Pondering a pension - Worcester Telegram & Gazette - telegram.com: "The approval of a tax-free disability pension for Marian J. McGovern, the recently retired commander of the Massachusetts State Police, calls into question an apparent contradiction in the state’s retirement system. Ms. McGovern, 58, capped a 33-year career by serving three years as head of the state police, a position that earned her $209,000 annually and qualified her for a $163,000 annual public pension free of state taxes. Now, because she has qualified for a disability pension, Ms. McGovern will also be exempt from federal taxes, meaning she will save about $25,000 a year. . . Ms. McGovern’s heart condition was diagnosed in 2009, before she was appointed as the state’s top cop. That condition was apparently not an impediment to her serving in a stressful and high-pay position; yet, now that she is retired, it seems to have qualified her for a more lucrative pension classification. In a similar case, two years ago we questioned the decision of another former head of the state police, Thomas Foley, to run for sheriff of Worcester County even as he was collecting a full disability pension. In both cases, it seems to us that a medical disability is simply incompatible with full-time service in a highly responsible and highly stressful law enforcement job. . . . "
You think?
Tuesday, July 31, 2012
Sunday, July 29, 2012
CalPERS needs reality check
Denial is a river in California--
CalPERS needs reality check | calpers, pension, return - Our View - Appeal-Democrat: "A common defense of California's giant public employee pension systems against calls for bold and expedient reforms is that the funds' investments are performing "just fine" and that, once the economy turns around, the funds will be able to pay the retirement benefits promised to their members, and there will be nothing to worry about. A recent disclosure by the California Public Employees Retirement System about its investments should refute such assurances. CalPERS, which projects a 7.5 percent annual return on investments, earned only 1 percent for 2011-12, according to the fund itself and analysis by Orange County Register Watchdog reporters. This is the fifth time in five years CalPERS has failed to reach its investment return goal. What that means is that state unfunded pension liabilities will grow, again. One highly cited Stanford University study estimates California's unfunded pension liability at up to a half-trillion dollars."
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CalPERS needs reality check | calpers, pension, return - Our View - Appeal-Democrat: "A common defense of California's giant public employee pension systems against calls for bold and expedient reforms is that the funds' investments are performing "just fine" and that, once the economy turns around, the funds will be able to pay the retirement benefits promised to their members, and there will be nothing to worry about. A recent disclosure by the California Public Employees Retirement System about its investments should refute such assurances. CalPERS, which projects a 7.5 percent annual return on investments, earned only 1 percent for 2011-12, according to the fund itself and analysis by Orange County Register Watchdog reporters. This is the fifth time in five years CalPERS has failed to reach its investment return goal. What that means is that state unfunded pension liabilities will grow, again. One highly cited Stanford University study estimates California's unfunded pension liability at up to a half-trillion dollars."
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Saturday, July 28, 2012
The Public Pension Crisis--does Obama have a clue?
When's the last time you heard Obama talk about the public pension crisis in this country? Probably never--does he not care? Or is it just more "amateur" hour?
Public Pension Crisis is Worse Than You Thought - Independent Voter Network: "Public pensions, under rules established by the Government Accounting Standards Board can discount based on what they assume their expected rate of return to be. This is generally between 6-8%, and number many financial analysts find to be laughably high. By contrast, private pensions use a fair-value method which produces a much low discount rate. This means they need to have much more money on hand. This is not a “he said, she said” argument; while public pensions are following GASB rules in calculating their liabilities, nearly all disinterested outside observers have concluded that these rules seriously understate pension’s true benefit liabilities. Public pensions are guaranteed by governments. If a public pension is in financial trouble and cannot meet obligations then taxpayers will be forced to make up the difference. This directly impacts all of us."
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Public Pension Crisis is Worse Than You Thought - Independent Voter Network: "Public pensions, under rules established by the Government Accounting Standards Board can discount based on what they assume their expected rate of return to be. This is generally between 6-8%, and number many financial analysts find to be laughably high. By contrast, private pensions use a fair-value method which produces a much low discount rate. This means they need to have much more money on hand. This is not a “he said, she said” argument; while public pensions are following GASB rules in calculating their liabilities, nearly all disinterested outside observers have concluded that these rules seriously understate pension’s true benefit liabilities. Public pensions are guaranteed by governments. If a public pension is in financial trouble and cannot meet obligations then taxpayers will be forced to make up the difference. This directly impacts all of us."
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Entitlements include public pensions
In reality there are no "entitlements." There are handouts--"entitlements" is a term dreamed up by bureaucrats and politicians. In the U.S. public pensions are not "earned" by government workers--they contribute little (if anything) to the total payout liability of most public pension programs. Let's call public pensions what they are--handouts from the taxpayers to government workers who have been lavished benefits unavailable to most who work in the private sector.
Public Pensions Fail Simple Math - John Ransom - Townhall Finance Conservative Columnists and Financial Commentary - Page 1: "Increasingly state governments in the US are facing budget shortfalls over entitlements paid to public servants and those on the public dole (is there a difference?). And like the Social Security program, the shortfalls have been wholly predictable as government makes bigger and bigger promises to a select number of citizens who then take up a bigger share of the public pie."
Public pensions are beyond "fixing"--the answer? Abolish all public pensions--and provide tax-sheltered, individually funded retirement accounts for all Americans.
