Post by jeffolie on Mar 15, 2012 16:04:11 GMT -6
Pension dooms Cities+ ... 10 years no gains from stocks or real estate investments, CALPERS barely adjusts to reality
30 year timeframe ... pensions and actuarial forecasts look long term, so the last 10 years of no capital gains have been mostly ignored ... however, I look to Japan's now 23 years of no gains plus big loses and question sceptically if the mere close to nothing .25% adjustment means doom or bankruptcy for California's extremely big pensions
Even this mere close to nothing .25% adjustment means probable doom for some on the breaking point California governments such as the City of Stockton's much publicized bankruptcy discussions.
Public Pensions mere close to nothing .25% adjustment means my jeffolie prediction of 2012 plays out as correct: " .…US STATES, CITIES, LOCAL AGENCIES CRISIS: major layoffs by the end of 2012, bills will not be paid, some bonds will default. ..."
==============================
CALPERS fund to ask more
SACRAMENTO - The nation's largest public pension fund lowered its forecast Wednesday for investment returns and asked the state of California, school districts and local governments to increase contributions - a move that could siphon more money from basic services.
The California Public Employees' Retirement System voted to lower its projected annual return from 7.75 percent to 7.5 percent. The change will cost the state an extra $303million a year, with about $167 million coming from the general fund.
It also bumps the overall annual state contribution to CalPERS to $3.8 billion, or about 4percent of the overall general fund budget for the coming fiscal year.
The action by the CalPERS board marked the first time in a decade it has lowered its projected return. The fund, which serves 1.6million California government workers, retirees and their families, has an unfunded liability of at least $85 billion.
Representatives of local agencies said they were concerned the board's action will further hurt their budgets at a time when many are facing deficits.
Sacramento Metropolitan Fire District Chief Kurt Henke acknowledged that the investment rate eventually will need to be lowered even further but warned the board before the vote that "you have a lot of local governments on the edge."
"Implementing this in one fell swoop would be devastating for us," he told board members before their vote. "I don't see the bottom in Sacramento."
In taking its action, the board directed its staff to examine phasing in the rate adjustment over two years as a way to lessen the immediate budget impact on local governments.
Henke estimated the reduction would cost his district $2.5 million and would affect service. He said employees previously agreed to $28 million in long-term contract concessions and the district has closed six stations.
The CalPERS action came amid increasing scrutiny of the cost of providing for government retirees, who receive the types of defined-benefit pensions that are unavailable in the vast majority of the private sector.
Those covered by CalPERS are guaranteed a certain monthly benefit for life, no matter how well or how poorly the fund's investments perform. Many state and local government employees can retire in their 50s and receive full family health care in retirement that is separate from Medicare.
Supporters of pension reforms said CalPERS made a modest change by lowering the discount rate and should have done even more. They noted that the federal government assumes its pension fund will have a 6.2 percent rate of return, and most private employers that still have pension plans use a rate of 5 percent.
"They've been paying too little for the (retirement) benefit value and finally it's caught up to them," said Marcia Fritz, president of the California Foundation for Fiscal Responsibility.
Fritz said taxpayers will not want to see public services reduced to pay for pensions and will demand public workers make concessions through wages or health benefits.
"I can't see us laying off more teachers or taking more cops off streets," she said.
Under the CalPERS action, school districts would have to chip in another $137 million to cover the pension costs for non-teaching personnel. Cities, counties and local agencies will see an increase in contributions by 1-2 percent for civil workers and 2-3 percent for public safety workers starting in fiscal year 2013-14.
The action was taken on a voice vote, so there is no official tally. Just one board member, J.J. Jelincic, said he was opposed, arguing that he believes inflation will rise and he did not want governments to pay more.
CalPERS' chief actuary previously recommended lowering the assumed annual investment return from 7.75 percent to 7.25 percent, citing the risk to taxpayers in the future. But the fund's pension and health benefits committee on Tuesday voted 6-2 to ignore the advice and went with the higher estimate of returns.
