it off. And of course the intimidating national debt may be financed through the printing of devalued currency, an option not available to irresponsible state legislators who may discharge debts in one of only three ways: through bonding, revenue increases or spending cuts.

Having established a Connecticut pension fund that remained empty for three decades, state politicians, in succeeding years, have transferred to the General Fund payments that should have been secured in the state’s pension “lockbox.” And the same politicians have raided other so called lockboxes along the way, dumping their loot into the General fund and disbursing the pilfered funds to advance the political interests of state politicians allied with the unions that benefit from their ministrations.

One Connecticut commentator heralded the advent of a new Lamont administration this way: “Lamont and Malloy, similar on policy, much different in personality.” But if policy does not change, the state will be in for more of the same — because Malloy, who tagged himself as a porcupine, was blind as a deer to the predictable consequences of his ruinous policies. The 300-page apologia Malloy distributed to the media before he left office touting the high points of his administration — the abolition of the death penalty, the institution of a poorly conceived “Get Out Of Jail Early” reform plan that involved the unearned release of some violent criminals, a ban on so called “assault weapons” after the Sandy Hook mass murder of young children, a hand of affection held out to gay people, including two of his close political associates, Michael Lawlor, now the state’s prison czar, and Superior Court Judge Andrew McDonald — were social campaign blindfolds that served to prevent opinion makers from dwelling on his economic failures.

Malloy insists that McDonald was spurned by homophobic Republican General Assembly members for a position on Connecticut’s Supreme Court, a claim that seems highly improbable, since the presumed homophobes in the legislature did nothing to impede McDonald’s precipitous rise in state politics. This is a prime example, though not the only one, of the gubernatorial porcupine throwing his quills at his political opponents. Lamont, we are to suppose, will be a kinder and gentler Malloy. In matters of policy — the only matter that matters — the New Year will usher in a governor whom many regard as being more of the same, more Malloy minus the quills.


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Old 01-07-2019, 12:49 PM
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CALIFORNIA

https://www.latimes.com/politics/la-...107-story.html
Quote:
As California's new governor, Gavin Newsom needs to address what no one wants to talk about

Spoiler:
There’ll be heaps of happy talk in Sacramento this month about bold new, expensive government programs. That’s normal from an eager new governor and Legislature.

Too bad there won’t also be some bitter truth spoken about the crucial need for state government to correct festering old mistakes that threaten or already are damaging California.


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But like politics and religion at some family holiday dinners, certain subjects are taboo among most politicians — such as unfunded public pension liabilities, regulatory abuse that stymies economic development and a sick, decrepit state tax code.

Elected officials will be feeding dessert to the public and skipping the nourishing vegetables that don’t go down easily with many voters and powerful interests.

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The happy talk is fine. Heaven knows, everyone can use some to mitigate the depressing blather spewing from Washington and talk shows.

Democrat Gavin Newsom is anxious to inaugurate his gubernatorial regime with a popular package of programs aimed at expanding early education and childcare. He envisions a $1.5-billion one-time expense, plus $300 million in annual costs. Vital details to come.

When legislators talk about passing such an ambitious program, however, they peg annual costs at $1 billion to $2 billion.

Pre-kindergarten and childcare programs are commendable if the state can afford them without jeopardizing the treasury or forcing yet another tax increase. And that’s debatable.

Newsom also repeatedly promised voters he’d create some sort of universal medical coverage, probably including care for immigrants living here illegally. He’ll be pressed by his nurses union allies to follow through. The cost, however, may be out of reach — at minimum into the multibillions.

Those proposed government luxuries fit nicely into happy talk.

The bitter truth about unfunded liabilities for public employee retirees just makes voters angry — on both sides.

There’s pension envy by private sector workers whose employers in recent years have frozen their traditional “defined benefit” retirement plans and turned to risky 401(k)-type savings programs. And there’s resentment by public employees who feel they’re being disrespected and picked on by pension reformers.

