Mercatus Mushrooming Costs

Ranking states by fiscal condition, as the Mercatus Center has done for FY12, FY13, FY14, and now FY15 based on state data reports, gives us a clue as to what an apathetic public might owe for public pensions, retiree health care benefits (OPEBs), and regular debt but since factors for calculating the values of pensions and OPEBs are questionable (and likely understated) while repudiation is probable to varying degrees the public remains mostly in the dark there.

Whereas borrowing by states in the bond market is relatively transparent, benefit costs fall prey to the actuarial/political delusion machine resulting in this trend:

The spreadsheets are here and they clearly show that, while regular state debt from various forms of bonding has actually declined from FY13 to FY15, liabilities for pension and OPEB* benefits have exploded, primarily due to mushroom management of these liabilities.

.

.

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* Data was taken from the Mercatus reports which had the California OPEB value for FY14 at $29 billion, less than half of the FY13 and FY15 values, and could have been an error.

29 responses to this post.

  1. The City of New York borrows the retirement savings of its k-12 crowd at an interest rate of 7 percent for teacher union members or 8.25 percent for all others. Now that is a sweetheart deal and puts the City’s ability to pay pensions in jeopardy.

    Reply

    • Posted by Anonymous on July 16, 2017 at 7:19 pm

      In “jeopardy” ?

      Depends on your position in this problem (a Plan participant or a Private Sector taxpayer).

      If a Taxpayer (who can leave NYC if Taxes become too burdensome), it doesn’t seem like THEY are in much “jeopardy”.

      Perhaps the jeopardy will fall upon those (the Plan participants) who have overly benefited from the excessive pension/benefit promises …… the clear result of underhanded deal-making between their Unions and NYC’s Elected Officials.
      ****************************

      Watching NYC Mayor Bill de Blasio’s campaign was oh-so-trying………. his head was always so far up the Unions’ asses.

      Reply

    • Posted by S Moderation Anonymous on July 17, 2017 at 6:12 pm

      You could double check, but according to the author, the town does not contribute to pensions for these people. One of the articles also stated they do not receive medical benefits.

      Reply

      • Posted by Anonymous on July 17, 2017 at 9:29 pm

        Well than the pay increases make sense b/c their total compensation s/b comparable to other public’s with the P&B!

        Reply

  2. Posted by George on July 17, 2017 at 6:00 pm

    4/30/2017 pension assets are said to be TOTAL PENSION FUND $74.79 Billion

    http://www.state.nj.us/treasury/doinvest/

    Up from $69.6 on 1/31/2016

    http://www.state.nj.us/treasury/doinvest/pdf/DirectorsReport/2016/JanuaryInvestingReport2016.pdf

    Reply

  3. Posted by skip3house on July 17, 2017 at 7:00 pm

    “The United States is falling apart because — unlike Canada and other wealthy countries — the American public sector simply doesn’t have the funds required to keep the nation stitched together. A country where impoverished citizens rely on crowdfunding to finance medical operations isn’t a country that can protect the health of its citizens. A country that can’t ensure the daily operation of Penn Station isn’t a country that can prevent transportation gridlock. A country that contracts out the operations of prisons to the lowest private bidder isn’t a country that can rehabilitate its criminals,” Kay writes.

    “It’s really quite simple: When Canadian governments need more money, they raise taxes. Canadians are not thrilled when this happens. But as Justice Oliver Wendell Holmes Jr. put it, taxes are the price paid ‘for civilized society.’ And one of the reasons Canada strikes many visitors as civilized is that the rules of arithmetic generally are understood and respected on both sides of the political spectrum.”

    Reply

    • Posted by Anonymous on July 17, 2017 at 7:11 pm

      That’s what Ill and CA have been doing …. raising Taxes (and “fees”).

      And CLEARLY to keep paying for the ludicrously excessive pensions (and benefits) promised it’s Public Sector workers.

      You sound like you think raising taxes to do so is the right thing to do.

      Really ?

      Reply

      • Posted by skip3house on July 17, 2017 at 7:46 pm

        https://www.theatlantic.com/business/archive/2017/07/canada-america-taxes/533847/?utm_source=Fareed's+Global+Briefing&utm_campaign=46357c8e91-EMAIL_CAMPAIGN_20 … “For civilized society..Trudeau hiked the marginal income-tax rate up over 50 percent on rich taxpayers…..”.. (see Atlantic July 2017)

        Reply

        • Posted by Anonymous on July 17, 2017 at 8:26 pm

          All very interesting, and raising taxes because they are truly needed for NECESSARY infrastructure repair and expansion is appropriate.

          Raising taxes (even if only on the wealthy) to pay for Public Sector pensions (or benefits) that are routinely MULTIPLES greater in value upon retirement (than those of comparable Private Sector workers) is NOT.

          Reply

          • Posted by Anonymous on July 17, 2017 at 10:50 pm

            1. Keep the dogma simple. Make only 1 or 2 points.
            2. Be forthright and powerfully direct. Speak only in the telling or ordering mode.
            3. As much as possible, reduce concepts down into stereotypes which are black and white.
            4. Speak to people’s emotions and stir them constantly.
            5. Use lots of repetition; repeat your points over and over again.
            6. Forget literary beauty, scientific reasoning, balance, or novelty.
            7. Focus solely on convincing people and creating zealots.
            8. Find slogans which can be used to drive the movement forward.

