How will unfunded “pensions” affect the local economy?

[phaster]

Here is a simple question, how do you think unfunded pensions affect the economy, specifically RE prices?

To illustrate specifically what I am concerned with, below is an outline of a local unfunded public pension issue….

*** WHAT YOU NEED TO KNOW ABOUT PUBLIC PENSIONS IN SAN DIEGO ***

A recent wall street journal article essentially said the SD county pension system was using derivaties to manage their portfolio.

“Simply put, it could have a market exposure of $20 billion despite only managing half that amount.”

http://online.wsj.com/articles/san-diego-pension-dials-up-the-risk-to-combat-a-shortfall-1407974779

To show why the current SD county pension “operations” is a bad idea, google “buying stocks on margin” and check out the first search result.

The math is pretty simple to understand (just add “000,000” to the following $ figures):

A Buying Power Example
Let’s say that you deposit $10,000 in your margin account. Because you put up 50% of the purchase price, this means you have $20,000 worth of buying power.

http://www.investopedia.com/university/margin/margin1.asp

Returning to our example of exaggerated profits, say that instead of rocketing up 25%, our shares fell 25%. Now your investment would be worth $15,000 (200 shares x $75). You sell the stock, pay back your broker the $10,000, and end up with $5,000. That’s a 50% loss, plus commissions and interest, which otherwise would have been a loss of only 25%.

Think a 50% loss is bad? It can get much worse. Buying on margin is the only stock-based investment where you stand to lose more money than you invested. A dive of 50% or more will cause you to lose more than 100%, with interest and commissions on top of that.

http://www.investopedia.com/university/margin/margin4.asp

A good basic math education, is all that is needed to understand the “downside” risk of a margin account (but all the reports in the media so far do not show this simple “downside” math).

Adding the “options” account variable complicates matters, but kinda explains the lackluster single digit portfolio returns of the SD county portfolio (i.e. the various options w/in the portfolio of “puts for downside protection and “calls” to try and win big on the upside” cancelled each other out – so far, in a market that has gone up), the big unknown is how the “options” are structured within the portfolio and how it react if there is sudden and dramatic turbulence.

Consider all it might take for the “local” house of cards to fall is some kind of foreign black swan event that drops the market towards 10% down, and because of leverage things could suddenly get ugly for the local economy (for example LTCM, which happened in a less complex world, now one has to factor in some thing akin to high speed robo traders, that will sell off a position because of a trigger event, thus converting a “paper” loss into a real loss for the pension portfolio??).

10 billion dollars placed into a margin account to play the options market IMHO is “insane” if anyone was investing their own money, but think I uncovered the motive.

The reason the county pension board might have taken such drastic action is the change in accounting rules which put public pensions on the balance sheet next year.

Few even in the investment community know that:

PUBLIC “Pension liabilities must be included on the balance sheets of the agencies responsible for funding their employees’ pensions. Until now liabilities have been buried in arcane footnotes that few read and even fewer understood”

http://articles.latimes.com/2014/apr/09/opinion/la-oe-fritz-pension-liability-california-20140410

NOTE if San Diego’s pension board margin-option strategy fails, the tax payer is on the hook!

One other thing, there is a youtube video (starting at 3:24), where san diego is mentioned at the being at the top of the list (for being the deepest in the hole overall for unfunded pensions and having an unfunded health care plan)

https://www.youtube.com/watch?v=BRr49iAgI9g

If pensions and health care costs have to both be included on the balance sheet, the bond markets are in for a real shock which will ripple through the economy and affect everyone on main street.

If you want understand why there is a problem with pensions in San Diego, read the history of pensions at the state level (which started out well managed and over the years turned corrupt and mismanaged):

http://www.city-journal.org/2013/23_1_calpers.html

The local(s) (city and county) basically followed the CalPERS model, and what might be telling is the former CEO of CalPERS just plead guilty to a fraud, corruption charge

http://www.latimes.com/business/la-fi-calpers-guilty-plea-20140712-story.html

[CA renter]

Yes, the pension funds were once well-managed by staid, boring pension managers, most of whom were in-house.

Over the years, Wall Street has corrupted the public pension funds, and more and more of the pension money is being placed at greater and greater risk in more “financially innovative” investments. We have Wall Street and the Federal Reserve to blame for this. The Fed’s insistence on keeping rates at ~0% are exacerbating the problems.

As for how it will affect the bond market, I believe that most people who work in these markets understand the risks…at least, I sure hope so.

It’s important to note, though, that public employees have been the ones to take the biggest hits, so far. They’ve been moving more employees, especially the newer ones, into hybrid retirement plans, and most employees with most municipal agencies haven’t been getting retiree healthcare for decades — they’ve been phasing it out since the early/mid 90s. Also, PEPRA has made quite a few changes regarding pensionable compensation, benefit caps, and increased pension contributions from employees.

The above information is related mostly to changes in California, though I know that other states and municipalities are moving in the same direction.

[bearishgurl]

[quote=CA renter]Yes, the pension funds were once well-managed by staid, boring pension managers, most of whom were in-house.

Over the years, Wall Street has corrupted the public pension funds, and more and more of the pension money is being placed at greater and greater risk in more “financially innovative” investments. We have Wall Street and the Federal Reserve to blame for this. The Fed’s insistence on keeping rates at ~0% are exacerbating the problems.

As for how it will affect the bond market, I believe that most people who work in these markets understand the risks…at least, I sure hope so.

It’s important to note, though, that public employees have been the ones to take the biggest hits, so far. They’ve been moving more employees, especially the newer ones, into hybrid retirement plans, and most employees with most municipal agencies haven’t been getting retiree healthcare for decades — they’ve been phasing it out since the early/mid 90s. Also, PEPRA has made quite a few changes regarding pensionable compensation, benefit caps, and increased pension contributions from employees.

The above information is related mostly to changes in California, though I know that other states and municipalities are moving in the same direction.[/quote]

Good point, CAR. In fact, SDCERA (mentioned in the OP’s article) has substantially reduced their “Supplemental Benefit Allowance” (intended to help pay healthplan premiums, if not covered by someone else) in recent years for 99% of the workers who retired (or took “deferred retirement”) after March 29, 2002 (Tier “A”):

http://www.sdcera.org/PDF/Supplemental_Benefit_Allowance_FS.pdf

This probability and also the fact that the SBA was could be withdrawn at any time was known to all active employees at the time of signing up for the plan (March 2002) but the vast majority elected to be folded into Tier “A” (from Tier I/II) at the time due to their future monthly retirement annuity being calculated upon a full percentage point higher of their highest annual salary. The caveat is that they would be required to contribute 7.5% of their salaries towards the (Tier “A”) plan where Tier I/II employees were not. Fortunately, for taxpayers, a very large portion of Tier I/II retirees are now deceased, and, in any case, the portion still living (all folded into Tier I) have much smaller pensions than those in Tier “A” which are based upon a much less generous calculation and smaller highest-year salaries.

In addition, SDCERA has implemented Tier “B”, a “defined contribution” plan or “hybrid plan,” (as discussed above) offered to all employees who were first hired between 8/28/09 and 12/1/12:

http://www.sdcera.org/PDF/Tier-B_booklet.pdf

… and Tier “C”, an even scantier “defined-contribution” plan” offered to all employees who were first hired after 12/1/12:

http://www.sdcera.org/PDF/retirement_plan_Tier-C_booklet.pdf

Here is an overview page of the 3 retirement tiers now administered by SDCERA which still have active employees:

http://www.sdcera.org/active_retirement_benefit.htm

[quote=phaster]To show why the current SD county pension “operations” is a bad idea, google “buying stocks on margin” and check out the first search result.

The math is pretty simple to understand (just add “000,000” to the following $ figures):

A Buying Power Example
Let’s say that you deposit $10,000 in your margin account. Because you put up 50% of the purchase price, this means you have $20,000 worth of buying power.

http://www.investopedia.com/university/margin/margin1.asp

Returning to our example of exaggerated profits, say that instead of rocketing up 25%, our shares fell 25%. Now your investment would be worth $15,000 (200 shares x $75). You sell the stock, pay back your broker the $10,000, and end up with $5,000. That’s a 50% loss, plus commissions and interest, which otherwise would have been a loss of only 25%.

Think a 50% loss is bad? It can get much worse. Buying on margin is the only stock-based investment where you stand to lose more money than you invested. A dive of 50% or more will cause you to lose more than 100%, with interest and commissions on top of that.

http://www.investopedia.com/university/margin/margin4.asp

[snip][/quote]

Uh, well, I don’t think our fact-skimming newbie, Phaster, had a chance to see this recent piece from the UT (hint: google SDCERA and it comes up first :)):

…. For the past decade, San Diego County and its employees paid 100 percent or more of their annually required contribution to the SDCERA retirement fund. Consistent employee and employer contributions over the years have laid a foundation for investment gains and asset growth. SDCERA’s investment strategy helps the employer’s budgeting process and stabilizes employer costs by reducing the volatility of returns and steadily achieving the rate of return needed to fund the benefit.

At $10 billion, the SDCERA fund is able to pursue certain investment strategies that larger plans like CalPERS cannot access and smaller plans do not have the resources to deploy. SDCERA’s investment strategy is purposely designed to be no riskier than traditional pension fund asset allocation strategies. Risk-parity and trend strategies, which utilize leverage, are limited to 25 percent of the SDCERA portfolio, not the entire set of portfolio assets. The other 75 percent of the portfolio is managed using traditional asset allocation and rebalancing approaches…

http://www.utsandiego.com/news/2014/aug/15/sdcera-pension-investment-strategy/

see also: http://sdcera.com/investments.htm

[phaster]

[quote=bearishgurl]
Uh, well, I don’t think our fact-skimming newbie, Phaster, had a chance to see this recent piece from the UT (hint: google SDCERA and it comes up first :)):

…. For the past decade, San Diego County and its employees paid 100 percent or more of their annually required contribution to the SDCERA retirement fund. Consistent employee and employer contributions over the years have laid a foundation for investment gains and asset growth. SDCERA’s investment strategy helps the employer’s budgeting process and stabilizes employer costs by reducing the volatility of returns and steadily achieving the rate of return needed to fund the benefit.

At $10 billion, the SDCERA fund is able to pursue certain investment strategies that larger plans like CalPERS cannot access and smaller plans do not have the resources to deploy. SDCERA’s investment strategy is purposely designed to be no riskier than traditional pension fund asset allocation strategies. Risk-parity and trend strategies, which utilize leverage, are limited to 25 percent of the SDCERA portfolio, not the entire set of portfolio assets. The other 75 percent of the portfolio is managed using traditional asset allocation and rebalancing approaches…

http://www.utsandiego.com/news/2014/aug/15/sdcera-pension-investment-strategy/

see also: http://sdcera.com/investments.htm%5B/quote%5D

I’m just a knuckle head that is honest enough to admit that I’m not a “investment expert.”

Since I am not an “investment expert” I won’t buy into the latest investment fad hype (such as “risk parity”) without pondering the downside.

Nor do I pretend to understand all the details about Tier “a” employees vs Tier I/II employees, or care about employees that say they paid their annual required contribution, because basically my goal is to try to understand general trends.

To that end, the wall street journal article as I understand it has three key facts:

1) SD county has “currently” about 10 billion in its pension fund account

2) there is some kind of pension short fall (i.e. underfunding issue)

3) to make up for the “unfunded” pension obligations, the pension board adopted a strategy to use “leverage” on the order of 100% (in other words taking out a loan equal to the amount the pension board has in its account or a total of about 20 billion bucks and playing the markets)

Next I know if I go to a broker, I can place money for “investing” in one of three general types of account(s):

1) a “cash” account

(www.scottrade.com/investment-products/stocks.html)

2) a “margin” account

(www.scottrade.com/investment-products/interest-margin-rates.html)

3) an “options” account

(www.scottrade.com/investment-products/options-trading.html)

Perhaps its just me but after reading the “definitions” from the “investopedia DOT com” website, and “skimming” a typical broker website, the reported decision to borrow 10 billion against the 10 billion the SD pension board has in its account – sure looks like the definition of a “margin” account (with its associated risks)

One reason I’m guessing the SD pension board emphasize they are investing using “risk parity” in a “press release,” is its a marketing/spin/propaganda ploy.

Basically they (the SD pension board) are selling the idea to the joe/jane taxpayer, that the “derivatives” strategy involves little or no risk (something akin to why the name “credit default swap” was given to what is essentially “insurance on a bond”).

FYI while trying to understand why the economy imploded a few years ago, I read if the term “insurance” was used instead of the term “CDS” (credit default swap), then an inconvenient rule about the level of capital reserves required by regulators to back traditional insurance policies would apply. BTW guess what exotic financial instrument had a big hand in taking down the economy last time…

Back to the matter at hand, the only conclusion I can draw (translating all the B$ terms and given all the data), is that the SD pension board is seeing the handwriting on the wall with the “change in accounting rules, which requires pension obligations be placed on the balance sheet” and is borrowing an amount equal to what they currently have in the bank and “investing” the whole pile of cash (20 billion) hoping to grow the “value” of the pool of assets and makeup for the short fall.

Like any investor, they (the pension board) are looking for some kind of investment “vehicle” (like: stocks, put options, call options, bonds, credit default swaps which is a fancy name for insurance on bonds that they might or might not own, commodities, derivatives, real estate, etc.) that increases in value.

Given that a “margined account” consists of a pool of money which has to be invested in some kind of investment “vehicle,” it does not matter what the exact asset mix is, because the market “value” for the pool of assets can be looked at as, ending up in one of three states:

1) going down over time

If the “assets” w/in the pension portfolio go down overall, this would be considered a “loss,” on top of which there also would be some kind of “rent” payment paid to the broker (over the life of the “margin” loan)

In absolute terms if all the “assets” were sold off and the loan from the broker paid back, there would be a lot less money in the pension account (than at the beginning).

Perhaps as described in the “risk” section describing a “margin account,” the pension board might owe the broker more money than they initially bet, BUT it won’t matter to them because no matter what happens the taxpayer picks up the tab.

2) holding more or less, “constant” over time

If the “assets” w/in the pension portfolio are constant over time, the fact of the matter is this too would be considered a “loss” because some kind of “rent” payment will have to be paid to the broker (over the life of the “margin” loan).

In absolute terms if all the “assets” were sold off and the loan to the broker paid back, there would be less money in the pension account (than at the beginning).

Again in this case, any pension shortfall would be backstopped by the tax payers.

3) going up over time

If the various “assets” w/in the pension portfolio go up overall, this “might be considered a win” BUT like in the two cases above, one also has to consider the drag of servicing the “margin” loan (and also thrown away costs of “unused” expired options, etc., which is also a consideration in the two cases above).

But for sake of simplicity, lets ignore debit service payments, etc. and just say the PortfolioValue(final) > PortfolioValue(initial), then this would considered a “win!”

In this case “hopefully” the pension pool assets grow in value fast enough to satisfy the promises made by past political leaders to public employees (i.e public employee union members), and the tax payer is off the hook. Basically this is the la la land, “Hollywood” fairy tail happy ending!!

So (at best) I basically see the simple odds being 1/3 “successful” vs 2/3 “unsuccessful” (and a very “deadly” downside) with the reported SD pension “derivative” portfolio strategy

Knowing there are three basic “endgame” states, I guess I could write a fancy monte carlo computer simulation, and forecast the exact date of the SD pension fund implosion and $uckness for all parties involves (i.e. exact doller values).

But such a forecast would only be a “guesstimate” because its impossible write an equation that accurately describes the psychological pain of all players in the system, along with their responses.

It is this impossibility to write an exact math equation which describes all the variables and gives exact predictive answers, which is why “economics” is called “the dismal science”

http://en.wikipedia.org/wiki/The_dismal_science

I know it is impossible to remove all risk from a portfolio, yet get the feeling the SD pension board thinks otherwise (and is tying to sell their idea to the financially illiterate public/taxpayers)

Just hope my worst fears don’t come true, cause from what I’ve read and understand about markets, the derivate strategy for managing what should be boring and safe “retirement” portfolio, could economically implode in a spectacular fashion.

[phaster]

[quote=CA renter]
The Fed’s insistence on keeping rates at ~0% are exacerbating the problems.

As for how it will affect the bond market, I believe that most people who work in these markets understand the risks…at least, I sure hope so.
[/quote]

The fed is keeping interest rates near “0” because historically that is how economic activity was kickstarted.

The mechanism by which the fed directed interest rates, was by printing money and lending it out to credit worth institutions, who in turn lent it out to credit worth people… (see the problem?)

Few institutions have their books in order, same goes for people (fewer people have the capacity to take on more debt), yet since 2008 the fed has created something like 4 TRILLION dollars in an attempt to try and get the economy going (but most of the printed credit “money” is just sitting on ledger sheets at the fed and big banks)

As I see it we’re in twilight zone of global “mild stagflation” waiting for something to give…

I say that is because if ya think the US FED printing 4 TRILLION or so is a big number, consider the mind-blowing 15+ TRILLION the bank of china has printed since 2008.

I’d bet that most people who work in the “bond” market don’t ponder such things, and only see a limited picture of stuff around them and not the BIG “crazy” picture.

It is this narrow world view, that caused 99% of “financial experts” to miss seeing the bubble in housing, systemic problems caused by CDOs, etc. last time around.

Perhaps, I might be fooling my self looking at all the data trying to grasp the big picture, but feel the next implosion is going to be government debt at the city and state level.

Unlike the federal level which can print money and have deficit spending, there is no similar pressure relief valve “mechanism” at the city and state level AND the unfunded “pension” debt is a huge value – in the billions or tens of billions for large cities, and “collectively” hundreds of billions at the state level.

Muni bonds are based on the faith, that the city and states will pay back bondholders, so when I read that new account rule about public pension debts being required to be placed on the balance sheet (I kinda think that a “debt” tidal wave seemingly appearing out of nowhere is something to be concerned about, because somehow its going to affect bond ratings, investors perceptions and in time the outlook of joe six pack walking down main street)

Its going to be interesting in years ahead, cause somehow something BIG has to give with all the mismanagement…

[CA renter]

[quote=phaster][quote=CA renter]
The Fed’s insistence on keeping rates at ~0% are exacerbating the problems.

As for how it will affect the bond market, I believe that most people who work in these markets understand the risks…at least, I sure hope so.
[/quote]

The fed is keeping interest rates near “0” because historically that is how economic activity was kickstarted.

The mechanism by which the fed directed interest rates, was by printing money and lending it out to credit worth institutions, who in turn lent it out to credit worth people… (see the problem?)

Few institutions have their books in order, same goes for people (fewer people have the capacity to take on more debt), yet since 2008 the fed has created something like 4 TRILLION dollars in an attempt to try and get the economy going (but most of the printed credit “money” is just sitting on ledger sheets at the fed and big banks)

As I see it we’re in twilight zone of global “mild stagflation” waiting for something to give…

I say that is because if ya think the US FED printing 4 TRILLION or so is a big number, consider the mind-blowing 15+ TRILLION the bank of china has printed since 2008.

I’d bet that most people who work in the “bond” market don’t ponder such things, and only see a limited picture of stuff around them and not the BIG “crazy” picture.

It is this narrow world view, that caused 99% of “financial experts” to miss seeing the bubble in housing, systemic problems caused by CDOs, etc. last time around.

Perhaps, I might be fooling my self looking at all the data trying to grasp the big picture, but feel the next implosion is going to be government debt at the city and state level.

Unlike the federal level which can print money and have deficit spending, there is no similar pressure relief valve “mechanism” at the city and state level AND the unfunded “pension” debt is a huge value – in the billions or tens of billions for large cities, and “collectively” hundreds of billions at the state level.

Muni bonds are based on the faith, that the city and states will pay back bondholders, so when I read that new account rule about public pension debts being required to be placed on the balance sheet (I kinda think that a “debt” tidal wave seemingly appearing out of nowhere is something to be concerned about, because somehow its going to affect bond ratings, investors perceptions and in time the outlook of joe six pack walking down main street)

Its going to be interesting in years ahead, cause somehow something BIG has to give with all the mismanagement…[/quote]

The Fed cannot kick-start an economic recovery as much as it can unleash a speculative wave of misallocated money…rushing around the globe in search of yield. I, for one, have long been staunchly opposed to the Fed’s responses to recessions and the corrections of these monetary misallocations.

As to the rest, the government debt implosion has already happened. It’s been on the radar for many years, now. If someone isn’t aware of it, they certainly have no business in the financial markets.

But to think that these debt problems are solely due to public pensions is to ignore all of the other deficit spending done during the monetary free-for-all. Pensions are only one piece of the puzzle, and they’re not even the major piece in many cases. ALL stakeholders need to come to the table in order to fix this mess — taxpayers (many of whom have been getting tax subsidies, like Prop 13, that we have no business giving away, especially for real estate that isn’t a primary residence), bondholders, public employees, government contractors, (illegal) immigration advocates, and VOTERS who’ve voted in every election to spend money that we do not have.

[phaster]

[quote=CA renter]
But to think that these debt problems are solely due to public pensions is to ignore all of the other deficit spending done during the monetary free-for-all. Pensions are only one piece of the puzzle, and they’re not even the major piece in many cases.[/quote]

Let’s try and stay focused, and look at only the public pension vs the local economy.

I am ignoring federal programs like social security, medicare, military spending, because the federal government has tools like a printing press, and deficit spending, but local and state governments do not (unless I am mistaken).

The way muni and state governments can raise funds, is by property taxes, sales taxes and selling bonds.

Given new accounting rules which put public pensions on the balance sheet, I think there will be “downgrades” as what just happened with NJ just a few days ago

http://www.bondbuyer.com/news/regionalnews/fitch-downgrades-new-jersey-go-to-a-from-a-plus-1065917-1.html

My concern is “realistic estimates” not the B$ there is no problem view of politicians who seem to be on various drugs:

http://www.webmd.com/depression/depression-medications-antidepressants

will reveal the magnitude of unfunded pensions BILLIONS higher than TPTB are saying “publicly” now.

Or put another way, think what would happen to bonds floated by SD if they are poorly rated w.r.t. other muni bonds (I’d think this would start some kind of death spiral “feedback loop,” because bond bought by large pension funds would avoid SD bonds because of a negative rating, etc.). Its kinda like the problem detroit has right now with trying to raise money in the bond market (in other words because detroit has bad press, its bonds are looked upon as being garbage that will only pay cents on the dollar, so the city of detroit gets more bad press, the bonds get harder to sell, etc., etc., etc.)

If I was a poker player, I’d see the actions of the SD pension reported in the WSJ strike me as being one of desperation, basically asking why double down now?

Seems like a bluff when they say their investment strategy is sound, when I have shown the simple odds of success is 1 in 3 (and that “win” covers a range of values from small to big) AND it seems SD is betting big because they are short big time…

Putting 10 billion down into a margin account (so they can bet as if they have 20 billion, in the pot), either means they have have a good hand or they are desperate (I’d bet good money, its the latter).

Consider in investing, an actively managed account is less likely to beat the market average (i.e. index fund)

http://www.marketwatch.com/story/with-actively-managed-mutual-funds-more-is-less-2013-08-15

As I said I don’t pretend to be a market expert, nor do I have a degree in economics or finance. But I think my three case(s) of a portfolio outcome are one good way to explain why actively managed accounts, fail to beat their index benchmark 2/3 of the time…

So the way I see things, the unfunded SD pension and the strategy to try and make the pension whole, is an armed weapon of financial mass destruction.

One other thing that worries me about local RE is

In this episode of the Keiser Report, Max Keiser and Stacy Herbert discuss the impending second wave of the lastest mortgage crisis, this time due to Helocs (Home equity lines of credit) and HAMP (Home Affordable Modification Program) interest rate resets. In the second half, Max interviews Aaron Krowne on the true state of the housing market across America – from home ownership rates to mortgage arrears.

[spdrun]

Why worry? If rates reset and we end up with a lot of short sales slamming prices down, it will be an opportunity to pick up cheap(er) r.e. before the gov steps in again and kicks the can further down the road.

[phaster]

[quote=spdrun]Why worry? If rates reset and we end up with a lot of short sales slamming prices down, it will be an opportunity to pick up cheap(er) r.e. before the gov steps in again and kicks the can further down the road.[/quote]

FWIW I don’t know how many more times the problem can kept on being kicked down the road. I have not figured it out but the various scenarios I game out are chaotic. Basically its a question of the fed being a one trick pony of printing more and more money, but each iteration seems have less and less bang for the buck (and then there is the question, how does this play out in say the dollar “oil” market)

Helocs (Home equity lines of credit) and HAMP (Home Affordable Modification Program) interest rate resets, bought time for many who managed to keep their homes after the first big wave wiped out many who had “liar loans.”

TPTB (a few years ago) I guessing had hoped the “recovery” would be further along (currently), but I’d bet many in the general public don’t feel things are getting better (unlike those at the top whose balance sheets have more than recovered).

Basically I see several trends like the loan resets, new pension accounting rules, etc., all converging and will build upon one another to produce the next economic downturn.

The economy as I see it, is not built on a sustainable foundation and changes in public pension accounting rules are all necessary steps to that end! BUT IMHO there is going to be unavoidable economic pain on the way to reaching that goal.

BTW here is another rule that will in the long run will dampen bubble behavior like “flipping” but in the short run might very well be a drag on the economy:

The Federal National Mortgage Association, more commonly known as Fannie Mae, will extend its mandated waiting period to qualify for a conventional home loan after a short sale from two years to four years.

http://www.bizjournals.com/denver/blog/real_deals/2014/08/new-fannie-mae-rule-could-hamper-colorado-home.html?page=all

[CA renter]

Local and state governments have been spending freely on other things, too. The point is that pensions are only ONE small part of the puzzle. In the case of California, pension contributions represent approximately 3-5% of the state’s expenditures. On a local level, it’s quite a bit higher, though it still varies greatly, depending on the location (high RE prices/taxes, vibrant economy with higher income and sales taxes).

Some local agencies will be in a particularly bad spot because the communities they serve present a double whammy for them: low taxes (property, sales, and income) and a much higher public service burden. These are communities where the houses cost less or where more of the homes are owned by old-timers or landlords who are paying the old Prop 13 taxes, so the property taxes are lower. They also tend to have lower income taxes, where applicable, and lower sales taxes if the community, in general, is poor and there’s not enough high-end commercial RE to boost sales tax revenues. It’s these communities that will also tend to have a much higher crime problem, requiring more cops, often at a higher cost than in more affluent communities (because most cops will move to a nicer area, all else being equal).

And their fire departments will require more personnel and more equipment because these communities will have more crime victims, overdoses, and more patients who will call 911 for medical care vs. going to a doctor and utilizing preventative care measures, etc. They will also have more buildings that have been illegally altered and added onto…resulting in more fires, etc.

It’s a pickle for the govt leaders who try to “do the right thing” by their constituents by providing the necessary services, while also trying to manage a smaller and more volatile budget, as revenues and spending in these communities tend to be affected more by general economic trends than agencies in more affluent areas are.

[livinincali]

One way or another somebody is going to have less money spend. Whether it’s the pensioners that take a haircut or the tax payers are forced to pay more in taxes. In general it’s another headwind for continued price appreciation in real estate, but it might not be the biggest or even that significant.

I suppose it could trigger some movement in people. Pensioners facing a big haircut might move to a lower cost of living state. Huge tax increases might encourage businesses and individuals to leave the state/city.

I don’t think the pension crisis is going to do anything good for the economy. Essentially it’s a big debt and economic impact of that debt doesn’t clear until the debt is paid off or you default on it.

[bearishgurl]

[quote=livinincali] . . . I suppose it could trigger some movement in people. Pensioners facing a big haircut might move to a lower cost of living state. Huge tax increases might encourage businesses and individuals to leave the state/city. . . . [/quote]

Well, I’m representative of the typical local Suzy Q. Gubment-Pensioner with a fairly low income. But every time I look at listings the places I WOULD be interested in fleeing to (wine country and mtns, in and out of state), I’m finding the home prices to be just as much or higher than where I currently live … and utilities higher or much higher. And I don’t owe very much on my current home … relative to its value …. and could pay it off anytime I so choose to. And I have a running vehicle and know how to get on the interstate ….

So there you have it …. the “real” dilemma facing state and local gubment pensioners who are native San Diegans or have resided in SD County nearly all of their lives.

Sorry, but I just don’t see a “mass exodus” of SD County retirees, even if Tier “A” loses their (minuscule) Supplemental Benefit Allowance (this was supposed to happen 6/30/14 but SDCERA must have found a way to “patch the hole” for FY 14/15).

[Anonymous]

“Wall Street” is an abstraction.

“Wall Street” does not manage any investments.

Pension funds in California are managed by public employees. Real agencies. Real people.

The public pension system has evolved into a complex and arcane bureaucracy over the decades as it was influenced by public sector employee unions, which are some of the best-funded political lobbying organizations in the nation:

https://www.opensecrets.org/orgs/list.php

Government exists to provide services to the public.

Government agencies hire employees to provide the service.

Pensions are simply a component of compensation for these employees.

Like any government activity, policy should seek to provide the service at the least cost.

Much of the complexity of the public sector pension systems simply does not need to exist. The bureaucracy is complex, by design, to allow the true cost of pension benefits to be hidden from the public and to allow politicians to defer costs.

The pension system is a useful tool for budget shenanigans.

And it is all totally unnecessary.

It is entirely possible to provide all government services without the overhead of the complex public pension system.

The solution is simple: End defined-benefit pension programs for government employees. Compensate public employees fairly and provide them with defined-contribution retirement benefits, just like the majority of the population and workforce.

[CA renter]

[quote=harvey]”Wall Street” is an abstraction.

“Wall Street” does not manage any investments.

Pension funds in California are managed by public employees. Real agencies. Real people.

The public pension system has evolved into a complex and arcane bureaucracy over the decades as it was influenced by public sector employee unions, which are some of the best-funded political lobbying organizations in the nation:

https://www.opensecrets.org/orgs/list.php

Government exists to provide services to the public.

Government agencies hire employees to provide the service.

Pensions are simply a component of compensation for these employees.

Like any government activity, policy should seek to provide the service at the least cost.

Much of the complexity of the public sector pension systems simply does not need to exist. The bureaucracy is complex, by design, to allow the true cost of pension benefits to be hidden from the public and to allow politicians to defer costs.

The pension system is a useful tool for budget shenanigans.

And it is all totally unnecessary.

It is entirely possible to provide all government services without the overhead of the complex public pension system.

The solution is simple: End defined-benefit pension programs for government employees. Compensate public employees fairly and provide them with defined-contribution retirement benefits, just like the majority of the population and workforce.[/quote]

Once again, you’re proving how totally ignorant and uninformed you are. Nothing new here. Wall Street firms (and other outside money management firms) are absolutely managing public pension money, and they’ve been doing so for quite awhile.

Just a couple of examples of what happens when Wall Street corrupts public pension funds:

Former CalPERS CEO Pleads Guilty to Bribery, Fraud, Including Taking Cash in Paper Bags

http://www.businessweek.com/magazine/content/09_46/b4155036786606.htm

What once was the boring business of in-house investment managers buying very safe Treasuries and highly-rated municipal bonds, with a smattering of very highly-rated corporate bonds, has become an insidiously corrupt casino where “pay to play” is an expected part of the investment dance. It is unacceptable.

[Anonymous]

[quote=CA renter]Once again, you’re proving how totally ignorant and uninformed you are. Nothing new here. Wall Street firms (and other outside money management firms) are absolutely managing public pension money, and they’ve been doing so for quite awhile.[/quote]

Thanks for the links. For those that need a summary:

– Frank Buenrostro was the CEO of CalPERS.

– Frame Buenrostro made the investment decisions, including which funds to use.

– Frank Buenrostro was a public employee when he committed fraud.

The State of California exists to provide services to the people of California.

Why is the State of California in the investment business — why does the state manage the largest investment fund in the country, a fund that only serves a small fraction of the population?

Why do we have this massive, opaque bureaucracy riddled with unnecessary financial risk? (thanks for the example.)

Why do government jobs need such ridiculously complex compensation rules?

http://reason.com/archives/2014/08/29/california-embraces-pension-spiking-bona

Under the current public pay system, clerical employees get extra cash for typing and taking dictation — activities that seem like basic parts of the job description. Likewise, police officers who attend physical-fitness programs get paid extra. Librarians get extra payments if they routinely help library patrons find books and resources.

Why can’t CalTrans engineers, CHP officers, librarians, fireighters, and park rangers be compensated with a base salary and defined contribution plan, like everyone almost everyone else in the workforce?

Would park rangers be less effective if there were no CalPERS?

[CA renter]

Yes, Wall Street has corrupted the pension plans. That’s exactly what I had said in my previous post.

Yes, public employees would be less effective without these benefits, and turnover rates would be much higher. These jobs value experience, because that’s the ONLY way you’re going to know how to do your job in many of these positions. The costs to recruit, train, and equip many of these employees are extremely high, so turnover is a huge cost to public employers.

Defined benefit plans encourage the most experienced and valuable employees to stay, and this reduces costs for the public employers, while also ensuring that they have the highest-qualified workforce.

And the “state of California” isn’t in the investment business. The pension funds most certainly are, as they should be.

Once again, private sector workers have Social Security AND defined contribution plans. In many cases, this costs almost as much as a DB plan (most public employees who’ve worked long enough to get the full defined benefit do not get Social Security).

And not “everyone else in the workforce” has a DC pension plan. Many have defined benefits, and DB plans were the norm a few decades ago…you know, when the middle class and the economy were at their strongest. Corporate greed has caused the demise of the middle class; not unions, and not DB pension plans.

It’s amazing how the right-wing propagandists have managed to fool so many people into working against their own interests.

[livinincali]

[quote=CA renter]
Yes, public employees would be less effective without these benefits, and turnover rates would be much higher. These jobs value experience, because that’s the ONLY way you’re going to know how to do your job in many of these positions. The costs to recruit, train, and equip many of these employees are extremely high, so turnover is a huge cost to public employers.

Defined benefit plans encourage the most experienced and valuable employees to stay, and this reduces costs for the public employers, while also ensuring that they have the highest-qualified workforce.
[/quote]

It also encourages the worst and most disgruntled to stay as well. Once you get 10-12 years into city employment the benefit to stay on even though you hate doing what you’re doing is too high. Why do we want to lock down the best and the brightest shouldn’t they have freedom to pursue other opportunities like the rest of us. If you have someone that is truly great and want to keep them throw out the silly bucket pay scales and pay them what they are worth on the free market. Seriously where is the 10-15 year teacher making $60K in pay, $15K in medical benefits and probably another $10K in pension benefit going to go in the private sector and make a comparable amount.

[CA renter]

[quote=livinincali][quote=CA renter]
Yes, public employees would be less effective without these benefits, and turnover rates would be much higher. These jobs value experience, because that’s the ONLY way you’re going to know how to do your job in many of these positions. The costs to recruit, train, and equip many of these employees are extremely high, so turnover is a huge cost to public employers.

Defined benefit plans encourage the most experienced and valuable employees to stay, and this reduces costs for the public employers, while also ensuring that they have the highest-qualified workforce.
[/quote]

It also encourages the worst and most disgruntled to stay as well. Once you get 10-12 years into city employment the benefit to stay on even though you hate doing what you’re doing is too high. Why do we want to lock down the best and the brightest shouldn’t they have freedom to pursue other opportunities like the rest of us. If you have someone that is truly great and want to keep them throw out the silly bucket pay scales and pay them what they are worth on the free market. Seriously where is the 10-15 year teacher making $60K in pay, $15K in medical benefits and probably another $10K in pension benefit going to go in the private sector and make a comparable amount.[/quote]

The worst employees tend to leave before benefits vest to any large extent. That doesn’t mean that some dead wood isn’t hanging around after too many years — and I absolutely support making it easier to fire truly bad employees. It’s more important to keep the good ones than to worry about the average or slightly less-than-average ones. Also, there’s no guarantee that if you got rid of the bottom 10%, that you’d get a new group that is better. Churning costs money, and it doesn’t necessarily mean that you’re getting better quality employees. And many of the best employees might not want to stick around, either, if they think that management is indiscriminately or wrongly terminating their coworkers.

As for the argument that there is any kind of a “free market” in labor…you clearly aren’t looking at the same things that I am. Employers are always conspiring to drive down wages and benefits, and they do so on many levels, including political, which is why we desperately need politically active unions…”united we negotiate, divided we beg,” and all that.

And that teacher going into another profession where s/he can make the same or better compensation? Lots of them do exactly that. Again, look at the attrition rate for teachers. Many teachers also come from the private sector where they were making more money, but they change for lifestyle or other factors (often to get hours that match their children’s hours). But since you’ve asked the question, how many professional athletes can leave the profession and make more money in another field? How many CEOs can leave that position and make anywhere near the same amount in another position? How about investment bankers? And how about the techies? Think they can leave tech and make more money elsewhere? Obviously, people tend to gravitate toward positions that give them the best of what they’re looking for with respect to job satisfaction, freedom, lifestyle, compensation, etc. That goes for everybody, not just teachers and other public servants.

[livinincali]

[quote=CA renter]
And that teacher going into another profession where s/he can make the same or better compensation? Lots of them do exactly that. Again, look at the attrition rate for teachers. Many teachers also come from the private sector where they were making more money, but they change for lifestyle or other factors (often to get hours that match their children’s hours). But since you’ve asked the question, how many professional athletes can leave the profession and make more money in another field? How many CEOs can leave that position and make anywhere near the same amount in another position? How about investment bankers? And how about the techies? Think they can leave tech and make more money elsewhere? Obviously, people tend to gravitate toward positions that give them the best of what they’re looking for with respect to job satisfaction, freedom, lifestyle, compensation, etc. That goes for everybody, not just teachers and other public servants.[/quote]

But your argument was that we need defined benefit pension plans to keep people yet you say people stay and leave for other reasons. Just like how they do in the private sector. If that’s you argument than don’t you have to give up the argument that you NEED to offer guaranteed benefit contribution plans in order to make people stay.

[CA renter]

[quote=livinincali]

But your argument was that we need defined benefit pension plans to keep people yet you say people stay and leave for other reasons. Just like how they do in the private sector. If that’s you argument than don’t you have to give up the argument that you NEED to offer guaranteed benefit contribution plans in order to make people stay.[/quote]

Of course, there will always be somemovement. The goal is to keep the churning to a minimum and to keep the most valuable employees in place once you’ve spent all that time and money on hiring and training them.

[phaster]

[quote=CA renter]Many have defined benefits, and DB plans were the norm a few decades ago…you know, when the middle class and the economy were at their strongest.[/quote]

That era back in the 1950’s and 1960’s was IMHO an anomaly in world history, because the USA was the only super power in terms of military and manufacturing.

Consider that Japan and Germany back then had no manufacturing base, so DB were a way to instill worker loyalty (or said another way, DB came about because of a good economy, DB for the “middle class” didn’t create a good economy).

Now with workers in the USA having to compete with workers in not only Germany and Japan, one also has to contend with workers in China, Brazil, etc., so it makes sense that pensions in the private sector for USA workers are no long possible (its the double edge sword of a capitalistic economy). In other words it was inevitable that living standards of people around the world would rise, but since the USA was no longer the only game in town for manufacturing, the standard of living for those with more brawn than brain would fall.

Was reading someone mentioned the dangers of the military industrial complex, actually the concept should be updated IMHO.

Specifically what was once the danger of nepotism w/ the military and their contractors, is paralleled all around the nation (not just here in CA WRT pensions), I just think its going to hit SD first because it has all the right conditions for an economic implosion of biblical proportions!!

The entrenched problem is the “political-legal welfare system” which is the tendency of politicians to pander to public employee unions for political support in a bid to get into or retain an office. The “Quid pro quo” in this instance is a literal “sweet heart deal” payoff when it comes time labor talks. In economic terms, the idea of a public employees union is bad because the interests of politicians and public employees is the same (they are seeking shelter form the “real world” where global competition is now the norm, and DP in the private sector are history)

FDR long ago recognized the problem w/ public employee unions when he said:

“The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.”

http://www.politifact.com/wisconsin/statements/2013/aug/13/scott-walker/Did-FDR-oppose-collective-bargaining-for-governmen/

From what I understand of economic, unions in the private sector work because there is alternatives which over the long run makes the product better and lowers the cost (i.e. products like cars and computers).

Now consider what has happened to public services here in SD, have the roads been kept up or are they in disrepair? WRT public schools, what I’ve read is the traditional “factory” one size all school is giving way to new “organic” centers of learning, like high tech high in point loma, albert einstein charter school in golden hill, etc.

[quote=CA renter]The worst employees tend to leave before benefits vest to any large extent. That doesn’t mean that some dead wood isn’t hanging around after too many years — and I absolutely support making it easier to fire truly bad employees.[/quote]

could not agree more, and think this concept should be extended to entrenched politicians (both on the left and right) because it seem they enable lots of the problems:

http://patrick.net/forum/?p=1247288&c=1114955#comment-1114955

[CA renter]

[quote=phaster][quote=CA renter]Many have defined benefits, and DB plans were the norm a few decades ago…you know, when the middle class and the economy were at their strongest.[/quote]

That era back in the 1950’s and 1960’s was IMHO an anomaly in world history, because the USA was the only super power in terms of military and manufacturing.

Consider that Japan and Germany back then had no manufacturing base, so DB were a way to instill worker loyalty (or said another way, DB came about because of a good economy, DB for the “middle class” didn’t create a good economy).

Now with workers in the USA having to compete with workers in not only Germany and Japan, one also has to contend with workers in China, Brazil, etc., so it makes sense that pensions in the private sector for USA workers are no long possible (its the double edge sword of a capitalistic economy). In other words it was inevitable that living standards of people around the world would rise, but since the USA was no longer the only game in town for manufacturing, the standard of living for those with more brawn than brain would fall.

Was reading someone mentioned the dangers of the military industrial complex, actually the concept should be updated IMHO.

Specifically what was once the danger of nepotism w/ the military and their contractors, is paralleled all around the nation (not just here in CA WRT pensions), I just think its going to hit SD first because it has all the right conditions for an economic implosion of biblical proportions!!

The entrenched problem is the “political-legal welfare system” which is the tendency of politicians to pander to public employee unions for political support in a bid to get into or retain an office. The “Quid pro quo” in this instance is a literal “sweet heart deal” payoff when it comes time labor talks. In economic terms, the idea of a public employees union is bad because the interests of politicians and public employees is the same (they are seeking shelter form the “real world” where global competition is now the norm, and DP in the private sector are history)

FDR long ago recognized the problem w/ public employee unions when he said:

“The very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations.”

http://www.politifact.com/wisconsin/statements/2013/aug/13/scott-walker/Did-FDR-oppose-collective-bargaining-for-governmen/

From what I understand of economic, unions in the private sector work because there is alternatives which over the long run makes the product better and lowers the cost (i.e. products like cars and computers).

