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Preview: Government plans - state and local - misc (BenefitsLink.com)

Government plans - state and local - misc (BenefitsLink.com)



Headlines re Government plans - state and local - misc, gathered by BenefitsLink.com



 



State and Local Pension Plans Funding Sputters in FY 2016
"The ratio of assets to liabilities for the 170 plans in the Public Plans Database decreased from 73 percent in 2015 to 72 percent in 2016, as measured by the traditional GASB standard; and from 73 percent to 68 percent, as measured by the new standard ... Payments as a percentage of payroll have increased to 18.6 percent; Plans in the PPD have continued to adjust their annual investment return assumptions downward to an average of 7.6 percent in FY 2016[.]" (Center for State & Local Government Excellence)



Illinois Pension Payments to Eat Up Entire $5 Billion Tax Increase, and More
"Lawmakers overrode Gov. Bruce Rauner's veto of a $36 billion budget July 6, enacting it into law. Under the newly enacted budget, the state will spend around $7 billion for public sector pension funds. That means the entirety of the $5 billion income tax increase will go to pay for pensions, and nearly 20 cents of every dollar taxpayers send the state will go toward public sector pensions this year." (Illinois News Network)



CalPERS 2017 Investment Return Exceeds Expectations
"[CalPERS] rode a strong year in the stock market and private equity investments to earn a return rate of 11.2 percent for the fiscal year that ended June 30 ... That's about double what CalPERS expected to earn this year. It's also a marked improvement over the previous year, when CalPERS' investment return rate was 0.61 percent. In the budget year that ended in June 2015, CalPERS' investment return rate was 2.4 percent." (The Sacramento Bee)



[Opinion] Michigan Weakens the Retirement Security of Public School Employees
"How have Michigan state employees fared under the defined contribution-only plan? Very poorly. Earlier this year, the Michigan Office of Retirement Services reported that the median account balance for state employees is only $37,000. For workers who are age 60 or above and have worked for the state for at least 15 years, it is actually worse: only $36,000. This is hardly enough to retire with dignity as it would barely cover a year's worth of expenses in retirement." (National Public Pension Coalition)



[Discussion] Permissive Service Credits under a Governmental Plan
"Can a governmental plan permit a participant to purchase an enhanced benefit without relying upon section 415(n) if it otherwise complies with section 415?" (BenefitsLink Message Boards)



[Discussion] Government DB Plan Wants to Extend DROP Period
"Governmental defined benefit plan contains a provision that allows certain employees to extend their DROP periods using accrued annual leave. Employees have the option to cash out leave or use the hours to extend their DROP period. This looks like a CODA to me because the employees have the option to cash out or us leave hours to extend DROP. Am I wrong on this?" (BenefitsLink Message Boards)



[Opinion] Public Plans Data Takeaway: Bad Actuarial Assumptions
"Actuarial assumptions for public plans are selected with one goal in mind -- to generate the lowest contribution amounts possible. As those assumptions are not realized the funded levels drop despite the fact that these funding methods are supposed to develop contributions that consist of an annual cost to pay for benefits accruing during the year plus an amortization amount to pay off any past shortfall." (Burypensions)



New Jersey Approves Budget, Shifting State Lottery to Pension Fund
"The state's $2.51 billion contribution for fiscal 2018 to the New Jersey Pension Fund represents a 35% increase from the $1.86 billion for the 2017 fiscal year. By using lottery proceeds, the recently passed budget law means the contribution from general operating funds will be reduced to approximately $1.5 billion, assuming the lottery receipts meet projected totals." (Pensions & Investments)



[Guidance Overview] IRS Form 14581-C: Medicare Coverage Compliance Self-Assessment for State and Local Government Employers (PDF)
"The self-assessment tools are designed to help public employers identify areas that indicate potential compliance issues. They are intended to be completed by those responsible for withholding and paying employment taxes and filing required information returns." [June 2017] (Internal Revenue Service [IRS])