            You got it down pat.

          • Posted by Anonymous on July 17, 2017 at 11:00 pm

            Do you mean like the Public Sector Unions demanding MORE & MORE & MORE ……….. and to hell with the Taxpayers ?

          • Posted by S Moderation Anonymous on July 17, 2017 at 11:29 pm

            ¡Si!

            Déjà pooh

          • Posted by Anonymous on July 18, 2017 at 1:05 am

            And that “CANCER” thing; simple, stereotype, repititious, no reasoning, balance, or novelty, etc., etc.

            That’s a keeper. It never gets old.

            Copy,
            Paste,
            Post

    • Posted by George on July 17, 2017 at 10:27 pm

      Canadian heathcare does equalize one gap between public and private sector.

      Reply

      • Posted by Anonymous on July 17, 2017 at 10:57 pm

        Raising taxes (on a progressive basis) so that everyone has reasonable (but not Rolls Royce care ….which the country cannot afford to give everyone via taxes) is indeed appropriate.

        Of course the tax increase necessary to achieve the above would be MUCH smaller if we froze the ludicrously excessive Public Sector DB pensions (AND benefits) for all CURRENT Public Sector workers……… replacing them with pensions/benefits EQUAL TO but no greater than those granted COMPARABLE Private Sector taxpayers.

        Reply

        • Posted by George on July 18, 2017 at 9:59 pm

          Raising taxes – In the US it is not clear what would happen. The Canadian system substitutes government inefficiency and redistribution for American corruption and profiteering. It is really not clear if taxes would need to be raised as premiums are already the highest in the world. Canadian healthcare taxes could be considered comparable to US premiums.

          Looking at the US Canadian border, there must be a reason why if you cross from Detroit or Buffalo into Canada it seems everything improves.

          Reply

      • Posted by S Moderation Anonymous on July 17, 2017 at 10:59 pm

        It’s a big gap, especially for the lower level workers. For public workers, family healthcare benefits could be 25%-35% of wages for those under $40,000 a year. Of course, for many private sector families in that salary range, healthcare is largely paid by Medi-Cal or Medicaid anyway.

        Reply

  4. Posted by Anonymous on July 17, 2017 at 11:12 pm

    LOL………… Lucky for LA Taxpayers that this guy was just an engineering “associate”. Can only guess at what his pension would have been if he was a full “engineer”.

    Quoting … “Former DWP electrical engineering associate Nevenka Ubavich’s $363,061 annual pension was the largest of any DWP retiree”

    https://blog.transparentcalifornia.com/2017/07/17/former-dwp-general-managers-356000-pension-among-highest-statewide/
    ********************************

    Hey SMD…………… you pick the wrong specialty.

    Reply

    • Posted by S Moderation Anonymous on July 18, 2017 at 12:31 am

      Funny, a blast from the past…

      Robert Fellner 27 December, 2014, 17:39 (Calwatchdog)

      The areas most likely to see where govt is overpaying are those with a strong public union for the type of jobs that are crowded in the market w/ more (qualified) buyers than sellers, making the job market highly competitive and putting downward pressure on wages.

      Think basic data entry, secretarial, janitorial, prison guard etc. Given the relatively low skill set needed combined with an unemployment rate anywhere above 0.00% suggests there exists more buyers than sellers.

      This is precisely where you see the biggest divergence of wages in public vs private in California. The average pay for an executive assistant for the Los Angeles Department of Water and Power is $204k. That’s salary only. (salaries.latimes.com/)

      By comparison, the average salary for an executive assistant in LA according to salary.com is $44k. http://www.indeed.com/salary/q-Secretary-l-Los-Angeles,-CA.html
      ……………………………………

      S Moderation Douglas 28 December, 2014, 05:03

      We can’t use job titles alone to compare public and private-sector pay. An “executive assistant” in one office may have entirely different responsibilities and requirements…….
      ……………………………………

      Robert Fellner28 December, 2014, 08:05

      …..

      You’ve gone completely off the rails here and doubled down on your ignorance of what drives wages.

      For your position to be true, executive assistants in the LADWP provide and have 500% more responsibilities than executive assistants in general in LA. I specifically choose a relatively low-skilled, generic profession because of the lack of such a diverse range within such a job.

      You didn’t bat an eye in blindly defending your pre-existing bias and responded that the EAs in LADWP are worth 5x because they must have more responsibility. I like it!…..
      ……………………………………….

      S Moderation Douglas29 December, 2014, 21:31

      Thanks again.

      LOL!!!

      I don’t know what I was thinking. Mr. Fellner even gave us a link to the website.

      1) log on to website
      2) scroll down list to “Exec Asst ( to the Gm )…$213,543
      3) copy/paste employee name to your favorite search engine
      4) graduated Cum Laude, University of Miami
      5) Assistant Director, Policy & Legislative Affairs, Miami Dade mayors office
      6) yada, yada, yada
      7) BUT, an ” average” secretary should be able to type at least 50 wpm
      8) if this guy can’t do at least 250 wpm, he does NOT deserve five times the salary of an “average” executive assistant.
      9) must be that “strong public union” ramping up his salary.
      10) It would be funny, if it wasn’t so pathetic
      ………………………………….

