Pension360 | The Complete View of Public Pensions

Colorado Supreme Court Won’t Hear Lawsuit Seeking Release of Pension Data

Colorado Treasurer Walker Stapleton has for years pushed the state toward initiatives designed to improve the health of its pension system, and open pension data was a big part of Stapleton’s plans.

Back in 2011, Stapleton filed a lawsuit seeking the release of retirement benefit data for Colorado’s highest-earning pensioners. But the state’s pension fund, the Public Employees Retirement Association (PERA), said the information was confidential and refused to release it.

Since then, two lower courts have sided with the pension system on the issue. Stapleton appealed the rulings all the way to the state Supreme Court—but the Court announced today that they wouldn’t be hearing his case. From the Associated Press:

The Colorado Supreme Court has decided not to hear a lawsuit from state Treasurer Walker Stapleton seeking information about employee benefits in the state’s pension system.

Stapleton, a Republican, has sought non-identifying information about the top 20 percent of the pension’s beneficiaries and their annual retirement benefit. He says the information would help him to assess the health of the state pension’s program and how to keep it solvent.

Neither Stapleton nor the Court have released statements addressing the turn of events.

Last year, Stapleton convinced the Board of the PERA to lower its assumed rate of return from 8 percent to 7.5 percent. The Denver Post:

Colorado’s Public Employees’ Retirement Association voted 8-7 to lower its expected rate of return on investments to 7.5 percent, down from 8 percent.

State Treasurer Walker Stapleton has urged the board for three years to lower its rate of return, warning of an eventual collapse and bailout of the pension system for 300,000 teachers and state workers.

[The] vote means the pension fund’s unfunded liability will increase by about $6 billion to $29 billion, Stapleton estimated.

“In the short term, that’s not a good thing,” Stapleton said. “But it makes it all the more imperative that we find a way come together … and commit ourselves to fixing this problem sooner rather than later.”

The vote was a shift in philosophy from three years ago, when the board voted 10-5 to keep its rate of return at 8 percent.

The rate is used to predict investment growth over the next 30 years. Numerous economists have suggested a realistic expectation is 6.5 percent to 7.5 percent for state funds nationwide.

PERA’s average actual rate of return over the last decade has been over 8 percent. But over a different ten-year period—2001 through 2011—it returned only 3 percent annually on average.

Photo: “Denver capitol” by Hustvedt – Own work. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

CalPERS Is Proposing 98 Ways To Boost Member Pensions

CalPERS is drafting new regulation that could boost worker pensions, but critics say the rules would fly in the face of much of Gov. Jerry Brown’s 2012 reform efforts. CalPERS is holding a public hearing on the issue tomorrow (Tuesday August 19) to seek the public’s feedback.

The new regulations could increase pension benefits for many workers by adding 98 new types of “pensionable compensation”—or, in other words, types of pay that can be counted toward pension benefits.

For example, workers would receive pension boosts for holding various professional certifications, for being bilingual or for working at the same job for a long period of time.

[Read the full list of types of pensionable compensation at the bottom of this post].

From a CalPERS press release:

The proposed new regulation is intended to clarify the types of pensionable compensation items that state, public agencies, and school employers report to CalPERS as part of a new member’s retirement benefit. The most common items excluded as pensionable for new PEPRA members are bonuses, uniform allowance, and any ad hoc payments. Members who were hired on or after January 1, 2013 are considered new members under PEPRA.

Compensation that is reportable for classic members is unaffected under the new regulation.

One category of pensionable compensation would be Incentive Pay.

A few other interesting special pay items:

As the CalPERS released indicates, these changes would only apply to new hires. But critics say the new rules would directly undermine California 2012 pension reforms, which also only dealt with new hires. From a LA Daily News editorial:

At issue is what counts as income on which pensions are calculated. The 2012 law was clear: Pensions for new employees should be based on their “normal monthly rate of pay or base pay.” Whereas current employees can boost their pension calculations by also including “special compensation” for “special skills, knowledge, abilities, work assignment, workdays or hours, or other work conditions,” the Legislature didn’t include those sorts of extra pay items for new employees.

The hearing over the draft regulations will be held on Tuesday at 9:30 am pacific time.

It will also be live-streamed at www.calpers.ca.gov.