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Public Pensions Fail Simple Math - John Ransom - Townhall Finance Conservative Columnists and Financial Commentary - Page 1: "Increasingly state governments in the US are facing budget shortfalls over entitlements paid to public servants and those on the public dole (is there a difference?). And like the Social Security program, the shortfalls have been wholly predictable as government makes bigger and bigger promises to a select number of citizens who then take up a bigger share of the public pie."
Public pensions are beyond "fixing"--the answer? Abolish all public pensions--and provide tax-sheltered, individually funded retirement accounts for all Americans.
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Thursday, July 26, 2012
Comment on Syracuse school board story
Interesting comment to the story we highlighted yesterday--
Comments on Syracuse school board approves raises, down the road, for two upper-level employees | News from The Post-Standard - Page 2 -: a comment-- "First - These two individuals are not in a public or private union, they are just greed hogs at the trough. Second - I am totally dismayed at the quality of the newly elected school board members and how they so quickly lost their way, except Max. He has the courage of his conviction to stand alone and do what is right, the rest can count on not getting re-elected."
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Comments on Syracuse school board approves raises, down the road, for two upper-level employees | News from The Post-Standard - Page 2 -: a comment-- "First - These two individuals are not in a public or private union, they are just greed hogs at the trough. Second - I am totally dismayed at the quality of the newly elected school board members and how they so quickly lost their way, except Max. He has the courage of his conviction to stand alone and do what is right, the rest can count on not getting re-elected."
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Syracuse school board --
Interesting story about the Syracuse school board--
Syracuse school board approves raises, down the road, for two upper-level employees | syracuse.com: "The Syracuse school board voted tonight to give 2 percent raises, a year down the road, to two upper-level district staff. The board voted to gave a 2 percent annual raise for two years to the chief academic officer and the chief of staff, but the raises do not kick in until July 2013, board member Max Ruckdeschel said. The vote was 5-1, with Ruckdeschel casting the no vote. He said given the hard financial times the district is undergoing, he could not vote to approve the raise recommended by Superintendent Sharon Contreras. The district cut more than 180 jobs to balance the 2012-13 budget, its second consecutive year of big job cuts. The raises will go to Chief Academic Officer Laura Kelley and Chief of Staff Kim Bradley. Bradley currently makes $145,000 a year and Kelley makes $141,000 a year, according to the district. Bradley was hired in July 2011 and Kelley was hired in January."
Tomorrow we will have the followup comment to the above story.
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Syracuse school board approves raises, down the road, for two upper-level employees | syracuse.com: "The Syracuse school board voted tonight to give 2 percent raises, a year down the road, to two upper-level district staff. The board voted to gave a 2 percent annual raise for two years to the chief academic officer and the chief of staff, but the raises do not kick in until July 2013, board member Max Ruckdeschel said. The vote was 5-1, with Ruckdeschel casting the no vote. He said given the hard financial times the district is undergoing, he could not vote to approve the raise recommended by Superintendent Sharon Contreras. The district cut more than 180 jobs to balance the 2012-13 budget, its second consecutive year of big job cuts. The raises will go to Chief Academic Officer Laura Kelley and Chief of Staff Kim Bradley. Bradley currently makes $145,000 a year and Kelley makes $141,000 a year, according to the district. Bradley was hired in July 2011 and Kelley was hired in January."
Tomorrow we will have the followup comment to the above story.
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Tuesday, July 24, 2012
San Bernardino seeks bankruptcy protection - pt. 2
More on the California "mess"--
Falsified documents? Hogs at the Trough!
Monday, July 23, 2012
San Bernardino seeks bankruptcy protection - pt. 1
More on the public pension fiasco--California is one of the worst states--
San Bernardino seeks bankruptcy protection - latimes.com: "The city's fiscal crisis has been years in the making, compounded by the nation's crushing recession and exacerbated by escalating pension costs, lucrative labor agreements, Sacramento's raid on redevelopment funds and a city reserve that is tapped out, officials said. Miller told the council that the city faced major deficits for the next five years. The deficits remain even after the city negotiated $10 million in concessions from employees and slashed the workforce 20% over the last four years."
Remember when government workers were called public servants? What an oxymoron that is today!
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San Bernardino seeks bankruptcy protection - latimes.com: "The city's fiscal crisis has been years in the making, compounded by the nation's crushing recession and exacerbated by escalating pension costs, lucrative labor agreements, Sacramento's raid on redevelopment funds and a city reserve that is tapped out, officials said. Miller told the council that the city faced major deficits for the next five years. The deficits remain even after the city negotiated $10 million in concessions from employees and slashed the workforce 20% over the last four years."
Remember when government workers were called public servants? What an oxymoron that is today!
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Sunday, July 22, 2012
Rising pension costs push California cities to fiscal brink
California--it's the same story all over that state--
Rising costs push California cities to fiscal brink - latimes.com: "Rising public pension costs are one of the catalysts pushing cities into fiscal peril. In San Bernardino, the city's obligation to its employee retirement system rose from $1 million in the 2006-07 fiscal year to nearly double that in the current budget year. In three years, those costs are expected to swallow up 15% of the budget. Pension spending grew an average of 11.4% a year in the state's biggest cities and counties between 1999 and 2010, roughly twice as fast as spending on public safety, social services, recreation, health and sanitation, according to a February report by the Stanford Institute for Economic Policy Research. Joe Nation, a Stanford economics professor and co-author of the February report, thinks that for at least some cities, insolvency is inevitable unless they can wrest much bigger concessions on salaries and pensions from public employees. "I think this is the tip of the iceberg in terms of the problem,'' Nation said. "Stockton was spending $12 [million] or $13 million on pensions 10 years ago. By 2010, it was $30 million … and will double again over the next five years, unless something is changed.""