Now consider what has happened to public services here in SD, have the roads been kept up or are they in disrepair? WRT public schools, what I’ve read is the traditional “factory” one size all school is giving way to new “organic” centers of learning, like high tech high in point loma, albert einstein charter school in golden hill, etc.

[quote=CA renter]The worst employees tend to leave before benefits vest to any large extent. That doesn’t mean that some dead wood isn’t hanging around after too many years — and I absolutely support making it easier to fire truly bad employees.[/quote]

could not agree more, and think this concept should be extended to entrenched politicians (both on the left and right) because it seem they enable lots of the problems:

http://patrick.net/forum/?p=1247288&c=1114955#comment-1114955%5B/quote%5D

You are totally wrong about politicians and unions being on the same side of the table. Nothing could be further from the truth. Some politicians are labor-friendly, and others have a vitriolic hatred for unions. I have personal experience with contract negotiations, and there is NO truth to your statement that politicians automatically pander to unions.

Unions are no different from any other group that supports politicians who will further their particular interests. That goes for public contractors (or those who hope to be public contractors); businesses who want special infrastructure that will benefit their businesses or who want special tax breaks or financial incentives; “taxpayer advocates” who are looking to reduce taxes for special interests (think Prop 13); interest groups who push for things that will place a heavier burden on public agencies without a commensurate benefit to the population at large (immigration reformers; citizens who want special projects, infrastructure, tax breaks/credits; landowners who want roads, bridges and other infrastructure specifically built to increase the value of their holdings, etc.). The list goes on and on. Every one of these groups cost taxpayers money. Every single one. Again, public employees are one piece of the puzzle (and a very small one in some instances).

And unions work because they allow employees to bargain collectively. Public unions benefit private employees, too, because private employers have to compete for the same pool of candidates.

Right now, corporate tax revenues, as a percentage of GDP, are near an all-time low, and profits are at an all time high. At the same time, labor participation rates, and all other metrics used to determine the well-being of labor are at or near all-time lows. Coincidence? Not at all. Again, we desperately need unions for ALL workers, and very politically active ones at that.

http://research.stlouisfed.org/fred2/graph/?g=cSh

——-

Regarding the charter movement? That began in public schools, and it was supported by unions.

The charter school idea in the United States was originated in 1974 by Ray Budde,[10] a professor at the University of Massachusetts Amherst. Albert Shanker, President of the American Federation of Teachers, embraced the concept in 1988, when he called for the reform of the public schools by establishing “charter schools” or “schools of choice.”[11] Gloria Ladson-Billings called him “the first person to publicly propose charter schools”.[12] At the time, a few schools already existed that were not called charter schools but embodied some of their principles, such as H-B Woodlawn.

http://en.wikipedia.org/wiki/Charter_schools_in_the_United_States

————-

But before you get too excited about charter schools, most of which are now publicly-funded private schools, you should look at how they compare to traditional public schools.

http://credo.stanford.edu/documents/NCSS%202013%20Final%20Draft.pdf

[CA renter]

As for globalization? Yes, that’s a huge problem for U.S. workers. IMO, we need to enact tariffs to offset any discrepancies between labor and environmental protection in the U.S. and other countries. Additionally, if a corporation is making most of their profits overseas and doing most/all of their production overseas, then they aren’t U.S. companies, and they shouldn’t be entitled to the protections and benefits (military protection of sea lanes, infrastructure, IP/private property protection, legal, etc.) provided by U.S. taxpayers.

[phaster]

[quote=CA renter][quote=phaster]

[quote=CA renter]The worst employees tend to leave before benefits vest to any large extent. That doesn’t mean that some dead wood isn’t hanging around after too many years — and I absolutely support making it easier to fire truly bad employees.[/quote]

could not agree more, and think this concept should be extended to entrenched politicians (both on the left and right) because it seem they enable lots of the problems:

http://patrick.net/forum/?p=1247288&c=1114955#comment-1114955%5B/quote%5D

You are totally wrong about politicians and unions being on the same side of the table. Nothing could be further from the truth. Some politicians are labor-friendly, and others have a vitriolic hatred for unions. I have personal experience with contract negotiations, and there is NO truth to your statement that politicians automatically pander to unions.

Unions are no different from any other group that supports politicians who will further their particular interests.[/quote]

There is a perception (which I happen to share) that public unions have a great deal of control over the careers of their negotiating counterparties (i.e. politicians). Said another way its an old boys club, same as what happens in wall street, where the basic instinct is to protect their own. Bottom line is, politicians and public employees are part of a club, the “public at large” isn’t part of.

You most likely have lots of stories you know and want to share about $hit that happens on wall $t, but the same thing happens between public employee union members and politicians.

Recall the before SD made the national news headlines that we had a groper for a mayor (who was forced to resign), there was a similar pervert problem w/in the SDPD. Seem there is an “old boys club” attitude, because the reporter from the “reader” stated:

It was surprising to see the lengths that the City Attorney’s office went to try and get this case dismissed.

http://www.sandiegoreader.com/weblogs/news-ticker/2012/nov/09/city-to-pay-675000-to-victim-of-sexual-assault-by-/#

I have my own sad example when I encountered the “old boys club,”, that is kinda how I stumbled onto the issue of public “pensions,” basically I followed the money motive trail…

http://TinyURL.com/EnronByTheSea

I have a feeling there is something akin to a watergate type mentality w/ local politician (goldsmith and gloria) who are being sued for wanting to delete eMails from both their personal and official city accounts.

http://www.utsandiego.com/news/2014/aug/01/tp-sd-oks-outside-lawyer-use/

I think these officials are trying to hide public employee sins of the past that have something to do with software that allows building permit fraud and tax dodges possible with properties labeled as “historic”

Jim Mills, a former state senator from San Diego who pushed for the law’s creation in 1972, said he is surprised by how the financially strapped city has embraced the program during a time when it has had to close swimming pools, reduce library hours and delay sewer and water projects.

“I have to admit what I had in mind was significant buildings and houses, and I now see houses being covered by the Mills Act that were not what I had in mind,” Mills said.

http://www.utsandiego.com/uniontrib/20080127/news_1n27mills.html

Imagine you’re a developer with a pal who handles permits for the city of San Diego. And say you thought the permitting fees were a little too high. Not to worry, your pal says, and he knocks down the price for you.

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/

Another “moral/ethical” reason if I were king, I would eliminate public employee unions is, because I read they:

PUBLIC EMPLOYEE UNIONS “hurt the overall interests of the working poor.”

http://www.thedailybeast.com/articles/2014/07/11/why-progressives-shouldn-t-support-public-workers-unions.html

I’d guessing if there were some kind of public vote, I’d bet a majority of people would have to wonder if the “public employee economic self interest” more often than not is biased inward toward “the old boys club” rather than to the public at large.

[quote=CA renter]Many have defined benefits, and DB plans were the norm a few decades ago…you know, when the middle class and the economy were at their strongest.[/quote]

Ya don’t seem to understand basic cause and effect, like when I pointed out the reason DB pensions came to be associated with so called “middle class” jobs in the USA is because of unique global economic conditions that existed in the 1950’s and 60’s.

Anyway I’d further argue the big deal made about “middle class” in the USA, was done as part of an “unofficial” cold war hearts and minds propaganda effort directed toward those in the USSR.

For example in high school I was told the USA included adding the words “in god we trust” to the US dollar bill in the late 50’s (to show those “godless” communists, we in the west have freedom of religions),

Then there was the “nixon” kitchen debate, to show those “poor” communists, the capitalist economic system can make guns as well as butter….

http://teachingamericanhistory.org/library/document/the-kitchen-debate/

[quote=CA renter]I don’t get distracted by non-economic issues where politics are concerned. That’s not to say that these issues are unimportant, but that they pale in comparison to economics.[/quote]

If you’re just starting off on your own journey to think like an “economist,” perhaps you might consider its a good thing to have low corporate taxes (because that is where jobs are). Like when I first did experiments and the associated math in quantum mechanics, thinking like an economist has its own counterintuitive to normal everyday life logic one has ponder just a bit before things make sense.

Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that’s good. Don’t tax companies in an effort to tax rich people.

http://www.npr.org/blogs/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate

As to why labor participation rates are low, consider “thinking like an economist” and you might see it might be due to the fact that technology lessens the demand for those with just “brawn” to offer the market, combined with the fact that with population growth there is a “skills” mis-match.

http://www.cbsnews.com/videos/are-robots-hurting-job-growth-50138922/

It might not feel right that conditions change, but fact is, things in life do change…

[CA renter]

[quote=phaster][quote=CA renter][quote=phaster]

[quote=CA renter]The worst employees tend to leave before benefits vest to any large extent. That doesn’t mean that some dead wood isn’t hanging around after too many years — and I absolutely support making it easier to fire truly bad employees.[/quote]

could not agree more, and think this concept should be extended to entrenched politicians (both on the left and right) because it seem they enable lots of the problems:

http://patrick.net/forum/?p=1247288&c=1114955#comment-1114955%5B/quote%5D

You are totally wrong about politicians and unions being on the same side of the table. Nothing could be further from the truth. Some politicians are labor-friendly, and others have a vitriolic hatred for unions. I have personal experience with contract negotiations, and there is NO truth to your statement that politicians automatically pander to unions.

Unions are no different from any other group that supports politicians who will further their particular interests.[/quote]

There is a perception (which I happen to share) that public unions have a great deal of control over the careers of their negotiating counterparties (i.e. politicians). Said another way its an old boys club, same as what happens in wall street, where the basic instinct is to protect their own. Bottom line is, politicians and public employees are part of a club, the “public at large” isn’t part of.

You most likely have lots of stories you know and want to share about $hit that happens on wall $t, but the same thing happens between public employee union members and politicians.

Recall the before SD made the national news headlines that we had a groper for a mayor (who was forced to resign), there was a similar pervert problem w/in the SDPD. Seem there is an “old boys club” attitude, because the reporter from the “reader” stated:

It was surprising to see the lengths that the City Attorney’s office went to try and get this case dismissed.

http://www.sandiegoreader.com/weblogs/news-ticker/2012/nov/09/city-to-pay-675000-to-victim-of-sexual-assault-by-/#

I have my own sad example when I encountered the “old boys club,”, that is kinda how I stumbled onto the issue of public “pensions,” basically I followed the money motive trail…

http://TinyURL.com/EnronByTheSea

I have a feeling there is something akin to a watergate type mentality w/ local politician (goldsmith and gloria) who are being sued for wanting to delete eMails from both their personal and official city accounts.

http://www.utsandiego.com/news/2014/aug/01/tp-sd-oks-outside-lawyer-use/

I think these officials are trying to hide public employee sins of the past that have something to do with software that allows building permit fraud and tax dodges possible with properties labeled as “historic”

Jim Mills, a former state senator from San Diego who pushed for the law’s creation in 1972, said he is surprised by how the financially strapped city has embraced the program during a time when it has had to close swimming pools, reduce library hours and delay sewer and water projects.

“I have to admit what I had in mind was significant buildings and houses, and I now see houses being covered by the Mills Act that were not what I had in mind,” Mills said.

http://www.utsandiego.com/uniontrib/20080127/news_1n27mills.html

Imagine you’re a developer with a pal who handles permits for the city of San Diego. And say you thought the permitting fees were a little too high. Not to worry, your pal says, and he knocks down the price for you.

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/

Another “moral/ethical” reason if I were king, I would eliminate public employee unions is, because I read they:

PUBLIC EMPLOYEE UNIONS “hurt the overall interests of the working poor.”

http://www.thedailybeast.com/articles/2014/07/11/why-progressives-shouldn-t-support-public-workers-unions.html

I’d guessing if there were some kind of public vote, I’d bet a majority of people would have to wonder if the “public employee economic self interest” more often than not is biased inward toward “the old boys club” rather than to the public at large.

[quote=CA renter]Many have defined benefits, and DB plans were the norm a few decades ago…you know, when the middle class and the economy were at their strongest.[/quote]

Ya don’t seem to understand basic cause and effect, like when I pointed out the reason DB pensions came to be associated with so called “middle class” jobs in the USA is because of unique global economic conditions that existed in the 1950’s and 60’s.

Anyway I’d further argue the big deal made about “middle class” in the USA, was done as part of an “unofficial” cold war hearts and minds propaganda effort directed toward those in the USSR.

For example in high school I was told the USA included adding the words “in god we trust” to the US dollar bill in the late 50’s (to show those “godless” communists, we in the west have freedom of religions),

Then there was the “nixon” kitchen debate, to show those “poor” communists, the capitalist economic system can make guns as well as butter….

http://teachingamericanhistory.org/library/document/the-kitchen-debate/

[quote=CA renter]I don’t get distracted by non-economic issues where politics are concerned. That’s not to say that these issues are unimportant, but that they pale in comparison to economics.[/quote]

If you’re just starting off on your own journey to think like an “economist,” perhaps you might consider its a good thing to have low corporate taxes (because that is where jobs are). Like when I first did experiments and the associated math in quantum mechanics, thinking like an economist has its own counterintuitive to normal everyday life logic one has ponder just a bit before things make sense.

Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that’s good. Don’t tax companies in an effort to tax rich people.

http://www.npr.org/blogs/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate

As to why labor participation rates are low, consider “thinking like an economist” and you might see it might be due to the fact that technology lessens the demand for those with just “brawn” to offer the market, combined with the fact that with population growth there is a “skills” mis-match.

http://www.cbsnews.com/videos/are-robots-hurting-job-growth-50138922/

It might not feel right that conditions change, but fact is, things in life do change…[/quote]

Whew! You’ve thrown a lot of stuff out there, the vast majority of which has absolutely nothing at all to do with public pensions. But I’ll address the issues in separate posts, one subject at a time, below.

[edited to add:] Have run out of time today, but will get on this tomorrow. 🙂

[phaster]

[quote=CA renter][quote=phaster][quote=CA renter][quote=phaster]

[quote=CA renter]The worst employees tend to leave before benefits vest to any large extent. That doesn’t mean that some dead wood isn’t hanging around after too many years — and I absolutely support making it easier to fire truly bad employees.[/quote]

could not agree more, and think this concept should be extended to entrenched politicians (both on the left and right) because it seem they enable lots of the problems:

http://patrick.net/forum/?p=1247288&c=1114955#comment-1114955%5B/quote%5D

You are totally wrong about politicians and unions being on the same side of the table. Nothing could be further from the truth. Some politicians are labor-friendly, and others have a vitriolic hatred for unions. I have personal experience with contract negotiations, and there is NO truth to your statement that politicians automatically pander to unions.

Unions are no different from any other group that supports politicians who will further their particular interests.[/quote]

There is a perception (which I happen to share) that public unions have a great deal of control over the careers of their negotiating counterparties (i.e. politicians). Said another way its an old boys club, same as what happens in wall street, where the basic instinct is to protect their own. Bottom line is, politicians and public employees are part of a club, the “public at large” isn’t part of.

You most likely have lots of stories you know and want to share about $hit that happens on wall $t, but the same thing happens between public employee union members and politicians.

Recall the before SD made the national news headlines that we had a groper for a mayor (who was forced to resign), there was a similar pervert problem w/in the SDPD. Seem there is an “old boys club” attitude, because the reporter from the “reader” stated:

It was surprising to see the lengths that the City Attorney’s office went to try and get this case dismissed.

http://www.sandiegoreader.com/weblogs/news-ticker/2012/nov/09/city-to-pay-675000-to-victim-of-sexual-assault-by-/#

I have my own sad example when I encountered the “old boys club,”, that is kinda how I stumbled onto the issue of public “pensions,” basically I followed the money motive trail…

http://TinyURL.com/EnronByTheSea

I have a feeling there is something akin to a watergate type mentality w/ local politician (goldsmith and gloria) who are being sued for wanting to delete eMails from both their personal and official city accounts.

http://www.utsandiego.com/news/2014/aug/01/tp-sd-oks-outside-lawyer-use/

I think these officials are trying to hide public employee sins of the past that have something to do with software that allows building permit fraud and tax dodges possible with properties labeled as “historic”

Jim Mills, a former state senator from San Diego who pushed for the law’s creation in 1972, said he is surprised by how the financially strapped city has embraced the program during a time when it has had to close swimming pools, reduce library hours and delay sewer and water projects.

“I have to admit what I had in mind was significant buildings and houses, and I now see houses being covered by the Mills Act that were not what I had in mind,” Mills said.

http://www.utsandiego.com/uniontrib/20080127/news_1n27mills.html

Imagine you’re a developer with a pal who handles permits for the city of San Diego. And say you thought the permitting fees were a little too high. Not to worry, your pal says, and he knocks down the price for you.

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/

Another “moral/ethical” reason if I were king, I would eliminate public employee unions is, because I read they:

PUBLIC EMPLOYEE UNIONS “hurt the overall interests of the working poor.”

http://www.thedailybeast.com/articles/2014/07/11/why-progressives-shouldn-t-support-public-workers-unions.html

I’d guessing if there were some kind of public vote, I’d bet a majority of people would have to wonder if the “public employee economic self interest” more often than not is biased inward toward “the old boys club” rather than to the public at large.

[quote=CA renter]Many have defined benefits, and DB plans were the norm a few decades ago…you know, when the middle class and the economy were at their strongest.[/quote]

Ya don’t seem to understand basic cause and effect, like when I pointed out the reason DB pensions came to be associated with so called “middle class” jobs in the USA is because of unique global economic conditions that existed in the 1950’s and 60’s.

Anyway I’d further argue the big deal made about “middle class” in the USA, was done as part of an “unofficial” cold war hearts and minds propaganda effort directed toward those in the USSR.

For example in high school I was told the USA included adding the words “in god we trust” to the US dollar bill in the late 50’s (to show those “godless” communists, we in the west have freedom of religions),

Then there was the “nixon” kitchen debate, to show those “poor” communists, the capitalist economic system can make guns as well as butter….

http://teachingamericanhistory.org/library/document/the-kitchen-debate/

[quote=CA renter]I don’t get distracted by non-economic issues where politics are concerned. That’s not to say that these issues are unimportant, but that they pale in comparison to economics.[/quote]

If you’re just starting off on your own journey to think like an “economist,” perhaps you might consider its a good thing to have low corporate taxes (because that is where jobs are). Like when I first did experiments and the associated math in quantum mechanics, thinking like an economist has its own counterintuitive to normal everyday life logic one has ponder just a bit before things make sense.

Eliminate the corporate income tax. Completely. If companies reinvest the money into their businesses, that’s good. Don’t tax companies in an effort to tax rich people.

http://www.npr.org/blogs/money/2012/07/19/157047211/six-policies-economists-love-and-politicians-hate

As to why labor participation rates are low, consider “thinking like an economist” and you might see it might be due to the fact that technology lessens the demand for those with just “brawn” to offer the market, combined with the fact that with population growth there is a “skills” mis-match.

http://www.cbsnews.com/videos/are-robots-hurting-job-growth-50138922/

It might not feel right that conditions change, but fact is, things in life do change…[/quote]

Whew! You’ve thrown a lot of stuff out there, the vast majority of which has absolutely nothing at all to do with public pensions. But I’ll address the issues in separate posts, one subject at a time, below.

[edited to add:] Have run out of time today, but will get on this tomorrow. :)[/quote]

still no answer? or comments from the peanut gallery??

[quote=livinincali]
The one benefit of defined benefit contribution plans, retention, isn’t worth the risks, the frauds, the vote buying, and everything else it enables. That’s the bottom line. The rewards (reduced training costs retention, etc.) don’t outweigh the risks and therefore they should be scrapped..[/quote]

Agree! And after doing some research, seems the best way forward is to follow the example set by the Thrift Saving Plan (a federal government 401K style program, that can’t be corrupted/mismanaged like what happend at CalPERS or as what is happening with the SD pension program)

https://www.tsp.gov/investmentfunds/fundsoverview/comparisonMatrix.shtml

Getting back to the topic of the economy and how things will be affected locally. After the bubble burst in 2007, the FED response to save the system from total failure because of “swaps,” was to buy “the too big to fail” mortgage backed securities from various banks.

Since about 2011 the 1%, people who can qualify for “credit” and the hot Chinese money have driven up RE prices because the money supply has dramatically increased.

The paradox is the money velocity, it is at a record low!

http://research.stlouisfed.org/fred2/series/M2V

With 4 trillion being printed out of thin air in the USA, and 15+ trillion in china, the next economic downturn seems to me will be caused at the local level (when public pension accounting rules change, interest rates reset, etc.). And the FED IMHO being a one trick pony won’t have any way to help out??

Actually anyone one else think the geo-political danger for the USA is if the FED further increases the money supply in order to try and kick the LOCAL unfunded public pension issue(s) further down the road?

From what I gather, this will play right into the BRICS plans to create an alternative to the dollar as the default global reserve currency.

http://www.zerohedge.com/news/2014-07-15/brics-announce-100-billion-reserve-bypass-fed-developed-world-central-banks

Basically by not getting our LOCAL city/county/state “banana republic” financial house in order, it further accelerates/weakens the position of the USA as an economic/military superpower!

One last thing to ponder, Don’t Blame Shrinking Work Force Participation on Great Recession (according to a FED Paper)

http://blogs.wsj.com/economics/2014/09/04/dont-blame-shrinking-work-force-participation-on-great-recession-fed-board-paper/

[CA renter]

Sorry, phaster. As I had mentioned above, this is a busy time for me, so didn’t have the time to give thoughtful responses to your many, varied points. You took the time to write a lengthy post, so I wanted to be sure to give a proper response to your writings.

Your post lists a number of grievances, and each deserves a separate post because the issues are not related.

——–

[quote=phaster][quote=CA renter][quote=phaster]

[quote=CA renter]The worst employees tend to leave before benefits vest to any large extent. That doesn’t mean that some dead wood isn’t hanging around after too many years — and I absolutely support making it easier to fire truly bad employees.[/quote]

could not agree more, and think this concept should be extended to entrenched politicians (both on the left and right) because it seem they enable lots of the problems:

http://patrick.net/forum/?p=1247288&c=1114955#comment-1114955%5B/quote%5D%5B/quote%5D

This link addresses how to report slumlords or illegal construction. It does not say anything about “entrenched politicians,” nor does it show any kind of a link between politicians and slumlords or illegal construction.

Having read your piece on the construction of the garage, I’ll assume that you’re suggesting some sort of link between what you describe as “entrenched politicians” and the construction of a detached garage on private property that you seen to take issue with because it (presumably) has caused some sort of backup in the sewer lines of neighboring properties.

You then go on to talk about the Mills Act (totally unrelated to the other construction/building issues), and I think BG explained things quite well in her above post. There is nothing “fraudulent” about the Mills Act. And if you think it was “sold” to the public in a deceitful way, then you certainly must think that Prop 13 is fraud on a grand scale, since it was sold as “a way to keep granny from being taxed out of her own home.”

[quote=phaster]I have my own sad example when I encountered the “old boys club,”, that is kinda how I stumbled onto the issue of public “pensions,” basically I followed the money motive trail…

http://TinyURL.com/EnronByTheSea

I have a feeling there is something akin to a watergate type mentality w/ local politician (goldsmith and gloria) who are being sued for wanting to delete eMails from both their personal and official city accounts.

http://www.utsandiego.com/news/2014/aug/01/tp-sd-oks-outside-lawyer-use/

I think these officials are trying to hide public employee sins of the past that have something to do with software that allows building permit fraud and tax dodges possible with properties labeled as “historic”

Jim Mills, a former state senator from San Diego who pushed for the law’s creation in 1972, said he is surprised by how the financially strapped city has embraced the program during a time when it has had to close swimming pools, reduce library hours and delay sewer and water projects.

“I have to admit what I had in mind was significant buildings and houses, and I now see houses being covered by the Mills Act that were not what I had in mind,” Mills said.

http://www.utsandiego.com/uniontrib/20080127/news_1n27mills.html

Imagine you’re a developer with a pal who handles permits for the city of San Diego. And say you thought the permitting fees were a little too high. Not to worry, your pal says, and he knocks down the price for you.

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/

[/quote]

I’ve actually taken the time to read most/all of the information you’ve provided in your links and timeline. I’m not sure that any actual fraud was committed, though. It looks like the new garage was indeed a replacement for an older garage, even if the older garage was torn down in ~1991. The easement for the sewer lateral was recorded in 1929, so the original garage existed over the sewer easement. As for the setback requirements, I think there might be a typo, because it gives the setback requirements in yards instead of feet. There is no way that a 10 yard setback requirement is in place for garages in the front of the home. The lots simply wouldn’t allow for that. If the setback requirements are in feet, which would make far more sense, then the setback requirement for the new garage would be 1′, if I’m reading that right.

If you look at neighboring lots, they all look as though the garages are placed at the lot lines, so the original garage probably existed at the very edge of the lot, right about where the current garage is located.

As for the owner increasing the footprint of the garage, that is noted on the drawing used for the permit.

You’ll also note that the garage failed to pass inspection on a number of occasions because of foundation issues. It’s also noted that they did not see the sewer line during the inspection.

All that being said, there are going to be situations when the building department will try to work with owners/builders to facilitate a project, and they might allow a variance if they believe it won’t cause any problems. People apply for, and get, zoning variances all the time. There is nothing fraudulent about it. The other option would be to make everything so incredibly rigid that nothing gets done. California and its cities have some of the most stringent building codes in the country.

If you’re one of the plaintiffs in this case, have you tried to talk to the owners of this house to see if they would pay to have the sewer laterals re-routed so that they don’t run under the garage? What sort of remedies have you worked on, other than trying to get them to tear down their permitted garage that they’ve had built on private property?

While I certainly understand your frustration, it doesn’t mean that there is any fraud, and it certainly doesn’t lead to some hidden conspiracy regarding unions or public pensions. There is no “old boys’ club” that I can see in this particular story.

———————-

Your assertion that Jan Goldsmith and Todd Gloria and wanted to delete public and private emails isn’t true, at least not from what I’ve read. The issue in this case is whether or not personal, private emails are subject to FOIA requests.

The likely issue here is whether or not Goldsmith was feeding the media “news” regarding Filner. He’s also said to have spent a significant amount of time campaigning for the likes of Mitt Romney, or pushing the agenda of certain well-connected folks from within *private industry* during working hours. Things of that nature are what people want to learn more about.

From your link:

Briggs, who filed the cases against Goldsmith and Gloria, claimed in court papers that Goldsmith is wasting taxpayer money by giving the council bad advice on public records matters, and “he is actively and purposefully spending a substantial amount of his time during official business hours communicating with the media.”

Briggs asked a judge to order Goldsmith to stop doing these things, and to pay back the city for “the illegal waste that he has committed.”

Early this year, Briggs filed a request for “any and all emails” from Goldsmith’s personal account between 2008 and 2013 “that pertain in any way to the official business of the City of San Diego.”

The city responded 10 days later, saying it had no responsive records.

“As you likely are aware, the email address … is not a city email address, nor does the city have access to such an individual’s personal email account,” the response said.

Briggs said the city subsequently identified about 2,500 emails to or from Goldsmith’s personal account — and turned over about 1,000 of those — that could be construed as public records.

More may be released as the records are vetted for privacy concerns, although city officials do not concede that state law requires them to do so.

The issue of public officials using personal email to conduct public business has vexed local governments across the state, which has no specific rules governing their release.

In June, the state Supreme Court said it would review a case in San Jose, in which officials declined to release personal emails to and from the mayor and council members regarding city business.

A lower court found that the city could not be expected to release emails that were not in its possession.

http://www.utsandiego.com/news/2014/aug/01/tp-sd-oks-outside-lawyer-use/2/?#article-copy

——————

And that KPBS link regarding the software that would allow for “fraudulent” transactions? NO FRAUD WAS FOUND. The issue here is that the auditors thought some employees had access to certain modules in the software that they shouldn’t necessarily have access to. It’s like people in sales having access to the accounting modules. The apparent reason for this is that the building/planning department is understaffed, and people are trained to do more than one thing when necessary. It also looks like they are working on fixing this.

“Luna recommends 13 changes to the Development Services Department including restructuring its management to create greater internal controls, separating employees’ responsibilities so they can’t access as much of the computer system and documenting more changes to individual permits. He attributed much of the failures to inefficient staffing, high workloads, limited supervision and deficiencies with the computer system itself.

Department head Kelly Broughton disputed almost all of Luna’s findings, contending that his auditors didn’t understand how the computer system worked and that its internal controls were strong.

The department, Broughton said in its official response, “follows appropriate access protocols; and documents and records changes in the system appropriately. We believe the authorities currently granted to employees are appropriate and proper.”’

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/

[phaster]

[quote=CA renter]
And that KPBS link regarding the software that would allow for “fraudulent” transactions? NO FRAUD WAS FOUND. The issue here is that the auditors thought some employees had access to certain modules in the software that they shouldn’t necessarily have access to. It’s like people in sales having access to the accounting modules. The apparent reason for this is that the building/planning department is understaffed, and people are trained to do more than one thing when necessary. It also looks like they are working on fixing this.

“Luna recommends 13 changes to the Development Services Department including restructuring its management to create greater internal controls, separating employees’ responsibilities so they can’t access as much of the computer system and documenting more changes to individual permits. He attributed much of the failures to inefficient staffing, high workloads, limited supervision and deficiencies with the computer system itself.

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/%5B/quote%5D

What’s the old saying “where there smoke there is fire”

In general, people don’t like bad news so they don’t dig for it. Then there is tendency of people not wanting to admit anything thing is wrong (if they missed something the first time around), so if the root cause of a problem is not fully understood, it can’t be fixed!

IMHO TPTB are in denial (much like an individual who has a substance abuse problem), unfortunately for me I inherited an issue that required me to try and figure out the root cause of a bad news problem.

If ya first look at the MLS for the property (which was sold in 2006), it shows no structure (because it was torn down after a homicide investigation back in 1988), therefore the plans submitted to the city for a permit that show a “termite infested detached garage” to be replaced is a fraudulent statement!

Given all the historical documents (like a 1929 documents showing an easement, along with city maps indicating utilities in place), news reports that the the city has software that allows fraud and the statement from an eMail dated 9/23

“In addition, based on preparation of a thorough historical report on our property to apply for a historical designation of the residence, no existence of any sewer line or associated easement was noted on any of the historical documents/maps we researched.”

there as you can see, lots of “interesting” questions one can ask about the “integrity” of the building permit process, along with questions about “historical property” designations.

Being god fearing and honest all their lives, the last thing my parents wanted to do was be an accessory to insurance fraud (because an offer was given to fix the mess from the builders/owner of the construction project)

Because there were lots of questions/concerns my parents parents “informally” worked their way up the chain of command to eventually goldsmith and gloria, asking for an investigation.

So after my parents died, I inherited the whole damn mess which legally put me between a rock and a hard place.

The city IMHO basically swept the whole problem under the carpet, because after the scandal allowing a skyscraper (the sun road building) to be built too tall next to an airport (as per FAA regulations) to fix the software that won’t allow fraud has a pretty high price tag (financially and politically), then there is the tricky question what about all those tax credits based on “historical property” status.

Trying to do the right thing, cost me well into six figures of legal and repair costs (basically had to cave in because it was my only survival option after I was sued for “quiet title” )

I’ve been more financially fortunate than most, having a legacy my parents left me as well as managing to save and invest my own monies, so I can survive a six figure hit. But I’ve learned the game is rigged, and its not only wall street “greed” that is causing the economy to hurt those in the so called 99%…

I am not a lawyer, but was able to piece together case law “logic” that seems to fit the fact pattern…

“Obtaining Recovery for Property Damage through Inverse Condemnation”
http://www.lacba.org/files/lal/vol33no10/2774.pdf

ARREOLA v. MONTEREY COUNTY
An entity with the power to control a project need not actively participate in it to suffer liability.

BOOKOUT v. STATE OF CALIFORNIA
a five-year statute of limitations applies only where a public entity has physically entered and exercised dominion and control over some portion of the plaintiff’s property.

Main body logic…

HARSHBARGER v. CITY OF COLTON
1) there is a mandatory duty for building inspectors to enforce building codes because of public safety concerns
2) an exception to the rule of sovereign immunity is fraudulent inspection

BLAIR v. MAHON
3) failure to speak is a species of fraud

HORWITZ v. CITY OF LOS ANGELES
4) “Just as the city has no discretion to deny a building permit when an applicant has complied with all applicable ordinances, the city has no discretion to issue a permit in the absence of compliance”

Is section 1983 Applicable???

MAXWELL v. COUNTY OF SAN DIEGO
5) the court ruled that the officers were not entitled to qualified immunity because of the danger creation exception

(9th circuit has addressed the legal standard issue in “danger creation” cases and agrees with the majority view that a heightened level of culpability, i.e., more than mere negligence is required. Specifically, in Grubbs II, the court held a plaintiff must plead and prove “deliberate indifference.”

pleadings and briefs are available upon request see:

http://www.mcnicholaslaw.com/CM/Custom/MSM_PMc-Governmental-Torts.pdf)

The silver lining, in this whole mess is I have had my eyes opened to looking at issues (like public pensions, etc.) in a whole new light.

[CA renter]

[quote=phaster]

You most likely have lots of stories you know and want to share about $hit that happens on wall $t, but the same thing happens between public employee union members and politicians.

Recall the before SD made the national news headlines that we had a groper for a mayor (who was forced to resign), there was a similar pervert problem w/in the SDPD. Seem there is an “old boys club” attitude, because the reporter from the “reader” stated:

It was surprising to see the lengths that the City Attorney’s office went to try and get this case dismissed.

http://www.sandiegoreader.com/weblogs/news-ticker/2012/nov/09/city-to-pay-675000-to-victim-of-sexual-assault-by-/#

[/quote]

I’ve mentioned many times that there are multiple entities who will attempt to use politicians to get what they want. From unions, to RE developers, to private govt contractors, to special interest groups of various sorts, to “taxpayer advocates,” to retired citizens with too much time on their hands who want the city/state/country to look or feel a particular way, to corporations looking for tax credits or special infrastructure, etc., etc. (The fact that all of the attention has been focused on labor will be addressed in a different post.)

Filner was an elected official who had a definite problem with women. No excuse for that. And he’s gone.

The cop with the groping problem is also gone…in jail. Nobody with any brains or morals will try to justify his behavior. The reason the city had to defend him (and look into the character of the main victim/witness) was because the city is on the hook if he’s convicted. So far, they’ve had to pay hundreds of thousands of dollars to at least one victim. This is why public agencies screen their potential employees so thoroughly (and, yes, some bad ones will still manage to slip through the cracks). It’s why they don’t want to lose the good ones. A public agency is viewed as a very deep pocket. People often file fraudulent lawsuits against public employers, so every accusation has to be investigated thoroughly.

This isn’t so much about the “old boys’ club” as it is about liability…though it does look like the PD had him return to work when he absolutely should not have been working, and that’s a problem…but then, people would be complaining that he was being “paid not to work” while he was being investigated.

http://www.10news.com/news/judge-overturns-convictions-against-former-san-diego-police-officer-anthony-arevalos

[CA renter]

[quote=phaster][quote=CA renter]

You are totally wrong about politicians and unions being on the same side of the table. Nothing could be further from the truth. Some politicians are labor-friendly, and others have a vitriolic hatred for unions. I have personal experience with contract negotiations, and there is NO truth to your statement that politicians automatically pander to unions.

Unions are no different from any other group that supports politicians who will further their particular interests.[/quote]

There is a perception (which I happen to share) that public unions have a great deal of control over the careers of their negotiating counterparties (i.e. politicians). Said another way its an old boys club, same as what happens in wall street, where the basic instinct is to protect their own. Bottom line is, politicians and public employees are part of a club, the “public at large” isn’t part of.

…

Another “moral/ethical” reason if I were king, I would eliminate public employee unions is, because I read they:

PUBLIC EMPLOYEE UNIONS “hurt the overall interests of the working poor.”

http://www.thedailybeast.com/articles/2014/07/11/why-progressives-shouldn-t-support-public-workers-unions.html

I’d guessing if there were some kind of public vote, I’d bet a majority of people would have to wonder if the “public employee economic self interest” more often than not is biased inward toward “the old boys club” rather than to the public at large.

[/quote]

Yes, I’m sure you do have that perception, and it’s no accident that you do. It’s been fed to you by the Privatization Movement. These are people/entities who benefit from the government far more than any union employees do, and they will not be satisfied until they own and control public finances and all of the commons.

http://en.wikipedia.org/wiki/Commons

The ONLY thing standing in their way? Public employee unions.

Once again, politicians and public employees are NOT “on the same side of the table.” There is no “club,” there is no secret society where public union employees and politicians come together to conspire against “the people.” Public unions are no different from any other stakeholder group, as mentioned in my post, above. They have no more control or power than those other groups. The ONLY thing any of them can do is donate to a candidate’s campaign, or endorse a candidate, or help pound signs, etc. Every single person has that same power, either as a group (for those of “normal” means…”immigration reform” advocates, Chamber of Commerce, National Association of Realtors, etc., etc.) or as a single, wealthy individual (Bill Gates, George Soros, David Koch, etc.).

And you’ve offered up a perfect example of the Privatization Movement’s propaganda, right there in your very own post. That totally ridiculous “Daily Beast” article, apparently telling “progressives” that they need to encourage an artificial divide between public and private workers, was written by Dmitri Mehlhorn, the venture capitalist “free market” thinker who is going to lecture progressives about how to think and act in ways that will further destroy labor. Who is Dmitri Mehlhorn?

“As a political activist, Dmitri has co-founded several groups focused on market-friendly advocacy. In 2003, he co-founded Hope Street Group, a 501c3 national nonprofit focused on centrist innovation in healthcare and education. In 2010, with former Washington DC Public Schools Chancellor Michelle Rhee, Mehlhorn co-founded and served as COO of StudentsFirst, a 501c4 focused on K-12 educational performance. In 2011, Mehlhorn founded and chaired the Great New England Public School Alliance, a group funded by Michael Bloomberg and focused on electoral advocacy in New England. Mehlhorn has also served on the boards of other market-oriented groups, and has written about market-friendly progressive solutions in housing, antitrust, technology, and economics, with publications in journals such as the Fordham Law Review and the San Diego Union Tribune.”

Here’s a thread where we had discussed Michelle Rhee’s qualifications and successes (if one can call them that).

http://piggington.com/ut_opinion_article_on_sb_1021_and_prop_30?page=2

She’s stepped down as head of Students First.

https://nonprofitquarterly.org/policysocial-context/24688-michelle-rhee-leaves-studentsfirst-assessing-her-accomplishments.html

This is an excellent blog if you want to learn more about the Privatization Movement in education (it’s a HUGE deal):

http://dianeravitch.net/category/studentsfirst/

The Privatization Movement at work in San Diego:

http://piggington.com/ot_public_employee_unions_attack_the_city_of_san_diegoprop_b?page=1

And my all-time favorite post from paramount where he tried to claim that some poor, little ol’ teacher was taking on the big, bad unions (see who was hiding behind the curtains):

http://piggington.com/ot_california_teachers_taking_on_the_california_teachers_union

[CA renter]

Here’s another post about “pension reform” advocates.

The link from paramount’s original post no longer works, but I’ve found another source with the same article.

http://www.modbee.com/2011/11/03/1931321/ballot-proposals-seek-change-in.html

[quote=CA renter][quote=paramount]Let’s not be distracted by those who inordinately benefit from our inordinate taxes, let’s get it on the ballot:

(It’s gaining momentum)

http://www.bellinghamherald.com/2011/11/02/2254976/california-pension-reform-group.html%5B/quote%5D

Dumbasses… They’re spending lots of money when the governor’s proposed the very same thing already.

Let’s see who’s behind this anti-union propaganda, shall we?

——————————-
Pension Reform President Dan Pellissier said the group is now trying to raise the millions needed to gather signatures and eventually mount a campaign against well-funded public employee unions.

Read more: http://www.bellinghamherald.com/2011/11/02/2254976/california-pension-reform-group.html#ixzz1cd4wdT7E

“Some recipients of BP tickets are playing key roles in crafting the climate law’s landmark environmental policies… It also gave Kings tickets to Dan Pellissier, then the deputy secretary for energy policy at the state environmental protection agency; Pellissier is now a deputy cabinet secretary advising Governor Arnold Schwarzenegger on energy and environmental policy.”

BP’s Secret Ticket Request Line

……..

“John D. Arnold, a former Enron Corp. trader in Texas who became a billionaire by buying and selling natural gas, is bankrolling a group supporting changes to limit California’s pension-fund obligations.

Arnold, who formed hedge fund Centaurus Advisors LLC in Houston after leaving Enron, started a foundation that Meredith Simonton, a spokeswoman, said has given $150,000 to the California group.

The organization set up by Arnold and his wife, Laura, a lawyer, plans to be involved in pension-overhaul efforts around the U.S., Simonton said by telephone from Houston. State and local governments confront “massive financial distress” from the gap between assets and promised benefits, she said.

Their foundation, like the one run by Fritz, is restricted from political activities as a 501(c)3 tax-exempt organization under U.S. law.

“I can’t say, ‘Go for this’” proposal because of that tax status, Fritz said Aug. 8. In promoting a bipartisan legislative approach, she said, “I’m looking to avoid the fights we’ve seen in Wisconsin and New Jersey.”

Her organization and the one backing the ballot measure are opposed by a union group called Californians for Retirement Security. Steve Maviglio, a spokesman, has sought to compel Fritz to disclose her foundation’s financial backers.

“Clearly, transparency is an issue,” Maviglio said by telephone last week. “Voters deserve to know who’s paying for their propaganda.”

http://www.bloomberg.com/news/2011-08-12/enron-billionaire-bankrolls-california-advocate-for-public-pension-changes.html

[Hmmm…I’m seeing an “energy industry” relationship here. How about you, paramount? Still think it’s about “pension reform,” or have your eyes been opened to the true nature of the attacks on unions (privatization of public assets and revenue streams). Follow the money… KNOW **WHO** IS BEHIND THE ATTACKS ON UNION WORKERS AND KNOW **WHY** THEY ARE DOING IT. -CAR]
————————————

Pellissier said the plan has united several leading pension reform advocates, including former California Republican Party Chairman Duf Sundheim and former GOP Assemblyman Roger Niello.

So far the group has spent about $250,000 on polling and legal help to write the proposals. The largest chunk of that money came from billionaire John D. Arnold, a former Enron Corp. trader who became wealthy buying and selling natural gas for the now-defunct energy firm.

Read more: http://www.bellinghamherald.com/2011/11/02/2254976/california-pension-reform-group.html#ixzz1cd5749dd

……

“Duf Sundheim has been active in Republican Party politics for over 30 years beginning with his service as a page in the Illinois State Legislature at age 18 and working in the trenches as a campaign advance staffer for the Illinois Republican U.S. Senate candidate in 1974. Duf also had a record setting term as Chairman of the Lincoln Club of Northern California.”