[iframe src=”<p style=” margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;”> <a title=”View Proposed Adoption Pensionable Compensation on Scribd” href=”http://www.scribd.com/doc/237135073/Proposed-Adoption-Pensionable-Compensation” style=”text-decoration: underline;” >Proposed Adoption Pensionable Compensation</a></p><iframe class=”scribd_iframe_embed” src=”//www.scribd.com/embeds/237135073/content?start_page=1&view_mode=scroll&show_recommendations=true” data-auto-height=”false” data-aspect-ratio=”undefined” scrolling=”no” id=”doc_62392″ width=”100%” height=”600″ frameborder=”0″></iframe>”]

Court: Washington Acted Within Law When It Repealed Pension Benefits

The Washington Supreme Court unanimously sided with the state on not one, but two pension-related decisions over this past weekend.

The court affirmed the legality of two actions by Washington in recent years: in 2007, the state repealed a “gain-sharing” policy that had given retirees a bonus when pension fund investments exceeded return expectations. Then, in 2011, Washington eliminated automatic COLAs for certain classes of retirees.

Gain-sharing and automatic COLAs were originally implemented in the mid-1990s. But when the lawmakers repealed the policies in recent years, public employee unions were quick to sue the state for breaches of contract.

Lower courts had previously sided with unions on these issues, but the case was appealed all the way to the state Supreme Court.

The high court found that, in both cases, the state acted legally when they repealed the policies. The actions weren’t a breach of contract, the court said, because the legislature had reserved the right to reverse those policies at any time.

But public employees claim they were duped—they say the state put workers in pension plans that provided less benefits, but came with promises of “gain-sharing” and automatic cost-of-living adjustments. From the Seattle Times:

Public-sector unions and others who sought to maintain the benefits concede they are pricey. But, they argued, the state had dangled the promise of the pension enhancements in the late ’90s when officials persuaded tens of thousands of workers to give up their defined-benefit retirement plans for cheaper plans.

The cheaper plans reduced the defined benefits by half while adding a mix of defined contributions and gain-sharing, which occurred when investment returns exceeded 10 percent for four straight years.

James Oswald, a Seattle lawyer who represented state ferry worker Cheryl Costello and others who sued over repeal of the gain-sharing benefit, said that when the state Department of Retirement Systems provided written material encouraging workers to give up their more expensive plans, it never informed them gain-sharing could be repealed. The workers could not have known unless they had parsed the fine print of the statute creating the benefit, he said.

“Tens of thousands of employees gave up their benefits based on representations about what they’d receive,” Oswald said. “They were never told that these benefits could be repealed, and that’s very troubling to me. That’s the kind of bait-and-switch the court would never permit a private employer to do.”

A bit of background of the “gain-sharing” policy, from the Bonney Lake Courier Herald:

The Legislature enacted gain-sharing in 1998. Gain-sharing gave certain public employee retirees (members of Plans 1 and 3) a share of extraordinary investment gains whenever the pension trust funds had average investment gains of more than 10 percent over the prior four years.

When enacting gain-sharing, the Legislature made clear that it “reserves the right to amend or repeal this chapter in the future and no member or beneficiary has a contractual right to receive” this pension provision not granted prior to the time of the repeal.” (Former RCW 41.31.030 and former RCW 41.31A.020)

The Legislature repealed gain-sharing in 2007, after paying gain-sharing benefits already earned.

When the legislature enacted automatic COLAs for retirees, they gave themselves an identical way out—writing that they “reserve the right to amend or repeal this chapter in the future and no member or beneficiary has a contractual right to receive” this pension provision not granted prior to the time of the repeal.”

Photo: “Washington Wikiproject” by Chetblong. Licensed under Creative Commons Attribution-Share Alike 3.0 via Wikimedia Commons

San Diego Pension Fund Pays “Big” Price For Big Office Space

One of California’s largest city pension funds is not only paying a “big” sum for its huge, high-end office space—it’s also locked into a long lease.

An investigation by a ABC10 found that the San Diego City Employees’ Retirement System is locked into a 10 year lease for the office space it rents, and the System will pay over $10 million in rent over that period. From ABC10:

The San Diego City Employees’ Retirement System manages a $7 billion fund. A review of office leases by Team 10 found SDCERS will spend $10.1 million renting office space at 401 West A Street in downtown San Diego. The lease is for 26,000 square feet over 10 years, and an SDCERS spokeswoman said 58 employees use the space — which breaks down to roughly 450 square feet per employee.

