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  #31  
Old 01-04-2017, 02:44 PM
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PENNSYLVANIA

http://thetimes-tribune.com/news/cou...debt-1.2138032

Quote:
Court rules school districts not responsible for charter school pension debt

In a precedent-setting ruling, the state Supreme Court said a school district is not liable to pay pension contributions that a closed charter school failed to make to a state pension fund for teachers.

Ruling in a case brought by the Pocono Mountain School District, the high court said that requiring a school district to pay outstanding retirement debt of a defunct charter school violates the Charter School Law.

The ruling has important implications for school districts statewide because it resolves a conflict within the charter school law regarding what constitutes a “debt” of a charter school, said the school district’s solicitor, John Freund.

“This case is very significant in a number of aspects,” Mr. Freund said. “The decision makes it crystal clear that a school district cannot be held liable for a debt created by a charter school.”

The dispute centered on the former Pocono Mountain Charter School’s failure to deposit $87,700 in pension contributions it owed for its teachers into the Public School Employees’ Retirement System, known as PSERS.

The charter school shut down after the district revoked its charter in June 2014, based on concerns over financial improprieties.

By law, a charter school is responsible to pay into PSERS. If it fails to do so, the state Department of Education will recoup money owed by withholding state funding from the school district in which the school is located, which it then turns over to PSERS. The district can obtain reimbursement by withholding state subsidies it pays to the charter school.

In this case, the school district had no way to recoup its money because the charter school already was closed. It sought a refund from the state Department of Education, but the department refused.

.....
The case was heard by six of the seven justices on the court. In a 4-2 decision, the court said the section that obligates the district to cover pension payments only applies if the charter school is still in operation.

“We hold that following the dissolution of a charter school, the school district that originally approved the charter is not financially responsible for the charter school’s prior failure to remit the mandatory payment to the employees retirement fund,” the court said.
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  #32  
Old 01-04-2017, 02:47 PM
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PENSION OBLIGATION BONDS

https://www.standish.com/us/en/Resea...046_451177.pdf

Quote:
Summary
In light of the exceptionally low interest rate environment and rapidly increasing public pension
liabilities, a number of state and local governments are struggling to close their pension funding
gaps. Governments are considering structural changes, such as lowering cost of living adjustments
and raising retirement ages, and are also considering increasing investable assets by issuing bonds.
Pension obligation bonds (POBs) are typically secured by either a general obligation (GO) or annual
appropriation pledge of the issuer and are on parity with outstanding GO or appropriation debt. Bond
proceeds have been most frequently used to shore up pension funded ratios, effectively substituting
a debt for a pension liability. There have also been a few cases where issuers have imprudently used
bond proceeds to fund the current year’s pension contribution as a budget-balancing measure,
effectively issuing long-term debt to pay for current expenses. Standish considers structural pension
reform to be the most prudent and creditworthy approach to addressing the growing liability, and the
issuance of POBs can be merely a tactic that delays a long-term solution. We rely on the deep expertise
and experience of our municipal credit analysts to quantify the relative risks of each issuer’s pension
funding practices.

.....
Conclusion
Meaningful pension reform needs to be urgently addressed for the long term fiscal solvency of state
and local governments, and in fairness to future generations. Reforms such as reducing benefits,
increasing retirement ages, increasing employee contributions, and lengthening vesting periods
may be effective in curtailing the declines in pension funded ratios. Taking on more debt to disguise
funding gaps via POBs has proven to invite serious risk, including a reduction of a sense of urgency
to truly address the growing structural liability. The issuance of POBs in lieu of legislative action can
signal fiscally imprudent practices and potentially overwhelm future financial obligations. Certainly,
not all governments are issuing POBs irresponsibly. Nevertheless, when considering POBs, a deep
understanding of each issuer’s pension policy, reform, and funding activity adds tremendous value and
is warranted before an investment can be made.
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  #33  
Old 01-04-2017, 05:57 PM
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DALLAS POLICE AND FIRE
TEXAS

http://www.pionline.com/article/2017...igest-20170104

Quote:
Dallas mayor calls for criminal investigation into police and fire pension fund

Dallas Mayor Mike Rawlings has requested that the Texas Ranger Division investigate the $2.1 billion Dallas Police & Fire Pension System for potential criminal offenses.