“Mr. Sundheim was Chairman (2003-06) of the California Republican Party during one of the most critical times in its history. Shortly after Mr. Sundheim was elected in 2003, California had its first recall of a sitting Governor and elected Arnold Schwarzenegger Governor. Mr. Sundheim’s election itself was historic, as it marked the first time in 38 years the seating Vice Chairman had not been elected Chair. In February of 2005, Mr. Sundheim became the first Chairman in the history of the CRP to be re-elected to a consecutive term. In three years, with the active support of Governor Schwarzenegger, the CRP has raised over $100 million dollars, an unprecedented figure.”

[Friends in high places? -CAR]

http://igs.berkeley.edu/people/nac/sundheim.html

…..

“The head of an upstart group that aims to recruit California Republicans to run for statewide offices earned $900,000 in salary and benefits in the 2007-2008 election cycle, angering some Republicans who wondered Monday if the cash is being well-spent.

Duf Sundheim, former California Republican Party chairman, collected the money while launching California Republicans Aligned for Tomorrow, according to reports that the 527 political group has filed with the Internal Revenue Service.

The group was officially made public in 2008, though Sundheim said he started working on the GOP candidate development and recruitment efforts in 2007.

It was backed with $100,000 pledges from more than a dozen major supporters of Gov. Arnold Schwarzenegger, including businessmen Lawrence Dodge and Paul Folino. Over the two-year period, the group raised $1.4 million and paid much of it to Sundheim.

Details of Sundheim’s pay package, including salary, medical and automobile expenses that topped $43,000 a month, were first discussed on Republican blogs over the weekend.

[Holy cow! THIS is the guy criticizing public employees’ compensation????? Gee, I wonder which “bought politicians” these guys are trying to get elected. I’ll go out on a limb and guess that they have nothing to do with “taxpayer advocacy.” -CAR]

Read more: http://www.mcclatchydc.com/2009/03/03/63138/california-republicans-question.html#ixzz1cdFRtFzU

……………..

[Uh-oh. Looky here at what Mr. Lawrence Dodge has been up to. -CAR]

“A federal agency has concluded former bank president and co-CEO Lawrence Dodge violated the law, breached his fiduciary duties, engaged in unsound business practices and filed false and misleading reports, including claims of proceeds from a $2 million loan to the California Republican Party that did not exist.

At different times, American Sterling claimed to OTS the bank was “well-funded” or “adequately funded.” This was based on Dodge telling his board of directors that the bank received contributions from loan proceeds from $2 million his parent company gave to the California Republican Party and $400,000 to Millennium Gate Receivable, a real-estate investment.

[Why is a MO banker interested in California’s pensions? There’s a lot more to this story, but don’t want to make a long post even longer. Do your research. -CAR]

http://blogs.ocweekly.com/navelgazing/2010/07/lawrence_dodge_office_thrift_s.php
……….

[More stuff about Lawrence Dodge. Apparently, he thinks public employees make too much, but is “donating” millions (and then not paying for it, though claiming credit for it) in order to get buildings named after himself. -CAR]

http://blogs.ocweekly.com/navelgazing/2011/08/kansas_city_art_institute_sues.php
………….

And Roger Niello:

“In addition, Assemblyman Niello’s legislation to authorize the state to participate in Public Private Partnerships for infrastructure projects provided a template for the language in the most recent budget agreement.

Additionally, Assemblyman Niello has introduced legislation to bring about innovative reforms to our method of contracting public infrastructure…”

[Anytime I hear about “Public-Private Partnerships,” I think “fraud and corruption.” But, that’s just me… -CAR]

http://en.wikipedia.org/wiki/Roger_Niello

“The formation of a 527 is curious, too.

[A]fter all, there’s nothing stopping the California Republican Party or the New Majority Political Action Committee, of which Dodge and Folino are board members, from building a farm team of prospective statewide candidates.

But a 527 is a federal entity and not subject to California campaign contribution or spending restrictions, although it must disclose its donors and expenses. (Click here to look up CRAFT’s filings on the IRS web site.)

Dodge, Folino and the New Majority PAC are among those who donated $100,000 each, along with William Lyon of Lyon Homes, the San Diego Chargers and Baron Real Estate CEO William Bloomfield Jr.

As CRAFT’s CEO, Sundheim earned $20,833 in each of the first three months of 2008 plus expenses, according to the filing.”

http://www.ibabuzz.com/politics/2008/04/16/gop-splinter-group-launches-candidate-initiative/

………………..

Looks like real estate and fiance people like CRAFT.

http://forms.irs.gov/politicalOrgsSearch/search/Print.action?formId=40848&formType=E72
………………

“We’re taking it one step at a time,” Pellissier said, noting that former U.S. Secretary of State George Schultz has agreed to raise money for the effort.

Read more: http://www.bellinghamherald.com/2011/11/02/2254976/california-pension-reform-group.html#ixzz1cd5BevZB

So, we have finance, energy, and real estate being pretty heavily represented here. Any of those helped you (or any other taxpayers) out lately, paramount?[/quote]

http://piggington.com/gov_brown_proposes_state_worker_pension_changes?page=1

[Anonymous]

[quote=CA renter]Here’s another post about “pension reform” advocates.

The link from paramount’s original post no longer works, but I’ve found another source with the same article.

…
[/quote]

Wow – spending a nice Saturday afternoon recycling old posts from old arguments.

While you are digging through old threads, why not come up with an example where I said that public sector compensation should be lower? Now would be a good time to prove your claim from earlier in this thread (September 8, 2014 – 6:39pm, to be precise.)

Just one example of these “ad nauseum” posts you describe should be trivial to find.

Unless, of course, you were not telling the truth, making stuff up, you know … lying.

Enjoy your weekend!

[CA renter]

Well, since the same subject was brought up again — by someone who appears to be a new poster — it would be logical to link to threads where the topic was already discussed, no?

————–

Have you not said that public employees should be converted from defined benefit plans to defined contribution plans? And have you not suggested that the up-front contribution amounts should remain the same? Are you actually claiming that the two are of equal value?

http://neatoday.org/2012/03/23/why-a-401k-is-no-replacement-for-a-pension/

The only liar around here is you, pri. Crawl back into your hole, troll.

[Anonymous]

[quote=CA renter]Well, since the same subject was brought up again — by someone who appears to be a new poster — it would be logical to link to threads where the topic was already discussed, no?

————–

Have you not said that public employees should be converted from defined benefit plans to defined contribution plans? And have you not suggested that the up-front contribution amounts should remain the same? Are you actually claiming that the two are of equal value?

http://neatoday.org/2012/03/23/why-a-401k-is-no-replacement-for-a-pension/

The only liar around here is you, pri. Crawl back into your hole, troll.[/quote]

Your “proof” of something that I said is an article from a public sector lobby?

FAIL

Although everyone here but you gets this, let me spell it out:

– Given the same initial investment, defined benefit and defined contribution plans have the same value. Any (objective) accountant will tell you that.

– The only reason defined contribution could be “worth” more is because there is stupidity or outright shenanigans at play.

– The only difference between the two plans is that one comes with a promise to pay. In the case of public sector pensions, the entire burden of this promise is on the public. Any additional “value” in the plan will be taken from the taxpayer when the bill is due.

The fact that you insist that the same amount of money invested can somehow be magically more valuable because of the “promise” of a guaranteed return betrays your ignorance and your agenda.

Read the title of this thread. The pensions are UNFUNDED. The “additional value” you reference does not exist.

Promises are so much easier to make when someone else has to keep them.

Nevertheless, you have failed to provide any of my posts where I claim that public sector compensation should be lower. Until you do so, it as established fact that you are a liar.

Your credibility is shot (it was years ago) but on keep cutting and pasting…

[phaster]

[quote=harvey]
– The only reason defined contribution could be “worth” more is because there is stupidity or outright shenanigans at play.[/quote]

[CA renter]

[quote=harvey][quote=CA renter]Well, since the same subject was brought up again — by someone who appears to be a new poster — it would be logical to link to threads where the topic was already discussed, no?

————–

Have you not said that public employees should be converted from defined benefit plans to defined contribution plans? And have you not suggested that the up-front contribution amounts should remain the same? Are you actually claiming that the two are of equal value?

http://neatoday.org/2012/03/23/why-a-401k-is-no-replacement-for-a-pension/

The only liar around here is you, pri. Crawl back into your hole, troll.[/quote]

Your “proof” of something that I said is an article from a public sector lobby?

FAIL

Although everyone here but you gets this, let me spell it out:

– Given the same initial investment, defined benefit and defined contribution plans have the same value. Any (objective) accountant will tell you that.

– The only reason defined contribution could be “worth” more is because there is stupidity or outright shenanigans at play.

– The only difference between the two plans is that one comes with a promise to pay. In the case of public sector pensions, the entire burden of this promise is on the public. Any additional “value” in the plan will be taken from the taxpayer when the bill is due.

The fact that you insist that the same amount of money invested can somehow be magically more valuable because of the “promise” of a guaranteed return betrays your ignorance and your agenda.

Read the title of this thread. The pensions are UNFUNDED. The “additional value” you reference does not exist.

Promises are so much easier to make when someone else has to keep them.

Nevertheless, you have failed to provide any of my posts where I claim that public sector compensation should be lower. Until you do so, it as established fact that you are a liar.

Your credibility is shot (it was years ago) but on keep cutting and pasting…[/quote]

That’s correct, a DC plan is far less valuable than a DB plan. You’ve clearly advocated for reduced compensation for public sector workers. Anyone with at least two brain cells to rub together will tell you this. One of the biggest arguments (including yours) on this site is: “I don’t get a DB pension, why should they?” IOW, it is well known that a DB pension plan is more valuable than a DC plan. Of course, most people seem to forget the fact that they DO have a defined benefit plan…it’s called Social Security. Funny how so many people don’t grasp that fact.

As for the claim that the pension funds are “unfunded,” if you can find a pension fund that is unfunded, I’d like to see it. Pension funds can be over-funded, under-funded, or fully-funded. While there might be some anomaly in a red state where the Privatization Movement is trying to make a point by siphoning all the money out of a pension fund, I’m unaware of any “unfunded” pension funds in the real world.

You’re also clearly ignorant about the differences between DB and DC pensions. DC plans have higher administrative costs and lower returns; DC plans have access to fewer investment options; DC plans don’t pool longevity risk; DC plans have lower contribution limits than DB plans (for employer and employee); and DB plans can remain in higher-yielding and more diversified investments and can better manage the ups and downs of the market over time because they are continuously funded by the contributions of current employees and their employers, and benefits are staggered well into the future (pooled investment risks over time and number of people).

You’re also wrong about who bears the risks. As I’ve already mentioned on the first page of this thread, public employees are *already* taking the hit for the additional contributions to pension funds, not only because of the items I’ve mentioned there, but because they are taking pay cuts/pay freezes, and losing other benefits because of the additional costs of their pensions. As we speak, they are working on ways to share the costs of the “unfunded liabilities” (the difference between actuarially assumed rates of return and actual returns) with employees if return rates don’t make up the difference. Additionally, we can reduce the waste, fraud, and abuse that goes on in the public sector…like building a road or bridge to a well-connected “friend” of a politician. Note the stories posted by phaster to see how the corruption was specifically concentrated around entities in the PRIVATE SECTOR. No unions or boots-on-the-ground public employees were mentioned in the story where millions were diverted to various parties.

But I’d like to hear more about how my credibility was shot. Shot by whom? By you???? By the person who has absolutely no knowledge about, or experience with, the public sector? The person to whom I had to explain how pension formulas worked? The person to whom I had to explain how the benefits were paid, and by which entities? The person who makes personal attacks rather than addressing the actual issues in an intelligent and informed manner? The person who describes cited facts, statistics, studies, etc. as “cut and paste”? That’s the person who’s “discredited” me? You’re a quaint troll.

[phaster]

[quote=CA renter]
You’re also clearly ignorant about the differences between DB and DC pensions. DC plans have higher administrative costs and lower returns; DC plans have access to fewer investment options; DC plans don’t pool longevity risk; DC plans have lower contribution limits than DB plans (for employer and employee); and DB plans can remain in higher-yielding and more diversified investments and can better manage the ups and downs of the market over time because they are continuously funded by the contributions of current employees and their employers, and benefits are staggered well into the future (pooled investment risks over time and number of people).[/quote]

News reports about CalPERS and the SD pension board, leads me to believe idiots who over estimate their own management abilities AND have no basic understanding of math or the investing paradox, are at the helm.

Given your logic since CalPERS and SD have “professional” managers, elected board(s) to provide oversight and access to diversified investments, then why haven’t they beat the market benchmarks (i.e. the index of the DJ30 or S&P500)?

http://www.marketwatch.com/investing/index/djia

http://www.marketwatch.com/investing/index/spx

IMHO its because of the “investing paradox.”

Simply stated a disciplined small/individual investor can beat market averages over long periods of time, because their trades fly under the radar and are “un-noticed” by the market.

However when the portfolio is in the BILLIONS (as is the case w/ SD), or the HUNDREDS OF BILLIONS (as is the case w/ CalPERS), any trade they make I’d argue is the market (so a different investment style is needed).

[quote=phaster]
[quote=livinincali]
The one benefit of defined benefit contribution plans, retention, isn’t worth the risks, the frauds, the vote buying, and everything else it enables. That’s the bottom line. The rewards (reduced training costs retention, etc.) don’t outweigh the risks and therefore they should be scrapped..[/quote]

Agree! And after doing some research, seems the best way forward is to follow the example set by the Thrift Saving Plan (a federal government 401K style program, that can’t be corrupted/mismanaged like what happend at CalPERS or as what is happening with the SD pension program)

https://www.tsp.gov/investmentfunds/fundsoverview/comparisonMatrix.shtml
[/quote]

The Thrift Savings Plan, used by millions of federal workers, is like a 401(k), except it’s a lot cheaper. Last year it charged an average expense ratio of a mere 0.03%. That means just $3 in fees for $10,000 in savings, or $30 for a $100,000 portfolio.

John Turner, an economist and director of the Pension Policy Center and a former federal worker himself, said “Unless they’re advanced investors, I think they should leave their funds in the TSP because it’s simple and it’s easy enough that most investors can do it and do it well”

http://money.cnn.com/2014/10/01/retirement/federal-workers-leaving-thrift-savings-plans/

[phaster]

[quote=CA renter]Additionally, we can reduce the waste, fraud, and abuse that goes on in the public sector…like building a road or bridge to a well-connected “friend” of a politician. Note the stories posted by phaster to see how the corruption was specifically concentrated around entities in the PRIVATE SECTOR. No unions or boots-on-the-ground public employees were mentioned in the story where millions were diverted to various parties.[/quote]

Actually I think the role about unions or boots-on-the-ground public employees remains un-answered,

http://www.washingtonpost.com/local/us-seeks-to-end-tax-break-for-facade-easement-donations/2011/07/05/gIQAFsH35H_story.html

then re-read what I actually posted…

[quote=phaster][quote=CA renter]
And that KPBS link regarding the software that would allow for “fraudulent” transactions? NO FRAUD WAS FOUND. The issue here is that the auditors thought some employees had access to certain modules in the software that they shouldn’t necessarily have access to. It’s like people in sales having access to the accounting modules. The apparent reason for this is that the building/planning department is understaffed, and people are trained to do more than one thing when necessary. It also looks like they are working on fixing this.

“Luna recommends 13 changes to the Development Services Department including restructuring its management to create greater internal controls, separating employees’ responsibilities so they can’t access as much of the computer system and documenting more changes to individual permits. He attributed much of the failures to inefficient staffing, high workloads, limited supervision and deficiencies with the computer system itself.

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/%5B/quote%5D

What’s the old saying “where there smoke there is fire”

In general, people don’t like bad news so they don’t dig for it. Then there is tendency of people not wanting to admit anything thing is wrong (if they missed something the first time around), so if the root cause of a problem is not fully understood, it can’t be fixed!

IMHO TPTB are in denial (much like an individual who has a substance abuse problem), unfortunately for me I inherited an issue that required me to try and figure out the root cause of a bad news problem.

If ya first look at the MLS for the property (which was sold in 2006), it shows no structure (because it was torn down after a homicide investigation back in 1988), therefore the plans submitted to the city for a permit that show a “termite infested detached garage” to be replaced is a fraudulent statement!

Given all the historical documents (like a 1929 documents showing an easement, along with city maps indicating utilities in place), news reports that the the city has software that allows fraud and the statement from an eMail dated 9/23

“In addition, based on preparation of a thorough historical report on our property to apply for a historical designation of the residence, no existence of any sewer line or associated easement was noted on any of the historical documents/maps we researched.”

there as you can see, lots of “interesting” questions one can ask about the “integrity” of the building permit process, along with questions about “historical property” designations.

Being god fearing and honest all their lives, the last thing my parents wanted to do was be an accessory to insurance fraud (because an offer was given to fix the mess from the builders/owner of the construction project)

Because there were lots of questions/concerns my parents parents “informally” worked their way up the chain of command to eventually goldsmith and gloria, asking for an investigation.

So after my parents died, I inherited the whole damn mess which legally put me between a rock and a hard place.

The city IMHO basically swept the whole problem under the carpet, because after the scandal allowing a skyscraper (the sun road building) to be built too tall next to an airport (as per FAA regulations) to fix the software that won’t allow fraud has a pretty high price tag (financially and politically), then there is the tricky question what about all those tax credits based on “historical property” status.

Trying to do the right thing, cost me well into six figures of legal and repair costs (basically had to cave in because it was my only survival option after I was sued for “quiet title” )

I’ve been more financially fortunate than most, having a legacy my parents left me as well as managing to save and invest my own monies, so I can survive a six figure hit. But I’ve learned the game is rigged, and its not only wall street “greed” that is causing the economy to hurt those in the so called 99%…

I am not a lawyer, but was able to piece together case law “logic” that seems to fit the fact pattern…

“Obtaining Recovery for Property Damage through Inverse Condemnation”
http://www.lacba.org/files/lal/vol33no10/2774.pdf

ARREOLA v. MONTEREY COUNTY
An entity with the power to control a project need not actively participate in it to suffer liability.

BOOKOUT v. STATE OF CALIFORNIA
a five-year statute of limitations applies only where a public entity has physically entered and exercised dominion and control over some portion of the plaintiff’s property.

Main body logic…

HARSHBARGER v. CITY OF COLTON
1) there is a mandatory duty for building inspectors to enforce building codes because of public safety concerns
2) an exception to the rule of sovereign immunity is fraudulent inspection

BLAIR v. MAHON
3) failure to speak is a species of fraud

HORWITZ v. CITY OF LOS ANGELES
4) “Just as the city has no discretion to deny a building permit when an applicant has complied with all applicable ordinances, the city has no discretion to issue a permit in the absence of compliance”

Is section 1983 Applicable???

MAXWELL v. COUNTY OF SAN DIEGO
5) the court ruled that the officers were not entitled to qualified immunity because of the danger creation exception

(9th circuit has addressed the legal standard issue in “danger creation” cases and agrees with the majority view that a heightened level of culpability, i.e., more than mere negligence is required. Specifically, in Grubbs II, the court held a plaintiff must plead and prove “deliberate indifference.”

pleadings and briefs are available upon request see:

http://www.mcnicholaslaw.com/CM/Custom/MSM_PMc-Governmental-Torts.pdf)

The silver lining, in this whole mess is I have had my eyes opened to looking at issues (like public pensions, etc.) in a whole new light.[/quote]

I made a promise to my dad to find out exactly what happened, so any legal experts care to share their opinion…

FWIW just listened to a podcast story that involved the “old boys club” (another economic term I discovered is “regulatory capture”)

The Secret Recordings of Carmen Segarra

An unprecedented look inside one of the most powerful, secretive institutions in the country. The NY Federal Reserve is supposed to monitor big banks. But when Carmen Segarra was hired, what she witnessed inside the Fed was so alarming that she got a tiny recorder and started secretly taping

http://www.thisamericanlife.org/radio-archives/episode/536/the-secret-recordings-of-carmen-segarra

Getting back to the question “how will unfunded pensions affect the local economy,” I googled the term “san diego pensions” and found a 2010 article that stated the san diego region is on the hook for 45.4 BILLION (in public pensions and related health care costs)

http://www.edchoice.org/CMSModules/EdChoice/FileLibrary/593/CA-Pension-Brief—Trouble-Brewing-in-San-Diego.pdf

I also googled how many parcels in SD/SD county, and the number I found was just over a million. So if you own a home/condo in the region (on a parcel), your share of the “unfunded” pension debt amounts to about $45,000….

Couple of last news items, it was just reported that CalPERS is no better than bondholders in the stockton bankruptcy

California cities may turn to bankruptcy courts to ease pension obligations after a judge ruled the California Public Employees’ Retirement System doesn’t deserve special protection

http://www.bloomberg.com/news/2014-10-01/calpers-denied-special-protection-in-stockton-bankruptcy.html

Given all the facts, what does everyone think the odds are of SD going the bankruptcy route?

Personally, I think its not a matter of if, but when something in the overall US economy has to give…

Largest Public Pensions Face $2 Trillion Hole, Moody’s Says

http://www.bloomberg.com/news/2014-09-25/largest-u-s-public-pensions-face-2-trillion-gap-moody-s-says.html

[Anonymous]

Thanks for the data, phaster.

DB plans will go down in history as a failed economic experiment.

[CA renter]

[quote=harvey]Thanks for the data, phaster.

DB plans will go down in history as a failed economic experiment.[/quote]

LOL! And you think that DC pensions will go down in history as a successful experiment? Good luck with that.

[livinincali]

[quote=CA renter][quote=harvey]Thanks for the data, phaster.

DB plans will go down in history as a failed economic experiment.[/quote]

LOL! And you think that DC pensions will go down in history as a successful experiment? Good luck with that.[/quote]

Long comfortable retirement for the masses will go down as a failed experiment. Hope you didn’t burn too many bridges with your kids because it’s live with them or get the living equivalent of 3 hots and a cot. That’s what’s eventually going to happen. The top 20% may be able to experience comfortable retirement, but the rest will be living pretty damn broke in retirement. Surviving but not thriving. There’s just not enough disposal income from the productive members of society to provide comfortable retirement for the masses.

[CA renter]

[quote=livinincali][quote=CA renter][quote=harvey]Thanks for the data, phaster.

DB plans will go down in history as a failed economic experiment.[/quote]

LOL! And you think that DC pensions will go down in history as a successful experiment? Good luck with that.[/quote]

Long comfortable retirement for the masses will go down as a failed experiment. Hope you didn’t burn too many bridges with your kids because it’s live with them or get the living equivalent of 3 hots and a cot. That’s what’s eventually going to happen. The top 20% may be able to experience comfortable retirement, but the rest will be living pretty damn broke in retirement. Surviving but not thriving. There’s just not enough disposal income from the productive members of society to provide comfortable retirement for the masses.[/quote]

Agree, to a large extent. That was my point about historical social safety nets being familial. But how do we reconcile this with the trends related to industrialization and modernization — non-agrarian lifestyles where children are expected to sever ties with parents, siblings, and other family members at a fairly early age in order to pursue their own education and interests, etc.? It just doesn’t bode well, especially for most American families.

[CA renter]

[quote=phaster][quote=CA renter]Additionally, we can reduce the waste, fraud, and abuse that goes on in the public sector…like building a road or bridge to a well-connected “friend” of a politician. Note the stories posted by phaster to see how the corruption was specifically concentrated around entities in the PRIVATE SECTOR. No unions or boots-on-the-ground public employees were mentioned in the story where millions were diverted to various parties.[/quote]

Actually I think the role about unions or boots-on-the-ground public employees remains un-answered,

http://www.washingtonpost.com/local/us-seeks-to-end-tax-break-for-facade-easement-donations/2011/07/05/gIQAFsH35H_story.html

then re-read what I actually posted…

[quote=phaster][quote=CA renter]
And that KPBS link regarding the software that would allow for “fraudulent” transactions? NO FRAUD WAS FOUND. The issue here is that the auditors thought some employees had access to certain modules in the software that they shouldn’t necessarily have access to. It’s like people in sales having access to the accounting modules. The apparent reason for this is that the building/planning department is understaffed, and people are trained to do more than one thing when necessary. It also looks like they are working on fixing this.

“Luna recommends 13 changes to the Development Services Department including restructuring its management to create greater internal controls, separating employees’ responsibilities so they can’t access as much of the computer system and documenting more changes to individual permits. He attributed much of the failures to inefficient staffing, high workloads, limited supervision and deficiencies with the computer system itself.

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/%5B/quote%5D

What’s the old saying “where there smoke there is fire”

In general, people don’t like bad news so they don’t dig for it. Then there is tendency of people not wanting to admit anything thing is wrong (if they missed something the first time around), so if the root cause of a problem is not fully understood, it can’t be fixed!

IMHO TPTB are in denial (much like an individual who has a substance abuse problem), unfortunately for me I inherited an issue that required me to try and figure out the root cause of a bad news problem.

If ya first look at the MLS for the property (which was sold in 2006), it shows no structure (because it was torn down after a homicide investigation back in 1988), therefore the plans submitted to the city for a permit that show a “termite infested detached garage” to be replaced is a fraudulent statement!

Given all the historical documents (like a 1929 documents showing an easement, along with city maps indicating utilities in place), news reports that the the city has software that allows fraud and the statement from an eMail dated 9/23

“In addition, based on preparation of a thorough historical report on our property to apply for a historical designation of the residence, no existence of any sewer line or associated easement was noted on any of the historical documents/maps we researched.”

there as you can see, lots of “interesting” questions one can ask about the “integrity” of the building permit process, along with questions about “historical property” designations.

Being god fearing and honest all their lives, the last thing my parents wanted to do was be an accessory to insurance fraud (because an offer was given to fix the mess from the builders/owner of the construction project)

Because there were lots of questions/concerns my parents parents “informally” worked their way up the chain of command to eventually goldsmith and gloria, asking for an investigation.

So after my parents died, I inherited the whole damn mess which legally put me between a rock and a hard place.

The city IMHO basically swept the whole problem under the carpet, because after the scandal allowing a skyscraper (the sun road building) to be built too tall next to an airport (as per FAA regulations) to fix the software that won’t allow fraud has a pretty high price tag (financially and politically), then there is the tricky question what about all those tax credits based on “historical property” status.

Trying to do the right thing, cost me well into six figures of legal and repair costs (basically had to cave in because it was my only survival option after I was sued for “quiet title” )

I’ve been more financially fortunate than most, having a legacy my parents left me as well as managing to save and invest my own monies, so I can survive a six figure hit. But I’ve learned the game is rigged, and its not only wall street “greed” that is causing the economy to hurt those in the so called 99%…

I am not a lawyer, but was able to piece together case law “logic” that seems to fit the fact pattern…

“Obtaining Recovery for Property Damage through Inverse Condemnation”
http://www.lacba.org/files/lal/vol33no10/2774.pdf

ARREOLA v. MONTEREY COUNTY
An entity with the power to control a project need not actively participate in it to suffer liability.

BOOKOUT v. STATE OF CALIFORNIA
a five-year statute of limitations applies only where a public entity has physically entered and exercised dominion and control over some portion of the plaintiff’s property.

Main body logic…

HARSHBARGER v. CITY OF COLTON
1) there is a mandatory duty for building inspectors to enforce building codes because of public safety concerns
2) an exception to the rule of sovereign immunity is fraudulent inspection

BLAIR v. MAHON
3) failure to speak is a species of fraud

HORWITZ v. CITY OF LOS ANGELES
4) “Just as the city has no discretion to deny a building permit when an applicant has complied with all applicable ordinances, the city has no discretion to issue a permit in the absence of compliance”

Is section 1983 Applicable???

MAXWELL v. COUNTY OF SAN DIEGO
5) the court ruled that the officers were not entitled to qualified immunity because of the danger creation exception

(9th circuit has addressed the legal standard issue in “danger creation” cases and agrees with the majority view that a heightened level of culpability, i.e., more than mere negligence is required. Specifically, in Grubbs II, the court held a plaintiff must plead and prove “deliberate indifference.”

pleadings and briefs are available upon request see:

http://www.mcnicholaslaw.com/CM/Custom/MSM_PMc-Governmental-Torts.pdf)

The silver lining, in this whole mess is I have had my eyes opened to looking at issues (like public pensions, etc.) in a whole new light.[/quote]

I made a promise to my dad to find out exactly what happened, so any legal experts care to share their opinion…

[/quote]

1.) Regarding my comment in your quote, I was referring to the problems with the Detroit schools from your other post.

2.) Responding to that first link of yours, though, this has nothing at all to do with the Mills Act. The Mills Act is a California state program; the program in your link is federal.

If you have some issue with a particular property having a Mills Act designation, you should look up why they have that designation.

3.) Again, the issue with the software does not point to any fraud. There was no fraud found when they *tried* to find problems with the system. There is no smoke, nor any fire, from what I can see. If you have any evidence or reason to believe that there was fraud, please make your case. The fact is that fraud *can* be committed all over the place — in the public and private sectors — but we don’t get to randomly accuse people of fraud when there is no evidence nor reason to believe that any fraud was committed.

4.) I’m not sure how your parents would have been accessories to insurance fraud if the owner of the other property was willing to fix the problem and pay for it. Are you saying that he was filing a claim? That’s not made clear based on your posts. Quite frankly, if the owner was willing to pay to fix the problem, I’m not sure what the complaint is about.

Unrelated anecdote: A property we’ve owned had a decades-old easement that was never used. When I went to inquire about it, the building/planning department had different maps, and only one of them showed the easement. So, it’s entirely possible that the map that the owner used didn’t show the easement. Not sure if that’s the case in your situation, but it’s not like people in the planning/building departments are trying to commit fraud.

5.) The other owner probably sued for quiet title because you gave him no other option. It sounds like he did try to remedy things. I’m still not sure about what you were trying to accomplish with this. Were you trying to get him to tear down his garage? Why, when he offered to fix the sewer problem (re-route it?), would you want him to do that?

By the way, I’m very sorry for you loss. Your parents sounded like very nice people.

My 2 cents on this? Have the problem fixed, and be done with it, especially if the owner has offered to pay for it. It’s not worth the headache to try to prove a point when things are stacked against your winning. I think the other owner has some legitimate claims, as well. You both probably do; which is why it’s always better to try to setting things outside of court if at all possible. Compromise, and get it done.

[phaster]

[quote=CA renter]
2.) Responding to that first link of yours, though, this has nothing at all to do with the Mills Act. The Mills Act is a California state program; the program in your link is federal.

If you have some issue with a particular property having a Mills Act designation, you should look up why they have that designation.

3.) Again, the issue with the software does not point to any fraud. There was no fraud found when they *tried* to find problems with the system. There is no smoke, nor any fire, from what I can see. If you have any evidence or reason to believe that there was fraud, please make your case. The fact is that fraud *can* be committed all over the place — in the public and private sectors — but we don’t get to randomly accuse people of fraud when there is no evidence nor reason to believe that any fraud was committed.

4.) I’m not sure how your parents would have been accessories to insurance fraud if the owner of the other property was willing to fix the problem and pay for it. Are you saying that he was filing a claim? That’s not made clear based on your posts. Quite frankly, if the owner was willing to pay to fix the problem, I’m not sure what the complaint is about.
[/quote]

The current (political and bureaucratic) SD management, seem to have a “history” of looking the other way kinda like the old sgt schultz character,

[quote=livinincali]
I worked on a project for RISK management about 12 years ago, which is the San Diego’s self funded disability insurance office. What firefighter and cops did at retirement was pretty bad. That was more a case of disability fraud, where if you retire under disability 50% of you pension income is tax free. But there were crazy things in the payroll system. People claiming to work more than 24 hours in a day. People claiming light duty (aka a disability claim) and regular duty in the same day.
[/quote]

The link:

http://www.washingtonpost.com/local/us-seeks-to-end-tax-break-for-facade-easement-donations/2011/07/05/gIQAFsH35H_story.html

In recent years, the Internal Revenue Service has denied 70 percent of facade easement deductions, court filings show. Since 2002, the Justice Department estimates that inflated easement deductions have totaled $1.2 billion.

is directly related to fact that with a “historic property” classification its possible to game federal taxes (with a city policy)

Ability to donate a facade easement to the city or other historical preservation agency as a charitable donation deduction from income taxes.

Still don’t see the connection with software developed by the city that “allows for fraud?”

Bottom line, I was un-necessarly dragged into court and had to face delaying tactics because I seem to have uncovered a web of dishonesty no one wants to admit to (while initially I had concerns about being an accessory to insurance fraud)

https://dl.dropboxusercontent.com/u/22060281/bway_sewer_line_docs/is_it_insurance_fraud.pdf

[CA renter]

[quote=phaster]

Getting back to the question “how will unfunded pensions affect the local economy,” I googled the term “san diego pensions” and found a 2010 article that stated the san diego region is on the hook for 45.4 BILLION (in public pensions and related health care costs)

http://www.edchoice.org/CMSModules/EdChoice/FileLibrary/593/CA-Pension-Brief—Trouble-Brewing-in-San-Diego.pdf

I also googled how many parcels in SD/SD county, and the number I found was just over a million. So if you own a home/condo in the region (on a parcel), your share of the “unfunded” pension debt amounts to about $45,000….

Couple of last news items, it was just reported that CalPERS is no better than bondholders in the stockton bankruptcy

California cities may turn to bankruptcy courts to ease pension obligations after a judge ruled the California Public Employees’ Retirement System doesn’t deserve special protection

http://www.bloomberg.com/news/2014-10-01/calpers-denied-special-protection-in-stockton-bankruptcy.html

Given all the facts, what does everyone think the odds are of SD going the bankruptcy route?

Personally, I think its not a matter of if, but when something in the overall US economy has to give…

Largest Public Pensions Face $2 Trillion Hole, Moody’s Says

http://www.bloomberg.com/news/2014-09-25/largest-u-s-public-pensions-face-2-trillion-gap-moody-s-says.html

[/quote]

1.) Just so you know, EdChoice’s full name is “The Friedman Foundation for Educational Choice.” Why does this matter? Because the “Friedman” behind this foundation is none other than Milton Friedman. Not saying that I think his theories are wrong, as he’s totally correct about many things, just that certain aspects are incredibly damaging our country and its workers. IMHO, many of his policies, brought to life under Reagan, are what has brought this country to its knees.

Milton Friedman has long been an advocate for the public funding of private schools (privatization). There is no question that they want to take down the public pension systems because that is one of the main reasons that people choose public employment over private, and it’s a huge reason for the support and existence of unions. This is why the Privatization Movement is attacking pensions.

BTW, I’ve written many posts on this site — full of facts, data, and research — that show how privatization does NOT save money, nor does it provide better goods/services for the same, or less, money. Even the right-wing think tanks can’t come up with anything to support their views on this. They admit to getting “conflicting results.”

—————

As for San Diego and its risky bets, note that it’s the public employees and retirees who are asking them to reduce leverage:

The day’s developments marked a significant turn-back in a years-long trend. Since hiring Partridge as an outside consultant in 2009, the pension system has been transferring more responsibility, more staff and more money to him. The agency has also loosened its policies to allow more risk, with more leeway to borrow against current assets to make additional investments, a process known as leverage.

That mix of risk and leverage — uncommon among conservative public pension funds — landed the agency on the front page of The Wall Street Journal this summer, lending weight to concerns some board members have had for some time.

A number of retirees testified in front of the pension trustees on Thursday, pleading with them to dial back the risk and do away with relying on so much leverage to boost returns. Cheers and applause followed most of the testimony.

“The current leverage strategies are too risky and are not yielding the results that were anticipated,” retiree Phyllis Elkind told the board as many in the audience clapped in support.

Some trustees were already convinced the strategy is flawed.

“I think risk-parity needs to say bye-bye, and we need to say bye-bye to it, ” said Dan McAllister, the county treasurer who serves on the board as part of his elected duties.

http://www.utsandiego.com/news/2014/sep/18/salient-partners-lee-partridge-termination-vote/

Unfortunately, they are going to continue outsourcing with them:

McAllister, the treasurer, said it’s unusual for a retirement system as large as San Diego County’s to delegate its investments to a private firm.

“This is an exorbitant amount of taxpayer dollars being spent and is unprecedented in any other county in California,” McAllister said by e-mail before the vote. “I have strongly opposed the adoption of an outsourced government structure.”

http://www.bloomberg.com/news/2014-10-02/san-diego-weighs-firing-pension-manager-who-embraced-risk.html

============================================
============================================

Additionally, that propaganda piece from Friedman’s foundation was from 2010. Investment assets have risen significantly since then; they’re at an all-time high:

“SAN DIEGO — The San Diego County Employees Retirement Association (SDCERA) reported an all-time high of $10.1 billion in assets under management with a one-year estimated net return gain of 13.43% that exceeds the 7.75% rate of return needed to fund the benefit for the fiscal year ended June 30, 2014. SDCERA’s investment portfolio generated an estimated one year gross return of 13.82%.”

http://www.sdcera.org/news.aspx

From your Friedman propaganda piece:

“In this policy brief, I estimate that
San Diego faces total of $45.4 billion, including
$7.95 billion for the county pension system, $5.4
billion for the city pension system, and an estimated $30.7 billion share of unfunded liabilities for California state retiree benefits. These estimates are made by correcting the state and local pension plans’ figures, which use a too-optimistic assumption that their investments will grow by about 8% per year for the indefinite future.”

http://www.edchoice.org/CMSModules/EdChoice/FileLibrary/593/CA-Pension-Brief—Trouble-Brewing-in-San-Diego.pdf

In other words, he just pulled some numbers out of his behind and threw them at the wall, hoping they’d stick.

………

Here’s the reality:

“Conclusion

Origins and Severity of the Public Pension Crisis
Center for Economic and Policy Research

In the post 2008-2009 economy, public pensions have been the subject of scrutiny as a way to explain budget shortfalls. The main contributor to the current funding challenges facing some public pension funds was the collapse of the housing bubble and the subsequent downturn in the economy and the stock market, not inadequate contributions. Today, public pension plans remain a financially sound and cost effective mechanism for providing retirement benefits.

A number of studies have assumed that pension fund portfolios will earn a return of 4.5% annually; however, neither historical fact nor current data support this assumption.

SDCERA’s average rate of return over the past 25 years is 9.4%. Fiscal year 2013 (which closed June 30, 2013) realized returns of 8.3% and fiscal year 2012 returned gains of 6.5%.”

http://www.sdcera.org/pension_facts.htm

======================

Now, as for that “$2 Trillion Hole,” many public agencies are already addressing the unfunded liabilities. CalSTRS just enacted a new plan to pay off their unfunded liabilities over 32 years (because they can…because it’s not a DC system) by increasing contributions from all stakeholders. Most of the other pension funds are working on the numbers and legislation to pay off their unfunded liabilities, as well.

—————

And one final note about something that has not been made public yet is that the retirement age for many employees will naturally go up over the years (in addition to the new regulations under PEPRA, and as contracts are renegotiated) as the employees who do NOT get retiree healthcare (again, phased out by many public employers up to 20 years ago) stay employed longer in order to keep their health insurance. This has the potential to result in huge savings for the pension funds over the years.

[CA renter]

You’re welcome (for the *actual* data), pri.

[livinincali]

[quote=CA renter]
Now, as for that “$2 Trillion Hole,” many public agencies are already addressing the unfunded liabilities. CalSTRS just enacted a new plan to pay off their unfunded liabilities over 32 years (because they can…because it’s not a DC system) by increasing contributions from all stakeholders. Most of the other pension funds are working on the numbers and legislation to pay off their unfunded liabilities, as well.
[/quote]

Problem is those plans are still counting on 7%+ average returns for today’s current levels in the stock and bond market. A 50% crash in the stock market or a long bear market in bonds blows those projections up. The cold harsh reality, the pension funds are screwed and most people expecting to receive a defined benefit will probably see somewhere between a 30-50% cut in benefits when it’s all said and done. They’ll go down kicking, screaming, and suing but the money just isn’t there.

[scaredyclassic]

either the future is so bright we’re gonna have to wear sunglasses or
the future is so bright we’re all gonna have our eyeballs irradiated and melted from the nuclear blast of debt.

I’m getting tired of predicting disaster, which makes me want to think everything’s gonna be ok, but, from a contrarian point of view, it’s usually safest for me to think the opposite of what i’m thinking or want to think.

So I’m going with the melted eyeball scenario for the future.

[Anonymous]

You’ll probably live longer:

http://www.apa.org/news/press/releases/2013/02/pessimism-future.aspx

Pessimism About the Future May Lead to Longer, Healthier Life, Research Finds

[FlyerInHi]

[quote=harvey]You’ll probably live longer:

http://www.apa.org/news/press/releases/2013/02/pessimism-future.aspx

Pessimism About the Future May Lead to Longer, Healthier Life, Research Finds[/quote]

People who are pessimistic are always researching and doing something in case of disaster.

You need stress in your life to keep the youth enzymes going. They tell your body to fight to live longer. Of course, the optimal level of stress is debatable and varies from person to person.

You can create your own stress by taking on more than your can handle, but not too much that you fail at everything. That way you’re always running around doing something. It prevents you from being bored and sitting around watching TV and eating potato chips.

[CA renter]

[quote=livinincali][quote=CA renter]
Now, as for that “$2 Trillion Hole,” many public agencies are already addressing the unfunded liabilities. CalSTRS just enacted a new plan to pay off their unfunded liabilities over 32 years (because they can…because it’s not a DC system) by increasing contributions from all stakeholders. Most of the other pension funds are working on the numbers and legislation to pay off their unfunded liabilities, as well.
[/quote]

Problem is those plans are still counting on 7%+ average returns for today’s current levels in the stock and bond market. A 50% crash in the stock market or a long bear market in bonds blows those projections up. The cold harsh reality, the pension funds are screwed and most people expecting to receive a defined benefit will probably see somewhere between a 30-50% cut in benefits when it’s all said and done. They’ll go down kicking, screaming, and suing but the money just isn’t there.[/quote]

I’m generally at least as bearish as you are, but will admit that things have, as of yet, not been nearly as bearish as I would have predicted.

[Anonymous]

[quote=CA renter]CalSTRS just enacted a new plan to pay off their unfunded liabilities over 32 years (because they can…because it’s not a DC system) by increasing contributions from all stakeholders. Most of the other pension funds are working on the numbers and legislation to pay off their unfunded liabilities, as well.[/quote]

Whew! That’s a relief!

It’s good to hear that CalSTRS has a 32 year plan that will fix the problem.

Their execution for the past thirty years has been a total failure, but I’m sure they’ll get it right after a a few more decades.