[Guidance Overview] IRS Form 14581-E: Retirement Plan Coverage Compliance Self-Assessment for State and Local Government Entities (PDF)
"The self-assessment tools are designed to help public employers identify areas that indicate potential compliance issues. They are intended to be completed by those responsible for withholding and paying employment taxes and filing required information returns. Each topic contains brief information on the law with links to IRS publications and other authoritative resources that provide more information." [June 2017] (Internal Revenue Service [IRS])



A First Look at Alternative Investments and Public Pensions
"Public pension plans have boosted their holdings in alternative assets, defined as private equity, hedge funds, real estate, and commodities. This shift reflects a search for higher returns, a hedge for other investment risks, and diversification. The question is how the shift has affected returns and volatility over two periods: 2005-2015 and 2010-2015. In terms of returns, a 10-percent increase in the average allocation to alternatives was associated with a reduction of 30-45 basis points, primarily due to hedge funds. In terms of volatility, alternatives did not have a statistically significant effect. Hedge funds reduced volatility, but real estate and commodities increased it." (Center for Retirement Research at Boston College)



[Opinion] Do US Pensions Threaten Real Estate?
"So, can underfunded US public pensions pose a threat to residential real estate? You better believe it, especially in states like Illinois where public pensions pose a serious threat to state finances and a court ruling just sent the state into a financial abyss.... And ... what will happen to commercial real estate values when the next crisis hits and these mature, chronically underfunded pensions have to unload commercial real estate to meet their pensions obligations?" (Pension Pulse)



Pension Watchdog Sues San Rafael
"A Marin man is suing San Rafael over public pension 'enhancements' he says were approved illegally and have put taxpayers on the hook for millions of dollars in future benefits.... [His] comments and lawsuit specifically call into question the city's response to a 2015-16 Marin County Civil Grand Jury report that criticized the pension enhancements approved by San Rafael, as well as those by Southern Marin Fire District, Novato and Marin County. The grand jury report ... suggested Marin public agencies may have violated statutes for transparency in approving pension enhancements." (Marin Independent Journal)



The San Francisco Retirement System: Increasing Understanding and Adding Voter Oversight (PDF)
36 pages. "As of June 30, 2016, the City and County of San Francisco (City) owes its Retirement System $5.8 1 billion; this is more than half of the City's entire 2 016 budget ($ 8. 94 billion).... [T]he main underlying cause is the retroactive retirement benefit increases implemented by voter-approved propositions between 1996 and 2008. These retroactive increases were very expensive gifts to employees and retirees from taxpayers, paid for with money borrowed at a high interest rate from the Retirement System, and paid back over 20 years by taxpayers. The financial details of these retroactive increases were not disclosed to voters." (Civil Grand Jury, City and County of San Francisco)



CalPERS Announces New Disability Retirement Mandates and Local Agency Audits
"CalPERS announced that it is auditing the industrial disability retirement (IDR) process for 60 contracting agencies.... [B]ecause many local agencies do not have a formal policy that sets forth the procedures for determining disability and industrial disability retirement, agencies should strongly consider adopting such a policy in light of the due process concerns related to the separation process and CalPERS' direction that such a policy is necessary." (Liebert Cassidy Whitmore)



A First Look at Alternative Investments and Public Pensions
17 pages. "Public pension plans have boosted their holdings in alternative assets, defined as private equity, hedge funds, real estate, and commodities. This shift reflects a search for higher returns, a hedge for other investment risks, and diversification.... [A] 10-percent increase in the average allocation to alternatives was associated with a reduction of 30-45 basis points, primarily due to hedge funds.... Hedge funds reduced volatility, but real estate and commodities increased it." (Center for State & Local Government Excellence)



Quarterly Survey of Public Pensions for 2017: First Quarter
"This report provides national summary data on the revenues, expenditures and composition of assets of the largest defined benefit public employee pension systems for state and local governments. This report produces three tables: [Table 1 and Table 3] include data on cash and security holdings and Table 2 provides data on earnings on investments, contributions and payments." (U.S. Census Bureau)