      Robert Fellner 30 December, 2014, 23:14

      Great save – thank you.

      I was in a haste to see if there was the most blatant example of excessive public salaries that Doug would acknowledge as excessive, as opposed to attempt to deflect away and 200k for executive assistant fit the bill!
      ……………………………………….

      “I was in a haste…”? That’s tantamount to an apology for saying I had “…gone completely off the rails here and doubled down on your ignorance…”

      I’m takin’ it!

      For the record, Executive Assistant to the GM at the DWP isn’t a clerical position. It’s a vice-president (C-level) executive position.

      Also, for the record, LA DWP does have comparably high pay.

      Also, in his zeal and bias, Mr. Fellner doesn’t hesitate to repeat extraordinary claims (in haste?) without even trying to verify. Sound like anyone else we know?

      Never fear, that’s why Moderation is here.

      Reply

      • Posted by Anonymous on July 18, 2017 at 1:02 am

        WOW, Transparent California’s Robert Fellner pegged you out PERFECTLY 3 years ago (and you haven’t changed one bit) when he stated……

        “You didn’t bat an eye in blindly defending your pre-existing bias”

        Reply

      • Posted by S Moderation Anonymous on July 18, 2017 at 1:19 am

        Twas Mr. Fellner who didn’t bat an eye in posting a ludicrous comparison. (Not the first time, either, nor the last, I fear.)

        Carl Sagan… “Extraordinary claims require extraordinary evidence.”

        Mr. Fellner doesn’t hesitate to repeat extraordinary claims (in haste?) without even trying to verify. Sound like anyone else we know?

        Reply

        • Posted by Anonymous on July 18, 2017 at 2:23 am

          And Twas YOU who stated that Eileen Norcross said (re CA pensions):

          ““IN GENERAL, IT IS NOT BECAUSE BENEFITS ARE GENEROUS” ”

          When what she ACTUALLY said was:

          ““IN GENERAL, IT IS NOT BECAUSE BENEFITS AREN’T GENEROUS” ”
          ***********************************

          Remember that thing about throwing stones and glass houses ?

          Reply

        • Posted by S Moderation Anonymous on July 18, 2017 at 7:17 am

          “…It’s because these systems have been systematically underfunded due to what I would call accounting mistakes; undervaluing the true size of the benefits and then not putting in enough.

          … and then there’s a lack of discipline in some states in just skipping out on the annual payments.”

          Looks like you didn’t finish the quote in context.

          WOW ………………. You owe the readers an explanation.

          Reply

          • Posted by Anonymous on July 18, 2017 at 11:36 am

            LOL ………….. you changed “aren’t” to “are” …. and got caught doing it.

            Sounds like more (like Fellner stated) ……”blindly defending…”

  5. Posted by Earth on July 18, 2017 at 1:09 pm

    Earth to TL:

    Grow up.

    Reply

  6. Posted by Anonymous on July 18, 2017 at 2:05 pm

    Anyone with even modest math/finance skills knows that (with VERY few exceptions and then only for a small % of the most recently hired workers) that Public Sector pension formulas/provisions are unnecessarily generous, unfair to Taxpayers (now called upon to pay for 80% to 90% of total Plan costs), and clearly unaffordable. Continuing to grant ADDITIONAL (future service) pension accrual under formulas/provisions that we KNOW are unaffordable is financial-insanity.

    And if you do have those math/finance skills, you are also likely smart enough to realize that the Public Sector Unions/Workers will not WILLINGLY “negotiate away” more than a VERY VERY small share of the enormous advantage that they now have.

    Such changes MUST be FORCED upon them……. something no less direct than Ronald Reagan’s firing of the Air Traffic Controllers. Impediments (be they Constitutional clauses, Contract provisions, Case law, State/Local laws/regs., etc.) must be challenged again and again and again. I’d rather USE-UP our money FIGHTING these unjust pensions than paying for them. This is a battle that the Taxpayer CANNOT “afford” to lose.

    If we (the Taxpayers) don’t, we will ANNUALLY get less and less and less services while our taxes go up and up and up ….. all to pay for these ludicrously excessive Public Sector pension/benefit “promises”……… and eventually these ludicrously excessive pensions will fail anyway becasue the MATH assures that end.

    I don’t care about being politically correct, pleasing those who choose to cheat me (via unjustified pension/benefits…. that I must pay for), and those who knowingly lie to justify the absurd (e.g., safety workers typically die withing 5 years of retirement, “average” Public Sector pensions are only $xx, we “need” generous pensions to attract the “best and brightest”, yada, yada, yada).

    Reply

    • Posted by Anonymous on July 18, 2017 at 4:38 pm

      The last time I would agree that we TRULY had the “best and brightest” Public Sector workers (and THAT was at the “Federal” level) was likely for the the “Manhattan Project” in the 1940s ….. when our scientists developed the atomic bomb.

      Reply

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