And “most of the the other” fiscal time bombs are “working on the numbers and the legislation” …

Sounds like everything is under control. No worries!

[scaredyclassic]

We have a very worried cat. I am never nervous when she stays outside for the night. I know she’s paranoid and scared beyond all reason.

We have a different cat who is confident and oblivious. We get really nervous when he stays out for the night.

Income inequality. No income. Poverty. Climate change. Humanity huddled in environmental refuge camps in Alaska eating the last canned goods and tree bark.

I just hope we continue to produce Floss so I can have teeth.

[phaster]

[quote=harvey][quote=CA renter]CalSTRS just enacted a new plan to pay off their unfunded liabilities over 32 years (because they can…because it’s not a DC system) by increasing contributions from all stakeholders. Most of the other pension funds are working on the numbers and legislation to pay off their unfunded liabilities, as well.[/quote]

Whew! That’s a relief!

It’s good to hear that CalSTRS has a 32 year plan that will fix the problem.

Their execution for the past thirty years has been a total failure, but I’m sure they’ll get it right after a a few more decades.

And “most of the the other” fiscal time bombs are “working on the numbers and the legislation” …

Sounds like everything is under control. No worries![/quote]

Thought I’d drop in after the watching the market head south the past few days…

Thank god…

SD PENSION “officials close to the system say it is designed to balance out the fund’s holdings and protect it against big losses in the event of a stock-market meltdown.”

http://online.wsj.com/articles/san-diego-pension-dials-up-the-risk-to-combat-a-shortfall-1407974779

actually given the magnitude of the problem (and burn rate) if california/SD makes it 8 years (a quarter of the 32 year plan) w/o going bankrupt I’d be surprised…

[CA renter]

[quote=phaster]

FWIW just listened to a podcast story that involved the “old boys club” (another economic term I discovered is “regulatory capture”)

The Secret Recordings of Carmen Segarra

An unprecedented look inside one of the most powerful, secretive institutions in the country. The NY Federal Reserve is supposed to monitor big banks. But when Carmen Segarra was hired, what she witnessed inside the Fed was so alarming that she got a tiny recorder and started secretly taping

http://www.thisamericanlife.org/radio-archives/episode/536/the-secret-recordings-of-carmen-segarra

[/quote]

Yes, I’m aware of this story. “Regulatory capture” is pretty much they way everything works WRT regulations. Find me a regulatory agency that doesn’t have a revolving door to the very same companies/entities that it’s supposed to regulate. Yes, it’s a problem. The only solution I can think of to expressly prohibit anyone from going from a regulatory agency to any related company in the private sector, and vice versa…and prohibit it FOR LIFE. Not only that, but you’d have to prohibit spouses or other friends/relatives (or mistresses, or “buddies” who are owed favors) from being employed with the regulated companies and ALSO prohibit them from being employed by anyone who has connections to these companies, even if they’re not in the same industries (I hope you can imagine how complex this can get).

Feel free to share any solutions you might have…there’s a dearth of ideas out there.

[phaster]

[quote=CA renter]

Yes, I’m sure you do have that perception, and it’s no accident that you do. It’s been fed to you by the Privatization Movement. These are people/entities who benefit from the government far more than any union employees do, and they will not be satisfied until they own and control public finances and all of the commons.

http://en.wikipedia.org/wiki/Commons

The ONLY thing standing in their way? Public employee unions.

Once again, politicians and public employees are NOT “on the same side of the table.” There is no “club,” there is no secret society where public union employees and politicians come together to conspire against “the people.”[/quote]

The old boys club, as I have used it in an economic context is one of association and “peer” social norms…

“one of our findings is that people’s standards for morality are dramatically influenced by the behavior of people around them and I think that if you have a situation where bankers are friends with bankers and politicians are friends with politicians and they see people in their social circle misbehaving in a dishonest way there is basically a temptation to match that behavior and find a similar behavior, find it socially acceptable, follow up on it and continue behaving this way. And of course, the really sad thing about it is that those things have a propensity for a slippery slope and escalation, which I think is exactly what we’ve seen over the past few years and sadly I have not seen any serious attempt to stop this escalation and even to reset it, but we have to because we are getting into a worse and worse situation over time.”

http://www.forbes.com/sites/danschawbel/2012/06/11/the-truth-about-honesty-and-dishonesty/

This “economic” explanation could account for why there have been so many lapses in good judgement “locally” (i.e. mayor and SDPD being “exposed” as pervers, pay to play in the south bay “sweetwater,” FBI investigation of foreign national to donate to political campaigns, poway billion dollar school bond, the 20 billion WSJ news report about “pension” portfolio management, etc.)

Our outlook on life is based on actual hands on experience and interactions with family/friends. Since I have no “teaching experience” yet have interest in the subject, I enjoy watching documentary news reports/films

Perhaps it is look into the future of schools here in SD/CA in that many students have parents struggling to find a way to make living in a global economy. In addition we have administrators/teachers trying to protect their own position in a system that is not producing “members” of the next economic generation that are a net positive to society.

Dan Rather Reports – A National Disgrace

Sadly another way of looking at the “status quo” problem is the school system is more like prison (where students are the in mates, and administrators/teachers/union members are the guards). Upon graduation/release the students/inmates do not have a “reputable” skill set necessary to thrive in a world with so called free and open markets.

Waiting for superman

“I teach in California in a district where teachers get tenure after 2 years. No portfolios are required, no interview, nothing! You get it simply by fulfilling your time. My school is in a very high poverty area with predominately ELLS. Our kids are behind as it is, and they are stuck with terrible teachers year after year who are protected by a bogus contract and a terrible teachers union that protects it.”

which I realize has to be balanced against a$$holes and idiots

The biggest reason teachers need unions is that educational administrators are not always the best and the brightest.

http://blog.stenhouse.com/archives/2011/05/25/a-teacher-reviews-waiting-for-superman/

Looking at the overall trend(s) its a downward spiral and personally think it prudent to, brace for impact!!

[CA renter]

[quote=harvey]

The public pension system has evolved into a complex and arcane bureaucracy over the decades as it was influenced by public sector employee unions, which are some of the best-funded political lobbying organizations in the nation:

https://www.opensecrets.org/orgs/list.php

[/quote]

And this goofy claim of yours needs to be clarified, as well. From your link:

——-

Heavy Hitters: Top All-Time Donors, 1989-2014

This list includes the organizations that have historically qualified as “heavy hitters” — groups that lobby and spend big, with large sums sent to candidates, parties and leadership PACs. Individuals and organizations have been able to make extremely large donations to outside spending groups in the last few years. While contributions to outside groups like super PACs do not factor into an organization’s designation as a “heavy hitter” (a listing of about 150 groups), those numbers are included for the roster below.

For example, this list does not include casino magnate Sheldon Adelson. He and his wife Miriam donated nearly $93 million in 2012 alone to conservative super PACs — enough to put him at No. 2 on this list. Similarly, the list excludes former New York City mayor Michael Bloomberg, who has donated more than $19 million in the past two years, largely to groups that support gun control. Neither Adelson nor Bloomberg — or the organizations they report as their employers — qualifies as a “heavy hitter” under our current definition. It’s also important to note that we aren’t including donations to politically active dark money groups, like Americans for Prosperity, a group linked to the Koch brothers, or the liberal group Patriot Majority — because these groups hide their donors; see a list of top donors that we’ve been able to identify to such groups. We are working to revise this list to take into account the new realities of campaign finance created by the Citizens United decision, but as it currently stands, there are significant omissions.

It is also worth noting that certain organizations, such as ActBlue and Club for Growth, are included although they function for the most part as pass-through entities: individual donors give to them with the contributions earmarked for specific candidates.

[CA renter]

Let’s look at where the real money is coming from, and whether it’s supporting labor or capital, shall we?

[formatting issues, but click on the link]

Grand Total Democrats Republicans Dem % Repub %
Business $698,136,635 $295,238,284 $398,886,016 43% 57%

Labor $284,017 $272,187 $8,855 97% 3%

————

The broadest classification of political donors separates them into business, labor, or ideological interests. Whatever slice you look at, business interests dominate, with an overall advantage over organized labor of about 15-to-1.

Even among PACs – the favored means of delivering funds by labor unions – business has a more than 3-to-1 fundraising advantage. In soft money, the ratio is nearly 17-to-1.

An important caveat must be added to these figures: “business” contributions from individuals are based on the donor’s occupation/employer. Since nearly everyone works for someone, and since union affiliation is not listed on FEC reports, totals for business are somewhat overstated, while labor is understated. Still, the base of large individual donors is predominantly made up of business executives and professionals. Contributions under $200 are not included in these numbers, as they are not itemized.

https://www.opensecrets.org/overview/blio.php

[EconProf]

[quote=CA renter]Let’s look at where the real money is coming from, and whether it’s supporting labor or capital, shall we?

[formatting issues, but click on the link]

Grand Total Democrats Republicans Dem % Repub %
Business $698,136,635 $295,238,284 $398,886,016 43% 57%

Labor $284,017 $272,187 $8,855 97% 3%

————

The broadest classification of political donors separates them into business, labor, or ideological interests. Whatever slice you look at, business interests dominate, with an overall advantage over organized labor of about 15-to-1.

Even among PACs – the favored means of delivering funds by labor unions – business has a more than 3-to-1 fundraising advantage. In soft money, the ratio is nearly 17-to-1.

An important caveat must be added to these figures: “business” contributions from individuals are based on the donor’s occupation/employer. Since nearly everyone works for someone, and since union affiliation is not listed on FEC reports, totals for business are somewhat overstated, while labor is understated. Still, the base of large individual donors is predominantly made up of business executives and professionals. Contributions under $200 are not included in these numbers, as they are not itemized.

https://www.opensecrets.org/overview/blio.php%5B/quote%5D
CAR: You report how business donations far outweigh labor donations. But don’t a lot of businesses support liberal causes? Solyndra comes to mind. With crony capitalism under Obama, big business is “persuaded” to help out the existing administration, whether Democrat or Republican. Let’s remember that true conservatives do not automatically support big business.
I recall media reports that in present House and Senage races, the Republicans are being outspent by Democrats, even with the troubled economy and foreign policy.
I don’t know if this funding difference is true or not, so perhaps you can look it up. Your research seems to be thorough, so I tend to trust what you will reveal to us.

[FlyerInHi]

[quote=EconProf]CAR: You report how business donations far outweigh labor donations. But don’t a lot of businesses support liberal causes? Solyndra comes to mind. With crony capitalism under Obama, big business is “persuaded” to help out the existing administration, whether Democrat or Republican. Let’s remember that true conservatives do not automatically support big business.
[/quote]

I think true conservatives would not focus on solyndra, which is small fish. They would focus of the homeland security and military industrial complex that has built up in the DC area and across the country.

They would also focus on how our military has screwed things up that we have to keep on using the military on unscrew things. That situation seems like the perfect climate for the security/armament/defense business.

[CA renter]

[quote=FlyerInHi][quote=EconProf]CAR: You report how business donations far outweigh labor donations. But don’t a lot of businesses support liberal causes? Solyndra comes to mind. With crony capitalism under Obama, big business is “persuaded” to help out the existing administration, whether Democrat or Republican. Let’s remember that true conservatives do not automatically support big business.
[/quote]

I think true conservatives would not focus on solyndra, which is small fish. They would focus of the homeland security and military industrial complex that has built up in the DC area and across the country.

They would also focus on how our military has screwed things up that we have to keep on using the military on unscrew things. That situation seems like the perfect climate for the security/armament/defense business.[/quote]

I don’t get distracted by non-economic issues where politics are concerned. That’s not to say that these issues are unimportant, but that they pale in comparison to economics. I’m far more concerned about what the donors are doing WRT the position of labor (union and non-union workers), and how their actions and activities affect workers’ compensation and general quality of life vs that of “capital” (those who do not work for their living, but invest/speculate for a living, instead). When looked at from that perspective, there is no question that capital has been outspending labor by many multiples. See my link, above, for the info.

[CA renter]

And in case you’ve missed this:

———

McConnell opened his remarks at the California resort with a tip of the hat to the wealthy conservative activists hosting the summit — whose network raised over $400 million for the Republican cause in 2012 alone — saying “I want to start by thanking you, Charles and David (Koch), for the important work you’re doing. I don’t know where we’d be without you…”

The senator devoted most of his speech to his desire to free up unlimited political spending, or what he calls “free speech.” He described the campaign finance reform movement beginning during the Watergate scandal as an effort by “the political left” to control the political process, though neglecting to mention his support for strict contribution limits and public financing of elections during the 1970s, when he called the corrupting influence of money in politics a “cancer” on democracy.

Referring to the Supreme Court’s 2010 Citizens United decision that freed up unlimited political spending by corporations and Super PACs, McConnell said the decision “leveled the playing field” for corporations, ushering in “the most free and open system we’ve had in modern times.” McConnell added, “I pray for the health of the five” justices who ruled his way in the case.

While most of McConnell’s comments on campaign finance mirrored his public statements, he did add this eye-opening quote on the passage of the 2002 McCain-Feingold bill that regulated electioneering communications.

“The worst day of my political life was when President George W. Bush signed McCain-Feingold into law in the early part of his first Administration,” said McConnell.

Commentators have noted that McConnell’s tenure in the Senate has included two government shutdowns, multiple wars, the 9/11 attacks, and the financial collapse of 2008. Regarding the latter, McConnell said at the time that the passage of the $700 billion Wall Street bailout for firms directly implicated in the crash was “the Senate at its finest.”

In other words, legislation limiting political spending by the wealthy was his worst day in the Senate, and legislation giving a $700 billion handout to the wealthy was his finest day in the Senate.

Regarding the newly proposed amendment to the Constitution to overrule Citizens United, McConnell fielded a question from David Koch and told the crowd that this is radical legislation seeking to silence the wealthy.

http://insiderlouisville.com/metro/leaked-audio-mcconnells-speech-koch-summit-reveals/

————-

Yet, some people still claim that we don’t need unions, or that we don’t need politically active unions. And these very same people will say there is a “level playing field” in politics… The level of ignorance out there is off the charts.

[Anonymous]

Right, organized labor has no political power, they are helpless victims of “wall street.”

Of course compensation is important for retention. That explains why police officers in one nearby community get more than five times the people that they serve:

The average pay and benefits package for a police officer here had been worth $177,203 per year, in a city where the median household income was $31,356 in 2011, according to the Census Bureau. All of this had gone largely unnoticed until becoming the center of debate during the recent municipal election.

Defined benefit pensions make it way too easy for politicians and unions to hide the true cost of services and to defer those costs until long after the politicians are gone. This is why we are seeing a wave of municipal bankruptcies. Politicians and public-sector unions gave themselves a sweet deal years ago, using the arcane pension system to hide the cost, until eventually the day of reckoning comes.

Defined benefit pensions for public employees are a completely unnecessary risk.

Of course there is the alternate explanation: That big, bad wall street “forced” these modest public servants to take their $177K compensation.

Wall street made them do it!

[CA renter]

[quote=harvey]Right, organized labor has no political power, they are helpless victims of “wall street.”

Of course compensation is important for retention. That explains why police officers in one nearby community get more than five times the people that they serve:

The average pay and benefits package for a police officer here had been worth $177,203 per year, in a city where the median household income was $31,356 in 2011, according to the Census Bureau. All of this had gone largely unnoticed until becoming the center of debate during the recent municipal election.

Defined benefit pensions make it way too easy for politicians and unions to hide the true cost of services and to defer those costs until long after the politicians are gone. This is why we are seeing a wave of municipal bankruptcies. Politicians and public-sector unions gave themselves a sweet deal years ago, using the arcane pension system to hide the cost, until eventually the day of reckoning comes.

Defined benefit pensions for public employees are a completely unnecessary risk.

Of course there is the alternate explanation: That big, bad wall street “forced” these modest public servants to take their $177K compensation.

Wall street made them do it![/quote]

That’s Desert Hot Springs. They seem incapable of managing their finances, and not just because of pensions.

From your link:

This is not Desert Hot Springs’ first experience with fiscal problems. In 2001, it went bankrupt after losing a $10 million lawsuit brought by a developer who complained that the city was thwarting his efforts to build affordable housing. The city had to borrow to pay the judgment and is still paying off that debt — a struggle for a working-class town.

…

Also from your link:

The city, Desert Hot Springs, population 27,000, is slowly edging toward bankruptcy, largely because of police salaries and skyrocketing pension costs, but also because of years of spending and unrealistic revenue estimates. It is mostly the police, though, who have found themselves in the cross hairs recently.

In other words, the other spending that caused the crisis is already spent, so the easy targets are the public employees whose pay is deferred and still under the control of the public entities.

…

And the city council was unwilling to consider options that would fix the problem (the claim that it would only “delay the reckoning” is subjective, and not fact-based).

Mr. Phillips, the police union lawyer, said the current crisis had been driven by the new majority on the City Council — including Mayor Sanchez and Mr. Betts — that was philosophically opposed to tax increases. The union’s own proposal to address the budget shortfall — by cutting the size of the force and filling in with overtime work for which the officers would defer payment for 17 months, as well as raising the local sales tax — was rejected by city officials, who said it would only delay the reckoning.

==========================

Now, there IS a real problem with the changes made to pension benefit formulas under Gray Davis, as mentioned here:

Mr. Adams said that California’s rich police pensions were first offered to prison guards by former Gov. Gray Davis more than a decade ago. The move set off a chain reaction, with the California Highway Patrol soon clamoring for the deal, and then city police officers all over the state.

I have ALWAYS been opposed to these pension changes, long before you were ever aware of how public pensions worked, and long before the “pension crisis” that was 100% caused by Wall Street (and they were also responsible for those pension changes during the internet/stock market bubble in the late 90s…I was there, and I was warning about it back then).

Additionally, while the pension system might be “arcane” to you, it’s perfectly transparent and easy to understand to those who know what they are looking at. All of the numbers are available on the CalPERS website.

I also want to point out that while contribution amounts were raised after the Wall Street crisis, these public employers were paying very little, and usually NOTHING AT ALL during the years of the stock market bubble. That’s what enabled them to enhance the pension formulas…because the pension funds were OVER-funded.

[no_such_reality]

It’s going to resolve itself the same way any significant health issue resolves itself that you ignore, like being too fat, eating poorly and not exercising.

We wil either wake up one day and address it and start making improvements, eating better, putting the cigs down, and exercising. Or we won’t. There are some signs we
Ve taking baby steps in addressing the blatant problems

When the bubble burst Cali had its first heart attack. We’ve made some changes but I give it 50/50 odds we just go back to the old patterns of financial management and political graft

[FlyerInHi]

Why not pay them compensations up front?

If they’re not good at managing their money for retirement, then they’re are not the cream of the crop, are they?

[CA renter]

[quote=FlyerInHi]Why not pay them compensations up front?

If they’re not good at managing their money for retirement, then they’re are not the cream of the crop, are they?[/quote]

Not that they are necessarily bad with money (some are, some aren’t; but public employees do tend to have better credit than most*), but the skills that make a good money manager don’t necessarily translate into making a good cop, firefighter, teacher, etc.

*Most public employers do run a credit check during the hiring process, and candidates with low credit scores are unlikely to get a job with the government.

http://money.msn.com/credit-rating/3-jobs-where-good-credit-counts

[Anonymous]

Tony “Mack” Rodriguez, a retired sergeant on the Desert Hot Springs police force describes how the situation came about. “The union told us that the revenue estimates were unrealistic, and we should do something about it. We were talking about deferring some raises, or maybe cutting back overtime. We had a plan.”

But Rodriguez said the union proposal never made through because of interference from a number of investment firms. “Our plan never got too far. These Wall Street guys came in and made us take raises. They increased the pension payouts and lowered the retirement age. They were ruthless, there was no stopping them.”

Now Rodriguez , 51, is not working but is forced to receive 90% of his prior salary of $132.000. “I’m stuck with these paychecks, for life” he said. “I could live till I’m eighty-five, and I’ll have to deal with this for the next thirty years.”

The situation has required him to fill his garage with motorsport vehicles he rarely uses. He recently was forced to purchase a fifty foot RV. “We had to buy a bigger house because of all this stuff” lamented Rodriguez. “I even had to get a disability tax break because the Wall Street guy told me that my knee hurts.”

[CA renter]

Blah, blah, blah…

Nice try, pri.

For those of you who haven’t figured it out yet, that wasn’t an actual quote. This is what harvey/pri does — quotes or claims things that aren’t real.

[CA renter]

[quote=harvey]Tony “Mack” Rodriguez, a retired sergeant on the Desert Hot Springs police force describes how the situation came about. “The union told us that the revenue estimates were unrealistic, and we should do something about it. We were talking about deferring some raises, or maybe cutting back overtime. We had a plan.”

But Rodriguez said the union proposal never made through because of interference from a number of investment firms. “Our plan never got too far. These Wall Street guys came in and made us take raises. They increased the pension payouts and lowered the retirement age. They were ruthless, there was no stopping them.”

Now Rodriguez , 51, is not working but is forced to receive 90% of his prior salary of $132.000. “I’m stuck with these paychecks, for life” he said. “I could live till I’m eighty-five, and I’ll have to deal with this for the next thirty years.”

The situation has required him to fill his garage with motorsport vehicles he rarely uses. He recently was forced to purchase a fifty foot RV. “We had to buy a bigger house because of all this stuff” lamented Rodriguez. “I even had to get a disability tax break because the Wall Street guy told me that my knee hurts.”[/quote]

FYI, it was indeed the Wall Street/financial geniuses who convinced public leaders that they could enhance pension benefits during the internet/stock market bubble *at no additional cost.* While the boots-on-the-ground workers certainly didn’t oppose the benefit enhancements (would you?), the unions more certainly DID warn public agencies that reducing the pension contributions to zero during the bubble years would result in underfunded pensions down the road when the market corrected. They were right.

And why didn’t govt leaders want to fund the pensions during the good times? They did it so that they could take care of other stakeholders, like public contractors (a HUGE problem in local governments) and advocacy groups who wanted their various pet projects completed since all of that “extra money” was just sitting around doing nothing. This is why it’s almost impossible for government leaders to save for a rainy day: every stakeholder is watching the funds and will demand, on a daily basis, that the money be spent on their personal projects and ideas.

[Anonymous]

Wow. Not a hint of compassion in your posts.

There are lot of Macks out there, on the golf courses, in the RV parks and marinas — yes they’re out there. They can be easy to miss — their youth masks their retiree status — but they’re out there. Victims, all of them.

What about Mack? Who will rescue Mack from Wall Street?

[CA renter]

[quote=harvey]Wow. Not a hint of compassion in your posts.

There are lot of Macks out there, on the golf courses, in the RV parks and marinas — yes they’re out there. They can be easy to miss — their youth masks their retiree status — but they’re out there. Victims, all of them.

What about Mack? Who will rescue Mack from Wall Street?[/quote]

Bullshit. Very few can retire at 50 with full benefits because they’d have to start at 20 to do so.

And talk about a lack of compassion. You think nothing at all about taking away someone’s compensation that was already earned over many years. If you think that’s a good idea, great; you can step up to the plate and reduce your own pay and donate that to a public agency of your choice…you know, to help out the poor taxpayers and all. That’s what you’re asking these public employees to do, so you should be happy to serve as a role model, right? IIRC, you didn’t favor clawing back compensation of the people who caused the mess in the first place — the Wall Street scum who’ve made *far more* than any cop, firefighter, or teacher in the U.S.

[Anonymous]

[quote=CA renter]
And talk about a lack of compassion. You think nothing at all about taking away someone’s compensation that was already earned over many years. If you think that’s a good idea, great; you can step up to the plate and reduce your own pay and donate that to a public agency of your choice…you know, to help out the poor taxpayers and all. That’s what you’re asking these public employees to do, so you should be happy to serve as a role model, right? IIRC, you didn’t favor clawing back compensation of the people who caused the mess in the first place — the Wall Street scum who’ve made *far more* than any cop, firefighter, or teacher in the U.S.[/quote]

I’ve never said that public employee compensation should be reduced. Never.

There you go again, just plain tellin’ lies.

BTW: Our new friend phaster gets it. Welcome to Piggington!

[CA renter]

[quote=harvey][quote=CA renter]
And talk about a lack of compassion. You think nothing at all about taking away someone’s compensation that was already earned over many years. If you think that’s a good idea, great; you can step up to the plate and reduce your own pay and donate that to a public agency of your choice…you know, to help out the poor taxpayers and all. That’s what you’re asking these public employees to do, so you should be happy to serve as a role model, right? IIRC, you didn’t favor clawing back compensation of the people who caused the mess in the first place — the Wall Street scum who’ve made *far more* than any cop, firefighter, or teacher in the U.S.[/quote]

I’ve never said that public employee compensation should be reduced. Never.

There you go again, just plain tellin’ lies.

BTW: Our new friend phaster gets it. Welcome to Piggington![/quote]

Oh hell yes you have, ad nauseam. When you suggest that public sector employees should have their vested benefits reduced, you are saying that their compensation should be reduced. Defined benefit pensions are a form of deferred compensation. You should know that since you claim to be a financial expert.

So, not only have you repeatedly advocated for reduced compensation for public employees, you’ve suggested that we should reduce the compensation *that they have already earned.*

Just keep on lying…as always.

And I can show post after post where you’ve lied your ass off. If you’re going to call me a liar, you’d better be able to find ONE post where I’ve lied. Go ahead and try to find one.

[spdrun]

Their pensions should be capped at their salary upon retirement, adjusted for inflation. I might feel sorry for teachers and firefighters, a bit. Cops. Nah, not really.

[Anonymous]

[quote=CA renter]Oh hell yes you have, ad nauseam. When you suggest that public sector employees should have their vested benefits reduced […][/quote]

I have never suggested that anyone’s compensation should be reduced.

Can you provide proof of your claim?

[livinincali]

[quote=CA renter]
When you suggest that public sector employees should have their vested benefits reduced, you are saying that their compensation should be reduced. Defined benefit pensions are a form of deferred compensation. You should know that since you claim to be a financial expert.
[/quote]

I would consider reduced deferred compensation as a cut in total compensation, but I realize that’s the inevitable outcome. The math says it’s pretty much impossible for that deferred compensation to be paid in full. Whether you want to blame wall street, politicians, unions, tax payers, the fed, demographics or whatever it doesn’t change the mathematical equation.

Essentially it’s just far to risky to offer guaranteed deferred compensation that will be paid out 40, 50 60 years after a person starts working based on events that are unknown. When that police officer started 30 years ago making $20K and 30 year treasury rates where over 10% did the actuaries have any idea that the officer was going to work a ton of overtime those last couple of years earn $150K/year and get a defined benefit of $100K year with 30 year interest rates at 3.5%. People couldn’t believe 30 years interest rates would get to to 4% 5 years ago, let alone 30 years ago.

The one benefit of defined benefit contribution plans, retention, isn’t worth the risks, the frauds, the vote buying, and everything else it enables. That’s the bottom line. The rewards (reduced training costs retention, etc.) don’t outweigh the risks and therefore they should be scrapped. They were lies to the employees receiving them. The private sector came to this conclusion a long time ago. Private sector pension plans went bust all the time. The benefits were renegotiated all the time. Most businesses don’t last 50-60 years, even fewer grow and thrive for 50-60 years.

There was a very small period in history where defined benefit retirement plans were offered and many of them failed to deliver. Public sector plans are no different, they will fail to deliver as promised even with laws and implied tax payer backstops. The money isn’t there.

[CA renter]

[quote=livinincali][quote=CA renter]
When you suggest that public sector employees should have their vested benefits reduced, you are saying that their compensation should be reduced. Defined benefit pensions are a form of deferred compensation. You should know that since you claim to be a financial expert.
[/quote]

I would consider reduced deferred compensation as a cut in total compensation, but I realize that’s the inevitable outcome. The math says it’s pretty much impossible for that deferred compensation to be paid in full. Whether you want to blame wall street, politicians, unions, tax payers, the fed, demographics or whatever it doesn’t change the mathematical equation.

Essentially it’s just far to risky to offer guaranteed deferred compensation that will be paid out 40, 50 60 years after a person starts working based on events that are unknown. When that police officer started 30 years ago making $20K and 30 year treasury rates where over 10% did the actuaries have any idea that the officer was going to work a ton of overtime those last couple of years earn $150K/year and get a defined benefit of $100K year with 30 year interest rates at 3.5%. People couldn’t believe 30 years interest rates would get to to 4% 5 years ago, let alone 30 years ago.

The one benefit of defined benefit contribution plans, retention, isn’t worth the risks, the frauds, the vote buying, and everything else it enables. That’s the bottom line. The rewards (reduced training costs retention, etc.) don’t outweigh the risks and therefore they should be scrapped. They were lies to the employees receiving them. The private sector came to this conclusion a long time ago. Private sector pension plans went bust all the time. The benefits were renegotiated all the time. Most businesses don’t last 50-60 years, even fewer grow and thrive for 50-60 years.

There was a very small period in history where defined benefit retirement plans were offered and many of them failed to deliver. Public sector plans are no different, they will fail to deliver as promised even with laws and implied tax payer backstops. The money isn’t there.[/quote]

Many of those private pension funds went bust because of reasons completely unrelated to the pension funds’ ability to pay out the promised benefits. Funds were mismanaged and used as piggy-banks for corporations, bloated executive pensions, and the way they intermingled funds between the funds of regular employees and executives blew many of them out of the water. UCGal has recommended a book a few times here:

I highly recommend it.

—————–

As for the retention issue, San Diego is dealing with this problem right now.

San Diego’s police force faces an uncertain future, with about half of its officers eligible for retirement in the next few years and younger officers leaving for other agencies that have better pay and benefits. San Diego officers have seen their healthcare costs soar and are paying more into their pensions than officers from most other police agencies.

“We can’t ignore the market,” said Carol Kim. “How can we expect to retain our officers when they can go to other law enforcement agencies in the area and get considerably better compensation packages?”

Kim is particularly troubled by the millions of dollars the City spends to train officers, who leave for other agencies. “It’s a bad deal for taxpayers,” she said. “We need to be competitive if we want to reap the benefits of our investment.”

Kim proposes re-investing one-third of the projected budget surplus that was identified in Mayor Kevin Faulconer’s most recent budget into increased police salaries; her plan calls for a 5% raise in salaries per year for each of the next four years, resulting in a 20% increase in police salary.

Councilmember Ed Harris, who represents District 2, attended the forum and was extremely supportive of the plan. “It’s refreshing to see a candidate who is ready to tackle this crisis and offer concrete, fiscally responsible solutions,” he said.

“We can’t afford to be paying $190,000 to train police officers, only to have them leave for other departments,” said Kim. “It’s time we start re-investing this money into the SDPD to protect both our officers and our communities.”

—————-

Also, there are a number of things that can be changed that would make the public pension funds completely, or nearly, whole. Many of these fixes are already law; they include changes (reductions) to benefit formulas, hybrid pension plans for new hires, increased employee contributions, capping benefit amounts, redefining (reducing) pensionable compensation, eliminating spiking, etc. Also want to clarify that overtime is not usually used to calculate pensions, though you’ll see claims of this in various blogs and forums. Each agency has it’s own agreement with different employee groups, but most municipal employers do use O/T in their formulas.

The point is that ALL stakeholders need to come to the table to fix the problems that were created — and are still being created — by the Federal Reserve and Wall Street. The burden should not be born entirely by public sector employees.

[Anonymous]

Good research CAR! Some hard “facts” from Carol Kim!

Yes, the Carol Kim!

Uh … who is Carol Kim?

She’s a city council candidate endorsed by – surprise – public sector unions!

http://www.carolkimd6.com/endorsements

And what about her budget numbers?

[…] these statements are misleading.

We fact checked the union’s claim that each new officer requires a $190,000 investment last March. The association relied on the Police Department’s cost analysis for that number, as did Kim’s campaign. Cate’s campaign couldn’t be reached for comment.

A Questionable Price Tag for Departing Cops

Yup, an independent fact check concluded the numbers were “Misleading”:

Keeping Cops on the Job: Mega Fact Check

But the fact checking above is just an article from the Voice of San Diego … what do those guys know about the economy?

http://voiceofsandiego.org/author/richtoscano/

The real problem here is that we have politicians who are so cozy with the people they pay. It’s an incestuous relationship that encourages the downward spiral: Unions support politicians, politicians get elected, politicians give union members raises (hiding the true cost in the form of deferred benefits) and the unions have more money to support politicians.

Carol Kim has chosen to play right along, using the police department’s propaganda word-for-word in her platform.

CAR, you need to step out of the echo chamber, or just admit you’re just a shill for the unions.

(BTW, we are still waiting for an example where I said public-sector compensation should be reduced … or at least the name of one socialist country in Europe!)

[NotCranky]

Why does it take 190k to make a basic cop who can then relocate?
If that number is legit….there’s your compensation. What other ordinary person get’s their career prep paid for to the tune of 190k?

[CA renter]

[quote=harvey]Good research CAR! Some hard “facts” from Carol Kim!

Yes, the Carol Kim!

Uh … who is Carol Kim?

She’s a city council candidate endorsed by – surprise – public sector unions!

http://www.carolkimd6.com/endorsements

And what about her budget numbers?

[…] these statements are misleading.

We fact checked the union’s claim that each new officer requires a $190,000 investment last March. The association relied on the Police Department’s cost analysis for that number, as did Kim’s campaign. Cate’s campaign couldn’t be reached for comment.

A Questionable Price Tag for Departing Cops

Yup, an independent fact check concluded the numbers were “Misleading”:

Keeping Cops on the Job: Mega Fact Check

But the fact checking above is just an article from the Voice of San Diego … what do those guys know about the economy?

http://voiceofsandiego.org/author/richtoscano/

The real problem here is that we have politicians who are so cozy with the people they pay. It’s an incestuous relationship that encourages the downward spiral: Unions support politicians, politicians get elected, politicians give union members raises (hiding the true cost in the form of deferred benefits) and the unions have more money to support politicians.

Carol Kim has chosen to play right along, using the police department’s propaganda word-for-word in her platform.

CAR, you need to step out of the echo chamber, or just admit you’re just a shill for the unions.

(BTW, we are still waiting for an example where I said public-sector compensation should be reduced … or at least the name of one socialist country in Europe!)[/quote]

Perhaps you didn’t read the information from your own links…or perhaps you’re still struggling with that reading comprehension problem, as noted in your constant requests for information about socialism in Europe (already gave that to you, in spades).

http://piggington.com/2012_edition_what039s_your_raise_this_year?page=2

…

The information in your own VOSD link breaks down the costs.

• Pre-employment vetting: $4,200-$4,300

This covers testing, a background check by the San Diego Police Department and psychological and medical evaluations.

• Salary and benefits: $93,600

This includes both salary, benefits and pension costs. The officer’s total compensation during the six-month academy is $39,600. For the remainder of the year it’s $44,000. Police also add an estimated $10,000 in overtime to reach the $93,600 total. Zimmerman said the overtime is based on the average amount of extra work expected for critical incidents or court hearings on days off.

• Equipment and Academy Tuition: $14,500

This includes an officer’s duty pistol, laptop, radio, protective vest and other supplies. In most cases, officers must return these items if they leave the department. This cost also covers tuition at the San Diego Regional Public Safety Training Institute at Miramar College.

• Instruction: $25,385

This covers academy instruction costs, as well as management of the department’s shooting range and training provided by the Police Department.

• Training in the field: $54,000

After an officer graduates from the police academy, he’s assigned to a series of veteran officers who evaluate his performance and provide on-the-job training. At least four senior officers assist each newcomer for a one-month period and those officers receive additional pay for their efforts. Those additional amounts, as well as a portion of the officer’s regular salary, are incorporated into the estimated investment cost.

Two of those categories are problematic. Both the rookie and veteran officers still patrol city streets and make arrests during on-the-job training. And the more experienced officers would collect a paycheck even if they weren’t offering guidance to new officers.

…

I agree that the new officer’s regular salary should not be included in the cost to recruit, hire, train, and equip a new officer because the city is getting a service in return for this cost. OTOH, I disagree with the VOSD regarding the extra money paid to the mentor officer, as that pay is over and above his/her regular pay and the only reason for that cost is the training of the new officer. The portion of that officer’s regular pay that is used in this calculation probably should not be included, IMO.

They don’t break down the mentor’s pay to detail how much is strictly a result of the mentoring vs the portion of his/her regular pay that is applied to this number…I’m assuming that the portion of regular pay is significantly less than the portion fully dedicated to mentoring, so am leaving that cost in my number. If you back out the new officer’s pay of $93,600, you still end up with a cost of $93,885 for a new recruit.

Now, if you consider the fact that a more senior officer costs more, the cost of turnover (hiring a string of new recruits) is reduced a bit. A more senior patrol officer makes around $72,924 vs. $46,356 for a new patrol officer. If we reduce the cost of a new recruit by that amount, we get a cost of $67,317 to recruit, hire, equip, and train a new recruit. Not $190,000, but still a very high cost which the employers would prefer to avoid. Also, a high turnover rate negatively affects morale and the operations of the department.

———-

And your assertion that politicians have a “cozy relationship” with unions is completely ignorant of the facts, as always. Politicians can be pro-labor, anti-labor, or somewhere in between. In general, the number of anti-labor politicians over the past ~15-20+ years (depending on region being represented) has been greater than pro-labor politicians, as is evidenced by the changes in tax, trade, and labor laws that have gone into effect over that time. Just look at the campaign contribution numbers that were included in your very own link from an earlier post.

[Anonymous]

Bottom line:

The pension debate is not about total compensation. It’s about the folly of defined benefit plans.

The compensation question is a separate debate. That debate is necessary also, but today’s compensation is so obfuscated by deferred benefits that nobody even knows what the final numbers will be.

Pensions are such a huge and unknown component of state and municipal budgets that we don’t even know what our public services really cost.

Today’s pubic sector defined benefit plans are a gamble as big and as dangerous as anything “Wall Street” has ever dreamed up. All for no good reason.

Defined benefit plans are not necessary for retention. They are not necessary, period.

There are other ways to compensate and retain that do not involve decades of extreme risks to our communities.

[CA renter]

[quote=harvey]Bottom line:

The pension debate is not about total compensation. It’s about the folly of defined benefit plans.

The compensation question is a separate debate. That debate is necessary also, but today’s compensation is so obfuscated by deferred benefits that nobody even knows what the final numbers will be.

Pensions are such a huge and unknown component of state and municipal budgets that we don’t even know what our public services really cost.

Today’s pubic sector defined benefit plans are a gamble as big and as dangerous as anything “Wall Street” has ever dreamed up. All for no good reason.

Defined benefit plans are not necessary for retention. They are not necessary, period.

There are other ways to compensate and retain that do not involve decades of extreme risks to our communities.[/quote]

Pri, not long ago, you didn’t even know how these pensions worked — not a clue about how the formulas worked or how the plans were funded. You have no experience with public employment. You’ve never been involved with contract negotiations between politicians and public unions. You’re clueless about the costs and about the transparency of public employee compensation (it is all public record, BTW). And yet, you claim to be an expert about these things, and will argue incessantly with people who do have knowledge about and experience with these issues.

I’ll just leave it at that.

[Anonymous]

[quote=CA renter]You’re clueless about the costs and about the transparency of public employee compensation (it is all public record, BTW).[/quote]

Yes, I am clueless.

Everyone is clueless. That’s the problem.

Simple question:

How much will San Diego’s police services cost this fiscal year?

How do we know?

When will will we know?

Answer:

We won’t know for decades. Only after the officers starting on the force today are retired – even later – when they’ve passed away (and perhaps even their spouses have passed away.) … after the shortfalls and surpluses and lawsuits and debates over the endless complexities of the compensation formulas.

Only when the last dollar of the pensions of every officer on the force is paid will we really know how much it costs today to have a police force. That will be decades from now.

We won’t know the fiscal 2014 cost until … maybe 2050 or so. Most of us will be dead. Let’s hope our children can afford to pay for the services we are receiving today.

How do I know this is true? Because of all the evidence both sides have posted here. Because of all the conflicting data about how much pensions are costing us today – for services that were provided decades ago.

No one should need to be an “expert” at anything to answer my question. Yet there is wide disparity among even those who are experts as to what the answer is.

So tell us, “expert” – since the information is all public record, this should be easy enough:

How much will San Diego’s police services cost this year?

How long before the 2014 books are truly reconciled?

[no_such_reality]

http://transparentcalifornia.com/pensions/search/?q=police+captain&y=

I find the publishing of the names to be tacky. Unfortuately, it’s probably the easiest way for people to relate it to what they know and experience.

The amount of non-compliance in reporting by the government agencies is insulting.

Overall it’s enlightening. The majority are just taking a straight up retirement, a well compensated retirement, but clearly weren’t ‘gaming’ the system. A sizable component though aren’t.

The lump sum payments are stunning.

I like some of the notes like on #3 from LAPD. Pension includes one time payment of $652,269.93

I’m assuming #1, from San Deigo has something similar in getting over $785K in a single year.

[SK in CV]

[quote=no_such_reality]The lump sum payments are stunning.

[/quote]

I suspect much of these “one time payments” are their own money they’re getting back. My brother retired after 33 years with the SDPD last year, and would have been 4th on the list if the search criteria would have been different. But more than 2/3 of what he got was his money that he elected to defer. More than 90% was eligible for rollover. His ongoing pension, while healthy isn’t astronomical, and is much less than he earned while working.

Edited to add: I DID change the search criteria, and sure enough, he came up with a huge pension payout. Not quite as much as I thought, but I know to the penny what he got, and for some reason it doesn’t include everything. But it does include both his DROP payment and most but not all, of his deferred comp.

[bearishgurl]

[quote=SK in CV][quote=no_such_reality]The lump sum payments are stunning.

[/quote]

I suspect much of these “one time payments” are their own money they’re getting back. My brother retired after 33 years with the SDPD last year, and would have been 4th on the list if the search criteria would have been different. But more than 2/3 of what he got was his money that he elected to defer. More than 90% was eligible for rollover. His ongoing pension, while healthy isn’t astronomical, and is much less than he earned while working.

Edited to add: I DID change the search criteria, and sure enough, he came up with a huge pension payout. Not quite as much as I thought, but I know to the penny what he got, and for some reason it doesn’t include everything. But it does include both his DROP payment and most but not all, of his deferred comp.[/quote]

Once again, thanks for pointing out the nitty gritty, here, SK. The general public really does not understand the concept of a public employee funding part of their own retirement. The truth is often not as glamorous-sounding as no_such_reality’s carefully-worded soundbyte.

