State and Local Government Spending on Pensions

According to a USA Today story:

24/7 Wall St. reviewed annual pension fund contributions at the state and local level to identify the states that are spending the most to fund their residents’ retirement. States are ranked based on total 2017 pension fund contributions per current state and local government employment.

Since New Jersey was ranked only 14th worst I assumed that 24/7 Wall St. was missing something. After putting their data into a spreadsheet to see what they were using for total contributions, it turns out that they were.

New Jersey shows $3.7 billion as their FY17 contribution (about $1.9 billion from local governments and $1.8 billion from the state) though the state only made 40% of the ‘required’ contribution. Without that arbitrary 60% cut in the state portion of the contribution the total government contribution would rise to $6.6 billion with an average of $12,000 per government worker.

Then we get to Pension Obligation Bonds which add another $1,000 per government worker.

 

16 responses to this post.

  1. Posted by Anonymous on August 6, 2019 at 2:36 pm

    Good timing.

    There is a similar? article hitting all the headlines in California.

    https://www.sacbee.com/news/politics-government/the-state-worker/article233372547.html

    It charts data for selected city and county pension expenditures, and specifically how those cost are being met. I.e. by raising taxes, or reducing services.

    Like this one, her data includes current expenditures, not actuarially required normal costs and/or amortization costs.

    For California (not specifically CalPRS or STRS) she showed costs of abot $13,000 per worker IN 2007, increasing to about $20,000 in 2017. CalPERS by law has to pay 100% of ARC, plus paying down on unfunded liabilities.

    All these different studies? using different nomenclature really muddy the waters.

    Reply

    • Posted by Rex the Wonder Dog! on August 7, 2019 at 12:14 am

      CalPERS by law has to pay 100% of ARC, plus paying down on unfunded liabilities.
      Not true…If it were CA would not be 68% funded after the longest Bull Market in US history.

      Reply

      • Posted by Tough Love on August 7, 2019 at 12:23 am

        Because it’s 100% of a phony (materially understated liabilities via use of WAY to liberal valuation assumptions and methodology*) ARC.

        * Just like all other PUBLIC Sector pensions Plans routinely do ………. INCLUDING El gaupo’s beloved NJ PFRS (which is only about 50% funded when using APPROPRIATE assumptions & methodology)……….. and yet he feels that COLAs should be reinstated !

        How do you spell “moocher” ?

        Reply

    • Posted by Anonymous on August 7, 2019 at 12:54 am

      Not true. Subtle difference, New York State law requires the plan be fully funded every year. CalPERS requires 100 percent of the ARC be contributed. If the discount rate is set too high, and returns are low, CalPERS will never catch up.

      See Calpensions. . ” New York pension systems outperform California”

      Reply

  2. Posted by Anonymous on August 6, 2019 at 2:54 pm

    I haven’t found her supporting data, but I try to caution readers that if, for instance in this article, California “contributes” $12,792 per gov’t worker while New Jersey contributes $6,740, that does not mean California pensions are more expensive than NJ. (They probably are, but not by that much.)

    Confusing to your average reader, sure. But what I got from people who actually follow this stuff was basically, “see, I told you so.” or “This confirms my previous posts.” It does not.

