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  #1041  
Old 05-20-2019, 06:00 PM
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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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Old 05-20-2019, 06:02 PM
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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 05-20-2019, 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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Old 05-21-2019, 09:36 AM
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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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Old 05-21-2019, 11:35 AM
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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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Old 05-21-2019, 12:06 PM
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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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Old 05-22-2019, 08:44 PM
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MARYLAND
ESG
DIVESTMENT

https://www.carrollcountytimes.com/n...517-story.html

Quote:
Shoemaker urges Franchot to 'quit playing politics' in response to Alabama abortion law

Spoiler:
After Maryland Comptroller Peter Franchot asked officials to review whether the state’s pension system has investments in Alabama, Carroll County Del. Haven Shoemaker sent a letter to him decrying the move.

The letter from Shoemaker’s office urged Franchot to “quit playing partisan politics over the sovereign state of Alabama’s recent actions to abortion.” Franchot had made his announcement after Alabama enacted a law that bans almost all abortions.


Shoemaker said in his letter to Franchot that he is “dismayed that you have decided to opine on a matter that rests solely within the province of Alabama’s elected officials.”

In the letter, Shoemaker went to compare Franchot’s actions to those of Maryland Attorney General Brian Frosh.

In light of abortion law, Franchot questions whether Maryland has investments in Alabama
“You may recall that I have taken Attorney General Brian Frosh to task for doing this same sort of thing regarding this penchant for wasting tax dollars on filing frivolous lawsuits against President Trump” Shoemaker said in the letter. “I am disappointed that you are endeavoring to take a page from this same playbook, ostensibly for partisan political purposes.”

Franchot posted on Facebook Thursday that he has “no direct control over the behavior of Alabama lawmakers would thrust their religious interpretations upon those they are paid to represent.”

Franchot said he’s asking the pension system’s managers to review any assets that the state has in Alabama and whether it works with any investment managers or brokers that have offices there.

He also said he will ask the retirement system not to send any employees or trustees to Alabama for any meetings or conferences.

At the end of the Shoemaker’s letter, he suggested that Franchot shift his focus.

Haven Shoemaker letter to Peter Franchot
“In essence, what you should concentrate on is investigating Maryland’s pension funds where it can earn the greatest return,” Shoemaker said in the letter.

Regardless of the letter, Franchot still has not frayed from his original mindset.

“Comptroller Franchot regards Delegate Shoemaker as a nice guy,” Alan Brody, press secretary to the comptroller, said in an email Friday afternoon. “However, as vice chairman of the State Retirement and Pension System Board of Trustees, the Comptroller is well within his bounds to seek more information about the state’s investments with Alabama-based entities. Furthermore, he will continue to be a fierce advocate for women’s rights that are under assault in Alabama and other states.”

Alabama is the latest state to pass laws further restricting access to abortions. Bills restricting abortions have also been passed or are moving forward in Missouri, Louisiana, Utah, Wisconsin, Ohio and Georgia, among others.

Many believe that the Alabama law, or one of the laws from another state, will make its way to the Supreme Court. Supporters hope Roe v. Wade could be overturned.