Public pensions need to be abolished--they've become just another way for "public servants" to rob the public treasury. Public pensions (and private pensions) need to be abolished and replaced with tax-sheltered, self-funded retirement accounts.
Note one reader's comment to the above story--
"Go ahead and go bankrupt, its the only way to get rid of those idiotic overpaid pensions that should NEVER have been agreed to in the first place. Municipalities should outsource ALL services to private companies and pay only current cash for current services. If employees want a pension, let them save for it themselves like the rest of us do."
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Rising costs push California cities to fiscal brink - latimes.com: "Rising public pension costs are one of the catalysts pushing cities into fiscal peril. In San Bernardino, the city's obligation to its employee retirement system rose from $1 million in the 2006-07 fiscal year to nearly double that in the current budget year. In three years, those costs are expected to swallow up 15% of the budget. Pension spending grew an average of 11.4% a year in the state's biggest cities and counties between 1999 and 2010, roughly twice as fast as spending on public safety, social services, recreation, health and sanitation, according to a February report by the Stanford Institute for Economic Policy Research. Joe Nation, a Stanford economics professor and co-author of the February report, thinks that for at least some cities, insolvency is inevitable unless they can wrest much bigger concessions on salaries and pensions from public employees. "I think this is the tip of the iceberg in terms of the problem,'' Nation said. "Stockton was spending $12 [million] or $13 million on pensions 10 years ago. By 2010, it was $30 million … and will double again over the next five years, unless something is changed.""
Public pensions need to be abolished--they've become just another way for "public servants" to rob the public treasury. Public pensions (and private pensions) need to be abolished and replaced with tax-sheltered, self-funded retirement accounts.
Note one reader's comment to the above story--
"Go ahead and go bankrupt, its the only way to get rid of those idiotic overpaid pensions that should NEVER have been agreed to in the first place. Municipalities should outsource ALL services to private companies and pay only current cash for current services. If employees want a pension, let them save for it themselves like the rest of us do."
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Saturday, July 21, 2012
In California the Hogs are Running Wild!! (pt. 3)
California going bankrupt and the Hogs are running wild!!--
Unauthorized vacation buyouts secretly pushed through at state parks department, audit says - Capitol and California - The Sacramento Bee: " . . . The auditors turned up evidence of additional unauthorized vacation buyouts at parks headquarters in 2004, 2005 and 2008. The cost of these buyouts is unknown, either because the auditors did not fully investigate those leads or records could not be found. . . . The investigators found that payroll codes were falsified to obscure what was happening. The payouts were coded as overtime, not as vacation, personal leave or compensatory time off. "This was not an accurate or truthful representation of the leave that was being purchased," the attorney general's report states. . . . "
Better not dig too deep!
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Unauthorized vacation buyouts secretly pushed through at state parks department, audit says - Capitol and California - The Sacramento Bee: " . . . The auditors turned up evidence of additional unauthorized vacation buyouts at parks headquarters in 2004, 2005 and 2008. The cost of these buyouts is unknown, either because the auditors did not fully investigate those leads or records could not be found. . . . The investigators found that payroll codes were falsified to obscure what was happening. The payouts were coded as overtime, not as vacation, personal leave or compensatory time off. "This was not an accurate or truthful representation of the leave that was being purchased," the attorney general's report states. . . . "
Better not dig too deep!
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Friday, July 20, 2012
In California the Hogs are Running Wild!! (pt. 2)
The Hogs are running wild in bankrupt California--
Unauthorized vacation buyouts secretly pushed through at state parks department, audit says - Capitol and California - The Sacramento Bee: " . . . State workers are allowed to accrue up to 680 hours of unused leave time during their career, but that cap is routinely ignored. The state is obligated to pay for accrued leave when an employee leaves state service, at the rate of the employee's final salary.The secret program at the parks department was unusual because it allowed a select group of workers to cash out their leave. The money spent to buy out vacation time would have been enough to keep several state parks open. . . . The Natural Resources Agency would not divulge the name of the executive responsible for carrying out the vacation buyouts, citing state laws that forbid disclosing personnel matters. . . . "People did not know about it except at the highest levels," Marshall said of the buyout. "There was definitely discontent. The practice was questionable while we were trying to keep parks open." State Parks Director Ruth Coleman said the buyout occurred without her knowledge. She said she felt "shock and dismay" when she learned about it months later after rumors about the program had spread through the department. "From the minute I found out about it, I knew it was an egregious, bad thing," Coleman said . . . . "
Too little too late--the hogs had already gorged themselves at the public trough.
Too little too late--the hogs had already gorged themselves at the public trough.
