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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



 



[Opinion] Teachers and Schools Are Well Served by Teacher Pensions
"While attrition is high in the first years, teachers who end up leaving the profession are a small share of the teaching workforce and at a minimum recover their contributions to the pension plan plus interest ... [T]eachers who spend their careers in one district earn higher benefits because all their service credits are tied to their final salaries, typically averaged over three to five years.... A shift to account-style plans would not benefit most teachers and would increase teacher turnover to the detriment of students." (Economic Policy Institute)



How a 40-Year-Old Bill Is Key to This Local Pension Lawsuit in California
"In his suit against the county, George Luke, a resident of Santa Rosa since 1975, argues that the county did not follow the rules when it significantly boosted public employee retirement benefits in 2002 and 2003. He claims the Board of Supervisors did not hire its own actuary to make cost projections. It did not publicly disclose those costs at least two weeks before the increases were approved and a public hearing was never noticed.... Because they did not follow the law, 'the action is void,' Luke argues. 'It's like it never happened.' ... [T]hose enhanced benefits ... are expected to eat up nearly $50 million a year in additional expenses from the county budget between now and 2030." (PressDemocrat)



Pension Costs in Context (PDF)
"[In] 9 states, the total annual cost of corporate subsidies, tax breaks and loopholes exceeds the current annual pension costs for their main public pension plans. In some cases the differences are enormous. In Florida they are nearly three times pension costs. In four of the twelve states, subsidies and loopholes are more than twice pension costs." (Good Jobs First)



Public Pension Spending and Crowd-Out of Governmental Services in California, 2003-2030 (PDF)
193 pages. "The case studies demonstrate a marked increase in both employer pension contributions and unfunded pension liabilities over the past 15 years, and they reveal that in almost all cases that costs will continue to increase at least through 2030, even under the assumptions used by the plans' governing bodies -- assumptions that critics regard as optimistic.... Pension costs have crowded out and will likely to continue to crowd out resources needed for public assistance, welfare, recreation and libraries, health, public works, other social services, and in some cases, public safety." (Stanford Institute for Economic Policy Research [SIEPR])



[Opinion] California's Pension Costs Cause Reduction in Services by Local Governments
"[M]any US public pensions are chronically underfunded and will not be able to sustain another financial crisis.... Until we reach the boiling point, the pension 'crowding out' effect will continue taking a big chunk out of public budgets, leaving less money for governments to spend ... [No] matter what you do to slay the public-sector pension beast, it's deflationary, and with inflation in freefall, the long-term effects are self-reinforcing." (Pension Pulse)



[Opinion] South Carolina Can't Afford Its State Pension System
"Gov. Henry McMaster wants to abolish the state's defined-benefit pension system and replace it with a 401(k)-style plan, making state employees responsible for their own retirement income planning. Generations of future South Carolinians who understand what's at stake are turning cartwheels.... Why? Because South Carolina, like most public entities, has created a monster that must be slain." (GreenvilleOnline)



Wisconsin Governmental Entities Now Prohibited from Offering Domestic Partners Benefits
"[T]he official passage of the 2017-2019 biennial budget [included] the creation of Wis. Stat. Section 66.0510, which prohibits all municipalities, counties, and school districts from offering employee benefit plan coverage to domestic partners of employees as of January 1, 2018.... [T]he Legislature pointed to the State's recent legalization of same-sex marriage as eliminating the need for government employers to offer benefit plans which cover domestic partners." (von Briesen & Roper, s.c.)



Summary of the Quarterly Survey of Public Pensions: Asset Growth Continues in Second Quarter 2017 (PDF)
"For the 100 largest public-employee pension systems in the country, assets (cash and investments) totaled $3,584.0 billion in the second quarter of 2017, increasing by 2.2 percent from the 2017 first quarter level of $3,505.5 billion. Compared to the same quarter in 2016, assets for these major public-pension systems increased 8.5 percent from $3,302.5 billion. This continues the growth trend that began in the third quarter of 2015." (U.S. Census Bureau)



Ohio's Public-Employee Pensions Face Cutbacks
"Collectively, Ohio's five public pension funds have $192 billion in assets and last year paid out more than $15 billion in pension benefits and $1.1 billion in health-care benefits.... Although the funds have been mostly reliable and financially sound for decades, recent economic downturns, soaring health-care and prescription-drug costs, and the increased longevity of retirees have taken a toll. Several of the funds are reducing or eliminating cost-of-living adjustments, cutting subsidies and increasing health-care premiums." (The Columbus Dispatch)



