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  #1041  
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NEW JERSEY

https://www.bloomberg.com/news/artic...-lawmaker-says

Quote:
N.J. Pension Change May Skip Governor, Go to Voters, Lawmaker Says
By Elise Young
May 17, 2019, 2:00 PM EDT
Highest-ranking legislator calls union protesters ‘Trumpian’
Workers say Senate leader’s plan would punish new employees
Spoiler:
New Jersey’s highest-ranking state lawmaker said voters may decide on his pensions overhaul, a day after hecklers forced him to end a public meeting on a bills package aimed at rescuing the worker retirement system from insolvency.

Senate President Steve Sweeney on Thursday introduced a set of 27 bills that includes the introduction of 401(k)-style accounts for new hires and a shift from top-tier health-insurance plans that will be highly taxed starting in 2022. The bills, he says, would rescue one of the nation’s lowest-funded pension systems, improve overall fiscal health and boost New Jersey’s credit rating. The workers say new hires would bear an unfair burden as a result.




Governor Phil Murphy, a Democrat and retired Goldman Sachs Group Inc. senior director, is reluctant to change pensions for unions whose endorsements were key to his November 2017 election. Murphy in March negotiated 2 percent annual pay raises for Communications Workers of America New Jersey’s 32,000 members in a four-year contract that included health-care cuts. The union says its insurance negotiations save the state $2 billion a year.


Sweeney’s proposals have support from Democratic and Republican lawmakers, chambers of commerce, finance experts and local and county governments. He expects votes on at least some of the legislation in June, as lawmakers hash out the governor’s $38.6 billion spending plan that is due July 1. If the bills fail, Sweeney said, he’ll ask voters in November to make the changes via constitutional amendment.

“For the first time in my lifetime, we will cut property taxes for real,” said Sweeney, who was instrumental to Republican Governor Chris Christie’s 2010 law that compelled workers to contribute more for benefits and retire at an older age. The senator resisted a second round of cuts when Christie backtracked on a promise to raise pension contributions.

In New Jersey, 65% of residents want public workers to pay more toward their pensions, and 64% said their health benefits should be more in line with private employees’, according to a Rutgers-Eagleton poll of 1,203 adults released April 10.

Almost 80% of those surveyed said property taxes, the nation’s highest, were unfair. The poll, conducted in conjunction with the New Jersey Business and Industry Association, which supports Sweeney’s plan, had a 3.7 percentage point margin of error.

Sweeney’s own plan came under attack on Thursday at a New Brunswick appearance to discuss the bills. He left after 20 minutes of heckling by audience members, some wearing T-shirts identifying them as members of the CWA, the state’s largest public-employees union. A loudspeaker blasted Twisted Sister’s 1984 anthem “We’re Not Gonna Take It.”


Sweeney, in a phone interview today, said opponents used “Trumpian tactics” to quash debate. “This is a tactic to scare people away, to silence people,” he said. “Sorry, guys. I’m not going away. I’m not afraid of you.”

Seth Hahn, the CWA chapter’s political director, said the audience included trades-union members -- allies of Sweeney, a career ironworker -- and some tried to intimidate his own members. He said the meeting offered no opportunity to speak, and questions had to be written and submitted.

‘They’ve never met with us,” Hahn said in an interview. “They’ve never allowed us to present our view. They’re actively trying to suppress dialogue.”

One of the union’s chief criticisms is the retirement-savings proposal, which would channel some gains back to the state for pension payments. Hahn said that unfairly targets new hires who would be enrolled in the plan.

New Jersey’s pension system, with $76.2 billion in assets, has at least $100 billion in unfunded obligations.
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  #1042  
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KENTUCKY

https://www.huffpost.com/entry/kentu...b00e035b8f448d

Quote:
They Helped Lead Kentucky’s Teacher Protests. Now They’re Running For Office.
Battered by budget cuts and pension changes, some Kentucky educators hope to change the system from within.
Spoiler:
A year after a record number of Kentucky teachers ran for state Legislature and mass protests shut down schools across the state, two educators are setting their sights on more powerful statewide offices.

