Local Pension Propaganda

Apparently the official June 30, 2015 actuarial reports are out with their phony numbers designed to mask, as much as is decently possible, the real situation and the sad part is that a lot of people will take the Milliman/Buck numbers seriously and make their decisions, to the extent they are allowed to make decisions, accordingly (ie. disastrously). A perfect example of how politicians believe what will allow them to spend the most and ignore reasoned warnings was played out tonight at the Union County freeholder meeting.

John Donnadio of the New Jersey Association of Counties (NJAC) came to “discuss their 2016 strategic goals and objectives” and one of those was to convince all who would listen that the local portions of the New Jersey retirement system are just fine, nothing to see here, move on, keep spending on things like your NJAC dues. It’s the state that has the problems but the counties and municipalities are fine:


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I tried to set them straight:
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But it didn’t take:
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Never mind that:

  1. there is only one fund and it is the actuaries who divide up what little is left among different categories of employees
  2. PFRS and PERS include both state and local employees
  3. if the local plans are in so much better shape then how come those retirees lost their COLAs (from 2011 until what might be the next few days) too?

45 responses to this post.

  1. Posted by Tough Love on April 1, 2016 at 2:13 am

    John,

    It’s interesting how (in the last video) that he did NOT challenge your assertion that (using realistic assumptions) the County/Town Plans are only 50% funded.

    As for whether or not the State vs County/Town Plans are LEGALLY separate although the funds are commingled for investment purpose begs the question …… when the STATE Plans hit zero assets, will the State continue to pay the pensions of State retirees with assets earmarked for the County/Local Plans?
    —————————–

    But not to worry. According to BH and a few other of your Public Sector employee/retiree commentators, there nothing to worry about because the LOCAL Plans are in great shape…… just ask them.

    Reply

    • Posted by Anonymous on April 1, 2016 at 8:15 am

      The fact is no matter what drop dead date you use, local pfrs and pers have dates that are years further out. In fact I can’t find a drop dead date for local pfrs. It is probably at least 15 years after tpaf/sprs, because the towns “fully’ fund them. I can’t see how funds from pfrs could legally ve used to pay for another system, but then again this is nj. You will see another lawsuit I’m sure. But John makes a great point, why did the law apply to state plans only, if the local ones are in better shape. They knew that there would be a another battle if they pitted state vs local at the time. Interestingly enough, pfrs never received the infamous 9%pension increase that the other funds received. There was 70/75 bill that never actually happened. Also in the early 2000s pers and tpaf members had pension contribution holidays. Pfrs never did. The precedent is there to apply different benifits. It is also there to apply with a broad brush. Don’t forget, tons of local pers politicians are still out there and will do what is in their interests.

      Reply

      • Posted by Tough Love on April 1, 2016 at 2:00 pm

        Qouting ….

        “Interestingly enough, pfrs never received the infamous 9% pension increase that the other funds received. ”

        How convenient that you mentioned that, but DON’T mention that in the roughly same time period PFRS pensions WERE increased from 60% to 65% of pay at 25 years of service.

        Reply

        • Posted by Anonymous on April 1, 2016 at 2:06 pm

          Uhhh, wrong yet again TL. That happened in the 70’s/early 80’s. Check your facts and get back to me. Lol. Swing and a miss.

          Reply

          • Posted by Tough Love on April 1, 2016 at 2:32 pm

            I recall the moment I heard about it and was stunned even then (knowing the cost of the extraordinarily generous Plan ALREADY in place). It CERTAINLY wasn’t in the 70’s, and I’m quite sure it occurred some time in the 90’s.

            And a …….. “Swing and a miss.” … because my timing may be off?

            Really?

            How about addressing the SUBSTANCE (and outrageous betrayal of the Taxpayers) of increasing something that is ALREADY excessive ?