“I have to wonder why more than 20,000 square feet. Forget whether you own or lease it. Why that big a space?” real estate appraiser and San Diego State University lecturer Dana Kahn asked after reviewing the SDCERS lease.

Those numbers fall roughly in line with what SDCERS has reported publicly for years; according to its latest financial report, the System spent $998,000 on rent in 2013.

The investigation also looked into office space rented by the California Public Employees Retirement System.

CalPERS—the nation’s largest public fund—has eight offices around the state, although its staff is much larger than that of SDCERS.

CalPERS is a bit more secretive about its rental costs, as its financial reports don’t specifically disclose the cost of rent for its offices.

Its latest financial report does disclose that the System pays $3,789,000 for “facilities operations”, which may include rent as well as utility costs associated with its office spaces.

ABC10 managed to get a hold of SDCERS’ spokesperson over email, and she answered a few questions.

1. Why did SDCERS choose to rent office space?

SDCERS has been renting office space for many years. We’ve been in the current locating for the past seven, and then rented space in other downtown office building locations for many years before that.

2. Did SDCERS considering buying space?

No. The only investments in real estate done by SDCERS are as part of the fund’s real estate holdings in our investments portfolio.

3. How many employees work in the office?

There are 58 budgeted staff positions at SDCERS.

4. How much of SDCERS portfolio consists of real estate?

Real estate holdings in our investments portfolio account for 9.1 percent of the fund, or approximately $630 million.

5. Who negotiated the lease?

The original lease for SDCERS’ space at 401 West A Street was signed in April 2007. Signing for SDCERS were its then CEO and Board President. SDCERS was assisted in finding space by broker Irving Hughes. The first amendment to the current lease was signed in October 2013, again by its current CEO and Board President. SDCERS was assisted in negotiating the amendment by broker Hughes Marino.

Photo by Justin Brown via Flickr CC License

Gen X Retirements At Risk? Not So Fast, Says EBRI

Even smart people can disagree with each other. Who knew?

A great example of that sentiment is playing out right now, as a handful of nationally renowned retirement research groups have found each other at odds with the other’s conclusions about the retirement security of the next few waves of retirees.

Retirement savings (or a lack there-of) have been getting a lot of press lately. The Federal Reserve recently released data that suggested 20 percent of people aged 55-64 had zero money saved for retirement. All in all, 31 percent of people surveyed said they had no retirement savings at all.

Two other recent studies make similarly striking claims—a 2013 Pew Charitable Trusts study found that newer retirees would have far less income during retirement than their baby boomer predecessors. Likewise, a 2012 study by the Center for Retirement Research (CRR) found nearly half of households in their 50’s were “at risk” for a rocky retirement.

But the Employee Benefit Research Institute doesn’t think the situation is so dire. In fact, the EBRI has gone so far as to rebuff the findings of those latter two studies. From ThinkAdvisor:

EBRI recently challenged a pair of studies that concluded Gen Xers’ retirement prospects were in worse shape than boomers’ prospects, pointing out also that the oldest Gen Xers are only 49, with many earnings years left before they reach traditional retirement age.

EBRI charges that some studies used flawed assumptions or bad methodologies to reach their conclusion that investors born between 1965 and 1974 had a smaller likelihood of saving enough for retirement than older investors born between 1948 and 1964.

“Calculating retirement income adequacy is very complex, and it’s important to use reasonable assumptions and current data if you want credible results,” Jack VanDerhei, EBRI research director and author of the report, said in a statement.

More on the “flawed assumptions” used in the Pew and CRR studies:

EBRI took issue with a 2013 study by Pew Charitable Trusts that found the median replacement rate for Gen Xers who retire at 65 would be 32 percentage points lower than early boomers’ and nine points lower than later boomers’.

However, that finding “explicitly ignores future contributions,” EBRI argued. “EBRI’s analysis concludes that ignoring decades of potential future contributions (as the Pew study does) exaggerates the percentage of Gen X workers simulated to run short of money in retirement by roughly 10 to 12 percentage points among all but the lowest-income group,” according to the report.

An earlier study, conducted in 2012 by the Center for Retirement Research (CRR) at Boston College, found 44% of households in their 50s were “at risk,” compared with 55% of those in their 40s and 62% of those in their 30s.