Several cities and districts had written the board when its investment committee was considering the larger reduction - a move that would have required even greater contributions from the state general fund and local governments.
Peter Ng, employee benefits director in Santa Clara County, home of Silicon Valley, wrote a letter warning that it would have cost the county an additional $67.5 million starting in fiscal year 2013-14.
"This additional cost to the county will undoubtedly result in more program and position cuts that will further reduce critical services to the community," Ng wrote.
In many cities and counties, the rising costs of public employee pensions and retiree health care have forced cuts to basic services.
CalPERS staff had urged the board to take some action, warning that deferring tough decisions now would only push costs to future taxpayers.
The $233 billion fund has earned an average return of 8.4 percent annually over the past two decades, but the economy's gyrations over the past few years have pressured pension funds to take more precautions.
The fund recorded a 20.9 percent increase in the fiscal year that ended June 30, 2011, but had an increase of just 1.1 percent for the 2011 calendar year.
With California facing a $9.2 billion budget deficit, Gov. Jerry Brown, a Democrat, has proposed reducing retirement benefits for new and current public workers. He is calling for increasing the retirement age and having local and state workers pay more toward their retirement and health care.
www.presstelegram.com/news/ci_20176087/calpers-fund-ask-more
======================================
Jon Coupal: Gov. Jerry Brown giving only lip service to substantial pension reform
By Jon Coupal
In his State of the State address, Gov. Jerry Brown acknowledged the dire need for pension reform in California. But the immediate question on the minds of political insiders was twofold: First, whether the governor would support substantive reform (as opposed to just window dressing) and, second, how much, if any, political capital he would expend to see his plan enacted into law.
On the first point, Brown surprised us by proposing a fairly detailed 12-point plan that even his most harsh critics had to concede was substantive. But, regrettably, as HJTA predicted, the answer to the second question of how much effort he would use to see the plan to fruition was, simply, not much.
That Brown would not push pension reform is really not all that surprising. First, labor brought him to the governor's office and he is on a short leash. Second, the Democrat-dominated Legislature isn't about to do anything that hurts the primary source of their political power and campaign funds.
But it is one thing to say that you are for pension reform and not really mean it and entirely another thing to actively sabotage meaningful pension reform in those places where it is actually happening -- at the local level.
In February, the California Public Employee Relations Board (PERB) ruled that a pension reform measure that is to appear on the June ballot in San Diego is an unfair labor practice. More than 115,000 voters signed petitions to qualify an initiative, which would provide a private sector style 401(k) plan to new employees. Government employee union bosses, objecting to any change to the guaranteed benefit system that has nearly bankrupted the city, sent out "goon squads" to try to "influence" petition signers, but voters refused to be intimidated.
Failing to block reform from going on the ballot, the unions sought the help of the friendly PERB that is stacked with Brown appointees. Their argument, with which the board agreed, is that because the ballot measure is supported by San Diego Mayor Jerry Sanders and City Council members Kevin Faulconer and Carl DeMaio, the measure is de facto city sponsored, and therefore San Diego is violating the requirement that officials meet and confer -- negotiate with the unions -- prior to any changes to the pension system.
Fortunately, the unions' move to prevent the pension reform initiative from going before the voters was rejected by Judge William Dato, who said there is no established case law that would allow him to block the measure from going to the ballot based on the PERB's findings. (Kudos to City Attorney Jan Goldsmith who vigorously fought the union effort).
The upshot is that San Diego voters will indeed have the opportunity to vote on pension reform this June, assuming that any further legal challenges by the unions and Brown's handpicked PERB members get the judicial rebuff they so richly deserve.
