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  #71  
Old 01-15-2018, 11:08 AM
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http://labornotes.org/2018/01/attack-workers-retirement

Quote:
The Attack on Workers' Retirement
January 12, 2018 / Dean Baker
Spoiler:
While many current retirees are reasonably comfortable because they have pensions, the future does not look bright for those yet to retire.

Traditional defined-benefit pensions are rapidly disappearing in the private sector—less than 15 percent of workers have them. Most public sector workers still have them—more than 20 million are either now receiving or looking forward to a pension. However, public sector pensions are coming under attack from the American Legislative Exchange Council (ALEC) and other right-wing groups.

Over the last four decades employers have been anxious to convert the traditional defined-benefit pensions into defined-contribution 401(k) plans.

The difference is that with a defined benefit, the worker is secure while the employer does not know exactly how much it will have to pay in. Workers are guaranteed a lifetime benefit based on their salary and years of service; the employer’s bill depends on the worker’s longevity and on stock market performance.

Butch Lewis Act
In November, Senator Sherrod Brown introduced the Butch Lewis Act, which would provide loans to pension funds in critical or declining status to pay out promised benefits to retirees, funded by new bonds issued by the U.S. Treasury. The bill is named after the late Butch Lewis, a longtime Teamsters for a Democratic Union activist and a leader in the fight to defend Teamster pensions.

Grassroots mobilization and lobbying by retirees over the last three years have been critical to stopping cuts to the Teamsters’ Central States Pension Fund, and to generating the pressure on Congress to come up with a solution for ailing funds.

Retirees are now making a big push for the Butch Lewis Act. In December, 500 Teamster retirees, active members, and spouses packed a union hall in St. Paul, Minnesota, in support of the bill. The rally was sponsored by Save Our Pensions-Minnesota, which is an affiliate of the National United Committee to Protect Pensions, a network of 60 Teamster rank-and-file pension protection committees formed in 2016. – Dan DiMaggio

With a defined-contribution plan, the employer knows just how much it will pay each year, and the worker shoulders all the uncertainty. This means that workers face the risk that the market will plunge just after they retire—and they may quite possibly outlive their savings.

By getting rid of defined-benefit plans, employers are transferring risk to workers. In addition, they often contribute less to a defined-contribution plan than to the defined-benefit plans they replaced, in effect cutting workers’ pay.

PUBLIC PENSIONS UNDERFUNDED?
There has been a huge effort to portray public employee pension plans as both overly generous and hugely underfunded. Neither is true.

In nearly all cases the public plans provide relatively modest benefits. For example, the average benefit for a retired city worker in Detroit was just over $18,000. When the city declared bankruptcy these workers were forced to take a 4.5 percent cut and give up cost-of-living increases. After two decades of missed increases, this concession may cost retirees one-third of their pensions.

In Chicago, where city workers’ pensions are seriously underfunded, the average benefit is a bit over $30,000 a year. Most news accounts fail to mention that these workers are not covered by Social Security, which means that for most this will be pretty much all their retirement income.

For the most part, public sector pensions are reasonably well-funded. Right-wingers have tried to exaggerate the size of the shortfall with accounting gimmicks that make it appear much larger, producing figures as high as $4 trillion for all local and state pension plans.

However, if we assume that the pension funds earn a return consistent with projections of future economic growth, the additional contributions needed from local, state, and federal governments to maintain full solvency would be around 0.25 percent of the U.S. gross domestic product.

This is hardly a trivial sum, but it would not bankrupt the country. By comparison, at the peak, the wars in Afghanistan and Iraq cost 1.6 percent of GDP. Shoring up pensions would require additional tax revenue from state and local governments, assuming that workers do not agree to make larger contributions from their pay, as many have.

These pensions are workers’ deferred pay. They already worked for them. No one suggests retroactively taking back money governments have paid to contractors in earlier years. It doesn’t make any more sense to retroactively cut workers’ pay, which is effectively what pension cuts do.


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  #72  
Old 01-15-2018, 11:08 AM
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CONNECTICUT

https://www.newstimes.com/local/arti...s-12494692.php

Quote:
Increased assets help towns save money on pensions

Spoiler:
Recent economic growth and a strong stock market have meant higher returns on municipal pension investments for Danbury-area towns.

This has translated into savings at a time when elected officials are trying to tighten their fiscal belts.