Thursday, July 19, 2012
In California the Hogs are Running Wild!! (pt. 1)
No wonder California is going bankrupt--the hogs are running wild!!--
Unauthorized vacation buyouts secretly pushed through at state parks department, audit says - Capitol and California - The Sacramento Bee: "A high-ranking official at the California Department of Parks and Recreation carried out a secret vacation buyout program last year for himself and other headquarters staff, according to an internal audit, former employees and other documents obtained by The Bee. . . . The money was spent even as the department was planning the unprecedented closure of 70 state parks due to budget cuts. The program, in which employees were allowed to sell unused vacation time back to the state, was not approved by the California Department of Human Resources, as required by state law, said Lynelle Jolley, a spokeswoman for the human resources department. Due to the state's precarious budget condition, she said, no vacation buyouts have been approved by the agency since 2007. "They definitely did not authorize this," Stapler confirmed. To avoid a paper trail, the buyout requests were submitted in some cases only on Post-It notes, not official forms, according to an internal parks department audit obtained by The Bee. Investigators were told that "the knowledge of the leave buy out plan was not to go out to anyone … and that the leave buyout plan was not to be referred to or discussed in email communications," according to the audit. . . . Ted Jackson, a retired deputy director of operations at the parks department, said he was appalled that the buyouts occurred with so many state parks on the verge of closure. "People I care about are being hurt and the parks are being hurt," said Jackson, a 30-year state employee who worked at parks headquarters for five years. "These are sensitive resources that were given to us to hold in trust for ourselves and future generations.". . .
Hogs at the Trough don't care about the public or the public parks.
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Unauthorized vacation buyouts secretly pushed through at state parks department, audit says - Capitol and California - The Sacramento Bee: "A high-ranking official at the California Department of Parks and Recreation carried out a secret vacation buyout program last year for himself and other headquarters staff, according to an internal audit, former employees and other documents obtained by The Bee. . . . The money was spent even as the department was planning the unprecedented closure of 70 state parks due to budget cuts. The program, in which employees were allowed to sell unused vacation time back to the state, was not approved by the California Department of Human Resources, as required by state law, said Lynelle Jolley, a spokeswoman for the human resources department. Due to the state's precarious budget condition, she said, no vacation buyouts have been approved by the agency since 2007. "They definitely did not authorize this," Stapler confirmed. To avoid a paper trail, the buyout requests were submitted in some cases only on Post-It notes, not official forms, according to an internal parks department audit obtained by The Bee. Investigators were told that "the knowledge of the leave buy out plan was not to go out to anyone … and that the leave buyout plan was not to be referred to or discussed in email communications," according to the audit. . . . Ted Jackson, a retired deputy director of operations at the parks department, said he was appalled that the buyouts occurred with so many state parks on the verge of closure. "People I care about are being hurt and the parks are being hurt," said Jackson, a 30-year state employee who worked at parks headquarters for five years. "These are sensitive resources that were given to us to hold in trust for ourselves and future generations.". . .
Hogs at the Trough don't care about the public or the public parks.
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Wednesday, July 18, 2012
Growing backlash against public pensions, part 2
A day of reckoning is coming--
The growing backlash against public pensions | savannahnow.com: " . . . Basically, the problem revolves around defined benefit retirement plans, known as pensions. They used to be necessary to entice workers to remain in place for an entire career — obviously not so today. Contributing a small portion of their wages, employees are guaranteed a percentage of their salaries for years of retirement. The benefit is often for life, and it can pay up to 60 percent or more of the highest salary earned during employment. Many of these plans include a sweet deal at a reduced rate for early retirement at age 52 or 55, and, medical benefits until age 65 when Medicare kicks in. It’s not unusual for public employees to retire early and draw benefits, then take another public sector job and start an additional retirement plan. When wages and benefits are combined, dollars per hour worked for public employees has surpassed that of the private sector for many years now. As soon as defined contribution plans were created, a la 401(k)s in the late 1970s, the private sector began to abandon defined benefit plans. By the 1980s, 60 percent of private sector employees remained on pension plans. Today it is only 10 percent — and falling. That’s not because private businesses are ‘greedy,’ but because it is financially prudent and a matter of survival. The holdouts are the unionized sectors such as the auto and airline industries — and even they are beginning to understand their tenuous situation. Contrast this with more than 90 percent of government workers still on pension plans today. Why? Because until recently they have not had to worry about being financially prudent. The U.S. government has a bigger unfunded liability for military and civil servant retirement benefits than it does for Social Security. And as we all know, Social Security is going broke. Disaster looms. It will be avoided only when the public sector is fully transitioned to private investment, and all have skin in the same game: The free market."
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The growing backlash against public pensions | savannahnow.com: " . . . Basically, the problem revolves around defined benefit retirement plans, known as pensions. They used to be necessary to entice workers to remain in place for an entire career — obviously not so today. Contributing a small portion of their wages, employees are guaranteed a percentage of their salaries for years of retirement. The benefit is often for life, and it can pay up to 60 percent or more of the highest salary earned during employment. Many of these plans include a sweet deal at a reduced rate for early retirement at age 52 or 55, and, medical benefits until age 65 when Medicare kicks in. It’s not unusual for public employees to retire early and draw benefits, then take another public sector job and start an additional retirement plan. When wages and benefits are combined, dollars per hour worked for public employees has surpassed that of the private sector for many years now. As soon as defined contribution plans were created, a la 401(k)s in the late 1970s, the private sector began to abandon defined benefit plans. By the 1980s, 60 percent of private sector employees remained on pension plans. Today it is only 10 percent — and falling. That’s not because private businesses are ‘greedy,’ but because it is financially prudent and a matter of survival. The holdouts are the unionized sectors such as the auto and airline industries — and even they are beginning to understand their tenuous situation. Contrast this with more than 90 percent of government workers still on pension plans today. Why? Because until recently they have not had to worry about being financially prudent. The U.S. government has a bigger unfunded liability for military and civil servant retirement benefits than it does for Social Security. And as we all know, Social Security is going broke. Disaster looms. It will be avoided only when the public sector is fully transitioned to private investment, and all have skin in the same game: The free market."
