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Old 01-02-2014, 10:08 AM
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Mary Pat Campbell
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Default Public Pensions Watch 2014

UPDATE:
Post with comment letter summary for ASB on Public Pensions:

http://www.actuarialoutpost.com/actu...postcount=1421

Should've started this yesterday but eh, whatcha gonna do

For reference -- prior threads:

1. Public plans in trouble, Sept 2008

2. Public plans in trouble, part 2, Jan 2010

3. Public Plan Watch III: the reckoning, Jan 2011

4. Public Pensions Watch IV: the saga continues, Jan 2012

5. Public Pensions Watch 2013, Jan 2013


The years go by so quickly.....


....and if you like those threads, you may also be interested in:

Detroit bankruptcy watch

Muni watch

PPACA exchange watch

Because who doesn't like a good disaster show?
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Old 01-02-2014, 10:27 AM
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MINNESOTA
http://www.mankatofreepress.com/loca...ng-retirements

Quote:
MANKATO — A change in pension rules for Minnesota police officers and firefighters has contributed to the early retirements of at least three police officers and two firefighters in Mankato, including the Department of Public Safety's deputy director.

Matt Westermayer said changes to the Police & Fire Plan within the Public Employees Retirement Association of Minnesota (PERA) influenced his decision to retire. Westermayer said the changes will have a financial impact on officers and firefighters between the ages of 50 and 55.

There are six Mankato police officers in that age group, but only Westermayer and two others had given retirement notices to the city as of Tuesday afternoon. The employees have until May 31 to retire under the current pension rules, so more officers and firefighters could decide to retire.

For planning purposes the city did offer its own incentive, one additional month of health insurance coverage and a 50 percent payout for unused sick leave, to employees who provided retirement notices before the end of 2013. In a notice to City Council members, City Manager Pat Hentges said the incentive will give administrators more time to find and train new employees.

.....
Examples of what the changes will bring were provided to employees by PERA. One example used employees retiring at age 50 with a five-year average salary of $60,000. Their full annual pensions without a penalty would be $45,000. The current penalty would reduce those annual pensions to $42,300. Three years from now, the new penalty would reduce the annual pensions to about $38,000. When the full 5 percent penalty is reached, the annual pensions would be reduced to about $34,000.

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Old 01-02-2014, 10:37 AM
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DESERT HOT SPRINGS, CA

http://nation.foxnews.com/2013/12/31...-pension-costs

Quote:
Desert Hot Springs, California, north of Palm Springs, is desperately trying to avoid being the next California city to face bankruptcy, and the prime factor in the city’s dilemma is the huge shortfall in paying the pensions of its police force.

The fire department has already closed, and the small town of 27,000 is attempting to pay last springs’ budget of $7 million for the police force out of the total city budget of $10.6 million. An audit conducted prior to November’s elections showed the city was $4 million short and would run out of money by April 2014. Robert Adams, the acting city manager since August, said, "I would not venture to say they are overpaid. What I would say is that we can't pay them."

Last week, the new City Council voted unanimously to cut all city salaries by 22%, cap incentive pay, and lower the number of paid holidays and vacation days. Adams said that the cuts would still leave the city $2 million short by next June. But the police union protested that the cuts could hit some officers by as much as 40%. Wendell Phillips, a lawyer for the Desert Hot Springs Police Officers Association, immediately filed a fact-finding request with California’s Public Employment Relations Board, saying, "All they are going to end up doing is driving away their best, experienced officers and creating a police force made up of people who couldn't get a job on another force."

Adams said that the huge police pensions around California began when former Gov. Gray Davis offered them to the states’ prison guards. That was followed by the California Highway Patrol demanding the same pensions, and then city police officers from around the state. CalPERS, the huge state-run pension system which covers the employees of Desert Hot Springs, has consistently insisted that cities cannot reduce the pensions of public employees, even in the bankruptcies of Vallejo in 2008 and San Bernardino and Stockton in 2012.