Jacqueline Coleman, a high school assistant principal, and Kelsey Hayes Coots, a middle school teacher, both participated in last spring’s protests, during which Kentucky teachers swarmed the state Capitol to demonstrate against years of school budget cuts and proposed changes to their pension plans.

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Neither has held office, but now both will appear on the ballot in Tuesday’s Democratic primary ― Coleman as the running mate of gubernatorial candidate Andy Beshear, Kentucky’s current attorney general, and Hayes Coots as a candidate for state auditor.

Kentucky was one of several states that experienced widespread teacher protests last spring. Offshoots of those demonstrations have continued into 2019, a statewide election year in which Gov. Matt Bevin (R) ― one of the chief targets of teachers’ ire ― is seeking reelection.

The presence of two teachers on the ballot, even in a little-watched off-year election, will test the ongoing strength of the “Red for Ed” movement that grew out of last year’s protests, especially as teachers’ unions and public education advocates fight to reverse decades of budget cuts that have strangled school systems nationwide.

It could also make education a major issue in Democrats’ efforts to unseat an unpopular Republican governor. Critics have painted Bevin as one of the nation’s most ardent opponents of public education and teachers’ efforts to stave off even more cuts.

“There is a war on public education in Kentucky, and it’s going to take educators rising up [to stop it],” Coleman told HuffPost this week. “And if our government won’t listen to us, invite us in and give us a seat at the table. We’ve just decided that we’re going to run and we’re going to become that government.”

‘Our Leaders Are Working To Gut Education’
Both Coleman and Hayes Coots cited the 2018 protests as their inspiration for seeking office this year.

Hayes Coots, who teaches middle school in Louisville, helped organize the demonstrations as part of a grassroots organization that originated on Facebook and helped persuade teachers to shut down schools in April 2018. For days, those teachers swarmed the state Capitol in Frankfort to protest further rounds of public education budget cuts and reforms to the public pension system.

The ordeal, in which the GOP-led Legislature attached pension reforms to a piece of legislation dealing with public sewage system regulations, gave Hayes Coots “a front-row seat into the broken inner workings of the Legislature,” she told HuffPost.

“Our leaders are working to gut public education, trample workers’ rights, roll back our gains in health care, and are doing everything they can to institute a two-tiered, 48th-in-everything, win-at-all-costs, every-man-for-himself version of Kentucky,” Hayes Coots said. “And I reject that.”

Coleman, meanwhile, ran for office in 2014, four years before joining the protests in Frankfort last April. The daughter of a former state legislator, she ultimately fell short in her own bid to win a state legislative race, returning to school and her job coaching girls’ basketball. She had no plans to pursue another office until Beshear ― who as the attorney general successfully sued to block the pension reform law ― tapped her to run for lieutenant governor. It was an opportunity, she said, to ensure that public education played a major role in the governor’s race.

I think that we are learning how to channel that frustration.
Jacqueline Coleman
“Fully funding public education has become kind of like a buzzword, but it has real meaning and there are real kids behind that issue,” Coleman said. “And I’ve seen exactly how it affects a school, and a classroom. And I don’t know that the greater population truly understands how detrimental budget cuts are to public education year after year after year.”

The Beshear-Coleman ticket is currently locked in a three-way race for the Democratic nomination against former state auditor Adam Edelen and state Rep. Rocky Adkins. Tuesday’s winner will likely face Bevin, who will enter the general election as one of the most unpopular governors in the country, according to public polls. Bevin’s approval ratings ― which are low even among Republicans ― cratered after the teacher protests a year ago, especially after he insinuated that teachers’ choice to close schools would result in instances of child abuse across Kentucky.

He later apologized, but when smaller groups of teachers closed schools again this year, Bevin’s administration took an even more aggressive response, demanding that school districts turn over the names of teachers who had used sick days to return to Frankfort to protest another round of proposed pension changes.