https://www.ai-cio.com/news/two-stat...-abortion-ban/
Quote:
Two States Assail Alabama Following Abortion Ban
Maryland comptroller Franchot says pension money will not be used to ‘subsidize extremism.’
Spoiler:
Just after Alabama approved one of the most controversial anti-abortion laws in the country, state officials from Maryland and Colorado took consequential actions against the state in an effort to refute the bill.
Maryland Comptroller Peter Franchot ordered state officials to review Maryland’s pension portfolio for any investments that are affiliated with the state of Alabama, and subsequently divest from them.
Franchot said that Alabama lawmakers “thrust their religious interpretations” into the legal system, and chose to “weaponize their system of laws to punish women who are already experiencing great vulnerability.”
“However, I can work to ensure that Maryland’s taxpayer dollars are not used to subsidize extremism,” he continued in a Facebook post. The Democratic legislator asserted that the state would divest from all Alabama-based companies, including investment managers, brokers, and consultants that are headquartered or have regional offices in the state.
In addition, he requested that employees and trustees of the pension refrain from traveling to the state “under any circumstances—be it for professional conferences or meetings with investment partners.”
Colorado Secretary of State Jena Griswold also called for a similar travel boycott of the state, saying “Until the laws of Alabama allow for safe and legal access to health care for women, we call on the Election Center to move the location of its trainings from Alabama. I will not authorize the spending of state resources on travel to Alabama for this training or any other purpose.”
Alabama Gov. Kay Ivey received nationwide criticism for her passing of legislation that bans abortion at every stage of pregnancy, and criminalized the procedure for medical professionals with a penalty of up to 99 years in prison. The move banned abortion in most circumstances—even when conception was situated through rape or incest—but allows for abortion to occur when the pregnancy seriously endangers a mother’s well-being.
Franchot implored that he hopes his actions will influence the thinking of Alabama lawmakers and other states who “may be contemplating abusing public laws for theocratic gratification.”
Representatives from Gov. Ivey and Comptroller Franchot’s offices did not respond to calls by press time.
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Old 05-22-2019, 08:45 PM
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NEW MEXICO
https://reason.org/commentary/new-me...ore-is-needed/
Quote:
New Mexico Takes Steps to Reform Teacher Pensions, But More Is Needed
These recent positive steps still fall short of meaningfully addressing NMERB’s longer-term solvency concerns.
Spoiler:
In April, New Mexico Gov. Michelle Lujan Grisham signed a bill that, among other things, grants the New Mexico Educational Retirement Board (NMERB) a permanent contribution boost and changes the benefit accrual formula for active employees. While commendable, these positive steps fall short of meaningfully addressing NMERB’s longer-term solvency concerns.

New Mexico legislators just passed House Bill 360 —originally mandating state and local governments increase their contributions into NMERB by 300 basis points— that in its final version mandates government employers to increase NMERB contributions from 13.9 percent to 14.15 percent (up by 25 basis points) effective July 1, 2019.

“It was a collaborative process… [HB 360] Is a major step forward in ensuring the long-term fiscal strength of the educational retirement fund,” said Mary Lou Cameron, MMERB’s chair. According to pension officials the original bill would have helped the 52 percent-funded NMERB (using GASB standards) achieve full funding in 30 years. Per the bill’s amended language, however, NMERB would be expected to reach full funding in 44 years instead.

In addition, the new pension policy would initiate a tiered retirement multiplier for new public employees to help smooth out pension benefit accruals and nudge them toward longer careers. Defined Benefit (DB) pensions for public workers are generally calculated as:

Benefit multiplier* years of service* final average salary.

Under a single multiplier (NMERB currently uses 2.35 percent) most of the benefits accrue near the end of a public career. A tiered multiplier, however, assumes a gradual increase in the rate of benefit accruals over time, encouraging some to postpone their retirements until reaching the next or the maximum multiplier threshold (see graph below).

Table 1: New Tiered Benefit Multiplier

Years of Service Multiplier
10 or less 1.35%
10.25 – 20 2.35%
20.25 – 30 3.35%
30.25 plus 2.40%


Jan Goodwin, NMERB’s executive director, thinks this change will slow down the accrual rate of promised pension benefits for future educational workers until they surpass 20 years of service. By extension, this could also potentially reduce future actuarial liabilities.

Legislators also implemented a measure to require all retired members who have returned to employment—as well as their employers—to start chipping into the NMERB fund as would be required if the member were non-retired.

Despite the positive steps, however, Moody’s Investor Service analysts decided to keep the state’s credit rating untouched—following two downgrades since 2016—explaining that the pension reforms did not increase contributions enough to reduce New Mexico’s unfunded financial liabilities (i.e. pensions and other post-employment benefits). In fact, as a result of the amended bill, there are only going to be additional contributions each year in the single-to-low-double digit millions, which are nowhere near the dollar amounts needed to cover the unfunded portion of the NMERB liabilities.