          • Posted by Anonymous on April 1, 2016 at 7:43 pm

            TL read chapter 78. It repeal 70/75 bill for pfrs (70 at 25 aND 75 at 30) this bill was passed in 2001 along w the 9% increase. Again, same deal w the ss, In 21 years of service, never was the benifit less than 65 at 25. Never. It is now for tier 3 pension members. The 70/75 bill as it was called never clicked in because certain funding levels were needed that never materialized. Because we never received that benefit, we obviously had no non forfietable right to it(as we do the COLA – we will lose that case for political reasons and ONLY political reasons)
            Any time you checked my facts, I have been right. I have been on our pba negotiations committee twice so I know exactly what my benefits are.
            And as a former semipro baseball player, uh yea, if your timing is in fact off, it usually is a swing and a miss. 🙂 or at least a foul ball. 😉
            You off by at least 20yrs. Even I don’t know the exact year. So I think when you state that u recall “the moment you heard about it” you are referring to the 70/75 bill in 2001. Not something that you were pretty sure happened in the 90’s.
            Personally, I think you are a smart person who just has a hard on for public employees, I don’t ever hear you rip anyone else. I know it is a pen sion website, but I am curious as to your feelings on say, divorce attorneys, iinsurance salesmen, private sector lobbyists, huge ceo payouts, etc. All your anger seems to be at rank and file publics not the big boys on top who really fuck things up. The are many more professions that are less noble than serving the public. And it is beneath you, in my opinion, to state “greedy public takers, etc” just as it is beneath me to say “screw you, pay me” there are two sides.

          • Posted by Smooth Moderation Equal on April 1, 2016 at 11:19 pm

            TL…..Often in error, never in doubt.

            How can someone claim to be an expert on “egregious” pensions when they have such a loose grasp of the facts?

            Mark Twain — ‘What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so.’

          • Posted by Tough Love on April 2, 2016 at 1:37 am

            Responding to Anon time-stamed April 1, 2016 at 7:43 pm …….

            (2) I do recall exactly when I heard about the 60% to 65% increase in 25-year PFRS pensions, and the 70s are impossible, and the 80’s very unlikely …. all I can say for now. Perhaps someone can identify the exact law and date.

            (2) I have no beef with ANY Public Sector “employees”, but strongly object to what I believe are grossly excessive (by any reasonable metric) taxpayer-funded Pension and Benefits …… always multiples greater in value at retirement than those of similarly situated (in pay, age at retirement, and years of service) Private Sector workers.

            (3) Is there no legitimate place (or need) for diverse attorneys and insurance salesmen ?

            (4) Private Sector lobbyists indued bug me but far less than Public Sector Unions

            (5) In my opinion, Private Sector CEOs (mostly from very large Public Corporations) are VASTLY overpaid, their total compensation now 300 times that of the average worker, while 40 years age is was about 25 times greater. But that excessive compensation is “paid -for” NOT by taxpayers (under force of law) but by willing INVESTORS and by willing CUSTOMERS of the companies products and services. When dealing with PRIVATE Sector companies I have choices. If CEO compensation leads to too high prices, I can shop somewhere else. It’s a whole different picture in the PUBLIC Sector. If my Town’s Police Officers or DPW workers are over-compensated, I have no “choice” …. no option to buy those service more cheaply elsewhere….. and FORCED to pay for them.

            (6) yes, the big boys F things up ….. and the pension spikers, the double-dippers, and the phony Disability retirement are all a problem. But they represent such a very small share of the 800,000 active and retired Public Sector workers in NJ that the FINANCIAL problem is driven by the massive rank and file, ALL OF WHOM get pensions and benefit that are grossly excessive, unnecessary to attract and retain a qualified workforce, are unjust, unfair to the Taxpayers (called upon to pay for 80% to 90% of total Plan costs) and are CLEARLY unaffordable.

          • Posted by Sean on April 2, 2016 at 1:15 pm

            Ahhhh Douglas. You always make me chuckle, dude.

            “TL…..Often in error, never in doubt.”

            And then, there’s always the cute pictures, like the pot and the kettle.