Most towns in the region have consistently met their pension obligations. So while cities across the nation struggle to find the funds to pay those who retire and seek to collect on their pension, area towns have ensured their pension funds have been at least 80 percent funded over the years.

The asset growth caused by the favorable economic conditions and stock market has helped reduce the amount towns have to contribute from taxpayer dollars toward their pension funds.

New Milford has seen its assets grow from about $28 million in 2010 to about $60 million in 2018, saving the town roughly $500,000 in the most recent year.


“The town’s contribution in the past several years has gone down because of asset growth,” said Tom Pilla, chairman of New Milford’s pension committee. “This alleviated a lot of pressure on the taxpayer.”

He attributed the growth to several factors, including the addition of a cap on the size of pensions in union contracts and a switch in the company that manages the fund — from John Hancock to Principal Financial Group and Angel Pension. The latter change meant a different investment strategy, to more diversified accounts.

The committee decided to change its practices when it realized more employees were joining the plan and salaries were increasing, said Pilla, who has served on the committee for 20 years.


“It wasn’t sustainable,” he said.

Most Danbury-area towns offer their own pension plans, though some departments participate in the Connecticut Municipal Retirement System, such as Danbury Housing and New Fairfield police.

Redding employees are only enrolled in this state system.

All teachers and school administrators are enrolled in a separate state teacher retirement fund and do not draw from their towns’ plans.

Ridgefield is expected to reduce its contribution for Fiscal Year 2018-2019 by about 10 percent for the town departments and 3 percent for the Board of Education.

Laurie Fernandez, Ridgefield’s human resources director, said the decrease is due to the improved assets as well as a change from a defined benefit plan to a defined contribution plan. There were also lower raises than the actuaries used in their projections.

“The town’s plan is managed by a pension commission which has done very well for the town over the years,” she said. “They are a volunteer board who helped dictate where pension funds are invested and have done superb for us.”

Improved assets helped Bethel improve its funding rate up from about 50 percent 10 years ago to 84.5 percent for the town today.

“The biggest reason is the fully funding of the required annual contribution. We have also had favorable gains in the investment of the assets,” Bethel Comptroller Bob Kozlowski said.

Bethel First Selectman Matt Knickerbocker said they saw an 11.25 percent return on their assets in the past 12 months. He said this, and the larger contributions the town and employees have been making, will help the town reach its ultimate goal of funding it 100 percent.

Bethel invests conservatively which meant their assets hadn’t generally grown as much, but it also protected the town in the recent recession.

When he came into office in December 2009, Knickerbocker discovered the town wasn’t making the full required contribution. He and the finance department committed to budgeting for a little more than the required payment to help bring the rate up. The town was also able to negotiate with unions to have employees contribute more too. It also switched to a plan similar to a 401K for new hires.

“It’s a nice, gradual increase that puts the town in a very good position financially,” Knickerbocker said.

Betsy Gara, executive director of the Connecticut Council of Small Towns, said she’s seen many towns move toward 401K-style plans, like Bethel. Both Danbury and Ridgefield now offer this option.

“This has helped them hold down pension costs in local budgets,” she said.

This summer, the state also reported growth in some of its pension accounts. The State Employee’s Retirement Fund had a 14.34 percent return while the Teachers Retirement Fund saw a 14.40 percent return.

State Treasurer Denise Nappier said the results “significantly surpassed” fiscal year 2017 actuarial assumed rates of return, which were 6.9 percent for the state employees fund and 8 percent for the teachers, according to the Associated Press.

But even with the strong showing at the stock market this year, towns are lowering the expected rate of return on their investments to better reflect the actual return.

Danbury Finance Director David St. Hilaire said the city recently started to project a 7.25 percent return instead of 8 percent.

New Milford also lowered its rate from 8 percent to 7.5 percent. Pilla hopes to get that figure to 5.5 percent, which he said is closer to the actual figure and helps for long-term planning.

“It wasn’t reality,” he said, of the 8 percent.

Staff writers Julia Perkins, Anna Quinn and Rob Ryser contributed.
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Old 01-16-2018, 12:20 PM
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https://www.themaven.net/mishtalk/ec...Eky-rHZajGBHxQ

Quote:
Drastic Pension Cuts Will Hit California, Kentucky, Other States

Spoiler:
The CA Supreme Court will rule on pension cuts. Curiously, the court's ruling will be irrelevant in case of bankruptcy.

