Tag: pension reform

Rauner’s State of State Address Short on Pension Talk

Bruce Rauner

On Wednesday, new Illinois Gov. Bruce Rauner gave his State of the State address.

The speech wasn’t short on policy ideas – but in one area, Rauner was conspicuously mum: Pensions.

Rauner didn’t so much as say the words “pension” or “retirement” in his speech. Observers say he could be saving that talk for his budget address later this month.

More from the Chicago Tribune, including reaction from credit rating agencies:

For rating agency analysts, who routinely check the state’s pulse for signs of improving health, the assessment was simple: “Show me.”

[…]

On Wednesday, Rauner provided little detail about how he’d tackle Illinois’ largest financial troubles.

The past is littered with proposals to “right the ship, but they didn’t get there,” said Karen Krop, an analyst for Fitch. “We’re looking for an effective balanced budget and a pension solution.”

She said she will be watching closely for the governor’s coming budget proposal — a document that will provide more detail than the agenda Rauner outlined this week. The key, Krop said, would be permanent solutions to the state’s financial problems.

The state’s rating, its financial grade, has been “downgraded multiple times over the last five years because of its inability to find permanent solutions,” Krop said. There’s a “mismatch between spending and revenue,” and while temporary tax increases helped since 2011, they aren’t lasting.

“A lot has to do with the pension liability,” Moody’s analyst Ted Hampton said. “The state is still a long way off from coming to terms with its pension liabilities.”

A potential pension solution remains tied up in courts and is a major reason why rating agencies such as Moody’s have graded Illinois as the most unhealthy of states financially.

[…]

“Illinois’ long-term liabilities, particularly pension liabilities, are very high for a U.S. state and are expected to remain so even with improvement in pension funding from pension reform,” Krop said.

Read the full speech here.

 

By Steven Vance [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Public Utility Back in Fold of Jacksonville Pension Reform Plan

palm tree

Jacksonville public utility company JEA is back on board with the city’s pension reform plan.

The company is helping to finance much of the city’s current reform proposal; JEA will make a $120 million lump sum payments to the city’s Police and Fire Pension Fund.

Last week, it was unclear whether JEA would go through with the plan.

More from the Florida Times-Union:

After a series of fast-paced negotiations between Mayor Alvin Brown’s administration and top JEA officials, prompted by a public rift last month, a plan to use the financial wherewithal of JEA and the city to pay the hefty price tag of Jacksonville pension reform is back on track.

JEA audit and finance committee members Thursday unanimously approved an agreement that stipulates the utility would — in exchange for financial and administrative concessions — make a $120 million lump sum payment to the city. Brown wants the city to use that payment, plus an additional $120 million the city would borrow, to more quickly pay down the $1.62 billion debt to the Police and Fire Pension Fund.

[…]

JEA’s annual general fund contribution currently increases by $2.5 million each year, maxing out at a total $114.2 million in 2016. That contribution formula — which expires next year — means that even as JEA’s revenues have declined in recent years, its contribution to the city has ballooned, a gulf that has become a top concern for JEA officials in recent years.

In exchange for borrowing $120 million for pension reform, however, the city had agreed to, in broad terms, reduce those JEA contributions by $2.5 million for the next several years and ultimately revert to a formula linked to JEA revenues.

JEA’s participation isn’t yet fully guaranteed; the utility’s board will meet later this month to vote on its participation.

 

Photo by  pshab via Flickr CC License

Video: Lawmaker Talks Pennsylvania Pensions, Reform Plan

In this video, Pennsylvania State Rep. Warren Kampf [R] talks at length about the state’s pension systems – including funding, budget implications, and reform — and how he would address these issues.

 

Feature Photo credit: “Flag-map of Pennsylvania” by Niagara – Own work from File:Flag of Pennsylvania.svg and File:USA Pennsylvania location map.svgThis vector image was created with Inkscape. Licensed under CC BY-SA 3.0 via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Flag-map_of_Pennsylvania.svg#mediaviewer/File:Flag-map_of_Pennsylvania.svg

Former NJ Official: Christie Used Misdirection on Pension Payments in State of State Address

Chris Christie

During his State of the State address last month, New Jersey Gov. Chris Christie made a few remarks defending himself against accusations of short-changing the state’s pension system.