Texas Rangers is the criminal investigative arm of the Texas Department of Public Safety.

“The past administration of the Dallas Police & Fire Pension System committed a grave breach of trust with our first responders with serious ramifications impacting current and former police and fire personnel and their families, as well as all Dallas taxpayers,” Mr. Rawlings said in a statement Dec. 30. “As I have learned more in recent years and months about how the pension fund reached its current crisis, I have come to believe the conduct in question may rise to the level of criminal offenses.”

The mayor's office declined to provide further information, including specifics on the conduct in question.

.....
Kelly Gottschalk, the pension fund's executive director, said the Texas Ranger Division had not yet reached out to the pension fund, but the fund would cooperate if asked. The FBI has already been investigating matters related to the pension fund for about a year, Ms. Gottschalk wrote in an e-mail.

In a previous interview, Ms. Gottschalk estimated that about a third of the pension plan's underfunding (roughly 36% funded currently) came from its investment decisions, while the remainder came from generous benefits like DROP, an aging population, unrealistic return assumptions and other plan design issues.

For years, the pension fund invested in speculative real estate deals. A failure to obtain regular appraisals concealed the properties' true value, and losses are estimated at $545 million. In 2014, after the magnitude of the losses began to be realized, the pension fund's administrator, Richard Tettamant, resigned at the request of the pension fund board.


In April, the pension fund filed a lawsuit against one of its former real estate managers, CDK Realty Advisors, for allegedly advising the pension fund to enter into high risk and speculative real estate investments, resulting in write-downs and losses of more than $320 million.

CDK filed its own lawsuit against the pension fund in February over $139,479 in alleged unpaid money management fees.
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  #34  
Old 01-05-2017, 06:00 PM
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PENSION OBLIGATION BONDS

https://burypensions.wordpress.com/2...of-bankruptcy/

Quote:
The ProPublica website has a handy chart on the 20 largest POB issues since 1996 with the warning:
"Governments that borrow money to fund their pensions often pay less into their pension funds in future years than they’re supposed to. That can leave the funds in a worse shape than they were when the debt was sold, even if the pensions earn more on the borrowed money than taxpayers owe in interest."

.....
It is no coincidence that the worst funded public pension systems (NJ, IL, CT, PR) all tried the POB gambit not because it made any fiscal sense but because they chose not to look at immediately unpleasant alternatives (i.e. cutting benefits or affording honest contribution amounts).
The POB money suddenly appeared in trust assets making the plans seem better funded which would theoretically reduce future contributions. In practice, in New Jersey at least, future contributions were reduced anyway as politicians simply chose to pick their contribution numbers with expediency as the primary determinate.


https://projects.propublica.org/graphics/pension_bonds

Quote:
Bet Big, Then Go Short
by Cezary Podkul and Cecilia Reyes, ProPublica
July 10, 2015


.....

Methodology

Top 20 list excludes pooled bond issues, refinancings, and bond sales whose pension funding component was too small to make the cut.

Funding ratios and liabilities reflect phasing-in of new accounting rules, which require pensions to calculate their assets and liabilities using different methodologies that require the use of lower rates of return for deeply underfunded pension plans. That makes certain plans, like New Jersey, Puerto Rico and Kentucky look more underfunded than they would have been under old accounting standards, but the general trend of decreasing funding is the same.

Unfunded liabilities measured at end of fiscal year in which bonds were sold, or next nearest year if data was unavailable, and the latest year for which the information was published. Amounts in parentheses mean pension assets exceed liabilities.

Count of years of pension underfunding includes fiscal year in which bonds were sold.
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  #35  
Old 01-05-2017, 06:06 PM
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CHICAGO, ILLINOIS
OPEBs

http://chicago.suntimes.com/news/rah...e-health-care/

Quote:
Rahm says he ‘wasn’t bragging’ about cutting retiree health care

Mayor Rahm Emanuel said Wednesday he “wasn’t bragging” as much as he was “acknowledging how we stabilized” skyrocketing health care costs in a 2015 email exchange that has infuriated retired city employees stripped of their 55 percent health care subsidy.