As the Pension Integrity Project at Reason Foundation continues to emphasize: insufficient contributions are one of the key culprits in defined benefit pension underfunding. New Mexico ERB, as with many other plans, has not been consistent in footing its pension bills in full over the past 15 years (see graph below).

Figure 1: New Mexico ERB Required vs. Actual Contributions



In fact, New Mexico contributed only 81.3 percent, on average, of the Actuarially Determined Employer Contribution (ADEC) into NMERB from 2000 to 2018. Last year alone, the state came short of the $546.6 million required contribution and paid only 71 percent of the ADEC, which alone added more than $150 million to existing unfunded liabilities.

And given NMERB’s insufficient contribution history, more significant contribution increases would need to be initiated in future, compared to what the new policy mandates, in order to close the funding gap that escalated to $11.9 billion (GASB standards) last year.

Due to NMERB’s critical role in providing retirement to 109,000 educational workers and retirees, state legislators ought to consider making a long-term contribution commitment that would better secure these funds. One way to do this would be to scrap the current practice of setting annual contribution rates in the statute. As it stands, the statutory contribution approach has an inherent risk of delaying decision-making regarding contribution increases for far too long (or never) because of the nature of the political process. In short, politicizing pension contribution rates is a bad funding policy approach, often leaving public pensions cash-strapped.

Instead, New Mexico legislators should require employers to cover 100 percent of the ADEC contribution each year going forward. The downside of this type of policy would be a reduction in year-to-year budget predictability, but the benefit would be a retirement system that is far less likely to veer off into long periods of underfunding.

However, there is a catch. As practice shows, even paying the full ADEC might not be enough to actually reduce unfunded pension liabilities in the long-run, as Moody’s alluded to in its comments. Until 2012 NMERB re-amortized its pension debt each year over 30 years. Similar to annually re-financing a mortgage, this method nearly guarantees that the debt will never be paid off. NMERB did set a fixed end date for its debt amortization in 2012, but statutorily-set contributions were nowhere near the amounts needed to make good on this schedule. Not surprisingly, last year the amortization period reached an “infinite” number of years (see graph below).

Figure 2: Years Remaining to Fully Amortize New Mexico ERB’s Unfunded Liability



To illustrate the negative effects of insufficient contributions and poor amortization policy, over the last 16 years, ERB’s annual contributions were even below the annual interest accrued on the existing debt (a trend known as negative amortization). Negative amortization alone has added around $2.49 billion to the pension plan’s debt since 2000 (see graph below).

Figure 3: Negative Amortization as a Share of New Mexico ERB’s Unfunded Liability



As rightly outlined by Heather Gillers in a recent Wall Street Journal piece, while the 2007-08 financial crisis left many states and localities grappling with lower tax revenues and increased demand for government services, even a decade-long bull market did not alleviate public pension funding concerns. Despite its recent efforts at pension reform, New Mexico will likely continue to struggle with these same issues.

It is yet to be seen how NMERB’s new multiplier will actually affect retention and retirement rates, as well as the growth of actuarial liabilities going forward. And the increase in the state’s contributions into the system, while a positive step, will likely not be enough to stop the continued growth of pension debt. Quite often such superficial, yet positive, reform steps can be misinterpreted (or proactively portrayed) as solving the full problem — giving legislators a false sense that the reforms are more impactful than they really are and potentially stalling momentum for the additional reforms needed to tackle the risks that drove the problems in the first place.

One thing is clear, New Mexico needs to initiate additional pension reform proposals. Reforms that would improve the system’s long-term funding, amortize the debt over shorter period, consider new pension plan designs that would reduce liability risks, expand portability, and improve retirement security— beyond its most recent effort— are needed if the state wants to make meaningful progress in securing pensions for its teachers and alleviate some of the tax burdens for future taxpayers.