Chicago Mayor Bypasses State, Introduces Plan to Raise City Contributions for Two Pension Plans
"The ordinance calls for Chicago's pension contributions to be increased over the next five years, reaching actuarial required levels in budget year 2022, payable in 2023.... The city contribution changes ... formed part of a municipal and laborers' pension reform bill that was passed by the Illinois Legislature in April and is awaiting Gov. Bruce Rauner's signature.... While the city can increase its contributions without a state law change, it does not have the authority to adjust employee contributions or benefits." (Pensions & Investments)



Cybersecurity: Are Public Sector DC Plans at Risk? (PDF)
"One major challenge faced by many public sector defined contribution plan sponsors is internal, sometimes antiquated, IT systems ... and the heavy reliance on third party data recordkeeping systems.... [T]here is no comprehensive federal regulatory scheme that governs cybersecurity for retirement plans and their associated service providers.... [W]hile governmental defined contribution plans are not subject to [ERISA], the ERISA fiduciary and the DOL's cybersecurity rules can serve as best practices for governmental defined contribution plan sponsors." (National Association of Government Defined Contribution Administrators [NAGDCA])



When Will California Supreme Court Rule on Constitutionality of Reductions or Freezes in Future Pension Accruals?
"An early Supreme Court decision upholding the appellate rulings might allow time for reformers to consider putting an initiative on the state ballot next year. A favorable ruling also might prompt local action or labor bargaining to curb budget-squeezing pension costs. The four county suits and the state firefighters suit all challenge minor parts of Gov. Brown's pension reform that apply to employees hired before the reform took effect on Jan. 1, 2013." (Calpensions)



[Opinion] Will Public Pensions Sink Illinois?
"[W]hat Illinois and other states that suffer from similar pension woes need is to amalgamate all these public pensions at the state level, introduce better governance, adopt a shared-risk model, and get real on investment returns even if this means higher contributions from employees and the state government (these plans need be jointly sponsored). But none of these reforms are being discussed. Instead, lawmakers want quick fixes which will make things worse for everyone, including Illinois taxpayers." (Pension Pulse)



69 Percent Funding Ratio Reported for State-Sponsored DB Systems (PDF)
"The funding ratio of state pension plans dropped four percentage points to 69 percent in fiscal year 2016 ... [For] the 103 state retirement systems that reported actuarial data for 2016, pension assets shrank by 1.8 percent ... in 2016 while liabilities grew 5.4 percent ... [A]ggregate shortfall, or net pension liability, [increased] $222.4 billion over fiscal 2016 from $963.2 billion to $1,185.6 billion." (Wilshire Associates)



Public Fund Trustees Facing Host of Difficult Challenges
"Every public pension system and trustee is unique, and only the pension system itself can determine what governance approach works best for it ... However, common questions must be asked ... [G]ood governance is a four-legged stool ... The first leg is setting the direction of the organization, followed by directing staff and prudently delegating, overseeing what has been delegated, and correcting course when needed." (Pensions & Investments)



[Opinion] Public Pensions: Why It's Important to Keep Watching
"It takes a long time for these problems to come to fruition. Much longer than it takes a company to run into trouble ... Part of the reason is the 'taxpayer put' ... there's a limit to how much governments can soak taxpayers, but they can increase the taxes over time until more and more people leave ... Another part of the reason is the 'bondholder put', which is exercised less frequently, and does a lot more damage when it's exercised by politicians. The biggest part of the reason is no oversight." (STUMP)



Getting Back On Track: Financial Wellness in the Public Sector
"Between 2009 and 2013, to improve their pension positions, virtually every state applied some combination of lower benefit accruals and higher employer contributions made possible with the federal government's help. Higher employee contributions became commonplace, too.... Now public employers are searching for opportunities to provide workers with services that may compensate for benefit changes and better prepare them for financial security in retirement." (Prudential)