Employee Contributions to Public Pension Plans (PDF)
10 pages; Sept. 2017. "[By] providing a consistent and predictable stream of revenue to public pension funds, contributions from employees fill a vital role in financing pension benefits. Reforms made in the wake of the 2008-09 market decline included higher employee contribution rates in many states. This issue brief examines employee contribution plan designs, policies and recent trends." (National Association of State Retirement Administrators [NASRA])



University of California Hands Out Generous Pensions While Students Pay the Price with Higher Tuition
"As parents and students start writing checks for the first in-state tuition hike in seven years at the University of California, they hope the extra money will buy a better education. But a big chunk of that new money -- perhaps tens of millions of dollars -- will go to pay for the faculty's increasingly generous retirements. Last year, more than 5,400 UC retirees received pensions over $100,000. Someone without a pension would need savings between $2 million and $3 million to guarantee a similar income in retirement." (Los Angeles Times)



[Opinion] Kentucky Pension Blues: Let's Get This Fire Started
"[A] variety of proposals [have been] put forth to 'fix' the problem. None of them actually fix the problem: the pension benefits already promised and earned by current and past employees. The 19% fundedness of the state plan is not for future retirees ... It's for people currently getting pension benefits. It's for people who aren't yet retired but have 20 years' worth of pensionable service. It's for people with 5 years of service that they've earned.... It doesn't include future service, it doesn't include new employees. It's for benefits that have already been legitimately earned. Those benefits have got to be paid for." (STUMP)



[Opinion] Revisiting the Three Rs of Teacher Retirement Systems: Recruitment, Retention, and Retirement (PDF)
22 pages. "Teacher effectiveness increases with experience.... The cost of teacher turnover is quite high, both in terms of financial cost and loss of productivity to the school district.... Defined benefit pension plans help to recruit high quality teachers, and to retain highly productive teachers longer, as compared with defined contribution (DC) accounts.... In 2009, DB pensions helped to retain and additional 30,000 teachers nationwide.... In 2009, DB pensions saved school districts between $130.7 million and $284.4 million nationally in teacher turnover costs." (National Institute on Retirement Security [NIRS])



CalPERS Considers Paying Down New Debt Faster
"CalPERS plans to get local government reaction to a proposed new policy that would pay down new pension debt over a shorter period, yielding big savings in the long run but also requiring larger payments in the early years.... [F]or new debt from investment losses, the payment period would be shortened from the current 30 years to perhaps 20 years ... and the higher debt payments from years with investment losses could be offset by lower payments from years with gains." (Calpensions)



Public Pension Assets Quarterly Update, Q2 2017
"As of the second quarter of 2017 (June 30), public pension assets were a record $3.06 trillion, an increase of approximately 2.0 percent, from $3.98 trillion as reported for Q1 2017." (National Association of State Retirement Administrators [NASRA])



[Opinion] The Push for Full Funding of Public Pensions: Is It Worth It?
"[P]ublic pension liabilities are long-dated and unlike corporate pensions, there is no solvency threat to treat them the exact same way as their corporate counterparts.... [P]ensions are all about matching assets and liabilities but more importantly, they are about fulfilling a pension promise to allow plan beneficiaries to retire in dignity and security." (Pension Pulse)



Rhode Island General Assembly Passes Bill Requiring Transparency from Investment Managers
"The legislation ... establishes mandatory public disclosure of information regarding how the state's pension investments are managed and invested and how such investments are performing, along with an overview of the state's pension investment strategies." (Pensions & Investments)



[Opinion] Public Pension Storm Warning
"Admittedly, public pension liabilities don't come out of nowhere the way hurricanes seem to -- we know exactly where they will strike. In many cases, we know approximately when they'll strike, too. Yet we still let our elected officials make impossible-to-fulfill promises on our behalf.... Worse, we let our government officials use predictions about future returns that are every bit as unrealistic as calling a 13-inch rain in Houston a 100-year event. And while some of us have called pension officials out, they just keep telling lies -- and probably will until we reach the breaking point." (Mauldin Economics)