Please consider California's Brown Raises Prospect Of Pension Cuts In Downturn.
.....
Pension Cuts Are Coming

It's refreshing to hear a politician admit the obvious: Pension cuts are coming.

However, whether or not the cuts are "reasonable" is irrelevant in cases of bankruptcy. Bankruptcy is under federal, not state law.

Municipal Bankruptcy State Laws


The above map is from Governing.Com.

Municipalities located in states that are green, generally have a right to declare bankruptcy. Those in purple don't. There could be bankruptcy legislation at the national level that would supersede state constitutions and I am in favor of that.

Meanwhile, despite the enormous gains in the stock market in the past decade, CALPers is still only 68% funded, and that even assumes 7-8% returns into the future.

Illinois and Kentucky are much worse off.

Even 3% gains would devastate most pension plans. Steep actual losses are likely.

Translation: Things are dire and pension cuts are coming.

Municipalities will resort to bankruptcy if necessary, in states that allow it. Those states that do not allow municipal bankruptcy will be forced one way or another to do so.

Mike "Mish" Shedlock
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  #74  
Old 01-16-2018, 12:45 PM
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https://www.ai-cio.com/news/nasra-al...serious-flaws/

Quote:
NASRA: ALEC Report Contains ‘Serious Flaws’
Association says study on public pension funding was ‘contrived’, and ‘cherrypicked’ data.
Spoiler:
The National Association of State Retirement Administrators, (NASRA) has rejected the findings of a recent report on public pension funding from the American Legislative Exchange Council (ALEC), saying the findings contain “serious flaws.”

The ALEC report claimed that US public pension plans are far more underfunded than they report, and that the aggregate unfunded liability of all plans exceeds $6 trillion, with a funding level of approximately 33%. However, NASRA said that using “current, prevailing actuarial methods” for valuing liabilities, public pensions report an aggregate unfunded liability of approximately $1.5 trillion, and a funding ratio of around 70%.

NASRA said its main problems with ALEC’s report on 280 state-administered public pension plans is that its conclusions are based on the use of a below-market, risk-free interest rate to calculate the funding condition; it “erroneously states” that using a risk-free rate for funding is endorsed by the Society of Actuaries; and it “ignores the variable nature of benefit structures and financing arrangements in many public pension plans,” rather than assign all public pension liabilities and costs to employers and taxpayers.

NASRA also argued the report implies that only a few states have enacted modifications to their retirement systems, “even though every state has recently made changes to one or more of its pension plans,” and claims that public pension reporting and transparency is inadequate, “when, in fact, public pensions are highly transparent and a public database of state level plans already exists.”

ALEC’s report used a discount rate “derived from a short, cherrypicked time period,” said NASRA, which was calculated using a “so-called” risk-free investment return of 2.14%. NASRA said a risk-free rate “is not helpful for calculating pension funding information,” and that the outcome of this calculation should not be used to characterize plans’ funding condition.

“By ALEC’s admission, this is a synthetic rate manufactured by averaging the yield on 10- and 20-year bonds from April 2016 to March 2017,” said NASRA, “an unconventional window to measure financial data, and one that featured atypically low rates even in the current low-rate environment.”

It added that the rate used by ALEC is lower even than the current yield on 10-year US Treasury bonds, which is just under 2.5%, and that rates used for corporate pension plans are currently around 4.0%.

“It is only through the use of a rate as low as the one used in the report that ALEC finds ‘every single state would be considered at risk of defaulting on their pension obligations,’” said NASRA. “Using current interest rates, particularly from such an oddly brief and irrelevant period of time, to calculate long-term funding requirements, and to characterize the funding condition of a pension plan that will continue to operate for decades, is incongruous with the way plans actually are funded.”


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Old 01-16-2018, 02:40 PM
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NEW JERSEY

http://www.nj.com/politics/index.ssf...yor_other.html

Quote:
Christie signs bill giving ex-Camden mayor, other N.J. politicians bigger pensions

Spoiler:
On his final full day in office, Gov. Chris Christie on Monday signed a controversial bill into law that will increase the pensions of former Camden Mayor Dana Redd -- a Democratic ally -- and some other elected New Jersey officials.

Christie made no statement on the measure, which was one of 150 he took action on before he's set to leave office Tuesday. His office did not immediately return a message seeking comment.

The Democratic-controlled state Legislature fast-tracked the Democratic-sponsored legislation in the final weeks before a new set of lawmakers were sworn in and Christie finished his eight-year tenure.

