NASRA ARC Outlier

The National Association of State Retirement Administrators (NASRA) released an issue brief comparing Actuarially Determined Contributions (ADC) to Annual Required Contributions (ARC), a concept introduced by GASB Statement 25 and defined essentially as the sum of the normal cost (the estimated cost of  benefits earned each year); and an amortization payment. They conclude:

On a weighted average basis, states’ percentage of ARC/ADC paid since FY 2001 ranges from less than 40 percent to more than 100 percent. In the median, state plans received 97.0 percent of their required contributions, and 85.3 percent as a weighted average. The average actuarially determined contribution received for the period was 90 percent, as a few larger plans pulled down the average because they received a relatively lower portion of their ADC.

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And the state that really pulled down the average:

79 responses to this post.

  1. Posted by Anonymous on June 21, 2017 at 6:30 pm

    Having contributed only 40% of it’s ARCs, NJ seems to have been the most sucessful of all States (when measured in terms of NOT unjustly screwing it’s Taxpayers).

    Why so ? Because with Public Sector pension in NJ UNJUSTLY ranging from 2 to 5 times MORE generous (i.e., greater in value upon retirement) than those typically granted their Private Sector counterparts, leveling that UNJUST structure suggests that if Taxpayers contributed somewhere between 1/5 and 1/2 of the ARC necessary to fully fund the excessive pensions actually promised, such an amount would be sufficient to FULLY FUND a pension EQUAL to those typically granted Private Sector workers.

    By having contributed 40% …. on the higher end of that 1/5 to 1/2 range, NJ’s Taxpayers have ALREADY paid “their fair share”.

    Reply

    • Posted by Anonymous on June 21, 2017 at 7:14 pm

      What an ignorant simpleton analogy.

      Reply

    • Posted by S Moderation Douglas on June 22, 2017 at 2:01 am

      “NJ’s Taxpayers have ALREADY paid “their fair share”.

      Get out the tinfoil hats. This should be right up your alley…

      https://www.google.com/url?sa=t&source=web&rct=j&url=https://m.youtube.com/watch%3Fv%3DAdStd8w35XQ&ved=0ahUKEwiAv6KE19DUAhUj6oMKHZF2BVoQtwIIKzAG&usg=AFQjCNHX8iFBABPl5lVkAP1rQ38ADHbv1Q

      You think you can be the arbiter of NJ pension law based on your “opinion” of the generosity of pensions? Not even factoring in, this time, the level of total compensation? You have been making this same claim since before you even heard of Andrew Biggs, or Alicia Munnell. It was wrong then, even more wrong now.
      Your claim five years ago was that public workers make more now in wages alone than the private sector, so the publics did not deserve pensions. Wrong then, wrong now. It was a widespread misunderstanding, then and now. Spreading like Internet wildfire on anecdotal evidence only.

      Whether you like it or not, laws were passed. Whether you believe the laws are illegitimate due to union influence is irrelevant. That is “your opinion”. You may refuse to pay that portion of your taxes you believe to be fraudulent due to OUTRAGEOUS pensions. You may then be able to share a cell with Irwin Schiff, now serving his third prison term for tax crimes.

      Reply

      • Posted by Anonymous on June 22, 2017 at 12:47 pm

        Quoting ….

        ““NJ’s Taxpayers have ALREADY paid “their fair share”.”

        YES they have. If per the charts above, NJ has contributed 40% of the cost of fully funding a Plan 2 to 5 time MORE generous than it SHOULD HAVE BEEN (meaning a Plan with a generosity level EQUAL to those typically granted Private Sector workers) then it has FULLY FUNDED 100% of the cost of the Plan that likely WOULD HAVE been granted in the absence of the Public Sector Union/Elected-Official COLLUSION …… with the former BUYING the favorable votes of the latter (on pay, pensions, and benefits) with BRIBES disguised as campaign contributions and election support.

        If ALL of NJ’s Public Sector DB Plan were frozen (ZERO future growth), it would be GENEROUS on the part of NJ’s Taxpayers to help pay down ANY of the PAST service unfunded liability.

        Reply

        • Posted by S Moderation Anonymous on June 22, 2017 at 12:53 pm

          Irwin says “Hi, come on in.”

          Reply

          • Posted by Anonymous on June 22, 2017 at 2:04 pm

            SMD,

            You can forever stand on your greed and entitlement mentality ………. including the fact that “promises” of that grossly excessive level exist (because they were unjustly BOUGHT from our self-interest, self-dealing Elected Official), but it won’t justify it…… not now, not ever.

            As Taxpayers costs rise and services decrease (to pay for these unjust/stolen promises), the Taxpayer will wise up …………. and eventually put an end to it.

          • Posted by PS Drone on June 22, 2017 at 7:24 pm

            FYI, Irwin is no longer with us.

  2. Posted by S Moderation Anonymous on June 22, 2017 at 3:56 pm

     “promises”… Agreed. Also called “contracts”

    “excessive level”… Sorry, you never have demonstrated that empirically.

    “grossly excessive level”… Ludicrous.

    “BOUGHT”… ? Diebold; “In the past decade, almost all states have reformed their pension systems to reduce either, or both, the benefits paid to current retirees and those promised to future retirees.”

    Exactly, or approximately, how much did the unions pay to get those benefits reduced?

    Most of the increases in pay or benefits I am aware of came between 2000 and 2005. Very different times, economically.