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Tuesday, July 17, 2012
Growing backlash against public pensions, part 1
Government employees -- the new elite?
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Monday, July 16, 2012
Pension crisis continues: part 6
The pension crisis--how bad is it? Scary bad--
Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "The debt from 10 Chicago-area pension plans swelled more than 600 percent to $27.4 billion between 2001 and 2010, according to a study released Monday by the nonpartisan Civic Federation. That's $8,993 for each man, woman and child in Chicago, according to the report. The shortfall comes on top of more than $83 billion in unfunded pension liabilities at the state level, driving the cost up to nearly $15,000 per Chicagoan, the report shows. "While they're debating what to do about the state funds, these local funds are continuing to decline," said Laurence Msall, Civic Federation president. "Inaction during the past 10 years means it's not just politically more difficult to fix this problem but also mathematically more difficult." The report bolsters the urgency for pension reform expressed by Mayor Rahm Emanuel and Gov. Pat Quinn in recent months. In May, the mayor traveled to Springfield to testify before a House pension panel, saying essential city services and education reforms would suffer if dramatic changes aren't made to the city's pension system. "Chicago's quality of life and economy will falter," Emanuel warned, calling for raising retirement ages, increasing employee contributions and freezing cost-of-living increases for retired workers for 10 years, among other measures."
Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "The debt from 10 Chicago-area pension plans swelled more than 600 percent to $27.4 billion between 2001 and 2010, according to a study released Monday by the nonpartisan Civic Federation. That's $8,993 for each man, woman and child in Chicago, according to the report. The shortfall comes on top of more than $83 billion in unfunded pension liabilities at the state level, driving the cost up to nearly $15,000 per Chicagoan, the report shows. "While they're debating what to do about the state funds, these local funds are continuing to decline," said Laurence Msall, Civic Federation president. "Inaction during the past 10 years means it's not just politically more difficult to fix this problem but also mathematically more difficult." The report bolsters the urgency for pension reform expressed by Mayor Rahm Emanuel and Gov. Pat Quinn in recent months. In May, the mayor traveled to Springfield to testify before a House pension panel, saying essential city services and education reforms would suffer if dramatic changes aren't made to the city's pension system. "Chicago's quality of life and economy will falter," Emanuel warned, calling for raising retirement ages, increasing employee contributions and freezing cost-of-living increases for retired workers for 10 years, among other measures."
Sunday, July 15, 2012
Pension crisis continues: part 5
Empty Promises?--
Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "The main driver of the increase in pension debt continued to be a severe lack of contributions. The nearly $1 billion local governments put into the pension funds in 2010 was less than half of what was required to cover benefits promised to workers, the report found."
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Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "The main driver of the increase in pension debt continued to be a severe lack of contributions. The nearly $1 billion local governments put into the pension funds in 2010 was less than half of what was required to cover benefits promised to workers, the report found."
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Saturday, July 14, 2012
Pension crisis continues: part 4
Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "In percentage terms, Chicago's plan for municipal employees received the lowest amount of required contributions in 2010. The city put in just 32 percent of what was needed to cover benefits. With more than $6 billion in unfunded liabilities, the municipal pension plan also has the largest debt load of any Chicago-area fund."
So who's going to pay to make up the difference?
So who's going to pay to make up the difference?
Friday, July 13, 2012
Pension crisis continues: part 3
Pension holiday? Read this--
Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "The Chicago Teachers' Pension Fund received the highest percentage of required contributions in 2010. The fund received 81.7 percent of the money it needed that year, about $290 million. Projected budget shortfalls for 2011, however, led CPS to seek a partial pension holiday from the General Assembly, which drastically reduced the amount the district was required to pay into the fund during the next three years. Last year, the teachers' pension fund received $187 million, $400 million less than the amount it should have gotten. When the holiday ends in 2014, the district's pension costs are expected to more than triple to $647.8 million, adding even more stress to the CPS budget. "The school district essentially balanced its budget by borrowing from the pension fund," Msall said. "This kind of legislative manipulation not only damages the pension system but also the education system because while the partial pension holiday provided some budget relief, the cost over the long haul is far greater.""
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Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "The Chicago Teachers' Pension Fund received the highest percentage of required contributions in 2010. The fund received 81.7 percent of the money it needed that year, about $290 million. Projected budget shortfalls for 2011, however, led CPS to seek a partial pension holiday from the General Assembly, which drastically reduced the amount the district was required to pay into the fund during the next three years. Last year, the teachers' pension fund received $187 million, $400 million less than the amount it should have gotten. When the holiday ends in 2014, the district's pension costs are expected to more than triple to $647.8 million, adding even more stress to the CPS budget. "The school district essentially balanced its budget by borrowing from the pension fund," Msall said. "This kind of legislative manipulation not only damages the pension system but also the education system because while the partial pension holiday provided some budget relief, the cost over the long haul is far greater.""