I personally know of several former members of local law enforcement agencies (incl SDPD) who retired in the last five years and have already died (age 57-63). None of these deaths were due to being out of shape or an alcoholic … far from it. They were all due to heart disease exacerbated partly from uncontrolled or unknown high blood pressure and stroke danger. Some who met the fate of an early demise couldn’t get out fast enough. That’s what constant stress of being in the force will do to you. So I don’t think all this worry about the perceived drain on taxpayers of future “Class C” (law enforcement) pensions is warranted. Not only does the typical CA law enforcement officer work 8+ years longer than the year which they are able to retire, a portion of them don’t last very long after retirement. Not ALL are still married at the time of retirement and some never married so not ALL elected to have survivor benefits upon retirement. In any case, their very costly survivor benefit premium is deducted from their monthly retirement check. their survivor benefit amounts to 1/4 to 1/2 of their pension check for their beneficiary, should they die first.

There’s a lot of misconception out there about what a public pension award actually consists of (actual % of employee contributions + % of employer contributions + investment proceeds + possible deferred comp) such a the DROP program which SK mentioned. Note that SK’s brother worked 33 years before retiring. There is absolutely no financial incentive to work past 30 years in any level of government. I would venture that 99-100% of SD employees who participated in DROP did so only because they were begged by their superiors to stay beyond their retirement age for a fixed number of years and the DROP program was used to sweeten the pot at the time (the program doesn’t exist anymore). I have a neighbor who was offered DROP to stay with City of SD past 30 years (back in the late 90’s) and he told them to pack sand …. he was retiring (he’s still alive, btw). The DROP incentive didn’t always work to keep all of an agencies’ valuable intellectual property (in the form of longtime employees) from walking out the door.

[livinincali]

[quote=CA renter]
Many of those private pension funds went bust because of reasons completely unrelated to the pension funds’ ability to pay out the promised benefits. Funds were mismanaged and used as piggy-banks for corporations, bloated executive pensions, and the way they intermingled funds between the funds of regular employees and executives blew many of them out of the water. UCGal has recommended a book a few times here:
[/quote]

Just like politician used those funds as piggy banks for various project. That’s the problem. It’s the risk factor for people to misuse those funds. When you have a big pot of money over there that isn’t needed for 20 years into the future it’s very tempting to borrow from it especially when you won’t be on the hook when it goes bust.

Retention might in an issue in some areas of the city work force but clearly a defined benefit pension (the police still have one) isn’t solving the problem is it. If that was the solution then we wouldn’t be having retention issues.

The problem is that if you saved 10% of you income over the past 30 years and invested it safely i.e. treasuries and then relied on income from an annuity you would have nothing close to the defined benefit that public sector employees currently receive. People love defined benefit contribution plans because they are too good to be true.

[CA renter]

[quote=livinincali]

Just like politician used those funds as piggy banks for various project. That’s the problem. It’s the risk factor for people to misuse those funds. When you have a big pot of money over there that isn’t needed for 20 years into the future it’s very tempting to borrow from it especially when you won’t be on the hook when it goes bust.

Retention might in an issue in some areas of the city work force but clearly a defined benefit pension (the police still have one) isn’t solving the problem is it. If that was the solution then we wouldn’t be having retention issues.

The problem is that if you saved 10% of you income over the past 30 years and invested it safely i.e. treasuries and then relied on income from an annuity you would have nothing close to the defined benefit that public sector employees currently receive. People love defined benefit contribution plans because they are too good to be true.[/quote]

Agree with your first paragraph. And most public pension funds cannot be accessed by politicians. Of course, you can have problems with these funds, like when politicians used the money that *should have been going toward pension fund contributions* for other purposes…based on what they were told by the “financial experts” from Wall Street and their lackeys who worked for the public pension funds.

Retention is still an issue here because the total compensation package is poor compared to other agencies. Without DB pensions, it would be far worse.

The employees pay around 9% of their income toward their pensions, and the employer covers another part that is determined periodically by actuaries (usually updated every 1 to 3 years, depending on the agency and benefit formula offered, along with investment returns, etc.). The majority of the money used for benefit payments comes from investments. I agree that pension funds should be much more conservatively invested, and that contribution amounts and benefit formulas should be adjusted accordingly. Unfortunately, I am not in charge of these decisions.

[Anonymous]

[quote=CA renter]The majority of the money used for benefit payments comes from investments.[/quote]

So the majority of pension funds come from Wall Street?

The hero and the villain change with every paragraph…

The cause and effect is completely backwards in CAR’s arguments.

In the early part of the 20th century, pension benefits were very modest and retirement ages were high so that they typically only had to be paid out a few years. This was the original intent of pensions – as protection against poverty for the elderly. The system had little risk and it worked.

In the 1960s, the unions began to gain power and retirement benefits grew substantially. Over the years as private sector retirement ages increased to reflect demographic realities, public sector retirement ages decreased. By the late 1990s, pension benefits were astronomical, amounting to a seven-dight jackpot for a large number of employees who could retire in their mid-early fifties.

http://www.city-journal.org/2013/23_1_calpers.html

As benefits increased, so did pressure to pay for them by boosting CalPERS’s investment returns. The shift started in 1966 when voters approved Proposition 1, a measure, promoted by CalPERS, that let it invest up to 25 percent of its portfolio in stocks. The timing wasn’t ideal, since the long economic stagnation of the late sixties and seventies had left equity markets struggling for gains. But by the early eighties, markets were roaring again, and CalPERS asked for permission to invest up to 60 percent of its portfolio in stocks. Voters rejected that ballot initiative but approved another, Proposition 21, in 1984, which likewise let CalPERS expand its investments —and didn’t specify a percentage limit. Instead, Prop. 21 supposedly protected taxpayers with a clause that held CalPERS board members personally responsible if they didn’t act prudently. The proposition received the enthusiastic backing of government unions and CalPERS board president Robert Carlson, former head of the powerful California State Employees Association. CalPERS’s conservative investment approach, Carlson and other supporters argued, was shortchanging the state’s taxpayers. After all, the better the investment returns were, the less state and local governments would need to pay into the pension fund.

It was the unions and CalPERS that championed the shift in investment strategy.

And why not? If the more aggressive portfolio doesn’t work out, the taxpayers will have to make up the difference.

When it’s defined benefit you are gambling with someone else’s money.

Solution?

So simple: Switch to defined contribution plans.

No need to change anyone’s compensation. Paychecks are the same. Retirement contributions, whether form employee or employer are the same. Just eliminate the unrealistic promise of guaranteed payouts decades later.

[quote=CA renter]Unfortunately, I am not in charge of these decisions.[/quote]

If you had a 401K, you would be!

[CA renter]

Wall Street was behind those changes, Pri. That’s what was going on behind the curtain. Just as they were behind the changeover to defined contribution plans instead of more conservative DB pension plans for private sector workers. Just as they’re behind the push to privatize Social Security. Notice who the *real* winners are behind these changes. It’s not govt retirees (who are being scapegoated for Wall Street’s excesses, and the politicians who’ve enabled them), and it’s not the private sector workers who’ve been shafted by Wall Street in their private retirement portfolios. It’s the financial sector that has benefited most from all of these changes.

Also, read the first paragraph in by above response to livinincali for my perspective on risky investments and how I believe pension funds *should* be managed.

[livinincali]

[quote=CA renter]
The employees pay around 9% of their income toward their pensions, and the employer covers another part that is determined periodically by actuaries (usually updated every 1 to 3 years, depending on the agency and benefit formula offered, along with investment returns, etc.). The majority of the money used for benefit payments comes from investments. I agree that pension funds should be much more conservatively invested, and that contribution amounts and benefit formulas should be adjusted accordingly. Unfortunately, I am not in charge of these decisions.[/quote]

Here’s a table of the math. I made the following assumptions. You currently make 80K after 30 years of service. You started back in 1985 at just about $20K. I think those reasonable for some average worker. We could changes the starting and ending number but it won’t make much difference because defined benefits typically use the last year or last couple of years of compensation as a benchmark and usually 30 years of service is going to get you at lease 50% of that amount maybe 60 or 70% spending on the position.

Lets assume this hypothetical employee gets $48K in defined benefit compensation (60% of 80K). That’s probably reasonable. Let’s also assume that we save 10% of this employees pay every year and put it into a conservative investment portfolio. We’ll do the most conservative 30 year treasuries. I’ll give you the benefit of compounding that interest rate too. So you buy a 10% year bond back in 1985 I’m going to go ahead an let you reinvest dividends at that same rate because I don’t want to complicate the math.

So what do you end up with after 30 years. I came up with $360K or so. For the private sector you take that $360K buy an annuity because you want to be secure in retirement. Guess what that gets you just about $21K per year for a 6% annuity excluding fees. Even if you were to draw down some of that money each year it doesn’t get you anywhere close to the defined benefit. You want to be conservative and offer a defined benefit retirement plan, then for an $80K year salary it needs to be much closer to $20-30K per year. Not close to $50K or even higher in some cases.

Year Salary 10% Savings 30 year Interest Rate Total (Compound Interest)
1985 $19,436 $1,944 11.21 $42,342
1986 $20,407 $2,041 9.34 $24,866
1987 $21,428 $2,143 7.48 $15,025
1988 $22,499 $2,250 8.42 $18,408
1989 $23,624 $2,362 8.84 $19,637
1990 $24,805 $2,481 8.46 $17,419
1991 $26,046 $2,605 8.21 $15,991
1992 $27,348 $2,735 7.77 $14,187
1993 $28,715 $2,872 7.21 $12,390
1994 $30,151 $3,015 6.22 $10,079
1995 $31,659 $3,166 7.69 $12,937
1996 $33,242 $3,324 6.02 $9,521
1997 $34,904 $3,490 6.8 $10,680
1998 $36,649 $3,665 5.8 $9,033
1999 $38,481 $3,848 5.09 $8,103
2000 $40,405 $4,041 6.49 $9,745
2001 $42,426 $4,243 5.54 $8,552
2002 $44,547 $4,455 5.43 $8,402
2003 $46,774 $4,677 4.85 $7,875
2004 $49,113 $4,911 4.97 $7,977
2005 $51,569 $5,157 4.59 $7,723
2006 $54,147 $5,415 4.68 $7,807
2007 $56,855 $5,685 4.93 $7,963
2008 $59,697 $5,970 4.35 $7,707
2009 $62,682 $6,268 3.6 $7,481
2010 $65,816 $6,582 4.51 $7,852
2011 $69,107 $6,911 4.57 $7,902
2012 $72,562 $7,256 2.93 $7,688
2013 $76,190 $7,619 3.17 $7,861
2014 $80,000 $8,000 3.62 $8,000
$361,152
6% annunity $21,669.12

[CA renter]

Livinincali,

Yes, I understand the math. You’re forgetting about the employer-paid portion of the pension contributions (much like Social Security or a 401k plan). Right now, the employer contributions can run anywhere from 100% of the employee portion to about 200%. Again, it depends on the particular financial situation of the employing agency, and their benefit formulas.

And, yes, the benefit amount would be somewhat less than what it is today in most cases. I have no problem with that as long as everyone knows about it up front.

What I have a problem with is the claim that we should retroactively change an employee’s compensation — long after they have earned it, and after everyone agreed to the terms of the agreement.

[FlyerInHi]

Defined benefits or defined contribution can have the same value. It all depends on the Net present value.

All else being equal, I personally would not mind everything being paid to me in cash up front. Hell, I don’t even need health care benefits. Just give me the cash.

What’s best for me, however might not be best for the same group of people.

Problem is public employers say x contributions today will pay for y benefits in the future. Then 10 years later, opps we calculated wrong so we need to cut services and raise taxes to contribute more to pensions. Because by law, we cannot cut pensions.

[CA renter]

[quote=FlyerInHi]
Problem is public employers say x contributions today will pay for y benefits in the future. Then 10 years later, opps we calculated wrong so we need to cut services and raise taxes to contribute more to pensions. Because by law, we cannot cut pensions.[/quote]

Wrong. Public employees are the only ones to take a hit, so far. Many haven’t had a raise in over 6 years…many have had their compensation reduced, some by a large amount. READ what I’ve posted, above, about how employees are having to contribute more to their pensions…and more increases are on the way.

Sorry, brian, because I don’t want to take this out on you, specifically; but it gets very frustrating when I have to keep correcting some incredibly ignorant and uninformed statements, over and over and over, again. This has been going on for years, usually because the same ~2-3 people want to keep attacking public sector employees by spreading the propaganda put out there by the Privatization Movement.

[Anonymous]

[quote] Public employees are the only ones to take a hit, so far.[/quote]

It’s easy to prove a lie with a counterexample (you should try it sometime.)

Vallejo

http://www.pbs.org/newshour/bb/cities-financial-straights-weigh-bankruptcy/

For nearly 30 years, he was a police officer in the city of Vallejo […] He was able to retire at 50 with a pension and family health insurance benefits worth a total of a little over $180,000 a year.

Cop retires at 50 with a pension worth millions.

He’s not working, but making an income that is easily in the top 5% of the nation.

(BTW: Who was saying up-thread that a police officer retiring at 50 was “bullshit?”)

Vallejo’s financial situation is desperate, city services were cut by 40%, city is still on verge of bankruptcy. Cost of pensions alone is 30% and rising – yes, thirty percent of the budget pays for people who aren’t even working for the city.

http://money.cnn.com/2014/03/10/pf/vallejo-pensions/

Retired cop in PBS interview did have to take a cut. He now has to pay for his own health insurance. Income was reduced by $769/month, or about 5%.

Cop complains about it, as if it will be a struggle to live on $170K per year. Would rather current employees (and therefore the quality of current services) to take the hit:

“Where I think that they should’ve started to make changes is with the current employees. Those people still have an opportunity to plan for these things in the future.”

Yup, kick the can down the road, into the face of the next generation.

[CA renter]

[quote=harvey][quote] Public employees are the only ones to take a hit, so far.[/quote]

It’s easy to prove a lie with a counterexample (you should try it sometime.)

Vallejo

http://www.pbs.org/newshour/bb/cities-financial-straights-weigh-bankruptcy/

For nearly 30 years, he was a police officer in the city of Vallejo […] He was able to retire at 50 with a pension and family health insurance benefits worth a total of a little over $180,000 a year.

Cop retires at 50 with a pension worth millions.

He’s not working, but making an income that is easily in the top 5% of the nation.

(BTW: Who was saying up-thread that a police officer retiring at 50 was “bullshit?”)

Vallejo’s financial situation is desperate, city services were cut by 40%, city is still on verge of bankruptcy. Cost of pensions alone is 30% and rising – yes, thirty percent of the budget pays for people who aren’t even working for the city.

http://money.cnn.com/2014/03/10/pf/vallejo-pensions/

Retired cop in PBS interview did have to take a cut. He now has to pay for his own health insurance. Income was reduced by $769/month, or about 5%.

Cop complains about it, as if it will be a struggle to live on $170K per year. Would rather current employees (and therefore the quality of current services) to take the hit:

“Where I think that they should’ve started to make changes is with the current employees. Those people still have an opportunity to plan for these things in the future.”

Yup, kick the can down the road, into the face of the next generation.[/quote]

First, here is my quote. Note how your poor reading comprehension skills have, once again, prevented you from grasping what was written.

[quote=CA renter][quote=harvey]Wow. Not a hint of compassion in your posts.

There are lot of Macks out there, on the golf courses, in the RV parks and marinas — yes they’re out there. They can be easy to miss — their youth masks their retiree status — but they’re out there. Victims, all of them.

What about Mack? Who will rescue Mack from Wall Street?[/quote]

Bullshit. Very few can retire at 50 with full benefits because they’d have to start at 20 to do so. [/quote]

Now, for why Vallejo has so many financial problems…it’s not because of pensions. EVERYBODY has to take a hit, including the retirees, because of problems that were brought on by base closures and the recession (and the bursting of the Fed’s bubbles…we’re in another one right now). Is is not the public employees’ job to take the hit for everyone else. All stakeholders have to share in the pain. From your own PBS link:

“RICK KARR: Gomes had a front row seat on the city council as Vallejo went broke in 2008. The city never recovered from the blow its economy took in 1996, when the Mare Island Naval Shipyard closed there and thousands of residents lost jobs. The additional burden of the recession was too much for the municipal budget. For Gomes, the worst part of the crisis was just before the city filed for bankruptcy.”

……….

BTW, how many people have personally lost $769/month in order to fund someone else’s pension? Again, your post proves that the public employee is the one taking the largest hit, by far.

I have always said that changes are needed with respect to benefit formulas and retroactive pension increases, especially for those who get retiree healthcare when newer employees do not (benefit parity between older retirees and current employees). And I’ve long said that contribution rates have to increase, even for employees. They have been increasing, as noted in my comment about PEPRA, and also in my comments about changes in negotiations that result in a net reduction in compensation for public employees (effectively increasing their contribution rates by reducing other pay/benefits to pay for it). They are also working on *legal* legislative changes that would increase direct employee contribution amounts for employees.

Pensions do need to be managed wisely, but ALL aspects of government finance need to be managed wisely, and they are not (again, reference links in phasters last post…and there are many, many more examples of this).

[CA renter]

[quote=harvey][quote] Public employees are the only ones to take a hit, so far.[/quote]

It’s easy to prove a lie with a counterexample (you should try it sometime.)

Vallejo

http://www.pbs.org/newshour/bb/cities-financial-straights-weigh-bankruptcy/

For nearly 30 years, he was a police officer in the city of Vallejo […] He was able to retire at 50 with a pension and family health insurance benefits worth a total of a little over $180,000 a year.

Cop retires at 50 with a pension worth millions.

He’s not working, but making an income that is easily in the top 5% of the nation.

(BTW: Who was saying up-thread that a police officer retiring at 50 was “bullshit?”)

Vallejo’s financial situation is desperate, city services were cut by 40%, city is still on verge of bankruptcy. Cost of pensions alone is 30% and rising – yes, thirty percent of the budget pays for people who aren’t even working for the city.

http://money.cnn.com/2014/03/10/pf/vallejo-pensions/

Retired cop in PBS interview did have to take a cut. He now has to pay for his own health insurance. Income was reduced by $769/month, or about 5%.

Cop complains about it, as if it will be a struggle to live on $170K per year. Would rather current employees (and therefore the quality of current services) to take the hit:

“Where I think that they should’ve started to make changes is with the current employees. Those people still have an opportunity to plan for these things in the future.”

Yup, kick the can down the road, into the face of the next generation.[/quote]

More…

He’s not living on $180,000/year. That’s the TOTAL cost of his retirement benefits, including the family’s healthcare which probably accounts for at least $24,000 of that. Not saying he’s living in poverty, but let’s be honest about numbers. Let’s also not forget that he’s probably paying a much higher percentage of income tax than the vast majority of “taxpayers” who are complaining about public sector employees and their pensions.

And current employees are already taking the hit. It is primarily the current and future employees who will take the hits. The only possible way for current retirees to take some kind of a hit is in retiree healthcare because, in most cases, that is not a legally protected benefit. It can be used as a negotiation tool to extract other concessions from current retirees.

Also, the almost 26% (not 30%) of the budget going toward pensions is NOT paying for “people who aren’t even working for the city.” Again, your ignorance and lack of knowledge about this topic rears its ugly head…not to mention your poor reading comprehension skills (again), as I’ve explained this to you multiple times over the years. The employer share of pension contributions is paid out as a percentage of their **current employees’** pay. The (almost) 26% number comes from the percentage of the budget that is going toward pension contributions for current employees. Vallejo does not cut retirement benefit checks to their retirees.

But, feel free to keep on “discrediting” me, troll.

[livinincali]

[quote=CA renter]
Wrong. Public employees are the only ones to take a hit, so far. Many haven’t had a raise in over 6 years…many have had their compensation reduced, some by a large amount. READ what I’ve posted, above, about how employees are having to contribute more to their pensions…and more increases are on the way.
[/quote]

The problem is the total cost of employee isn’t what they see in their pay check. San Diego’s revenue stream has been pretty flat and just growing with GDP/inflation at best. The problem is that things like healthcare benefits and pension issues are growing at a faster rate so somehow the city has to reduce it’s costs. It has done so via pay freezes, laying people off, etc. In some cases the citizens took a hit, your water bill has gone quite a bit over the past 5-6 years correct. In some cases services were reduced. In some cases employee got pay freezes or pay reductions. With all those cuts the pension plan is still underfunded.

Let’s say tomorrow we magically get a 10% increase in city revenues. Are we going to use that money to shore up the pension system or give employees raises who haven’t had a raise in 6 years. My guess is we’ll give raises now and leave the pension system underfunded because that’s a problem in the future. That act of giving employees raises makes the pension problem worse because of how most of these defined benefit pension plans work.

These defined benefit plans just don’t manage the risks properly. They never have. Most of them are going to fail one way or another.

Look at social security. You contribute 13.6% of your salary. If you make 50K per year and wait until 70 to retire you get 50% of your salary. If you retire at 62 you get about 25% of you salary. If you make $100K per year you get 37% of your salary at 70, at 62 you get 20%. So that’s far less of a benefit and even that system is in some trouble.

The problem for the public sector employees is that combined the employee and employer might be putting in 20% max which is more than social security, but the benefit is far higher. Usually something like 60% of your highest salary. Plus you tend to retire earlier. So a social security system that’s in a bit of trouble pays like 20-25% of you salary at 62 but the public sector wants to get 60% at 60 or so. It’s just not going to work. You might be able to do it but you’d need to contribute 30-35% percent of your compensation or assume unrealistic returns and end up unfunded.

[CA renter]

[quote=livinincali][quote=CA renter]
Wrong. Public employees are the only ones to take a hit, so far. Many haven’t had a raise in over 6 years…many have had their compensation reduced, some by a large amount. READ what I’ve posted, above, about how employees are having to contribute more to their pensions…and more increases are on the way.
[/quote]

The problem is the total cost of employee isn’t what they see in their pay check. San Diego’s revenue stream has been pretty flat and just growing with GDP/inflation at best. The problem is that things like healthcare benefits and pension issues are growing at a faster rate so somehow the city has to reduce it’s costs. It has done so via pay freezes, laying people off, etc. In some cases the citizens took a hit, your water bill has gone quite a bit over the past 5-6 years correct. In some cases services were reduced. In some cases employee got pay freezes or pay reductions. With all those cuts the pension plan is still underfunded.

Let’s say tomorrow we magically get a 10% increase in city revenues. Are we going to use that money to shore up the pension system or give employees raises who haven’t had a raise in 6 years. My guess is we’ll give raises now and leave the pension system underfunded because that’s a problem in the future. That act of giving employees raises makes the pension problem worse because of how most of these defined benefit pension plans work.

These defined benefit plans just don’t manage the risks properly. They never have. Most of them are going to fail one way or another.

Look at social security. You contribute 13.6% of your salary. If you make 50K per year and wait until 70 to retire you get 50% of your salary. If you retire at 62 you get about 25% of you salary. If you make $100K per year you get 37% of your salary at 70, at 62 you get 20%. So that’s far less of a benefit and even that system is in some trouble.

The problem for the public sector employees is that combined the employee and employer might be putting in 20% max which is more than social security, but the benefit is far higher. Usually something like 60% of your highest salary. Plus you tend to retire earlier. So a social security system that’s in a bit of trouble pays like 20-25% of you salary at 62 but the public sector wants to get 60% at 60 or so. It’s just not going to work. You might be able to do it but you’d need to contribute 30-35% percent of your compensation or assume unrealistic returns and end up unfunded.[/quote]

Healthcare costs need to come down dramatically, for everyone. We’re paying higher costs than anyone else in the developed world for the same, or poorer, care. I’ve always been a staunch supporter of single-payer healthcare, which all the research shows is capable of delivering better care for less money.

Actually, the combined contributions from employees and employers is usually quite a bit higher than 20%, usually by around 50% (it varies from one agency to another, depending on all of the usual investment and benefit factors). And I’ve also said that public employees will probably see a 25-35% cut in compensation when all is said and done in order to fund the pensions with higher benefits. IMO, in the future, they will be offered a series of benefit options, matched with respectively higher contribution amounts for the more generous benefit packages. Retirement ages have already been increased, too.

I also agree that raises should not be given until the pension issues are resolved. As you’ve noted, increasing their pay will make the pension problem worse.

Essentially, we’re in agreement about this.

[FlyerInHi]

CAr, what you say is so irrelevant.

You can calculate an amount today that equates to a stream of future payments. The only reason that pension funds are underfunded is because past and present contributions are too low in relation to future promises.

Depending on the amount, I would theoretically be indifferent between a DB or a DC plan. If they raise my salary enough, I’d be willing to give up any kind of future benefits.

There is a shifting of risk. But you have to pay for the risk.

[CA renter]

[quote=FlyerInHi]CAr, what you say is so irrelevant.

You can calculate an amount today that equates to a stream of future payments. The only reason that pension funds are underfunded is because past and present contributions are too low in relation to future promises.

Depending on the amount, I would theoretically be indifferent between a DB or a DC plan. If they raise my salary enough, I’d be willing to give up any kind of future benefits.

There is a shifting of risk. But you have to pay for the risk.[/quote]

They do pay for the risk. Most public employees have taken lower pay and other benefits in return for these pensions. Again, contribution rates absolutely do need to go up and, IMHO, benefit formulas need to be reduced (and there are many *fair and legal* ways to do this).

[Anonymous]

[quote=CA renter]Wrong. Public employees are the only ones to take a hit, so far.[/quote]

Unbelievable that anyone could make this claim, which is absolutely false.

You contradict it in the very next post!

[quote]EVERYBODY has to take a hit[/quote]

And this one perfectly illustrates your grasp of the situation:

[quote]He’s not living on $180,000/year. That’s the TOTAL cost of his retirement benefits, including the family’s healthcare which probably accounts for at least $24,000 of that. Not saying he’s living in poverty, but let’s be honest about numbers. Let’s also not forget that he’s probably paying a much higher percentage of income tax than the vast majority of “taxpayers” who are complaining about public sector employees and their pensions.[/quote]

So, being “honest about numbers:”

– It’s not all cash – part of it is $2000/month in healthcare benefits.

– And the poor guy makes so much money, it puts him in a high tax bracket.

When a city has to cut services while the taxpayers still pay the same, your only concern is for the “employees” that have to “take a hit.” When the people who are paying for services get substantially less police protection, fewer ambulances and paramedics, more crowded schools and crumbling infrastructure, you direct your outrage toward the notion that public employees might actually have to fund their own retirements.

The selfishness and complete disregard for the public you supposedly serve says a lot about your character.

[CA renter]

[quote=harvey][quote=CA renter]Wrong. Public employees are the only ones to take a hit, so far.[/quote]

Unbelievable that anyone could make this claim, which is absolutely false.

You contradict it in the very next post!

[quote]EVERYBODY has to take a hit[/quote]

And this one perfectly illustrates your grasp of the situation:

[quote]He’s not living on $180,000/year. That’s the TOTAL cost of his retirement benefits, including the family’s healthcare which probably accounts for at least $24,000 of that. Not saying he’s living in poverty, but let’s be honest about numbers. Let’s also not forget that he’s probably paying a much higher percentage of income tax than the vast majority of “taxpayers” who are complaining about public sector employees and their pensions.[/quote]

So, being “honest about numbers:”

– It’s not all cash – part of it is $2000/month in healthcare benefits.

– And the poor guy makes so much money, it puts him in a high tax bracket.

When a city has to cut services while the taxpayers still pay the same, your only concern is for the “employees” that have to “take a hit.” When the people who are paying for services get substantially less police protection, fewer ambulances and paramedics, more crowded schools and crumbling infrastructure, you direct your outrage toward the notion that public employees might actually have to fund their own retirements.

The selfishness and complete disregard for the public you supposedly serve says a lot about your character.[/quote]

There you go with your reading comprehension problems again, troll. The first statement is about what IS happening. The second statement is about what should be happening. The problems were not caused by public employees, so they should not be the only ones to take the hit. ALL STAKEHOLDERS need to take the hit. Get it?

Your disregard for the people who do the actual work is disgusting. You advocate for investors (like landlords and other non-resident property owners who benefit from Prop 13, and high-frequency traders, to name a couple); I advocate for the people who make the world go ’round — the workers.

[EconProf]

This thread has had a lot of back and forth about little details about public employee pensions. But there are several well-established realities that all sides ought to agree on which point to a grossly unfair system that will only get worse.
It is well known that public sector employees have total compensation that far exceeds similar positions in the private sector. Remember that total compensation includes ALL fringe benefits: medical, retirement, vacation days off, etc., plus the smaller likelihood for getting fired for poor performance. And fire and police personnel are good at gaming the system to enhance their benefits with pseudo disability claims, racking up overtime in their final year, etc. Those same public safety workers have convinced the public that their jobs are dangerous, even though the mortality rates for a host of other occupations are far greater. Construction workers, fishermen, farmers, taxi-drivers, convenience store clerks face far more danger and higher on-the-job deaths. And on top of it all, the latter workers retire in their 60’s in order to pay taxes to support the public safety workers retiring in their 50’s.
Let’s remember these obvious realities and not get so bogged down in little details. Government pension expenses in cities, counties, and states are exploding and squeezing out other needed government goods and services.

[CA renter]

[quote=EconProf]This thread has had a lot of back and forth about little details about public employee pensions. But there are several well-established realities that all sides ought to agree on which point to a grossly unfair system that will only get worse.
It is well known that public sector employees have total compensation that far exceeds similar positions in the private sector. Remember that total compensation includes ALL fringe benefits: medical, retirement, vacation days off, etc., plus the smaller likelihood for getting fired for poor performance. And fire and police personnel are good at gaming the system to enhance their benefits with pseudo disability claims, racking up overtime in their final year, etc. Those same public safety workers have convinced the public that their jobs are dangerous, even though the mortality rates for a host of other occupations are far greater. Construction workers, fishermen, farmers, taxi-drivers, convenience store clerks face far more danger and higher on-the-job deaths. And on top of it all, the latter workers retire in their 60’s in order to pay taxes to support the public safety workers retiring in their 50’s.
Let’s remember these obvious realities and not get so bogged down in little details. Government pension expenses in cities, counties, and states are exploding and squeezing out other needed government goods and services.[/quote]

Econprof, are you really an economics professor? After all of the false statements you’ve made in various threads — teachers don’t like unions, privatization saves money, etc., etc. — I have to question this. You simply spout right-wing propaganda, and when asked for any kind of data to back up your points, you disappear. It’s happened on numerous occasions.

As for your claim that public sector employees have total compensation that far exceeds similar positions in the private sector, we’ve already covered that, too.

[quote=CA renter][quote=ocrenter][quote=CA renter][quote=ocrenter][quote=sdrealtor]But if you perform below average you should fall behind. Its the private sectors way of showing you where the door is without getting sued.[/quote]

ultimately that’s the downfall of the public sector. the pay increases are all set in stone, regardless of performance.[/quote]

I’m pretty familiar with a number of public employers and their compensation numbers. Of the ones I’m familiar with, almost all have had their compensation frozen or seen net decreases in total compensation since about 2008. No net raises in the vast majority of cases. Their compensation has gone down in real terms, and in many cases, in nominal terms.[/quote]

But that’s looking at a short term deviation from the norm secondary to budgetary crisis at all levels of government. Overall, the government employees are significantly overpaid.

http://www.bls.gov/news.release/pdf/ecec.pdf%5B/quote%5D

Where does it say that?

From your link, on page 4:

“Comparing private and public sector data
Compensation cost levels in state and local government should not be directly compared with levels in
private industry. Differences between these sectors stem from factors such as variation in work
activities and occupational structures. Manufacturing and sales, for example, make up a large part of
private industry work activities but are rare in state and local government. Professional and
administrative support occupations (including teachers) account for two-thirds of the state and local
government workforce, compared with one-half of private industry.”
——————

Here are some articles and studies regarding compensation in the public vs. private sectors:

http://abcnews.go.com/blogs/politics/2011/02/working-in-america-public-vs-private-sector/

And this more “mixed” analysis from the Reason Foundation — hardly a “liberal” or “pro-union” organization:

http://reason.org/news/show/public-sector-private-sector-salary

And from Mother Jones (to get all sides in here), another “mixed” bag:

Chart of the Day: Federal Government Pay vs. Private Sector Pay

——————

One comment I have to make about the higher pay for the jobs with fewer degree requirements — many of which are public safety jobs — there are no similar jobs in the private sector with which to compare them.

Not only that, but they mention the much lower turnover rate in many public sectors jobs; this is very important to public employers. The (necessarily) bureaucratic hiring process and extensive initial, and ongoing, training required for these employees is VERY expensive. They cannot afford to have high turnover rates. IMHO, even if they were to go to defined contribution plans (as many suggest), I don’t think they’d end up saving very much (anything?) in the long run. One of the main reasons people are attracted to these jobs is the benefits packages. Take that away, and the turnover rates — and related costs — would be much, much higher.[/quote]

http://piggington.com/2012_edition_what039s_your_raise_this_year

Here’s another study regarding public vs private sector compensation:

http://www.politifact.com/texas/statements/2011/apr/21/mitch-daniels/mitch-daniels-says-government-workers-41-states-ma/

————

And your claim that public safety workers “game the system” to enhance retirement benefits? While some do (mostly state employees), most cannot. Overtime is NOT calculated in pension benefit formulas for many (most?) municipal employees. New employees are specifically prohibited from using OT to “spike” pensions (and I think it should apply across the board).

“Also specifically excludes certain types of pay from being
reported as pensionable compensation, including, bonuses, overtime, pay for additional
services outside normal working hours, cash payouts for unused leave (vacation, annual,
sick leave, CTO, etc.,), and severance pay, among others.”

http://www.calpers.ca.gov/eip-docs/employer/program-services/summary-pension-act.pdf

—–

And those public safety workers are not just being paid because of the dangerous nature of their jobs (and they are dangerous; cops are in the top 10, firefighters in the top 15), they are also being paid for the skill set and responsibilities (HUGE liabilities…witness the Ferguson issue…where a split-second decision can easily change the rest of your life) inherent with those jobs.

Most dangerous jobs:

http://jobs.aol.com/articles/2013/11/12/the-15-most-dangerous-jobs-in-america/

[EconProf]

To answer your question–I taught economics for 18 years at SDSU and have since kept up with the research and published nationally.
CAR, please tell us Piggs what you and your spouse do for a living.

[CA renter]

[quote=EconProf]To answer your question–I taught economics for 18 years at SDSU and have since kept up with the research and published nationally.
CAR, please tell us Piggs what you and your spouse do for a living.[/quote]

Then why are you so inclined to just spout propaganda without ever using data and research to back up your claims? Why do you disappear whenever somebody calls you out on your false claims? It’s frightening that you were an economics professor. I’ve never seen a professor so inclined to argue the way you do without any regard for the facts (and harvey/pri and paramount are right behind you).

And I’ve already stated many times what I do/have done. I was a public school teacher many years ago, but spent most of my time in the private sector…management in the tech industry, to be specific.

[EconProf]

Thank you for telling us what you have done in the past. What about your spouse?

[CA renter]

[quote=EconProf]Thank you for telling us what you have done in the past. What about your spouse?[/quote]

Also in the public sector after working for years in the private sector.

If you were a full-time, faculty professor, are you also receiving a pension and, possibly, retiree healthcare? How about your spouse?

[EconProf]

[quote=CA renter][quote=EconProf]Thank you for telling us what you have done in the past. What about your spouse?[/quote]

Also in the public sector after working for years in the private sector.

If you were a full-time, faculty professor, are you also receiving a pension and, possibly, retiree healthcare? How about your spouse?[/quote]
Someone told me he is a firefighter. Is that correct?

[CA renter]

[quote=harvey][quote]Yes, I’ve been following the pension issue for many, many years (far, far, far longer than you have)[/quote]

I’ve been following the pension issue since the steel industry began collapsing in the 1970s. But go ahead and tell me more about myself since you seem to know so much.[/quote]

I know by the claims you’ve made about public sector pensions that you know nothing about them. There is no way you’ve been following them for any amount of time, and what you do know about them, you’ve only learned from propaganda pieces put out by the Privatization Movement. We’re not talking about steel mills here, we’re talking about pensions in the public sector.

[quote=harvey][quote=CA renter]FYI, a person who makes $120K/year ]about the average for a public safety worker with many years of experience,[/quote]

You specifically defended the $180K compensation of a retired Vallejo police officer.

The $180K figure is retirement income, which means the total income pre-retirement would need to be far more.

(Have you taken the time to understand the value of an $180K lifetime fixed annuity for a 50 year old? It turns out to be quite a nest egg!)

[quote]For the example in the story, which is probably an outlier, they are in the top 8% in both areas. See map with income percentiles. And they most certainly are “the workers.”[/quote]

The data in your link is for household income, not individual.

And do you think someone retired with that level of income is going to live in a city with inadequate public services and and crumbling infrastructure … a place like Vallejo?

You see, the people of Vallejo – the ones that don’t have the option to move to the golf course community in a low cost of living area – did “take a hit” … a big one!

The retirees can live wherever they want. And $180K is in the top 2% of the nation.

(If you don’t like the 2% figure please don’t bother to dig up links so that you can split hairs – everybody knows that $180K is a very good income.)

As for EconProf’s question: What you personally do for a living doesn’t alter the merits of your arguments which have consistently been self-contradictory and nonsensical.

But he did call you out, and you showed your true character with your answer. The claim that your support of public sector pensions has nothing to do with your “self interest” is blatantly dishonest.[/quote]

I didn’t “defend” anyone’s compensation. We’re discussing the reasons for Vallejo’s financial problems and how these problems affect their pension obligations. And I’ve never claimed that $180K isn’t a good income, whether one is retired or not.

BTW, $180K is still not in the top 2% for men, even for individual income, but it is in the top 4%, and that’s for the U.S. 😉 And where a person lives dramatically changes the percentile ranking; this guy is still living in the Bay Area (Napa), and has moved to an even more expensive area, so he’s nowhere near the top 2%, or even the top 5% for the area.

http://politicalcalculations.blogspot.com/2013/09/what-is-your-us-income-percentile.html#.VC0Fb1eTl1M

The residents of Vallejo are losing what was gained during the Fed’s bubbles. Services and infrastructure were greatly enhanced as a result of the bubbles; now, they are losing some of those things. These financial losses are in addition to the losses (and additional expenditures) sustained as a result of the base closure. These residents were the ones who were begging the city council for a larger and better-paid police force, among other things. I would also point out that while the city is claiming that they can’t afford to pay their employees as promised, they’ve managed to militarize their police force, as have many other “broke” police departments across the country. While much of that money comes from the federal govt, it would have been better if the same money could have been used to actually improve these departments instead of gearing them up for a war against “domestic terrorists” (a.k.a.: people who don’t agree with the current corporatist regime).

Please show me an example of my “self-contradictory and nonsensical” posts. The only ones who’ve made self-contradictory and nonsensical posts about this topic are you, econprof, and paramount. While others might have opinions that differ from mine, at least they appear to be trying to better understand the issues. You just spout pure nonsense.

And econprof, the former public sector worker of 18 years who, if he was full-time faculty, is probably getting one of those awful pensions (and, quite possibly, retiree healthcare) didn’t call out anything. Let’s revist my post and show, once again, how poor your reading comprehension skills are, shall we?

[quote=CA renter]

I’ve never let my own self-interest get in the way of what I thought was right, which is why I advocate for eliminating Prop 13 protection for non-owner-occupied properties, even though we have benefited from it in the past and stand to benefit greatly in the future. It’s why I’ve advocated for changes to the pension systems that would go very much against my own interests. There are many things that I advocate for and against that go against my own self-interest. How about you?

[/quote]

I have ALWAYS been 100% in favor of DB pensions for ALL workers (and single-payer healthcare, among other things), even when I was working in the private sector. I have been arguing *for years* about the insane, and growing, wealth/income gap between capital and labor. I have participated in the (original, when it was opposed to bank bailouts) Tea Party movement and the Occupy Wall Street movement, even though it doesn’t affect me, personally. This has nothing to do with my own self-interest; I have always been an advocate for doing the right thing, period.

[Anonymous]

[quote=CA renter]We’re not talking about steel mills here, we’re talking about pensions in the public sector.[/quote]

If you don’t understand the relationship between defined-benefit pensions, labor unions, and the collapse of one of the most important industries in the United States, then you don’t have a clue about “the pension issue.”

[CA renter]

That would be globalization. Because in a world where some people are willing to work for pennies on the dollar (and where environmental protections are low to non-existent) vs. American labor, the U.S. will continue to lose jobs.

So, do you think we should continue to spiral down until we are all living in mud huts and eating a bowl of rice per day (while our corporate masters get wealthier and more powerful), or do you think we should protect our industries and our way of life by enacting trade laws and tariffs that offset the differences between our environmental and labor standards and the standards of others?

[Anonymous]

[quote=CA renter]So, do you think we should continue to spiral down until we are all living in mud huts and eating a bowl of rice per day (while our corporate masters get wealthier and more powerful), or do you think we should protect our industries and our way of life by enacting trade laws and tariffs that offset the differences between our environmental and labor standards and the standards of others?[/quote]

A strawman and a false choice in one sentence! Nice use of logical fallacies!

What I think is that any attempt to guarantee investment returns decades into the future is folly. I think we should base policy on the realities that history has taught us, not the fantasies that some would like to believe.

[CA renter]

[quote=harvey][quote=CA renter]So, do you think we should continue to spiral down until we are all living in mud huts and eating a bowl of rice per day (while our corporate masters get wealthier and more powerful), or do you think we should protect our industries and our way of life by enacting trade laws and tariffs that offset the differences between our environmental and labor standards and the standards of others?[/quote]

A strawman and a false choice in one sentence! Nice use of logical fallacies!

What I think is that any attempt to guarantee investment returns decades into the future is folly. I think we should base policy on the realities that history has taught us, not the fantasies that some would like to believe.[/quote]

Not at all a false choice or a straw man argument (you like to make these claims a lot, pretty much anytime you don’t have an answer to someone else’s challenge). Do you seriously not understand the trajectory that we’re on? Do you honestly not know where our corporate masters are driving the global economy? Do some research for a change!

And if we were to all lose Social Security and DB pensions (and Medicare, since we’re throwing everything out there that is backed by taxpayers), how do you think that would play out? Do you not understand that we would still have to pay for these people when they run out of money (and they would run out of money), or risk serious social and civil strife?

In the past, a large and strong family unit was the social safety net. With industrialization and globalization, that can’t happen. What do you propose *that would actually work*?

[EconProf]

CAR, the (apparent) fact that your husband is a firefighter explains your strong defense of government sector unions. We all get that. I don’t know why you won’t admit it. Piggs are smart enough and fair-minded enough to look beyond that fact and weigh the arguments and evidence based on their merits.

[joec]

[quote=EconProf]CAR, the (apparent) fact that your husband is a firefighter explains your strong defense of government sector unions. We all get that. I don’t know why you won’t admit it. Piggs are smart enough and fair-minded enough to look beyond that fact and weigh the arguments and evidence based on their merits.[/quote]

Because CAR likes to believe she is a good person and isn’t out to get what’s best for herself and her loved ones.