“You can call what I did heartless. We worked it through over a three-year period. We avoided raising taxes. And we avoided cutting basic neighborhood services. And we still met the objective of providing and giving people health care,” the mayor said.

“Over 30 or 40 years, we promised benefits that were never paid for. Not only has this [three-year phase-out of retiree health care] saved the city $100 million. It was gonna grow to $350 million with no revenue source. I wasn’t bragging so much as acknowledging how we actually have stabilized our health care costs for the first time in 30 years. Nobody in the private sector or public sector has done that.”

The exchange of emails with venture capitalist Henry Feinberg that infuriated city retirees was among 2,700 private emails released by City Hall last month as part of an agreement that ended a marathon legal battle with the Better Government Association.

The email chain started just days after Emanuel unveiled a 2016 budget that included a $588 million property tax increase for police and fire pensions and school construction.

Feinberg wrote, “Massive tax hikes w/o reform is the problem that got us here.” He enclosed an article under the headline, “The Shock and Awe Address Rahm Should Have Given.”

It proposed radical solutions under the threat of bankruptcy, including terminating contracts and collective bargaining agreements; “broad and deep” layoffs and pay cuts; “massive operational changes and a ban on future contributions to city employee pension funds, with a “new, affordable plan” to cover only new employees and “certain participants particularly hurt” by termination of old plans.

Emanuel took exception to the radical recipe, calling his budget endorsed by the Civic Federation a “major restructuring of our finances….You may want to look it up.”


http://www.wirepoints.com/rahms-reac...s-wp-original/

Quote:
On October 16, 2015 I wrote an article here, The Shock and Awe Budget Address Rahm Should Have Given. It outlined the drastic steps Chicago should have taken to avoid doom.



In the batch of personal emails of Mayor Emanuel recently released is an exchange between Rahm and Henry J. Feinberg in which Feinberg included a copy of my article to urge him to consider serious reform. I don’t know Feinberg but know of him: He’s a very accomplished guy in finance and evidently spends some time advising Rahm.



The exchange puts Rahm’s character on full display. Denial, closed mindedness, arrogance, deceit, smugness. It’s all there. The full copy of the email exchange is linked here.

Feinberg starts just by sending a copy of the article.



Rahm responds saying, “Usually I read your email I am very proud Civic Federation endorsed my budget as has Crain’s and Sun-Times. Major restructuring of our finances. You may want to look it up.”



Feinberg tries again saying pensions are the “1,000 pound gorilla in the room” that “could/would sink Chicago even if you made progress across many other fronts…. Massive tax hikes without pension reform is fiscally insane….. Surely you have noticed the self fulfilling prophesy of long term irresponsible fiscal policies (starting pre-Rahm) emigration of the best and the brightest that puts the larger burden on the fewer and fewer.”



Rahm answers, “You obviously have not read the Supreme Court decision…. Their view is pretty clear. No reform allowed.”



Feinberg wisely then tries to appeal to Rahm’s sense of omnipotence: “Since when did Rahm Emanuel let a judicial ruling get in his way and not find a creative workaround solution?”

......
A few observations. Yes, Rahm, we know what the courts said about pension reform and the article is predicated on what they said. No, you did not eliminate healthcare as a pension benefit. The courts have chopped away some of that, appeals continue, and even if you had saved a full $175 million that’s no fix for a city that has consistently been over $1 billion in the red per year. Every word of that 2015 article applies today, though it’s probably too late now to avoid doom.
http://www.wirepoints.com/wp-content...EMBER-2015.pdf
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  #36  
Old 01-05-2017, 06:11 PM
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TAIWAN

http://www.reuters.com/article/us-ta...-idUSKBN14O2BG

Quote:
Taiwan's military may be first casualty in pension crisis

Taiwan's military pension fund may be in default by 2020 after years of widening deficits, raising alarm about the island's defense stability when tensions are heating up with political foe China.

