From the amazon.com description:
Richard Ravitch, former lieutenant governor of New York, writes the Foreword and Robert P. Inman and Susan M. Wachter provide the Conclusion. The book’s three chapters examine the issue from different key perspectives: Joshua D. Rauh, a leading scholar in the study of unfunded pension liabilities, provides an economist’s perspective; Amy B. Monahan, a renowned authority in public employee benefits law, illuminates the legal framework; and D. Roderick Kiewiet and Mathew D. McCubbins, visionary political scientists, put the crisis and its economic and legal implications into context and lay out the necessary framework for reform.
Some useful excerpts:
The Enrolled Actuaries meeting is next week and for the first time ever there will be no recording of the proceedings, per the CCA website:
No EA sessions are recorded. As a condition of your attendance at the meeting, you agree not to audio or video record any portion of the educational sessions held at the meeting. Any violation of this condition may result in your ejection from the meeting without a refund of your registration fee. In addition, you agree that the CCA shall be entitled to any costs incurred as a result of any violation of this provision, including payment of CCA’s attorneys’ fees. Violators may be prohibited from attending future meetings/events.
This might speed things up a bit since moderators can replace the ubiquitous opening announcement:
This session is being recorded. If you have a question please come to the microphone or it will not be on the tape. Please identify yourself and speak clearly. Your opinions will considered your own and will not represent the opinions of your employer or the government agency you work for. Recordings of individual sessions can be purchased separately or together after the meeting.
Is John Bury in the room?
Among the conveniences that 41 years of holding these meetings has brought is that session handouts are online before the meeting so you can decide which sessions would be best to attend (ie. those least likely to spend their 90 minutes on reading the session handout off a screen).
An interesting one based on its title is Session 406: Ethical Dilemmas Public Plan Actuaries. I am not sure as to whether handouts are also supposed to be kept secret so I will make a précis of the four dilemmas up for discussion:
The decision came down this morning and, though the Supreme Court here is Illinois and the pension plans are Chicago’s, the situation is eerily similar to what is being mulled over by New Jersey Supreme Court judges right now, based on excerpts from the Illinois opinion:
According to the NCTR anti-PEPTA hit piece:
Rauh advised Congressman Nunes when he was first developing PEPTA, and the Nunes materials contain Rauh’s projections. For example, Nunes/Rauh claim that seven states will run out of money before 2020, including Louisiana and Oklahoma in 2017. Furthermore, the Nunes materials state that these insolvency dates “are based on generous assumptions concerning the performance of pension plans and are likely the ‘best case scenario.’”
The only problem? If you check with your colleagues in Louisiana and Oklahoma, they will be happy to inform you that they are not going to completely deplete their pension assets by next year and have to make pension payments out of general revenues. In fact, as the Government Accountability Office (GAO)—an independent agency that provides Congress with audit, evaluation, and investigative services—said in a 2012 report, Rauh’s exhaustion dates were based on assumptions that it found to be “unsupported.” Indeed.
So how are Rauh’s run out predictions, made in 2009, working out?
According to the NCTR anti-PEPTA hit piece:
For a much more accurate understanding of these so-called “accounting gimmicks,” be sure to read “Understanding the Valuation of Public Pension Liabilities; Expected Cost versus Market Price,” by Paul Angelo, a well-respected senior vice president and actuary for Segal Consulting. In this article, Angelo expertly and very clearly explains how the current process used by public pension plans for measuring liabilities “imparts information about the issues that are most important to decision makers: the expected costs associated with funding promised benefits.” By comparison, the financial economists’ measures “are far less useful for public-sector plans because they are not designed to answer the critical questions facing policymakers, employers, and trustees related to the expected cost of current and future benefit obligations,” he writes.
So what does the Angelo paper tell us?
According to a blog post on the National Council on Teacher Retirement (NCTR) website (P/W=nctrinsight) :
Congressman Devin Nunes (R-CA) is poised to re-introduce his “Public Employee Pension Transparency Act”’ (PEPTA), based on a “Dear Colleague” letter that was sent to the U.S. House of Representatives on Tuesday, March 8, 2016, seeking cosponsors for the legislation. The letter states that PEPTA is necessary in order to “bring transparency and financial stability to state and local governments, which harbor trillions of dollars in hidden public employee pension debt.” Furthermore, it will “strongly encourage these governments to reveal the true cost of their pension promises and to reform their pension systems if needed to meet their obligations,” Nunes tells his fellow Members of Congress. Previous PEPTA legislation, which was first introduced by Nunes in 2010, would require that, in order to retain Federal tax-exempt status for their bonds, sponsors of State and local pension plans (other than defined contribution plans) must file an annual report disclosing their plans’ liabilities, as well as potential supplementary reports that restate these liabilities using a so-called “risk-free” assumed rate of return, with the Secretary of the Treasury. These reports would then be entered into a Federal database that will be accessible to the public. The bill also makes it explicitly clear that state and local pension obligations are solely the responsibility of those entities and that the Federal government will not provide a bailout.
I learned of this from Jeremy Gold on actuarialoutpost who identified the author as Leigh Snell, Federal Relations Director for NCTR, and the purpose of his blog piece to “attack PEPTA and the expertise of Josh Rauh and Andrew Biggs” which is accurate based on excerpts from that NCTR blog:
In trumpeting his record in Ohio John Kasich mentioned:
Last year the Mercatus Center ranked states by fiscal condition. Ohio came in at 7. By comparison New Jersey was 49.
But are Ohio public pensions really secure?