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Old 01-03-2014, 07:42 AM
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ILLINOIS

http://www.wifr.com/news/headlines/R...238492971.html

Quote:
SPRINGFIELD, Ill. (AP) -- Another group of retired Illinois workers has filed a lawsuit challenging a new plan to eliminate the state's $100 billion public pension shortfall.

The Illinois State Employees Association Retirees sued Thursday afternoon in Sangamon County Circuit Court. The Retired State Employees Association filed a similar lawsuit earlier Thursday.

The groups are the latest to argue the landmark plan violates a provision of the Illinois Constitution that states pension benefits may not be diminished.

Illinois has the nation's worst-funded public-employee pension systems. Lawmakers in December approved legislation to reduce the unfunded liability, largely by cutting benefits.

http://www.wifr.com/news/headlines/J...238459801.html

Quote:
SPRINGFIELD, Ill. (AP) -- A published report says groups with ties to the pension-reform law adopted last month have contributed close to $3 million to Illinois Supreme Court justices who might decide its fate.

The Chicago Sun-Times reports that six of seven justices have taken money in the past 13 years from labor unions, business groups and a political committee controlled by Chicago Democratic House Speaker Michael Madigan.

.....
Most of the pension-related money went to former Chief Justice Thomas Kilbride. He accepted $2.5 million from both Madigan and business groups in a 2010 retention battle.

Current Chief Justice Rita Garman says court decisions are based on constitutional standards, not politics.

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Old 01-03-2014, 07:44 AM
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JACKSONVILLE, FLORIDA

http://members.jacksonville.com/news...nd-firefighter

Quote:
The head of Jacksonville’s pension reform task force said Thursday his goal of delivering a package of changes that has buy-in from all sides is “dead in the water.”
Bill Scheu, the chairman of the Jacksonville Retirement Reform Task Force, said an injunction issued Tuesday would bar him from having the private discussions he planned to undertake with the city’s Police and Fire Pension Fund about changing retirement benefits.

The injunction would still allow those meetings to occur if they are open to the public. Scheu said that format would not be productive, however, so the task force will make its recommendations this month without any assurance the Police and Fire Pension Fund is on board.

....
The 18-member task force is mounting the latest attempt to revamp the pension system for police and firefighters, which faces a $1.7 billion shortfall in being able to pay all the future benefits pledged by law to retirees.

This year’s city contribution to the fund is $148 million, which accounts for about 15 percent of the city’s general fund. The contribution amount has almost doubled over the past two years, putting a strain on the city’s budget.

.....
An injunction issued Tuesday by Circuit Judge Waddell Wallace says that because of the state’s Sunshine Law, any meetings involving representatives of the city, pension fund board, or the unions must be conducted in public if the topic is negotiating pension benefits.

Under that order, Scheu could meet with Keane so long as the public gets advance notice of the meeting, minutes are recorded of the discussion, and the public can attend.

Scheu said that would not be a format for meaningful negotiations.

“John Keane is not going to tell me in a public meeting what is acceptable and what is not,” Scheu said.

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Old 01-03-2014, 07:45 AM
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IOWA

http://www.desmoinesregister.com/art...nclick_check=1

Quote:
An Iowa lawmaker wants to review whether to include overtime pay in calculating some police and fire employees’ pension benefits, even as retirement plans strain city budgets.

Unlike employees covered under the Iowa Public Employees’ Retirement System, the state’s largest public pension program, police and fire employees in a smaller plan cannot include overtime when calculating what they’ll be paid after they retire.

“I’m looking at all this overtime thinking, ‘Why are they not getting paid pension on all that overtime?’ ” said Rep. Dawn Pettengill, a Republican from Mount Auburn and co-chairperson of the Public Retirement Systems Committee. “Part of our charge is to compare different member groups and make sure no member group is getting a better deal than another one.”

Advocates for reforming the system say other provisions of the municipal plan make up for the fact that overtime isn’t included in the pension formula.

Some city leaders also argue that the added cost of overtime benefits would place more strain on a program that is already a financial burden on the state’s largest municipalities.