In that report, CRR failed to consider the effect of automatic enrollment and escalation features, which were widely adopted following the Pension Protection Act of 2006. Gen X is the first generation to have a full working career in a defined contribution environment, EBRI noted.

EBRI says all its recent research points to very different conclusions than other studies: Generation Xers are facing approximately the same retirement prospects as the Boomers’.

EBRI concludes that 60 percent of Generation X won’t run out of money in retirement.

Is the Retirement Savings Crisis Too “Hyped”? These Researchers Think So.

A seemingly routine Capitol Hill hearing got very interesting very fast late last month. The hearing was held by the Ways and Means Social Security Subcommittee and focused on the state of retirement savings in the U.S.

Why was it so interesting? Two of the witnesses, Sylvester J. Schieber and Andrew G. Biggs, insisted that the retirement savings “crisis” in the U.S. is over-hyped. (They were referencing, among other things, the recent government statistics claiming that 20 percent of Americans aged 55-64 had zero retirement savings).

An outpouring of criticism followed, led by Christian Weller, who wrote:

Launched by Chairman Sam Johnson (R-TX), the hearing announcement made reference to retirement income being underreported, implying that families are better off than the data show. Moreover, the witness list included crisis deniers, such as the American Enterprise Institute’s Andrew Biggs, making claims that the number of households inadequately prepared for retirement is largely overstated. Some testimony turned to calls for Social Security benefit cuts. Because, after all, cutting Social Security would theoretically inflict little harm if families are already well prepared for retirement. In reality, families would suffer tremendously from Social Security cuts. Why? Because as a long-standing body of economic research has repeatedly shown, there is indeed a growing crisis.

Schieber and Biggs (who, by the way, are no slouches–you can read their bios at the bottom of this post) quickly took to the blogosphere to explain their position.

First, they tackled why they disputed the government data, released last week, that suggested one in five Americans nearing retirement had no money at all saved for retirement. From Sheiber and Biggs (S + B):

These [Social Security Administration] publications rely on data from the Current Population Survey, which omits the vast majority of income that seniors receive from IRA and 401(k) accounts and thus makes seniors appear significantly poorer and less prepared for retirement than they actually are.

IRS tax data, which include all forms of pension withdrawals, show that true incomes for middle class retirees receiving Social Security benefits are substantially higher than is believed. The fact that these faulty SSA statistics were cited by the Social Security Subcommittee’s ranking member, apparently without knowledge of the limitations of these data, is evidence that even policymakers’ understanding of retirement security can be improved.

What about National Retirement Research Index’s findings that 6 in 10 Americans are at risk of an insecure retirement? S + B write:

With due respect to the NRRI’s authors, we have already detailed how the NRRI sets a higher bar for retirement income adequacy than most financial advisors and how it ignores the ways that family size and structure play into retirement saving patterns. In addition, the NRRI projects current workers’ future incomes using a one-size-fits-all pattern that ignores the dispersion in earnings that takes place from middle age onward.

This assumption erroneously reduces the “replacement rates” that low earners will receive from Social Security. The NRRI also predicts that traditional defined benefit pension plans will continue to contract, but assumes that future retirees will have no larger IRA or 401(k)s accumulations than those of people who retired prior to 2010. Together, these factors substantially – but erroneously, in our view – increase the share of workers considered to be “at risk” of an insecure retirement.

So who are these people anyway?

Sylvester J. Schieber:

Sylvester J. Schieber is Chairman of the Social Security Advisory Board (SSAB) and a private consultant on retirement and health issues. He retired from Watson Wyatt Worldwide in September 2006 where had served as Vice President/U.S. Director of Benefit Consulting and Director of Research and Information. He holds a Ph.D. in economics from the University of Notre Dame in 1974. He has served on the Board of Directors of the Pension Research Council at the Wharton School, University of Pennsylvania since 1985. Dr. Schieber was a member of the 1994-1996 Social Security Advisory Council. In January 1998 he was appointed to a six-year term on the Social Security Advisory Board.

Andrew Biggs:

Andrew G. Biggs is a resident scholar at the American Enterprise Institute (AEI), where he studies Social Security reform, state and local government pensions, and public sector pay and benefits.

Before joining AEI, Biggs was the principal deputy commissioner of the Social Security Administration (SSA), where he oversaw SSA’s policy research efforts. In 2005, as an associate director of the White House National Economic Council, he worked on Social Security reform. In 2001, he joined the staff of the President’s Commission to Strengthen Social Security.