He claimed that he had contributed more to the pension system than any governor in New Jersey history.

That’s not a false statement. But it also doesn’t tell the full story.

Edward Buttimore, formerly of the state’s Attorney General’s Office, penned a column on Tuesday explaining the misdirection.

Buttimore writes:

When Gov. Chris Christie praised himself during the State of the State address for making the largest contributions to the State pension funds of any governor in New Jersey history, that statement was true, but not accurate.

While Gov. Christie has contributed $2.9 billion (if he makes the reduced $681 million payment for FY2015), what he fails to be clear about is that he will have skipped $14.9 billion in required pension payments during the past five years as Governor, according to his own Pension & Health Benefit Study Commission’s Status Report.

Former Gov. Corzine made $2.1 billion in pension payments while skipping an additional $6.4 billion required from 2007 to 2010.

In fact, Gov. Christie’s $14.9 billion skipped pension payments eclipses the $12.8 billion combined missed payments of his five predecessors over a 15-year period from 1996 to 2010. That was a pretty important fact that he omitted from his State of the State address.

For the last three years Gov. Christie has traveled the country congratulating himself for his 2011 bipartisan pension reforms, including prominently mentioning it during his keynote address for Mitt Romney at the 2012 Republican National Convention. He then he failed to follow through on making the required payments.

Read the entire piece here.

 

Photo by Bob Jagendorf from Manalapan, NJ, USA (NJ Governor Chris Christie) [CC BY 2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Former Jacksonville Mayor Calls for Tax Increase to Fund Pension Reform

palm tree

Former Jacksonville mayor and current city Chamber president John Delaney said Monday that a tax increase is likely the best way to fund the city’s pension reform measure.

The city has been weighing a pension reform bill for months, and one of the points of debate has been the source of funding for the measure. Current Mayor Alvin Brown’s plan was to team with a public utility company and borrow the money.

But Delaney says a tax increase is more likely.

From the Florida Times-Union:

JAX Chamber Chairman John Delaney said Monday a pension financing plan supported by Mayor Alvin Brown is “not viable” and the solution “probably is going to be a tax increase to solve that problem.”

[…]

In regard to pension reform, Brown favors a plan for the city and JEA to borrow $240 million to more quickly pay down the city’s $1.62 billion debt to the Police and Fire Pension Fund.

JEA would pay off its $120 million in borrowing by getting reductions in the amount it pays in annual contributions to City Hall. The city would repay its $120 million by using savings from its annual pension contributions to the Police and Fire Pension Fund, along with projected growth in tax revenues from an improving economy.

[…]

But Delaney said City Hall already is financially strained in paying the day-to-day costs of city services, so reductions in future JEA revenue would hurt the city. He said the same financial constraints affect the city’s ability to borrow $120 million and repay it.

He said to “dig out of the pension hole, it’s going to take a new independent slug of money, which ultimately probably is going to have to be a tax increase to solve that problem.”

Read more Pension360 coverage of the Jacksonville pension reform saga here.

 

Photo by  pshab via Flickr CC License

Video: How Might Bruce Rauner Tackle Illinois Pensions?

How might Bruce Rauner attack the state’s pension debt? Pension360 has covered his changing views on reforms.

In this video, Illinois Policy Institute CEO John Tillman talks about the state’s pension debt and how Rauner might handle it.

 

Video credit: The Wall Street Journal

 

By Steven Vance [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)], via Wikimedia Commons

Cincinnati Mayor: Pension Deal Removes “Dark Cloud” From Over City

Cincinnati

Cincinnati Mayor John Cranley took to the newspapers on Thursday to comment on the city’s recently passed pension reform measure.

In a column in the Cincinnati Enquirer, Cranley talks about the effects of the reforms on the city’s pension funding and the compromises made on both sides.