    Reply

    • Posted by Rex the Wonder Dog! on August 8, 2019 at 12:05 pm

      I haven’t found her supporting data, but I try to caution readers that if, for instance in this article, California “contributes” $12,792 per gov’t worker.
      The base salary for a CA “Public Safety” employee is over $100K in salary, not counting OT. The cost to fund a 3%@50 CA “Public Safety” employee, where the employee is “retiring” at age 50-53 is more than the BASE SALARY. Base salary = $100K, pension contribution = $100K++. The CA “Public Safety” employee pays in as little as ZERO of that amount (muni “picks up” employee contribution portion (10%), ++ muni portion (90%)=100% of entire pension cost), and as much as 12%. The average male CA “Public Safety” employee lives to age 80, the average female CA “Public Safety” employee lives to age 85. The CA “Public Safety” employee pensions are COLA adjusted every year. Remember, a CA “Public Safety” employee is making just 1/3 of their final base salary on their first day of employment, and that base salary goes up every year in CA at least 3%, sometimes more, sometimes less-but never less than the cost of inflation. So a female (male also) CA “Public Safety” employee will be receiving a pension that exceeds her 30 years of service and her 30 years of base salary work by a factor of 10+++. So the CA “Public Safety” employee contributes at MOST $500K into their OWN pension while they receive 10 times that amount on the back end…

      Personal note: I PERSONALLY know of a CA “Public Safety” employee who worked just 26 years, not 30, just 26, and then retired with a $100K/year pension at age 50. Where in the world can ANYONE in real life work just 26 years at GED job and then “retire” at age 50 with a $100K/year pension, with COLA’s??????? No where. As a disclaimer, this is a cop from Walnut Creek CA, like all Bay Area CA cities today is high income and affluent (ever since the tech boom started in 1989-1990, the housing in the Bay Area has gone through the roof, and it has not stopped in 30+ years. A family member married a developer in the Bay Area, and they were close to BK in 1990, then once the Tech Boom took ff they have been raking in MILLION, yes MILLIONS, every year since. From close to BK, to multi, multi millionaires, all because of Silly Con Valley tech.

      Reply

  3. Posted by Carl Mason on August 6, 2019 at 8:26 pm

    Using real math. Looks like only KY. is the only state putting is less of a percentage then NJ.

    Reply

  4. Posted by Anonymous on August 8, 2019 at 5:57 pm

    To El gaupo, and to whom it may concern…

    Are public sector unions really a cancer?

    “We focus on two groups of em-
    ployees that make up a large percentage of overall city em-
    ployment: firefighters and police officers. ”

    Sarah Anzia led a study (linked in the first comment above) comparing government “expenditures” on public pensions in select cities across that nation. (Not “costs” which are greatly different and much more difficult to quantify.)

    She also has done several studies on public sector unions and the costs of government…
    Specifically police and firefighters.

    https://www.researchgate.net/profile/Terry_Moe/publication/256026287_Public_Sector_Unions_and_the_Costs_of_Government/links/5cb8dcb04585156cd7a256b0/Public-Sector-Unions-and-the-Costs-of-Government.pdf

    She has included data from several sources and longitudinal and cross sectional studies which show that…

    Wait for it…

    Controlling for other factors, wages and benefits are higher in unionized government agencies.

    Interesting study, but like the first, I would say this is meant more for academics (and other researchers) than for the general public.

    Read between the lines and what she actually –doesn’t– say, in either the union or non-union cases, is whether the wages are excessive.

    Reply

  5. Posted by Anonymous on August 8, 2019 at 6:51 pm

    If I were paranoid…

    An excerpt from the abstract of the article cited above…

    “Looming above these arguments was a political reality
    that heightened the stakes considerably. Public sector unions
    are a bulwark of the Democratic Party, and collective bar-
    gaining is the unions’ power base, providing members,
    money, and activists. When Republicans weaken collective
    bargaining, they are weakening the Democratic Party—and
    ultimately the values and policies the party stands for.”
    ———————-
    Ed Ring, California Policy Center

    “They (Public Sector Unions) are the greatest menace to American civilization that nobody seems to be talking about.”

    “Public-sector unions are the brokers and enablers of corporate power. As politicians come and go, and business interests rise and fall, they are the continuity, decade after decade. In every city and state where they’ve been allowed, they are the deep state. They are globalist instead of nationalist, authoritarian instead of pluralistic, they favor rationing and regulation over competitive development. They want to make everything harder, scarcer, more expensive. They prefer cultural disintegration and chaos to unity because it empowers them when things get bad. In a just world, public-sector unions would be outlawed. Until then, their agenda and their impact must be exposed for all to see.”*

    Public sector unions are the devil incarnate.