The $4 Trillion Pension Problem
"Earlier this month, the $20.2 billion Los Angeles Fire and Police Pension System lowered its assumed rate of return by a quarter of a percentage point to 7.25 percent. This seems like a fairly minor and obvious move.... But the fund's relatively minor adjustment will probably cost taxpayers $27 million in additional contributions to help make up the shortfall in fiscal year 2018 alone." (Bloomberg)



CalPERS Moves to Adopt 2018 Health Plan Premiums
"The California Public Employees' Retirement System Board of Administration today approved health care rate and plan changes for 2018 that include an average 2.33 percent overall premium increase. Individual plan increases may vary, but the overall Medicare and Basic (non-Medicare) increase is the lowest in 20 years." (CalPERS)



U.S. Public Pension Plan Contribution Indices, 2006-2014 (PDF)
"In every year studied, most of the 160 plans with enough data to complete analysis for the year received insufficient employer contributions to maintain their unfunded liabilities ... For 2014, 3% of plans showed a funding surplus and 20% of plans received enough employer contributions to fund their shortfall within 30 years without it growing through negative amortization in the meantime. Employer contributions for the same 130 plans increased 76%, from about $48 billion in 2006 to roughly $85 billion in 2014. Employee contributions increased 30% during this period, from $28 billion to $37 billion, while payroll and prices both increased 17%." (Society of Actuaries)



State and Local Government Contributions to Statewide Pension Plans, FY 2015 (PDF)
"The median actuarially determined contribution [ADC] received in FY 15 was 100 percent, and ranged from 12 percent to 528 percent.... On a dollar-weighted basis, the average ADC received was 91 percent, up from 87 percent in FY '14 and marking the highest aggregate annual contribution effort since FY '02.... The aggregate rate of increase in required contributions from FY '14 to FY '15 was 4.5 percent, which is the lowest rate of increase during the measurement period." (National Association of State Retirement Administrators [NASRA])



Pension Crisis Won't Be Reversed by High Returns, Moody's Says
"A 'best case' scenario of a cumulative 25% investment return during the 2017-2019 period will not offer a respite for chronically underfunded U.S. public pension plans ... The growing gap between how much state and local governments are projected to pay employees and how much funds they actually have set aside has risen to over $4 trillion nationwide. New Jersey sports the widest funding gap, followed closely by Kentucky and Illinois." (Bloomberg)



How New York City's Pension Costs Threaten Its Future (PDF)
12 pages. "Today, pension contributions stand at a near-record 11% of the city's total budget -- and 36% of payroll alone. They consume 17% of city tax revenues, double the average proportion of the 1990s and early 2000s.... New York's annual pension contributions will soon displace social services as the second-largest spending category in the city budget, behind only education, consuming more than 80 cents of every dollar raised by the city's personal income tax." (Manhattan Institute for Policy Research)



Most State Pension Plans Paper Over Unfunded Liabilities
"State officials can adopt open-ended amortization to reduce the amount the state must contribute to the pension system each year or to improve the appearance, but not the reality, of the state's current funding effort. Regardless of the reason, open-ended amortization exacerbates funding shortfalls, compounding the risk that the state will have insufficient funds to pay its pension obligations to retired state employees." (Phys.org)



California's Bold DB-to-DC Pension Reform: Five Years In
"San Diegans voted five years ago this month to switch all new city hires, except police, from pensions to 401(k)-style individual investment plans, becoming one of the first big cities to take the plunge.... A union official said offering new hires a 401(k)-style plan rather than a pension is having an impact on recruitment, particularly for middle and upper management and skilled positions such as engineering and surveying. Michael Zucchet, San Diego Municipal Employees Association general manager, said the switch reduces services by contributing to an overall vacancy rate in city positions of about 10 percent, rising to 15 to 20 percent in some positions." (Calpensions)