The 49 cities that participate in the Municipal Fire & Police Retirement System of Iowa will contribute 30 percent of their employees’ salaries to the plan this fiscal year, up from about 17 percent five years ago.

That increase was needed primarily to make up for investment losses.

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Old 01-03-2014, 07:57 AM
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ILLINOIS

more details on the lawsuit

http://hosted.ap.org/dynamic/stories...MPLATE=DEFAULT

Quote:
The Illinois State Employees Association Retirees and the Retired State Employees Association filed separate class-action lawsuits in Sangamon County Circuit Court on behalf of their members. They argue that the landmark plan approved by Illinois lawmakers last month violates a provision of the state constitution that says pension benefits may not be diminished. They also say the law is unfair to retirees who made their required contributions to their retirement funds, while the state for years did not, choosing to spend that money elsewhere.

.....
The lawsuits also ask the court to create an escrow fund while the case is pending. The state would be required to deposit the difference between previously scheduled pension payments and the payments as scheduled under the new law.

.....
Lawmakers say the legislation approved in December will save the state about $160 billion and eliminate the unfunded liability over the next 30 years, largely by cutting annual cost-of-living increases, raising the retirement age and shifting more money into the pension funds.

Members of the Illinois Retired Teachers Association and the Illinois Association of School Administrators sued last week, and other lawsuits are expected to be filed.

The new law isn't scheduled to take effect until June 1, though lawmakers anticipated its implementation would be held up by legal action.

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Old 01-03-2014, 09:23 AM
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INDIANA

http://www.lifehealthpro.com/2014/01...&_LID=97617789

Quote:
A battle appears to be brewing in Indiana over a plan to privatize future annuity payments to retired public workers and teachers.

In July, the Indiana Public Retirement System (INPRS) board of trustees voted to seek an outside third-party insurer to administer its Annuity Savings Account (ASA) program for future payments. It also green-lighted a switch to a market rate for annuities, beginning Oct. 1, 2014.

Currently, retirees receive a defined benefit (DB) pension, as well as an option to direct contributions into an ASA, which can result in investments gains and/or losses. State law requires that 3 percent of wages be contributed to the annuity account, according to a spokesperson for INPRS.

When they retire, members can choose to withdraw as a lump sum, roll over or convert the ASA account balance into a monthly income stream. The ASA program is in addition to the DB benefit. Half of retirees decline to participate in the annuitization option, according to INPRS.

However, the Pension Management Oversight Commission (PMOC) the Indiana State Legislature has recommended that the pension board keep the annuity program in-house and not contract with a third-party provider. In October, INPRS asked that its staff work with PMOC for clarification on that recommendation.

....
As it stands now, INPRS calculates the ASA annuitizations at an assumed interest rate of 7.5 percent. In a letter dated Dec. 13, 2013, from the INPRS board of trustees to the Indiana General Assembly, INPRS stated that rate is “well above prevailing private market rates,” and has created $143 million in unfunded liabilities. “A continuation of this practice adds another $343 million of additional unfunded liabilities,” stated the letter, which was signed by Ken Cochran, chairman of the INPRS board of trustees.

The letter goes on to say that keeping the annuity program in-house, even if the interest rate were changed, could still lead to the possibility of unfunded liabilities. In addition, the board of trustees noted that Indiana law gives INPRS the ability to enter into an agreement with an insurance company to provide annuities to retired members. “The insurance company option maintains the same level of benefit to the member, while also immunizing the funds from additional unfunded liabilities,” the board wrote, adding that Indiana law also protects retirees from “the extremely unlikely event of an insurance company default.”

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Old 01-03-2014, 12:38 PM
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On discount rates

http://www.auditor.illinois.gov/Audi...pt-Summary.htm

Quote:
Exhibit 1-3
CHANGE IN INTEREST RATE ASSUMPTIONS SINCE 2001
126 PENSION PLANS IN THE NATION’S LARGEST PUBLIC RETIREMENT SYSTEMS

Source: NASRA Public Fund Survey.
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Old 01-03-2014, 12:39 PM
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their notation sucks on the vertical scale
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