    Reply

    • Posted by Anonymous on June 22, 2017 at 4:55 pm

      Quoting ……………

      ““excessive level”… Sorry, you never have demonstrated that empirically. ”

      The ONLY state-specific study that I have even seen published shows that NJ (and CA, your home State) have Public Sector “Total Compensation” (wages + pensions + benefits) 23% higher than that of COMPARABLE Private Sector workers ….. with that rising to 33% to 34% when the FAR GREATER incremental value of Public Sector “job security” is properly factored in.

      And because the above %s are based on a comparison that excludes Public Sector Safety-workers, with the highest pay, pensions, and benefit, had they been included, those %s would assuredly have been materially greater.

      Additionally, that same study shows (in Figure 1) that (on average for all but safety-workers combined) Public Sector “wages” alone are 12% lower in CA and 4% lower in NJ than their Private Sector counterparts.

      The word “excessive” in my above comment was used in the context of “pensions”, so tell me “genius” ……………. with LOWER “wages”, and HIGHER “Total Compensation” (and the net of non-pension “benefits” not being of sufficient magnitude to shift the direction) how is it ANYTHING but mathematically definitive that Public Sector pensions are FAR FAR greater than those of their Private Sector counterparts.

      So YES, they ARE “FAR FAR Greater”, but are they “excessive” ?

      For MANY Private Sector workers, a level annual ADDITIONAL 23%-of-pay (the CA & NJ Public Sector ADVANTAGE shown in that study and applicable to BOTH CA and NJ) would, if saved and invested throughout one’s career, accumulate to an additional $1 Million, and THAT is a very reasonable estimate of the career THEFT ….. per NJ public Sector worker …… now being perpetrated upon NJ’s Taxpayers.

      Yes, I’d call BOTH NJ’s and CA’s pension “excessive”.

      Reply

    • Posted by Anonymous on June 22, 2017 at 5:07 pm

      Quoting SMD ……….

      Diebold; “In the past decade, almost all states have reformed their pension systems to reduce either, or both, the benefits paid to current retirees and those promised to future retirees.””

      So what? If your pensions are 3 to 6 times greater in “value upon retirement” and you reduce them to 2.5 to 5.5 time greater, are Private Sector Taxpayers supposed to be happy or satisfied with that?

      THAT is a VERY good picture of the immaterial reductions in Public Sector pensions.

      Luckily for NJ (Thank you Gov. Christie) NJ suspended COLAs. THAT indeed has material value, perhaps reducing it’s pension (over the full payout period …… IF the suspension holds throughout) by 25%.

      Reply

  3. Posted by George on June 22, 2017 at 5:23 pm

    GE corporate pension is in the news, partially because a new ceo is in place. So it is not just gov plans.

    its main plan, covering 231,000 retirees and families and about 242,000 current and former workers and other plans, including those inherited via acquisitions, covering about 120,000 current and former workers. In 2015, the pension obligations of those plans came to about $90.3 billion and their assets to $63.1 billion, for a shortfall of about 30%. Last year, obligations had grown to about $94 billion and assets to about $63 billion, for a shortfall of about 33%.

    And its expectation for long-term growth within the pension portfolio is 7.5% annually, which implies it will have to keep the portfolios heavily stocked with equities, which currently constitute about 56% of their holdings.

    http://www.latimes.com/business/hiltzik/la-fi-hiltzik-ge-buybacks-20170616-story.html

    https://www.bloomberg.com/gadfly/articles/2017-06-22/ge-botched-its-pension-math-on-way-to-31-billion-shortfall

    https://www.bloomberg.com/news/articles/2017-06-16/ge-s-31-billion-hangover-immelt-leaves-behind-big-unfunded-tab

    Reply

    • Posted by Anonymous on June 22, 2017 at 5:52 pm

      GE we bring good things to light? Free market choice don’t buy GE and don’t live in NJ, right?

      Reply

    • Posted by Anonymous on June 22, 2017 at 5:43 pm

      Imagine that the charlatan do no wrong ‘private sector’ blaming their pension problems on the Great Recession – boy now that sounds publicly familiar!

      Reply

      • Posted by Anonymous on June 22, 2017 at 6:08 pm

        Yes “Imagine”………….

        GE’s Shareholders & Customers will pay for any pension Plan shortfalls, NOT Taxpayers, who have (for decades) been financially raped by the greedy Public Sector Unions/workers acting in collusion with our self-interested Elected Officials.

        Reply

        • Posted by Anonymous on June 22, 2017 at 6:10 pm

          Yeah imagine shareholders and customers contributed to the ~$15b surplus prior to the great recession – equal to not better than what, huh?

          Reply

          • Posted by Anonymous on June 22, 2017 at 6:23 pm

            With few exceptions, the US Gov’t wound up making a profit on the money expended in dealing with the great recession.

          • Posted by Anonymous on June 22, 2017 at 6:45 pm

            Sure whatever, always the BSing optimist. That’s why the GOP hammered away at Obama’s handling of the mess Brush left him – intentional misspelling. Keep singing the same old song while constantly changing your tune.

        • Posted by S Moderation Anonymous on June 23, 2017 at 5:46 pm

          Tough Anonymous:

          “GE’s Shareholders & Customers will pay for any pension Plan shortfalls, NOT Taxpayers,”

          Ehh, may be…

          “DOE nevertheless ultimately bears the investment risk incurred by the contractors.” This is a great deal for the companies but a raw deal for taxpayers.”