But, hypothetically, what if the governor's cronies on PERB succeeded in their legal challenge so that Sanders and the City Council members were found to be officially representing the city rather than themselves as private citizens? Wouldn't this also mean that Brown is actually representing the state of California, rather than himself, as an advocate for his tax increase initiative? After all, not only is he listed as the official "proponent" of his plan to increase both the income and sales tax, he readily admits that he has been working the phones to raise money for the proposal and also to dissuade competing measures from appearing on the ballot.
The constitution, as amended by Proposition 13, is clear. For the state to raise taxes, it must receive approval from two-thirds of each house of the Legislature. Even to place the measure on the ballot for voter approval requires a two-thirds vote. But Brown is totally bypassing the Legislature and, therefore, by the logic of the PERB members that he appointed, isn't he in violation of the law?
The Howard Jarvis Taxpayers Association has never maintained that an elected official gives up his or her right to endorse or support a ballot measure by virtue of holding office. However, if the governor's appointees persist in maintaining that a legitimate local ballot measure, qualified through the efforts of more than 100,000 voters, is null and void because it is also supported by local officials, we might have to rethink our position.
In the end, Brown can do what he wants, as can the local officials in San Diego and other municipalities where officials are actually demonstrating leadership to address a serious issue. But the actions of his PERB members make it abundantly clear: Jerry is a labor guy and he, like the Democrats in the legislature, will do nothing to anger or upset their most valued constituency.
--------------------------------------------------------------------------------
Jon Coupal is president of the Howard Jarvis Taxpayers Association. Contact him through the organization's website, www.hjta.org.
www.presstelegram.com/opinions/ci_20175583/jon-coupal-gov-jerry-brown-giving-only-lip
====================================
Make your predictions for 2012.
Here are mine:
jeffolie predicts...Throw the bastards out of office gained ground against Establishment politicians in 2010, 2011 and will gain ground in 2012 .
jeffolie predicts...This repeats my old assertions made prior to Obama winning the 2008 primaries that Obama and the Democrats will lose enough power to fail after the 2010 elections to get anything done, continued political and economic gridlock.
jeffolie predicts...2010 food crisis that I made in 2008 will continues in 2012 for selective commodities such as grains with special attention to the seasonal trends for midyear tops from continuing weather issues.
jeffolie predicts...stock market gains to mid year which is the traditional seasonal high hence the long standing cliche of 'sell in May and go away' with Ben of the Fed providing stimulus.
jeffolie predicts...housing prices will continue going down because trends to rent continue.
jeffolie predicts…SCREWFLATION: everything the ‘average American family’ buys goes up in price and everything they own goes down in value. Taxes, fees, charges, special assessment districts from State, Local, etc governments will rise while services from them will decrease. Energy expenses for homes, cars, electricity will rise compounded by additional taxes and fees. Food prices will rise. Health care/insurance expenses will rise; College Tuition will rise; Mortgage/house payments will rise because interest rates will rise seasonally; Rents will rise. The ‘average American family’ wealth will decline. The ‘average American family’ wealth will decline for those still owning their homes because house prices will continue to decline. Food Stamp use will make new records. I prefer screwflation over stagflation because of the regressive impact on middle and lower class families' standard of living and that they have no investments that rise with inflation or money printing and in fact usually have their wealth tied up in declining or negative home equity while the upper 20% of earners usually have investments that will rise in 2012 outside of their home equity.
jeffolie predicts… EUROPEAN CRISIS: the financial crisis will increase ‘austerity’ as retirement ages extend, services are privatized from higher paying government salaries to lower paying private jobs, benefits reduced. Bailouts of European banks will shift low valued debt from the banks to the IMF, FED, ECB, China via ‘swaps’, bond sales, loans, etc. Average European families will have their version of screwflation because their incomes will decline and expenses increase from governments privatizing.
jeffolie predicts…US STATES, CITIES, LOCAL AGENCIES CRISIS: major layoffs by the end of 2012, bills will not be paid, some bonds will default.
jeffolie predicts…INTEREST RATES: higher through summer.