            I found it interesting awhile back when you admonished TL, in your usual condescending way: “‘Tough Love’ is an oxymoron.” And in other posts, you have expanded your copy and pasting to now include bible references. You used to just copy and paste cute little Latin phrases; now, we get Greek as well. And, God forbid you just quote scripture in English. No. Not Mr. Smooth. Mr. Smooth has to go to the Greek, so we can all know he’s the smartest guy in the room. But I find it interesting that you quote the bible when convenient, yet, to make the statement that “tough love” is an oxymoron, you must ignore at least two thirds of the bible, the very bible you quote. I’m curious as to how you reconcile that. The concept of tough love is not only not an oxymoron, it is actually quite biblical, if you actually do read the bible.
            “Mark Twain — ‘What gets us into trouble is not what we don’t know. It’s what we know for sure that just ain’t so.” Indeed.

            I also chuckle when reading the back and forth between you and TL. Don’t get me wrong, I do think you make very salient points at times, and I also believe that challenging each other is both healthy and necessary. No problem there.
            To me, as a trader and investor, it all gets a little mind-numbing, and like people arguing over who is going to win the Super Bowl, after awhile, you just say, “Whatever. Let’s just place our bets. Come game time, we’ll see who was correct.” That’s how I feel. If this whole public sector pension issue was a stock or a commodity, and I was forced to take a position, I certainly wouldn’t be a buyer. I wouldn’t be short just yet either (there is still some churning that will take place), but eventually, in the not-too-distant future, it is going down. And I do not wish any harm to anyone, nor do I see this as a game. Real people’s financial lives are at stake, so it is quite sobering. I am simply saying that all trends point downward.

            Speaking of trends, that’s another issue. I think we all spend way too much time on the justification, what’s fair, and what’s excessive hobby horse that we really miss the point. We can average anything into reasonableness, but as a person with a degree in economics, you of all people know the limitations of averages. (Of course, we all know that economists have successfully predicted nineteen of the last two recessions, and that, if every economist joined hands, they could reach around the earth, but they couldn’t reach a conclusion. Sorry. Couldn’t resist.) No. The real focus should be on trends, the rate of change within those trends, and how those trends affect the funding of the pensions. I focus my attention on that, and from what I see, there are many, many trends developing and gaining momentum, looming over this issue like storm clouds. The Big Short was an excellent movie, and you could fit virtually every bubble into its script, including public pensions. The only difference to me is, the public pension bubble isn’t going to implode quite like the others. It won’t happen immediately and in totality; rather, it will cascade in pieces, like sheets of ice falling off a glacier, the weakest ones falling first, but eventually catching all of them. Some pensions will go to zero, while others will survive, but none of them will remain unaltered. It was simply a naive gamble to think there could be a static benefit that could survive a fluid environment, where the benefits could only be ratcheted up during good times, yet never adjusted to reflect reality during bad times. The refusal to reflect reality and make adjustments while there was a chance leaves only one option: accepting the mother of all adjustments now that it’s too late. No laws, elections, or arguments are going to fix this, nor are they necessary. It will get fixed all on its own.

          • Posted by Smooth Moderation Anonymous on April 2, 2016 at 2:59 pm

            Glad we could amuse you. Sometimes that was actually the intent.

            “TL…..Often in error, never in doubt.”

            I’ll stick with that one, as well as the Mark Twain quote.

            Yes, I’ve called him on it often and specifically, as in when he said the private sector workers who construct New Jersey roads definitely do not have DB pensions and they earn less in cash wages than state road maintenance workers. Both those statements are demonstrably incorrect, and fairly easily verifiable. I knew it personally because I work with these guys on a regular basis on construction contracts in California. It’s not that difficult to verify that New Jersey is similar. I don’t know why TL decided to spout off without checking.

            I “met” Tough Love on other similar blogs years ago, and tried to tell him/her that the exaggerations and misstatements were counterproductive. Like the boy who cries “wolf”. Credibility goes out the window, and any valid points he does have are tainted by his previous hyperbole (and attitude, frankly). It’s the same as Governor Christie saying “In the private sector, you don’t get pensions anymore.”