More from George Skelton
The problem is that two decades ago state and local politicians promised public employees a lot more than pension funds could afford. There’s an obvious conflict: Politicians get big hunks of campaign money from public employee unions.

Today, California’s public pension systems are badly underfunded. Under the best scenarios, they owe roughly $3 in promised benefits for every $2 in projected assets. The total unfunded liabilities for all state and local pension systems in California range from $330 billion to $1 trillion, depending on how they’re calculated.

“We’re still on this glide slope to a really bad place,” says Joe Nation, a former Democratic state assemblyman who’s a Stanford public policy professor and heads a pension research project. “In the end, someone has to pay this. It’ll probably be the public employees.”

The options are ugly: Trim pensions, raise taxes, increase employee and government contributions or cut other public programs such as education. Local governments could also go bankrupt and slash retiree benefits.

Gov. Jerry Brown and the Legislature took at stab at a partial fix in 2012. They enacted some modest reforms that made pensions less generous for future state employees.

But the biggest barrier to a real fix is the so-called California Rule, an old, illogical concept. It decrees that pension benefits existing when a public employee is hired can never be reduced, even if they haven’t yet been earned by service.


https://www.bizjournals.com/sacramen...but-still.html
Quote:
CalPERS beat major stock indices in 2018, but still faces shortfall concerns

Spoiler:
Halfway through its fiscal year, the California Public Employees’ Retirement System has seen its assets decline 3.9 percent, which could make hitting its 7 percent goal at the end of June difficult.

But compared to major stock indices, CalPERS is doing great.

In calendar year 2018, Sacramento-based CalPERS’ fund was up 3.3 percent.

The Dow Jones Industrial Average, by contrast, was down 5.6 percent on the year and down 3.9 percent in the past six months. The tech-heavy Nasdaq was down 8.6 percent on the year and down 7.8 percent in the past six months. And the wider S&P 500 index was down 8.6 percent on the year and 7.8 percent in the past six months.

While CalPERS is faring better than the market in general, the fund is still in danger of falling short of its goal of hitting average annual returns of 7 percent, which it needs to do to fund employee benefits and retirements, said Joe Nation, project director of the Stanford Institute for Economic Policy Research at Stanford University. Nation was a three-term member of the California State Assembly until he termed out in 2006.

The CalPERS asset allocation target is currently 50 percent in stocks, 28 percent in bonds, 13 percent in real estate, 8 percent in private equity and 1 percent in cash.

“I think it is appropriate to de-risk and have a larger share of investments into non-turbulent markets,” Nation said.

Having said that, however, he added that when the stock market soars, like it did for parts of last year, having a pension fund in safer investments is not as rewarding.

A more diversified portfolio is “not as satisfactory in bull markets, but safer in general,” Nation said.

CalPERS, the largest U.S. public pension fund, posted an 8.6 percent investment gain in its 2017-18 fiscal year ended June 30. In its 2016-17 fiscal year, CalPERS reported an 11.2 percent gain.


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The fund’s net average rate of returns from 1988 through June last year was 8.4 percent.

CalPERS' primary problem isn’t necessarily its ability to hit its annual average earnings goals, Nation said, but the growth of liabilities to its pensioners and beneficiaries.

CalPERS has increased its funded ratio, which was at only 60 percent funded in 2009, to end 2018 at about 68 percent, Nation said. The funded ratio was at 72 percent at the end of CalPERS’ fiscal year at the end of June.



https://calpensions.com/2019/01/07/b...than-pensions/
Quote:
Brown cut retirement debt bigger than pensions

Spoiler:
Most large private-sector companies and some government employers do not provide retiree health care. But state workers not only get state-paid health care in retirement, they often pay less for it than they did while working.

On the job, the state usually pays 80 percent of the average worker health care premium. The state pays 100 percent of the average retiree premium and 90 percent for dependents, if the worker had 20 years or more of service.

Since most state workers can retire at age 50, the current state retiree premium payment of $21,456 a year for a family of three or more is a particularly good deal for those who choose early retirement.