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Old 05-22-2019, 08:46 PM
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NEW JERSEY

http://laborpress.org/senators-pensi...es-n-j-unions/

Quote:
Senator’s Pension-Cut Proposal Infuriates N.J. Unions

Spoiler:
TRENTON, N.J.—A top New Jersey politician’s proposal to set up a two-tier pension system for government workers and cut their health benefits immediately infuriated public-sector unions.

State Senate President Stephen Sweeney (D-Gloucester) introduced a 27-bill package May 16 that would move non-uniformed public-sector workers on the job for five years or less to a hybrid pension plan that would only pay defined benefits on the first $40,000 of their income. Workers’ contributions on income above that would go into a 401(k)-style plan.

Another bill in the package would switch all of the state’s more than 70,000 workers from a “platinum” level health-care plan, in which they pay 10% of costs, to a “gold” plan, with 20% copayments and a higher deductible.

Sweeney said in a statement that the bills would provide “the path to real, sustainable tax relief in a state with the highest property taxes, the second-largest unfunded pension liability, the second-worst credit rating, and the fifth-highest overall tax burden in the nation.”

“Our pension funds are at risk for one reason and one reason only: 25 years of state government’s failure to pay their annually required contribution. In fact, New Jersey has underfunded its pension worse than any state in the nation,” state AFL-CIO President Charles Wowkanech responded in a statement. “Over the past ten years, multiple reforms have been signed into law that reduced the amount of workers’ pensions, removed the cost of living adjustments for workers, increased the retirement age, and significantly increased worker contributions. This was done in exchange for a commitment from the Legislature and various governors to fund their fair share. Time and time again, workers have sacrificed while the Legislature has walked away from its commitment.”

State workers were equally vocal when Sweeney hosted a town hall at Rutgers University in New Brunswick that evening, chanting “millionaires’ tax” and heckling a speaker who told them that the plan would not affect workers already vested in the system. As Sweeney began to speak, Twisted Sister’s “We’re Not Gonna Take It,” a 1980s hard-rock song that’s been adopted as a union anthem, began playing from a speaker hidden underneath the stage. Audience members, many wearing red Communications Workers of America T-shirts, laughed, then began clapping and singing “No, we’re not gonna take it.”

The senator left the stage two slides into his presentation, NJ.com reported.

“Right now, there are two visions of what happens in this year’s state budget,” the CWA-New Jersey said on its Website. “There is Governor [Phil] Murphy’s proposed budget that makes investments in public education and services, and funds public worker pensions and our state employee contract while asking millionaires to pay their fair share in taxes. Then there is Sweeney’s ‘Path to Progress’ report that calls for ending the current public worker pension system for state, county, and municipal government employees and shifting billions of dollars of health-care costs on to workers—all while protecting billions of dollars of tax cuts for the super-wealthy and corporations.”

The CWA, which represents more than 40,000 state workers and 15,000 county and local government workers, is planning to hold a rally in Trenton June 13.

The hybrid pension plan, cosponsored by Senate Budget Chair Paul Sarlo (D-Bergen), Republican Senate Budget Officer Steve Oroho (R-Sussex) and Assembly Majority Leader Lou Greenwald (D-Camden), would cover teachers and non-uniformed state, county, and municipal employees. The 401(k)-style part would be a “cash balance” plan that would guarantee at least a 4% return on workers’ contributions, with any excess being returned to the system. The bill would also raise the retirement age from 65 to 67.

New Jersey’s pension plans for teachers and general employees are both less than 60% funded. Former Gov. Chris Christie twice vetoed measures to require the state to make quarterly contributions. Sweeney, a union ironworker who describes himself as having “sponsored and supported measures to protect the rights of workers and support organized labor,” allied with Christie to raise the retirement age and freeze cost-of-living adjustments.