[Opinion] Pennsylvania Pension Reform, Part 1
"For a system that will likely run out of money by 2034 the thrust of this 'reform' is to reduce those onerous employer contributions while keeping employee contributions at similar, if not higher, levels in part by confusing those new participants impacted." (Burypensions)



[Opinion] The Disturbing Trend That Will End in a Full-Fledged Pension Crisis
"Though the challenges are well known by now, many believe that public-sector pension funds will be maintained and the gaps filled by strong investment returns, increasing employee contributions, raising taxes, or some combination of the three. They hope with these measures and ongoing strong asset returns, liabilities can be reduced and pensions salvaged. Unfortunately, this is wishful thinking at best." (Olivier Garret, via Forbes)



[Discussion] Spousal Benefits Required Under a FICA Replacement Plan?
"Client is a local government entity that has a FICA replacement plan, so employees who participate in the plan don't pay into Social Security OASDI or receive those benefits. The requirements for replacement plans are framed in terms of what an employee must receive. Is there any requirement that a replacement plan provide spousal benefits?" (BenefitsLink Message Boards)



TE/GE Advisory Committee Recommendations for FICA Replacement Plan Requirements (PDF)
68 pages. "Currently the revenue procedure used for evaluating defined benefit plans ... includes only limited safe harbor alternatives referencing more traditional benefit formulas. The standard for defined contribution plans is based on a 7.5 percent employee and employer combined contribution rate of 'compensation.' ... [T]he guidance has not been updated to reflect the emerging trend to use hybrid plans, including cash balance plans, and combinations of defined benefit and defined contribution plans." (Advisory Committee on Tax Exempt and Government Entities [ACT], Internal Revenue Service [IRS])



[Opinion] Presidential Pensions as Broken Windows
"Why should federal taxpayers pay a post-presidential pension to a former President who is willing and able to enrich himself after he leaves the White House? ... [T]he presidential pension presents the classic case of a 'broken window,' the relatively small incident which suggests deeper disarray. The same 'broken windows' effect occurs when former state legislators manipulate state pension laws, taking short-term but highly paid state executive positions to boost their retirement pensions." (Prof. Edward A. Zelinsky, OUPblog)



Texas Governor Signs Houston Pension Reform Bill; Firefighters Fund Sues City
"A pension reform bill for Houston's three pension funds was signed into law by Texas Gov. Greg Abbott on [May 31], a day after the Houston Firefighters' Relief and Retirement Fund filed a lawsuit challenging the constitutionally of the bill's provisions. The pension reform package, proposed by the city of Houston and passed the Texas Legislature on May 24, includes benefit reductions for participants in the $3.9 billion Houston Police Officers' Pension System, $3.8 billion firefighters' fund and $2.3 billion Houston Municipal Employees Pension System that would help reduce the plans' $8.2 billion in total unfunded liabilities." (Pensions & Investments)



[Official Guidance] Text of IRS PLR 201722014: Severance and Special Retirement Benefit Offered by State in Connection with Hospital Closure Creates Cash or Deferred Arrangement (PDF)
"Statute provides that employees of the State's public hospitals whose positions are being abolished or who are directly affected by a reduction-in-force or workforce restructuring plan ... could... elect one of the following: ... [1] a one-time lump-sum cash payment ... or ... [2] a subsidized early retirement benefit under the Plan ... [If] Statute becomes effective, the election granted to the State employees under Statute with respect to the benefit they receive upon separation from service would constitute a cash or deferred election[.]" (Internal Revenue Service [IRS])



Why Hire a '3(38)' Adviser for a Public Agency 457(b) or 401(a) Plan?
"In California, many public agencies' retirement plan committees are unaware that unless they fulfill certain ERISA-like requirements with respect to their participant-directed 457(b) and 401(a) plans, they can be held personally liable for investment losses suffered by plan participants.... [W]hat can they do to protect themselves? More importantly, what can they do to improve the overall investment process within their plan?" (Chang Ruthenberg & Long PC)