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Thursday, July 12, 2012
Pension crisis continues: part 2
The problem just keeps getting worse--
Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "The report also found that dramatic investment losses from 2008 continue to affect the funds' bottom line because they spread investment performance over a three- to five-year period. The average rate of return for the 10 funds reached a low of negative 21.1 percent in 2008. Although investment income has bounced back, hitting an average of 13.5 percent in 2010, the pension crisis is now so severe that it's impossible for the funds to invest their way out of the problem. Another contributing factor to the financial decline of Chicago-area public pension plans is a decrease in the ratio of active workers to retirees. The Civic Federation found that the ratio dropped from 1.7 active workers for every retiree in 2001 to 1.23 in 2010. That means fewer people are contributing to the funds at a time when the funds need contributions more than ever."
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Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "The report also found that dramatic investment losses from 2008 continue to affect the funds' bottom line because they spread investment performance over a three- to five-year period. The average rate of return for the 10 funds reached a low of negative 21.1 percent in 2008. Although investment income has bounced back, hitting an average of 13.5 percent in 2010, the pension crisis is now so severe that it's impossible for the funds to invest their way out of the problem. Another contributing factor to the financial decline of Chicago-area public pension plans is a decrease in the ratio of active workers to retirees. The Civic Federation found that the ratio dropped from 1.7 active workers for every retiree in 2001 to 1.23 in 2010. That means fewer people are contributing to the funds at a time when the funds need contributions more than ever."
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Wednesday, July 11, 2012
Pension crisis continues: part 1
The problem is not going to go away--
Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "Overall, the area's pension debt has grown by an average 24 percent a year. Some funds are in danger of going insolvent in less than a decade, including the firefighters fund and the police pension plan. The firefighters fund has the lowest funding ratio of any local pension plan, with just 32.4 percent of the assets it needs to cover its liabilities. The figure for the police plan is 39.7 percent. "By ignoring this issue for so long, you've guaranteed that any pension reforms will have to be much larger to be effective," Msall said. "Government will have to pay dramatically more or dramatically reduce the actual benefits that will be paid to employees and retirees.""
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Pension crisis continues: Dramatic rise in debt for Chicago-area pension plans - chicagotribune.com: "Overall, the area's pension debt has grown by an average 24 percent a year. Some funds are in danger of going insolvent in less than a decade, including the firefighters fund and the police pension plan. The firefighters fund has the lowest funding ratio of any local pension plan, with just 32.4 percent of the assets it needs to cover its liabilities. The figure for the police plan is 39.7 percent. "By ignoring this issue for so long, you've guaranteed that any pension reforms will have to be much larger to be effective," Msall said. "Government will have to pay dramatically more or dramatically reduce the actual benefits that will be paid to employees and retirees.""
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Tuesday, July 10, 2012
Congress, Insider Trading, and the Financial Crisis
Take a good look at the Hogs at the Trough--
Congress, Insider Trading, And The 2008 Financial Crisis: " . . . . The lawmakers, many of whom held leadership positions and committee chairmanships in the House and Senate, changed portions of their portfolios a total of 166 times within two business days of speaking or meeting with the administration officials. The party affiliation of the lawmakers was about evenly divided between Democrats and Republicans, 19 to 15. The period covered by The Post analysis was a grim one for the U.S. economy, and many people rushed to reconfigure their investment portfolios. The financial moves by the members of Congress are permitted under congressional ethics rules, but some ethics experts said they should refrain from taking actions in their financial portfolios when they might know more than the public.“They shouldn’t be making these trades when they know what they are going to do,” said Richard W. Painter, who was chief ethics lawyer for President George W. Bush. “And what they are going to do is then going to influence the market. If this was going on in the private sector or it was going on in the executive branch, I think the SEC would be investigating.” Of course they would. Indeed, people like Michael Milken and Martha Stewart were subjected to intensive SEC and FBI investigations over the mere suggestion that they had traded on information that they had received from insiders. Milken’s actions were, of course, far more serious than Stewart’s and Stewart ended up being convicted only of lying to Federal agents, but the principle remains the same. The law has been eminently clear for years that trading on material, non-public information is forbidden. Unless, that is, you happen to be a member of Congress. . . "
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Congress, Insider Trading, And The 2008 Financial Crisis: " . . . . The lawmakers, many of whom held leadership positions and committee chairmanships in the House and Senate, changed portions of their portfolios a total of 166 times within two business days of speaking or meeting with the administration officials. The party affiliation of the lawmakers was about evenly divided between Democrats and Republicans, 19 to 15. The period covered by The Post analysis was a grim one for the U.S. economy, and many people rushed to reconfigure their investment portfolios. The financial moves by the members of Congress are permitted under congressional ethics rules, but some ethics experts said they should refrain from taking actions in their financial portfolios when they might know more than the public.“They shouldn’t be making these trades when they know what they are going to do,” said Richard W. Painter, who was chief ethics lawyer for President George W. Bush. “And what they are going to do is then going to influence the market. If this was going on in the private sector or it was going on in the executive branch, I think the SEC would be investigating.” Of course they would. Indeed, people like Michael Milken and Martha Stewart were subjected to intensive SEC and FBI investigations over the mere suggestion that they had traded on information that they had received from insiders. Milken’s actions were, of course, far more serious than Stewart’s and Stewart ended up being convicted only of lying to Federal agents, but the principle remains the same. The law has been eminently clear for years that trading on material, non-public information is forbidden. Unless, that is, you happen to be a member of Congress. . . "
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Monday, July 9, 2012
A New Normal for All but the Hogs at the Trough
EDITORIAL: Pension suit shows unions out of touch - The Westerly Sun: News: " . . . Rhode Island led the nation last year in bringing reform to its state pension system, and on Friday labor unions filed the suit everyone knew was coming in an effort to reverse that reform. Trouble is, no one can seem to figure out how to reverse the new normal — the money just isn’t there to fund pensions the rest of us lost decades ago. Annual cost of living increases, early retirement ages, luxurious medical benefits all went out the window for the average worker years and years ago. . . Many of us are earning less than we did a few years ago and so the money just isn’t there to pay the increased taxes for benefits no one else has anymore. . . "
A New Normal for Everyone but the Hogs at the Trough!