I don’t blame CAR, but this is true for pretty much everyone in society including all the wall street, big business types, etc…Everyone just wants their piece of meat and screw the hells with everyone else.

That’s life…honestly. It doesn’t hurt to look in the mirror and admit it (I know I do and can care less for plenty of things/people/etc…).

Best course of action for everyone is just find ways to avoid getting taxed I think and be able and flexible to move…If you can find ways to like get solar, your own water, police/fire protection, etc…do it…or find tax advantaged ways to generate very to 0 income, and live off capital gains, tax exempt bonds, etc…

Since her husband is a fire fighter, that makes her whole argument biased already since any change will greatly affect her own life so take anything mentioned with buckets of salt.

[CA renter]

[quote=EconProf]CAR, the (apparent) fact that your husband is a firefighter explains your strong defense of government sector unions. We all get that. I don’t know why you won’t admit it. Piggs are smart enough and fair-minded enough to look beyond that fact and weigh the arguments and evidence based on their merits.[/quote]

I’ve never said what my husband did, only that he works in the public sector. I have often mentioned that on this site; it’s no secret. My father also worked in the public sector, as did I.

But I’m definitely calling you out on your bullshit. Some of us are quite capable of doing the right thing, irrespective of whether or not we benefit or lose as a result of any changes. As I’ve said before, I ALREADY HAVE advocated for things that would go against my own best interests. And I have spent a lot of time, money, and energy on improving things for others when I never stood to benefit one bit from my actions; oftentimes, I would lose. How about you?

——–

BTW, nice diversionary tactics, econprof. Once again, were you full-time faculty? Do you have a pension? How about retiree healthcare? How about your spouse?

Let me guess, you tried to get a faculty position at a *public* institution because of the pay and benefits, right?

And we’re STILL waiting for you to cite some facts to back your claims about how the high teacher attrition rate is due to unions, or how non-union schools outperform union schools, or how private sector workers are underpaid relative to public sector workers, or how privatization saves money, etc.

I’ve cited many sources over the years that totally refute what you’ve said (even from right-wing think tanks, just for the sake of fairness). You’ve never done so.

[Anonymous]

[quote=CA renter]And I’ve already stated many times what I do/have done. I was a public school teacher many years ago, but spent most of my time in the private sector…management in the tech industry, to be specific.[/quote]

For years on this forum you have claimed extraordinary, detailed knowledge of public sector labor economics, such as pension investment strategies and compensation rules. You have claimed to have been intimate with union and contract negotiations.

And now you are saying you have had little affiliation with the public sector and spent most of your career in private industry?

It doesn’t jibe.

[quote]I advocate for the people who make the world go ’round — the workers.[/quote]

Then why are you arguing so hard for the guy making an income in the top 2% who isn’t working at all?

And what would you know about “the workers?” You just said you were in management.

[CA renter]

[quote=harvey][quote=CA renter]And I’ve already stated many times what I do/have done. I was a public school teacher many years ago, but spent most of my time in the private sector…management in the tech industry, to be specific.[/quote]

For years on this forum you have claimed extraordinary, detailed knowledge of public sector labor economics, such as pension investment strategies and compensation rules. You have claimed to have been intimate with union and contract negotiations.

And now you are saying you have had little affiliation with the public sector and spent most of your career in private industry?

It doesn’t jibe.

[quote]I advocate for the people who make the world go ’round — the workers.[/quote]

Then why are you arguing so hard for the guy making an income in the top 2% who isn’t working at all?

And what would you know about “the workers?” You just said you were in management.[/quote]

Yes, I’ve been following the pension issue for many, many years (far, far, far longer than you have), and I have also worked with negotiating committees and have done research for public employee unions. Yes, I’ve also spent most of my working years in the private sector.

I’ve never let my own self-interest get in the way of what I thought was right, which is why I advocate for eliminating Prop 13 protection for non-owner-occupied properties, even though we have benefited from it in the past and stand to benefit greatly in the future. It’s why I’ve advocated for changes to the pension systems that would go very much against my own interests. There are many things that I advocate for and against that go against my own self-interest. How about you?

See, I actually do research and make sure that I know what I’m talking about before spouting off, unlike you.

FYI, a person who makes $120K/year [about the average for a public safety worker with many years of experience, often in a management position (captain, etc.), including benefit costs and some overtime] in San Diego is in the top 21%, not the top 2%. Also in the top 21% in Vallejo. For the example in the story, which is probably an outlier, they are in the top 8% in both areas. See map with income percentiles. And they most certainly are “the workers.”

http://www.nytimes.com/interactive/2012/01/15/business/one-percent-map.html?_r=0

[Anonymous]

[quote]Yes, I’ve been following the pension issue for many, many years (far, far, far longer than you have)[/quote]

I’ve been following the pension issue since the steel industry began collapsing in the 1970s. But go ahead and tell me more about myself since you seem to know so much.

[quote=CA renter]FYI, a person who makes $120K/year ]about the average for a public safety worker with many years of experience,[/quote]

You specifically defended the $180K compensation of a retired Vallejo police officer.

The $180K figure is retirement income, which means the total income pre-retirement would need to be far more.

(Have you taken the time to understand the value of an $180K lifetime fixed annuity for a 50 year old? It turns out to be quite a nest egg!)

[quote]For the example in the story, which is probably an outlier, they are in the top 8% in both areas. See map with income percentiles. And they most certainly are “the workers.”[/quote]

The data in your link is for household income, not individual.

And do you think someone retired with that level of income is going to live in a city with inadequate public services and and crumbling infrastructure … a place like Vallejo?

You see, the people of Vallejo – the ones that don’t have the option to move to the golf course community in a low cost of living area – did “take a hit” … a big one!

The retirees can live wherever they want. And $180K is in the top 2% of the nation.

(If you don’t like the 2% figure please don’t bother to dig up links so that you can split hairs – everybody knows that $180K is a very good income.)

As for EconProf’s question: What you personally do for a living doesn’t alter the merits of your arguments which have consistently been self-contradictory and nonsensical.

But he did call you out, and you showed your true character with your answer. The claim that your support of public sector pensions has nothing to do with your “self interest” is blatantly dishonest.

[phaster]

[quote=sandiegouniontribune.com]

CENSUS DATA ON PENSIONS SORT OUT WHO PAYS WHAT

The debate over public employee pensions often centers on funding — who’s paying the tab. Taxpayer groups point to large public contributions to retirement funds. Public employees and pensioners point to their own contributions.



New data from the U.S. Census Bureau shed light on the balance among those three sources.



The top contributor to state and local pensions in 2015 in California was investment earnings, at $28.2 billion or 45 percent of incoming revenue for pension systems. Next was government contributions, generally borne by taxpayers, at $24.6 billion or 40 percent of funding. Public employee contributions totaled $9.4 billion, or 15 percent of positive revenue.



The picture varies from pension fund to pension fund. One fund for judges is 98 percent government funded. The Los Angeles Fire And Police Pension System received only 18 percent of its funding from government last year. Employees of the Turlock Irrigation District contributed 1 percent of their pension fund’s revenue last year, while Los Angeles MTA employees contributed 37 percent of their pension fund’s revenue— the highest in the state.

http://www.sandiegouniontribune.com/news/2016/jul/05/public-pensions/
[/quote]

[livinincali]

[quote=CA renter]
And your claim that public safety workers “game the system” to enhance retirement benefits? While some do (mostly state employees), most cannot. Overtime is NOT calculated in pension benefit formulas for many (most?) municipal employees. New employees are specifically prohibited from using OT to “spike” pensions (and I think it should apply across the board).
[/quote]

I worked on a project for RISK management about 12 years ago, which is the San Diego’s self funded disability insurance office. What firefighter and cops did at retirement was pretty bad. That was more a case of disability fraud, where if you retire under disability 50% of you pension income is tax free. But there were crazy things in the payroll system. People claiming to work more than 24 hours in a day. People claiming light duty (aka a disability claim) and regular duty in the same day. People like to game the system unfortunately, and defined benefit contribution plans like the ones that are currently designed encourage that unethical but possibly legal behavior.

[CA renter]

[quote=livinincali][quote=CA renter]
And your claim that public safety workers “game the system” to enhance retirement benefits? While some do (mostly state employees), most cannot. Overtime is NOT calculated in pension benefit formulas for many (most?) municipal employees. New employees are specifically prohibited from using OT to “spike” pensions (and I think it should apply across the board).
[/quote]

I worked on a project for RISK management about 12 years ago, which is the San Diego’s self funded disability insurance office. What firefighter and cops did at retirement was pretty bad. That was more a case of disability fraud, where if you retire under disability 50% of you pension income is tax free. But there were crazy things in the payroll system. People claiming to work more than 24 hours in a day. People claiming light duty (aka a disability claim) and regular duty in the same day. People like to game the system unfortunately, and defined benefit contribution plans like the ones that are currently designed encourage that unethical but possibly legal behavior.[/quote]

I agree with you on the disability stuff. While most are legitimate claims, I think that some people do stretch things in order to qualify for this. IMO, the 50% tax-free income should not be allowed, especially if the person gets retiree healthcare…so their healthcare costs are covered, witch would be the only legitimate reason for this tax-free status if they had to pay for their own healthcare costs in retirement.

The other issues might have been a problem with the record-keeping system. I know for a fact that the system can sometimes double-count shifts when the employee enters a different code for a shift; it’s not intentional in the cases that I’m aware of. It should be audited on an ongoing basis (and it usually is) to make sure this doesn’t happen.

[FlyerInHi]

Student loans are a bigger worry in the shorter term. Debts are preventing household formation and home buying.

[spdrun]

That’s a “worry?” Nah. Keep ’em renting and leave buying up to the professionals.

[FlyerInHi]

Yeah, it is a worry because household formation and homebuying are good for the economy.

I see so many rental condos in Vegas. I’m surprised that people don’t buy and lower their monthly housing costs. I can understand renting in the expensive coastal areas… but you can get an OK condo in Vegas for $70k.

[spdrun]

Why worry about what’s good for the economy? Worry about what’s good for you and enjoy the fact that you don’t have Twitter Twits competing with you to buy.

BTW – the home ownership rate is similar to what it was in 1995, which wasn’t exactly the end of the world economically. Actually, not owning a primary residence has its benefits. For example, if you have to move 1000 miles for work, you’re mobile and more likely to take a job than be tied to your city.

The idea that every schmoe has to own a house is egalitarian nonsense. Some people simply aren’t cut out to make an expensive investment. Lastly, you’re talking about Vegas. No one whom I know who’s moved there has stayed beyond a few years. It’s a transient town and people know it. I can understand the aversion to putting down roots there.

[phaster]

[quote=FlyerInHi]Student loans are a bigger worry in the shorter term. Debts are preventing household formation and home buying.[/quote]

Have to disagree, that student loans are the bigger problem (short term). Just look at the magnitude of each component of the “difficult/unserviceable debt” and the context.

Broadly speaking in ascending order, here is a list of various “debt” problem(s).

“the volume of total subprime auto loans increased roughly 15 percent, to $145.6 billion“

There is “a $518 billion total pool of HELOCs“ (i.e. people using their homes as an ATM)

http://blogs.reuters.com/felix-salmon/2013/11/26/are-heloc-defaults-about-to-spike/

$1.2 Trillion College Debt Crisis

“According to The Institute for College Access and Success (TICAS) Project on Student Debt, the average borrower will graduate $26,600 in the red.”

http://www.forbes.com/sites/specialfeatures/2013/08/07/how-the-college-debt-is-crippling-students-parents-and-the-economy/

I hear what you’re saying there is a “negative” feed back going on, with recent graduates having a difficult time getting a start in the job market, this kicks the can down the road of household formation and home buying BUT

There is “a [dark] cloud totaling $4.1 trillion dollars for state-administered public pension plans“

http://www.statebudgetsolutions.org/publications/detail/promises-made-promises-broken-the-betrayal-of-pensioners-and-taxpayers

[edited 12/14/2014 – added a “link” and a graphic showing a range of PV calculation from a Harvard University’s John F. Kennedy School of Government working paper titled:

Underfunded Public Pensions
in the United States:
The Size of the Problem, the Obstacles to Reform and the Path Forward]

http://www.hks.harvard.edu/centers/mrcbg/publications/fwp/2012-08

Keep in mind the reason I think “unfunded” public pensions will be the trigger event (of the next economic downturn) is because of the change in accounting rules starting in 2015 (which puts debts on the balance sheet and will affect “muni” bond ratings).

Looking at the big picture…

America – its government, businesses, and people – are nearly $60 trillion in debt

“The Congressional Budget Office predicts that the economy will stall by 2017 because Americans will continue spending, but wages and wealth won’t be going up…

Economists have not agreed on how to stave off the impending crisis. But Americans’ addiction to spending on credit will not help.”

http://rt.com/usa/166352-us-total-debt-sixty-trillion/

http://research.stlouisfed.org/fred2/series/TCMDO

[CA renter]

Agree that debt is a HUGE problem going forward, but public pensions are just one part of the problem. They are dwarfed by other types of debt.

BTW, nobody in their right mind would use the market value of of assets discounted by the 15-year Treasury rate, especially during a time of unprecedented Federal Reserve manipulations. This was put out by a right-wing group that is 100% funded by those behind the Privatization Movement. In other words, pure propaganda.

There is a very real war going on against working/middle-class people in developed countries. Don’t be a a useful idiot. If you’re not being paid, you should definitely demand payment from the Privatization Movement for your services. They expect to reap great rewards from the work of people like yourself; make sure to get your piece of the pie.

http://en.wikipedia.org/wiki/Useful_idiot

[FlyerInHi]

A $70k condo is hardly putting down roots.
Buy it to live and sell later. Why is that a big deal if it lowers your monthly housing outlay?

People in Vegas do drive nice cars. Lots of flashy cars.

[spdrun]

What do you care? Why would you want them competing with you? Keep ’em renting!

And there’s your answer: if you have a $600 car payment and $200 insurance per month, it eats into your ability to get approved for a mortgage a wee bit…

[FlyerInHi]

Realistically, no, unfunded pensions, whatever the total size, will not put a damper on the economy.

I don’t think the municipalities can increase taxes much more, so they can’t take a larger share of the economy.

Plus, if there’s a problem, it’s far into the future with different municipalities working out their problems at their own pace.

Localities can cut services to service debt and pay employees. The services might suck, but there won’t be a systemic collapse of the economy.

In the mean time, student debt is weighing on young people putting a drag on household formation and home building. That’s an immediate concern.

[spdrun]

That’s not a “concern” for you — less home building and fewer people buying hours = more renters and less competition for you. 🙂

[phaster]

[quote=Wall Street Journal]
San Diego County Pension Chief to Resign

By Dan Fitzpatrick
March 19, 2015 6:22 p.m. ET

The chief executive of San Diego County’s pension system announced he would resign at the end of the month, bringing fresh turmoil for the $10.4 billion fund.

San Diego County Employees Retirement Association said in a statement that CEO Brian White and the board had “amicably agreed” that Mr. White’s tenure of nearly two decades would end March 30. David Wescoe, former head of the city of San Diego’s pension fund, will take over as CEO while the board searches for a permanent replacement.

A Sdcera spokesman said Mr. White made the decision to resign and that he and the board had been discussing the move “over the course of several months.” Mr. White said in a statement that “Sdcera has enjoyed great success, which I expect will continue” and that “serving as Sdcera’s CEO has been an incredibly rewarding professional experience.”

The exit of the system’s longtime leader caps a period of strife for a fund that manages money on behalf of more than 39,657 active and former public employees.

Board members and staff members spent much of the past year wrangling over an outside firm’s investment strategy that involved the use of derivatives to boost performance. The controversial approach was the subject of a front-page article in The Wall Street Journal.

The board voted in November to find a new internal investment chief rather than rely on an outside manager for that role.

Write to Dan Fitzpatrick at [email protected]

http://www.wsj.com/articles/san-diego-county-pension-chief-to-resign-1426803772

[/quote]

FWIW everything I’ve looked at tells me that mis-use of math models are the cause for the financial crisis

paradoxically “the math” also tells me it is only a matter of time before the $hit hits the fan because no matter who the board finds to manage the fund, the “economic” system as it exists today is unsustainable…

[phaster]

FWIW in todays news paper

CalPERS may lower its return target;
taxpayers may have to contribute more

Experts have warned for years that the state’s largest public pension plan has overestimated how much its investments will earn, leaving taxpayers to pay billions of dollars more than expected.

Now the board of the California Public Employees’ Retirement System is reconsidering. As soon as Wednesday, the fund’s board could approve a plan that would slowly reduce to 6.5% the current 7.5% it says it expects to earn on its investments.

For taxpayers, that seemingly small change is significant.

Under the proposal, the rate would be reduced slowly by tiny increments. Getting to 6.5% could take 20 years.

Many experts believe that even the 6.5% estimate is too optimistic.

The average corporate pension plan now uses a rate of 4% to determine how much money needs to be contributed, according to a recent study by Milliman, a consulting firm.

This year, after several years of double-digit returns, CalPERS earned just 2.4%.

http://www.latimes.com/business/la-fi-calpers-investment-rate-20151118-story.html

[CA renter]

“Fact:

CalPERS investments have earned an average 7.6 percent annual return over the past 20 years and 9.4 percent over the past 30 years.
CalPERS investments earned 13.2 percent in Fiscal Year 2012-13.
CalPERS assumed rate of investment return is a long-term (20 years or more) average. Any given year is likely to be higher or lower than the assumed rate.

May 9, 2014”

https://www.calpers.ca.gov/page/newsroom/myths-vs-facts

This covers a period of time during which we’ve seen two massive bubbles and subsequent crashes, plus a recession that was steeper than any other recession since the Great Depression.

————–

They are trying to be conservative since the Federal Reserve seems unlikely to allow interest rates to “normalize” for some time to come.

Additionally, some of this money will come from public employers, some from public employees (reductions in pay, benefits, etc…as we’ve already seen since 2008), and some from other special interest groups and private contractors.

[Anonymous]

[quote=CA renter]Fact:

[cherry-picked data points published by CalPERS]
[/quote]

And we should believe the tobacco companies when they tell us smoking doesn’t cause cancer.

Because they have “facts” !

[CA renter]

Feel free to double-check their numbers. Get back to us with what you find.

[Anonymous]

[quote=CA renter]Feel free to double-check their numbers. Get back to us with what you find.[/quote]

That’s exactly what the LA times did in the post above yours. They found the CalPERS claims to be bogus and yet you immediately go back to CalPERS to get your “proof.”

Even Jerry Brown is calling bullshit on CalPERS.

You’re link is nothing but a shallow propaganda piece with cherry-picked facts. It makes claims like “state employees don’t receive Social Security” while conveniently omitting the fact that they don’t pay into it either. Another one: “not everyone retires at age 50” because “some start their jobs later than age 20” is also nonsense. The relevant fact is that a 20 year-old state employee will receive their government-funded retirement benefits more than a decade before a private-sector employee would.

The “myth vs. fact” list is clearly written with the intention of deceiving those who are misinformed and/or incapable of basic critical thinking. Apparently it worked on you.

Throughout this debate, every source you cite has ties to the public pension system.

You really don’t seem to understand the concept of an objective source.

Someone cites the LA Times, you counter with CalPERS.

Some cites the WSJ, you counter with something written by a firefighters union.

In other words, haven’t provided any credible data, nor do you seem to even understand the distinction between credible data and propaganda.

[CA renter]

I shouldn’t even be responding to your trolling, but I will do so one more time…

1. The LA Times is more biased than CalPERS, and CalPERS is, one would assume, the original source of the information that the LA Times is citing.

2. The information on the CalPERS site is factual. If you take issue with any of their numbers, please post a credible source showing how CalPERS is lying about these numbers.

3. Yes, you need to learn how to cite credible sources. Specifically, you need to learn about the difference between a primary source, and a secondary source (which is where the spin usually happens).

Good luck!
——–

edited to add: Just looked up Melody Petersen, the journalist who wrote the LA Times article. It’s clear that she has a right-wing, pro-privatization perspective because her other articles about the Military Industrial Complex don’t show the same sort of hawkish stance. To the contrary, they are glowing articles talking about all the jobs that will be created when the govt spends tens of billions of dollars on more war planes that we don’t need, and shouldn’t be building.

http://www.latimes.com/la-bio-melody-petersen-staff.html

Additionally, in that article, she quotes research from the Stanford Institute for Economic Policy Research (SIEPR). Though they claim that they are “non-partisan,” SIEPR was founded by George P. Shultz and Michael J. Boskin, both of whom have been deeply involved with the Hoover Institution.

http://www.hoover.org/profiles/george-p-shultz

http://www.hoover.org/profiles/michael-j-boskin

—–

The Hoover Institution’s purpose and scope statement:

“This Institution supports the Constitution of the United States, its Bill of Rights and its method of representative government. Both our social and economic systems are based on private enterprise from which springs initiative and ingenuity…. Ours is a system where the Federal Government should undertake no governmental, social or economic action, except where local government, or the people, cannot undertake it for themselves…. The overall mission of this Institution is, from its records, to recall the voice of experience against the making of war, and by the study of these records and their publication, to recall man’s endeavors to make and preserve peace, and to sustain for America the safeguards of the American way of life. This Institution is not, and must not be, a mere library. But with these purposes as its goal, the Institution itself must constantly and dynamically point the road to peace, to personal freedom, and to the safeguards of the American system.”‘

– Herbert Hoover

http://www.hoover.org/about/missionhistory

Epic fail, Pri. You still haven’t shown anything that indicates CalPERS was lying about it’s numbers. Nothing.

Try again.

[CA renter]

1. Going through that LA Times article, and it says nothing at all about CalPERS lying about their returns. It says that they will be lowering their return assumptions because the overall investment climate has changed, and pension funds may not be able to meet their existing return targets (because of the Fed’s gross manipulation of interest rates over far too many years -CAR) if there is another crash. They have lowered return assumptions in the past, are evaluating the need to lower them further, and are proactively shifting their risk profile and trying to make more conservative assumptions. This is a wise and responsible policy.

2. I have yet to see Jerry Brown “calling bullshit” on CalPERS. Please include a quote (a real one, not one of your “edited” ones), and cite your source.

3. My link is a link to the original/primary source of the information. The LA Times and the WSJ are secondary sources. You have yet to show anything from the CalPERS site that is “bogus,” as you say.

4. The statement about public employees not earning SS was directed at those who think that public employees earn both a SS benefit and a DB pension benefit at the same time. As a matter of fact, even if they’ve earned SS from another job in the private sector, that benefit that they have already earned from SS is **reduced** if they receive a retirement check from a public DB pension plan.

https://www.ssa.gov/pubs/EN-05-10045.pdf

https://www.ssa.gov/pubs/EN-05-10007.pdf

5. It’s also funny how you think that a 20 or 30-year return history is more “cherry-picked” than a fraction of a single year’s return. You really are dense, Pri.

So far, I’m the only who who has presented credible data from original/primary sources. You are the one who has relied on biased secondary sources.

[Anonymous]

[quote=CA renter]Going through that LA Times article, and it says nothing at all about CalPERS lying about their returns. […][/quote]

I never used the word “lying about their returns” – that’s your distorted interpretation of what you read here.

The LA Times article was about the recent 6.5% investment return assumption announcement by CalPERS. The CalPERS link you provided doesn’t even mention the announcement.

I used the word “bogus” because many observers, including the liberal pro-union governor of the state, called CalPERS out on how they frame their decisions to the public.

The point of the LA Times article is that CalPERS is already in the red and with the recent announcement taxpayers will now pay even more to compensate. Anybody with basic math skills can understand the impact of their recent announcement, yet CalPERS is blowing smoke with propaganda like your link and trying to obfuscate the basic realities.

If you still cannot see how shallow and misleading the CalPERS “myth vs. fact” page is, then I cannot help you.

[quote=CA renter]I have yet to see Jerry Brown “calling bullshit” on CalPERS. […][/quote]

Because you have yet to type “jerry brown calpers” into Google.

Don’t bother doing it now, as you are so blinded by bias that you wouldn’t even “see” the page full of links.

As for the rest of your long cut/paste posts above, it’s all the same tiresome attempts to compensate for quality with quantity.

[CA renter]

LOL! You just keep burying yourself, Pri. You don’t even have the slightest knowledge about this issue, and when someone calls you out on your BS, you resort to more of your trolling.

Good luck!

[Anonymous]

[quote=CA renter]LOL! You just keep burying yourself, Pri. You don’t even have the slightest knowledge about this issue, and when someone calls you out on your BS, you resort to more of your trolling.

Good luck![/quote]

Was Jerry Brown also trolling?

[phaster]

[quote=harvey][quote=CA renter]LOL! You just keep burying yourself, Pri. You don’t even have the slightest knowledge about this issue, and when someone calls you out on your BS, you resort to more of your trolling.

Good luck![/quote]

Was Jerry Brown also trolling?[/quote]

I’m guessing that many “believers” now see Jerry as an apostate, traitor, DINO (Demi In Name Only), etc…

[EconProf]

In this long-running debate about whether public pension plans will bankrupt us or not, there is one decisive data-point. The government-run pension plans assume a rate of return of near 8% for the indefinite future, while the private sector pension plans assume a rate of about 4%.
The pension plans constructed and run by politicians is keeping present taxpayer and employee contributions low because they want to avoid the pain that being honest would entail. The private sector, company-run plans are forced by their auditors and actuaries to be honest and assume a 4% rate of going into the future. The politicians know they will not be around in a few years, and want to look good only for the next election. The private sector companies have to consider their long-run survival prospects, and they act accordingly.
If the public sector were forced to be as honest as the private sector, many California cities and counties would instantly be bankrupt. As it is, public sector pensions are already squeezing budgets for schools, parks, libraries, etc. across the state, and it is soon to get much worse, all because of the pension promises politicians made.

[Coronita]

[quote=EconProf]In this long-running debate about whether public pension plans will bankrupt us or not, there is one decisive data-point. The government-run pension plans assume a rate of return of near 8% for the indefinite future, while the private sector pension plans assume a rate of about 4%.
The pension plans constructed and run by politicians is keeping present taxpayer and employee contributions low because they want to avoid the pain that being honest would entail. The private sector, company-run plans are forced by their auditors and actuaries to be honest and assume a 4% rate of going into the future. The politicians know they will not be around in a few years, and want to look good only for the next election. The private sector companies have to consider their long-run survival prospects, and they act accordingly.
If the public sector were forced to be as honest as the private sector, many California cities and counties would instantly be bankrupt. As it is, public sector pensions are already squeezing budgets for schools, parks, libraries, etc. across the state, and it is soon to get much worse, all because of the pension promises politicians made.[/quote]

Gotta love the 8% unicorn guaranteed return. Especially when it also counts heavily on wall street’s performance.

[phaster]

To begin

[quote=FlyerInHi]CAr, what you say is so irrelevant.

You can calculate an amount today that equates to a stream of future payments. The only reason that pension funds are underfunded is because past and present contributions are too low in relation to future promises.

[/quote]

then there is an inconvenient truth of the basic concept of the disclaimer that states: “Past performance does not guarantee future returns!”

Seems CalPERS like some mutual fund firms use past performance to distract investors

http://money.usnews.com/money/blogs/the-smarter-mutual-fund-investor/2013/11/21/past-performance-wont-protect-your-investments

Like it or not the world evolves and (economically speaking) there cannot be a status quo (that favors specific sectors like the CEOs and the shareholders of “Big Tobacco” or the “Fossil-fuel industry”)

Actually if you think about it CEOs and the shareholders of “Big Tobacco” and/or the “Fossil-fuel industry” along with “believers” of public pensions share much in common in that there is an interest in keeping the economic status quo AND perpetuating the “DELUSION!”

In other words, “Big Tobacco” ignores the math/science that their product causes cancer, the “Fossil-fuel industry” ignores the math/science that their product contributes to the danger of climate change AND “believers” of public pensions say its benefits are a sacred cow that should not be changed (even with changing “global” economic conditions, fund corruption/mis-management, etc.)

Consider the trait “Big Tobacco” and/or the “Fossil-fuel industry” and/or “believers” of public pensions have in common, WHICH is the need to keep up the PR media “NEWS DELUSION/DENIAL!”

for example w/ “Big Tobacco” you’ll see:

for example w/ the “Fossil-fuel industry” you’ll see:

http://www.npr.org/templates/story/story.php?storyId=5425355

http://america.aljazeera.com/opinions/2015/4/the-long-dirty-trail-of-fake-science.html

with “believers” of public pensions we see the need to spin the corruption, fund mis-management w/in “news media”

recall what happened when the SD public pension fund was in the “news” last year:

[quote=bearishgurl]
Uh, well, I don’t think our fact-skimming newbie, Phaster, had a chance to see this recent piece from the UT (hint: google SDCERA and it comes up first :)):

…. For the past decade, San Diego County and its employees paid 100 percent or more of their annually required contribution to the SDCERA retirement fund. Consistent employee and employer contributions over the years have laid a foundation for investment gains and asset growth. SDCERA’s investment strategy helps the employer’s budgeting process and stabilizes employer costs by reducing the volatility of returns and steadily achieving the rate of return needed to fund the benefit.

At $10 billion, the SDCERA fund is able to pursue certain investment strategies that larger plans like CalPERS cannot access and smaller plans do not have the resources to deploy. SDCERA’s investment strategy is purposely designed to be no riskier than traditional pension fund asset allocation strategies. Risk-parity and trend strategies, which utilize leverage, are limited to 25 percent of the SDCERA portfolio, not the entire set of portfolio assets. The other 75 percent of the portfolio is managed using traditional asset allocation and rebalancing approaches…

http://www.utsandiego.com/news/2014/aug/15/sdcera-pension-investment-strategy/

see also: http://sdcera.com/investments.htm%5B/quote%5D

eventually the fundamental nature of math/science prevails and the un-sustainable facade “DELUSION!” can not be kept up/masked over:

[quote=Wall Street Journal]
San Diego County Pension Chief to Resign

By Dan Fitzpatrick
March 19, 2015 6:22 p.m. ET

The chief executive of San Diego County’s pension system announced he would resign at the end of the month, bringing fresh turmoil for the $10.4 billion fund.

San Diego County Employees Retirement Association said in a statement that CEO Brian White and the board had “amicably agreed” that Mr. White’s tenure of nearly two decades would end March 30. David Wescoe, former head of the city of San Diego’s pension fund, will take over as CEO while the board searches for a permanent replacement.

A Sdcera spokesman said Mr. White made the decision to resign and that he and the board had been discussing the move “over the course of several months.” Mr. White said in a statement that “Sdcera has enjoyed great success, which I expect will continue” and that “serving as Sdcera’s CEO has been an incredibly rewarding professional experience.”

The exit of the system’s longtime leader caps a period of strife for a fund that manages money on behalf of more than 39,657 active and former public employees.

Board members and staff members spent much of the past year wrangling over an outside firm’s investment strategy that involved the use of derivatives to boost performance. The controversial approach was the subject of a front-page article in The Wall Street Journal.

The board voted in November to find a new internal investment chief rather than rely on an outside manager for that role.

Write to Dan Fitzpatrick at [email protected]

http://www.wsj.com/articles/san-diego-county-pension-chief-to-resign-1426803772

[/quote]

IMHO the back and forth dance between the news media and pension board “managers” is the same spin/bull$hit playbook response we saw locally (and its just a matter of time till CalPERS will have to give up the DELUSION that its possible to manage the portfolio and grow it to cover all the public pension promises made long ago)

Just watched a NatGeo documentary that kinda shows why there is “Denial and “Anger” from parties interested in keeping up the “DELUSION/economic status quo” WRT the “Fossil-fuel industry” and the concept of danger involving climate change

http://channel.nationalgeographic.com/explorer/galleries/the-five-stages-of-climate-change-grief/at/why-is-bill-nye-so-blue-2100657/

The way I see things the same idea(s) could be applied to “believers” of public pensions, and wonder if they ever bother to look in the mirror WRT their own DELUSION/POV

[quote=CA renter]
There is a very real war going on against working/middle-class people in developed countries. Don’t be a a useful idiot. If you’re not being paid, you should definitely demand payment from the Privatization Movement for your services. They expect to reap great rewards from the work of people like yourself; make sure to get your piece of the pie.

http://en.wikipedia.org/wiki/Useful_idiot%5B/quote%5D

one last thing for all to ponder is a news wire report:

[quote=REUTERS]
Calpers vote to lower investment return target draws governor’s ire

California Public Employees’ Retirement System on Wednesday adopted a policy to gradually reduce the amount that the pension fund expects from its investments, a decision that came under fire from California’s governor for not going far enough.

The move by the nation’s largest public pension fund is controversial because lower investment returns must be offset by higher contributions from the state’s cities and public workers.

Calpers will reduce its expected rate of investment returns in years after the fund outperforms its 7.5 percent target by 4 percentage points. The goal is to ultimately reduce the rate to 6.5 percent, although that could take decades under the new policy.

Rob Feckner, president of the Calpers board of administration, said the policy “makes significant strides in lowering risk and volatility in the system, and helps lessen the impacts of another financial downturn.”

But Governor Jerry Brown, a proponent of a sharper reduction in the expected rate of return, was quick to criticize the move, arguing the pension fund should move faster to cut risk from its portfolio.

“I am deeply disappointed that the CalPERS Board reversed course and adopted an irresponsible plan that will only keep the system dependent on unrealistic investment returns,” Brown said in a statement on Wednesday. “This approach will expose the fund to an unacceptable level of risk in the coming years.”

http://www.reuters.com/article/2015/11/19/california-calpers-policy-idUSL1N13E02Y20151119
[/quote]

Let me guess what happens next election, now that Gov Brown acknowledges the danger of “public pension math” he no longer can be assured of the the moonbeam vote 😉

[CA renter]

For one thing, many of us have been saying that some of the benefit formulas need to be reworked, putting them back to levels seen before pension benefits were boosted back in the late 90s.

Some of us have also advocated for pension funds (of all stripes) to get back into more conservative types of investments — govt bonds and very high quality debt, etc. — and to realign their return forecasts as a result. But this would only work if the Federal Reserve were mandated to stay out of interest rate manupulations except for very rare emergencies. Even then, their moves would have to be closely scrutinized and the pension funds (or a federal agency that oversees govt pension funds) should have some representation in the decision making process at the Fed.

If we want to change the way all financial entities calculate risks, the entire FIRE sector would implode. I’m all for holding people accountable, but we can’t cherry-pick the ones we want to target.

Along the same lines, ALL government guarantees and expenditures need to be much more closely monitored. That includes govt contracts; corporate subsidies (including tax expenditures); guarantees to investors, farmers, etc.; public-private partnerships, etc. — all of which need to be much more closely controlled and scrutinized.

As I’ve noted regarding the author of the LA Times piece, she is harshly critical of public pensions, but doesn’t bat an eye when cheering on our bloated defense spending (with a single unnecessary project costing as much as 1/3 of the unfunded pension debt in her worst-case scenario), or public-private partnerships and govt subsidies of private companies, like Space X, etc.

[phaster]

[quote=CA renter]For one thing, many of us have been saying that some of the benefit formulas need to be reworked, putting them back to levels seen before pension benefits were boosted back in the late 90s.

Some of us have also advocated for pension funds (of all stripes) to get back into more conservative types of investments — govt bonds and very high quality debt, etc. — and to realign their return forecasts as a result. But this would only work if the Federal Reserve were mandated to stay out of interest rate manupulations except for very rare emergencies. Even then, their moves would have to be closely scrutinized and the pension funds (or a federal agency that oversees govt pension funds) should have some representation in the decision making process at the Fed.

If we want to change the way all financial entities calculate risks, the entire FIRE sector would implode.[/quote]

an economic implosion that harms finance, insurance as well as RE and other sectors of the economy is all but certain IMHO (the only question(s) are when will the TSHTF, to what magnitude will TSHTF how long will the global economy be screwed)

as I see things the stresses built up on the fault line of is too far gone to prevent an inevitable “economic/social” earthquake

starting from the beginning seems you don’t understand that the problem you seem to care about “inequality” is NOT a fed caused problem (WRT setting interest rates) but rather systemic in nature

they (the fed) are a one trick pony and separating out all the emotional baggage, the data tells me what is going on is just economic darwinism at work

the reason rich are rich is because they are very efficient at taking advantage of low interest rates and have access to investment vehicles that grow money (whereas the “poor” are NOT very efficient at taking advantage of low interest rates)

because you seem hung up on labels, perhaps you should watch this video clip of an economist of a liberal think tank that explains things:

http://america.aljazeera.com/watch/shows/Ali-Velshi-On-Target/2015/6/economist-says-the-federal-reserve-did-not-make-inequality-worse.html

from what I have seen, the root cause of the problem is corruption (and if somehow that was fixed then lots of other problems get resolved)

http://www.breitbart.com/big-government/2015/10/15/media-fail-americans-1-fear-is-government-corruption/

a few months ago a neighbor (who own a few properties in the neighborhood) and he shared that some in the neighborhood were trying to build support for local park

when I looked at the project calculated it was a hundred million dollar pork barrel project

basically like a corrupt corp that under-bids a project then charges cost over runs, seems estimated costs were much less than what seems to me as a common sense cost approach (but what do I know) FYI the project was being supported by RE interests and some local politicians (go figure)

http://1drv.ms/21In5ap

this is just another example of local corruption/self interest destroying the economy from w/in

ironically this past week there was a news video that was about a program trying to help homeless people in the area by requiring them to have one-on-one financial counseling (which seems to be a good start)

http://america.aljazeera.com/watch/shows/Ali-Velshi-On-Target/2015/11/middle-class-americans-forced-to-live-in-cars.html

I have to admit I didn’t really care or understand the nature of public pensions (till a few years ago), but as I see things it requires politicians to admit the system is corrupt and since they have an economic/political self-interest in hiding the truth there is very little hope to avoid a crisis of biblical proportion.

nothing will be fixed for a long time (if at all) for the simple reason in order to fix a problem, first one must admit that there is a problem and have the mental ability to understand the complex nature of the system.

one only has to read the newspaper to see that local politicians share economic traits much in common with corrupt companies/official like in the ENRON corp

http://www.voiceofsandiego.org/topics/politics/more-ties-revealed-between-dumanis-and-accused-campaign-moneyman/

http://www.sandiegouniontribune.com/news/2015/aug/04/azano-appeals-fbi-jurisdiction-campaign-finance/

recall officials at Enron ordered destruction of to evidence

http://abcnews.go.com/WNT/story?id=130518

its not too hard to find that same thing was ordered here in town

http://www.kpbs.org/news/2014/feb/28/san-diego-begin-deleting-all-city-emails-older-one/

given all this, have to wonder if the problem I inherited was somehow related (i.e. another symptom of government corruption)

engineers_report_2675_bway.pdf
https://onedrive.live.com/redir?resid=B4A61592A33514F4%21114

which it points to a much larger problem no-one wants to admit exists

tax evasion – motive and means.pdf
https://onedrive.live.com/redir?resid=b4a61592a33514f4%21110

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/

actually the guy that helped me understand my sewer line issue told me stuff has been going on for years and over sights like a ex-council member who got a permit to build a garage (right on the property line, contrary to stated set-back rules which are clearly stated) in the neighborhood just after he was termed out and ran for higher office (years ago) is no different that what happened to me…

http://www.TinyURL.com/EnronByTheSea

government corruption is just like a fractal (because the pattern reappears over and over again, at different levels of government)

my own look at the data shows the system is corrupt and there is no economic incentive to admit there is anything wrong (which IMHO is going to play right into the hands of foreign powers that are playing the long “economic” warfare game against the USA)

http://www.cnbc.com/2015/11/30/china-could-see-2-3-trillion-inflows-after-yuan-enters-imfs-currency-basket.html

bottom line I can’t imagine foreign powers ignoring easy to exploit useful-idiots (as well as corrupt politician) who want to keep their unsustainable public pension (in play) as a diversionary tactic against the USA in the realm of geo-politics

[phaster]

City pensioners get ’13th check’ bonus

More than $6.1 million has been distributed to retired San Diego city employees in the form of a “13th check” — beyond their usual 12 monthly payments — making this year’s holiday bonus the largest such payout in the history of the three-decade-old practice.

But it’s become a source of conflict as the city’s pension system faces a $2 billion shortfall in promised payments, which remains a taxpayer burden and has led to budget crises in the past at City Hall.

http://www.sandiegouniontribune.com/news/2015/dec/18/13th-check/

POLL What should happen with the 13th check?

http://www.sandiegouniontribune.com/polls/2013/nov/what-should-happen-13th-check/results/

this corrupt $hit for brains give away is well documented and eventually (perhaps soon) will come home to roost and destroy the economy…

Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV8xFsgC&pg=PA286&lpg=PA286&dq=san+diego+pension+13th+check&source=bl&ots=ZKEjv0C-rD&sig=RHojR7aJR0Ehb8mScjQnxLIhW6M&hl=en&sa=X&ved=0ahUKEwjJl76j3vLJAhVO4GMKHR1RAJkQ6AEIKTAC#v=onepage&q=san%20diego%20pension%2013th%20check&f=false

[temeculaguy]

phaster the OP was about SD county from 2014, your rant is about SD city, two separate systems. FWIW SD county spent the last few years renegotiating employee contracts shifting the pension burden to the employees,changing formulas for new employees and eliminating health benefits to pensioners. I know first hand some county employees retiring and taking state jobs for the retiree health benefits for life after 5 years (and age 50) for no reason other than health benefits drying up at the county level. SD county is fiscally conservative and has an excellent bond rating because they like to pay cash and avoid debt. My friends with the county planned on lifetime medical and had to change plans once that went away. As far as the OP on county pensions, now fully funded and derivative playing advisers all fired. Its back to boring and reduced benefits, meaning no local impact from the county at least as far as the county goes, the city is another story and i do not have any inside information as far as the city goes. I’d imagine they will follow suit at some point. The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.

[bearishgurl]

[quote=temeculaguy]phaster the OP was about SD county from 2014, your rant is about SD city, two separate systems. FWIW SD county spent the last few years renegotiating employee contracts shifting the pension burden to the employees,changing formulas for new employees and eliminating health benefits to pensioners. I know first hand some county employees retiring and taking state jobs for the retiree health benefits for life after 5 years (and age 50) for no reason other than health benefits drying up at the county level. SD county is fiscally conservative and has an excellent bond rating because they like to pay cash and avoid debt. My friends with the county planned on lifetime medical and had to change plans once that went away. As far as the OP on county pensions, now fully funded and derivative playing advisers all fired. Its back to boring and reduced benefits, meaning no local impact from the county at least as far as the county goes, the city is another story and i do not have any inside information as far as the city goes. I’d imagine they will follow suit at some point. The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.[/quote]

Thanks for the clarification, TG. You explained it better than I could. Yes, lifetime healthcare allowances were never guaranteed to “Tier A” SD County retirees (SDCERA members who retired or took deferred retirement since 3/31/02). I took deferred retirement prior to that date and thus am guaranteed a healthcare allowance (HIR) for life under “Tier I.” However, my pension was calculated on a much less generous formula than “Tier A” recipients, which was bargained for and in place at the time of my leaving county employ.