Cranley writes:

The historic agreement reached Dec. 30 among the retirees, unions, active employees and the city – after 10 months of negotiations and a nine-hour marathon session on the final day – will ensure a good pension remains in place for current and future retirees.

Through painful but necessary benefit cuts and increased city contributions, the pension system is now on solid financial footing.

As a result of these actions, by 2016 the pension fund will be 85 percent solvent and rise to 100 percent over the next two decades, which reverses a decadelong trend of worsening solvency. What was an $862 million liability will be reduced to zero; an independent actuary has certified that the math we are using is not fuzzy, but dependable.

This resolution will restore the city’s credit and reputation, and it will allow us to use the restored credit to address other city problems that have been ignored, such as deteriorating roads.

[…]

All parties – the city included – conceded more than they intended to, but it was a rare and wonderful case of shared sacrifice and heeding the “better angels of our nature.”

The Cincinnati Enquirer provides a refresher as to the effects of the reform measure:

Under the pension agreement, the city will:

*Contribute $38 million to the pension system in 2015. The city will pay that over the next seven years by borrowing against future revenue.

*Contribute $200 million in 2016 from the financially stable retiree heath care trust fund to the pension system.

*Make a larger contribution to the pension starting in July 2016 – 16.25 percent of the annual operating budget compared with 14 percent – and continuing for 30 years.

Employees will:

*Take a three-year cost of living adjustment holiday.

*After three years, both current retirees and active employees will receive an annual cost of living adjustment of 3 percent simple interest. Most current retirees receive an increase that is “compounded,” meaning the previous year’s increase is included in the following year’s calculation. Current employees already have a 3 percent simple COLA in place when they retire.

 

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Illinois Supreme Court Pension Ruling May Not Affect Chicago Reforms, Say Lawyers

chicago

The City of Chicago filed a brief with the state Supreme Court last week in support of the state’s pension reform law, in part because the city has its own set of pension reforms that could be impacted by the ruling.

But even a ruling overturning the state’s pension law might not affect Chicago’s own reforms, a lawyer for the city said Wednesday.

From Reuters:

Richard Prendergast, an attorney representing Chicago, told Cook County Circuit Court Associate Judge Rita Novak that the 2014 law for Chicago’s municipal and laborers’ retirement systems would not automatically be voided if the state’s high court later this year determines a 2013 law enacted for Illinois’ sagging pension system is unconstitutional.

He said the state is basing its defense on the need to invoke its police powers to ensure it can fund essential state services. The city has an additional argument that its law does not unconstitutionally diminish pension benefits because without its cost-saving elements and higher contributions the two pension funds would become insolvent within a matter of years, he explained.

“The one thing that is not contested here is these two pension funds are in the toilet,” Prendergast said at a court hearing on the unions’ request for a preliminary injunction to stop the Chicago pension law.

Chicago’s reforms mandate higher pension contributions from workers and the city, as well as reduced COLAs.

Two lawsuits have been filed challenging the constitutionality of those reforms.

 

Photo by bitsorf via Flickr CC License

Video: Kansas Treasurer Talks PERS Funding, Reforms

Here’s Kansas Treasurer Ron Estes talking about the condition of the state’s Public Employees Retirement System, the state’s 2012 reform law and his support for Gov. Brownback’s new proposal to issue $1.5 billion in bonds to go toward pension funding.

 

Photo credit: “Seal of Kansas” by [[User:Sagredo|<b><font color =”#009933″>Sagredo</font></b>]]<sup>[[User talk:Sagredo|<font color =”#8FD35D”>&#8857;&#9791;&#9792;&#9793;&#9794;&#9795;&#9796;</font>]]</sup> – http://www.governor.ks.gov/Facts/kansasseal.htm. Licensed under Public Domain via Wikimedia Commons – http://commons.wikimedia.org/wiki/File:Seal_of_Kansas.svg#mediaviewer/File:Seal_of_Kansas.svg


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