New York Gov. Seeks to Retroactively Strip Pensions From Public Officials Convicted of Felonies

Andrew Cuomo

The arrest of New York Assembly Speaker Sheldon Silver last month left a bitter taste in the mouths of many in the New York legislature.

The arrest came at an ironic time, just as Gov. Andrew Cuomo was rolling out a series of ethics proposals aimed at lawmakers.

Now, Cuomo has added another bullet point to his ethics reform wish list: retroactively stripping pensions from public officials convicted of felonies.

A 2011 law – the Public Integrity Reform Act – already takes away pensions from officials who have been convicted of felonies in relation to their public duties. But the law only affects those who were convicted after 2011.

Cuomo wants to extend the law to retroactively include officials convicted before the law was passed.

More from the Times-Union:

The proposed change, part of the governor’s five-point ethics ultimatum, would retroactively extend the effects of a 2011 law that allowed for the denial of pensions from public officials who entered the system going forward. Because of the need for a constitutional change to affect those already in the system, an entire rogues’ gallery of corrupt pols […] who faced trial after the law was passed continue to receive sizable public pensions despite being convicted of stealing from the same trough or using their positions to enrich themselves in other ways.

“Public officials who are convicted of public corruption should not have taxpayers pay for their retirement,” Cuomo said two weeks ago in a speech at New York University Law School, where he laid out the reform items he wants to see included in the state budget package. That plan has to be hammered out with legislative leaders before the April 1 start of the new fiscal year.

[…]

The 2011 Public Integrity Reform Act said that the pensions of a wide swath of public officials and employees — including the governor and lawmakers as well as state agency and municipal workers — could be taken away following conviction on a defined set of felonies, including larceny from public sources and using official powers in an attempt to defraud someone. But because of the ’38 amendment, the law could only affect those joining the pension system after the law went into effect.

The proposal could be hard to enact because it will require a constitutional amendment – which is no easy feat.

The proposal will have to be passed by both chambers of the New York legislature. Then, it will need to be passed again by both chambers in 2017.

After that, the measure will be put on the ballot and voted on by state citizens. If it passes the state-wide vote, then the measure will become law.

 

Photo credit: Andrew Cuomo by Pat Arnow.jpeg: Pat Arnow derivative work: UpstateNYer (Andrew Cuomo by Pat Arnow.jpeg) [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

Jacksonville Pension Task Force Member: Use Sales Tax to Fund Pensions

palm tree

A member of Jacksonville’s Pension Reform Task Force is calling for the levy of a sales tax, with revenues going toward the city’s Police and Fire Pension Fund.

Dr. Sherry Magill, the president of the Jessie Ball Du Pont Fund and a member of Jacksonville’s Pension Reform Task Force, is latching on to a sales tax measure proposed last month by Councilman Bill Gulliford.

Gulliford’s measure would put a half-penny sales tax on the May ballot. Voters would then decide its fate.

More from the Florida Times-Union:

As a member of the mayor’s task force on pension reform, I urge members of City Council to pass Councilman Bill Gulliford’s bill to place a half-penny sales tax on the ballot.

I appeal to voters to pass the measure. Without a dedicated revenue source to pay down the police and fire pension obligation we incurred over many years, City Council will have no choice but to close libraries, stop mowing parks and eventually eliminate the basic functions of local government.

[…]

The city’s finances will only get worse over time. The fairest method of raising revenue is the sales tax, spreading our obligation across the community.

Since the task force released its report 11 months ago, many City Council members have reached the identical conclusion: We cannot maintain basic functions of local government if we do not raise new funds to spend down the debt. Both the Fitch and Moody credit rating agencies downgraded the city’s bond ratings, warning us to pay our debts.

[…]

The task force called for shared sacrifice. Police and firefighters have agreed to make additional pension payments and reduce benefits. It’s time for the public to keep faith with the people who protect us and to pay our debts.

Jacksonville Mayor Alvin Brown has said he will veto any measure to put a sales tax on the ballot.

 

Photo by  pshab via Flickr CC License

Rhode Island Lawyers to Suss Out How Court Should Handle Pension Lawsuit

Rhode Island

At the end of this week, the lawyers representing Rhode Island and its retirees will meet with a Superior Court judge to discuss a major point of contention in the pension lawsuit brought against the state: how many trials should be held?

Lawyers for retirees argue that the lawsuit should be separated into multiple trials.

But the state, citing cost, is arguing for one trial.

More from the Providence Journal:

Lawyers for the Rhode Island Public Employees Retiree Coalition are pleading for a separate jury trial on their bid for reinstatement of their annual “cost-of-living adjustments,” which they see as the potentially more winnable case.