[Opinion] Pensions Leaving Workers Behind by Focusing on Messaging, Politics
"[The Council for Institutional Investors (CII)] describes itself as a 'leading voice for effective corporate governance practices for U.S. companies and strong shareowner rights and protections.' But what started off as promoting good governance has transformed into politically motivated environment and social governance, often referred to as ESG. Fiduciary responsibility has taken a back seat.... CII members are staring at an unfunded liability of nearly $4 trillion ... So why do they insist on devoting so much of their time and resources on initiatives that will do nothing to help close that gap?" (Mark A. Bloomfield, American Council for Capital Formation, via Investor's Business Daily)



California Pension Reform: The San Jose Model
"[In] August 2015, the San Jose city council passed a compromise resolution that replaced Measure B with a scaled down reform; this was approved by voters in November 2016. The provisions of this new pension reform measure should be of keen interest to local reformers everywhere in California, because they survived relentless attacks in court.... San Jose's current unfunded pension liability now stands at just over $3.0 billion. These reforms are estimated to save $1.7 billion over the next ten years." (PensionTsunami)



[Opinion] What Is the New Hampshire Decennial Retirement Commission?
"There is legitimate concern that the anti-pension ideologues serving on the decennial retirement commission will use the commission's report and recommendations to push for harmful changes to the New Hampshire Retirement System. This could mean a push for cash balance plans or even conversion to a 401(k)-style defined contribution plan." (National Public Pension Coalition)



Using a Section 115 Trust to Help Manage Pension Obligations
"[An Internal Revenue Code section 115] trust is a vehicle for segregating agency funds from general assets for the purpose of funding essential governmental functions.... Funds placed in a 115 trust are irrevocably committed for the essential government function(s) specified in the applicable trust agreement (e.g., pension obligations). Therefore, the monies held in such trusts can be invested in accordance with the rules governing such special purpose accounts." (Best Best and Krieger LLP)



Texas Teacher Retirement System Adjusts Proposed 403(b) Rule Amendments
"TRS is sticking with its current rule allowing a 10-year surrender period (12 years with disclosure) at 10%, instead of its proposal to halve the penalty to five years and 5%. Additionally, TRS is opting to raise the caps it previously proposed on asset-based fees and split those caps into two categories, one for variable annuity (VA) products and one for non-annuity products[.]" (National Tax-Deferred Savings Association [NTSA])



CalPERS Said to Mull Outsourcing Its Private-Equity Investments
"CalPERS, the largest pension fund in the U.S., may ask BlackRock to manage all or part of its private-equity holdings, as it seeks to control fees ... CalPERS in April began reviewing how it invests in private equity, looking to cut exposure to the asset class because of rising fees.... The California pension fund has about $26 billion in private-equity assets that BlackRock could help manage if the preliminary talks lead to an outsourcing arrangement." (Institutional Investor)



This Missouri City Just Switched Employees from a 401(k) to a Defined Benefit Plan
"The city of Webster Groves switched from a defined contribution 401(k) plan to a defined benefit pension through the Local Government Employees Retirement System (LAGERS) ... [which is] a statewide public pension system for local government employees in Missouri.... The system is also 95% funded, a clear sign of the strength of the system." (National Public Pension Coalition)



[Opinion] New Math Hits Minnesota's Pensions?
"[W]hile Kentucky, Illinois, and New Jersey have well-known public pension problems, other states are also on the verge of seeing their pensions collapse, either because of years of neglect or more likely, because the new pension math (new GASB rules) is forcing them to use a much lower discount rate to determine their future liabilities.... [S]ince the duration of liabilities is a lot bigger than the duration of assets, then no matter how well investments do, pension deficits will keep widening as interest rates decline. This effectively is the death knell for chronically underfunded US public pension plans." (Pension Pulse)



Commonwealth of Kentucky Pension Performance and Best Practices Analysis: Recommended Options (PDF)
113 pages. "In the aggregate, the Commonwealth of Kentucky's pension plans are among the worst funded in the nation. Without corrective action, the large and growing unfunded liabilities associated with these pension benefits not only threaten the retirement security of plan participants, but they are also eroding the fiscal stability of the state ... [This report presents] ideas and alternatives for improving the long-term security, reliability, and affordability of these benefit programs. These recommended options build on [an] analysis of factors that have led to the current conditions ... Actuarial assumptions; Benefit levels and risk exposure; Funding; Investment practices and approach." (pfm)