          “The article also noted that Lockheed Martin showed “reimbursements of $3.45 billion over the last five years: $3.1 billion came from United States taxpayers. During that period, the company generated $21.8 billion in operating profits.”

          https://www.cagw.org/media/wastewatcher/federal-contractor-pensions-protected-taxpayers%E2%80%99-expense

          Reply

      • Posted by S Moderation Anonymous on June 22, 2017 at 6:48 pm

        What is the “root cause” of GE pension mess?
        Answer …………. because “funding” FOLLOWS in lock-step with pension “generosity”, the “root cause” of pension mess is the ludicrously excessive …GE… pension promises ……. by EVERY reasonable metric when compared to those typically granted similarly situated Private Sector workers.

        “Top 25 Corporate Pension Plans Alone Are Underfunded By Over $225 Billion” Zerohedge, Aug 22, 2016

        What is the “root cause” of pension mess?
        Answer …………. because “funding” FOLLOWS in lock-step with pension “generosity”, the “root cause” of pension mess is the ludicrously excessive pension promises of the …top 25 corporate pension plans ……. by EVERY reasonable metric when compared to those typically granted similarly situated Private Sector workers.

        Reply

  4. Posted by S Moderation Anonymous on June 22, 2017 at 6:32 pm

    Average, Anonymous, 23% higher …average…

    If 23 percent is your mantra…

    and Biggs is your source…

    and EQUAL …but NOT better…

    is your obsession…

    Why not start at the bottom?…

    Janitors, Clerks, landscapers, garbage men, etc.

    With wages alone, we know these people are very close in compensation to their peers in the private sector. Totally eliminate their pensions, give them a 3% DC match. Keep going up the payscale and education ladder until you get to equality.

    We haven’t saved any taxpayer money yet, because the money we saved on the low end must be redistributed to the doctors, lawyers, engineers, CPAs, MBAs, etc. Start at the top, work your way down till you hit equality.

    If there is any left over, we can use it to pay down the unfunded liability. It is the law, you know.

    If there is not enough to redistribute, We could claw back from that janitor (and all retired janitors) the excessive benefits they have already received. (claw back five percent a month from his pay or pension. We want to wound him, not kill him.)

    Got a problem wit EQUAL?

    SMH

    Reply

    • Posted by Anonymous on June 22, 2017 at 6:57 pm

      Quoting SMD ……

      “is your obsession…

      Why not start at the bottom?…

      Janitors, Clerks, landscapers, garbage men, etc. ”

      ****************************************

      Because looking at individual segments of NJ working population irrelevant. It’s the financial impact of ALL WORKERS TAKEN TOGETHER that impacts the Taxpayers …………….. and in NJ it’s:

      (a) a 23% of pay Public Sector wage ADVANTAGE (EVERY year) PLUS
      (b) the incremental impact of greater job security (PER THE Bigg’s study, about 10% of pay) PLUS
      (C) the ADDITIONAL incremental %-of-pay if Safety-workers had not been excluded from the Bigg’s study
      ****************************************
      And you’re bull-shitting the readers again when you say that they would simply be a shift from the lowest paid to the highest paid. A “SHIFT” would NOT account for the 23% “NET” Public Sector wadge ADVANTAGE.

      *******************************************

      Why not get it off your chest and ADMIT that you’re a retired Public Sector “moocher”.

      Reply

      • Posted by Anonymous on June 22, 2017 at 7:22 pm

        I’m pretty sure SMD has previously stated he’s retired military and calpers, unlike your generic I’m a ‘private sucktor worker shrouded in mystery. Got a problem with free market choice, get your house sale ready and …..

        Reply

        • Posted by Anonymous on June 22, 2017 at 8:21 pm

          And aren’t YOU the retired NJ Police officer who said ………………

          “To hell with “private sector workers” comparisons. They often do much better (or much worse) than the market. If the elected politicians had contributed the ARC then this would not be an issue. More to the point… nobody would get reelected. I want my pension promise! I put my life on the line and now it’s time to pay. I gambled….I did not die. PAY ME!”

          Reply

          • Posted by Anonymous on June 22, 2017 at 8:34 pm

            I’m glad you didn’t die (and hope you were never injured as well). but you didn’t “earn” a pension 4 to 5 times greater (than that typically granted comparable Private Sector workers) in value upon your retirement. It was fraudulent BOUGHT from NJ’s self-interested, vote-selling, contribution-soliciting, taxpayer-betraying Elected Officials with BRIBES disguised as campaign contributions and election support.

            Nj Taxpayers owed you (while both active and while retried) compensation and retiree income EQUAL to what you would have received in a Private Sector job with equal risks and with equal requirements as to education. experience, skills and knowledge. Any more (forced upon Taxpayers) is simply THEFT.

            If indeed you a retired NJ Police Officer, you were overpaid in wages ALONE …. and VASTLY over-pensioned by a factor of AT LEAST 4 times.

            And with an HONEST estimate of the underfunding of NJ’s Public Sector pensions not being $49 Billion, but closer to $150 Billion, you would be wise to develop a Plan “B” for your retirement needs.

      • Posted by S Moderation Anonymous on June 22, 2017 at 11:04 pm

        The ….alleged… “23% “NET” Public Sector wadge ADVANTAGE.”

        Reply

  5. Posted by S Moderation Anonymous on June 22, 2017 at 8:45 pm

    “It’s the financial impact of ALL WORKERS TAKEN TOGETHER that impacts the Taxpayers …”

    But you can’t CUT THE PAY OF THOSE WHO ARE ALREADY UNDERPAID.

