[quote=CA renter]For one thing, phaster, while you’ve been obsessing about what other people’s benefits are costing, there are people who’ve been actively working on solutions to these problems. One part of the solution began about 20 years ago when public employers started to get rid of retiree healthcare…which will begin affecting retirement ages (causing them to go up) within the next 10 years as employees without retiree healthcare stay on longer in order to retain their medical coverage. This is something that is not yet being calculated in the actuarial data, and may never be included, even though it will have a fairly significant effect, especially WRT public safety workers. In 2013, PEPRA was enacted, and many employees are receiving lower benefits and paying more toward their retirement. Over the past few years, employers have also been renegotiating contracts, and employees have been paying more toward their retirement and healthcare costs — even longer-term employees are being affected.
More solutions are being worked on at this very moment, and we’ll begin to see a combination of changes within the next 2-3 years, IMO, as benefit formulas are reevaluated and contribution requirements are updated.
All that being said, I still can’t help but wonder if you like to focus so much on the benefits that have been **earned** by public employees in order to distract people’s attention from the multi-billion dollar annual giveaway to property owners such as yourself in the form of Prop 13 subsidies. Most people favor Prop 13 protection for a single primary residence, but they strongly dislike subsidizing the profits of wealthy commercial and residential landlords, wealthy owners of large tracts of land, and entitled heirs of expensive California properties who did absolutely nothing to deserve these billions of dollars in tax subsidies every year.
If you truly care about the heath of our state and local economies, they you should be willing to take the first step yourself. We can discuss the costs of those who’ve earned their benefits AFTER those who have not earned their tax subsidies refuse/refund this money first. Go ahead…prove to everyone how much you care about the financial health of our governmental agencies by paying back your unearned subsidy first (thousands of dollars per year). After you’ve done that, then you can come back and talk to us about reducing the compensation that other people have actually worked for and earned.
BTW, you’re not educating or informing anyone of anything. The pension issue was beaten to death LONG before you ever came into the picture.[/quote]
PROP 13 ??? = NOISE
not accounting for health care costs for DECADES (which dramatically increases the burden on taxpayers), is yet another symptom that interested parties (who derive financial benefits) lack a basic understanding of middle school math concepts when they designed and managed various public pensions
as it currently exists various state and local public pension(s) are unsustainable and the end result is going to be no different than a deliberately designed “debt bomb” or ponzi scheme
it’s great to be here and I really appreciate having the chance to talk with Jody we just met this morning at another conference
and I’m really excited about continuing this conversation beyond today because virtually everyone recognizes that we had a significant public employee pension problem in California
for the most part people have been sniping at each other and there really has not been a lot of dialogue and I think that we really need to work to try to find some sort of consensus as we move forward because we all have a fairly significant stake in
this
I’ve only got three slides I will be fairly brief so we can maximize the time for discussion
so let me start here okay
this is what got everything going
John referred to the study that five grad students for the public policy program did not quite a year ago
we’ve been asked by Governor Schwarzenegger’s office to assess the funded status of the the big three state funds CALpers CALstrs and UC system
essentially the governor simply wanted to know what number he should use
you know how much in the red are we how much are we underwater
on the left hand side those up first five columns against reported liabilities from 2008
and you see CALpers CALstrs and UC system the total
again this is prior to the financial crisis
that number was around $55 and half billion dollars
now the fund ratios assets to liabilities look okay eighty-six percent ninety one percent ninety nine percent
but then the students working with a lot of very smart folks here said well because these obligations are different I mean these are not traditional pension obligations these are guaranteed payments you have to make
you really should discount those liabilities at a risk-free rate
and that risk free rate they used at the time was four point one four percent
so if you work through that unfunded liabilities you end up with about $425 billion dollars
quite a different figure from the fifty five and a half billion dollars
so Governor Schwarzenegger liking things bigger took this number and say well let’s just make it 500
in fact the number was probably pretty close that because the market did significant downturn in loss of assets probably end up about five hundred billion dollars
then I issued another and I apologize you probably have a tough time reading some with that type there
I issued another brief in November this last year
we done the work at the state level I said well let’s get a sense of how things are at the local level for these municipal funds because it’s not just CALpers CALstrs and you know state workers
we really should look at things like the San Francisco fund the one in San Jose, Orange County, city of San Diego, etc.
so I did a fairly simple analysis in which I looked at the unfunded liabilities not just for pensions obligations but also for retiree health care
and when you add those together and make again, these are based on that risk-free assumption for those future liabilities
in this section shows the share of payroll that those entities will need to pay in order to cover pension and OPEB unfunded liabilities as you see the worst one is the city of SAN DIEGO would need to devote about eighty percent of its covered payrolls (a little less than total payroll) just to cover those unfunded liabilities for pensions and for retiree health care, huge number
the average here is about 50
you see San Francisco in the middle there
I can’t remember where San Jose is offhand, San Jose is toward the bottom as well so San Jose which actually just passed some pension reforms measures the last election is down there as well
so again it’s not this is not a problem as you know that exist only at the state level it existed the at the local municipal level, in fact by a number of metrics I would argue that things are actually worse off at the local level
and then in preparation for this today I said well you know there have been changes in the market since we looked at this a about a year or so ago and I ran a Monte Carlo simulations a total of 10,000
I said let’s take the assets and liabilities the market value assets liabilities that CALpers has, again use reasonable assumptions and this actually assumes that they hit their target, seven and three quarter percent rate of return over this period of time, over sixty year duration of liabilities
and if you add up the numbers on the left and on the right hand side you’ll will be underfunded over the 16-year period, only about one in four chance it’ll actually make meet those obligations
so again no matter how you slice this at the end of the discussion I think most people would say boy these are serious numbers and we need to find some way to help dig these funds at the state and local level out the hole that they are in
[quote=public radio] When It Comes To Pensions, Illinois Is California’s Ghost Of Christmas Yet To Come
As California’s public-employee pension crisis grows—with taxpayers on the hook for hundreds of billions of dollars, and no clear plan for how to pay—other states are facing similar problems, and have lessons to teach.
In some cases, those will be lessons about what not to do.
looking at the big picture most of the budget @ the state level goes toward three things, k-12 education, higher education and health and human services (i.e. welfare and medical for the poor)
bottom line, by ignoring problems like corruption in public pensions @ the state down to the local levels, it has contributed to an increase number (and will continue to do so) of people who are low-income, uninsured, and uneducated
[quote=CA renter]
BTW, you’re not educating or informing anyone of anything. The pension issue was beaten to death LONG before you ever came into the picture.
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