The new law (S3620) allows some politicians to re-enroll in the state's Public Employees' Retirement System after being kicked out because they switched positions.

You'll miss me, Jersey! Christie has lots more to say
You'll miss me, Jersey! Christie has lots more to say

Proud and feisty, blunt and still fighting, Chris Christie doesn't hold back in his final NJ Advance Media interview before leaving office next Tuesday.


Though lawmakers have not specifically said the bill was written to benefit Redd, the former mayor -- a Democrat who left office after eight years Jan 1. -- is the the most notable beneficiary.

Redd is an ally of some of the state's top Democrats, including state Senate President Stephen Sweeney and south Jersey powerbroker George Norcross III.

Christie, a Republican, had a longstanding bipartisan alliance with Sweeney and Norcross, and the three often worked with Redd on initiatives to improve Camden.


ADVERTISING

inRead invented by Teads

Christie signed the bill just days after Redd was hired as CEO of the Rowan University/Rutgers-Camden Board of Governors -- a job that pays an annual salary of $275,000.

The new law would allow her to triple her pension if she stays in the job for three years, according to a report by Politico New Jersey.

Lawmakers also never specified how many other elected officials would benefit from the measure, though they said it would also affect state Assembly members James Beach, D-Camden, and Ralph Caputo, D-Essex.

The state Senate passed the bill 23-9 last month and the Assembly voted 41-19 to pass it on the final day of the lame-duck session. The 41 votes is the lowest number it needed to head to Christie's desk.

Christie signed the measure even though he has railed against past governors and elected officials for adding debt to New Jersey's ailing public-worker pensions system.

The state's pension liability is more than $90 billion -- among the largest in the nation, and Christie made it a big part of his final State of the State address last week.

Democratic leaders argue the cost to taxpayers is minor because the law affects a small number of officials in a pension system where more than 80,000 are enrolled.


The bill essentially changes a 2007 law that mandated all newly elected officials be placed in a less generous "defined contribution" pension plan similar to a (401)k.

Incumbent elected officials at the time were allowed to stay in the traditional pension system, as long as they kept the same office -- with the exception of lawmakers who moved between the state Senate and Assembly.

Thus, when Redd -- then a state senator and Camden councilwoman -- was elected mayor in 2010, the pension she had been collecting since 1990 was frozen at a little over $92,000.

The new law would grandfather in those who held office continuously since July 1, 2007, allowing them to re-enroll in the system as long as they have served at least 15 years in elected office with no break in time between switching positions.

It also would allow them to make their enrollment retroactive to the date they first took elected office.
http://www.courierpostonline.com/sto...gs/1034138001/

Quote:
Christie: Yes to pension bill, no to service dogs
Spoiler:
TRENTON - Gov. Chris Christie signed a bill Monday that will boost the pension of former Camden Mayor Dana Redd, but took no action on funding for a service-dog program at a jail in the city.

On his last full day in office, Christie approved a pension measure that had moved quickly through the Legislature after being introduced Dec. 11 in the lame-duck session.

Critics said the bill would allow Redd, who worked closely with Christie on turnaround efforts for Camden, to re-enroll in the state pension system.

More: Redd's new job: CEO of Rowan-Rutgers board

More: Camden's new mayor answers questions you asked

The bill was amended last month to apply to elected officials who left office within the past 30 days.

Redd ended her second term as mayor last month and is now CEO of the Rutgers-Rowan Joint Board of Governors at a salary of $275,000 per year.

Her predecessor, Kris Kolluri, had an annual salary of $118,501, according to state pension records.


In an interview Friday, Redd acknowledged controversy over the pension measure, but said it was intended to correct "an unintended flaw in a 2007 law.”

The 2007 law said newly elected or current office holders who switched offices would be bumped from the Public Employees Retirement System (PERS) to a less generous system.

Redd, a state senator from 2008 to 2010, triggered that provision when she became Camden's mayor eight years ago.

The new law allows Redd and an unknown number of other officials to enroll retroactively in the PERS as long as they have at least 15 years of continuous service. That would allow Redd, who also served on Camden's city council, to receive a pension based on a higher salary and more years of service.

"I am affected along with others," Redd said Friday. "But I was not personally involved in lobbying for or against this bill."