The government says an urgent overhaul of the pension system is needed as large payouts are no longer sustainable for the export-reliant economy, with contributions crimped by slower economic growth since the 1990s and a rapidly aging population.

Some 120,000 on military pension benefits and another 200,000 in the civil service are nervous about pension reform, a priority of President Tsai Ing-wen. A restructured scheme could result in having to wait longer to retire as well as smaller pension payments, among other changes.

.....
Successfully reforming the pension system will be crucial for President Tsai, whose popularity has hit an all-time low since taking office last May. She says reforms are "urgent" given limited national and social resources and wants to see pension reform bills passed by the legislature this spring.

As doubts arise over the government's ability to fund pension and health insurance, Taiwan's youth feel increasingly demoralized.

"If the pension system is not reformed soon, young people see no hope for their future," said Chu ying-ju, 23, a graduate student and member of an advocacy group on pension reform.

Military staff draw monthly pensions of T$49,379 on average, and civil servants T$56,383 - around 75-85 percent of last-drawn salaries and about twice the starting pay of new graduates.

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  #37  
Old 01-05-2017, 06:13 PM
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CALIFORNIA

http://www.mercurynews.com/2017/01/0...rein-in-costs/

Quote:
Jerry Brown’s pension reforms have done little to rein in costs

SACRAMENTO — A year after his 2010 election, Gov. Jerry Brown confronted lawmakers about the steep cost of public employee pensions and urged them to pass his 12-point pension overhaul so public retirement costs would not overburden future generations.

“We don’t really have too much choice here,” Brown said, challenging fellow Democrats who control the Legislature to drink the political “castor oil” of pension reforms hotly opposed by politically powerful government employee unions.

Instead, legislators tinkered at the margins, passing some of Brown’s proposals but rejecting those with biggest cost-savings potential. Although Brown touted it as the “biggest rollback to public pension benefits in the history of California,” it is now clear that the package of modest changes he signed into law in 2012 has done little to slow the growth of retirement costs. New projections show the state’s annual bill for retirement obligations is expected to reach $11 billion by the time Brown leaves office in January 2019 — nearly double what it was eight years earlier.

“The status quo is unsustainable, and it gets worse and worse every year,” said Dan Pellissier of California Pension Reform. “You can nibble at the margins with spiking and that sort of stuff, but those are the easy things. The hard thing is they’ve got to change the cost of the benefits being earned every year by all the employees. It’s just the math; You have to start making less-expensive promises to people.”

......
Democratic lawmakers are strongly allied with public employee unions, for which pension protection is a top priority. Public employee unions gave $12.5 million to Democratic candidates for the Legislature between 2010 and 2014, compared with $1 million for Republicans, according to the nonpartisan National Institute on Money in State Politics. Every Democratic lawmaker elected in 2010 received campaign contributions from public sector unions, as did Brown.

“Let’s just be clear: The unions have a stranglehold on the Legislature,” said Sen. Joel Anderson (R-San Diego), the only senator to vote against the pension reform bill.

Former Sen. Joe Simitian (D-Palo Alto), who served on the special pension committee and is now a Santa Clara County supervisor, said the final package reflected the governor’s willingness to confront labor, something no single lawmaker could have done without fear of union retribution.

Assemblyman Warren Furutani (D-Gardena), then chair of the Assembly’s public employees and retirement committee, recalled there was tacit support from labor to close pension-spiking loopholes, but not to do much more than that.

.....
Brown’s most ambitious proposal was a hybrid pension plan for new employees that would join traditional pensions and 401k-style plans, which help workers build up retirement savings but don’t guarantee any level of benefits. Brown said the hybrid system, similar to changes for federal workers in the 1980s, would pay retirees 75% of the salaries they collected when active.

But Steinberg, since elected mayor of Sacramento, said “we were never going to go there because we didn’t believe in that.” As an alternative, lawmakers approved a cap on the salary that could be used to calculate an employee’s pension.

Brown’s 12-point plan also called for public employees to contribute toward the cost of their retirement health benefits, however, lawmakers told the governor to negotiate the issue with labor unions. So far, highway patrol officers, prison guards and engineers have agreed to make contributions but the largest state employee union, the Service Employees International Union Local 1000, has threatened a strike.