    Am I paranoid to believe that some (or much) of the publicity on public sector wages and pensions are not really about “taxpayer money” at all? Or is the current pension crisis just a means to an end. Specifically, to end public sector unions.

    “Never let a good crisis go to waste.”

    Whoever supplied the money and other support behind Janus v. AFSCME didn’t give two shakes about his “freedom of speech” or saving him from union dues. It’s good old fashioned Union Busting because…

    ” When Republicans weaken collective
    bargaining, they are weakening the Democratic Party—and
    ultimately the values and policies the party stands for.”

    *Translation: Public Sector Unions are Democrats.

    Reply

  6. Posted by Anonymous on August 8, 2019 at 7:31 pm

    If I were paranoid, part deux…

    Transparent California is a 401(c)(3) educational corporation

    They provide the public service of collecting and publishing public worker salaries, pensions, and benefits.

    They will gladly accept tax deductible donations. Thank you Transparent California?

    Transparent California was started by a Las Vegas-based political think tank, called the Nevada Policy Research Institute.

    California Policy Center (see Ed Ring in the previous post) is a 501(c)(3) educational non profit focused on policies to improve California’s democracy and economy.

    The two groups had a falling out over money in 2015, resulting in litigation. In court documents, the organizations were candid about each other’s shared goals. 

    NPRI was described as a group undertaking “efforts to persuade public sector union members to leave their union.”

    Union busting.

    CPC was described as being out to “diminish the power of moneyed interests, especially public sector unions, which use their political power in California to implement policies that are counterproductive to prosperity.” 

    Union busting.

    ” When Republicans weaken collective
    bargaining, they are weakening the Democratic Party—and
    ultimately the values and policies the party stands for.”

    Reply

    • Posted by Tough Love on August 8, 2019 at 8:25 pm

      Stephen,

      You call the following ………………. “Union busting”

      “CPC was described as being out to “diminish the power of moneyed interests, especially public sector unions, which use their political power in California to implement policies that are counterproductive to prosperity.”

      I call it a VERY Good objective !

      Reply

    • Posted by Rex the Wonder Dog! on August 9, 2019 at 2:04 am

      CPC was described as being out to “diminish the power of moneyed interests, especially public sector unions, which use their political power in California to implement policies that are counterproductive to prosperity.”

      Union busting.
      “Moneyed Interests”= ALL $$$ and corruption, not just “unions” Dougie, you progressive surrender monkey 🙂

      Reply

  7. Posted by Anonymous on August 9, 2019 at 10:14 am

    And where do you suppose CPC and Transparent California both get their financial support?

    “Moneyed Interests”

    “counterproductive to prosperity.” is a euphemism for big business.

    Reply

    • Posted by Richard Rider on August 21, 2019 at 4:43 pm

      Soooo, “anonymous”, Transparent California is taking the CA GOVERNMENT data and legally putting it on its website for analysis by anyone. But you think they are corrupt because they get funding from conservative groups, and thus I suppose that their CALIFORNIA data base must be false.

      Thanks for clarifying that for us.

      Reply

  8. Posted by Richard Rider on August 21, 2019 at 2:51 pm

    It would be nice to include the NATIONAL average taxpayer contribution per employee.

    Two things jumped out at me from this excellent article:

    1. The six highest taxpayer pension cost per employee are all blue states — most are DEEP blue states. All are above $10,000 an employee. And the these high pension costs in the top blue states are often QUADRUPLE the other states’ cost.

    2. My state of CA has 2.3 million state and local government employees. That’s a LOT of voters. Moreover, many have adult kin who will vote to support the candidates who champion these legal Ponzi schemes. It makes for a daunting effort to end this unnecessary giveaway in CA — given that so many voters profit directly from this scam.

    Reply

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