Camden County Jail inmates sit with puppies being trained
Camden County Jail inmates sit with puppies being trained as service dogs in a May 2017 photo. (Photo: Courier-Post file photo)

Christie did not sign a measure, overwhelmingly approved by the Legislature, that would have appropriated $150,000 for a service dog pilot program at Camden County Jail.

Under the 12-week program, inmates trained puppies to become companion dogs for veterans with service-related conditions like anxiety, depression and post-traumatic stress disorder.

Camden County provided $150,000 to fund the service-dog program last year.

Under the 12-week program, inmates trained puppies to become companion dogs for veterans with service-related conditions like anxiety, depression and post-traumatic stress disorder.

County spokesman Dan Keashen said the board was "disappointed in the veto" but believes the program "has an intrinsic value and impact on the inmates, dogs and veterans it serves."

He said the county will seek work with the Legislature and incoming Gov. Phil Murphy "to get this model program funded for the future."

"In the interim, we will continue to look for strategic partnerships or fund it through the corrections budget," Keashen said.

In a May 2017 interview, inmate Scott Ryan said the program “taught me to value life, helped me with my addiction. To take care of this animal, I need a clear mindset.”

State Sen. James Beach, D-Voorhees, and other South Jersey legislators had sponsored the measure seeking state funding.
https://burypensions.wordpress.com/2...ies-last-gift/

Quote:
Christie’s Last Gift
Spoiler:
Chris Christie spent part of his last full day as governor of New Jersey depleting the worst funded pension system in the nation for the benefit of political allies by signing S3620 after it swept through the lame duck legislative process in about a month. The bill appears to have been designed for former Camden Mayor Dana Redd, an ally of Christie and acolyte of South Jersey Democratic power broker George Norcross. On Friday, Redd was hired as the CEO of an obscure university governing board at a salary of $275,000.

$275,000 also happens to be the maximum salary that can used for pension purposes in 2018. Three years at that salary would develop an annual benefit of $155,000 ($275,000 x 31/55) whereas without this bill, Politico reports:


Had the law remained the same, she could have re-entered the pension system, but would have been knocked into the lowest tier. Her maximum pensionable salary in that case would have been around $127,000. She would not have been able to count the last eight years towards her pension.

That annual benefit would come to a mere $53,109 ($127,000 x 23/55).

$101,891 per year more which amounts to an additional lump sum value of about $1.5 million.


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  #76  
Old 01-16-2018, 02:40 PM
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FLORIDA
BROOKSVILLE POLICE

https://hernandosun.com/Brooksville-Police-Pension-Plan


Quote:
Review of the Brooksville Police Pension Plan
Spoiler:
Patrick Donlan with Foster and Foster, the actuary for the city of Brooksville police pension plan, presented a summary of the police department’s pension fund to the city council on Jan. 8, 2017.

He explained that that back in 1996, everyone was in the Florida Retirement system and then the state allowed cities/ municipalities to opt out of the Florida Retirement system. New employees went to the locally controlled retirement system and existing employees would stay in the Florida Retirement system if the municipality decided to maintain a local pension plan.

According to Donlan, there are still a couple city employees in the Florida Retirement System, but everyone else is in the local pension plan. Donlan explained that since the plan was created there has been a large funding credit balance from state funds.

In 2011 the funding credit balance was at $951,000 and in 2012 the city did not put in any money, lowering the credit balance to $715,000.

“That’s what was happening up until 2016,” said Donlan, inferring that the city chose to use the credit balance instead of paying the full contribution. Beginning in 2016, the credit balance was becoming depleted and the city started to contribute exactly what the real requirement was.

Vice Mayor Battista asked about the projection for 2018 and 2019 in terms of the city’s contribution. Donlan said for 2018 it would be about $278,000 and 2019 it would actually go down to $218,000.

He mentioned that the police fund has a 1 percent employee payroll contribution. It started out low, Donlan remarked because in the beginning there was a lot of money coming in from the state.

Donlan had a positive outlook over the performance of the pension plan. “Over the past 20 years if you would have… stayed in the Florida Retirement System, the city would have had to put in $2.9 million and instead they only had to put in $852,000,” he said.

“The pension plan has done very well for the city for the past 20 years,” Donlan remarked.

“Last year was a good year for investments, salary increases were lower than expected, we had more terminations than we expected, basically everything from the pension plan perspective that could go right, went right in 2017,” he continued.

Advocating for the pension plan, Donlan stated that the benefits are better with the city’s plan and the contribution is less in comparison to the state system.

