The Great Pension Deficit

[Show-me]

http://online.barrons.com/article/SB126843815871861303.html#articleTabs_panel_article=1

THE PROSPECTS ARE BLEAK for many state and local governments as a result of all this. According to a survey last month by the Pew Center on the States, a nonpartisan research group, eight states -- Connecticut, Illinois, Kansas, Kentucky, Massachusetts, Oklahoma, Rhode Island and West Virginia -- lack funding for more than a third of their pension liabilities. Thirteen others are less than 80% funded.

Governments could fill that gap by raising property, sales and income taxes, but most are wrestling with huge revenue shortfalls in trying to balance their budgets.

The more likely outcome is dramatic cuts in essential services, such as police and fire protection, health spending, education and infrastructure improvements, in order to cover ballooning pension payments. State and municipalities, after all, must do something: Most have a legal obligation to pay out earned pension benefits. And some don't even have the courage to switch new teachers, bureaucrats and police to a defined-contribution system, to prevent the funding problem from worsening as time rolls on.

 

[Show-me]

You think Illiniois has budget problems, HA, look who tops the list.

 

[OBGibby]

James,

The same old tired union cheerleading which totally sidestepped the point I made in my original post...The point I was making was that many local and state pensions are straining under unmanageable pension obligations that they promised to police and firefighters (thanks to their unions). No matter how you do the math, when a cop makes a salary of $60K per year, but brings in $80K per year in pension retirement, it spells trouble. Somebody has to pay for that, and that somebody is Joe Taxpayer.

 

[Boghie]

Folks,

The politicians (Local, State, and Federal) will end up jiggering the pension payouts...
It will be 'for the children'!!! :nuts:

They will kick the can till the can bangs off a wall. Then the electorate will force a crack down. And, when you force change on a retirement system in a short timeframe very bad things happen. And, folks, we ain't a majority. My guess is that the can is flying to a wall about 4 - 6 months out.

This 'Great Recession' will force the gubmint to trim. The FED tried to inflate the market and get the party going again (in a sustained rate). The Federal Government tried to buy more booze off the credit card and now all the boozers are broke and the hangover is here. And, the populace are going through 'enablers class':nuts: They will not pay for the party supplies. Laws can be changed!!!


Now, something nice. Our TSP accounts cannot be jiggered. It is in our little grubby lock box. However, our pensions can be 'adjusted'. Expect them to be.

 

[Show-me]

Exactly and look at the bill for poor old Joe Taxpayer in addition to the regular budget. Deficit spending will not work here and the States need to balance all of the books before we can go forward.

Only two ways to fix this problem and they do not want to touch either in a mid-term election year. That is cut spending to the bone and/or raise taxes. That is the ONLY two choices.

James,

The same old tired union cheerleading which totally sidestepped the point I made in my original post...The point I was making was that many local and state pensions are straining under unmanageable pension obligations that they promised to police and firefighters (thanks to their unions). No matter how you do the math, when a cop makes a salary of $60K per year, but brings in $80K per year in pension retirement, it spells trouble. Somebody has to pay for that, and that somebody is Joe Taxpayer.

 

[Boghie]

Show-Me,

Watch the excitement this April 15.
Watch the GenXers this summer.
They scared 'em last summer.

The Gubmint can jigger their tax rates all they want, folks will learn to work around it.

As an example, Kaleforea increased my income, sales, and car taxes last year. I used my TSP, FSA, and other tax management techniques to zero out their grasping hand. All legal, all simple - and still some space left. Regretfully, the poor Federal Government got hit as well - even though they haven't jacked me yet!!!

 

[OBGibby]

While this example doesn't relate to every police department across the nation, there are many departments in similar situations.



'No' to a Billion-Dollar class of cops

By STEVE LEVY
Last Updated: 9:06 AM, March 9, 2010
Posted: 12:13 AM, March 9, 2010

While I've authorized hiring 70 new police officers this year, Suffolk legislators are pushing to add 200. The problem is the staggering cost -- more than $1 billion over the next 20 years.

No, I'm not making that figure up: Thanks to state mandates, 200 officers really would cost us that much.

Thanks to the arbitration process that the state forces upon counties, Suffolk already has one of the highest-paid police forces in the world. And that same process guarantees that the costs will keep growing -- even though the recession has most taxpayers having to cut back.
State law gives union leaders practically no incentive to provide givebacks, even when the public can't afford current pay and benefits. They tell us we can simply raise taxes.

And arbitrators don't focus on what taxpayers can afford; they look to neighboring counties as a barometer for the award they give. They basically one-up the neighboring county's increase -- producing a leapfrog effect so that, over time, employees in both counties (and across the state) benefit over and over again.

