Author: Ted Ballantine

CalPERS votes in favor of rate hikes

Retirees are living longer—and that’s bad news for the many pension funds that are already suffocating under the weight of their unfunded liabilities.

But one of the world’s largest pension funds has taken a step to counteract the soaring expenses that accompany longer life spans: the CalPERS board voted today to incorporate retirees’ longer lives into the formula used to determine taxpayer contributions to their fund.

The result will be higher contribution rates to the fund by the state and local governments of California; the state, starting July 1, will be expected to contribute $5 billion over three years to the fund, an increase from $3.8 billion previously.

Local governments will not see their contribution rates increase until 2016, in an effort curb some stress on the state’s cities, some of which are going through bankruptcy proceedings.

The CalPERS board took into account projections that by 2028, men are expected to live 2.1 years longer and women an average of 1.6 years longer. Such an increase, if not addressed, would lead to the state’s pension expenses ballooning by $1.2 billion, or 32%, annually.

Chicago pushes to change city pensions, but workers push back

Chicago Mayor Rahm Emanuel is pushing to cut costs associated with the city’s pension system, which is among the unhealthiest in the nation. But city workers are pushing back—with the help of a powerful coalition of unions.

Mayor Emanuel is staring at tens of billions of dollars in unfunded pension liabilities, and has warned that deep changes to the pension system or sharp increases in taxes are likely on the horizon.

But We Are One Chicago, a coalition of public unions that represent the city’s teachers, police and firefighters, and other municipal workers, stands in stark opposition to the idea of pension cuts.

The group instead supports various tax measures to help fill the city’s funding shortfall, including expanding the sales tax, raising tax rates for higher earners and closing corporate tax loopholes.

ABC talked to city workers about their grievances:

“I keep saying that I feel that we’ve been robbed that someone is stealing from us,” said retired teacher Patricia Boughton.

“I paid my money into the pension and the employment contract was that I would receive a pension,” said firefighter Tom Ruane.

“It is wrong to blame us for wanting what is due us,” retired nurse Helen Ramirez said.

Chicago currently owes $18, 596 in pension debt for every resident, including children, of the city.

Rhode Island pension reform could be scaled back with settlement proposal

Rhode Island has been entangled in legal battles since the state signed its sweeping pension reform bill into law in 2011. But a new proposal may bring an end to the legal challenges mounted against the law once and for all, and in the process soften some of the law’s strongest provisions.

The 2011 law, titled the Rhode Island Retirement Security Act, aimed to curb the state’s pension costs by $4 billion over 20 years. It did so by raising retirement ages for most workers, suspending COLAs for retirees, and shifting workers into a new 401(k)-type retirement plan.

The settlement would keep in place most of the 2011 law. But it would also bring some key changes, as outlined by the New Haven Register:

The settlement would give cost-of-living increases to retired government workers sooner than the current law would allow. It calls for a one-time 2 percent cost-of-living pension increase once the settlement is enacted by lawmakers. Additional increases would come in 2017, and every four years thereafter until the pension fund is 80 percent funded.

The existing law calls for limited increases every five years until the 80 percent funding level is reached. The fund is now about 60 percent funded.

The settlement would also call on public workers to contribute slightly more toward their own retirement benefits.

The proposed changed would cost Rhode Island $13 million and the state’s towns and cities $11 million, and would raise the state’s unfunded liabilities from $4.8 billion to $5 billion.

The proposal must now pass through a series of votes by union members, a judge in the state Superior Court, the systems retirees and finally by state lawmakers.

Nevada’s public pensions are now public knowledge

The Nevada Public Employees Retirement System (NVPERS) has for years been notoriously tight-lipped about the benefits it provides its members. But no longer: the Nevada Supreme Court ruled in 2013 that public pension data are public records, and now those records are online for all to explore.

The Nevada Policy Research Institute launched its database of public pension data this week on the aptly named Transparent Nevada website.

Among other findings, the data brings to light the number of workers who are “double-dipping”; in other words, employees who earn two salaries by retiring from one job and going to work for another, all while receiving their full pension benefit payments from the first job.