Read more: unlawflcombatnt.proboards.com/index.cgi?board=general&action=display&thread=10102#ixzz1pE3ZpMKP
30 year timeframe ... pensions and actuarial forecasts look long term, so the last 10 years of no capital gains have been mostly ignored ... however, I look to Japan's now 23 years of no gains plus big loses and question sceptically if the mere close to nothing .25% adjustment means doom or bankruptcy for California's extremely big pensions
Even this mere close to nothing .25% adjustment means probable doom for some on the breaking point California governments such as the City of Stockton's much publicized bankruptcy discussions.
Public Pensions mere close to nothing .25% adjustment means my jeffolie prediction of 2012 plays out as correct: " .…US STATES, CITIES, LOCAL AGENCIES CRISIS: major layoffs by the end of 2012, bills will not be paid, some bonds will default. ..."
==============================
CALPERS fund to ask more
SACRAMENTO - The nation's largest public pension fund lowered its forecast Wednesday for investment returns and asked the state of California, school districts and local governments to increase contributions - a move that could siphon more money from basic services.
The California Public Employees' Retirement System voted to lower its projected annual return from 7.75 percent to 7.5 percent. The change will cost the state an extra $303million a year, with about $167 million coming from the general fund.
It also bumps the overall annual state contribution to CalPERS to $3.8 billion, or about 4percent of the overall general fund budget for the coming fiscal year.
The action by the CalPERS board marked the first time in a decade it has lowered its projected return. The fund, which serves 1.6million California government workers, retirees and their families, has an unfunded liability of at least $85 billion.
Representatives of local agencies said they were concerned the board's action will further hurt their budgets at a time when many are facing deficits.
Sacramento Metropolitan Fire District Chief Kurt Henke acknowledged that the investment rate eventually will need to be lowered even further but warned the board before the vote that "you have a lot of local governments on the edge."
"Implementing this in one fell swoop would be devastating for us," he told board members before their vote. "I don't see the bottom in Sacramento."
In taking its action, the board directed its staff to examine phasing in the rate adjustment over two years as a way to lessen the immediate budget impact on local governments.
Henke estimated the reduction would cost his district $2.5 million and would affect service. He said employees previously agreed to $28 million in long-term contract concessions and the district has closed six stations.
The CalPERS action came amid increasing scrutiny of the cost of providing for government retirees, who receive the types of defined-benefit pensions that are unavailable in the vast majority of the private sector.
Those covered by CalPERS are guaranteed a certain monthly benefit for life, no matter how well or how poorly the fund's investments perform. Many state and local government employees can retire in their 50s and receive full family health care in retirement that is separate from Medicare.
Supporters of pension reforms said CalPERS made a modest change by lowering the discount rate and should have done even more. They noted that the federal government assumes its pension fund will have a 6.2 percent rate of return, and most private employers that still have pension plans use a rate of 5 percent.
"They've been paying too little for the (retirement) benefit value and finally it's caught up to them," said Marcia Fritz, president of the California Foundation for Fiscal Responsibility.
Fritz said taxpayers will not want to see public services reduced to pay for pensions and will demand public workers make concessions through wages or health benefits.
"I can't see us laying off more teachers or taking more cops off streets," she said.
Under the CalPERS action, school districts would have to chip in another $137 million to cover the pension costs for non-teaching personnel. Cities, counties and local agencies will see an increase in contributions by 1-2 percent for civil workers and 2-3 percent for public safety workers starting in fiscal year 2013-14.
The action was taken on a voice vote, so there is no official tally. Just one board member, J.J. Jelincic, said he was opposed, arguing that he believes inflation will rise and he did not want governments to pay more.
CalPERS' chief actuary previously recommended lowering the assumed annual investment return from 7.75 percent to 7.25 percent, citing the risk to taxpayers in the future. But the fund's pension and health benefits committee on Tuesday voted 6-2 to ignore the advice and went with the higher estimate of returns.