‘We Can’t Afford To Lose A Single Dollar’
Bevin is not solely responsible for Kentucky’s pension crisis or its crunched education budgets, which have undergone repeated rounds of spending cuts over the last two decades. But his aggressive stance toward teachers and his pursuit of an arch-conservative agenda, which has included signing legislation legalizing charter schools in Kentucky, has bolstered teachers’ opposition to him. And Democrats hope it has made public education a major issue in the state.

“I think that we are learning how to channel that frustration,” Coleman said. “It’s one thing to go to Frankfort every year to rally. But I think we all realize now, ‘If I don’t want to keep doing this every year, then I probably should make sure that I’m voting for the best pro-public education candidates.’ The way that we can really make a difference as a voting bloc is obviously on Election Day.”

Hayes Coots, meanwhile, is also facing a crowded primary race in which public education and the state’s pension crisis are major issues. Both have factored into her campaign; as auditor, Hayes Coots said she would focus on bringing more transparency to a state government that a Harvard study recently ranked as one of the nation’s most corrupt.

“In a revenue-strapped state, we can’t afford to lose even a single dollar to fraud or corruption,” Hayes Coots said. “One dollar that is wasted to inefficiency or abuse is one dollar that doesn’t go to the 125 kids that sit in my classroom daily and kids that are like them across the commonwealth.”

Though neither has held office, both said their experience as educators has put them on the front lines of Kentucky’s most pressing problems.

“Every challenge we face in this commonwealth, teachers face in their classrooms,” Coleman said. “We cannot talk about any solution to any of the challenges that we face if we don’t first talk about public education, because it’s the genesis of every solution.”

The energy teacher protests generated in 2018 didn’t necessarily translate to the ballot box: Of the record 51 teachers who ran for office last year, 37 lost. But the 14 winners included a teacher who, running as a Republican, knocked off one of the highest-ranking lawmakers in the state House. And on Tuesday, Hayes Coots and Coleman could earn the chance to win even bigger seats.

“Public educators need to be at the table to protect public education,” Hayes Coots said. “I’m proud to prove that educators can move to the public square, gain broad support and run competitive and professional campaigns. If elected, I’ll show that we can win too.”
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  #1043  
Old Yesterday, 09:38 PM
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CHICAGO, ILLINOIS

https://www.chicagobusiness.com/ligh...ng-communities
Quote:
Dear Ms. Lightfoot: Reform pensions so we can invest in struggling communities
Turning the tide on spending priorities will mean embracing painful, but necessary, change.

Spoiler:
Lori Lightfoot does things differently. That’s a good thing for Chicago.

The city needs a new rhythm—it needs to get shaken out of the old way of doing things, because the house of cards holding the city together now was set up to benefit the few at the expense of the many.

That’s something Lightfoot knows. The new mayor spoke extensively about the gap in prosperity present in this city during her mayoral campaign.


Job creation is lagging in Chicago when compared to similar metro areas, with Chicago’s metro area experiencing the slowest economic growth since the end of the recession. Unemployed and impoverished Chicagoans often lack the skills to fill the jobs being created in this city. We often boast that Chicago is one of the most educated cities in America, but when a city’s population has a high percentage of college-educated workers, those without degrees or the right training face hard lives. Poor neighborhoods have been made disproportionately worse off because of high property taxes and lagging home price appreciations.

Why? Unfortunately, city government can’t afford to invest more to help fix problems such as crime and educational breakdown in struggling areas. It’s too saddled with debt, primarily related to pensions.

ADVERTISING

Recent tax increases in Chicago included $543 million in property taxes, $174 million in water and sewer utility taxes and $147 million in 911 surcharges. All of the money collected from Chicago's property tax levy—$1.2 billion in 2017—goes to pensions and debt service, often at the expense of poorer neighborhoods.

That will continue during the next 10 years as $21 billion of the Chicago budget, including the entire property tax levy, is expected to go toward pensions and debt service.