    And, honestly, you won’t find much support for cutting the pay at the lower levels, either.

    Also, we don’t (at least I don’t) care about your gender or name, but you could at least tell us where you work. Your illogical math and absolute reliance on dubious data five to nine years old doesn’t speak well for the reliability of your financial services.

    23% is (was) somewhat useful for comparing one state to another, but for determining actual relative compensation today, worse than useless.

    Reply

    • Posted by Anonymous on June 22, 2017 at 9:08 pm

      uoting SMD….

      “But you can’t CUT THE PAY OF THOSE WHO ARE ALREADY UNDERPAID. ”

      I’m assuming you meant to say …

      “But you can’t CUT THE PAY OF THOSE WHO ARE ALREADY UNDER-COMPENSATED*. ”

      * on an an apples-to-apples basis with their Private Sector counterparts in terms of hours worked per week, and measurable “productive-output”.

      I would agree with that statement, but disagree that Taxpayers would not support reduced TOTAL COMPENSATION (including wages) for those at the lower wage levels.

      There is simply ZERO justification to compensate lower (or ANY) Public Sector workers more than they would be compensated in a COMPARABLE job in the Private Sector. MORE, is unnecessary and unfair to Taxpayers.

      And if that compensation is insufficient to meet their basic needs, that should be address via the Social Service system……. in the identical manner in which is is now addressed for lower income Private Sector workers.
      ****************************************

      I prefer to remain anonymous. Some of you guys sound dangerous, with one stating that should their pension be reduced they would “drag me to my bank by my “cahonas” and take the money due them from my bank account”…….. and THIS coming from a retire cop !

      Reply

  6. Posted by S Moderation Anonymous on June 22, 2017 at 10:26 pm

    “I would agree with that statement, but disagree that Taxpayers would not support reduced TOTAL COMPENSATION (including wages) for those at the lower wage levels.”

    You are probably in the minority there.

    Monique Morrissey:

    “The national pattern that public-sector workers with college degrees are compensated somewhat less and those without college degrees are compensated somewhat more than their private-sector counterparts holds true for Connecticut as well. The more compressed pay structure—with top and bottom pay closer together—reflects the fact that people are drawn to public service for nonpecuniary reasons and that government employers have an interest in setting a higher floor on compensation than private-sector employers, some of whom pay poverty-level wages and pass health care and other costs onto government programs. Because public-sector workers are more likely to have college degrees, public employers—and taxpayers—are getting a bargain while ensuring a decent standard of living for less educated workers.”

    Ed Ring:

    “Impose a ceiling on pension benefits to retirees, based on the principle that pensions are supposed to ensure retirement security, not lavish affluence. Similarly, establish a floor for pension benefits to retirees, based on the principle that employees at the low end of the pay scale are nonetheless entitled to retire with an income sufficient to live with dignity.”

    Marc Joffee:

    Suggests a DC type plan for income above $50,000, retaining a standard DB under that level…

    “It may be fair to provide this type of security to public employees at lower income levels,”

    There are social and economic implications here that can’t be found in your spreadsheet functions.

    Reply

    • Posted by Anonymous on June 22, 2017 at 10:46 pm

      Well, we’ll have to agree to disagree………….

      Example, quoting………..

      “establish a floor for pension benefits to retirees, based on the principle that employees at the low end of the pay scale are nonetheless entitled to retire with an income sufficient to live with dignity.””

      Why is a PUBLIC Sector worker “at the low end of the pay scale” more deserving of a “retirement with dignity” than a COMPARABLE Private Sector worker ?

      Reply

      • Posted by S Moderation Anonymous on June 22, 2017 at 10:53 pm

        That is quoting Ed Ring, and there are a lot of people who agree with him. I could try to explain it to you …again… but I think that would be an exercise in futility.

        Reply

      • Posted by Anonymous on June 22, 2017 at 10:58 pm

        I might be convinced to accept such over-compensating “dignity” for the lowest paid Public Sector workers if we indeed provided ONLY DC plans (with a 3% Taxpayer “match” comparable to what they typically get from their employers) for all Public Sector income above $50K.

        Why don’t you run that by the next CA’s Police/Fire Union-hall meeting. I suggest you have a car waiting outside with the motor running as you’re likely to be skinned alive.

        Reply

        • Posted by Anonymous on June 22, 2017 at 11:05 pm

          Here’s a clearer picture of my views…………….. and it’s call EQUAL & FAIR:

          What I want to see is PRIVATE Sector Taxpayers NOT being ripped-off by (in total for all workers combined) paying more in Total Compensation: to Public Sector workers.

          I really don’t give a rat’s ass how the Public Sector workers (the lowest, the middle, and the highest earners) divvy up a Total Compensation pot EQUAL to that granted Private Sector workers.

          Reply

        • Posted by Anonymous on June 23, 2017 at 12:01 am

          “Oophs…”

          We were waiting with bated breath to see if you might accept that,
          because we really care what you want to see.

          Reply

  7. Posted by S Moderation Anonymous on June 22, 2017 at 10:36 pm

    As I said, I don’t care about your identity. It’s not a great big deal, but I prefer to remain anonymous myself. Most people on these blogs do. Years ago, on a site that used Facebook for log in, I saw several instances where one person would make disparaging remarks about something on another’s Facebook page, including insulting the appearance of the grandkids. No class.

    Reply

  8. Posted by Anonymous on June 22, 2017 at 10:37 pm

    There are some very rude people on these blogs.