            That may sound like an innocent exaggeration, but people not familiar with the subject actually believe, and repeat these things as if they were facts.
            ________________________________________________________

            There are a lot of misrepresentations, on both sides. I have told other posters that to claim safety workers deserve early retirement because they die at a much younger age is embarrassingly incorrect. It is counterproductive because it destroys credibility. And it is just plain wrong. Likewise the “average public sector pension is only $2,200 a month”: “Truthish” technically correct, but dangerously misleading. Steve Maviglio, among others, is guilty of this, and other exaggerations. As far as I can tell, he is the TL of of the public sector group.
            __________________________________________________________

            I understand your/our problem with “averages”. I’m kind of stuck here. I see a statement like “public sector workers retire ten to fifteen years earlier than the private sector”.

            One of my other favorite quotes is Carl Sagan: “Extraordinary claims require extraordinary evidence.”

            I have some spare time, not a lot, but thanks to Google, it usually doesn’t take long to learn that this is one of those things we “know for sure that just ain’t so”.

            I have read posters an this or other blogs who seem to base their claim that public sector compensation is excessive on the “fact” that “there are three retired firemen on my block who all retired in their 50’s with pension’s over $100,000”.

            My block apparently ain’t that big, I have to rely on whatever actual data I can find.

            Again, I don’t know how much a fireman or policeman is worth. Years ago, at an accident scene, a local cop made a remark about me making more than him. I happened to be in an economics class studying local budgets (this was way before the interweb) so I looked up the policeman’s pay for that city. His pay was actually about the same as my supervisor’s, which means that it was probably “average” at the time. Equivalent to about $55,000 in today’s dollars. Several years ago when I started reading these blogs about excessive public pay, I looked up the data and was surprised to see how safety pay had grown. In California, it seems a lot of this growth happened post 9/11. California Highway Patrol got a contract in 2004-2005 which increased their base pay by about 30% over a three year contract (in addition to COLAs). The reason they got this raise is that cadets were going through CHP academy (paid a salary, in addition to the cost of the academy), then, as soon as possible, transferring to higher paying local police jobs.
            _______________________________________________________
            Yes, I understand the math and the rising costs of pensions and healthcare. And that some may go under. Blame who you will. In New Jersey, the pension formulas seem to be less generous than California, yet are much more in danger of default. Sorry, but that difference is mainly because New Jersey (state) did not make the payments.

            As far as California, I feel confident that my state pension is at least as secure as my Social Security.

            (Yes, that was a joke.)

            Moderation ….”Fair and balanced”

          • Posted by Smooth Moderation Anonymous on April 2, 2016 at 3:10 pm

            FWIW,

            The images are often a convenient way to “mark” a thread in a long blog so I find it more easily.

          • Posted by Anonymous on April 2, 2016 at 3:49 pm

            Hey TL what do you think about an investor/trader from Chicago, ie Sean. Probably commodities given his geographical location. Interesting, lucrative business! And if not commodities then an off Wall Streeter, can you say Great Recession and Federal (taxpayer) bailout. Ok I know that’s different and it’s not going to resolve the pension mess. Like BH, aka, etc says Wash, Rinse, and (my spin) Regurgitate!
            $Chicago BullS(hit)$

          • Posted by Sean on April 2, 2016 at 3:53 pm

            Very interesting background. Thanks for putting that out there. I appreciate the fact that you at least look stuff up, and you at least back up what you say, so I’ll give you that, SMD. I know that you and TL go a long way back, so it’s interesting to follow. I’m sure it’s no mystery that, at least from a philosophical viewpoint, I am in agreement with TL (or, as Nutcase would say, I’m “one of TL’s minions!). In the end, there will be plenty of blaming and finger pointing, but I think it will be safe to say that no one was completely innocent. It will be interesting and scary to see how it all plays out.

          • Posted by Sean on April 2, 2016 at 4:11 pm

            Quoting Anonymous:

            “Hey TL what do you think about an investor/trader from Chicago, ie Sean. Probably commodities given his geographical location. Interesting, lucrative business! Blah blah blah…”

            I do not know which one of the Anonymous Brothers you are, but you seem to have the same pattern as one of them in particular. It’s so funny to watch you take a tidbit of information and run with it and create an entire reality for yourself, as you sum up people you do not know, and reach conclusions that you cannot possibly substantiate. Wow. The crap you come up with. I just hope that an ass hat like you isn’t in a position where people’s safety is at risk and dependent upon your decision-making abilities.