You can read their entire blog post here.

You can also read the initial blog post, “Yes, There Is A Retirement Crisis”.

It’s a fascinating discussion, although at this moment, it seems to be two men standing alone against a world of data.

The Lawsuit That Could Legalize Pay-To-Play For Pension Fund Investments

Here’s a scenario to chew on:

An investment firm makes a campaign contribution to a city mayor. Later, the mayor appoints members to the city’s pension board. The pension board decides to hire the aforementioned investment firm to handle the pension fund’s investments.

Does something seem fishy about that situation?

The SEC says yes, and they have rules in place to prevent those “pay-to-play” scenarios.

But a recent lawsuit says no: investment managers should be able to donate money to whichever politicians they choose, even if those donations could present a conflict of interest down the line.

The lawsuit, filed last week by Republican committees from New York and Tennessee against the SEC, wants the court to affirm that political donations are free speech—and, by extension, current SEC pay-to-play rules are unconstitutional.

Under the SEC’s current rules, investment advisors can’t make donations to politicians that have any influence—direct or indirect—over the hiring of investment firms.

In many states, it’s the job of the governor or mayor to appoint members to the state or city’s pension board—the entity that controls pension funds’ investment decisions.

The lawsuit claims that it’s not fair to make investment firm employees choose between their career and their First Amendment rights.

But does the lawsuit have a shot?

If past court decisions are any indication, it certainly has a fighting chance. David Frum writes:

It’s a good guess that the federal courts will listen sympathetically to the challenge to the SEC rule. The Supreme Court has made clear that campaign contributions are protected free speech, both for individuals and for corporations. While protecting against corruption remains a valid basis for restricting contributions, the Court has defined corruption narrowly: In the words of the majority opinion in McCutcheon v. FEC, the most recent major campaign-finance case, corruption is “an effort to control the exercise of an officeholder’s official duties.” And as Justice John Roberts wrote in FEC v. Wisconsin Right to Life, the courts “must err on the side of protecting political speech rather than suppressing it.” It seems very conceivable that the courts will find the SEC rule overly broad.

It should be noted, the SEC didn’t put these rules in place for no reason.

Over the course of a few years in the mid-2000’s, then-New York State Comptroller Alan Hevesi accepted over $1 million in campaign donations and gifts from investment firm Markstone Capital.

Hevesi, who at the time was the sole trustee of the New York State Common Retirement Fund, subsequently decided that the Fund should make a $250 million investment with Markstone.

Hevesi eventually pled guilty to corruption charges and served a little less than two years in prison. He is banned from holding public office again. The case was the catalyst for the pay-to-play rules the SEC currently has in place.

But Frum, in a piece written for the Atlantic today, wonders aloud whether the SEC rule targets the right people. Frum writes:

It’s a valid question whether the SEC rule is actually achieving anything.

The people with the most sway over state pension-funds decisions are not always—nor even often—elected officials. And those who exert the most effective influence over them are not always—nor even often—campaign contributors.

Frum points that it’s often placement agents who are helping to pull strings from behind the scenes. That’s been the case in California, Dallas, New Mexico and Kentucky, and those are just the high-profile ones.

From Frum:

In our belief that it’s politicians who are always and everywhere to blame for everything that goes wrong in a political system, we consign to the financial pages the abundant evidence that the most fundamental vulnerability of state pension plans to corrupt influence is located less in politicians’ need for campaign funds, and much more in the weak governance of state pension plans themselves.

As the New York Republicans’ case against the SEC winds its way through the courts, and if it begins to succeed, you’ll hear a lot of agitated discussion about what this all means for campaign finance, for Chris Christie, and for American elections. But the most important trouble—and the most disturbing practices—are located quite elsewhere. It will be worth keeping that in mind.

That doesn’t necessarily mean, however, that the SEC rule should be repealed and the floodgates opened.

It just means that the stuff happening behind closed doors—the opaque world of placement agents—is what we should be worried about, too.