[…]

The state’s lawyers said separating the cases could put the state — and by extension, the state’s taxpayers — at a potential legal, tactical and financial disadvantage.

“If the retiree cases were tried first,’’ they said, “the evidence that would be submitted would include not just… the facts, circumstances and legislative changes pertinent to the retirees, but also all the evidence concerning… the reforms in 2005, 2009, 2010 as well as 2011… the evidence of how, and why, each separate group was addressed in each set of the legislative changes… and the reasonableness and necessity of the changes impacting each group under the totality of the circumstances facing the state.’’

Beyond that, “Governor Raimondo and former Governor Chaffee [sic] would have to testify at multiple trials, given that they were the Treasurer and Governor, respectively, at all times relevant to these cases… This would prevent the Governor from attending to her official duties [if] she had to testify multiple times.’’

In fact, “all the [defendants’] witnesses would have to testify multiple times, including expert witnesses, at great expense to the State Defendants and the public fisc.”

Rhode Island is being sued by over 100 retiree and labor groups for its 2011 pension reforms, which raised the retirement age, suspended COLAs and shifted new workers into a 401(k)-style hybrid plan.

 

Photo credit: “Flag-map of Rhode Island” by Darwinek – self-made using Image:Flag of Rhode Island.svg and Image:USA Rhode Island location map.svg. Licensed under CC BY-SA 3.0 via Wikimedia Commons

Video: Caisse CEO Talks Pension’s Transit Partnership

Here’s an interview with Michael Sabia, president and CEO of Caisse de dépôt et placement du Québec.

Last month, the pension fund struck a deal to take over public transportation projects, including a light rail system and a bridge.

Here, Sabia talks about the partnership and how it came about.

Kolivakis: Can the Caisse Make Money on Public Transit?

public transit

Pension360 has covered the fascinating partnership between Caisse de dépôt et placement du Québec and the province’s public transit system.

But some observers – including Moody’s – have doubts that the partnership will prove fruitful for Caisse.

Over at Pension Pulse, Leo Kolivakis has thrown his expertise into the ring. In a post on Monday, he comments on the concerns over the partnership, and what Caisse needs to do to make this venture a successful one.

The post is printed below.

_____________________________________

By Leo Kolivakis, Pension Pulse

A month ago, I covered the announcement of the Caisse handling Quebec’s infrastructure needs and stressed the primacy of good governance.

But now critics are coming out to question the economic viability of this decision as well as the process, stressing a private-public partnership is more efficient. I asked a friend of mine who knows infrastructure and he told me he doesn’t know much about light rail transit. He also somewhat cynically quipped: “Who uses quotes from geography professors?”.

I’m a little more open-minded than my friend as I trust geography professors more than economists when it comes to urban planning. Having said this, I question whether a public-private partnership, especially here in scandal-ridden Quebec, would be more “efficient” and in the best interest of Quebec’s taxpayers.

As far as the Caisse’s infrastructure group, they have made money in the past on transit but this is a different beast altogether. They will be playing a much more direct and central role in developing and overseeing these projects from start to finish, as well as managing fares to make them economically viable.

Macky Tall, a senior vice-president in charge of the Caisse’s infrastructure portfolio, raises excellent points on leveraging the Caisse’s real estate expertise to help fund these projects. More importantly, he’s absolutely right, new model is better for the Caisse than a traditional public-private agreement because it will retain ownership indefinitely, and can spread out its return over a longer period, not having to recoup its initial investment in the first 35 years.

Having said this, there are legitimate concerns about how this project will be handled and how the Caisse can fulfill its dual mandate of achieving the actuarial returns its clients need while it develops Quebec’s economy. If something goes wrong in a major multibillion infrastructure project, this can have a severe impact on the Caisse’s long-term results.

But there is no question that Montreal desperately needs to develop its infrastructure. Peter Hadekel of the Montreal Gazette wrote a comment a couple of weeks ago, Stagnation city: Exploring Montreal’s economic decline, where he stressed among other things the need to focus on infrastructure projects to bolster Montreal’s stagnating economy.

I’m highly skeptical of Montreal’s economic future, especially now that Canada’s crisis is just beginning. On a relative basis the city will do better than Calgary or Edmonton, which will bear the brunt of the economic weakness that comes with the plunge in oil prices. But this city has been stagnating for a very long time and never experienced the boom that Canada’s other major cities experienced.