Puerto Rico Oversight Board Sues, Wants Governor to Enforce Pension Reforms
"Puerto Rico's Financial Oversight and Management Board filed a lawsuit [August 28] in U.S. District Court in San Juan to enforce parts of its fiscal plan calling for furloughs and pension reforms, following Gov. Ricardo Rossello's refusal to carry out those provisions. The complaint asks the court for an injunction prohibiting the governor from refusing to enforce or comply with the board's fiscal plan." (Pensions & Investments)



Puerto Rico Governor Signs Pension Reform Law
"Puerto Rico has passed pension reforms that include making payments to the depleted defined benefit system from general revenues, and creating a defined contribution plan for active workers and new hires.... The changes are subject to approval by Puerto Rico's Financial Oversight and Management Board [PROMESA] ... [which] has its own plan for pension reform that calls for progressively reducing pension benefits by a total of 10% for most participants and enrolling all active members and new hires in defined contribution accounts." (Pensions & Investments)



[Opinion] The 'Pension Crisis' Is a Myth, Part Three
"Illinois does face real challenges with its public pension systems, challenges that will take years to resolve.... Illinois' pension problems are the direct result of years of mismanagement and deliberate underfunding by governors and legislators of both parties. Resolving these problems will take the commitment of lawmakers from both parties to fully fund the state's pension obligations every year." (National Public Pension Coalition)



Public Pension Funded Ratio Continues to Improve Through Second Quarter, Now at 73.0% (PDF)
"The strong equity returns in Q2 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 $33 billion from the end of March 2017 through the end of June 2017 ... During the second quarter, the deficit dropped from $1.314 trillion to $1.281 trillion. As of June 30, the funded ratio stood at 73.0%, up from 72.0% at the end of March." (Milliman)



[Opinion] The 'Pension Crisis' Is a Myth, Part Four
"When a pension plan is closed ... it can no longer invest on an infinite time horizon. At a certain point in time, all of the participants in the plan will be retired and will be collecting benefits and no new employees will be paying into the plan. As the number of retired members in the plan continues to increase over time, with fewer and fewer active members contributing, the plan must shift to more conservative, lower-return investments in order to maintain the assets they already have. This makes it more difficult to pay down any unfunded liability already present in the plan." (National Public Pension Coalition)



An Update on Retirement Plan Choices for Public Employees and Employers (PDF)
38 pages. "When given the choice between a primary DB or DC plan, public employees overwhelmingly choose the DB pension plan. DC plans are less cost efficient than DB plans, due to lower investment returns, and the lack of longevity risk pooling. Some states have considered moving employees from a DB-only to a DC-only structure in an attempt to address an unfunded liability. Making this shift, however, does nothing to close any existing funding shortfalls, and can actually increase retirement costs. Traditionally, employers bear most of the risk in DB plans, and employees bear most of the risk in DC plans. The public sector has always had cost sharing in its DB pensions and employees have experienced increases in their portion of plan contribution in recent years." (National Institute on Retirement Security [NIRS] and Milliman)



[Opinion] Switching to 401(k)-Type Plan for Kentucky Public Employees Would Cause More Harm (PDF)
18 pages. "[T]he plan for most [Kentucky] state employees ... is severely underfunded, possessing only 16 percent of the assets it needs to pay future benefits ... [A] shift to a DC plan will not save money because its cost for new workers and teachers would be similar to the already-inexpensive defined benefit plans. In fact, closing the DB plans will increase the cost of paying off those plans' unfunded liabilities." (Keystone Research Center, for Kentucky Center for Public Policy)



District Court Rejects Union's Challenge to CalPERS Amendment Increasing Retirement Age
"The case goes back to the Golden State's budget crisis in 2013, when lawmakers passed a law that raised the retirement age to 62 for its state workers' pension plan CalPERS... The union said the change violated the Contract Clause of the U.S. Constitution by retroactively impairing the union's contract rights and sued CalPERS, Gov. Jerry Brown and other state administrators. In her ruling for summary judgment in favor of the state, U.S. District Judge Beth Labson Freeman found the change to the contract was legal." [Local 101 AFSCME v. Brown, No. 14-5640 (N.D. Cal. Aug. 16, 2017)] (SCVNews)