Several cities and districts had written the board when its investment committee was considering the larger reduction - a move that would have required even greater contributions from the state general fund and local governments.
Peter Ng, employee benefits director in Santa Clara County, home of Silicon Valley, wrote a letter warning that it would have cost the county an additional $67.5 million starting in fiscal year 2013-14.
"This additional cost to the county will undoubtedly result in more program and position cuts that will further reduce critical services to the community," Ng wrote.
In many cities and counties, the rising costs of public employee pensions and retiree health care have forced cuts to basic services.
CalPERS staff had urged the board to take some action, warning that deferring tough decisions now would only push costs to future taxpayers.
The $233 billion fund has earned an average return of 8.4 percent annually over the past two decades, but the economy's gyrations over the past few years have pressured pension funds to take more precautions.
The fund recorded a 20.9 percent increase in the fiscal year that ended June 30, 2011, but had an increase of just 1.1 percent for the 2011 calendar year.
With California facing a $9.2 billion budget deficit, Gov. Jerry Brown, a Democrat, has proposed reducing retirement benefits for new and current public workers. He is calling for increasing the retirement age and having local and state workers pay more toward their retirement and health care.
www.presstelegram.com/news/ci_20176087/calpers-fund-ask-more
======================================
Jon Coupal: Gov. Jerry Brown giving only lip service to substantial pension reform
By Jon Coupal
In his State of the State address, Gov. Jerry Brown acknowledged the dire need for pension reform in California. But the immediate question on the minds of political insiders was twofold: First, whether the governor would support substantive reform (as opposed to just window dressing) and, second, how much, if any, political capital he would expend to see his plan enacted into law.
On the first point, Brown surprised us by proposing a fairly detailed 12-point plan that even his most harsh critics had to concede was substantive. But, regrettably, as HJTA predicted, the answer to the second question of how much effort he would use to see the plan to fruition was, simply, not much.
That Brown would not push pension reform is really not all that surprising. First, labor brought him to the governor's office and he is on a short leash. Second, the Democrat-dominated Legislature isn't about to do anything that hurts the primary source of their political power and campaign funds.
But it is one thing to say that you are for pension reform and not really mean it and entirely another thing to actively sabotage meaningful pension reform in those places where it is actually happening -- at the local level.
In February, the California Public Employee Relations Board (PERB) ruled that a pension reform measure that is to appear on the June ballot in San Diego is an unfair labor practice. More than 115,000 voters signed petitions to qualify an initiative, which would provide a private sector style 401(k) plan to new employees. Government employee union bosses, objecting to any change to the guaranteed benefit system that has nearly bankrupted the city, sent out "goon squads" to try to "influence" petition signers, but voters refused to be intimidated.
Failing to block reform from going on the ballot, the unions sought the help of the friendly PERB that is stacked with Brown appointees. Their argument, with which the board agreed, is that because the ballot measure is supported by San Diego Mayor Jerry Sanders and City Council members Kevin Faulconer and Carl DeMaio, the measure is de facto city sponsored, and therefore San Diego is violating the requirement that officials meet and confer -- negotiate with the unions -- prior to any changes to the pension system.
Fortunately, the unions' move to prevent the pension reform initiative from going before the voters was rejected by Judge William Dato, who said there is no established case law that would allow him to block the measure from going to the ballot based on the PERB's findings. (Kudos to City Attorney Jan Goldsmith who vigorously fought the union effort).
The upshot is that San Diego voters will indeed have the opportunity to vote on pension reform this June, assuming that any further legal challenges by the unions and Brown's handpicked PERB members get the judicial rebuff they so richly deserve.
But, hypothetically, what if the governor's cronies on PERB succeeded in their legal challenge so that Sanders and the City Council members were found to be officially representing the city rather than themselves as private citizens? Wouldn't this also mean that Brown is actually representing the state of California, rather than himself, as an advocate for his tax increase initiative? After all, not only is he listed as the official "proponent" of his plan to increase both the income and sales tax, he readily admits that he has been working the phones to raise money for the proposal and also to dissuade competing measures from appearing on the ballot.