Moreover, the primary factor behind Montreal’s stagnation remains a political climate that hinders outside investments and forced many anglophones, allophones and even francophones in Quebec to move elsewhere in search of better opportunities. My biggest concern is institutional racism pervading many of Quebec’s government and quasi-government organizations as well as large private corporations (let’s not kid each other, diversity in the workplace is not Quebec’s strong suit, not that the rest of Canada is any better).

But let’s leave the politics aside and get back to the Caisse and building these light rail transit projects. One of the key elements of good pension governance is communication. The Caisse needs to be open, transparent and very clear on the terms and costs at every stage of these projects if they intend to have the public’s support because if something goes wrong, it will be another fiasco that will make the ABCP scandal the media is covering up look like a walk in the park.

 

Photo by  Claire Brownlow via Flickr CC License

South Korea Pension, In Bid to Boost Birth Rates, Considers Offering Loans to Couples For Wedding Expenses

wedding

South Korea is grappling with a number of demographic problems, including a rapidly aging population and a one of the lowest birth rates of any advanced economy.

The state’s public pension fund is particularly concerned, as it must pay out more benefits to the elderly even as its revenue stream (in the form of worker contributions) slows to a trickle.

The fund is now forced to consider creative solutions. One, discussed this weekend, is loaning money to young couples to encourage them to get married – and, ideally, have children.

From Korea Biz Wire:

South Korea’s national pension service is considering lending money to singles who delay or are reluctant to tie the knot because of wedding costs as a way to promote marriage and help raise chronically low birth rates, officials said Sunday.

South Korea is faced with mounting demographic problems as the ultra-low birth rate and the rapidly aging population are expected to seriously shrink the size of the labor force and depress economic growth. Such changes are also pressing on the pension operators who have to deal with increasing payments for the elderly while revenue drops.

The National Pension Service (NPS), under the wing of the Ministry of Health and Welfare, has been considering a wedding loan for singles, or those of a marriageable age, to support their housing plans, the biggest part of wedding costs, and other expenses.

In a fund management meeting in December, Health Minister Moon Hyung-pyo suggested using some of the pension funds on loans for singles to improve the welfare of young subscribers and reap higher returns from the loan businesses, according to ministry officials.

Korea’s National Pension Service manages about $300 billion in assets.

 

Photo by  Leland Francisco via Flickr CC License

New Orleans Can Sue Pension Board for Mismanagement, Says High Court

New Orleans

In 2014, New Orleans argued before a circuit court that it shouldn’t have to pay down the debt of its Firefighters’ pension fund, because the shortfall was caused by bad investments.

The circuit court rejected that argument.

But now, the state Supreme Court says the city can indeed sue the pension fund’s board of trustees for mismanagement of the fund.

From NOLA.com:

The high court ruled Friday that Norman Foster, [Mayor] Landrieu’s finance director who also serves as a pension board trustee, can sue his fellow board members for financial mismanagement of the fund. That decision sends the case back to New Orleans’ civil court and allows Foster to draft a new lawsuit. It also tracked closely with the findings of the 4th Circuit Court of Appeal Judge Joy Lobrano, who was the dissenting vote in that 2-1 ruling in September. She had argued that Foster had a responsibility to guard the fund’s finances, and could do so in court.

Several issues, including whether it is too late for a new lawsuit or who should Foster actually sue, will have to be sorted out, said Louis Robein, the pension board’s attorney. The board’s membership has changed since the lawsuit was originally filed, forcing the city to focus on the former board members who oversaw the fund lose a good deal of revenue, including $40.2 million in 2013.

Should Foster follow through, it’s possible his suit could focus on the former board members as those responsible for the fund’s losses, Robein said.

The city is trying to avoid paying a total of $17.5 million to the pension fund.

The court said the shortfall was caused by the city skipping annual contributions, and it ordered the city to pay up. But the city argued that it shouldn’t have to foot the bill because the gap was caused by mismanagement of investments by the board.

Japan Pension’s Portfolio Shift Makes Waves in Market

Japan

Japan’s Government Pension Investment Fund (GPIF) is in the midst of a portfolio shake-up that involves doubling its domestic and foreign stock holdings and cutting its domestic bond allocation by nearly 50 percent.

The GPIF isn’t nicknamed “the whale” for nothing – when the world’s largest pension fund moves, it makes waves that can be felt throughout the market.

That’s the case now, according to Bloomberg:

“We can only guess from piecing together the data, but it would seem natural that GPIF, called ‘the whale’ by the market, is moving toward its new portfolio targets,” said Takafumi Yamawaki, the chief rates strategist in Tokyo at JPMorgan Chase & Co. “As the Bank of Japan’s massive bond purchases have reduced liquidity, small catalysts can cause fluctuations in the yield. GPIF’s selling could expedite swings.”