City (SD) MUST honor all DROP contracts they made with prospective retirees (SDCERS members) who agreed to work the required five more years for them (to prevent a mass exodus and “brain drain”). However, all of the affected SDCERS members should be fully “retired” by mid to late 2016. I know several who will finally be gone by June 2016.

Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public “outrage” over contracts made long ago with current and former CA local government employees.

Move on, folks …. there’s nothing to see here.

[XBoxBoy]

[quote=bearishgurl]
Move on, folks …. there’s nothing to see here.[/quote]

Are you sure you didn’t speak too soon?

I have nothing intelligent to add to this back and forth on pensions, and no idea who is right, but I did notice an interesting article about how some (many?) of the changes are going to get reversed.

http://www.voiceofsandiego.org/topics/government/ruling-could-mean-pension-pandemonium-for-san-diego-again/

[bearishgurl]

[quote=XBoxBoy][quote=bearishgurl]
Move on, folks …. there’s nothing to see here.[/quote]

Are you sure you didn’t speak too soon?

I have nothing intelligent to add to this back and forth on pensions, and no idea who is right, but I did notice an interesting article about how some (many?) of the changes are going to get reversed.

http://www.voiceofsandiego.org/topics/government/ruling-could-mean-pension-pandemonium-for-san-diego-again/
[/quote]

There IS nothing to see as far as the wishes and hopes of those claiming terms of CA gubment pensions already promised …. even decades ago, will change in any way, shape or form. Just ask the cities of Vallejo and San Bern, who have both filed for Chapter 9 BK protection in the past decade if they have gotten any relief from their already-promised pension benefits.

And I thank you for posting this link, XBoxBoy. I’ve downloaded it and what better time than the last night of 2015 to peruse this long-awaited ruling. I’ve got to step out at the moment but can’t wait to pour me a glass (or two, lol) and dive right into it. Yes, in Cali, the wheels of justice turn slowly … but alas, they DO turn, people.

I just have one preliminary comment. At first blush, the first page of the ruling is quite telling. The three labor-union charging parties in the ULP were repped by the very best, most experienced, influential and heaviest hitting labor lawyers in the state … if not the entire country. Don’t ask me how I know but suffice to say, I know this first-hand.

We’ve discussed this particular issues in the ruling here on the forum ad nauseam as it was actually taking place and before and during the time these landmark ULPs were filed. I’d have to dig to find the links but central to this issue (and righter than rain, despite his creepiness, which caused his ultimate downfall) was the infamous former SD City Councilman, SD Mayor and longtime member of the House of Representatives, Bob Filner.

Happy New Year, folks!

[phaster]

[quote=harvey][quote=temeculaguy]The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.[/quote]

That is the trend, and I’m optimistic that common sense will ultimately prevail.

Defined benefit pensions are a financial experiment that failed, but the effects still linger.

The OP was asking how much damage is left to be done.

The question is still relevant.[/quote]

[quote=XBoxBoy][quote=bearishgurl]
Move on, folks …. there’s nothing to see here.[/quote]

Are you sure you didn’t speak too soon?

I have nothing intelligent to add to this back and forth on pensions, and no idea who is right, but I did notice an interesting article about how some (many?) of the changes are going to get reversed.

http://www.voiceofsandiego.org/topics/government/ruling-could-mean-pension-pandemonium-for-san-diego-again/%5B/quote%5D

I don’t know what I was thinking not believing what politicians/lawyers said in a press release about the prudent management of a public pension fund, because those professions have always been known for being pillars of integrity and deep intellect

[quote=bearishgurl]
September 2, 2014 – 2:02pm.

Uh, well, I don’t think our fact-skimming newbie, Phaster, had a chance to see this recent piece from the UT (hint: google SDCERA and it comes up first :)):

…. For the past decade, San Diego County and its employees paid 100 percent or more of their annually required contribution to the SDCERA retirement fund. Consistent employee and employer contributions over the years have laid a foundation for investment gains and asset growth. SDCERA’s investment strategy helps the employer’s budgeting process and stabilizes employer costs by reducing the volatility of returns and steadily achieving the rate of return needed to fund the benefit.

At $10 billion, the SDCERA fund is able to pursue certain investment strategies that larger plans like CalPERS cannot access and smaller plans do not have the resources to deploy. SDCERA’s investment strategy is purposely designed to be no riskier than traditional pension fund asset allocation strategies. Risk-parity and trend strategies, which utilize leverage, are limited to 25 percent of the SDCERA portfolio, not the entire set of portfolio assets. The other 75 percent of the portfolio is managed using traditional asset allocation and rebalancing approaches…

http://www.utsandiego.com/news/2014/aug/15/sdcera-pension-investment-strategy/

see also: http://sdcera.com/investments.htm%5B/quote%5D

FWIW given the current release of The Big Short, its a great movie which I just saw and encourage all to watch because its entertaining and educational since it illustrates lots of relevant/esoteric info about economic effects people might not have ever pondered or understood the danger of

after you watch the movie consider thinking like Einstein who was fond of “Gedankenexperiment” (or though experiments) and looking at a problem w/ various frames of reference

[quote=Morpheus]
This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes.
[/quote]

if you’ve decided to take the red pill, start off w/ the assumption that the all public pensions within the system (county and state level) are fully funded

[quote=temeculaguy]
December 29, 2015 – 10:18pm.

As far as the OP on county pensions, now fully funded and derivative playing advisers all fired. Its back to boring and reduced benefits, meaning no local impact from the county at least as far as the county goes, the city is another story and i do not have any inside information as far as the city goes.[/quote]

NOW lets the consider what would happen if we ONLY look at the city of SD and take things at face value (as was reported just before xmas)

City pensioners get ’13th check’ bonus

More than $6.1 million has been distributed to retired San Diego city employees in the form of a “13th check” — beyond their usual 12 monthly payments — making this year’s holiday bonus the largest such payout in the history of the three-decade-old practice.

But it’s become a source of conflict as the city’s pension system faces a $2 billion shortfall in promised payments, which remains a taxpayer burden and has led to budget crises in the past at City Hall.

http://www.sandiegouniontribune.com/news/2015/dec/18/13th-check/

since “The Big Short” is based on actual events, next lets say the CITY of SD issues bond(s) to cover the pension shortfall and not too long afterward some astute investors (from perhaps a soverign wealth fund w/ geo-political motives)

take out swaps on the bond(s) issued by the city [if you see the movie or have yet to see it, note the scene where the economist (Richard Thaler) and the singer (Selena Gomez) are playing black jack and explain to the movie audience, depending upon the tranche the payout ratio was 20:1 to 200:1 on a CDO]

what you should stop and think about is what happens if bond(s) of 2 billion to cover un-funded pension problem here in the city were to fail, which then triggers CDOs (for full face value)

the result would be an implosion of 40 to 400 billion dollars that hits the system (that someone would have to pay), AND THIS fallout IMHO would be enough to take down the rest of the hypothetical “debt free” state (which for comparison has an annual reported budget of around the $120 billion range)

http://www.wsj.com/articles/brown-unveils-largest-ever-california-budget-proposal-1420829069

In other words a big short (though experiment) based on an actual public pension problem ONLY in SD (aka enron by the sea), could be viewed as a economic cancer which would nuke an otherwise economically healthy state of california…

so BOTTOM LINE the ’13th check’ bonus, IMHO cannot be described as anything else than a corrupt $hit for brains idea, given a reported $2 billion shortfall (AND THAT IS EVEN BEFORE one should to ponder the economic dangers associated with “swaps” or other forms of economic warfare)

Though SDCERS investments were earning well above the 8 percent rate of return estimated by the system actuaries, under normal conditions investments surpluses are required to make up for below-average returns in other years to achieve the average rate of return. Therefore, unless the actuaries’ estimates are grossly incorrect, in the long run true “surplus earnings” are impossible. The use of surplus earnings for the purposes other than maintaining the pension system, such as to expand existing benefits should be viewed as a loan from the system THAT WILL REQUIRE REPAYMENT IN THE FUTURE.

The concept of surplus earnings is easily misunderstood, so sometimes these earnings are used inappropriately.

page 286

…like in the just reported BAU city of SD three-decade-old “holiday” practice???

Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV8xFsgC&pg=PA286&lpg=PA286&dq=san+diego+pension+13th+check&source=bl&ots=ZKEjv0C-rD&sig=RHojR7aJR0Ehb8mScjQnxLIhW6M&hl=en&sa=X&ved=0ahUKEwjJl76j3vLJAhVO4GMKHR1RAJkQ6AEIKTAC#v=onepage&q=san%20diego%20pension%2013th%20check&f=false

what should scare the $hit out of anyone with any bit of common sense is that there is a nation wide problem with the mis-managed public pensions AND the reported two billion dollar problem w/ the city of SD public pension, is just the proverbial tip of the ice berg!

Underfunded Public Pensions
in the United States:
The Size of the Problem, the Obstacles to Reform and the Path Forward

http://www.hks.harvard.edu/centers/mrcbg/publications/fwp/2012-08

so anyone else see BIG problem(s) ahead or can outline a concrete a example of a larger potential economic headwind we as a nation face?

[quote=CA renter]
December 14, 2014 – 5:09pm

…but public pensions are just one part of the problem. They are dwarfed by other types of debt.[/quote]

[bearishgurl]

[quote=phaster]

[snip irrelevant commentary and conjecture]

-snip-[/quote]

uhh, phaster, nice try but if you think this bleached whale “people-of-Walmart” couple you depicted here watching an implosion from their (polluted backyard?) in rural Nevada are representative of SD City and County retired workers, you need to see your eye doctor, pronto.

For the most part, we are fitter and trimmer than the Gen Y college-student set who comes back “home” for the holidays to work out at the gym we work out in all year-round!

And the only reason we can exist (or co-exist with a side gig) on our paltry city/county pensions is because our living expenses are relatively low in comparison to the “worker bee” currently raising a family. The COL is lowest for those older (WWII gen) members who retired prior to 2002 and thus purchased their current residences well below $100K.

Contrary to popular belief, SD city/county retirees don’t live lavish lifestyles on “golden pensions,” people …. NO, not even former sworn staff with more generous “Class C” retirements. We live in neighborhoods and houses most of you worker bees wouldn’t even bother getting off the freeway to look at in PAID FOR houses (or nearly so).

[CA renter]

[quote=bearishgurl][quote=phaster]

[snip irrelevant commentary and conjecture]

-snip-[/quote]

uhh, phaster, nice try but if you think this bleached whale “people-of-Walmart” couple you depicted here watching an implosion from their (polluted backyard?) in rural Nevada are representative of SD City and County retired workers, you need to see your eye doctor, pronto.

For the most part, we are fitter and trimmer than the Gen Y college-student set who comes back “home” for the holidays to work out at the gym we work out in all year-round!

And the only reason we can exist (or co-exist with a side gig) on our paltry city/county pensions is because our living expenses are relatively low in comparison to the “worker bee” currently raising a family. The COL is lowest for those older (WWII gen) members who retired prior to 2002 and thus purchased their current residences well below $100K.

Contrary to popular belief, SD city/county retirees don’t live lavish lifestyles on “golden pensions,” people …. NO, not even former sworn staff with more generous “Class C” retirements. We live in neighborhoods and houses most of you worker bees wouldn’t even bother getting off the freeway to look at in PAID FOR houses (or nearly so).[/quote]

Very true, BG. You can tell who gets all their news from the UT and Fox when they start talking about the “lavish” pensions. LOL!

And, Phaster, the CDO problem, along with any related derivatives, isn’t a result of what public employees are doing. That’s a problem that is created by the financial industry. Focus your righteous indignation in the right direction. “The Big Short” should have opened your eyes regarding the real perpetrators behind our economic collapse and the booms and busts that have caused most of the problems in the DB world.

If you’re really ticked off about taxpayers having to subsidize the lifestyles of others, then you should direct your anger squarely at Prop 13, as well — and that tax expenditure was never earned while pensions are deferred compensation for work already performed. Prop 13 is a HUGE tax subsidy, often to very wealthy people, which dwarfs California’s “pension crisis.” If we want to fix our fiscal house, we need to get rid of Prop 13 first (except for a single primary residence); then, we can see where we stand WRT other expenditures.

[Anonymous]

Whataboutism

Soviet propagandists during the cold war were trained in a tactic that their western interlocutors nicknamed “whataboutism”. Any criticism of the Soviet Union (Afghanistan, martial law in Poland, imprisonment of dissidents, censorship) was met with a “What about…” (apartheid South Africa, jailed trade-unionists, the Contras in Nicaragua, and so forth).

http://www.economist.com/node/10598774

[phaster]

[quote=CA renter][quote=harvey][quote=temeculaguy]The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.[/quote]

That is the trend, and I’m optimistic that common sense will ultimately prevail.

Defined benefit pensions are a financial experiment that failed, but the effects still linger.

The OP was asking how much damage is left to be done.

The question is still relevant.[/quote]

Fifty years from now, do you honestly think they’ll be talking about the success of defined contribution pension plans? Which one do you think will be viewed more favorably, DB or DC pensions, once the DC debacle comes home to roost?

You’re dreaming if you think that DC pensions are superior in any way to DB pensions. I agree that some of the formulas are too generous (and have felt that way since the pension increase passed in CA), but DB pensions have been around a lot longer than DC pensions (since the Roman Empire, if not earlier), and they’ve done exceptionally well, all things considered.

[/quote]

Déjà vu

[quote=phaster]
September 8, 2014 – 8:59am.

[quote=CA renter]Many have defined benefits, and DB plans were the norm a few decades ago…you know, when the middle class and the economy were at their strongest.[/quote]

That era back in the 1950’s and 1960’s was IMHO an anomaly in world history, because the USA was the only super power in terms of military and manufacturing.

Consider that Japan and Germany back then had no manufacturing base, so DB were a way to instill worker loyalty (or said another way, DB came about because of a good economy, DB for the “middle class” didn’t create a good economy).
[/quote]

[quote=phaster]
October 2, 2014 – 8:18pm.

[quote=CA renter]
You’re also clearly ignorant about the differences between DB and DC pensions. DC plans have higher administrative costs and lower returns; DC plans have access to fewer investment options; DC plans don’t pool longevity risk; DC plans have lower contribution limits than DB plans (for employer and employee); and DB plans can remain in higher-yielding and more diversified investments and can better manage the ups and downs of the market over time because they are continuously funded by the contributions of current employees and their employers, and benefits are staggered well into the future (pooled investment risks over time and number of people).[/quote]

News reports about CalPERS and the SD pension board, leads me to believe idiots who over estimate their own management abilities AND have no basic understanding of math or the investing paradox, are at the helm.

Given your logic since CalPERS and SD have “professional” managers, elected board(s) to provide oversight and access to diversified investments, then why haven’t they beat the market benchmarks (i.e. the index of the DJ30 or S&P500)?

http://www.marketwatch.com/investing/index/djia

http://www.marketwatch.com/investing/index/spx

IMHO its because of the “investing paradox.”

Simply stated a disciplined small/individual investor can beat market averages over long periods of time, because their trades fly under the radar and are “un-noticed” by the market.

However when the portfolio is in the BILLIONS (as is the case w/ SD), or the HUNDREDS OF BILLIONS (as is the case w/ CalPERS), any trade they make I’d argue is the market (so a different investment style is needed).

[quote=phaster]
[quote=livinincali]
The one benefit of defined benefit contribution plans, retention, isn’t worth the risks, the frauds, the vote buying, and everything else it enables. That’s the bottom line. The rewards (reduced training costs retention, etc.) don’t outweigh the risks and therefore they should be scrapped..[/quote]

Agree! And after doing some research, seems the best way forward is to follow the example set by the Thrift Saving Plan (a federal government 401K style program, that can’t be corrupted/mismanaged like what happend at CalPERS or as what is happening with the SD pension program)

https://www.tsp.gov/investmentfunds/fundsoverview/comparisonMatrix.shtml
[/quote]

The Thrift Savings Plan, used by millions of federal workers, is like a 401(k), except it’s a lot cheaper. Last year it charged an average expense ratio of a mere 0.03%. That means just $3 in fees for $10,000 in savings, or $30 for a $100,000 portfolio.

John Turner, an economist and director of the Pension Policy Center and a former federal worker himself, said “Unless they’re advanced investors, I think they should leave their funds in the TSP because it’s simple and it’s easy enough that most investors can do it and do it well”

http://money.cnn.com/2014/10/01/retirement/federal-workers-leaving-thrift-savings-plans/

[/quote]

[quote=CA renter]
December 14, 2014 – 5:09pm.

Don’t be a a useful idiot. If you’re not being paid, you should definitely demand payment from [Strike]the Privatization Movement[/Strike] [CalPERS] for your services. They expect to reap great rewards from the work of people like yourself; make sure to get your piece of the pie.

http://en.wikipedia.org/wiki/Useful_idiot
[/quote]

[quote=CA renter]
November 21, 2015 – 3:18am.

I have yet to see Jerry Brown “calling bullshit” on CalPERS. Please include a quote (a real one, not one of your “edited” ones), and cite your source.
[/quote]

[quote=REUTERS]
…Governor Jerry Brown, a proponent of a sharper reduction in the expected rate of return, was quick to criticize the move, arguing the pension fund should move faster to cut risk from its portfolio.

“I am deeply disappointed that the CalPERS Board reversed course and adopted an irresponsible plan that will only keep the system dependent on unrealistic investment returns,” Brown said in a statement on Wednesday. “This approach will expose the fund to an unacceptable level of risk in the coming years.”

http://www.reuters.com/article/2015/11/19/california-calpers-policy-idUSL1N13E02Y20151119
[/quote]

translate.google.com: (CalPERS = bull$hit)

[phaster]

[quote=bearishgurl][quote=phaster]

[snip irrelevant commentary and conjecture]

-snip-[/quote]

uhh, phaster, nice try but if you think this bleached whale “people-of-Walmart” couple you depicted here watching an implosion from their (polluted backyard?) in rural Nevada are representative of SD City and County retired workers, you need to see your eye doctor, pronto.

For the most part, we are fitter and trimmer than the Gen Y college-student set who comes back “home” for the holidays to work out at the gym we work out in all year-round!
[/quote]

irrelevant commentary??

[quote=INTERNAL MONOLOGUE]the pot calling the kettle black, WTF???

so how to use a MADE UP B$ PHRASE “subconscious-psychological-interpretation(s)?” which struck IN A MOMENT OF boredom/divine-inspiration, while prioritizing the structure of a “rant”[/quote]

hate to take credit for something that I never intended so for now I’ll go along w/ your subconscious-psychological-interpretation that the couple is representative of SD City and County retired workers

truth is I selected the photo because it was the first non-military, civilian color image that came up when I typed the phrase “watching nuclear explosions” using google image search and never gave it a literal “second” thought!

https://www.google.com/search?q=watching+nuclear+explosions

my reason (as if anyone cares) was basically wanted to stay away from “scary” military nuke images because of headline news (at the time)

http://www.wired.com/2016/01/science-can-tell-if-north-koreas-test-was-really-an-h-bomb/

your post(s) in general indicate a lack of critical-thinking and this last post indicates you’re vein/insecure about appearance/self-image

to address the issue of “self-image” insecurity, found is a photo of a “fit and healthy” miss mushroom cloud w/ admirers so you can self-project a positive image of SD City and County retired workers,… happy?

since you mentioned it, my second thought is the couple is gazing east-ward (possibly standing in California??? and looking toward Nevada??? the only way to know for sure which state(s), is to locate/match the specific “land-scape” shown)

[quote=INTERNAL MONOLOGUE]to see if (bearishgurl’s) subconscious-psychological-interpretation about the photo has any basis in reality lets try a simple experiment

GIVEN she first suggested the photo is representative of SD City and County retired workers AND is set in (polluted backyard?) in the state of Nevada [SO AS stated the couple is located “somewhere” in the state of Nevada AND in the real world that indicates they would have to be facing West-ward (toward the state of California)]

so with the photo on an iPad/iPhone, go out side (on a sunny day) and hold the device arms length away looking first to the east, then toward the west AND see first hand which orientation makes common sense (hint, note the shadows!)[/quote]

I deduced general direction(s) by noting the right side of the image is illuminated (thinking where the sun is in the sky – to the “south”) AND the shadows fall on the people/blast-cloud on the left hand side, so this indicates “north” (given the spherical geometry of the earth)

http://scienceline.ucsb.edu/getkey.php?key=629

[quote=INTERNAL MONOLOGUE]should I acknowledge anything I post about psychoanalytics is PURE B$ because I’ve never taken a psych class or read a psych book BUT did watch pixar’s “inside out” which might count as sorta something…

what about noting other observations about the photo that suggest the image was photoshopped???

http://gizmodo.com/5930971/tourists-watching-nuclear-explosions-is-a-terrible-idea-but-a-great-facebook-photo

nah, should close out and move on…[/quote]

WRT this tangent, “Gedankenexperiment” tells me your transference-interpretation of a photo which you described/interpreted as bleached whale “people-of-Walmart” couple watching an implosion from their (polluted backyard?) in rural Nevada is PURE B$ to mask self-image insecurities and a simple SCIENCE experiment in the real world can be done to confirm the diagnosis

now back to the serious topic at hand since this is an economics message board where it clearly states at the bottom of the page… In God we trust. Everyone Else Bring Data!

BUT before looking at data, it might be useful to recall lessons taught in middle school, specifically the topic about “compound interest” and basic money management skills (which is key to surviving/thriving day to day in the modern day world)

if you have a mortgage, then perhaps you might have heard that you can pay off a loan much faster, by “annually” making an extra — 13th — mortgage payment,… what an extra mortgage payment does is directly reduces the principal balance on the loan by the amount of the payment (and the observed effect is exponentially decreasing the payback period)

NOW lets (re)examine ACTUAL “historic” published documents/text (i.e. Data!)

City pensioners get ’13th check’ bonus

More than $6.1 million has been distributed to retired San Diego city employees in the form of a “13th check” — beyond their usual 12 monthly payments — making this year’s holiday bonus the largest such payout in the history of the three-decade-old practice.

But it’s become a source of conflict as the city’s pension system faces a $2 billion shortfall in promised payments, which remains a taxpayer burden and has led to budget crises in the past at City Hall.

http://www.sandiegouniontribune.com/news/2015/dec/18/13th-check/

Though SDCERS investments were earning well above the 8 percent rate of return estimated by the system actuaries, under normal conditions investments surpluses are required to make up for below-average returns in other years to achieve the average rate of return. Therefore, unless the actuaries’ estimates are grossly incorrect, in the long run true “surplus earnings” are impossible. The use of surplus earnings for the purposes other than maintaining the pension system, such as to expand existing benefits should be viewed as a loan from the system THAT WILL REQUIRE REPAYMENT IN THE FUTURE.

The concept of surplus earnings is easily misunderstood, so sometimes these earnings are used inappropriately.

page 286

Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV8xFsgC&pg=PA286&lpg=PA286&dq=san+diego+pension+13th+check&source=bl&ots=ZKEjv0C-rD&sig=RHojR7aJR0Ehb8mScjQnxLIhW6M&hl=en&sa=X&ved=0ahUKEwjJl76j3vLJAhVO4GMKHR1RAJkQ6AEIKTAC#v=onepage&q=san%20diego%20pension%2013th%20check&f=false

anyone able to grasp the power/implications of “compound interest” then reading the published reports should be very disturbed at the mis-management/incompetence/corruption since the PRIMARY CAUSE as to why the “magnitude” of the SD public pension “unfunded” problem exists is due to a simple math concept that was suppose to be learned in middle school…

as-reported for the past three decades the “surplus earnings” (aka 13th payment) was diverted to Gubment-Pensioner(s) every holiday season INSTEAD OF being used for the original goal of trying to make sure the long term average return of the portfolio was achieved (about about 8% as per actuaries’ design-estimates)

if anyone is able to think critically about “compound interest” then they will see that making an annual extra mortgage payment and making an extra payment to Gubment-Pensioner(s) every holiday are two side of the same coin; one side allows a mortgage debt to be paid “down” much sooner, the other side makes the debt to pile “up” exponentially over decades!

(bearishgurl) since you have taken the blue pill – its apparent you believe whatever you want to believe!

for all other(s) who dared take the red pill, the BOTTOM LINE seems to be as long as the “surplus earnings” (aka 13th payment) is siphoned off every holiday season for Gubment-Pensioner(s) INSTEAD OF being used to maintain the pension system designed target return rate, the SD pension system as currently structured/operated AND using nothing more than “honest” common sense and middle school math tells us, that the un-funded DEBT issue will basically ALWAYS grow!

http://www.doughroller.net/investing/power-of-compounding-interest/

[paramount]

[quote=bearishgurl]
Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public “outrage” over contracts made long ago with current and former CA local government employees.

[/quote]

For most paying attention that are not marxists, I think there is plenty of outrage.

At this point I’ve thrown in the hat – when my job dries up, I’m leaving California. The last thing I want to do is work until my death so some gd govt worker can retire in luxury meanwhile I’m living in poverty. Screw that….

public employee unions and california state govt are higly skilled in robbing/preying upon tax paying private sector workers in california.

[FlyerInHi]

[quote=paramount][quote=bearishgurl]
Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public “outrage” over contracts made long ago with current and former CA local government employees.

[/quote]

For most paying attention that are not marxists, I think there is plenty of outrage.

At this point I’ve thrown in the hat – when my job dries up, I’m leaving California. The last thing I want to do is work until my death so some gd govt worker can retire in luxury meanwhile I’m living in poverty. Screw that….

public employee unions and california state govt are higly skilled in robbing/preying upon tax paying private sector workers in california.[/quote]

Voting with your feet is the best way. I already did although I’m still paying CA taxes on CA related income, and property taxes. I hate property taxes that I see no personal benefit from.

I don’t mind paying taxes. But taxes should be for services to citizens and the poor. Not golden pensions.

[CA renter]

[quote=FlyerInHi][quote=paramount][quote=bearishgurl]
Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public “outrage” over contracts made long ago with current and former CA local government employees.

[/quote]

For most paying attention that are not marxists, I think there is plenty of outrage.

At this point I’ve thrown in the hat – when my job dries up, I’m leaving California. The last thing I want to do is work until my death so some gd govt worker can retire in luxury meanwhile I’m living in poverty. Screw that….

public employee unions and california state govt are higly skilled in robbing/preying upon tax paying private sector workers in california.[/quote]

Voting with your feet is the best way. I already did although I’m still paying CA taxes on CA related income, and property taxes. I hate property taxes that I see no personal benefit from.

I don’t mind paying taxes. But taxes should be for services to citizens and the poor. Not golden pensions.[/quote]

If you own property, then you benefit from the services provided via property taxes. What would the value of your property be without a local school district? How much would it be worth without roads, sidewalks, streetlights, local parks, sanitation services, police and fire protection, etc.?

This is what’s so messed up about many people who oppose taxes. They have no idea how these tax payments end up benefiting them. Very often, they receive an even greater benefit than what they pay because public infrastructure, as a whole, is often worth far more than the sum of its parts.

We desperately need better financial, economic, and political education in our schools. There are far too many people walking around who think that they know what they’re talking about when they really have no clue.

[paramount]

[quote=CA renter]

If you own property, then you benefit from the services provided via property taxes. What would the value of your property be without a local school district? How much would it be worth without roads, sidewalks, streetlights, local parks, sanitation services, police and fire protection, etc.?

This is what’s so messed up about many people who oppose taxes. They have no idea how these tax payments end up benefiting them. [/quote]

I don’t know anyone who opposes paying their ‘fair’ share of taxes, that’s not the issue here.

[bearishgurl]

[quote=paramount][quote=CA renter]

If you own property, then you benefit from the services provided via property taxes. What would the value of your property be without a local school district? How much would it be worth without roads, sidewalks, streetlights, local parks, sanitation services, police and fire protection, etc.?

This is what’s so messed up about many people who oppose taxes. They have no idea how these tax payments end up benefiting them. [/quote]

I don’t know anyone who opposes paying their ‘fair’ share of taxes, that’s not the issue here.[/quote]The reason you don’t “know anyone” opposed to paying their “fair share” of taxes, paramount is perhaps because the neighborhoods you have been living in have been built in the last 15 years or so.

Try living with a neighbor on one side who pays ~$800 year in property tax, a neighbor on the other side who pays ~$400 year in property tax and another neighbor directly across the street who pays ~$650 year in property tax while you cough up ~$4400 year in property tax.

It is disheartening, to say the least. Such are the effects of Prop 13 and its progeny, Prop 58.

The sheer “inequality” of Prop 13 (and its progeny) are VERY MUCH “the issue here.”

[CA renter]

[quote=paramount][quote=bearishgurl]
Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public “outrage” over contracts made long ago with current and former CA local government employees.

[/quote]

For most paying attention that are not marxists, I think there is plenty of outrage.

At this point I’ve thrown in the hat – when my job dries up, I’m leaving California. The last thing I want to do is work until my death so some gd govt worker can retire in luxury meanwhile I’m living in poverty. Screw that….

public employee unions and california state govt are higly skilled in robbing/preying upon tax paying private sector workers in california.[/quote]

And your employer, a government contractor, paramount? You think they’re not ripping off taxpayers?

https://www.youtube.com/watch?v=XwBGFZX6G2Q

https://www.usaspending.gov/transparency/Pages/SpendingMap.aspx

[phaster]

[quote=bearishgurl]
Thanks for the clarification, TG. You explained it better than I could. Yes, lifetime healthcare allowances were never guaranteed to “Tier A” SD County retirees (SDCERA members who retired or took deferred retirement since 3/31/02). I took deferred retirement prior to that date and thus am guaranteed a healthcare allowance (HIR) for life under “Tier I.” However, my pension was calculated on a much less generous formula than “Tier A” recipients, which was bargained for and in place at the time of my leaving county employ.

City (SD) MUST honor all DROP contracts they made with prospective retirees (SDCERS members) who agreed to work the required five more years for them (to prevent a mass exodus and “brain drain”). However, all of the affected SDCERS members should be fully “retired” by mid to late 2016. I know several who will finally be gone by June 2016.

Newbie Pigg phaster is in the habit of posting multiple (mostly dated) links in effort to incite public “outrage” over contracts made long ago with current and former CA local government employees.

Move on, folks …. there’s nothing to see here.[/quote]

huh…

first of all seems like Déjà vu (and perhaps a case of sour grapes?)

[quote=bearishgurl]
September 2, 2014 – 2:02pm.

Uh, well, I don’t think our fact-skimming newbie, Phaster, had a chance to see this recent piece from the UT (hint: google SDCERA and it comes up first :)):

…. For the past decade, San Diego County and its employees paid 100 percent or more of their annually required contribution to the SDCERA retirement fund. Consistent employee and employer contributions over the years have laid a foundation for investment gains and asset growth. SDCERA’s investment strategy helps the employer’s budgeting process and stabilizes employer costs by reducing the volatility of returns and steadily achieving the rate of return needed to fund the benefit.

At $10 billion, the SDCERA fund is able to pursue certain investment strategies that larger plans like CalPERS cannot access and smaller plans do not have the resources to deploy. SDCERA’s investment strategy is purposely designed to be no riskier than traditional pension fund asset allocation strategies. Risk-parity and trend strategies, which utilize leverage, are limited to 25 percent of the SDCERA portfolio, not the entire set of portfolio assets. The other 75 percent of the portfolio is managed using traditional asset allocation and rebalancing approaches…

http://www.utsandiego.com/news/2014/aug/15/sdcera-pension-investment-strategy/

see also: http://sdcera.com/investments.htm%5B/quote%5D

then not too long after, it was reported

[quote=Wall Street Journal]
San Diego County Pension Chief to Resign

By Dan Fitzpatrick
March 19, 2015 6:22 p.m. ET

The chief executive of San Diego County’s pension system announced he would resign at the end of the month, bringing fresh turmoil for the $10.4 billion fund.

San Diego County Employees Retirement Association said in a statement that CEO Brian White and the board had “amicably agreed” that Mr. White’s tenure of nearly two decades would end March 30. David Wescoe, former head of the city of San Diego’s pension fund, will take over as CEO while the board searches for a permanent replacement.

A Sdcera spokesman said Mr. White made the decision to resign and that he and the board had been discussing the move “over the course of several months.” Mr. White said in a statement that “Sdcera has enjoyed great success, which I expect will continue” and that “serving as Sdcera’s CEO has been an incredibly rewarding professional experience.”

The exit of the system’s longtime leader caps a period of strife for a fund that manages money on behalf of more than 39,657 active and former public employees.

Board members and staff members spent much of the past year wrangling over an outside firm’s investment strategy that involved the use of derivatives to boost performance. The controversial approach was the subject of a front-page article in The Wall Street Journal.

The board voted in November to find a new internal investment chief rather than rely on an outside manager for that role.

Write to Dan Fitzpatrick at [email protected]

http://www.wsj.com/articles/san-diego-county-pension-chief-to-resign-1426803772

[/quote]

or could there be an ECONOMIC INCENTIVE as to why you want others to move along and not question the news article why “City pensioners get ’13th check’ bonus”

http://www.sandiegouniontribune.com/news/2015/dec/18/13th-check/

[quote=bearishgurl]
September 2, 2014 – 2:17pm.

Well, I’m representative of the typical local Suzy Q. Gubment-Pensioner with a fairly low income. But every time I look at listings the places I WOULD be interested in fleeing to (wine country and mtns, in and out of state), I’m finding the home prices to be just as much or higher than where I currently live … and utilities higher or much higher. And I don’t owe very much on my current home … relative to its value …. and could pay it off anytime I so choose to. And I have a running vehicle and know how to get on the interstate ….[/quote]

given this information the (re)action seems no different than that of a CEO of a tabacco company who has an economic incentive to keep the public in the dark about the public health costs/dangers of smoking as long as possible AND ethically is par for the course given what another pigg disclosed about typical local Gubment-Pensioner(s)

[quote=livinincali]
October 1, 2014 – 8:00am.

I worked on a project for RISK management about 12 years ago, which is the San Diego’s self funded disability insurance office. What firefighter and cops did at retirement was pretty bad. That was more a case of disability fraud, where if you retire under disability 50% of you pension income is tax free. But there were crazy things in the payroll system. People claiming to work more than 24 hours in a day. People claiming light duty (aka a disability claim) and regular duty in the same day.
[/quote]

seems everything also dovetails (WRT possible motives and belief in the existing faulty design of public pensions) which is outlined in the Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV8xFsgC&pg=PA286&lpg=PA286&dq=san+diego+pension+13th+check&source=bl&ots=ZKEjv0C-rD&sig=RHojR7aJR0Ehb8mScjQnxLIhW6M&hl=en&sa=X&ved=0ahUKEwjJl76j3vLJAhVO4GMKHR1RAJkQ6AEIKTAC#v=onepage&q=san%20diego%20pension%2013th%20check&f=false

in science the goal is to understand fundamental truths and the mindset is to examine the honest “cause and effect” (which is the intellectual/moral framework I try my best to operate in)

as I see things the scientific method is the most objective way to look at an issue since there is little or no regard to the calculus of economics or politics when looking for the “cause and effect”

more often than not when the human emotional calculus of economics vs politics are included, people cheat/lie/steal to obtain an objective (i.e. deluded themselves into believing in a corrupt $hit for brains game plan is viable/sustainable because the math is all but ignored along with understanding the context of the object designed)

it would be like VW telling their customers and regulators to just believe our ads because they state we produce clean burning diesel engines BUT ignore all the evidence to the contrary that there was a design flaw and cover up for many years till we were caught in a lie…

so if you or others care to check the dates of the articles, you stated others should ignore, note that the date I post a link to an article is right around the time I find it while skimming some news source (aka THE EFFECT), and the other link corresponds to what to me looks like (THE CAUSE) which might have happened years ago!

[Anonymous]

[quote=temeculaguy]The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.[/quote]

That is the trend, and I’m optimistic that common sense will ultimately prevail.

Defined benefit pensions are a financial experiment that failed, but the effects still linger.

The OP was asking how much damage is left to be done.

The question is still relevant.

[CA renter]

[quote=harvey][quote=temeculaguy]The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.[/quote]

That is the trend, and I’m optimistic that common sense will ultimately prevail.

Defined benefit pensions are a financial experiment that failed, but the effects still linger.

The OP was asking how much damage is left to be done.

The question is still relevant.[/quote]

Fifty years from now, do you honestly think they’ll be talking about the success of defined contribution pension plans? Which one do you think will be viewed more favorably, DB or DC pensions, once the DC debacle comes home to roost?

You’re dreaming if you think that DC pensions are superior in any way to DB pensions. I agree that some of the formulas are too generous (and have felt that way since the pension increase passed in CA), but DB pensions have been around a lot longer than DC pensions (since the Roman Empire, if not earlier), and they’ve done exceptionally well, all things considered.

The ONLY way DC pensions (private savings) have ever worked in all of known human history, was when family members were expected — even mandated, in some cases — to care for each other until death. I’m not opposed to that personally, but how do you think that’s going to go over with the general public in the U.S.?

If Americans are forced to take on the care of their sick and/or elderly relatives, I’d bet anything that they would be willing to pay a small tax on their income, over their lifetimes, that would give them relief from this obligation. Welcome to DB pension plans.

Your thoughts? How do you see DC pensions actually working, over the long term, in real life?

Something for you, and other critics of DB plans, to think about:

http://www.forbes.com/sites/edwardsiedle/2010/10/07/401ks-americas-biggest-investment-fraud-was-foreseen-and-preventable/

[Anonymous]

[quote=CA renter]Your thoughts? How do you see DC pensions actually working, over the long term, in real life?[/quote]

Here’s my plan, see if you can follow along:

– People save for their own retirement.

– When they retire, they live off their savings.

– If their savings isn’t adequate for the lifestyle they would like to have, they adjust their lifestyle.

Here’s the part that may be especially difficult for you:

– Retiree’s don’t take governments to court, demanding more money forcing existing public services to be cut or eliminated because the retirees failed to plan properly decades prior.

It’s complicated, I know. Hard to follow without all the compensation formulas, spiking, guaranteed returns, “13th payments” and the long list of other shenanigans. It’s really hard to get one’s head around the idea that people just save their own money and that’s what they get and they don’t get to ask for more later.

You see, “DC pension” that you describe as some bogeyman is just a savings account.

But all of the Piggs, save two, have been able to grasp it. Maybe someday you will also.

[bearishgurl]

[quote=harvey][quote=CA renter]Your thoughts? How do you see DC pensions actually working, over the long term, in real life?[/quote]

Here’s my plan, see if you can follow along:

– People save for their own retirement.

– When they retire, they live off their savings.

– If their savings isn’t adequate for the lifestyle they would like to have, they adjust their lifestyle.

Here’s the part that may be especially difficult for you:

– Retiree’s don’t take governments to court, demanding more money forcing existing public services to be cut or eliminated because the retirees failed to plan properly decades prior.

It’s complicated, I know. Hard to follow without all the compensation formulas, spiking, guaranteed returns, “13th payments” and the long list of other shenanigans. It’s really hard to get one’s head around the idea that people just save their own money and that’s what they get and they don’t get to ask for more later.

You see, “DC pension” that you describe as some bogeyman is just a savings account.

But all of the Piggs, save two, have been able to grasp it. Maybe someday you will also.[/quote]

harvey (aka pri_dk), if you think there are only TWO Piggs who grasp this concept, you need to put on your thinking cap. Let me clue you in, here. There are several more Piggs here who are currently working FT (for the gubment) under the premise that they will eventually be due a pension under a “defined benefit plan.”

I’m truly sorry for you that YOU DIDN’T CHOOSE to attempt to “qualify” for one of these eligible positions in line for a(n eventual) DB plan upon retirement. However, that decision was YOUR CHOICE! You COULD have elected to “jump thru the proper hoops” in attempt to get hired … alas but you didn’t! Thusly, you have NO RIGHT at this late date to condemn those persons who have served their qualified (faithful) service so as to earn their current pensions.

[Anonymous]

[quote=bearishgurl]
I’m truly sorry for you that YOU DIDN’T CHOOSE to attempt to “qualify” for one of these eligible positions in line for a(n eventual) DB plan upon retirement. However, that decision was YOUR CHOICE! You COULD have elected to “jump thru the proper hoops” in attempt to get hired … alas but you didn’t! Thusly, you have NO RIGHT at this late date to condemn those persons who have served their qualified (faithful) service so as to earn their current pensions.[/quote]

Typical ad hominem response.

BG, you can’t seem to discuss an issue without making personal claims about people that are completely fabricated.

(And then there’s the perpetual references to your personal financial situation, which are just plain weird…)

Here’s an actual fact: I did have a position that offered a DB pension. I was an officer in the US Army, commissioned through a full ROTC scholarship – a process that requires a few qualifications!

Now please tell us again, for the umpteenth time, how arduous it was for you to get your guberment job. I’m sure your experience makes boot camp and paratrooper training sound like a picnic on a sunny day…

[phaster]

[quote=harvey][quote=bearishgurl]
I’m truly sorry for you that YOU DIDN’T CHOOSE to attempt to “qualify” for one of these eligible positions in line for a(n eventual) DB plan upon retirement. However, that decision was YOUR CHOICE! You COULD have elected to “jump thru the proper hoops” in attempt to get hired … alas but you didn’t! Thusly, you have NO RIGHT at this late date to condemn those persons who have served their qualified (faithful) service so as to earn their current pensions.[/quote]

Typical ad hominem response.

BG, you can’t seem to discuss an issue without making personal claims about people that are completely fabricated.

(And then there’s the perpetual references to your personal financial situation, which are just plain weird…)

Here’s an actual fact: I did have a position that offered a DB pension. I was an officer in the US Army, commissioned through a full ROTC scholarship – a process that requires a few qualifications!

Now please tell us again, for the umpteenth time, how arduous it was for you to get your guberment job. I’m sure your experience makes boot camp and paratrooper training sound like a picnic on a sunny day…[/quote]

FWIW

[quote]
Finally, a California government pension safety valve

For decades, under what was known as “the California rule,” once a government employee was hired, her or his pension benefits could only be increased, not reduced. This was based on the assumption that these benefits amounted to a contract between employer and employee.