According to the actuary, the pension plan has only one non-duty disability and less than $13,000 annually is paid to that one retiree. Additionally, two members are in the Deferred Retirement Option Plan (DROP).

The pension plan’s assumed rate of investment at 7.25 percent is conservative in comparison to the FRS assumed rate of 7.6 percent.


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Old 01-16-2018, 02:41 PM
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CALIFORNIA
https://calpensions.com/2018/01/16/b...nsion-reforms/

Quote:
Brown goes to court to finish pension reforms
Spoiler:
While his lawyers urge the state Supreme Court to allow pension cuts, Gov. Brown is taking his time to fill a vacant seat that would make his appointees a majority on the high court, four of the seven justices.

The vacancy created by the retirement last August of Justice Kathryn Werdegar, who gave notice in March, is being filled by different justices temporarily brought up from the appeals court to hear each case.

“It’s not something I want to do too quickly,” Brown said at a state budget news conference last week. “It’s very important now. I have appointed three. The fourth could be very decisive. So I want to understand how that decisivness should work.”

Democratic appointees will be a majority for the first time since 1986, when voters ousted three Brown appointees (Chief Justice Rose Bird, Cruz Reynoso, and Joseph Grodin) after a campaign focused on death penalty reservals, the Associated Press reported.

Brown said last week he has a “hunch” the courts will modify the “California rule,” so “when the next recession comes around the governors will have the option of considering pension cutbacks for the first time.”

As the news conference wrapped up, Gov. Brown was asked to explain, as a lawyer and former state attorney general, why he thinks the courts may allow future governors to consider pension cutbacks during a recession.

Part of his reply: “There’s already been several lower court opinions through the court of appeals where judges, both liberal and conservative, have taken a position that employees are entitled to a reasonable pension but not entitled to any remuneration they can imagine.”

The Supreme Court has agreed to hear an appeal of a ruling that employees are entitled to a “reasonable” pension, not the pension offered at hire. It was written by an appeals court justice, James Richman, appointed by former Republican Gov. Arnold Schwarzenegger.

Joining in the unanimous ruling by a three-justice panel were two Brown appointees, Marla Miller and J. Anthony Kline, Brown’s legal affairs secretary from 1975 to 1980 during his first two terms as governor.

The Supreme Court also has agreed to hear a similar appeals court ruling that cited Richman in a firefighters challenge to a different minor part of Brown’s pension reform — the purchase of “airtime” to boost pensions rather than county system “anti-spiking” provisions.

This ruling was written by Justice Martin Jenkins, a Schwarzenegger appointee, and concurred in by Peter Siggins, a Schwarzenegger appointee, and Stuart Pollak, appointed by former Democratic Gov. Gray Davis.

Last week, a third appeals court panel issued a ruling in a three-county consolidation of anti-spiking cases that, “respectfully” parting ways with Richman and his colleagues, said pensions can be cut but only under tight limits if there is no new offsetting benefit.

This ruling was written by Justice Timothy Reardon, an appointee of former Republican Gov. George Deukmejian, and concurred in by Ignazio Ruvolo, appointed by Schwarzenegger, and Maria Rivera, a Davis appointee.

Whether judges should rule on their own pensions recently has been an issue in Arizona and Rhode Island. But recusal has never been much of an issue in California, where judges have the most generous CalPERS formula because they tend to enter the system at a later age.



The California rule is a series of state court decisions believed to mean the pension promised at hire, unlike pay, becomes a “vested” right. It’s protected by contract law and can’t be cut, unless offset by a comparable new benefit that could erase any cost savings.

The rule was cited as courts overturned three measures approved by voters: A Pacific Grove limit on contributions to CalPERS in 2010; a San Francisco end to supplemental pension payments in 2011, and a San Jose option for current workers in 2012.

Presumably because of the rule, key parts of a pension reform Brown pushed through the Legislature six years ago, which extended retirement ages and capped pensions, were limited to new hires who have no vested right to the benefits cut to reduce costs.

Minor parts of the reform covering employees hired before the reform drew union lawsuits, contending vested rights were violated by “anti-spiking” provisions for county systems and a ban on “airtime,” the purchase of service time to boost pensions.

Brown intervened when his legal secretary, replacing the state attorney general, filed a brief in November in the airtime suit. His attorney also gave an oral brief last month in the consolidated county cases.

