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Old 10-13-2009, 02:55 PM
 
Location: Alaska
5,356 posts, read 16,345,810 times
Reputation: 4023

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Quote:
Originally Posted by TuborgP View Post
Excellent post with excellent links. I hope all interested in this topic read. There is a way to avoid the unable to pay scenario and hopefully states will take it long before we reach that point. California may lead the way. I haven't read it in print but I am assuming that furlough days are lowering annual salaries and thus reducing pensions based on the three highest years for folks planning to retire soon. Has that been discussed much? That would save some money both short and long term.
Alaska has already done that. There are currently 4 tiers in the state's retirement system. Tiers I-III are defined benefit plans and Tier IV is a defined contribution plan. All new employees are Tier IV and the grandfather clause ends in 2010 for those trying to get back into the earlier tiers.

Alaska's retirement plan was one of the earlier plans tested in court, when the legislature tried to change the benefits. The state lost, hence the tiers, with each higher tier tightening up on the benefits. The gist of the court decision was that the state is obligated to pay what was promised, so funding of the retirement system has a higher priority.

Most municipalities participate in the state's retirement plan. One thing that has hurt many employers is that their portion has risen from around 6% to 22% of pay, while the employee portion is fixed. Some cities are having to reduce services to budget for the percentage fluctuation.

I will say that those of us in the system are happy to be here.
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Old 10-13-2009, 02:58 PM
 
29,779 posts, read 34,863,854 times
Reputation: 11705
Quote:
Originally Posted by Curmudgeon View Post
Well, if whoever makes that call aspires for elective office, that would be a clear half-million "No" votes from retirees and potentially 1.1 million more from active members.

As with anything in politics, follow the money!
It would be the bond holders filing in court and the judicial system to evaluate. Not the legislature so votes might not matter. Also if the payout choices are:

A. Police Services
B. Fire Services
C. Current education services
D. Retiree's
E. Health and Human Services
F. Transportation services

Where do you think Joe voter would rank retiree's? If it meant furloughing and freezing the salaries of current public employees to support retiree's do you think they will be demanding their union concur and freeze their salaries and benefits? Do unions care more about current members or former members?

Which of the above provide no current benefits or provides the least current benefits to society and taxpayers? I suspect many a retiree would take a 10% cut in pension to maintain most of the above services.

What is the value added to a state for paying retiree benefits to people who are now retired? It is a moral obligation based on a commitment made years previously. Is it really something that enhances state efficiency and operations today? As far as bondholders go where would California or any state be if they couldn't fund debt by issuing bonds? Yes follow the money and that trail leads to bond holders. Would the residents of California rather have safe fresh water or happy retiree's? Yeah follow the money is not the answer retired public employees in Calif may want to hear in the future.
http://www.bloomberg.com/apps/news?p...d=aJLku22J0wF4
Oct. 13 (Bloomberg) -- California’s top Democratic lawmakers said their proposal to overhaul the most populous U.S. state’s aging water-delivery system would include asking voters to approve a $9.4 billion bond measure.

That debt would come in addition to as much as $15 billion that California Treasurer Bill Lockyer says the state may sell before the end of the current fiscal year in June, including refinancing as much as $4 billion of deficit bonds later this month. California already has $67 billion of general fund- supported debt outstanding.

Thats a chunk of change owed to bond holders in California.

Last edited by TuborgP; 10-13-2009 at 03:24 PM..
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Old 10-13-2009, 03:12 PM
 
29,779 posts, read 34,863,854 times
Reputation: 11705
Quote:
Originally Posted by akck View Post
Alaska has already done that. There are currently 4 tiers in the state's retirement system. Tiers I-III are defined benefit plans and Tier IV is a defined contribution plan. All new employees are Tier IV and the grandfather clause ends in 2010 for those trying to get back into the earlier tiers.

Alaska's retirement plan was one of the earlier plans tested in court, when the legislature tried to change the benefits. The state lost, hence the tiers, with each higher tier tightening up on the benefits. The gist of the court decision was that the state is obligated to pay what was promised, so funding of the retirement system has a higher priority.

Most municipalities participate in the state's retirement plan. One thing that has hurt many employers is that their portion has risen from around 6% to 22% of pay, while the employee portion is fixed. Some cities are having to reduce services to budget for the percentage fluctuation.

I will say that those of us in the system are happy to be here.
Has the drop in oil revenues been a concern about the stability of the new plan?
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Old 10-13-2009, 03:30 PM
 
Location: Alaska
5,356 posts, read 16,345,810 times
Reputation: 4023
Quote:
Originally Posted by TuborgP View Post
Has the drop in oil revenues been a concern about the stability of the new plan?
The new plan was enacted a couple of years ago, so oil revenues weren't a consideration. A drop in revenues was a concern for the state budget, but the state has a "rainy day fund" which they can access for situations such as this. Of course, they can only do it a couple of times before the funds are gone.
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Old 10-13-2009, 09:55 PM
 
48,516 posts, read 83,922,814 times
Reputation: 18050
Quote:
Originally Posted by TuborgP View Post
It would be the bond holders filing in court and the judicial system to evaluate. Not the legislature so votes might not matter. Also if the payout choices are:

A. Police Services
B. Fire Services
C. Current education services
D. Retiree's
E. Health and Human Services
F. Transportation services

Where do you think Joe voter would rank retiree's? If it meant furloughing and freezing the salaries of current public employees to support retiree's do you think they will be demanding their union concur and freeze their salaries and benefits? Do unions care more about current members or former members?

Which of the above provide no current benefits or provides the least current benefits to society and taxpayers? I suspect many a retiree would take a 10% cut in pension to maintain most of the above services.