Three Pension Funds Sue Major Banks in Stock Loan Case
"Three public retirement funds have banded together to file a lawsuit against six major Wall Street investment banks, alleging that they were overcharged by those banks in the stock loan market and that the banks conspired to control the market.... Stock lending is a common practice among institutional investors, particularly public pension funds, which often sit on large piles of cash for a long time. Lending shares ... allows these investors to earn a cash return on their investments while holding a stable interest in publicly-traded companies... [T]he investors allege that the banks worked together to keep the stock-loan market inefficient by conspiring to keep third-party electronic platforms from tapping into this lucrative business." (Institutional Investor)



Abandoning the Pension Rat Race for Absolute Returns
"A pension fund does three things... It pays current benefits, grows assets for future benefit payments, and weathers markets to ensure the delivery of the first two. For each function -- liquidity, growth, and hedging -- the investment team modeled a dedicated portfolio, so the assets overall no longer needed to serve three functional masters." (Institutional Investor)



Public Pensions: Why Do 100% Required Contribution Payers Have Decreasing Fundedness?
"[According to a May 2017 working paper from the Center for Retirement Research at Boston College,] 'The valuation (or measurement) of public pension liabilities and contribution requirements is highly sensitive to the choice of several actuarial assumptions, which should be considered when assessing the financial condition of public pension systems.' ... [T]he part that is significant: a sensitivity to valuation parameters, especially the discount rate used. And public pension plans get to choose that for themselves.... [T]he point is that the plans are often optimistic on parameter choice.... The discount rate is just the most obvious parameter choice. There are many others that go into the mix." (STUMP)



[Opinion] Public Pensions: A Good Deal for Taxpayers (PDF)
"Pension funds are resilient. Pension funds pose little burden, if any, on taxpayers. Taxpayers' contributions are fully or partially offset by the tax revenues generated by public pension investments in the community and by the local spending of retirees who receive pension checks.... [D]ismantling pensions contributes to income inequality, a sluggish economy, and economic volatility.... [If] governments continue to dismantle public pensions they will inflict $3 trillion in economic damage by 2025." (National Conference on Public Employee Retirement Systems [NCPERS])



New York's Soaring Pension Bills
"The latest Empire Center for Public Policy report on New York's soaring pension costs focuses on six-figure retiree payouts, which have now crossed the 3,000 mark. It's a telling sign of how public employees continue to collect benefits far greater than most private-sector workers -- at a huge cost to the taxpayers.... Many of the latest additions are Long Island police and firefighters (whose salaries are also well above the national and even state average)." (Manhattan Institute for Policy Research)



University of California Leads on Pension Loans, Are 401(k) Plans Next?
"The University of California began internal borrowing to pay pension costs six years ago ... 35 percent of the 6,411 eligible UC new hires chose a 401(k)-style individual investment plan, instead of a pension, during the first 10 months of the new program that began last year ... A new pension funding plan approved by UC Regents last month -- increasing the total loans to $6.4 billion and raising employer rates from 14 percent of pay to 15 percent -- only assumes 20 percent of new hires will choose the 401(k)-style plan." (Calpensions)



Fifth Circuit Remands Settlement of Pension Funding Class Action Case
"Over 200 objectors appealed to the Fifth Circuit, bringing up a variety of arguments regarding class certification and the fairness of the settlement.... The Fifth Circuit took issue with the fact that the 'unsecured contractual obligations' to make contributions to the plan would extend over 35 years while class counsel would receive their fees by the end of 2018." [Jones v. Singing River Health Servs. Foundation, No. 16-60550 (5th Cir. July 27, 2017)] (Greensfelder)



[Opinion] Pew Misleads States by Pushing Cash Balance Plans
"Pew trumpeted the adoption of the cash balance plan as a 'successful public pension reform.' In reality, though, moving to a cash balance plan has failed to fix the problems facing Kentucky's public pension systems. Rather than improving the 'fiscal health of the pension system by billions of dollars,' Kentucky's pension funding level has continued to fall.... [C]hanging the plan design didn't solve the true problem: mismanagement by the state." (National Public Pension Coalition)