Sen. John Moorlach (R-Costa Mesa), who serves on the Senate Public Employment and
Retirement Committee, said it was disappointing that Brown didn’t get all his reforms.

“Maybe you’re never going to get perfect,” Moorlach said, “so you settle for good.”
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  #38  
Old 01-05-2017, 06:14 PM
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PENNSYLVANIA

PENNSYLVANIA

http://abc27.com/2017/01/04/senator-...mising-not-to/

Quote:
Senator takes state pension after promising not to

.....
Last year, CAP embraced Cambria County Assistant District Attorney Wayne Langerholc, a state Senate candidate. Langerholc came to the CAP offices and filled out a questionnaire agreeing with CAP philosophies of limited government, pro-school choice, anti-union and a part-time legislature. Langerholc also signed a CAP pledge promising not to take a pension if elected.

In October, CAP spent $15,000 on a colorful campaign mailer that spotlighted Langerholc’s promise to decline a state pension.

In November, Langerholc easily won the seat previously held by longtime Democrat John Wozniak.

Tuesday, Langerholc was sworn in at the Capitol and Wednesday in his hometown paper he was quoted as calling pension reform a top priority.

But also on Wednesday, ABC27 confirmed with the State Employees’ Retirement System that Langerholc signed up for a state pension. Lawmakers have 30 days to decide whether to take or reject a pension. But once they decide, that decision is final. Langerholc is in.

“It’s appalling, it really is,” Knepper said. “He didn’t just lie to us. He lied to his constituents.”
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Old 01-05-2017, 06:15 PM
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NEW YORK

http://nypost.com/2017/01/04/pension...to-stay-sober/

Quote:
Pension-fund manager accused of drug-fueled sexcapades ordered to stay sober


DiNapoli whiffed on pension fund manager's alleged drug-fueled sexcapades
DiNapoli whiffed on pension fund manager's alleged drug-fueled sexcapades
The state pension manager charged with taking bribes to fund his rock-star lifestyle — including prostitutes, strippers and drugs — was warned Wednesday that he’d better stay sober pending trial or he’ll be tossed in jail.

“You will be subject to drug testing and treatment,” Manhattan federal Judge J. Paul Oetken told Navnoor Kang (right, leaving court) before releasing him on a $750,000 bond with the provision that he wears a GPS monitor.

The disgraced former New York pension official — hired by state Comptroller Thomas DiNapoli despite a shady past — pleaded not guilty to charges that he steered billions of dollars in fixed-income-securities trades to two brokers in exchange for bribes.

Kang’s co-defendant, broker Deborah Kelley, also pleaded not guilty, was released on a $500,000 bond, and was ordered to “not use or possess illegal narcotics” as a condition of her release.
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Old 01-05-2017, 06:18 PM
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FLORIDA

http://www.news4jax.com/news/florida...ld-be-too-rosy

Quote:
Pension fund projections could be too rosy
By Lloyd Dunkelberger, The News Service of Florida

TALLAHASSEE, Fla. - While Florida has a financially healthy state pension fund, a new report from the Department of Management Services warns the $144 billion system is relying on a projected investment return that independent financial consultants say is too optimistic.

State analysts lowered the projected rate of return to 7.6 percent in October, down from 7.65 percent.

But the Department of Management Services' annual report on the financial status of the pension system notes that Milliman, the state's actuarial consultant, recommended a 7 percent rate of return, saying that is more in line with the uncertain financial climate.

The 7.6 percent assumed rate is "materially above" the estimates developed by Milliman and Aon Hewitt, a financial consultant to the state Board of Administration, which oversees the pension fund, the report noted.

The consultants developed financial models that estimated the fund had a 50 percent chance of achieving its long-range rate of return if the projection was 6.3 percent to 7 percent.

The chance of meeting the long-range 7.6 percent projection is much lower.

"All models developed in 2016 indicated a likelihood of 35 percent or less of actual long-term future average returns meeting or exceeding 7.6 percent," the report said.
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