Gov. Murphy’s 2020 budget proposal would contribute a record $3.8 billion to the state’s pension funds, up from $3.2 billion last year. The Moody’s credit-rating service projects that payments will surpass $6 billion in 2023, the first year the state is scheduled to make a full recommended annual contribution.

The governor and Sweeney have disagreed on how to finance this. Murphy has advocated raising taxes on income over $1 million from about 9% to 10%. Sweeney, who opposes that tax increase, told the North Jersey Record that if the state doesn’t enact his pension and health-care changes, he’ll have the Legislature put them on the ballot as an amendment to the state constitution in the 2020 election.

New Jersey’s pensions for state workers and teachers are among the least generous of the nation’s 70 largest plans, Wowkanech said. A typical state or local government worker with 30 years of service would get $31,600 a year.

“New Jersey’s educators have already been pushed beyond the breaking point, with unsustainable health-care costs and a pension that costs much more and delivers much less than what was promised to many of us when we entered this profession,” the New Jersey Education Association said in a statement. “Proposals to further raise costs or slash benefits will irreparably harm our profession and our schools, and NJEA members will join as one to fight them.”


https://www.insidernj.com/path-progr...seys-teachers/
Quote:
‘Path to Progress’ Runs Right Over New Jersey’s Teachers

Spoiler:
BY EDWARD HENDERSON AND WILLIAM OSBORNE, PATERSON EDUCATION ASSOCIATION



This video, taken at an April 30 forum staged by Senate President Steve Sweeney, highlights the concerns of New Jersey public workers who are again having their pensions and health insurance put on the chopping block at the hands of the legislative leadership of this state.

In it Sweeney is asked “Why keep tapping into pensions? Has the government forgotten that it borrowed many millions and never paid it back, and when you speak of reducing benefits for public workers, which public workers are you talking about? Does this include police and firefighters?”

Steve Sweeney, we believe, all too readily answers the question by stating that “police and fire didn’t do what the other unions did. They didn’t change the amount of money they’re putting in, they didn’t change the retirement, they didn’t do any of the things the other unions did. So, by doing that, why should they be punished, if you’re saying punished…”

At which point the audience erupts and Sweeney futilely tries to backtrack and say “no one was being punished.” The message is out there loud and clear Mr. Sweeney. We didn’t play ball like you wanted, and now you intend to make us suffer for it. We absolutely believe firefighters and police deserve their full benefits and should not be subjected to the unwarranted cuts and “restructuring” you are peddling, but neither should any other state employee when the responsibility of this failure falls clearly on this state’s lack of adequate fiscal management and poor leadership.

Page one of the Sweeney commissioned “Path to Progress” proposal clearly states “this is a direct result of the failure of governors and legislatures of both parties to make the necessary pension payments.”

Yet, we, the public workers, are expected to fix the mistakes of bad leadership and their poor decision making. We are expected to give up what was promised in order to fix a system broken by this elected officials in Trenton.

We did not miss our payments. We did not borrow from the system. We, every day, do our jobs, take home less money, work more hours, and are once again expected to put ourselves through unfair fiscal constraints and an uncertain financial future because people like Steve Sweeney refuse to take onus for their own failures and fix the system they broke.

With this proposed pension reform, teachers with five or less years of employment will be put in a new, hybrid pension system that caps employee contributions, raising the retirement age (again), and effectively continue to deter the recruitment and retention of talented, dedicated classroom professional who are, once again, tired of being duped by New Jersey lawmakers.

In addition to this draconian attempt to rectify the state’s mishandling of its resident’s tax dollars, we are once again facing drastic changes to the health benefits promised us.

Teachers and other public workers enrolled in the system will be required to again switch plans leaving us with higher co-pays, higher out of network deductibles, and reduced coverage. This, after Sweeney’s botched attempt to fix rising healthcare costs in 2011 with his Chapter 78 law, that required state workers to pay more in an effort to fix, you guessed it, the “out of control costs in our state.”