          • Posted by Anonymous on April 2, 2016 at 4:19 pm

            Touched a nerve hey bro. No different than your crap against public’s. If you want to serve it up eat the crap!

          • Posted by Sean on April 2, 2016 at 4:31 pm

            And there you go. In your little universe, anyone who disagrees with you on the issue of pensions is, by default, evil, and therefore, by default, everything about them is evil. The good guys wear white hats, and the bad guys wear black hats. You are always spouting off this kind of stupid crap, then when someone else with an IQ above freezing gives you a beat down, you come back with your little attempts at personal insults. You really are a one trick pony, aren’t you? I mean, do your knuckles scrape the ground when you walk?

            Someone responds to your dumb sh*t, and your response? Touched a nerve hey bro? Jeez dude. Eventually, we all leave 7th grade. Why don’t you come up with something to support or refute an actual position on the matter?

          • Posted by Smooth Moderation Anonymous on April 2, 2016 at 4:47 pm

            Sean,
            re: “To me, as a trader and investor,”

            I studied economics, not finance. There is a big difference.

            I have a question for which I got part of an answer, but haven’t heard it discussed much. Steering completely away from public pensions for the moment (we’ll get back, of course), on the subject of private sector 401(k)s or IRAs; common knowledge has it that half of Americans have no retirement savings, and many of those who do have, don’t have enough.

            In a perfect world, if we could in fact count on an 8% return while building up a nestegg, and a 4% return near and into retirement, with more secure investments (like most of the retirement experts used to recommend)… Given that ideal assumption, if all those with inadequate savings, and all those with NO savings, by some miracle decided tomorrow to begin to set aside 15% of income (or more) what would happen to that 8% return, holding all other factors equal? Seems it would have to go down, with all those new dollars chasing profits. Maybe enough that workers would have to invest 25-30% of present income in order to finance a decent retirement. Is there even enough growth to sustain private sector retirement if …everyone… was in the game?

            The one answer I got was the “paradox of thrift” where all those dollars put into savings (investment) results in a reduction of demand, leading to lower returns on investments.

            Teresa Ghilarducci and others are pushing a semi mandatory national retirement plan (similar to what California is now trying to pass) where nearly everyone would be putting in at least three percent of wages. That’s a lot of cash to throw into the market, I say there is not now nor never will be enough growth to provide 8% returns if that many hands are in the pot.

            Which leads back to the public sector. If I am a wealthy investor with several million in stocks, bonds, real estate, etc. earning a comfortable 8% overall return, and suddenly CalPERS with their $300 billion, and all the other pension systems begin pulling out of the market, won’t my returns automatically increase? I’ve read of this in some other countries where pension investments were basically crowding out returns for other investments. Might that be partially some of the impetus for eliminating public pensions?

            Frankly, most California millionaires probably don’t give a crap how much pension a fireman gets, but if he can cut public pension contributions down from 25% of salary or more in DB programs to 10% or less in DC systems, that removes a lot of competition for his investment dollars. Laughing all the way to the bank.

          • Posted by Anonymous on April 2, 2016 at 4:56 pm

            One good reason, at least for me, is because this blog and definetly you are not my life’s focus. So no I’m not going to spend ions researching and posting information, or should I say reposting, that’s already available for anyone interested in finding it. Already spent more time then what it’s worth. So long greedy investor/trader keep up the good fleecing of your fellow customers. Guess it’s not OK to disagree with you and yours, huh! Freaking scumbag hypocrite$$$%%%

          • Posted by Sean on April 2, 2016 at 6:37 pm

            Well, if there was any doubt as to your mental state, I think you’ve done a good job of removing it…

          • Posted by Sean on April 2, 2016 at 6:49 pm

            “…, but if he can cut public pension contributions down from 25% of salary or more in DB programs to 10% or less in DC systems, that removes a lot of competition for his investment dollars. Laughing all the way to the bank.”