    Reply

  9. Posted by S Moderation Anonymous on June 23, 2017 at 12:47 am

    Seriously, back to the topic…

    Under 40% of ARC over 15 years is inexcusable. What’s worse?

    That’s an average – that was pulled up by the local governments.

    Post the state contributions by themselves… 17% to 22%

    Are you kidding me?

    What’s worse than that?

    Blame the victims. It’s the workers fault!

    Damn public sector moochers.

    Reply

  10. Posted by Anonymous on June 23, 2017 at 10:15 am

    Quoting SMD………….

    “Under 40% of ARC over 15 years is inexcusable. ”

    You’re still ignoring the ROOT CAUSE of the problem ………… NJ’s Plans are too generous, and you can’t intelligently discuss the ARC funding % without the Plan’s level of “generosity” being an integral part of that discussion.

    EXAMPLE: . if 40% of the ARC is all the money that NJ could find, but NJ’s Plan’s were TWICE as generous, that 40% of ARC funding would have been 20%. Would the ROOT CAUSE of that increase in the % been anything OTHER THAN that the Plan was even MORE ludicrously generous?

    ***************************
    In earlier comments I offered that NJ’s Taxpayers HAVE paid their fair share (even with ARC funding at 40%) because the $$$ amount associated with that 40% would have been sufficient to FULLY FUND a pension with a generosity level EQUAL to that typically granted COMPARABLE Private Sector Taxpayers ………… and THAT is the level that was necessary, just, fair to Taxpayers, and affordable.

    The Unions’ success in BUYING much greater pensions from our Elected Officials (with BRIBES disguised as campaign contributions and election support) DOES NOT magically make those “too generous” pensions necessary, fair or affordable. nor does it justify a demand that Nj’s Taxpayers pay for that excessive generosity.

    ******************************************************

    The fact that most States have much higher ARC funding %s does not change that. With their Plan’s generosity (in the majority of States) being comparable to that of NJ’s Plans, all it means is that theri Unions have been successful in unjustly squeezing more real money (as opposes to just an excessive level of “promises”) out of their own Taxpayers.

    Reply

  11. Posted by Anonymous on June 23, 2017 at 10:41 am

    A pleas for sanity from a Councilman……….

    http://www.citywatchla.com/index.php/los-angeles/13460-pension-pomperipossa-destroying-california-s-cities

    That article, from a Beverly Hills, CA (SMD’s home State) City Councilman, summarizes the “sinking ship” that is CA’s Cities ……… and virtually all due to grossly excessive Public Sector pension & benefit promises.

    Unfortunately for it’s citizens ……… as he very clearly describes with the myriad of endless increases in taxes and fees …….. with CA’s 80% ARC funding, the Unions (clearly in collusion with their Elected Officials) have indeed been far MORE successful than in NJ) in forcing it’s Taxpayer to unjustly fund this ludicrous level of Public Sector pension & benefits.

    NJ’s Taxpayers should rejoice in that we have been FAR less suckered !

    Reply

  12. Posted by S Moderation Anonymous on June 23, 2017 at 11:16 am

    I didn’t ignore it Love, I just don’t believe it.

    Any more than I believe Brietbart saying state/local workers make 43% more than private workers.

    Or Cato Institute saying federal workers make 73% more.

    Or Ed Ring saying public workers make twice as much.

    Or that… “Top 25 Corporate Pension Plans Alone Are Underfunded By Over $225 Billion” has a ROOT CAUSE of overly generous pensions.

    DON’T PAY THE BILLS, THE DEBT GETS LARGER

    17%… seriously?

    Reply

    • Posted by Anonymous on June 23, 2017 at 12:11 pm

      Quoting SMD…………….

      “I didn’t ignore it Love, I just don’t believe it.”

      It’s obvious to anyone with a properly functioning brain, and without the “agenda” commonly associated with those who benefit from the current Public Sector pension/Benefit structure, that the ROOT CAUSE of the pension mess EVERYWHERE is the ludicrously excessive Public Sector “promises”.

      Am I surprised that you don’t “believe it” ?

      No.

      Reply

  13. Posted by Anonymous on June 23, 2017 at 1:20 pm

    A few additional thoughts ………..

    While evidence CLEARLY shows (i.e. that 23% from the AEI study in both NJ and CA) that “Total Compensation” is MUCH greater for Public than for Private Sector workers, my last few comments addressed the PUBLIC Sector PENSION (alone) …… being excessively generous when measure against the pensions/retirement-security typically granted comparable Private Sector workers.

    You would need to be close to brain-dead to actually BELIEVE that such is not true.

    If Public Sector Cash wages (properly adjusted for typical hrs/worked and measurable productive output) are lower or higher than those of their Private Sector counterparts, they should be adjusted (up or down ….. by NOT only one way) to eliminate that differential.

    Doing so IN CONJUNCTION WITH making the future service PENSION accruals of all CURRENT workers no greater than those typically granted their Private Sector counterparts is …… by a VERY wide margin ………. the best action that Americas Cities & States can take to shore up their finances, because, by NOT deferring compensation to later years (and of course then not fully funding such promises …. generally in the form of ludicrously generous pensions and retiree healthcare) they would have to live WITHIN their means, and when called for, they would have HONESTLY justify and convince taxpayers of the need for those tax increases (because they would need them to pay CURRENT bills).

    EQUAL …. but NOT better !

    Reply

    • Posted by S Moderation Anonymous on June 23, 2017 at 5:28 pm

      #23%bulls hit

      Mortgage rates in 2008 were over 6%. Today they are under 4%.