Glenn Cook at the Las Vegas Review Journal has more:

Let’s start with a name that might surprise you: Clark County Sheriff Doug Gillespie. Bet you didn’t know that anyone who is elected sheriff has to formally retire from the police force before assuming office. The sheriff has a base salary north of $140,000. But in January, he also collected a gross pension benefit of $12,904, with a net payment of $10,874. If he receives the same check every month (PERS said January checks sometimes include credits and deductions), that’s an annual pension benefit of about $155,000, for total public-sector pay of nearly $300,000.

Here’s another one: Family Court Judge Robert Teuton. The longtime prosecutor and juvenile justice official retired from the county when was appointed to the bench in 2008. As a judge, he collects an annual salary of about $160,000. In January, he also collected a gross PERS benefit of $15,325, with a net payment of $10,099. Assuming that benefit is relatively consistent throughout the year, his total annual public-sector pay is north of $300,000.

There are plenty of other recognizable figures cashing two checks these days. Las Vegas City Councilman Stavros Anthony is a retired Las Vegas police detective. His salary as a councilman is north of $75,000. His January PERS benefit was $12,249 gross, $10,218 net. He’s probably raking in more than $200,000 per year at your expense.

Andy Matthews, president of the Nevada Policy Research Institute, said the database is already paying dividends.

“The PERS payouts now available on TransparentNevada show exactly why PERS bureaucrats worked so hard to keep this secret,” he told the Las Vegas Review Journal. “The information shows — in inflated retirement payout after inflated retirement payout — what Nevadans have long suspected: Public employee pensions are exorbitant and unsustainable.”

California Governor to CalPERS: Hike contribution rates now or pay more later

California Governor Jerry Brown (D) is urging CalPERS officals increase the contribution rates it requires from states, cities and employers to account for the costs associated with the increasing life span of retirees.

Brown sent a letter to the board that oversees CalPERS, the second largest public pension system in the United States, asking that the board members incorporate longer life spans of retirees into the formula used to calculate the rates of taxpayer contributions to the fund.

The CalPERS board is meeting later this month and is expected to vote on the proposal. CalPERS staff had recommended in December that contribution rates be increased, but not until 2016.

But Brown said in his letter that waiting until 2016 could cost the state $3.7 billion over the next 20 years.

From Gov. Brown’s letter:

“Since CalPERS last faced this issue in 2010, there have been dramatic changes in life expectancy: by 2028, men retiring at age 55 are projected to live an average of 2.1 years longer and women 1.6 years longer. For the state, these changes mean that pension costs will be much greater than previously thought and state costs will increase $1.2 billion annually – about 32 percent greater than today.”

CalPERS released their own statement today in response to Gov. Brown’s letter.

“We appreciate the Governor’s attention to this important matter,” the statement read. “We share a mutual goal to ensure that our fund is financially sound for the long-term.”

California pension database goes public

After a year of gathering data from public entities, a California group launched this week the largest assemblage of California pension data ever constructed.

The database currently contains data from 37 California public pension funds, including CalPERS, the second largest public pension fund in the country. Available data includes retirees’ names, their annual pension payments, years of service, the year of their retirement and their last employer.

The database, which can be found at Transparent California, was built in response to a 2011 state court ruling that made public pension information under the California Public Records Act.

The California State Controller’s Office had previously launched a database of public pension information, but the data was not as expansive as some pension watchdog groups had hoped.

Ed Ring of the California Public Policy Center highlights the need for the new database:

What level of public employee pay and benefits are affordable and appropriate is a difficult but necessary discussion. And missing too often from this discussion is good data on just how much, on average, public employees are currently making. In California, the State controller has made available a database of public employee compensation, organized by agency, that includes every city, county and state worker.

One of the biggest weaknesses inherent in the State controller’s “Government Compensation in California” database is that the summary information provides averages that take into account positions that were part-time, or only occupied by the employee for part of the fiscal year.

Last year, CalPERS considered the idea of posting a database of its pension data on its own website. But the idea has been delayed after members of the CalPERS system protested the public database. The system’s staff is now considering cancelling the project altogether.


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