            That’s an interesting concept: I just don’t know how much effect it would truly have, and I couldn’t begin to figure it out.

            I do think the atom bomb for all of this is going to be demographics. Generation Xers and Millennials are coming up to replace/support the Baby Boomers, and it is an upside down pyramid, with the new generations entering a world of diminished opportunities to build wealth, due to everything from globalization to automation and wage stagnation, etc, and they will most likely be unable/unwilling to keep paying in more for the benefits of others that they themselves aren’t getting. As for the current situation, many municipalities are going to get to the place where they have to choose between paying their current, active workforce, or their retirees. Since workers will stop working if they are not paid, the choice will be clear.It’s going to be a mess.

          • Posted by Anonymous on April 2, 2016 at 9:18 pm

            Reminds me of an unscrupulous character I once worked with. Always throwing around their pompous attitude, of course with an ear to ear smile. All the while *hitting on you behind your back. Nice to know the PRIVATE sector has their fair share of a**holes. BTW, forgot to answer your previous question. Nope not public safety nothing that critically important. Just responsible for oversight regulation of your kind – so a well deserved shout out to ya’ll for my job security. Keep up the devious work.

          • Posted by Sean on April 2, 2016 at 9:48 pm

            Desperado, why don’t you come to your senses
            You been out ridin’ fences for so long now
            Oh, you’re a hard one
            I know that you got your reasons
            These things that are pleasin’ you
            Can hurt you somehow

            Don’t you draw the Queen of Diamonds, boy
            She’ll beat you if she’s able
            You know the Queen of Hearts is always your best bet

            Now, it seems to me some fine things
            Have been laid upon your table,
            But you only want the ones that you can’t get

            Desperado, oh, you ain’t gettin’ no younger
            Your pain and your hunger, they’re drivin’ you home

          • Posted by Smooth Moderation Equal on April 2, 2016 at 11:25 pm

            In denario pro libra

            In for a penny….

            So shoot me, I live in a town at least thirty percent Hispanic and I don’t know more than a fistfull of Spanish words, let alone Greek.*

            I don’t know if I would spend too much time worrying about the next generation. For all we know, they may look back at us with amusement. And pity.

            You are correct about economists, in my class they said you could put every economist in America in a row, and no two would be pointing in the same direction.

            I’m not an economist, but, at the risk of making TL nauseous and half the conservatives apoplectic, I must agree with our Governor, Jerry Brown:

            “We need more welfare and fewer jobs.”

            http://nation.foxnews.com/jerry-brown/2010/10/14/jerry-brown-flashback-we-need-more-welfare-and-fewer-jobs

            In the longer version, he uses the example that two hundred years ago, eighty percent of Americans were involved in agriculture. Today two percent of the population can grow more than enough to feed us all.

            We don’t “need” jobs. We need “things”, like food, shelter, clothing, education, entertainment, ad infinitum. Automation is our friend. The conservative nightmare is that raising min wage will put teenagers out of work. Some of the fast food places I hear, already have touchscreen consoles to replace the order taker. And there are completely automated burger machines can crank out 400 custom burgers per hour. Instead of looking at that as “putting 5 people out of work”, consider it ” one person can do the work of six.”

            In 1945 there were 45 workers per SS beneficiary. Today (2012, close enough. I can’t spend ALL my time on Google) there are 2.9. By 2030, they predict 2 workers per retiree. Moderation, the avocational economist, says, “¡No hay problema! We have one worker here who can do the work of six!!!

            How many experts have we heard or read who says we must raise SS retirement age? Raise public worker retirement age? Why? We have millions of young job seekers and more displaced middle age workers. Tell those old guys to go home and get some well deserved rest. Give the young ones a shot. They can probably produce more than the old guy anyway. Efficiency is our friend. Automation is our friend.

            _________________________________________

            *I usually double or triple check any foreign translations because……..

            “As the story goes, this girl wanted to write “I love XXX” (boyfriend’s name) in Hebrew and tried to accomplish the task using Babylon translation software.