You can tell a lot about a city’s priorities by examining how government leaders spend tax dollars. Right now, Chicago unfairly prioritizes public-employee pensions above all else.

That doesn’t have to be the case. Turning the tide on spending priorities will mean embracing painful, but necessary, reform. Chicago’s pensions crisis is identical to Illinois’, and both the city’s and the state’s fates depend upon an amendment to the state constitution. That means the mayor must work with state lawmakers to put on the ballot a measure that protects earned pension benefits, while allowing for changes in future benefit accruals. Even outgoing Mayor Rahm Emanuel endorsed a constitutional amendment to reform pensions in 2018, recognizing the impossible challenge of burdens such as annual 3 percent benefit increases that are insulated from economic realities.

Lightfoot took office on a mission to take down the machine. When it comes to the city’s finances, the biggest blockade to investments that will improve upward mobility for residents is the pension problem. She can best lead a new Chicago if she helps stop this problem from grinding through city revenues.

Orphe Divounguy is chief economist for the nonpartisan Illinois Policy Institute, a Chicago-based research organization.


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BENEFIT CUTS

https://crr.bc.edu/briefs/do-benefit...yees-to-leave/

Quote:
Do Benefit Cuts Encourage Public Employees to Leave?

byLaura D. QuinbyandGal Wettstein
SLP#65

The brief’s key findings are:

Financially troubled state and local pensions may need to cut benefits for current workers, but such cuts could also induce some workers to leave.

To assess this human resource impact, the analysis looks at a 2005 reform in Rhode Island that reduced benefits for some current workers.

The results show that the affected employees were significantly more likely to leave the government over the next four years.

Although the direct cost of hiring new workers was relatively small, governments should consider how losing skilled workers affects the quality of public services.
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https://www.forbes.com/sites/johnmau.../#4765d74437fc

Quote:
The Coming Pension Crisis Is So Big That It's A Problem For Everyone

Spoiler:
A decade ago I pointed out that public pension funds were $2 trillion underfunded and getting worse. More than one person told me that couldn’t be right.

They were correct: It was actually much worse. It has gotten to $2 trillion and much worse in just a few years.

Note that we are talking here about a specific kind of pension: defined benefit plans. They are usually sponsored by state and local governments, labor unions, and a number of private businesses.

Many sponsors haven’t set aside the assets needed to pay the benefits they’ve promised to current and future retirees. They can delay the inevitable for a long time but not forever. And “forever” is just around the corner.


The numbers are large enough to make this a problem for everyone, even those without affected pensions. The underfunded pensions could also be one of the triggers to the unprecedented credit crisis I see coming in the next five years.

The problem is “solvable”… but the solutions will be problems in themselves.

The Funding Gap Is Actually Much Bigger than Reported

A defined benefit pension plan knows it owes a certain number of retirees certain monthly benefits for life. Their lifespans are quite predictable when the pool is large enough.

From that, it’s simple math to calculate how much money the plan should have right now in order to pay those benefits when they are due. But then the assumptions start.

The plan must presume a future rate of return on the invested portfolio, an inflation rate, and in some cases future health care costs (medical benefits are part of many plans).

So, when we say a plan is “fully funded,” it may not be so if the assumptions are wrong.

Almost all public pension funds assume investment returns somewhere around 7% (and some as high as 8%+). That’s highly unlikely due to the debt we’ve accumulated, and debt is a drag on future growth.

If you make more realistic assumptions on future returns the unfunded liability becomes $6 trillion according to the American Legislative Exchange Council.

A more conservative and realistic approach would force the state and local governments to fund those pension plans at a much higher level. They have only two ways to do that: either raise taxes or reduce services.

That may be the reason policymakers have turned a blind eye to this.

Pension Fund Underfunding Is Also a Local Problem

Another problem is that the taxpayers who might have to cover these amounts are mobile. They can move to other states with lower tax burdens.

And to make it even more interesting, the beneficiaries often no longer live in the states that pay them. Retired public employees from the Northeast might live in Florida now, for instance. They can’t even vote for the people who govern their incomes.