We remind Senate President Sweeney that doubling down on broken plans is a terrible way to gamble, but it’s not his life, nor his livelihood he’s rolling the dice on, it’s ours.

No teacher gets into the profession to be rich. We understand the sacrifices we have to make. Promises are made, however, to encourage the people we should all want in the classroom to stay there, and those promises are not being kept.

Teachers are expected to teach because “they love what they do.” In fact, it is one of the only professions where our passion is used against us to guilt us into working more for less. Love and passion, however, do not keep our power on. They do not pay our mortgage, and they do not ensure our families’ welfare in times of need.

We have always been willing to take less, but we have already been played by the likes of Sweeney, and we have nothing left to give. Let us be clear, we have no grandiose ideas of financial success. We want what we are worth and we want what we are owed.

Sweeney’s consistent attack on the public workers in this state can not be allowed to continue. We are not the enemy. We fulfilled our promises, now it is time to hold those responsible accountable and demand they fix their errors properly, like adults.

We ask Mr. Sweeney to clear his own “Path to Progress” – it will not be done on the backs of citizens you have sworn to serve.


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Old 05-22-2019, 08:47 PM
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HAWAII

http://www.hawaiifreepress.com/Artic...n-spiking.aspx

Quote:
Putting a spike into pension spiking


Spoiler:
From Grassroot Institute, May 17, 2019

Some advice for all our policymakers out there struggling with public pension liabilities:

The first step is admitting you have a problem. The next step is getting real data on how bad that problem is. Only then can you began working out how to address it.

Which means the Kauai County Council deserves praise, as it has already started down the road to a healthier pension system.

Last fall, the Kauai County Council invited Joe Kent, executive vice president of the Grassroot Institute of Hawaii, to make a presentation on the state’s public pension crisis and what it could mean for Kauai, based on the findings of a report he wrote last year,“How to resolve Hawaii’s public pension crisis.” While presenting the policy options outlined in the report, Joe specifically addressed Kauai’s problem with pension spiking.

Pension spiking refers to the practice of employees working lots of overtime in the last years of their employment in order to raise their average annual incomes for those years. Because pensions are based on a calculation of years worked and average annual income, that extra overtime can increase the amount of the pension payments.

In egregious cases of pension spiking, the extra overtime can amount to an additional $30,000 or $40,000 per year. Including the overtime can “spike” an employee’s salary up to six figures. From there, it’s easy to see how pension spiking can have a critical effect on an already overloaded public pension system.

Kauai has seen a dramatic increase in pension spiking in the past year. In 2017, pension spiking cost the county $854,398. In 2018, that number nearly tripled to $2.4 million.

The numbers are alarming, and the Kauai County Council has decided to get some answers. At a meeting on May 1, the Council met to consider a memo from Council Chair Arryl Kaneshiro outlining the need for performance audits of practices within the Fire Department and Department of Public Works. Among the practices to be examined by the audits is pension spiking.

As Joe explained to the Council in his presentation, there are many reasons why the county might be experiencing a rise in pension spiking. Knowing the “why” of it will help it formulate a policy to curb the problem.

There is no reason the state and counties cannot enact laws and rules to prevent overtime abuse. In fact, they have a responsibility to taxpayers to put a stop to pension spiking.

Stopping pension spiking is as much about protecting government employees as it is about preventing wasteful or fraudulent practices. We believe the employees deserve a healthy, reliable pension system. Pension spiking poses a threat to that system. In addition, those employees are also taxpayers, so any burden of the unfunded liabilities and excessive overtime will also affect them.

Kauai is leading the way with an audit of pension spiking among county employees. Now, the remaining counties need to follow suit with their own pension spiking audits.

Only then can we get on to the next order of business: stopping pension spiking for good.

E hana kakou! (Let's work together!)

Keli'i Akina, Ph.D.

President/CEO


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