            Well, you know where this is heading…

            What does her new Hebrew Tattoo read?

            “Babylon is the world’s leading dictionary and translation software”

          • Posted by Sean on April 3, 2016 at 12:28 am

            Good points SMD, and funny as hell to boot! Thanks

    • Posted by MJ on April 1, 2016 at 12:43 pm

      No worries, the taxpayers are good for it.

      Reply

  2. Posted by Anonymous on April 1, 2016 at 7:55 am

    Can you believe the nerve of those women soccer players demanding equal pay to their male counterparts – is that fair! Fair and equal has unintended consequences, be careful what you wish for because…..

    Reply

    • Posted by dentss dunnigan on April 1, 2016 at 10:53 am

      If their playing in the same league they deserve same pay ….different league different pay ..

      Reply

  3. Posted by PatB on April 1, 2016 at 7:15 pm

    Your point #3 is interesting. As I remember, if any plan is over 80% funded then the cola is restored by law. Do any of the individual plans qualify, and if so, why have the colas not been restored, or challenged in court by the unions?

    Reply

  4. Posted by Anonymous on April 1, 2016 at 7:44 pm

    Focusing only on funding levels and contributions the ONLY reason the Local’s funds are in “better shape” is because the State mandated the locals make their ARC when the State clearly did not do the same.

    Reply

    • Posted by Tough Love on April 2, 2016 at 2:18 am

      Intelligent Taxpayers have no problem FULLY funding a Public Sector DB pension EQUAL in value at retirement to what they typically get from their employers…… because the contribution to each will be very close. But they have a right to strongly object to GREATER taxpayer contributions towards Public Sector pensions.

      Public sector worker DO have a right to chose whatever level of generosity they want in retirement benefits ….. as long as THEY pay for ALL COST in excess of the taxpayer contribution described above.

      Reply

      • Posted by Anonymous on April 2, 2016 at 9:13 am

        TL I beg to differ but I don’t agree that ALL taxpayers are in favor of funding public worker pensions when most can barely fund their own retirements. I certainly am not in favor of it other than to provide financial counseling to public workers as they plan and save for their own retirements.
        that’s called personal responsibility. Some salaries may be less than in the private sector but when you factor in generous sick and vacation time, 35 hour work weeks, and other perks, they are still ahead of the game. I won’t even mention the generous health plans……….that they pay very little for at least for now. Please don’t group us all together.

        Reply

        • Posted by Smooth Moderation Equal on April 3, 2016 at 12:02 am

          “Paid leave encompasses sick time, vacation days, paid holidays, and personal leave. On average, paid leave is almost precisely the same in the private sector as in state government, with values of 11.11 percent and 11.06 percent of wages respectively. There are variations from region to region, with some governments providing more paid leave than private employees and others less. Overall, however, differences between the public and private sector are quite small relative to other fringe benefits. It is unusual for the value of state and private paid leave to differ by more than 1 percent of wages.”

          That is from one of the most conservative studies available.

          Reply

          • Posted by Tough Love on April 3, 2016 at 3:06 am

            In the Public Sector it appears to be commonplace to be able to accumulate Sick Time and then cash it out (sometime with limitations), and sometime with that sick pay cash-out included in pensionable compensation.

            Almost none of that is allowed in the Private Sector because they wouldn’t “waste” THEIR (not “taxpayers”) money in such foolish ways. While unused vacation days (often capped at 1 year) CAN often be cashed out, it is NOT common for Private Sector to allow ANY cash-out of unused sick days.
            ——————

            FWIW, it certainly seems like Public Sector workers get several more “holidays” than Private Sector workers.

  5. Posted by S Moderation Douglas on April 3, 2016 at 3:39 am

    Seems that way. For better or for worse, most of the major studies compare public salaries, pensions, benefits, etc.* to equivalent workers in “large” corporations (500 or more employees) Paid time off for smaller business are almost certainly not as generous.

    *One area where public employment is usually compared to the private sector as a whole is job security and turnover rates. I saw once but can’t now find a chart comparing turnover rates for large employers. I remember them being similar to public stats. But I wouldn’t bet a month of your pay on that, let alone mine.