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A New Normal for Everyone but the Hogs at the Trough!
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Sunday, July 8, 2012
The Hogs Won't Stop Feeding at the Trough
The Hogs won't stop feeding at the trough--they'll even force the trough into bankruptcy!--
Stockton, Calif., faces midnight deadline to avert bankruptcy | Reuters: ""It's definitely about sharing the pain a little more broadly," said Michael. "Up until recently there has been no real impact on the retirees or bond creditors ... The employees and the citizens have been bearing all of the pain." Stockton's finances collapsed along with its housing market, and despite slashing $90 million in spending in recent years and cutting a quarter of positions across its agencies, the city's finances cannot shake recurring deficits due to weak revenue. Stockton's financial troubles have been compounded, according to city officials, by generous pay and benefits for city employees and retirees and the city taking on too much debt when it enjoyed a home-building boom in the early part of the last decade that transformed it into a distant bedroom community for the San Francisco Bay area."
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Stockton, Calif., faces midnight deadline to avert bankruptcy | Reuters: ""It's definitely about sharing the pain a little more broadly," said Michael. "Up until recently there has been no real impact on the retirees or bond creditors ... The employees and the citizens have been bearing all of the pain." Stockton's finances collapsed along with its housing market, and despite slashing $90 million in spending in recent years and cutting a quarter of positions across its agencies, the city's finances cannot shake recurring deficits due to weak revenue. Stockton's financial troubles have been compounded, according to city officials, by generous pay and benefits for city employees and retirees and the city taking on too much debt when it enjoyed a home-building boom in the early part of the last decade that transformed it into a distant bedroom community for the San Francisco Bay area."
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Saturday, July 7, 2012
Why Public Pensions Should Be Abolished
If you ever need a reason why all public pensions should be abolished just go to this link: Tribune watchdog: Pension Games -- Chicago Tribune.
In short, public pensions should be abolished because public unions and public officials have demonstrated, time and time again, they cannot responsibly handle creating, maintaining, and funding public pensions.
What's the answer? Include everyone in Social Security and providing everyone individual, tax-sheltered, self-funded retirement accounts.
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In short, public pensions should be abolished because public unions and public officials have demonstrated, time and time again, they cannot responsibly handle creating, maintaining, and funding public pensions.
What's the answer? Include everyone in Social Security and providing everyone individual, tax-sheltered, self-funded retirement accounts.
Tweet Follow @hogsatthetrough
Friday, July 6, 2012
Illinois--unwilling to make tough choices?
"Illinois in poorest fiscal condition of all states"--Chicago Tribune
Poor, poor Illinois--here's some sound advice from its neighbor to the north:
Wisconsin governor urges Illinois to make tough choices - chicagotribune.com: By Scott Walker June 29, 2012 - "All too often political leaders have been afraid to tell the truth about the costs associated with pension, health care and other entitlement obligations. It is time for politicians to own up to these fiscal challenges. As is the case in Illinois, the truth is often sobering. I know the feeling. When I became governor in Wisconsin, the state faced a $3.6 billion deficit, was hemorrhaging jobs and had high unemployment. While I'm not an expert on the fiscal challenges facing Illinois, based on media reports I've read and stories I've heard from visiting your state, there are major budgetary issues that need to be resolved. Illinois faces a fiscal and economic crisis. In times of crisis, citizens should demand leadership. In the weeks leading up to the Wisconsin recall election, a supporter and friend told me: "If you hadn't gone as far as you did, you might have avoided this recall election." I responded, "We also wouldn't have fixed our problem. I'm not planning on it, but I'm not afraid to lose." The actions we took in balancing the state's budget and implementing collective bargaining reforms were solely aimed at ensuring that my two sons and other kids would inherit a state better off than the one I had. Burying the next generation under a mountain of crippling debt was never a realistic option.Economic growth and job creation are largely dependent on certainty, which government can provide by delivering stable services, predictable regulations and a favorable tax climate. . . ."
Poor, poor Illinois--here's some sound advice from its neighbor to the north:
Wisconsin governor urges Illinois to make tough choices - chicagotribune.com: By Scott Walker June 29, 2012 - "All too often political leaders have been afraid to tell the truth about the costs associated with pension, health care and other entitlement obligations. It is time for politicians to own up to these fiscal challenges. As is the case in Illinois, the truth is often sobering. I know the feeling. When I became governor in Wisconsin, the state faced a $3.6 billion deficit, was hemorrhaging jobs and had high unemployment. While I'm not an expert on the fiscal challenges facing Illinois, based on media reports I've read and stories I've heard from visiting your state, there are major budgetary issues that need to be resolved. Illinois faces a fiscal and economic crisis. In times of crisis, citizens should demand leadership. In the weeks leading up to the Wisconsin recall election, a supporter and friend told me: "If you hadn't gone as far as you did, you might have avoided this recall election." I responded, "We also wouldn't have fixed our problem. I'm not planning on it, but I'm not afraid to lose." The actions we took in balancing the state's budget and implementing collective bargaining reforms were solely aimed at ensuring that my two sons and other kids would inherit a state better off than the one I had. Burying the next generation under a mountain of crippling debt was never a realistic option.Economic growth and job creation are largely dependent on certainty, which government can provide by delivering stable services, predictable regulations and a favorable tax climate. . . ."