Here’s a summary of current pay-to-play regulation:

[iframe src=”<p style=” margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;”> <a title=”View Summary of the SEC&#x27;s Pay to Play Rule on Scribd” href=”http://www.scribd.com/doc/236911281/Summary-of-the-SEC-s-Pay-to-Play-Rule” style=”text-decoration: underline;” >Summary of the SEC&#x27;s Pay to Play Rule</a></p><iframe class=”scribd_iframe_embed” src=”//www.scribd.com/embeds/236911281/content?start_page=1&view_mode=scroll&show_recommendations=true” data-auto-height=”false” data-aspect-ratio=”undefined” scrolling=”no” id=”doc_2716″ width=”100%” height=”600″ frameborder=”0″></iframe>”]

Photo by Truthout.org via Flickr CC License

Michigan To Sell Record Number of Bonds to Finance Pension Shortfalls

640px-Kalamazoo — Kalamazoo is just one Michigan city considering a historic bond offering to cover pension obligations.

It’s a strategy that’s becoming increasingly common—municipalities, straddled with outstanding pension obligations, issue bonds to cover near-term funding shortfalls.

In a particularly risky iteration of the practice, cities and states will take the proceeds from selling the bonds and re-invest them into the market.

That’s exactly what Michigan is gearing up to do, according to Bloomberg:

The Detroit suburb of Macomb County plans a $270 million sale of municipal debt, its biggest ever, to finance retiree health-care costs, while Kalamazoo is considering a historic $100 million bond offer for similar expenses. Bloomfield Hills plans to borrow a record $17 million for pensions. The law allowing the practice expires Dec. 31.

U.S. states and cities are struggling with how to pay for promises to workers after the recession ravaged their finances. Yet few communities see debt as the answer — sales of revenue-backed pension bonds have tallied $356 million this year, data compiled by Bloomberg show. Interest rates close to five-decade lows are making it more attractive to pursue the risky strategy of investing borrowed funds in financial markets.

“We can’t afford to wait,” said Peter Provenzano, Macomb County finance director. “Timing the market is difficult. You could sit on the sidelines and miss out on an opportunity.”

It’s a risky strategy that’s been covered many times before, perhaps best by the Center for Retirement Research’s recent brief.

The gist: If a city is going to re-invest proceeds from issued debt, they better hope the market produces returns that exceed the cost of servicing the debt.

The problem is, most cities that turn to this practice are already in dire straits fiscally. If the bet doesn’t pay off, it leaves cities even worse off.

At least one Michigan city is shying away from the practice: Grand Rapids.

“The best way to have odds in your favor is to do this when stock prices are depressed,” Scott Buhrer, the city’s chief financial officer, told Bloomberg. “We’re in the latter stage of a bull market.”

Photo: “Kalamazoo” by User Mxobe on en.wikipedia – own-work. Licensed under Public domain via Wikimedia Commons

After String of Failed Investments, New Orleans Pulls Money From Police Budget To Cover Pension Funding Shortfalls

The New Orleans City Council voted today to dip into the Police Department’s budget and transfer $2 million to the Fire Fighters Pension and Relief Fund (FPRF), a fund which was been devastated by investment losses in recent years (more on those losses below).

The vote was unanimous, as the state Supreme Court ruled earlier this year that the city had to cover the fund’s funding shortfalls after neglecting to make tens of millions of dollars worth of required payments into the system.

But city officials claim the $2 million pulled from the police budget will have little effect on operations. From NOLA.com:

Led by Councilwoman Stacy Head, who sponsored the move, the council stressed that the re-appropriation won’t hurt police operations.

The department’s 2014 budget was built on the assumption that the NOPD would be adding hundreds of officers this year, said Councilman Jason Williams. Those officers haven’t materialized.

The council’s move to shift the money earmarked for the new officers is merely a recognition of that fact, he said.

“It’s like we bought food for a family of five but there are only two people in the house,” Williams said.

Mayor Mitch Landrieu had promised to add 150 officers to the department this year, but so far the department has produced only a single training academy class of fewer than 30 people.

Thanks in large part to those empty staffing positions, Head said, the NOPD is currently running a surplus of about $9 million.

The Firefighter’s Fund is in a precarious position due to a confluence of several factors, including 1) the city’s aforementioned neglect of its required annual contributions and, 2) severe investment losses over recent years.

Trustees of the Firefighters Fund claim that, between 2010 and 2013, New Orleans shorted payments by $54 million.

As far as investments go, the Fund has had its fair share of failures, according to an audit released this year.

[The auditor’s report can be read in full at the bottom of this post.]

