Editor’s Note: Apart from pensions, the most financially significant “OPEB,” or “other post employment benefit,” typically awarded a government employee is retirement health care. This benefit is designed to fill the health coverage gap during the years between when someone retires and when they become eligible for Medicare, and in many cases, they are also...
A recently released study by the California Public Policy Center (CPPC) entitled “Costa Mesa, California – City Employee Compensation Analysis,” using actual payroll data provided by the city, has calculated the average total annual compensation for an employee of that city to be $146,863 during 2011. Anyone wishing to review their calculations can download the...
Yes, this is an incredible statistic. But only one assumption is necessary to generate this shocking result – just assume that pension funds will only earn 4.5% per year instead of 7.5% per year. If you wish to cling to the utterly absurd belief that over the long-term, decade after decade, pension funds can achieve...
Municipal bonds have long been among the safest investments, but a coming wave of municipal bankruptcies in California – and the disturbing way one of those cities is stiffing its bondholders – could change perceptions about the wisdom of lending money to cities. The struggling port city of Stockton has declared bankruptcy after a spending...
Rhode Island’s Democratic state treasurer, Gina Raimondo, is fond of saying that pension reform is about math, not politics. Other blue-state politicians, ranging from New York governor Andrew Cuomo to Chicago mayor Rahm Emanuel, have moved toward fixing unsustainable pensions. But California’s top statewide political leaders have mostly shrugged at the problems caused by excessive...
In a welcome, common sense ruling, Court lets Stockton, Calif. cut retiree health care A federal bankruptcy judge on Friday cleared the way for Stockton, California to cut health care benefits for retirees while it is in bankruptcy proceedings. Stockton is seeking Chapter 9 protection from its creditors and said that it would cut retiree...
Editors Note: It remains an article of faith among public sector union defenders of defined benefit pensions – as they are – that “the market’s just taken a little beating,” and “the long-term outlook does not merit a crisis mentality.” Even pension fund managers, such as City of San Jose’s Police and Fire Retirement Plan...
On June 9th Reuters ran a story entitled “California’s Brown set for fight over pension reform” that has some interesting quotes from his Democratic counterparts in the state legislature. According to the article, Warren Furutani, an assembly member representing Long Beach. who co-heads a joint committee that will craft pension legislation, had this to say:...
In 2002, the Sonoma County Board of Supervisors agreed to essentially increase pension benefits by 50% back to the date people were hired. However, County records show that the deal cut between the employees and the Supervisors stated that General employees would pay for the entire cost of the increase and Safety employees would pay...
One major premise underlying the criticisms leveled at pension reformers is that defenders of the current system believe 7.5% is a realistic long-term rate of return for pension funds. This is problematic for several reasons: 1 – A return of 7.5% is too high for the economic era we’ve been living in since 2008, and...
We should all care deeply about pension costs and the 400% increase in the costs over the past decade in Sonoma County. Why? Because every dollar going to over generous, retroactively enhanced pensions is taxpayer money that is not creating jobs, helping our fellow citizens, educating our children, or maintaining our roads and parks. Most...
In the worst possible form of kicking the can down the road, at the worst possible time as well (given the lofty overvalued condition of the stock market), To Pay New York Pension Fund, Cities Borrow From It First. When New York State officials agreed to allow local governments to use an unusual borrowing plan...
Editor’s Note: The claims made in this commentary by Wayne Allen Root are incendiary. But they are true. We are on track in the United States to pay more money to 20 million public sector retirees – at an average pension of $65,000 we will pay these retirees $1.3 trillion per year, then we will...
The challenge of providing retirement security to all citizens is the broader issue behind the debate over what level of public sector pension benefits are both equitable and financially sustainable. California Senator Kevin De Leon’s proposed legislation, SB 1234, will hopefully further this debate. As reported in the Sacramento Bee by Jon Ortiz on February...