      Unemployment was 10%. Now it is 4%

      DJIA bottomed out at 6,600. Now it is 21,400.

      Average hourly earnings in 2008 were $18.40 ($17.02 CPI adjusted) in 2017, $22.00 ($17.56 CPI adjusted)

      Does your boss know that you are using data from 2008-2012 applied to today’s finances?

      And that the 2008-2012 “23%” claim was questionable to begin with?

      Yes, there were other state specific studies. 2010 stating California AND New Jersey were “roughly equal with the private sector.

      Yes, Keefe, who you believe should be fired for sloppy statistics. And I say neither Keefe nor Biggs could claim accurate, unbiased results.

      Tell me, If Keefe (or Biggs) used data, accurate or not, that is up to 9 years old and claimed it was still valid today, would you approve of their methodology?

      #23%bulls hit

      Reply

      • Posted by Anonymous on June 23, 2017 at 5:35 pm

        Ah yes, back to Study Author Keefe ….. who believes that the annual “cost” of Public Sector pensions is what the Gov’t entity actually CONTRIBUTES in that year.

        In several years, NJ contributed NOTHING . Does that mean that the value of that year’s pension accruals was nothing ?

        Go ahead, you brought Prof Keefe…….. justify such (ludicrous) thinking.

        Reply

        • Posted by S Moderation Anonymous on June 23, 2017 at 5:51 pm

          Tell me, If Keefe (or Biggs) used data, accurate or not, that is up to 9 years old and claimed it was still valid today, would you approve of their methodology?

          #23%bulls hit

          Reply

          • Posted by Anonymous on June 23, 2017 at 6:53 pm

            The 23% PUBLIC Sector Total Compensation ADVANTAGE was the low STARTING point.

            Per the Biggs Study for NJ:

            (a) a 23% of pay Public Sector “Total Compensation” ADVANTAGE (EVERY year) PLUS

            (b) the incremental impact of greater job security (PER THE Bigg’s study, about 10% of pay) PLUS

            (C) the ADDITIONAL incremental %-of-pay if Safety-workers (the highest-paid, and highest-pensioned of all grousp) had not been EXCLUDED from the Bigg’s study.

            Differences that HUGE DON’T move quickly……….. and you BS fools nobody.

        • Posted by S Moderation Anonymous on June 23, 2017 at 6:22 pm

          Yes, Keefe, who you believe should be fired for sloppy statistics. And I say…

          ” neither Keefe nor Biggs could claim accurate, unbiased results.”

          #23%bulls hit

          Reply

          • Posted by Anonymous on June 23, 2017 at 7:03 pm

            SMD,

            Repeating…

            “Ah yes, back to Study Author Keefe ….. who believes that the annual “cost” of Public Sector pensions is what the Gov’t entity actually CONTRIBUTES in that year.

            In several years, NJ contributed NOTHING . Does that mean that the value of that year’s pension accruals was nothing ?

            Go ahead, you brought Prof Keefe…….. justify such (ludicrous) thinking

            **********************

            Go ahead, JUSTIFY it …… you BULLSHIT Artist !

          • Posted by S Moderation Anonymous on June 23, 2017 at 7:36 pm

            TL Anonymous,

            In answer to your question, no, I cannot justify Keefe’s methodology. Nor can I justify Bigg’s.

            I reiterate… ” neither Keefe nor Biggs could claim accurate, unbiased results.”
            ………………………..

            Repeating…

            Tell me, If Keefe (or Biggs) used data, accurate or not, that is up to 9 years old and claimed it was still valid today, would you approve of their methodology?

            #23%bulls hit

          • Posted by Anonymous on June 23, 2017 at 7:50 pm

            Glad to hear that you acknowledge the ABSURDITY of Keefe’s thinking.

            As to the data, yes it’s growing stale, but until we get a State-specific update …. from an honest/competent Study-Author, that’s all we have to go by.

            That said, that HUGE Public Sector Total Compensation Advantage (in BOTH CA and NJ) of 23+++% of pay certainly did not have move anywhere 23+++% of pay in so few years …………. perhaps being even GREATER today.

          • Posted by S Moderation Anonymous on June 23, 2017 at 9:01 pm

            It’s not stale, Love, it is dead. Assuming it was even remotely accurate to begin with, and considering all the reforms after 2012.

            Biggs, Keefe, Biggs…

            Always have, and always will highly recommend Biggs 2014 paper. The main reason was the much better explanation of the wage compression in the public sector* and for quantifying that compression, at least for nationwide data.

            *http://www.nber.org/digest/jun03/w9313.html

            Secondary reason was a much better description of methodology.
            1) There are several sources of data available for these studies, each with its own advantages and disadvantages.
            2) None of these sources is specifically designed for the purpose of public/private compensation comparison.
            3) The researcher uses this data according to his own judgement (and prejudice).

            In every study there are dozens of assumptions and decisions which may greatly affect the outcome, accumulatively. My favorite is the treatment of Social Security. Clearly it is a “cost” to the employer of 6.2% of salary. But… because of the progressive nature of SS, only 2.4% of salary is considered a “benefit” to the employee (the remaining 3.8% is considered, in effect, a “tax”). This ratio isn’t the same for everyone. It is specific to the age and earnings level of the typical state government employee. “Typical” state employee… employer SS contributions are a greater benefit to lower paid employees, and less benefit to those more highly paid.