    As I recall, the average job tenure for the private-sector as a whole is about four years, vs. eight years for the public sector. That’s apples and oranges again, though, because the public sector doesn’t have fast food and sales clerks at the Gap pulling down the average.

    Reply

  6. Posted by Smooth Moderation Anonymous on April 3, 2016 at 4:00 pm

    Ah yes, I remember it (kinda) well.

    In one of the earlier contracts after the Dills Act (1978) gave collective bargaining rights to state employees, the main CA union (CSEA) bargained with the Department of Personnel Administration (who are, in fact, “government administrators, and also beneficiaries”. They agreed to a general salary increase of eight percent, plus another two percent of payroll to be used for employee healthcare. (This was early eighties, of the infamous double digit inflation.)

    The legislature, who are NOT beneficiaries, and are subject to other budget and political constraints, said …we will appropriate eight percent of payroll ..total.. split it up however you want.

    Which is why Moderation has coined the phrase ” ‘Powerful Public Employee Unions’ is an oxymoron” and dubbed the process “Collective Begging”.

    Good news/bad news….

    In one of the very first contracts (1979), DPA and the unions agreed to a general 14.5% increase (again, double digit inflation) which was ratified by the legislature… and vetoed by Governor Brown. Vetoes are fairly common. Veto overrides are very rare, and this was one.

    Good news/better news…

    According to salary surveys done by the DPA, there were several occupational groups where the private sector pay advantage was greater than average, and those groups received an additional 5% increase. This made Moderation very happy.
    __________________________________________________________________
    The Ralph C. Dills Act, authorized by the Legislature in 1977:
    “grants state employees the right to belong to organizations that serve as their exclusive representatives in contractual negotiations over wages, hours, and other terms and conditions of employment. The act requires the state and employee representatives to “meet and confer in good faith” and to endeavor to reach agreement on these matters.”

    But it ain’t over till the fat lady sings. The Memorandum of Understanding must be ratified by …both… parties, and the only party which can ultimately appropriate the funds is the legislature and Governor.

    Reply

  7. Posted by Smooth Moderation Difficult on April 4, 2016 at 8:05 pm

    Far be it from your humble servant to challenge or debate one of forty top pension experts in the country.

    But I’m sure there are others among that forty (with similar CVs) who would. In addition to Moderation, I also encourage Skepticism.

    In the first place, there seems to be a difference of interpretation:

    TL: “Gov’ts contribute only a very small share (about 1/5 per his analysis)”

    AB: “If state and local pension plans based their contributions on corporate pension rules, how much wold they have to pay? About four times as much.”*

    A picayune difference, perhaps, but in CalPERS case the difference is about $10 billion …a year. “A billion here, a billion there, and pretty soon you’re talking about real money.

    Big numbers aside, that really is a minor point, but it shows how misinterpretations can lead to large errors.

    *”About four times as much”, by the way, is not four times the “normal cost”, but the amount needed to pay normal costs PLUS pay off unfunded liabilities.

    Within seven years.

    At an assumed rate of 3.8%
    __________________________________________________________
    More to the point, I would encourage anyone reading Mr. Biggs “opinion” to not take it at face value (even if it DOES fit your agenda). You know what Moderation always says: “trust but verify”!!!

    Reply

  8. Posted by Smooth Moderation Equal on April 4, 2016 at 10:34 pm

    You still crack me up!!! Now I crack me up too. I slightly misremembered the quote:

    Andrew Biggs hisself: “…..in 2014 I was named by Institutional Investor Magazine named as one of the 40 most influential people in the retirement world.”

    There is a new list now, though. Number three is a hoot:

    http://www.institutionalinvestor.com/article/3515365/investors-pensions/the-2015-pension-40-john-and-laura-arnold.html#.VwMR7xJlBpU

    “Trust but verify”

    Reply

    • Posted by Tough Love on April 5, 2016 at 1:13 am

      Perhaps those cracks are from light bulbs you’ve dropped.

      Gee, how many light bulbs can one change in a career ???

      Reply

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