[Opinion] Public Pension Assets: Our Funds Were in Alternatives, and All We Got Were These Lousy High Fees
"In 2005, none of the plans in the database had more than 30% of their portfolios in alternative assets. In 2015, over 30% of the plans had more than 30% of their portfolios in alts. Some even had over half their portfolios in alts.... Can [public pension trustees] really provide appropriate oversight for such complicated investments and the asset managers they hire to manage them?" (STUMP)



State and Local Pension Plan Funding Sputters in FY 2016 (PDF)
15 pages. "The aggregate funded status of state and local pension plans declined in fiscal year (FY) 2016, because liabilities continued to grow steadily while poor stock market performance led to slow asset growth. Thus, the ratio of assets to liabilities fell whether measured by the old Governmental Accounting Standards Board standard (GASB 25), which uses a smoothed value of assets, or by the new standard (GASB 67), which values assets at market. While the new standard has been in effect since 2014, most plans also still report numbers under the traditional rules.... [T]his brief provides a multi-year comparison of the two approaches." (Center for Retirement Research at Boston College)



Public Pension Plan Investment Returns Are In for FY 2017
"The S&P 500 was up 15%, the Dow was up 19%, and NASDAQ was up 26%. Those 'expectations-breaking' public pensions returns don't look all that amazing now, do they?" (STUMP)



Judge Rules Against Contribution Cap for Arizona Plan
"Judge Timothy J. Thomason of Maricopa County Superior Court in Phoenix ruled Monday in favor of two retired judges and participants in the plan who had filed a lawsuit in 2016 charging that the EORP is not being funded by an annual actuarially determined employer contribution rate as required by the Arizona Constitution. The cap of 23.5% on employer contributions, established by the Arizona Legislature in 2012, should be thrown out, [the court ruled], because it prevents that rate actuarially determined rate from ever being implemented." (Pensions & Investments)



Public Universities Offer Superior Retirement for Professors
"Of the surveyed institutions, 42 percent offer a 401(k)-style defined contribution plan; only 12 percent offer a defined benefit pension plan; and 41 percent offer faculty a choice among either a defined contribution plan, a defined benefit plan, or both.... What is particularly striking, however, is the division between public and private institutions. Of the universities offering a defined contribution-only plan, 76 percent were private. Of the universities offering a defined benefit-only plan, a whopping 94 percent were public." (National Public Pension Coalition)



Task Force Struggles to Cut $5 Billion from Oregon Pension Costs
"A special task force convened by Gov. Kate Brown is deciding how to cut $5 billion from the Oregon Public Employees Retirement System's $22 billion in unfunded liability without hurting the retirement benefits of government workers who draw from it. Options that could be on the table ... include selling some state lands and partially or wholly privatizing state agencies, with the proceeds going to the pension liability[.]" (newstimes)



[Official Guidance] Text of GASB Proposed Implementation Guide: Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions
281 pages. "The objective of this Implementation Guide is to provide guidance that clarifies, explains, or elaborates on the requirements of Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, as amended, and Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as amended. Questions and answers in this Implementation Guide address issues related to accounting and financial reporting for postemployment benefits other than pensions and for plans that are used to administer those benefits.... The requirements of this Implementation Guide apply to the financial statements of all state and local governments." [June 28, 2017; comments due to GASB by Sept. 25, 2017.]. (Governmental Accounting Standards Board [GASB])



[Opinion] Public Pensions Are Under Attack in Iowa
"Each year IPERS pumps $1.8 billion into the Iowa economy through modest benefits that average $16,000 annually. This is economic activity that should not be underestimated in a small, mostly rural state like Iowa. As Iowa's population continues to shift from rural areas to larger cities, those small towns will find that they rely on the spending of pension benefits by retirees to stimulate local economies. Republican political leaders in Iowa appear to be laying the groundwork to attack and possibly eliminate IPERS." (National Public Pension Coalition)



[Opinion] California Is Still Facing a Pension Crisis Even with Good Stock Market Returns
"Californians need to temper the glowing statements and shrug off the efforts to keep us from looking too closely at the wreckage. Of course, impressive stock-market returns are a good thing that reduce the amount of taxpayer-backed pension obligations. But one good year doesn't fix a problem that has been two decades in the making. For perspective, CalPERS' returns for the previous two fiscal years were 0.6 percent and 2.4 percent respectively." (PensionTsunami)



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)



[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])