What is the value added to a state for paying retiree benefits to people who are now retired? It is a moral obligation based on a commitment made years previously. Is it really something that enhances state efficiency and operations today? As far as bondholders go where would California or any state be if they couldn't fund debt by issuing bonds? Yes follow the money and that trail leads to bond holders. Would the residents of California rather have safe fresh water or happy retiree's? Yeah follow the money is not the answer retired public employees in Calif may want to hear in the future.
California Democrats View $9 Billion Water Bond Plan (Update1) - Bloomberg.com
Oct. 13 (Bloomberg) -- California’s top Democratic lawmakers said their proposal to overhaul the most populous U.S. state’s aging water-delivery system would include asking voters to approve a $9.4 billion bond measure.

That debt would come in addition to as much as $15 billion that California Treasurer Bill Lockyer says the state may sell before the end of the current fiscal year in June, including refinancing as much as $4 billion of deficit bonds later this month. California already has $67 billion of general fund- supported debt outstanding.

Thats a chunk of change owed to bond holders in California.

Did no one pay attention to the chrysler bankrupsy settlement that the Obama administration forced thru. The bondholders where dropped to below the UAW in the bankrupsy agreement. So anyhting can happen because of politics.It would never reaxch the courts but be a planned bankrupsy like chrysler;decided by political interest.I would think that for retiress that it would be like most sates where the money was in their name and not involved with the settlement of sate bondholders and creditors.If its like my state where retirees money are paid out to the retirees account in the state retrement fund ;it would not be subject to any agreement because its in the retirees name and separate from the governments holdings.The money in their accoutn is paid out so they are no longer a creditor at all.Those they hace promised to pay in the future are creditors.Big difference even than bondholders.

Last edited by texdav; 10-13-2009 at 10:10 PM..
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Old 10-14-2009, 08:24 AM
 
29,779 posts, read 34,863,854 times
Reputation: 11705
Quote:
Originally Posted by texdav View Post
Did no one pay attention to the chrysler bankrupsy settlement that the Obama administration forced thru. The bondholders where dropped to below the UAW in the bankrupsy agreement. So anyhting can happen because of politics.It would never reaxch the courts but be a planned bankrupsy like chrysler;decided by political interest.I would think that for retiress that it would be like most sates where the money was in their name and not involved with the settlement of sate bondholders and creditors.If its like my state where retirees money are paid out to the retirees account in the state retrement fund ;it would not be subject to any agreement because its in the retirees name and separate from the governments holdings.The money in their accoutn is paid out so they are no longer a creditor at all.Those they hace promised to pay in the future are creditors.Big difference even than bondholders.
Until that pension fund runs out of money and needs to go to the general fund for support. Or the states annual contributions are now up for discussion due to financial insolvency. The thrust of the OP article is that the dedicated funds are running below long term solvency levels and could be dependent more and more on annual contributions from the general fund.
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Old 10-14-2009, 05:42 PM
 
29,779 posts, read 34,863,854 times
Reputation: 11705
Here's another one:
Baltimore police, fire pension costs could double next year -- baltimoresun.com
If the pension system is not altered before the bill comes due, needed cash could come from raising the city property tax rate 11 percent, or "significant reductions across all agencies, including public safety," Gallagher said. Mayor Sheila Dixon, who has long sought reductions in the city's tax rate of $2.27 per $100 in assessed value, has said both options are unacceptable.

Failing to pay a large portion of the bill could trigger a downgrade in Baltimore's AA bond rating, which would in turn increase the cost of borrowing money for capital projects.

This is one from the local level perspective
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Old 10-14-2009, 06:12 PM
 
26,589 posts, read 52,286,267 times
Reputation: 20413
Quote:
Originally Posted by Curmudgeon View Post
Thankfully, and I say that as a retired state employee who's married to another state retiree, our pensions and benefits are covered under contract law. A number of courts, both state and federal, have already ruled that they're virtually untouchable. The only adjustments that can be made are for future employees. Existing obligations that cannot be met by the state retirement systems must be met by the state general fund.
The rules must be different for State Employee's... I know plenty of retired folks that never received the promised pensions... everything from Airline Pilots to Electric Company Lineman...

Dad always said to get a Job with the State or Feds... none of his kids listened...

My Hospital no longer offers any pension, profit sharing or stock options... the 401k is only a shell since they no longer match... guess no retirement for me...
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Old 10-14-2009, 06:24 PM
 
Location: Sierra Vista, AZ
16,133 posts, read 20,822,095 times
Reputation: 8293
Actually they did, before ERISA almost every company funded a pension plan which they and the banks "managed" for a fee. With ERISA the Government began enforcing rules and ensuring that companies contributed adequate amounts to fund their plans.

So they invented the 401K, selling the public on the idea that the individual could manage his own plan, all the employer had to do was match part ofit. The biggest scam in 50 years. What it did was free the employers of the need to have money in their plan.

Had by Wall Street AGAIN
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Old 10-14-2009, 06:30 PM
 
26,589 posts, read 52,286,267 times
Reputation: 20413
Quote:
Originally Posted by TuborgP View Post
Detroit Schools on the Brink - WSJ.com
A filing under Chapter 9 of the Bankruptcy Code, which covers public entities like school districts and municipalities, would allow the district to put major creditors such as textbook publishers, private bus operators and DTE Energy, the local gas-and-electric utility, in line for payment. It also would give Mr. Bobb broad latitude to tear up union contracts without protracted negotiations.
Isn't Robert Bobb the same Mr. Bobb that was city manger of Oakland for so many years?
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