Meanwhile, the Brown reform provides little immediate relief for struggling pension systems. Significant savings could take decades because key parts only apply to employees hired after the reform took effect on Jan. 1, 2013.

The California Public Employees Retirement System never recovered from huge investment losses a decade ago. With roughly only 68 percent of the projected assets needed to pay future pensions, CalPERS fears another major market plunge could be crippling.

CalPERS expects the Public Employees Pension Reform Act to save $29 billon to $38 billion over the next 30 years, not a major dent in a debt or unfunded liability that as of June 30, 2016, was $138.6 billion over the same period.

A third of CalPERS state and local government workers, more than 285,000, are now under the reform, said Amy Morgan, CalPERS spokeswoman. The state CalPERS contribution this fiscal year is expected to be reduced $48 milllion by new hires since June 2016.

The state budget proposed by Brown last week (see chart) expects to contribute $6.2 billion to CalPERS in the new fiscal year beginning in July. A series of four rate increases that began in 2012 for employers, but not employees, is scheduled to continue until 2024.

The budget summary lists Brown’s retirement accomplishments: the pension reform, a long-delayed plan to more than double the California State Teachers Retirement System employer rates, and an investment fund to help pay for state worker retiree health care.

Retiree health care, one of state government’s fastest-growing costs, has been only pay-as-you-go. The debt or unfunded liability for state worker retiree health care last year was $72 billion, more than the state worker pension debt of $59.5 billion in 2016.

In the past the Legislative Analyst’s Office and others have suggested retiree health care may not have the same protection as pensions. Now employee contributions to an investment fund, as bargained with unions, may ensure retiree health care is vested.

If the high court softens or eliminates the Californa rule, the Brown legislation six years ago that drew the union legal challenges will, intentionally or not, add to the governor’s list of retirement reforms.

In his proposed budget at the end of his first two terms as govenor in 1982, Brown called for lower pensions for new hires, arguing that state workers could retire at age 62 and receive more from CalPERS and Social Security than their final salary.

That reform never happened.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Calpensions.com. Posted 16 Jan 18
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Old 01-16-2018, 02:42 PM
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SANTA MONICA, CALIFORNIA

http://www.surfsantamonica.com/ssm_s...0_Percent.html

Quote:
City of Santa Monica's Unfunded Pension Costs Jump 20 Percent

Spoiler:
January 16, 2018 – Unfunded pension liabilities for the City of Santa Monica jumped 20 percent in the last fiscal year, rising from $387 million to $461 million, according to a new report.

The rise is “primarily due to the actual returns on the investment portfolio being less than CalPERS’ (the California Public Employees' Retirement System) projected returns,” said Gigi Decavalles-Hughes, the City’s finance director.

The 20 percent leap in unfunded pension costs is detailed in the City’s newest Comprehensive Annual Financial Report, conducted by independent auditors. It goes to the City’s Audit Subcommittee tonight at a 6 p.m. meeting in the Ken Edwards Center, 1527 4th Street, Room 104.

The report covers the fiscal year that ended June 30.

The looming bill is one of the City’s biggest fiscal headaches. It is paying the debt down over 30 years, and last year stitched together a $45 million one-time payment to CalPERS to bring its liability down.

The extra money brought to $76.3 million the amount City has paid down, a move it said at the time would decrease its unfunded liability by 11 percent.

Decavalles-Hughes, however, said the impact of the extra $45 million won’t show up until the next annual financial report ("City Council Approves Record Payment Toward Santa Monica's Unfunded Employee Pensions," June 15, 2017).

However, she said “the combination of the additional pay down and a better than anticipated experience level resulting from City employees retiring later is contributing to a 1/3 decrease in the projected growth of pension costs over the next 5 years.”

The $461 million in unfunded liabilities represents the gap between the City government’s total employee pension liability of about $1.62 billion and plan assets of about $1.16 billion.

The City’s various pension plans are approximately 72 percent funded, she said.

Santa Monica City has among the highest pension costs per capita in the state ("Santa Monica City’s Pension Debt Ranked Among Highest in California," February 22, 2017).

But all of California’s public sector has been scrambling to deal with gaping holes in pension funding.

Soaring public-pension costs came into the limelight after a 2012 change in accounting practices required U.S. governments to disclose unfunded liabilities on their balance sheets.

Much of the problem stems from generous pension agreements made as early as 1999, when the Stock Market was booming, and kept governments locked when the market crashed and beyond.

