Posts Tagged ‘public’

Eggheads’ Cracked Reasoning

All the good Joshua Rauh and Robert Novy-Marx have done in spotlighting the real unfunded liabilities public pension systems are accruing (albeit through a fallacious riskless rate theory) could be undone as the two professors, in a recent book of essays edited by Aaron S. Edlin and Joseph E. Stiglitz, offer their solution – more debt and a Defined Contribution Plan for future employees – that would be even more disastrous if taken seriously.

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Judges paying for their pensions: a question for interpretation

I will be voting on November 6 but not for any person since the electoral process for individuals has devolved into a quagmire of obfuscation that allows for no reasoned discourse.  However in New Jersey there are two ballot questions (laid out here in English, Spanish, and conveniently Chinese – I think).

Number 1 is straight-forward.  Politicians want to build more school buildings to repay all those lawyers and contractors who fund their campaigns.  No conflict for me here.

Number 2 is about judges in New Jersey being forced to pay more for their health and pension benefits which is supposed to win easy approval but I’m not so sure it should. Continue reading

New Jersey vs. Illinois Pensions: What Now?

“Illinois must take the prize for the worst-run state-administered pensions in the country.”

State and Local Pensions: What Now? by Alicia H. Munnell of the Brookings Institute p. 117

I disagree.

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Please Pledge

New Jersey’s public pension system will bankrupt taxpayers, public employees, or some combination with the speed of default dependent on how it is decided to sequence the patches.

It is time for real change and the New Jersey Taxpayers’ Association has this day put out a call to all to work for a fairer public pension system in New Jersey.
Please sign on.

No Profit in Government?

George Meaney, legendary president of the AFL-CIO, agreed.  In 1955 he said, “It is impossible to bargain collectively with the government.”  The labor movement was about getting workers a larger share of profits they helped produce, but government workers don’t produce more profit, they only ask for money.

This quote came from a new book about Chris Christie and the footnote refers you to a think-tank article by James Sherk which avers that “government earns no profits.”  At first this seemed like a salient argument against having union representation for government workers but, after some reflection and regular attendance at Union County freeholder meetings, the idea that there is no profit in government (as practiced here) is absolutely preposterous.

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GASB Vote Today – What it means for tomorrow

This afternoon we will get new reporting standards for public pension plans as the Government Accounting Standards Board (GASB) votes on rules that would be effective in 2015.  From the summaries of the proposed changes that I’ve read here are two reasons why nothing will change much and one reason why the situation may get far worse.

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Public Pensions: What You’re Told and What You’re Not

This month the Pew Center on the States released a report on unfunded public benefits based on 2010 actuarial reports prepared by the states showing the unfunded liabilities in these plans to be $757 billion for pensions and $627 billion for retiree heath care.  It’s not.

As well-intentioned as the Pew people are in gathering this information it’s useless even for comparison purposes since different states are at different levels of denial in regard to these costs that they are allowed to hide with the help of a non-existent regulatory framework and a compliant actuarial profession.  Even Robert Rauschenberg couldn’t turn the trash Pew collected into art.

However, the existence (though not release) of another report did come to light this week that painted a much clearer (and bleaker) picture.

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Are Public Pensions Lying About Assets Too?

Public pension systems are understating the value of liabilities for benefits accruing in their plans primarily by using ridiculously high investment assumptions resulting, in the case of New Jersey, in reported liabilities of $124 billion when they really are $186 billion ($214 billion if COLAs return).  But there seems to be chicanery on the asset side of the ledger as well – aside from using a fictional ‘actuarial’ value that always seems to be higher than the market value.

In today’s New York Times there is a story about South Carolina’s retirement system investing half of its money in alternative investments on the recommendation of their former investment chief, a civil servant who made half-a-million dollars a year, drove a Lamborghini, and didn’t put a lot in his calendar.   I looked at the latest valuation report for the South Carolina plan and…….

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Bailout for Public Pensions? Schiff Says So….

I’ve read all of Peter D. Schiff’s books and I admire his fiscal perspicacity but, since pensions aren’t his field, when he tackles our public pension miasma he relies on sources that, though pessimistic, don’t quite grasp the utter hopelessness of the situation.  In his new book ‘The Real Crash: America’s Coming Bankruptcy’ he dedicates a page to the pro0blem (transcribed below in its entirety) to which I respond:

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Public Employee Unions Can’t Win This Way

“It isn’t lost on us that the one commonality in Wisconsin, San Diego and San Jose is that we were considerably outspent.  You have politicians conspiring with corporations to take away pensions from workers.” Steven Kreisberg, director of collective bargaining at the American Federation of State, County and Municipal Employees. quoted in a New York Times article.

Mr. Kreisberg is correct (except for one word*) but the generous pension and retiree health benefits that unions have historically won for their members through political influence are now obviously unaffordable** and cannot be sustained by buying more political favors and deluding more voters.  There is a better way – maybe the only way – and it involves a radical change of course.

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