The reality is a little more complicated, but that's really the cycle -- and it has produced salaries and benefits that are mind-boggling to an average, private worker.

More than 500 Suffolk police officers now earn more than $150,000 a year; many make more than $175,000 -- and some even crack the $200,000 mark. Add in health benefits, overtime, night differential, longevity pay and pension costs, and it costs taxpayers an average of about $180,000 a year per officer.

Another reason for that astronomical number is the huge numbers of days off that have been awarded under the contract. A veteran officer can have more than 100 paid days off a year -- including six weeks' vacation, 26 sick days and 28 more "chart" days (extra days off given simply to achieve a "magic number" of nonwork days).

An added outrage is that these public employees can bank half of their sick days until retirement -- then cash them out. It's possible for some to leave county government with a check of $300,000 for unused sick and vacation time.

Piled on top of this is another state mandate that sets pension payouts based on employees' final-year salary. Almost anyone about to retire naturally tries to rack up enormous overtime hours; our officers often achieve pensions topping $100,000 a year.

All of which is simply unsustainable for a county that's trying to balance a budget in this very difficult economic time.

That's why I refuse to hire for the sake of hiring: First, we need a detailed, long-term fiscal analysis to avoid putting an unnecessary burden on the taxpayers.

In fact, we've managed to reduce violent, property and all other crimes (combined) in Suffolk over the last six years by more than 20 percent. And we've done it not by putting more officers on the payroll, but by "civilianizing" the police department and redeploying officers.

Hiring a civilian at $40,000 to do audio-visual or personnel work frees up $150,000 officers for street patrols -- leaving us with less need to hire new officers.

So we have fewer officers on the payroll now -- but 100-plus more officers on the streets, patrolling our neighborhoods.

As some members of the Suffolk Legislature continue their efforts to hire 200 officers this year, I will consider adding to the 70 that I've OK'd so far -- if our budget can sustain it. But the best way to make it possible for us to hire more police is to get Albany to end the mandatory arbitration process.

Unfortunately, the "pension reform" the governor and Legislature passed in December actually extended this taxpayer-killing policy for four years.

When I served in the state Assembly, I was often alone in voting to squelch this crushing law. For the sake of taxpayers, lawmakers in both parties and both chambers must band together to end it once and for all.

Legislators should also cap sick-day retirement payouts and the mandate that bases pensions on employees' highest final-year salaries. While they're at it, change the ridiculous law allowing officers who slip and injure themselves at the office while on duty to get the same full salary (tax free!) while on disability as would an officer who was shot chasing down a criminal.

Lawmakers have not only put the state on the brink of bankruptcy, they're crushing local governments with these mandates. It's time to take on the special interests -- and give taxpayers a break.

Steve Levy is the Suffolk County executive.

http://www.nypost.com/p/news/opinion/opedcolumnists/no_to_billion_dollar_class_of_cops_5Owo5fIHCytsMIk6h1nz6L

 

[OBGibby]

Say it ain't so, Union Chief!


Borenstein: Huge overtime for Concord police union chief

By Daniel Borenstein
Staff columnist
Posted: 03/07/2010 12:01:00 AM PST
Updated: 03/07/2010 11:18:46 AM PST




DURING THE past two years, no one in the Concord Police Department collected more overtime than Ron Bruckert, the president of the police officers association, who took home an extra $101,120.

City payroll data show that Officer Bruckert collected about 3 percent of all the overtime pay for the entire Police Department, which includes about 150 sworn officers and about 50 other full-time employees.

His overtime sparked questions within the Police Department and led to a review of his timecards. But that inquiry was quietly stopped last year, months before his boss, Police Chief David Livingston, a candidate for Contra Costa County sheriff, sought, and received, the endorsement of Bruckert's association......


.....Stuart Roloson, a police department captain who retired last year, says he initiated the timecard investigation with Livingston's knowledge and approval. He said that the chief cautioned him to proceed carefully, that the issue was "sensitive" because Bruckert was president of the officers association.....


....Bruckert leads a union that has a long tradition of flexing its political muscle in city politics. According to recent membership minutes, the group is looking for "law enforcement supportive candidates" to run for City Council — "beneficial ... candidates that we can have a strong relationship with."