The constitution, as amended by Proposition 13, is clear. For the state to raise taxes, it must receive approval from two-thirds of each house of the Legislature. Even to place the measure on the ballot for voter approval requires a two-thirds vote. But Brown is totally bypassing the Legislature and, therefore, by the logic of the PERB members that he appointed, isn't he in violation of the law?
The Howard Jarvis Taxpayers Association has never maintained that an elected official gives up his or her right to endorse or support a ballot measure by virtue of holding office. However, if the governor's appointees persist in maintaining that a legitimate local ballot measure, qualified through the efforts of more than 100,000 voters, is null and void because it is also supported by local officials, we might have to rethink our position.
In the end, Brown can do what he wants, as can the local officials in San Diego and other municipalities where officials are actually demonstrating leadership to address a serious issue. But the actions of his PERB members make it abundantly clear: Jerry is a labor guy and he, like the Democrats in the legislature, will do nothing to anger or upset their most valued constituency.
--------------------------------------------------------------------------------
Jon Coupal is president of the Howard Jarvis Taxpayers Association. Contact him through the organization's website, www.hjta.org.
www.presstelegram.com/opinions/ci_20175583/jon-coupal-gov-jerry-brown-giving-only-lip
====================================
Make your predictions for 2012.
Here are mine:
jeffolie predicts...Throw the bastards out of office gained ground against Establishment politicians in 2010, 2011 and will gain ground in 2012 .
jeffolie predicts...This repeats my old assertions made prior to Obama winning the 2008 primaries that Obama and the Democrats will lose enough power to fail after the 2010 elections to get anything done, continued political and economic gridlock.
jeffolie predicts...2010 food crisis that I made in 2008 will continues in 2012 for selective commodities such as grains with special attention to the seasonal trends for midyear tops from continuing weather issues.
jeffolie predicts...stock market gains to mid year which is the traditional seasonal high hence the long standing cliche of 'sell in May and go away' with Ben of the Fed providing stimulus.
jeffolie predicts...housing prices will continue going down because trends to rent continue.
jeffolie predicts…SCREWFLATION: everything the ‘average American family’ buys goes up in price and everything they own goes down in value. Taxes, fees, charges, special assessment districts from State, Local, etc governments will rise while services from them will decrease. Energy expenses for homes, cars, electricity will rise compounded by additional taxes and fees. Food prices will rise. Health care/insurance expenses will rise; College Tuition will rise; Mortgage/house payments will rise because interest rates will rise seasonally; Rents will rise. The ‘average American family’ wealth will decline. The ‘average American family’ wealth will decline for those still owning their homes because house prices will continue to decline. Food Stamp use will make new records. I prefer screwflation over stagflation because of the regressive impact on middle and lower class families' standard of living and that they have no investments that rise with inflation or money printing and in fact usually have their wealth tied up in declining or negative home equity while the upper 20% of earners usually have investments that will rise in 2012 outside of their home equity.
jeffolie predicts… EUROPEAN CRISIS: the financial crisis will increase ‘austerity’ as retirement ages extend, services are privatized from higher paying government salaries to lower paying private jobs, benefits reduced. Bailouts of European banks will shift low valued debt from the banks to the IMF, FED, ECB, China via ‘swaps’, bond sales, loans, etc. Average European families will have their version of screwflation because their incomes will decline and expenses increase from governments privatizing.
jeffolie predicts…US STATES, CITIES, LOCAL AGENCIES CRISIS: major layoffs by the end of 2012, bills will not be paid, some bonds will default.
jeffolie predicts…INTEREST RATES: higher through summer.
Read more: unlawflcombatnt.proboards.com/index.cgi?board=general&action=display&thread=10102#ixzz1pE3ZpMKP