State Pension Depletion Dates: Kansas Stands Alone
"Of the 50 systems there is only one (Kansas) with positive cash flow. Of the others all are projected to go bust." (Burypensions)



Contributions to Public Pensions Experience Significant Gains
"The 2016 Annual Survey of Public Pensions found that total contributions were $191.6 billion in 2016, increasing 6.6 percent from $179.7 billion in 2015. Government contributions accounted for the bulk of them, $140.6 billion in 2016, increasing 6.5 percent from $132.0 billion in 2015, with employee contributions at $51.0 billion in 2016, climbing 7.1 percent from $47.7 billion in 2015[.]" (U.S. Census Bureau)



[Opinion] How to Steal a Lot of Money from CalPERS, the Nation's Largest Public Pension
"Presumably the mega-pension knows ... all the fees -- asset-based and performance -- it pays its money managers pursuant to fee invoices.... What CalPERS doesn't know is the performance and other fees its managers take directly from the funds they manage for CalPERS without asking, disclosing or invoicing.... [A] software program developed by outside firms determined at the end of 2015 that the pension paid $3.4 billion in performance fees over the past quarter-century to private-equity firms. In 2016, that number was said to be $490 million. Don't believe these figures for a second." (Edward Siedle, in Forbes)



[Opinion] The Big Squeeze: Big Bucks Paid to Alternative Investment Managers While Pension Deficits Get Worse
"[A] select few hedge fund and private equity titans have greatly benefitted from this shift into alternative assets, amassing extraordinary wealth, while U.S. public pension funds keep sinking deeper into a pension albatross, failing to deliver on these and other investments. Still, despite this reality, US pensions are rushing to invest more into alternatives, fearing a big downturn ahead.... The problem isn't paying fees when risk-adjusted performance is met. The problem is paying big fees for subpar or average returns in a low-return environment over a long period as your pension deficit gets worse." (Pension Pulse)



How NC Public School Teachers Choose to Participate When 401(k), 403(b), and 457 Plans Are Offered Simultaneously
"This study examines the decisions [North Carolina public school] employees make and the implications for retirement saving in a multiplan environment. Key Insights: [1] A third of North Carolina public school employees contribute to a retirement plan. [2] Only a tenth of plan participants contribute to two or more plans. [3] Highly compensated employees show no tendency to use secondary plans to exceed annual contribution limits." (TIAA Institute)



Economic Loss: The Hidden Cost of Prevailing Public Pension Plan Reforms (PDF)
28 pages. "76% of the money coming into public pensions comes from investment earnings. The same figure in 1940 was only 22%. The 2015 Census data show that state pensions are funded at a level of 76.3%... Using models and parameters developed through our 2015 analysis of empirical data, we estimate that if dismantling of pensions continues, the economy will suffer $3.3 trillion in damage in 2025.... Our analysis shows that in 2025 the economy is likely to grow at 4.00%, the same rate predicted by the Congressional Budget Office. 6 This rate, we project, will be dragged down to 3.29% if the dismantling of public pensions continues." (National Conference on Public Employee Retirement Systems [NCPERS])



Puerto Rico Public Pension Fund Joins Government's Bankruptcy Case
"The government's request to include the pension system ... was approved by the oversight board [on May 22].... Guy G. Gebhardt, the acting U.S. trustee for the bankruptcy case, said in court documents that he will appoint a retiree committee for participants in the commonwealth's five public pension systems. An ad hoc retiree committee had already asked the court to form an official committee." (Pensions & Investments)



Puerto Rico Goes to Court Over Failing Public Pension System
"Puerto Rico is seeking help from federal court to restructure the debt of the U.S. territory's public pension system, which is projected to run out of money this year. Gov. Ricardo Rossello said late Sunday that the government has been unable to reach a deal with creditors to whom it owes some $3 billion.... Rossello said retired workers will still receive their pensions, and that the government will dip into its general fund once the pension system itself runs out of money." (ABC News)



