Community newspapers pine for the 1990s when classified advertising revenue made them cash cows and they all had fully funded Defined Benefit plans using an 8% funding interest rate and 30-year amortizations of any unfunded liabilities.
Congress can’t bring back the revenue stream but they are trying to bring back the 80’s funding rules according to a story in The Virginian-Pilot:
A bill known as the Save Community Newspaper Act of 2018 was introduced last month by Rep. Erik Paulsen, R-Minn., who said it would help independent newspapers “find their financial footing.”
What it will really do is put these single employer plans on the path that self-imposed funding rules have taken multiemployer plans.
Wikipedia has a handy list of newspapers serving cities of over 100,000. The Star Tribune of Minneapolis is one of them and it maintains two Defined Benefit plans – O(001) for nonunion employees and A(002) for production employees. Both plans were frozen as of December 31, 2009 according to the Plan Summaries (though neither list 1I as a plan characteristic on the 5500). Based on 5500 data here is what each plan has been getting in contributions over the last few years:
Stricter funding rules that came in with PPA required higher contributions (and probably led to the freezes) before the MAP-21 and HATFA ‘relief’ cut contributions for all single-employer plans though, for community newspapers even with frozen plans, it apparently was not by enough.
Burypensions Blog 
Posted by Anonymous on August 14, 2018 at 3:12 pm
https://www.marketwatch.com/amp/story/guid/AA69B1D0-9BF2-11E8-9999-4B1A16BA4FF7
Posted by Now Retired Pat on August 14, 2018 at 6:44 pm
“In short, the generosity of benefits is not driving increased pension costs. If anything, benefit generosity has declined.
The problem is that many governments have not made adequate contributions to fund their benefit promises (and their initial assumptions regarding the cost of benefits turned out to be optimistic).
In some cases, such as Connecticut, Illinois, and New Jersey, the current underfunding is now so severe that only some sort of “grand bargain” can resolve the pension problem. In many other situations, however, a serious funding commitment can ensure that the money will be there to pay promised benefits.
In any case, increasingly generous benefit promises are not the issue.”
Posted by Tough Love on August 14, 2018 at 8:42 pm
The Linked article should be read carefully……………..
Yes, Ms Munnell is correct that “underfunding” leads to INCREASES in annual pension costs. That’s pretty obvious, but what is the level of pensions benefits that are “underfunded” ? And are they underfunded BECUASE they are VERY generous, and hence VERY costly, and hence VERY difficult to fully fund ?
Ms. Munnell never addresses what is meant by “pension generosity” ITSELF, but discusses it only in the context of whether it is contributing to the increase in annual pension costs.
Pension generosity ITSELF is properly measure by comparing the generosity of Public Sector Plans to the generosity of the retirement security (whether via DC or DB Plans) granted Private Sector workers in comparable jobs. When such comparisons are made (e.g. Biggs AEI Study) it is VERY VERY clear that Public Sector PENSIONS (as well as Public Sector BENEFITS) are MUCH MUCH greater than those granted their Private Sector counterparts. And even when we move the measure from just pensions (or pensions & benefits) to “Total Compensation” by including “wages”, for all workers together in one group ……… which IS the measure that financially impacts Taxpayers …….. the Public Sector STILL has a very large ADVANTAGE. An advantage that (per the Biggs Study) equates to 23% of wages in NJ (rising to 33% if the value of the much greater Public Sector job security is included …… also per the Biggs Study).
The upshot is that because pension generosity is not rising it’s not contributing to the “INCREASE” in annual pension costs ………… but that assuredly does NOT lead to a conclusion that Public Sector pensions are not too generous.
Posted by Anonymous on August 15, 2018 at 11:30 am
I suspect if the author thought other points were relevant they would have stated them but one sided opinions are always welcome and expected!
Posted by Tough Love on August 15, 2018 at 12:32 pm
Authors discuss/comment on the topic at hand, which was whether the rising costs are a result of benefit generosity and/or of under-funding. I’m sure there are 100’s of OTHER subjects she also DIDN’T discuss/comment-on because they too were not the subject of her article.