Last year, CalPERS lowed its anticipated return from investments to 7 percent, from 7.5 percent. The move shifted more of the cost to governments.

For Santa Monica and others in California’s public sector, the unfunded liability debt comes as many predict a recession and red ink.

Santa Monica’s 2017-2019 biennial budget totals $1.57 billion. But due to an increase in the amount California governments must contribute for employee pensions, the City is projecting an $18 million deficit for 2021-2022 -- $13 million of it tied to pensions ("The Wolf is Here,” Santa Monica City Manager Warns as Budget Woes Mount," May 25, 2017).

In recent years, the City has required employees to chip in more for their pensions and taken cost-cutting steps.
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Old 01-17-2018, 06:10 PM
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KENTUCKY

https://www.courier-journal.com/stor...medium=twitter

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Gov. Matt Bevin's Kentucky budget proposal includes surprise on teacher pensions
Spoiler:
FRANKFORT, Ky. — The fact sheet distributed by Gov. Matt Bevin's office on Tuesday night emphasizes that Gov. Matt Bevin's proposed budget "fully funds" the pension costs for state employees and the request for funding by Teachers' Retirement System.

The fact sheet says Bevin's budget provides just over $1 billion in state General Fund dollars over the two-year budget period to the state employee retirement plans and $2.3 billion over two years for the teacher's system.

The combined $3.3 billion amounts to nearly 15 percent of General Fund revenues anticipated over the next two years.

The fact sheet says that for the first time in a decade, this budget would fully fund the number of dollars requested by the actuary of the Teachers' Retirement System.

But the budget does not call for funding the teachers' system under a new funding approach favored by the Bevin administration that would have required hundreds of millions of additional dollars for the teachers' system, said Jason Bailey, executive director of the Kentucky Center for Economic Policy.

Bailey said he was surprised that Bevin's budget bill did not include this new funding approach — called "level dollar funding" — which would require massive additional outlays for the teachers' plan starting next year.

He also said he was pleased because that funding method would give more than needed to the teacher's system at the expense of spending on education and other parts of the state budget.

"It's still a concern because the administration and Republican leaders have said level dollar funding must be part of the pension reform bill, which hasn't been filed yet," Bailey said. "The question is what happens to the budget once we see what's in that bill."


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Old 01-17-2018, 06:53 PM
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http://www.pionline.com/article/2018...-8211-wilshire

Quote:
City and county pension plans’ funding dips to 67% in fiscal year 2016 – Wilshire

Spoiler:
The aggregate funding ratio of U.S. city and county pension plans fell to 67% in fiscal year 2016, down from 70% in 2015, as liabilities outpaced assets, said a report from Wilshire Consulting.

Aggregate liabilities rose 4.9% in fiscal year 2016 to $697.3 billion, while assets declined 0.4% to $464 billion.

"Despite relatively strong performance for U.S. stocks, institutional investors found their total portfolio performance dampened by a stronger U.S. dollar, hampering the performance of their non-dollar assets, as well as the United Kingdom's vote to leave the European Union in June 2016," said Ned McGuire, managing director and a member of Wilshire's pension risk solutions group, in a news release on the results. "With that, we found that 97% of the plans in this year's study have (a) market value of assets less than pension liabilities, or are underfunded" compared to 94% of plans in 2015.

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As of fiscal-year end 2016, the average asset allocation for city and county pension funds studied by Wilshire was 29.9% domestic equity, 22.6% domestic fixed income, 19.5% non-U.S. equity, 12.5% other, 8.6% real estate, 5% private equity and 1.9% non-U.S. fixed income.

Over the past decade, city and county pension funds' average allocation to U.S. equity and U.S. fixed income decreased by 14.8 percentage points and 4.8 percentage pints, respectively, while the average allocation to non-U.S. equity and non-U.S. fixed income rose 4.9 percentage points and 50 basis points, respectively. Over the same period, the allocations to real estate and private equity each rose 3.3 percentage points, while other assets (cash and cash equivalents, commodities, hedge funds and other absolute-return strategies) increased 7.6 percentage points.

Reason for the changes, the report cited, were plan executives' desires to reduce home-market bias, increase asset diversification and increase exposure to more leveraged strategies to meet return targets.

Data were analyzed for 107 city and county retirement systems. Of the 107, 106 reported actuarial data on or after June 30, 2016, and the remaining fund reported data on April 30, 2016.


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