In 2008, the fund invested $15 million in a Cayman Islands-based hedge fund, Fletcher International Ltd. But the hedge fund went bankrupt and New Orleans lost 100 percent of its investment. Richard Rainey reports:

[The investment] initially showed 12-percent annual gains, according to the audit. When the pension board tried to collect some of its apparent earnings in April 2011, it got no answer, according to the audit. Fletcher would file for bankruptcy in October 2012, leading the fund’s auditors to report the $15 million lost in 2013, Meagher said.

But that wasn’t even the FPRF’s biggest investment loss. That honor goes to a failing golf course, as Richard Rainey explains:

[The fund’s] biggest hit last year came from a failing golf course in Algiers. The Lakewood Golf Club, valued at more than $39.2 million in 2012, lost $17.5 million of its worth by December. Another golf course, this one in Austin, lost the fund another $3.5 million last year. Both sites are in the process of being put up for sale, Meagher said.

All told, the Fund lost $40 million in 2013. Since 2010, the Fund has lost 51 percent of its value.

You can read the full auditor’s report, originally obtained by The Times-Picayune, below:

[iframe src=”<p style=” margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;”> <a title=”View 2013 Firefighters Pension Audit on Scribd” href=”http://www.scribd.com/doc/236842433/2013-Firefighters-Pension-Audit” style=”text-decoration: underline;” >2013 Firefighters Pension Audit</a></p><iframe class=”scribd_iframe_embed” src=”//www.scribd.com/embeds/236842433/content?start_page=1&view_mode=scroll&show_recommendations=true” data-auto-height=”false” data-aspect-ratio=”undefined” scrolling=”no” id=”doc_33716″ width=”100%” height=”600″ frameborder=”0″></iframe>”]

Photo by Wally Gobetz via Flickr CC

School Contributions to NY Teachers Retirement System To Increase Next Year; Marks 58% Bump Since 2012

The New York State Teacher’s Retirement System announced Wednesday that school district contribution rates will increase by 8 percent next year, rising from 16.25 percent to 17.53 percent.

[The official announcement can be seen embedded at the bottom of this post.]

The new contribution rate doesn’t go into effect until the fall of 2015.

Including the latest increase, school district contribution rates have increase 58 percent since 2012—the contribution rate in 2012 was 11.05 percent, according to the Public Fund Survey.

That’s partially because the System is paying out more pension benefits than ever before; NYSTRS will pay out $6.3 billion in pensions in fiscal year 2014-15, according to the System’s spokesman. In 2009-10, that number was $5.3 billion.

The NYSTRS, once fully funded, has been on a steady decline for years.

The funded ratio has since dropped to 89.8%, according to the most recent data available.

Here’s the official announcement from the NYSTRS:

[iframe src=”<p style=” margin: 12px auto 6px auto; font-family: Helvetica,Arial,Sans-serif; font-style: normal; font-variant: normal; font-weight: normal; font-size: 14px; line-height: normal; font-size-adjust: none; font-stretch: normal; -x-system-font: none; display: block;”> <a title=”View Teacher Pension on Scribd” href=”http://www.scribd.com/doc/236735138″ style=”text-decoration: underline;” >Teacher Pension</a></p><iframe class=”scribd_iframe_embed” src=”//www.scribd.com/embeds/236735138/content?start_page=1&view_mode=scroll&show_recommendations=true” data-auto-height=”false” data-aspect-ratio=”undefined” scrolling=”no” id=”doc_19926″ width=”100%” height=”600″ frameborder=”0″></iframe>”]

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home/mhuddelson/public_html/pension360.org/wp-includes/formatting.php on line 3712

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home/mhuddelson/public_html/pension360.org/wp-includes/formatting.php on line 3712

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home/mhuddelson/public_html/pension360.org/wp-includes/formatting.php on line 3712

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home/mhuddelson/public_html/pension360.org/wp-includes/formatting.php on line 3712

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home/mhuddelson/public_html/pension360.org/wp-includes/formatting.php on line 3712

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home/mhuddelson/public_html/pension360.org/wp-includes/formatting.php on line 3712

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home/mhuddelson/public_html/pension360.org/wp-includes/formatting.php on line 3712

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home/mhuddelson/public_html/pension360.org/wp-includes/formatting.php on line 3712

Deprecated: Function get_magic_quotes_gpc() is deprecated in /home/mhuddelson/public_html/pension360.org/wp-includes/formatting.php on line 3712