Now as Gov. Brown leaves office, ending what he called the “anomaly” of retirees paying less for health care than current workers is part of one of his accomplishments — state worker retiree health care reform that had been delayed for decades.

Retiree health care, part of Brown’s 12-point pension reform, was not included in his pension reform bill that, for new hires, extends retirement ages and makes employees pay more for their pensions.

As a legislative analysis of the pension bill said, unions had “shown a willingness” to bargain the issue. Like the pension reforms, three of the retiree health care reforms bargained by the Brown administration only apply to new hires, reducing the amount of the savings.

The retiree health care premium payment is the same as the active worker payment. The state no longer pays for Medicare Part B. And five more years of service are needed to receive state payment of retiree health care premiums, beginning with 50 percent after 15 years and increasing 5 percent a year to 100 percent after 25 years.

After difficult bargaining eased by offsetting pay raises, the major part of Brown’s retiree health care reform applies to workers hired before the reform, not just new hires. All workers are beginning to contribute to a pension-like investment fund to help pay future retiree health care costs.

Lawmakers have known for decades that generous retiree health care should be “prefunded” to cut costs and reduce debt pushed to future generations, who didn’t receive the services of the retirees.

The California Public Employees Retirement System expects investments to pay about two-thirds of future pension costs. The No. 1 recommendation of former Gov. Arnold Schwarzenegger’s public retirement commission in 2008 was prefund retiree health care.

In 1991 legislation by former Assemblyman Dave Elder, D-Long Beach, (AB 1104) created a fund in the state treasurer’s office to begin prefunding state worker retire health care. But lawmakers never put money in the fund.

Meanwhile, state worker retiree health care debt soared to $91.5 billion as of June 30, 2017, state Controller Betty Yee reported last January. By comparison, in the latest CalPERS report state worker pension debt was $59.5 billion as of June 30, 2016.

Part of the difference is that Yee’s report, following new government accounting standards, uses a lower investment earnings forecast to discount debt, ranging from 3.56 to 4.22 percent. The CalPERS discount rate is about 7 percent.

The state retiree health care payment this fiscal year is $2.2 billion, up five-fold from $458 million in 2001. The current payment is about 1.7 percent of the state general fund, up from less than a half of one percent 15 years ago.

Brown3

Prefunding of retiree health care was not in Brown’s 12-point pension reform plan released in October 2011. He unveiled his prefunding plan as he presented the annual state budget in January 2015.

The governor pointed to a chart showing retiree health care debt at a crossroads. If no action is taken, the debt by 2047-48 grows to $300 billion. Under his plan, the debt by 2044-45 drops to zero.

Now all 21 state worker bargaining units, matched dollar-for-dollar by the state, have agreed to contribute to a pension-like retiree health care investment trust fund expected to have $1.6 billion by the end of this fiscal year.

The plan calls for workers to contribute half of the “normal” cost of their retiree health care, an amount large enough to pay for the retiree health care earned during a year, excluding the debt owed from previous years.

A chart (see below) in a Finance department summary of the state budget enacted last June shows the trust fund is expected to have enough money to pay off the retiree health care debt by roughly 2045.

Then the trust fund, rather than the state general fund, begins to pay the annual cost of providing retiree health care for state workers, as shown on the chart by the sharp plunge in cost.

Until roughly 2045, the state continues pay-as-you go funding of retiree health care. And as the chart shows, state costs are higher than pay-as-you-go for about three decades because of the matching payment for state worker contributions.

Some prefunding of retiree health care began in 2010, a year before Brown took office. One of the leaders was the Highway Patrol union, which also bargained an often-criticized large pension increase (SB 400 in 1999) widely adopted by local police and firefighters.

When fully phased in by July 1, 2020, the 21 state worker bargaining units will be paying a wide range of contributions to the retiree health care trust fund, according to a list provided by the Human Resources department.

The nine SEIU bargaining units will be contributing 3.5 percent of pay. The craft and maintenance unit will be making the highest contribution, 4.6 percent of pay; the physicians, dentists and podiatrists unit the lowest, 1.4 percent of pay, and the Highway Patrol 3.9 percent.