            I’m not claiming Biggs is wrong in using the benefit, rather than the cost, in this instance. But I an wondering about all the other assumptions he, and others make, that are not separately explained, and how much they accumulatively affect the outcome.

            #23%bulls hit

          • Posted by S Moderation Anonymous on June 23, 2017 at 9:12 pm

            Reading comprehension….

            I did not “acknowledge the ABSURDITY of Keefe’s thinking.”

            I said, ”neither Keefe nor Biggs could claim accurate, unbiased results.”

            #23%bulls hit

          • Posted by Anonymous on June 23, 2017 at 9:32 pm

            Quoting SMD………….

            “Assuming it was even remotely accurate to begin with, and considering all the reforms after 2012. ”

            And what evidence do you have to back up that statement that ……”Assuming it was even remotely accurate to begin with” ?

            And really? The supper-immaterial “reforms” after 2012, almost ALL of which ONLY impacted NEW workers ? CA’s Taxpayers have 20 to 30 MOREyears of CONTINUED “Ludicrously excessive” accrues for the reminder of the careers of the workers hired before 2012.

            And don’t think CA’s Taxpayers have forgotten the CalPERS-PUBLISHED list of 99 ways ….. even post 2012 pension changes …. that Public Sector workers can continue to Spike their pensions.

            ***************

            And all that done with your Social Security RANT, is justify how outrageous it is that only PUBLIC Sector workers have been allowed to elect not to participate. The higher-earning Private Sector wage earners DON’T have the same (beneficial) option to elect NOT to participate because (for THEM as well) SS is a lousy deal.

          • Posted by Anonymous on June 23, 2017 at 9:38 pm

            SMD, You didn’t even respond truthfully when you said ……………….

            “I did not “acknowledge the ABSURDITY of Keefe’s thinking.”
            I said, ”neither Keefe nor Biggs could claim accurate, unbiased results.”

            BS, you’re full of it. Above (time-stamped June 23, 2017 at 7:36 pm) you stated ………….

            “In answer to your question, no, I cannot justify Keefe’s methodology. “

          • Posted by S Moderation Anonymous on June 23, 2017 at 11:08 pm

            #23%bulls hit

            Lawd have mercy!

            “In answer to your question, no, I cannot justify Keefe’s methodology. “

            “acknowledge the ABSURDITY of Keefe’s thinking.”

            Yeah, that’s exactly the same.

            I also said… ” neither Keefe nor Biggs could claim accurate, unbiased results.”
            ………………………………….
            Still… stuck on 23% ?

            I made a prediction, of sorts… Calpensions, December 25, 2014 at 9:56 pm

            “If you read Biggs and Richwine, as I strongly recommend, please read carefully, and reread, all the text and methodology before you get to the lazy reporter bait bar graphs that show California state workers have a 33% compensation advantage over private sector workers.
            (Figure 13, page 74 if you’re with Washington Times or PRI)”

            Because,
            1) In his description of methodology, Biggs could not have been more clear about the margins for error, for himself and other researchers.

            2) The biggest difference between Biggs and most other researchers is the assumed discount rate. You may be “never in doubt”; but there is plenty of disagreement within the field*

            *”They failed in their guerilla campaign to persuade the Governmental Accounting Standards Board (GASB) to institutionalize the academic thesis that pension fund liabilities should be discounted using a “risk free” rate. Yet, we still hear from researchers who insist that Treasury bond rates would tell the “true story.” That just doesn’t reflect how the world works.”
            (Girard Miller)

            But TL Anonymous knows all? Sorry, CAPS LOCK and constant repetition won’t cut it.

            #23%bulls hit

            You may have skimmed Biggs, but you locked on to figure 6 and 13 like a true Brietbart “opinion writer”. Lazy reporter.

            Was Biggs right in 2014? Is it still right today, Biggs and Richwine studied California in 2011 (data from 2006 to 2010. That study included state AND local workers, and apparently safety workers (they weren’t specifically excluded). The results then were, a 3.7 public sector wage penalty, “properly accounting for retiree health benefits and defined-benefit pension plans generates a public compensation premium of around 15 percent.” And a job security public advantage of 15%

            ” meaning that the total public-sector pay premium in California may be as high as 30 percent.”

            For the purpose of Internet sensationalism, you can rant and yell till the proverbial cows come home. But if you seriously want to affect pension reform. That won’t cut it.

            23%, then and now, is bulls hit.

          • Posted by Anonymous on June 24, 2017 at 12:15 am

            SMD,

            If you REALLY understood pension funding you would realize has absurd the CURRENT GASB standards remains.

            Do you think that Private Sector DB Plan Sponsors (i.e, many huge companies with lots of lobbyist) would allow the Gov’t to force upon them standards that are overly conservative?

            Of course not. Yet the Standards that apply to Private Sector Plan valuations are MUCH MUCH more conservative than the GASB standard.

            The GASB “accommodated” the Public Sector Cities and States that (together with the Public Sector Unions) ferociously lobbied NOT to apply such standards to them, NOT because they were inappropriate, but because such PROPER standards would resulted in huge increases in Taxpayer contributions ………………. which would have in turn threatened the very existence of DB Plans in the Public Sector.