As to Ms. Munnell, from several of her articles that I have read, she “appears” to have a bias AGAINST talking about Public Sector pension generosity as a stand alone issue, and some of her statements suggest that her bias may be more deep-seeded. For example in the linked article she seems to go out-of-her-way to focus on what is clearly a smallish element of a bigger problem. Specifically she stated ……….
“In short, the generosity of benefits is not driving increased pension costs. If anything, benefit generosity has declined. ”
Isn’t whether the GENEROSITY-OF-BENEFITS is driving cost increases of much SMALLER concern than if the pensions themselves are too generous ? It certainly SHOULD BE.
And WHY did she include the last part …………… “If anything, benefit generosity has declined. ” ………… without AT LEAST pointing out that a DECLINE in Public Sector pension Plan generosity isn’t really meaningful if the generosity level that REMAINS (after such decreases) is still much greater than the Private Sector retirement security to which Public Sector pension generosity should rightful be compared.
Posted by Anonymous on August 15, 2018 at 4:46 pm
Ah bias something you don’t have huh, lol!
Posted by Stephen Douglas on August 15, 2018 at 4:38 pm
Wirepoints:
“Our report looks at the state’s accrued liability. The accrued liability, which as of 2017 was $214 billion, is the present value of the total amount state workers are owed in pension benefits over the next 30 years.”
Seriously, how can you compare that to the average wage today?
It’s apples and oranges.
Munnell is looking at the normal cost. Missed the logical fallacy in the Wirepoints article.
Biggs missed it too.
https://www.forbes.com/sites/andrewbiggs/2018/08/14/have-public-employee-pensions-become-more-generous-or-less/#289f9e9b1e20
Sorry, Wirepoints is all wet. Actual increases in individual benefits have obviously increased accrued liability, but not by 1,000 percent. Not even close. Low-balling the required contributions is a large cause of unfunded liabilities for most states.
Low-balling on steroids for Connecticut, Illinois, and New Jersey.
Where is Kenny when you need him?
And Meep: “I don’t actually agree that blame-finding is useless in this case. If people want the public pensions to keep going, then it needs to be clear exactly how the pensions got in the hole – to prevent it from happening again.”
There you go. Can’t fix the problem if you haven’t properly defined the problem, and Wirepoints is sure as hell not helping.
Posted by Tough Love on August 15, 2018 at 7:09 pm
Lol ………….. a light bulb changer is now tell us what professional economists “missed”
Can it get any better ???
Posted by Stephen Douglas on August 15, 2018 at 10:21 pm
It is what it is. At least half a dozen self proclaimed experts refuted Wirepoints article. All for different reasons. I agree most with Kenny:
“This is a horrible article and a horrible comparison. The wire points study offers up this comparison as if the liability growth is unusual or unexpected. Given the liabilities are generally being discounted at 7-8% (or more), the expectation is they will grow at 8% even if no one earns any additional benefits so given people are earning additional benefits one would expect them to grow at something more than 8% per year.
Proper advance funding of the benefits with a focus on 100% funding and amortization of both gains and losses over a reasonable period of time absolutely would result in the ability to maintain contributions at a fairly steady level % of pay contribution. You can argue about issues with the assumptions but any conclusion that attempts to claim that the growth of benefits by itself is the issue and not proper measurement and funding shows a gross misunderstanding of the entire topic.”
Posted by Tough Love on August 15, 2018 at 10:36 pm
Yeah right ………… taxpayer focus on 100% funding of undeniably lLUDICROUSLY EXCESSIVE Public Sector pensions.
WHY should we ?
Posted by Stephen Douglas on August 15, 2018 at 11:17 pm
“It’s an important debate: retirement benefits are needed to attract public employees but excessive benefits can squeeze out other important parts of state and local budgets. But both sides of this argument have something wrong.”
Andrew Biggs
—————————–
Nobody knew pensions could be so complicated.
Thank goodness we have TL to simplify it for us.
There are more things in heaven and earth, Brother Love, Than are dreamt of in your spreadsheets.
Posted by Tough Love on August 15, 2018 at 11:58 pm
Not to worry. You can be assured I will continue to correct your MANY mistakes (both unintentional as well as intentional).