Thursday, July 5, 2012
Obamacare and "cost containment"
The problem with Obamacare? Who's going to pay for it?
The Obamacare law is constitutional, now make it affordable - chicagotribune.com: "If Democrats want to save the ambitions of this law, they're going to have to find a way to write a Truly Affordable Care Act. That is, they're going to have to devise ways to put genuine cost containment in the bill, if they hope to keep the states on board for Medicaid expansion. They're not going to get much help from Republicans, whose mantra is "repeal and replace." Their view is that Democrats alone created this costly law and now own it. Within minutes of the court ruling, House Republicans scheduled a vote for July 11 to repeal the law. The House voted in January 2011 for repeal. Republican presidential challenger Mitt Romney vowed Thursday that he would act on his first day in office to repeal the law. It's unlikely that Republicans could engineer repeal through the Senate, though. They ought to engage Democrats in a real effort to contain the costs before the law takes full effect in 2014."
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The Obamacare law is constitutional, now make it affordable - chicagotribune.com: "If Democrats want to save the ambitions of this law, they're going to have to find a way to write a Truly Affordable Care Act. That is, they're going to have to devise ways to put genuine cost containment in the bill, if they hope to keep the states on board for Medicaid expansion. They're not going to get much help from Republicans, whose mantra is "repeal and replace." Their view is that Democrats alone created this costly law and now own it. Within minutes of the court ruling, House Republicans scheduled a vote for July 11 to repeal the law. The House voted in January 2011 for repeal. Republican presidential challenger Mitt Romney vowed Thursday that he would act on his first day in office to repeal the law. It's unlikely that Republicans could engineer repeal through the Senate, though. They ought to engage Democrats in a real effort to contain the costs before the law takes full effect in 2014."
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Wednesday, July 4, 2012
Robbing Peter to Pay Paul?
Government liabilities and debts--"robbing Peter to pay Paul?"--
Niall Ferguson: If the young knew what was good for them they'd join the Tea Party - Telegraph: ""These mind-boggling numbers represent nothing less than a vast claim by the generation currently retired or about to retire on their children and grandchildren, who are obligated by current law to find the money in the future, by submitting either to substantial increases in taxation or to drastic cuts in other forms of public expenditure," he said. . . . "
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Niall Ferguson: If the young knew what was good for them they'd join the Tea Party - Telegraph: ""These mind-boggling numbers represent nothing less than a vast claim by the generation currently retired or about to retire on their children and grandchildren, who are obligated by current law to find the money in the future, by submitting either to substantial increases in taxation or to drastic cuts in other forms of public expenditure," he said. . . . "
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Tuesday, July 3, 2012
The way out of the US fiscal crisis
The US fiscal crisis -- a way out:
Monday, July 2, 2012
US fiscal crisis -- where we are headed
US fiscal crisis -- where we are headed-- here's what the end looks like:
Niall Ferguson: If the young knew what was good for them they'd join the Tea Party - Telegraph: " . . . . Western democaracies “are going to carry on in their current feckless fashion until, one after another, they follow Greece and the other Mediterranean economies into the fiscal death spiral that begins with a loss of credibility, continues with a rise in borrowing costs, and ends as governments are forced to impose spending cuts and higher taxes at the worst possible moment.""
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Niall Ferguson: If the young knew what was good for them they'd join the Tea Party - Telegraph: " . . . . Western democaracies “are going to carry on in their current feckless fashion until, one after another, they follow Greece and the other Mediterranean economies into the fiscal death spiral that begins with a loss of credibility, continues with a rise in borrowing costs, and ends as governments are forced to impose spending cuts and higher taxes at the worst possible moment.""
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Sunday, July 1, 2012
If the young knew what was good for them
But ignorance is bliss?
Niall Ferguson: If the young knew what was good for them they'd join the Tea Party - Telegraph: " . . . . Professor Ferguson will argue the “young should welcome austerity,” adding they “find it quite hard to compute their own long-term economic interests.”. . the current public debt “allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn.” “It is surprisingly easy to win the support of young voters for policies that would ultimately make matters even worse for them, like maintaining defined benefit pensions for public employees,” he says in an article ahead of the lecture. He adds: "If young Americans knew what was good for them, they would all be in the Tea Party.". . ."
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Niall Ferguson: If the young knew what was good for them they'd join the Tea Party - Telegraph: " . . . . Professor Ferguson will argue the “young should welcome austerity,” adding they “find it quite hard to compute their own long-term economic interests.”. . the current public debt “allows the current generation of voters to live at the expense of those as yet too young to vote or as yet unborn.” “It is surprisingly easy to win the support of young voters for policies that would ultimately make matters even worse for them, like maintaining defined benefit pensions for public employees,” he says in an article ahead of the lecture. He adds: "If young Americans knew what was good for them, they would all be in the Tea Party.". . ."
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