          • Posted by S Moderation Anonymous on June 24, 2017 at 1:00 am

            I understand this…

            #23%bulls hit

          • Posted by Anonymous on June 24, 2017 at 1:18 am

            SMD,

            It’s …………….. “above your Grade Level”

          • Posted by S Moderation Anonymous on June 24, 2017 at 3:03 am

            #23%bulls hit

  14. Posted by Anonymous on June 23, 2017 at 3:59 pm

    Not much difference between the public and private sector when it comes to funding their pension obligations;

    http://www.cbsnews.com/amp/news/corporate-pension-relief-who-benefited-most/

    Reply

    • Posted by Anonymous on June 23, 2017 at 5:03 pm

      Wrong …. by a mile.

      Private Sector Plan discount Plan liabilities using an interest rate of about 4% vs the 7% to 8% commonly used by Public Sector Plans.

      Put them on the SAME basis, and Public Sector Plans have about HALF the funding ratio of Private Sector Plans.

      Reply

    • Posted by Anonymous on June 23, 2017 at 4:55 pm

      According to bury jrs & sprs will be first and second to cash flow out – now what’s the chances that’ll happen?

      Reply

      • Posted by Anonymous on June 23, 2017 at 6:58 pm

        Why not ask the teachers or the clerks or the Police ….. if they want THEIR contributions being used for continued annuity payments to the Judges.

        Assuredly THAT is what will happen.

        I’d fall out of my chair If NJ’s Elected Officials had the balls to tell the Judges…. Sorry, but you’re shit-out-of-luck !

        Reply

  15. Posted by Anonymous on June 24, 2017 at 1:00 pm

    Off Optic but ………….

    View story at Medium.com

    CA’s CalPERS should be shut down, and replaced with a Plan administrator whose Board’s fiduciary obligations are to ALL of CA’s Taxpayers (who pay all but the 10% to 20% of total Plan costs actually paid for by the workers), NOT just it’s Public Sector workers.

    This article’s author would make a wonderful Board Chairman.

    Reply

  16. Posted by Anonymous on June 24, 2017 at 1:53 pm

    Yeah, it is off optic.

    CalPERS, and many other pension administrators, do need some changes in governance, as per Johns last two articles on actuarial practices.

    The feds could help, either by requiring changes in return for continuing tax exempt status, or by requiring changes in exchange for federal guarantees to backstop the worst systems (New Jersey, Illinois, Pennsylvania, ad nauseum).

    Except…

    Oh yeah, feds…

    Out of the frying pan…

    BOHICA

    Reply

    • Posted by Anonymous on June 24, 2017 at 2:22 pm

      Wow….. nicely squeezd that in ………..

      “The feds could help ……… or by requiring changes in exchange for federal guarantees to backstop the worst systems (New Jersey, Illinois, Pennsylvania, ad nauseum).”

      What a horrible idea, to make the financially responsible financially support the financially irresponsible.

      Should there be ANY Federal support of State & City pensions, it should be conditioned upon a reduction in the future service accruals of all CURRENT workers to a level no greater than the average value of such accrual under Private Sector Plans.

      EQUAL …… but NOT better !

      Reply

  17. Posted by S Moderation Anonymous on June 24, 2017 at 3:29 pm

    So, California, which has more generous pensions, but has a higher funding level (because it has, for the most part, been keeping up with required contributions) could end up bailing out NJ, which has lower pensions, but has not contributed zip for over fifteen years.

    No, it’s not fair, it’s math. We could just blame the NJ workers, many of whom know next to nothing about their pension plan*. (Blame the victim.)

    We could reduce “future service accruals of all CURRENT workers to a level no greater than the average value of such accrual under Private Sector Plans.”

    Which, of course, presumes that the total compensation of CURRENT workers is excessive, when compared to equivalent private sector workers… which assumes facts not in evidence.

    Or, since most of the “pension mess” is not today’s normal cost, but unfunded liability, we could improve the governance, thereby reducing taxpayer costs without reducing pensions. (Pension reform is not the same as pension reduction.)

    *”Survey reveals priorities, limited knowledge about plans”

    http://www.pewtrusts.org/en/research-and-analysis/analysis/2017/05/22/what-younger-public-workers-think-about-retirement

    Reply

  18. Posted by Anonymous on June 24, 2017 at 11:14 pm

    Quoting SMD……

    “Which, of course, presumes that the total compensation of CURRENT workers is excessive, when compared to equivalent private sector workers… which assumes facts not in evidence ”

    Only YOU a greedy, greedy self-interested Public Sector retiree would attempt to conclude that the AEI-study-demonstrated 23%-of-pay Public Sector “Total Compensation” ADVANTAGE (33% WITH the Incremental impact of greater Public Sectorof Job security, and some HIGHER % if Public Sector Safety-workers with the HIGHEST pay & pensions had not been excluded) would simply disappear by 2017 because it was derived from data a bit over 5 years old.

    There is an equal change it have INCREASED.

    And you’re WRONG. Effective Public Sector pension “reform” MUST mean pension REDUCTIONS, because Publlic Sector pension are now ROUTINELY 2 to 4 times (4 to 6 times for Safety workers) greater in value upon retirement than those typically granted COMPARABLE Private Sector workers.

    ********************************************

    You’re simply a Public Sector …..moocher.

    Reply

  19. Posted by S Moderation Anonymous on June 24, 2017 at 11:32 pm

    #23%bulls hit

    Reply

  20. Posted by S Moderation Anonymous on June 24, 2017 at 11:35 pm

    “ROUTINELY 2 to 4 times (4 to 6 times for Safety workers) greater in value…”

    Still GIGO

    Reply

  21. Posted by Anonymous on June 25, 2017 at 9:47 am

    come on you to step it up and onto the next post….anonmice awaits you

    Reply

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