The Highway Patrol also is the only bargaining unit that has not agreed to add five more years of service to become eligible for 50 percent state payment of premiums (up from 10 to 15 years) and in 5 percent annual steps reach the maximum payment (up from 20 to 25 years).

Worker contributions to the retiree health care trust fund are not refundable. So new state workers who leave before serving at least 15 years get nothing for their contributions, unless it becomes an incentive to stay on the job.

The “anomaly” of retirees receiving a larger state health care premium payment than active workers is said by some to have a resulted from a cost-cutting move by the administration of former Gov. Pete Wilson in the early 1990s.

Active workers were required to begin paying some of the cost of their health care. No change was made for retiree health care.

Teachers are among the government workers that lack the generous retiree health care received by state workers.

A California State Teachers Retirement System survey in 2011-12 found 11 percent of teachers had no employer retiree health care, 49 percent had some retiree premium support until age 65 and Medicare eligibility, and 29 percent had lifetime employer health care support.

“Postretirement premium support varies by hire date and is decreasing,” said the CalSTRS study.

A Kaiser foundation survey two years ago found a sharp decrease in retiree health care provided by large private-sector companies. Among those with health care benefits for active workers, 66 percent provided retiree health benefits in 1988 and only 25 percent in 2017.




https://medium.com/@DavidGCrane/sacr...y-bdd7174435c9
Quote:
Sacramento’s Silliest Subsidy

Spoiler:
In December I turned 65 and became eligible for Medicare, the national health insurance program for people my age and older. Medicare is fantastic — and fantastically cheap — insurance. But, believe it or not, if I was a retired California state employee, I would also be entitled to a state-provided health insurance subsidy that this fiscal year will cost taxpayers $2.6 billion — more than double the cost ten years ago:


California State Budget
If you think Retiree Health costs are growing fast just because overall health care costs are growing fast, you’d be wrong. Health costs for the state’s active employees grew at half the pace of Retiree Health spending. Nope, Retiree Health spending is growing fast because the state legislature and governor have created huge and fast-growing — and unnecessary — liabilities:


State Controller’s Office
At $91 billion, Retiree Health liabilities are now the state’s second largest retirement liability:


California State Budget — 2018–19 ($ millions). Retiree Health liabilities as of June 30, 2017
Even General Obligation Bonds, which require voter approval, are surpassed in size by the state’s Retiree Health obligations, which are created by the state legislature and governor without voter approval.

Because most of the state’s spending is determined by the constitution and entitlements and the legislature and governor tend to protect Corrections spending, the consequences of Retiree Health spending fall disproportionately on discretionary programs such as courts, UC and CSU. This year, the $2.6 billion spent on Retiree Health represents ~10 percent of discretionary spending. Looked at another way, $2.6 billion is 35 percent more than the state will spend on courts, nearly 70 percent of what the state will provide CSU and UC each, and more than 85 percent of the expected cost of insuring undocumented seniors in California.

The state’s Retiree Health spending is not necessary. For retired employees aged 65 or over, federally-funded Medicare is an excellent program. For retired employees under the age of 65, the Affordable Care Act (Obamacare) provides robust federally-funded subsidies through the state’s excellent health care exchange, Covered California.

Retiree Health obligations can be reduced by transitioning retired employees to Medicare and Covered California and delinking the medical insurance premium rates paid by active and retired employees. By taking that action in 2015, the City of Glendale reduced Retiree Health liabilities by >90 percent. Applied to the state’s 2017 Retiree Health liability, the state could reduce its liabilities by >$80 billion and start saving >$2 billion per year.

There’s no reason for California to starve discretionary programs and unfairly tap taxpayers in order to provide unnecessary subsidies when generous federal subsidies are available. The state should end the practice of subsidizing retired employee health care. In doing so it would also set an important example for California’s many school districts and local governments suffering from similar unnecessary liabilities.


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