And it clearly is displeased with City Manager Dan Keen, who, like top administrators of most cities, is looking for ways to control costs in an era of declining revenue. "It is obvious to the board and the negotiations committee," according to the union's October minutes, "that City Manager Dan Keen has every intention of going after the Concord Police Association membership benefits, including retirement, when our contract comes up for negotiation.".....

http://www.contracostatimes.com/daniel-borenstein/ci_14520002

 

[Boghie]

It will soon be politically expedient to force gubmint pension change ‘for the children’.

And, in this case, it will actually be ‘for the children’.

These folks should have most of their retirement coming from a 401(k) style retirement plan. With a reasonable match. Maybe even a small pension as well. I think the FERS plan could be a model. From my reading, it appears that State and Local governments are on the old and unsustainable pension model. Their retirement plans are NOT like our FERS plan. They have the old GM model. Too much chance for abuse – both for the employee and the employer. The employee bargains for unsustainable benefits, the employer doesn’t fund it.

For me, give me my 401(k) lock box – and, let me move my Social Security contributions into it!

I DO NOT want a pension.

 

[Show-me]

Same here, my tax liability to the IRS was $500 this year with my retirement funding, FSA, and tax credits. I even lost a dependent last year. I actually feel a little bad about it.

Show-Me,

Watch the excitement this April 15.
Watch the GenXers this summer.
They scared 'em last summer.

The Gubmint can jigger their tax rates all they want, folks will learn to work around it.

As an example, Kaleforea increased my income, sales, and car taxes last year. I used my TSP, FSA, and other tax management techniques to zero out their grasping hand. All legal, all simple - and still some space left. Regretfully, the poor Federal Government got hit as well - even though they haven't jacked me yet!!!

 

[WorkFE]

Unions are without question one of the driving forces that improved alot of lives to everyday Americans. I'm not sure you are going to find many arguments there. Those same unions can be equally as destructive. When is enough, enough?

 

[Boghie]

Show-Me, less than $20 per pay period.
I don't think I'll be hearing about tax cuts from you!!!



WorkFE, why have unions for white collar government work? That sounds kinda dumb, eh. What are they fighting for? More taxpayer paid benefits? We white collar workers (and blue collar ones as well) already get a good 401(k) match, 2/3rds of our Medical paid, good life insurance, too many paid holidays, too many vacation days, too much sick time, and even a small (if in FERS) pension. We are now also paid fairly. That is why the hubbub.

My guess is that we will be looking wistfully at the days of NSPS when the taxpayer gets done with us

That is one of the main reasons why I don't think we should even consider Washington D.C. for a TSPTalk convention. April through August will be a time of demagogy – both valid and invalid. Hopefully, the pitchforks will take aim at holiday, annual, and sick leave policies and leave our retirement benefits alone.

 

[WorkFE]

Easy Boghie. If I gave you the impression that I am pro-union my appologies. Actually I'm neither.
I do believe uncorrupted unions can do good work. Unfortunately there are not any left.
I agree, why do you need a union in the Federal Work force. If you work for the man who makes policy concerning workers rights and benefits whats left to complain about.

 

[alevin]

Union plays a lot more role than just pay and benefits. I've seen where an extremely bad supervisor-known to be bad by employees across 3 states (ones who recognized the guy from description without even hearing the name)-went after a good conciencious employee (one I'd known for about 15 years and respected) for irrational and arbitrary reasons-tried to give a poor performance rating and permanent black mark in the guy's record ( I never met the supervisor myself-I'd moved out of that office before he arrived).

Morale in that office among all employees was extremely low the entire time that supervisor was in place (about 3 years)-more than one longtime friend told me that about the office environment.

Employee filed a grievance with union support. With that example, other people sucked up their nerve to start documenting against the supervisor as well. The supervisor was finally taken down and put out of harms way finally after impacting people's lives across 3 states for about 20 years. Justice would not have been served without grievance processes and union guidance on documenting violation of employee rights and conditions of employment.

This was my first real exposure to the value of union for us gubmint types-support for fair and just treatment on the everyday job-and I saw it entirely from the sidelines. btw, I'm not a union member.

 

[James48843]

James,

The same old tired union cheerleading which totally sidestepped the point I made in my original post...The point I was making was that many local and state pensions are straining under unmanageable pension obligations that they promised to police and firefighters (thanks to their unions).

You are totally missing the point.

Let me explain it to you.

Unions have NOTHING to do with the strain. Nothing. Nada. Zilch.

#1 Where do pension funds come from?

They come from two sources- contributions made by the employEE, and contributions made by the employER.

Then, the pool is managed by the pension manager- appointed by the EMPLOYER.

IN this case- no one is saying the EMPLOYEE failed to put in the proper amount of his/her contribution. In fact, employees don't have any control over how much is taken out for their contribution. That is either set by law (by legislators), or by executive policy (in the case of a pension administrator setting rates of contributions.)