The broader point: As with the federal debt, some portion of this unfunded pension debt is going to get liquidated in some way. Any way we do it will hurt either the pensioners or taxpayers.

The Future Looks Grim

The most common solution to this problem so far has been cutting services in the hope no one notices.

It is happening nationwide but California takes the lead, thanks to its massive pension debt. This is from a recent Brookings Institution note.

Pension and health-benefit costs are bending education finances in California to their will. The sheer magnitude of the rising costs is staggering. Large numbers of school board officials who participated in our survey indicate that the rising costs are meaningfully affecting educational services. For example, many report making cost-saving changes to district budgets that include deferred maintenance, larger class sizes, and fewer enrichment opportunities for students in response to rising pension and health benefit costs.

So in effect, today’s students are paying to keep benefits flowing to retired teachers and administrators.

Meanwhile, the Berkeley city council is taking criticism for prioritizing pension payments ahead of public works projects.

Voters approved bond issues supposedly dedicated to infrastructure but the city is apparently not doing the work.

Nor is it just California.

Bank of America analysts found an inverse relationship between infrastructure investment and pension fund contributions. Each additional $1 billion in plan contributions takes away about $2.5 billion from state and local government investment.

We have multiple parties fighting over pieces of the same pie, all hoping that Uncle Sam will step in and save them. Uncle Sam may well do it, too, but it won’t remove the pain.

It will just redistribute the burden, perhaps more widely, but the aggregate amount won’t change.

I see this leading to some kind of Japan-like deflationary recession or debt monetization. If we’re lucky, it will be mild and long. It won’t be fun but the alternatives would be worse.
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LOUISIANA

https://www.theadvocate.com/baton_ro...fc1c4a069.html

Quote:
Our Views: Pension debts crowding out better school investments

Spoiler:
The situation in a nutshell: “Teachers are frustrated over low and stagnant pay. But labor costs for districts are going up rapidly due to pension and health-benefit costs. Because these benefit cost increases do not correspond to rising benefits for current teachers — they reflect legacy costs — they are creating a larger and larger wedge between what teachers today take home in terms of wages and benefits, and school districts’ personnel costs.”

That is in California, but it fits in Louisiana just as well.

The report from Cory Koedel, a University of Missouri economist, comes from the Brookings Institution think tank, but its lessons are true beyond the Golden State to the Bayou State, and a lot of others.

The rising costs of health care, including pharmaceuticals but hospitals and doctors as well, are known to businesses public and private. Nothing seems to change that.

The problems of massive long-term pension debts, called unfunded accrued liabilities, are also chronic in many states. As in Louisiana, they arise in part because of very bad choices.

Politicians in our Legislature, as well as in many others, were loath to raise taxes or cut other spending to fund fully the future obligations for pension systems. So they avoided the political trouble, and made decisions on the basis of short-term thinking.

Over time, Louisiana has made a wiser choice to pay these down with big annual contributions from the state budget. Those payments will squeeze the budget for decades to come, but high rates of payment by schools — as well as universities, paying in for part of the UAL — also squeeze local districts budgets.

What Koedel writes about California is also true of Louisiana: Not only are teachers’ compensation options limited, but this problem can get worse.

Our Views: A new retirement plan for a mobile generation
That is because, in years of rising stock markets, the assumptions about future returns from pension systems have been rosy — as Koedel writes, far rosier than is realistic. Louisiana’s legislative auditor has pointed out that problem in Louisiana, but the administration of Gov. John Bel Edwards has failed to grapple with the difficulties.

The governor did not back a responsible effort by LASERS, the state employee system, to change to a hybrid type of pension that would be friendlier to new hires. Nor has the auditor’s call for more responsible forecasts of retirement systems' returns received any help from Edwards.


It’s troubling that this massive debt problem, for LASERS and teacher systems, has not drawn much effort from Edwards’ team — or legislators. That’s one of the big unfulfilled agenda items for the next governor, either Edwards or one of his challengers in the fall elections.


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