Pennsylvania Independent Fiscal Office Evaluates Teacher Pension Funding Bill
"The Pennsylvania Independent Fiscal Office ... concludes that the measure would change its financing but would leave benefit provisions intact.... The bill would ... accelerate the amortization of the unfunded accrued liabilities ... by: [1] computing the unfunded liabilities using the market value of assets; [2] providing for a fresh start amortization of the unfunded liabilities; and [3] providing a schedule of payments that would amortize the unfunded liabilities over approximately 20 years, based on a schedule of payments increasing at specified rates." (National Tax-Deferred Savings Association [NTSA])



[Opinion] New Jersey's Stupid Pension Trick: Let's Use Lottery Money!
"The lottery cash is already being used for something. Moving that cash to the pensions means they have to decide to cut something else. Which they would have to do if they simply said 'we're putting more cash in the pensions'. " (STUMP)



Puerto Rico Bankruptcy Pits Investors Against Pensioners
"Puerto Rico's fiscal tug-of-war with pensioners, bondholders, other creditors and its own finances starts a new, uncharted chapter on May 17. That's when a specially appointed federal judge opens bankruptcy proceedings in a case that dwarfs previous public bankruptcies, with nearly $50 billion in unfunded pension liabilities, $74 billion in bondholder debt and dim financial prospects." (Pensions & Investments)



Retiree Health Care Benefits for State Employees in Fiscal Year 2015 (PDF)
"In 2015, approximately 80 percent of state government units offered health insurance to retirees under age 65 and approximately 70 percent offered the benefit to those over age 65.... This report focuses on OPEB finances for states and state agencies, and all relevant data are sourced from state and statewide retirement system financial reports. A list of the agencies responsible for administering retiree healthcare plans reflected in this report is [included]." (National Association of State Retirement Administrators [NASRA])



Hidden Debt, Hidden Deficits: 2017 Edition (PDF)
32 pages. "The unfunded obligations of the pension systems sponsored by state and local governments in the United States continue to grow. [This] second annual report on the off-balance-sheet pension promises of state and local governments [studies] in detail 649 pension systems around the United States, including all of the main pension systems of the states, the largest U.S. cities, and the largest U.S. counties. [It reports] on both their own measurements of their costs and obligations, and how these differ from market valuations that are consistent with the principles of financial economics." (Hoover Institution)



[Opinion] New Jersey's Big Pension Gamble
"[T]his latest attempt to shore up its chronically underfunded state pensions by using lottery proceeds is a desperate move which will only kick the can further down the road. It will help at the margin, especially for the state teachers' pension fund, but it's doing nothing to address serious structural flaws that continue to hamper the state's pensions." (Pension Pulse)



NJ Gov. Christie Introduces Plan to Use Lottery Revenue for Pensions
"The state says the plan would immediately reduce unfunded obligations by $13.5 billion for the state's separate pension funds for teachers, public employees, and police and firefighters ... [and] raise the funded ratio of the retirement system from 45 percent to 59 percent. It would provide $37 billion over 30 years." (U.S. News & World Report)



PublIc Pension Funded Ratio Regains Ground Lost in Q4, Surges to 72.0% (PDF)
"The strong equity returns in Q1 led public plan asset growth to outpace the rise in pension liability, increasing the estimated funded status of the 100 largest U.S. public pension plans by $78 billion from the end of December 2016 through the end of March 2017 ... During the first quarter, the deficit dropped from $1.392 trillion to $1.314 trillion. As of March 31, the funded ratio stood at 72.0%, up from 70.1% at the end of December." (Milliman)



Closing a Governmental Pension Plan Increases Costs for Taxpayers
"In 1997, Michigan closed the Michigan State Employees' Retirement System (MSERS), the pension plan for state employees.... [E]mployer contributions to MSERS have risen sharply, from $145 million to $750 million, in the years since the plan was closed to new hires in 1997. This has occurred even as the payroll base has declined by more than $1 billion." (National Public Pension Coalition)