What ever the number is going it- that's what it is.

The employEE did exactly what they were supposed to - they put money in at the rate they were told to put money it.


#2 =The amount of money put in by the employER is not something the Union can control. It is set either by law, or by policy, in each of the individual states. When times are tight, States may FAIL to pay into the fund the amount required.

Now, is it the Union's fault that the State legislature fails to put in the required amount of money? NO.

#3. State governments have been known to STEAL the pension money out of state pension coffers, to fill holes elsewhere in the budget. Happens all the time. Is that the Union's fault? NO.

#4. Pension fund managers employed by the state play with the money entrusted to them. (See the bio of TSP exectutive Tracey Ray). They may play it safe, or they may play it risky. If they play it risky, an investment may turn out bad. Who selects the pension fund manager? NOT THE UNION.

#5. For decades, failing to have enough funding to cover obligations falls squarely on legislatures refusing to set tax rates high enough to meet obligations. The fund balance then is not big enough to cover the legislated payouts. Is that the Union's fault? NO.

No, the Union members are not the cause of pension plan problems.

The cause is squarely on the shoulders of the legislators who failed to collect enough taxes to meet their end of the deal; on the executive branch who appoints the fund administrators and bargained contract pay with their employees, and on the legislators who took money OUT of the employee pension funds.

NOT the Unions of employees, who have no control over all of those factors.

 

[James48843]

...
While I've authorized hiring 70 new police officers this year, Suffolk legislators are pushing to add 200. The problem is the staggering cost -- more than $1 billion over the next 20 years.

No, I'm not making that figure up: Thanks to state mandates, 200 officers really would cost us that much.

Thanks to the arbitration process that the state forces upon counties, Suffolk already has one of the highest-paid police forces in the world.

The problem there isn't Unions.

The problem is a state legislature who won't deal with the issue.

Put the issue to where the power is to change the issue- as this guy clearly points out. The state legislature needs to change the law.

 

[OBGibby]

You're missing my point, James. To borrow your condescending line, "let me explain it to you." The unions I referred to keep pushing and pushing and pushing every few years when their contracts come up for negotiation. They take, take, and take. They encourage "spiking" which leads to officers making more in retirement than they did on the job. They keep piling up more and more obligations which come due down the road. Well, those bills are finally coming due. That's not sustainable.

Yes, the local and state governments should have made their contributions, but the point is that the local and state governments shouldn't be in this position in the first place. The unions deserve much of the blame for the mess. But no, not in your book - unions can do no wrong. And the shop stewards and delegats and chapter presidents, and national officers shake their heads every month wondering why the decline of unions in America continues unabated...

So, I say again, thanks unions! The limits of your greediness knows no bounds...

 

[SkyPilot]

To say Unions have no responsibility is to say they have no influence. If so, then why do they exists if they are impotent to influence policy. I'm not saying it is the Union's fault, but to deny the power and strength of a Union is to declare them inert. Which is not the way I usually hear it from my shop steward. They are always telling us what they have won for us and what they do for us, and that is why we should join and pay dues.

 

[clester]

I have gotten so tired of blaming unions for everything. What ever happened to taking responsibility for your actions. In the pension debate I'm talking about the one's who agreed to or promised them.

 

[Bullitt]

Gibby, you are missing the point. While you've turned this thread a crusade against unions, you forget that FERS employees, even though it's small compared to CSRS, will receive a pension of some sort. (ie: 25 years= 25% of high three.) I'm guessing you're a FERS employee but if not, most of this MB is. Our 'pension's will be funded by the printing press but the state and locals don't have that luxury. That's the point. OT payed to a policeman has absolutely nothing to do with a pension shortfall. In fact, the words pension and retirement are nowhere to be found in that article.

Union bashing isn't going to solve the current predicament; it's water over the dam.

Great point below, James.

#4. Pension fund managers employed by the state play with the money entrusted to them. (See the bio of TSP executive Tracey Ray). They may play it safe, or they may play it risky. If they play it risky, an investment may turn out bad. Who selects the pension fund manager? NOT THE UNION.

Our current situation is forcing fund managers to play it risky by taking on margin and/or speculative futures and commodities instead of making good long term dividend paying investments in the stock market. Our futures hang in the balance between a casino game where speculative froth and excesses have become the norm and the pressure of fund manager outperformance glorifies the grand slam homerun.

***To anyone else posting on this thread, please keep it on topic. If you wish to bash unions, there are plenty of threads on this MB that have already gone that direction.***