GPIF, the world’s largest pension, pledged in October to reduce its holdings of Japanese debt by about half and double foreign assets and domestic equities, just as the BOJ expanded its unprecedented bond-buying stimulus. The pension’s shift may have exacerbated the decline of local bonds, the second-worst performing government security in the past month, while accelerating the weakening yen and boosting stocks at home, Yamawaki said.

[…]

The impact on overseas equities and the yen is smaller as GPIF’s purchases pale in comparison to global market values, said Jonathan Garner, chief strategist for Asia and emerging markets at Morgan Stanley in Hong Kong.

“The main importance is for the domestic equity market,” Garner said in a phone interview on Feb. 12. “It’s another reason to be quite bullish on Japanese stocks.”

Kazuhiko Ogata, an economist at Credit Agricole SA, said tight liquidity in the market is magnifying the effect of GPIF’s domestic bond reduction, causing sharp swings in yields.

The GPIF manages $1.1 trillion in assets.

 

Photo by Ville Miettinen via FLickr CC License

Canada Pension CEO Has Eyes Peeled For Opportunities Amidst Volatility

Canada

Canada Pension Plan Investment Board (CPPIB) Chief Executive Mark Wiseman sat down with Reuters for an interview last Friday, and made some interesting comments on how his fund deals with market volatility.

Wiseman said his fund would likely be particularly active in the coming months as fluctuations in commodities and currency markets open up investment opportunities.

Wiseman’s comments, from Reuters:

CPPIB, which manages Canada’s public pension fund, said that while investment deals have been slower in recent months because assets are fully valued, recent sharp movements in commodity and currency markets should help it find acquisitions.

“We are seeing more volatility in markets and that should generate more opportunities for CPPIB,” Chief Executive Mark Wiseman said in an interview.

“If you look at increased volatility, not just in equity markets but in currency markets, in commodity markets, the long-term view and those comparative advantages that we have, in these types of market conditions … our comparative advantages are more valuable,” he said, pointing to CPPIB’s scale, long investment horizon and certainty of assets.

[…]

Wiseman said that while CPPIB did not see deflation as a particularly large risk to the global economy, the world appeared to be moving to a two-speed model, with China and the United States showing growth and Europe and Japan needing “substantial long-term structural reforms” to improve.

“Let’s talk about Europe. It’s a very difficult situation. The economy has continued to underperform since the global financial crisis, and in terms of structural reforms, they have been reasonably slow in coming, for a myriad of reasons,” Wiseman said.

The CPPIB manages $191.3 billion in pension assets.

 

Photo credit: “Canada blank map” by Lokal_Profil image cut to remove USA by Paul Robinson – Vector map BlankMap-USA-states-Canada-provinces.svg.Modified by Lokal_Profil. Licensed under CC BY-SA 2.5 via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Canada_blank_map.svg#mediaviewer/File:Canada_blank_map.svg

Florida Lawmaker Turns to Legislature for Pension Audit

Florida

Florida Gov. Rick Scott recently shot down calls by state Rep. Janet Adkins and others for an investigation into Jacksonville’s Police and Fire Pension Fund.

Scott said the issue was a local matter and should be handled locally.

But Rep. Adkins is now asking her colleagues in the state legislature to help her investigate the pension fund and its deferred retirement option program.

From News 4 Jax:

Ongoing problems with the Jacksonville Police and Fire Pension Fund is the subject of a meeting of state lawmakers Monday.

The Joint Legislative Auditing Committee will consider a request by Rep. Janet Adkins, R-Fernandina Beach, for an audit of the pension fund.

Two weeks ago, Gov. Rick Scott’s chief inspector general turn downed Adkins’ request to investigate the pension. That request was joined by City Council President Clay Yarborough and the mayors of Atlantic and Neptune Beach.

Melinda Miguel, chief inspector general, wrote Adkins saying, “It appears that your concerns would be more appropriately handled at the local level.”

[…]

“Clearly, the public trust is broken as it relates to how the Jacksonville Police and Fire Pension Fund has handled its responsibilities,” Adkins said. “While I am disappointed that the Chief Inspector General has decided not to investigate the concerns I raised regarding the Jacksonville Fire and Police Pension Fund, I am committed to seeking a review of the pension fund and the questions that have surfaced over the last year.”

Specifically, Rep. Adkins wants an investigation into whether regulations were broken in the administration of the pension fund’s DROP.

 

Photo credit: “Bluefl”. Licensed under Public Domain via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Bluefl.png#mediaviewer/File:Bluefl.png


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