Posted by Stephen Douglas on August 16, 2018 at 12:48 am
I never doubted that for a second, but…
One of my original arguments was that Wirepoints comparison of accrued assets to such things as personal income was invalid. The proper comparison to increases in personal income in the private sector would be to the increase in normal cost for public workers, or to the average increase in actual benefits received by public employees… Not to the increase in accrued liabilities, which WP variously refers to as “pension benefits” or “promised pension benefits. That leads to WP’s false conclusion that underfunding is not the cause of the pension crisis.
Munnell and Biggs also use normal cost as the proper comparison of increasing generosity. They just disagree on the “proper” value of the normal cost.
My only beef with these experts is they should have told WP that their “1,000 percent increase” was an invalid comparison, and that those “eye-popping” increases are not the cause of underfunding. WP did not prove, as they claimed, that “overpromising” is to blame for unfunded liabilities. They just further muddied the water.
A. Munnell:
“In any case, increasingly generous benefit promises are not the issue.”
Mary Pat Campbell:
“DON’T PAY THE BILLS, THE DEBT GETS LARGER”
and…
“If people want the public pensions to keep going, then it needs to be clear exactly how the pensions got in the hole – to prevent it from happening again.”
Posted by Tough Love on August 16, 2018 at 8:25 am
While Wirepoints road to it’s conclusion …… “that “overpromising” is to blame for unfunded liabilities.” ……….. is circumspect, their conclusion itself is valid.
It is undeniable that Public Sector pensions are ludicrously excessive (MULTIPLES greater in value-upon -retirement) when compared to the retirement security typically granted Private Sector workers. Such promises were never necessary, just, fair to taxpayers or affordable.
AND …… VERY rich pensions are VERY costly, and hence VERY difficult to fully fund.
Posted by Stephen Douglas on August 16, 2018 at 9:56 am
Circumspect?
“If people want the public pensions to keep going, then it needs to be clear exactly how the pensions got in the hole – to prevent it from happening again.”
Posted by Tough Love on August 16, 2018 at 1:14 pm
Quoting Stephen Douglas/Earth……………
“If people want the public pensions to keep going, then it needs to be clear exactly how the pensions got in the hole – to prevent it from happening again.”
Indeed …………….. and they got in that hole becuase our Elected Officials (whose favorable votes on Public Sector pay, pensions, and benefits were BOUGHT with Public Sector Union BRIBES disguised as campaign contributions and election support) promised ludicrously excessive, unnecessary, unjust, unfair to taxpayers, and very clearly UNAFFORDABLE pensions.
Posted by Stephen Douglas on August 15, 2018 at 10:49 pm
Or pensions. Who knew?
Posted by Tough Love on August 16, 2018 at 8:39 am
Interesting response to the the linked article (from Ms. Munnell) in the first comment above. Essentially Andrew Biggs (bio *) trashes Ms Munnell’s methodology and conclusions.
https://www.forbes.com/sites/andrewbiggs/2018/08/14/have-public-employee-pensions-become-more-generous-or-less/#426e75151e20
————————————————————————–
* Andrew Biggs bio:
I am a resident scholar at the American Enterprise Institute. Before joining AEI, I was the principal deputy commissioner and the deputy commissioner for policy at the Social Security Administration. In 2005 I worked at the White House National Economic Council and in 2001 was on the staff of President Bush’s Commission to Strengthen Social Security. In 2013-14 I served as the co-vice chair of the Society of Actuaries Blue Ribbon Panel on public sector pension funding, and in 2014 I was named by Institutional Investor Magazine as one of the 40 most influential people in the retirement world. I have testified before Congress on numerous occasions, and my work has been published in the New York Times, Wall Street Journal, Washington Post and elsewhere. I hold a bachelor’s degree from Queen’s University Belfast in Northern Ireland, master’s degrees from Cambridge University and the University of London, and a Ph.D. from the London School of Economics.
Posted by American Rescue Plan Act of 2021 (7) 9707 | Burypensions Blog on March 17, 2021 at 12:05 pm
[…] Save the Community Newspaper Act, first proposed in 2018, is part of the Covid bailout bill as section 9707 which provides Community Newspaper Single […]