But in a ruling on unions’ push to continue late-career pension spiking in Marin County despite a 2012 state law saying such maneuvers were no longer legal, Associate Justice James Richman made a broader point: “While a public employee does have a ‘vested right’ to a pension, that right is only to a ‘reasonable’ pension — not an immutable entitlement to the most optimal formula of calculating the pension.”

http://www.sandiegouniontribune.com/news/2016/aug/27/pension-rules-can-be-changed/

California court rules that pensions can be reformed going forward

[/quote]

[livinincali]

[quote=bearishgurl]
harvey (aka pri_dk), if you think there are only TWO Piggs who grasp this concept, you need to put on your thinking cap. Let me clue you in, here. There are several more Piggs here who are currently working FT (for the gubment) under the premise that they will eventually be due a pension under a “defined benefit plan.”

I’m truly sorry for you that YOU DIDN’T CHOOSE to attempt to “qualify” for one of these eligible positions in line for a(n eventual) DB plan upon retirement. However, that decision was YOUR CHOICE! You COULD have elected to “jump thru the proper hoops” in attempt to get hired … alas but you didn’t! Thusly, you have NO RIGHT at this late date to condemn those persons who have served their qualified (faithful) service so as to earn their current pensions.[/quote]

It might be smart to have not worked under the promise of a DB plan. If it’s going to be cut in the future and based on the math of most of these plans it will probably have to be cut in some form, then you would have been better off not taking the promise of deferred compensation. The risk pool concept of a DB plan is good for most people. The problem is the benefit is not calculated as Total Amount put away plus a reasonable compounded interest rate (maybe 5%) and then distributed a rate rate similar to an annuity. It’s generally something much higher than that. That’s why there’s a problem. It’s the difference between the total amount put away plus investment returns versus the amount that was promised to be distributed.

[FlyerInHi]

I kinda agree, livin Some full benefits are costly and useless.
For example health care. I would rather have basic, rationed, universal government run health care in very utilitarian but competent hospitals, with long but doable wait times. The cost of health insurance that my employer incurs would instead be paid to me in cash that I could invest and do whatever I want.

[Parabolica]

The problem with defined contributions plans as I see it is that the vast majority of working people lack the financial sophistication required to invest for their retirement. They are consigned to investment company sharks by their ignorance and the limited choices available to them in their company 401(k) choices.

Harvey, how does the average person taking your prescription save for their own retirement? Do they know about index funds? Do they get idea of changing the equity/bond ratio as they approach retirement? If they look for advisers can they avoid the sharks? I say that they cannot begin to match the returns and stability provided by professional managers of defined benefit programs. Do you see it differently?

The corporations were allowed to strip workers of defined benefit plans, moving liabilities off their books, and giving employees the ‘freedom’ to chart their own financial course. It is like handing someone a parachute and kicking them out of a plane for the first time so that they may have the ‘freedom’ of learning how to reach the ground without perishing. Those stripped of defined benefit plans are angry that their employees, government workers, have not been been rendered naked as well. Understandable, but not pretty.

[paramount]

[quote=Parabolica]Those stripped of defined benefit plans are angry that their employees, government workers, have not been been rendered naked as well. Understandable, but not pretty.[/quote]

I’ll admit I am very unhappy about loosing my DB plan – my company took away our DB plan 2008-2009 – with barely a wimper (if even that) from employees.

I’m hopeful though we’ll start to break public unions with Friedrichs v. CTA.

[livinincali]

[quote=Parabolica]The problem with defined contributions plans as I see it is that the vast majority of working people lack the financial sophistication required to invest for their retirement. They are consigned to investment company sharks by their ignorance and the limited choices available to them in their company 401(k) choices.

Harvey, how does the average person taking your prescription save for their own retirement? Do they know about index funds? Do they get idea of changing the equity/bond ratio as they approach retirement? If they look for advisers can they avoid the sharks? I say that they cannot begin to match the returns and stability provided by professional managers of defined benefit programs. Do you see it differently?

The corporations were allowed to strip workers of defined benefit plans, moving liabilities off their books, and giving employees the ‘freedom’ to chart their own financial course. It is like handing someone a parachute and kicking them out of a plane for the first time so that they may have the ‘freedom’ of learning how to reach the ground without perishing. Those stripped of defined benefit plans are angry that their employees, government workers, have not been been rendered naked as well. Understandable, but not pretty.[/quote]

I don’t blame companies for moving the liability off there books. Are there any cities or government organizations that are in really good shape with their define benefit pension plan? The only thing that would make those government workers whole is an unlimited tax payer backstop. I think it’s virtually impossible to offer a define benefit plan that is somehow based a the last few years of salary while working and includes a variety of incentives to attempt to cheat that calculation.

If government employees want a shared defined contribution risk pool that pays out some defined benefit based on the total funds available and sound actuarial investment returns that’s fine with me. But if there’s problems within the fund let the risk pool of employees participating in such a plan bear the risks of poor performance or under contributing. That seems like a fair compromise to me. If the government employee union opts for higher payouts in retirement then contribute more during working years. If the funds are poorly invested then let those employees within the fund chose if they want to contribute more or accept lower benefits. Why should they be some special class of citizen that’s gets a tax payer funded bailout in retirement.

[Anonymous]

[quote=Parabolica]The problem with defined contributions plans as I see it is that the vast majority of working people lack the financial sophistication required to invest for their retirement.[/quote]

This is a problem, but there is no ideal solution.

Retirement as it exists today is actually two separate concepts:

1) As a society we want to insure the elderly against poverty.

2) Many people want to reap the rewards of hard work later in life by quitting their jobs and enjoying what they have accumulated.

Retirement is two things: insurance and a reward.

The two concepts overlap for sure, one needs to plan and save to achieve both.

I think government should be mostly responsible for item #1. As a society we can ensure that nobody find themselves destitute in old age. This guarantee should apply equally to everyone. We don’t need to divide society into public and private-sector groups.

For item #2, everyone is on their own. Some are going to be better than others for sure, but the idea of accumulating a nest-egg over many years isn’t that hard to grasp. There is enough regulation and information about investing available to protect all but the most naive from “sharks.” There really is no other way.

We already have a solution to #1. It’s Social Security. Not a perfect plan but it has been effective for nearly a century (probably longer than any other long-term financial program in history) and SS can continue indefinitely with occasional adjustments due to demographics. Social Security was always intended to be an insurance plan, not a retirement plan: it protects against poverty in old age. Despite the dire predictions we occasionally hear about Social Security, there are very credible and fair proposals to fix it.(Of course, medicare is also part of the solution.)

The approach is simple: Put everyone on Social Security, public and private sector. No special class of citizen. Keep Social Security transparent like it has been for many decades and we are all in it together. It works.

For those that want a lifestyle in retirement, then they are on their own. Save, invest, plan. Best of luck. It’s certainly doable, millions are already managing it just fine.

There is simply no need to have a class of citizens who are shielded from long-term investment risk at the cost of everyone else. The absurdly complex, corrupt, and broken government defined-benefit pension systems we have in America today is completely unnecessary.

[phaster]

[quote=Parabolica]The problem with defined contributions plans as I see it is that the vast majority of working people lack the financial sophistication required to invest for their retirement. They are consigned to investment company sharks by their ignorance and the limited choices available to them in their company 401(k) choices.

Harvey, how does the average person taking your prescription save for their own retirement? Do they know about index funds? Do they get idea of changing the equity/bond ratio as they approach retirement? If they look for advisers can they avoid the sharks? I say that they cannot begin to match the returns and stability provided by professional managers of defined benefit programs. Do you see it differently?
[/quote]

RETURNS AND STABILITY provided by professional managers? ROTFLMAO!! Oh you’re serious…

ever consider that the local city/county $hit for brains pension system as well as CalPERS are run by so called “professionals” and look where we are today!!

As it stands, the “tax payer” is the financial back-stop for a corrupt/mis-managed portfolio strategy (that only guarantees payouts BUT has no control on investment vehicle returns)

FWIW here is a link to an article about an investment scheme that has the very same characteristics you are seeking… because of the STABILITY of double-digit RETURNS and the reports of serious wealth creation…

http://www.forbes.com/2008/12/12/madoff-ponzi-hedge-pf-ii-in_rl_1212croesus_inl.html

Nuff said?

humans by nature are impulsive and irrational, so for the big bets that we as a society can’t afford to lose, its time to scrap the complex/corrupt “professional” portfolio management style and switch to a PASSIVE investment model

https://www.washingtonpost.com/news/get-there/wp/2015/06/29/active-vs-passive-how-fund-managers-stack-up-to-index-funds/

http://www.barrons.com/articles/solving-the-active-vs-passive-investing-debate-1422304950

[quote=phaster]
October 2, 2014 – 8:18pm.

[quote=CA renter]
You’re also clearly ignorant about the differences between DB and DC pensions. DC plans have higher administrative costs and lower returns; DC plans have access to fewer investment options; DC plans don’t pool longevity risk; DC plans have lower contribution limits than DB plans (for employer and employee); and DB plans can remain in higher-yielding and more diversified investments and can better manage the ups and downs of the market over time because they are continuously funded by the contributions of current employees and their employers, and benefits are staggered well into the future (pooled investment risks over time and number of people).[/quote]

News reports about CalPERS and the SD pension board, leads me to believe idiots who over estimate their own management abilities AND have no basic understanding of math or the investing paradox, are at the helm.

Given your logic since CalPERS and SD have “professional” managers, elected board(s) to provide oversight and access to diversified investments, then why haven’t they beat the market benchmarks (i.e. the index of the DJ30 or S&P500)?

http://www.marketwatch.com/investing/index/djia

http://www.marketwatch.com/investing/index/spx

IMHO its because of the “investing paradox.”

Simply stated a disciplined small/individual investor can beat market averages over long periods of time, because their trades fly under the radar and are “un-noticed” by the market.

However when the portfolio is in the BILLIONS (as is the case w/ SD), or the HUNDREDS OF BILLIONS (as is the case w/ CalPERS), any trade they make I’d argue is the market (so a different investment style is needed).

[quote=phaster]
[quote=livinincali]
The one benefit of defined benefit contribution plans, retention, isn’t worth the risks, the frauds, the vote buying, and everything else it enables. That’s the bottom line. The rewards (reduced training costs retention, etc.) don’t outweigh the risks and therefore they should be scrapped..[/quote]

Agree! And after doing some research, seems the best way forward is to follow the example set by the Thrift Saving Plan (a federal government 401K style program, that can’t be corrupted/mismanaged like what happend at CalPERS or as what is happening with the SD pension program)

https://www.tsp.gov/investmentfunds/fundsoverview/comparisonMatrix.shtml
[/quote]

The Thrift Savings Plan, used by millions of federal workers, is like a 401(k), except it’s a lot cheaper. Last year it charged an average expense ratio of a mere 0.03%. That means just $3 in fees for $10,000 in savings, or $30 for a $100,000 portfolio.

John Turner, an economist and director of the Pension Policy Center and a former federal worker himself, said “Unless they’re advanced investors, I think they should leave their funds in the TSP because it’s simple and it’s easy enough that most investors can do it and do it well”

http://money.cnn.com/2014/10/01/retirement/federal-workers-leaving-thrift-savings-plans/

[/quote]

no matter where one stands one the political spectrum, I’m sure all would agree we as a nation are in general mostly consumers NOT savers/investors

(if I were king) to encourage long term savings/investment and try to eliminate short term market volatility, I’d keep the “low” long term capital gains tax on equities in place BUT I’d set the short term capital gains tax “much higher” (at least 60%)

high taxes on short term trades would discourage high-frequency computer algorithm trades as well as discourage the average investor who feels the whim to sell/buy into the latest investment fad when they see the talking heads on CNBC/Bloomberg/etc.

there is also too much corruption in the system which is vary bias against the little guy trying to step up on the bottom rungs of the economic ladder, so IMHO its important to economically incentive long term savings/inventing in passive accounts

I’d like to try a progressive-inversive matching program, which means I’d borrow the idea of a euro basic income program, BUT the twist would be that it would only be used to save/invest for an individuals retirement (not to be used for short term consumption which has adverse affects on the global environment)

http://www.latimes.com/world/europe/la-fg-germany-basic-income-20151227-story.html

to seed an individuals portfolio all citizens below the age of 18 (but above age 10) would be given a token amount for a their own TSP like retirement account that could not be taken out till they turned say 65 (this way money could be grown by compounding)

I’d think with an infusion of “stable” stockholders US companies would not have to worry “as much” to cook the quarterly stock returns to appeal to talking head “analyst” ALSO figure by staring young this would cement the concept of compound math in student (while still in middle school)

don’t think such a program would cost any real money because it would be “credit” that could not be spent (hence no “inflation” or increased velocity of money)

this idea might sound complex/radical, but actually pretty sure in the long run it would simplify and clearly signal to everyone that its important to save for the long term

so wrt “working” at some fast food chain or at some other service job

-say a person earns 10k annually and manages to save 10% for a TSP like retirement account (then I’d want to have the government double the match, in other words put in $2000)

-say a person earns 20k annually and manages to save 10% for a TSP like reti)rement account (then I’d want to have the government the match 10%, in other words put in $2000)

note the amount stays the same, but as a percentage it goes down (and of course there would have to be a cap/cut-off)

-say a person earns more than 60k annually and manages to save 10% for a TSP like retirement account (then I’d want to have the government give a tax credit like in an IRA deduction, which is an economic signal to higher wage earners to save/shelter money for retirement)

as it stands today the system IMHO is very inefficient with various overlapping administration and means-testing costs, and there is no clear signal for individuals to save/invest for retirement

so as envisioned a forced basic saving program should eliminate inefficient administration costs, eliminating causes of short term market volatility, etc…

yeah I know this does not directly address the big wealth gap between people working at service jobs vs CEO/investment-bankers but its taken 30+ years for the condition to come about so there is NO easy/painless way out of this fucked up economic mess…

[CA renter]

[quote=Parabolica]The problem with defined contributions plans as I see it is that the vast majority of working people lack the financial sophistication required to invest for their retirement. They are consigned to investment company sharks by their ignorance and the limited choices available to them in their company 401(k) choices.

Harvey, how does the average person taking your prescription save for their own retirement? Do they know about index funds? Do they get idea of changing the equity/bond ratio as they approach retirement? If they look for advisers can they avoid the sharks? I say that they cannot begin to match the returns and stability provided by professional managers of defined benefit programs. Do you see it differently?

The corporations were allowed to strip workers of defined benefit plans, moving liabilities off their books, and giving employees the ‘freedom’ to chart their own financial course. It is like handing someone a parachute and kicking them out of a plane for the first time so that they may have the ‘freedom’ of learning how to reach the ground without perishing. Those stripped of defined benefit plans are angry that their employees, government workers, have not been been rendered naked as well. Understandable, but not pretty.[/quote]

You’ve nailed it, Parabolica.

Apparently, Pri/Harvey hasn’t seen the stats on savings, either.

“There hasn’t been a significant increase in wages, people have student loans and other debt, and many are continuing to struggle financially,” said Charles Jeszeck, the GAO’s director of education, workforce and income security, which analyzed the Federal Reserve’s 2013 Survey of Consumer Finances to come up with its estimates. “We aren’t surprised that people have not saved a lot for retirement.”

“…Even among those who do have retirement savings, their nest eggs are small. The agency found the median amount of those savings is about $104,000 for households with members between 55 and 64 years old and $148,000 for households with members 65 to 74 years old. That’s equivalent to an inflation-protected annuity of $310 and $649 per month, respectively, according to the GAO.

“I don’t care what anyone says. That’s not enough income for retirement,” said Anthony Webb, senior research economist at the Center for Retirement Research at Boston College, who reviewed the GAO report.”http://www.cnbc.com/2015/06/03/most-older-americans-fall-short-on-retirement-savings.html

.................

There isn't a "lifestyle adjustment" of any kind that will ever make this DC system solvent. The government WILL be bailing people out, one way or another. We might as well do it in a way that is transparent, honest, and humane. That means that we will need to strengthen and expand SSI. Just lift the contribution and benefit base (cap on income subject to SSI tax), and cap the benefits at around $100K or so and adjust this cap by CPI every year.

If it still needs more shoring up, increase the tax rate, or subsidize it with other federal money, until it's sustainable.

[XBoxBoy]

[quote=Parabolica]The problem with defined contributions plans as I see it is that the vast majority of working people lack the financial sophistication required to invest for their retirement. [/quote]

I have no idea who is right in this argument or what is fair, but I’d like to point out another issue that worries me about defined benefit vs 401k. That is that 401ks are generally optional, while defined benefit are not. I have well educated, professional friends working in high tech careers, in their late 50s who have never put any money into a 401 or any retirement plan (other than social security). Compare that to govt. workers or teachers who have no choice but to contribute. Not only are people not savvy enough to manage the financial waters, they aren’t savvy enough to figure out they need to save to have a retirement fund. Not sure how to fix that, but it seems to me to be a big issue lurking out there.

[Anonymous]

[quote=XBoxBoy]Not sure how to fix that, but it seems to me to be a big issue lurking out there.[/quote]

How to fix what?

My belief is that the only problem the government needs to fix is the risk of the elderly and disabled becoming destitute. Government has a responsibility to address humanitarian risks that could impact large populations.

And the federal government fixed that problem decades ago with Social Security and Medicare.

It’s not a responsibility of government to ensure a comfortable retirement for everyone.

[XBoxBoy]

[quote=harvey][quote=XBoxBoy]Not sure how to fix that, but it seems to me to be a big issue lurking out there.[/quote]

How to fix what?

My belief is that the only problem the government needs to fix is the risk of the elderly and disabled becoming destitute. Government has a responsibility to address humanitarian risks that could impact large populations.

And the federal government fixed that problem decades ago with Social Security and Medicare.

It’s not a responsibility of government to ensure a comfortable retirement for everyone.[/quote]

Whoa wait a minute!!! Where did I say I thought the govt. should do any of the fixin’?

My comment was to point out that from where I sit, there’s going to be a lot of people who are going to be really surprised that they aren’t going to be able to work until they drop and that they are going to find their standard of living will drop significantly when they find themselves retired.

That seems to be the fault of those people, and to be a symptom of moving from defined benefit plans to 401ks. To me the problem mostly stems from people not being savvy enough or responsible enough to plan for their retirement. I don’t know how to fix that lack of knowledge and responsibility. But mostly definitely don’t take that to imply the govt. should fix it.

[Anonymous]

[quote=XBoxBoy]Whoa wait a minute!!! Where did I say I thought the govt. should do any of the fixin’?[/quote]

Fair enough. In fact we are probably mostly in agreement. I’m even saying that there really is not a problem that anybody needs to fix.

This thread has been mostly about government policy regarding pensions. Some here have argued that government should fix the perceived problem by simply handing out defined-benefit retirements to everyone.

The doom and gloom stats about retirement all assume that people are entitled to a comfortable retirement on par with their previous standard of living. That’s easily achieved by any individual with financial discipline. The fact that so many don’t have that discipline is nobody’s problem but their own.

[joec]

This retirement problem I think will be a major issue in the next few decades. I agree that anyone not saving themselves should get very little help, but if they offer nothing, what you will just have is people purposely committing crime to get locked up. That costs a TON more money than probably basic living expenses which should have been forced taken from people when they were younger.

I read this was also happening in Japan (trying to get jailed) since at least you are fed and have a roof over your head…and the medicines…(and the added loving at night)…

All that said, I think they probably should setup something very minimally (to prevent people living/dieing on the streets), but not doing anything and saying “tough” would just lead to more crime and people locked up which will cost all of us more money.

I think putting someone in jail costs over 50k or much more a year…Pretty wasteful.

http://www.thecrimereport.org/news/inside-criminal-justice/2012-02-the-high-cost-of-prisons-using-scarce-resources-wise

Maybe they should setup old dorms or something where they can live/work and do simply tasks for their living expenses…and healthcare.

[livinincali]

[quote=XBoxBoy]
That seems to be the fault of those people, and to be a symptom of moving from defined benefit plans to 401ks. To me the problem mostly stems from people not being savvy enough or responsible enough to plan for their retirement. I don’t know how to fix that lack of knowledge and responsibility. But mostly definitely don’t take that to imply the govt. should fix it.[/quote]

It’s not a problem with defined benefit plans. Those have been around for such a short period of time in human history, nobody knows if they were going to work in the long run. Evidence is starting to pile up that they were never going to work in the first place. A few early retirees in those plans made out but it’s becoming increasingly likely that those nearing retirement in those plans will have them cut in some form once they are retired.

The real problem is that comfortable independent living retirement might not be workable. Our expectations of retirement are a relatively new phenomenon that’s never really been tested for multiple generations. For those in the top 20% that might be workable but it might not be workable for the masses. Multi-generational living or group living is probably going to end up being the solution. The old won’t die destitute but the standard of living is probably going to fall way short of expectations.

[FlyerInHi]

Cap health care to 10% of the economy. Can easily be done through policy.

We should also retire in cheap locales — Pensacola, Panama, Puerto Rico, Costa Rica, etc… Good for those local economies and good for retirees. Change Medicare to cover medical expenses overseas.

I plan to buy a condo in Thailand (when the next financial crisis hits). On $2,000 per month (excluding housing) I can live very well. Just travel back and forth. Social security + income on 1 rental should cover it. I don’t even need to touch my principal.

[bearishgurl]

[quote=FlyerInHi]Cap health care to 10% of the economy. Can easily be done through policy.

We should also retire in cheap locales — Pensacola, Panama, Puerto Rico, Costa Rica, etc… Good for those local economies and good for retirees. Change Medicare to cover medical expenses overseas.

I plan to buy a condo in Thailand (when the next financial crisis hits). On $2,000 per month (excluding housing) I can live very well. Just travel back and forth. Social security + income on 1 rental should cover it. I don’t even need to touch my principal.[/quote]More power to ya, FIH, but I don’t want to leave the country. If Trump becomes president, he states he plans on making all healthplans nationwide and portable (eliminating the state barriers among insurance carriers). That’s a great start but I think I’m going to contact my legislator about writing up a bill to introduce to the next Congress and administration to bring back HDHPs when the Repub Congress is in the middle of figuring out how to gut the ACA without too much disruption. For example, I didn’t sign up for “maternity benefits” or “autism coverage” for my child when I applied for my HDHP in 2004 and I don’t want to continue to pay for these services now. There are other services on my “ACA-compliant” healthplan that I don’t need and I don’t need as comprehensive of coverage as I have. I can deal with a $5K deductible and $12K OOP maximum and don’t need a “paternal” gubment to decide for me, otherwise. I want an affordable plan (without needing a “subsidy” to help pay for it where the gubment at all levels is constantly in my personal business, twice conducting unauthorized effing with my income and cancellation my plan), a good CHOICE of providers and NATIONWIDE coverage and am not alone. There are MANY people like myself who are on the road several weeks per year where anything can happen in the blink of an eye.

If I end up getting “roped into” lobbying in Sac or the like for healthplan “reform” in the wake of the ACA being piecemeal gutted, then so be it. I know how and there is a hotel room with my name on it waiting for me up there :=0

I feel very passionate about bringing back into CA all six health insurance carriers that defected at the end of 2013, in the wake of Obamacare :=)

I was registered as a dem for 25 years but I want to know WTH they were thinking when they passed the ACA. It is the most ridiculous, costly, poorly-thought-out piece of legislation that I have seen in my lifetime. From “ground zero,” its mechanics and moving parts are completely unworkable and are causing state gubments to actually run amok going “rogue” in their efforts to decide themselves who is and who isn’t eligible for a subsidy and how much. That decision was supposed to be the purview of the IRS but for the last two years, the hopelessly incompetent Covered CA has been taking it upon themselves to decide. It’s a comedy of errors which unfortunately has far-reaching ramifications, including effing up thousands of people’s lives. It’s a shining example of the “Peter Principle” in all its glory.

Everything should have been left alone and the people who had letters from carriers turning them down for coverage due to pre-existing conditions should have been able to use those letters to receive affordable coverage from the state insurance pool which EVERY carrier doing biz in the state is forced to join. I wouldn’t have minded a little added to my premium to get these people coverage. The gubment didn’t have to eff with the many thousands of OTHER existing individual policyholders. We were fine.

[end rant]

[phaster]

[quote=XBoxBoy][quote=Parabolica]The problem with defined contributions plans as I see it is that the vast majority of working people lack the financial sophistication required to invest for their retirement. [/quote]

I have no idea who is right in this argument or what is fair, but I’d like to point out another issue that worries me about defined benefit vs 401k. That is that 401ks are generally optional, while defined benefit are not. I have well educated, professional friends working in high tech careers, in their late 50s who have never put any money into a 401 or any retirement plan (other than social security). Compare that to govt. workers or teachers who have no choice but to contribute. Not only are people not savvy enough to manage the financial waters, they aren’t savvy enough to figure out they need to save to have a retirement fund. Not sure how to fix that, but it seems to me to be a big issue lurking out there.[/quote]

there is indeed a BIG ISSUE LURKING

[modesty/sarcasm ON]

and FWIW IMHO I’m RIGHT and everyone ELSE is to blame for causing an economic mess…

[modesty/sarcasm OFF]

As it stands politicians/lawyers/public-employees-union-members think it would be fair for the taxpayers to make them whole (after all they are the one’s who did all the hard work of implementing the policies, writing the contracts and were in charge of the day in and day out operation of various pension fund accounts…)

“they” (politicians/lawyers/public-employees) using circular logic would argue, thus it is written (and ignoring “crucial evidence”) therefore we find its the LAW

this POV isn’t much different than the approach taken by leadership in the catholic church back in the day when the pope made a law that which said, the earth was at the center of the universe (and ignored all the math and science)

http://www.washingtonpost.com/wp-srv/national/horizon/sept98/galileo.htm

http://www.studentpulse.com/articles/533/copernicus-galileo-and-the-church-science-in-a-religious-world

WRT the operation of the local pension fund – notice in press releases – on the side that supports the politicians/lawyers/public-employees position, stories ALL BUT IGNORE THE MATH because its an inconvenient truth

AND instead hide behind the convenient fiction that its possible to have a sustainable DB program for honest hard working muni “union” employees who will suffer otherwise

in the december 2015 (back pages news-paper story) that started me questioning the wisdom of existing fund management (yet again), the actuaries long ago calculated out that in order for the LOCAL pension portfolio to work, the investment vehicles (bonds, stocks, etc.) basically had to grow 8% over the long haul!!!

BUT as we know from year to year the market will vary…

so some years the total return of the portfolio will be much GREATER than the actuaries design target of 8%,… and some years the total return of the portfolio will be much LOWER than the the actuaries design target of 8%,… BUT OVERALL the idea was that pension portfolio was designed to AVERAGE OUT to 8%

its impossible to say exact DEBT figures w/out more data BUT think of the problem as being, for the past three decades the portfolio operators (i.e. politicians/lawyers/public-employees) said hey the portfolio is doing great and give themselves a pension bonus payment of say anything greater than the actuaries target of 8% (thinking this “EXTRA” is not needed)

for example, back in the 1980’s and 1990’s when the market was really booming (and the portfolio produced returns on average much greater than 8%)

THE HISTORICAL RATE OF RETURN FOR THE STOCK MARKET SINCE 1900

…
during the 1980s the market returned on average 17.57%
during the 1990s the market returned on average 18.17%
…

http://www.stockpickssystem.com/historical-rate-of-return/

the portfolio operators (i.e. politicians/lawyers/public-employees) in the 1980’s said hey since we averaged 17.57% in the market, so we have an EXTRA of 9.57% to give our selves because of a simple formula we included in a contract (average market return – actuaries design target = EXTRA) or (17.57%-8% =9.57%)

the portfolio operators (i.e. politicians/lawyers/public-employees) in the 1990’s said hey since we averaged 18.17%, we have an EXTRA of 10.17% because (18.17%-8% =10.17.%)

a misunderstanding of how “averages” work explains why the portfolio is BILLIONS in DEBT

City pensioners get ’13th check’ bonus

More than $6.1 million has been distributed to retired San Diego city employees in the form of a “13th check” — beyond their usual 12 monthly payments — making this year’s holiday bonus the largest such payout in the history of the three-decade-old practice.

But it’s become a source of conflict as the city’s pension system faces a $2 billion shortfall in promised payments, which remains a taxpayer burden and has led to budget crises in the past at City Hall.

http://www.sandiegouniontribune.com/news/2015/dec/18/13th-check/

what the $hit for brains managers of the San Diego pension portfolio did, was in reality take/pocketed for themselves the “excess” profits back in boom decades of the 80’s and 90’s that were originally designed to be kept w/in the account so that the portfolio averaged out to 8% from the 1980’s to the present day…

Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership (edited by Serge Matulich, David M. Currie)

Though SDCERS investments were earning well above the 8 percent rate of return estimated by the system actuaries, under normal conditions investments surpluses are required to make up for below-average returns in other years to achieve the average rate of return. Therefore, unless the actuaries’ estimates are grossly incorrect, in the long run true “surplus earnings” are impossible. The use of surplus earnings for the purposes other than maintaining the pension system, such as to expand existing benefits should be viewed as a loan from the system THAT WILL REQUIRE REPAYMENT IN THE FUTURE.

page 286

https://books.google.com/books?id=VLxvUV8xFsgC&pg=PA286&lpg=PA286&dq=san+diego+pension+13th+check&source=bl&ots=ZKEjv0C-rD&sig=RHojR7aJR0Ehb8mScjQnxLIhW6M&hl=en&sa=X&ved=0ahUKEwjJl76j3vLJAhVO4GMKHR1RAJkQ6AEIKTAC#v=onepage&q=san%20diego%20pension%2013th%20check&f=false

the economic problem NOW (and into the foreseeable future) is further compounded with financial instruments like “swaps” (which really supercharges the amount of money that somehow needs to be accounted for w/in the system)

http://www.bis.org/publ/otc_hy1504.pdf

and IMHO makes an economic disaster all but unavoidable (all because politicians/lawyers in a position of power who were suppose to over see pension portfolio operations, never took a step back to look at the big picture and apply basic middle school math concepts WRT the financial instruments they were in charge of)!!

[phaster]

[quote=temeculaguy]phaster the OP was about SD county from 2014, your rant is about SD city, two separate systems. FWIW SD county spent the last few years renegotiating employee contracts shifting the pension burden to the employees,changing formulas for new employees and eliminating health benefits to pensioners. I know first hand some county employees retiring and taking state jobs for the retiree health benefits for life after 5 years (and age 50) for no reason other than health benefits drying up at the county level. SD county is fiscally conservative and has an excellent bond rating because they like to pay cash and avoid debt. My friends with the county planned on lifetime medical and had to change plans once that went away. As far as the OP on county pensions, now fully funded and derivative playing advisers all fired. Its back to boring and reduced benefits, meaning no local impact from the county at least as far as the county goes, the city is another story and i do not have any inside information as far as the city goes. I’d imagine they will follow suit at some point. The trend is towards the elimination of the traditional pension, hopefully that makes you sleep better.[/quote]

so have any links to news reports/hard data about updated SD county pension management?

since this is an economics forum thought I’d try and understand what is going on locally (as well as what is happening nationally/internationally) using the intellectual tools I’ve picked up over the years

basically to try and make sense of the world around me I try relating stuff to concepts found w/in “Newtonian” physics which describes “cause and effect”

grouping all public pensions together is a way to incorporate the concept of a fractal (which is a math set concept that ties to model a natural phenomenon or something that exhibits a repeating pattern at every scale)

this technique of simplifying is standard practice in the study of physics where the goal is to try and understand what is happening to the system (in this case the “economy”) as a whole…

some might not understand or relate to the math/science framework I’ve presented, if so let’s examine the modern day economy using basic concepts found in scripture because that ancient document has a lot to say about effects of ethical decisions made by individuals/society using simple metaphor(s) like “sowing and reaping”

Galatians 6:7

Be not deceived; God is not mocked: a man reaps what he sows

Galatians 6:8

Those who live only to satisfy their own sinful nature will harvest decay and death from that sinful nature

suppose a rabbi, priest and imam go to a bar to discuss the topic, I’d bet they might agree that the implication from this passage is that when God says you will reap what you sow (s)he means you will live with the results of your actions (NOTE by including the “(s)” I’m trying to cover my ass and not offend the almighty, because I know the scientific method cannot determine the existence let alone the gender of God).

https://www.youtube.com/watch?v=kWjlkm5g-Tk

all theological joking aside, in an economy how well one does NOW depends upon the PAST decisions and acquired skill-set(s) of an individual or group

said another way, how an economy functions as a system, in the present/future reflects the care or lack thereof from inputs long ago!

so given various reports stating an ever growing problem w/ the viability of various public pensions (along w/ other alarming trends in the global environment) therefore I can only conclude there is eventually going to be some kind of armageddon that will manafest itself in the economic realm, so best to heed warnings

Revelations 16:15

Look, I come like a thief! Blessed is the one who stays awake and remains clothed, so as not to go naked and be shamefully exposed

Warren Buffett

Only when the tide goes out do you discover who’s been swimming naked

http://www.businessinsider.com/warren-buffett-warns-of-public-pension-crisis-2014-3

http://www.cnbc.com/2015/03/02/buffett-these-investments-are-a-fools-game.html

as to what keeps me awake at night, its a fear which is shared by many other americans AND that is that a righteous man cannot escape the collective ill effects of corrupt government which will have consequences as to the future “state” of USA (FYI by “state” I mean the economy as well as other condition(s): stable/unstable, prosperous/un-prosperous, admired/loathed, etc.)

[bearishgurl]

I got sidetracked but am still studying the voluminous long-awaiting PERB decision on City unions ULPs to cause the effects of voter-approved Prop B to be nullified/repealed.

Here’s a (rather dated) background link I just found on the subject:

https://ballotpedia.org/San_Diego_Pension_Reform_Initiative,_Proposition_B_%28June_2012%29

And here’s a (rather entertaining) background thread I found on the subject :=)

http://piggington.com/ot_public_employee_unions_attack_the_city_of_san_diegoprop_b?page=1

I’ll be back in a few days (or less) when I’ve had a chance to finish and properly notate the entire Decision. I have to say that it is really great to at last see something of this magnitude take place in the golden state. It’s been a long haul, to say the least.

[paramount]

[quote=bearishgurl]

I’ll be back in a few days (or less) when I’ve had a chance to finish and properly notate the entire Decision. I have to say that it is really great to at last see something of this magnitude take place in the golden state. It’s been a long haul, to say the least.[/quote]

Don’t forget to look into the golden staplers the state has been buying for govt employees that cost hundreds.

When I get back to work next week I’m going to place an order for one and see what happens. I think I already know….

[bearishgurl]

Uhh, phaster? You’re trolling now.

I don’t think you would be very happy as a current SD city or county “worker-bee” who is subject to mandatory payroll deductions of 7-14% of gross pay (depending on age) to fund their DB pensions. This doesn’t even take into account any mandatory payroll deductions they have for union dues and healthplans for any family members they are covering OR any voluntary payroll deductions they have in place to fund their 457 plans.

The average SD city/county “worker bee” (w/ 5-20 years service) currently makes just $15 – $25 hr.

Do you think YOU (phaster) could live comfortably in SD County on your net pay if YOU were a current employee in one of these systems??

Thankfully, I never had to find out as I had a high-earning spouse to help with living expenses while employed as a “civil servant” minion.

[bearishgurl]

Uhhhhh, phaster, may I ask what you DO for a living?

Inquiring minds would be interested to know.

[phaster]

[quote=bearishgurl]Uhhhhh, phaster, may I ask what you DO for a living?

Inquiring minds would be interested to know.[/quote]

[quote=bearishgurl][quote=phaster][quote=livinincali]The one benefit of defined benefit contribution plans, retention, isn’t worth the risks, the frauds, the vote buying, and everything else it enables. That’s the bottom line. The rewards (reduced training costs retention, etc.) don’t outweigh the risks and therefore they should be scrapped..[/quote]Agree! And after doing some research, seems the best way forward is to follow the example set by the Thrift Saving Plan (a federal government 401K style program, that can’t be corrupted/mismanaged like what happend at CalPERS or as what is happening with the SD pension program)

https://www.tsp.gov/investmentfunds/fund…

“The Thrift Savings Plan, used by millions of federal workers, is like a 401(k), except it’s a lot cheaper. Last year it charged an average expense ratio of a mere 0.03%. That means just $3 in fees for $10,000 in savings, or $30 for a $100,000 portfolio.

John Turner, an economist and director of the Pension Policy Center and a former federal worker himself, said “Unless they’re advanced investors, I think they should leave their funds in the TSP because it’s simple and it’s easy enough that most investors can do it and do it well”

http://money.cnn.com/2014/10/01/retireme…
[/quote]

W-a-a-a-ay back in the day, I was a payroll clerk employed by the Dept the Defense and can tell you with certainty that the TSP was the best plan in existence to supplement the DB plans for CSRS or FERS members (at that time). Any Federal employee who retires today (or in recent years) and elects to transfer their ENTIRE TSP investment to another vehicle upon retirement is a fool.

‘Nuff said.[/quote]

Because an investment retirement strategy in powerball DID NOT perform as expected, I can neither confirm nor deny what I do for a living

The powerball financial setback, has forced me to consider if I did hava a CV, what to state under Research/Skills given my qualifications, “a self-unmotivated full-time multi-slacker who specializes in beer·ology!”

Moving on, since you have some DOD experience/exposure, perhaps you have heard the expression win the battle but lose the war

I can only speculate but if DOD/treasury were to commission a threat assessment on public pensions, the plain speak summary would read TPTB are $hitbirds who have no grasp of the STRATEGIC picture and as a result TACTICS are driven by ad hoc economic/political self interest and existing OPERATIONS are a “corrupt” cluster-fuck!

As to how a hypothetical threat assessment study relates to the expression win the battle but lose the war, one would expect public pension advocates like politicians/lawyers are going to win a few delaying tactic battles along the way, but ultimately because of pension-math denialism, the war on improving the US economy will be lost and the cost paid by the “average” citizen will be high!

(analysis based on supporting data)

[quote=phaster]
now back to the serious topic at hand since this is an economics message board where it clearly states at the bottom of the page… In God we trust. Everyone Else Bring Data!

BUT before looking at data, it might be useful to recall lessons taught in middle school, specifically the topic about “compound interest” and basic money management skills (which is key to surviving/thriving day to day in the modern day world)

if you have a mortgage, then perhaps you might have heard that you can pay off a loan much faster, by “annually” making an extra — 13th — mortgage payment,… what an extra mortgage payment does is directly reduces the principal balance on the loan by the amount of the payment (and the observed effect is exponentially decreasing the payback period)

NOW lets (re)examine ACTUAL “historic” published documents/text (i.e. Data!)

City pensioners get ’13th check’ bonus

More than $6.1 million has been distributed to retired San Diego city employees in the form of a “13th check” — beyond their usual 12 monthly payments — making this year’s holiday bonus the largest such payout in the history of the three-decade-old practice.

But it’s become a source of conflict as the city’s pension system faces a $2 billion shortfall in promised payments, which remains a taxpayer burden and has led to budget crises in the past at City Hall.

http://www.sandiegouniontribune.com/news/2015/dec/18/13th-check/

Though SDCERS investments were earning well above the 8 percent rate of return estimated by the system actuaries, under normal conditions investments surpluses are required to make up for below-average returns in other years to achieve the average rate of return. Therefore, unless the actuaries’ estimates are grossly incorrect, in the long run true “surplus earnings” are impossible. The use of surplus earnings for the purposes other than maintaining the pension system, such as to expand existing benefits should be viewed as a loan from the system THAT WILL REQUIRE REPAYMENT IN THE FUTURE.

The concept of surplus earnings is easily misunderstood, so sometimes these earnings are used inappropriately.

page 286

Handbook of Frauds, Scams, and Swindles: Failures of Ethics in Leadership edited by Serge Matulich, David M. Currie

https://books.google.com/books?id=VLxvUV8xFsgC&pg=PA286&lpg=PA286&dq=san+diego+pension+13th+check&source=bl&ots=ZKEjv0C-rD&sig=RHojR7aJR0Ehb8mScjQnxLIhW6M&hl=en&sa=X&ved=0ahUKEwjJl76j3vLJAhVO4GMKHR1RAJkQ6AEIKTAC#v=onepage&q=san%20diego%20pension%2013th%20check&f=false

anyone able to grasp the power/implications of “compound interest” then reading the published reports should be very disturbed at the mis-management/incompetence/corruption since the PRIMARY CAUSE as to why the “magnitude” of the SD public pension “unfunded” problem exists is due to a simple math concept that was suppose to be learned in middle school…

as-reported for the past three decades the “surplus earnings” (aka 13th payment) was diverted to Gubment-Pensioner(s) every holiday season INSTEAD OF being used for the original goal of trying to make sure the long term average return of the portfolio was achieved (about about 8% as per actuaries’ design-estimates)

if anyone is able to think critically about “compound interest” then they will see that making an annual extra mortgage payment and making an extra payment to Gubment-Pensioner(s) every holiday are two side of the same coin; one side allows a mortgage debt to be paid “down” much sooner, the other side makes the debt to pile “up” exponentially over decades!

(bearishgurl) since you have taken the blue pill – its apparent you believe whatever you want to believe!

for all other(s) who dared take the red pill, the BOTTOM LINE seems to be as long as the “surplus earnings” (aka 13th payment) is siphoned off every holiday season for Gubment-Pensioner(s) INSTEAD OF being used to maintain the pension system designed target return rate, the SD pension system as currently structured/operated AND using nothing more than “honest” common sense and middle school math tells us, that the un-funded DEBT issue will basically ALWAYS grow!

http://www.doughroller.net/investing/power-of-compounding-interest/
[/quote]

[quote=phaster]
from what I have seen, the root cause of the problem is corruption (and if somehow that was fixed then lots of other problems get resolved)

http://www.breitbart.com/big-government/2015/10/15/media-fail-americans-1-fear-is-government-corruption/

a few months ago a neighbor (who own a few properties in the neighborhood) and he shared that some in the neighborhood were trying to build support for local park

when I looked at the project calculated it was a hundred million dollar pork barrel project

basically like a corrupt corp that under-bids a project then charges cost over runs, seems estimated costs were much less than what seems to me as a common sense cost approach (but what do I know) FYI the project was being supported by RE interests and some local politicians (go figure)

http://1drv.ms/21In5ap

this is just another example of local corruption/self interest destroying the economy from w/in

ironically this past week there was a news video that was about a program trying to help homeless people in the area by requiring them to have one-on-one financial counseling (which seems to be a good start)

http://america.aljazeera.com/watch/shows/Ali-Velshi-On-Target/2015/11/middle-class-americans-forced-to-live-in-cars.html

I have to admit I didn’t really care or understand the nature of public pensions (till a few years ago), but as I see things it requires politicians to admit the system is corrupt and since they have an economic/political self-interest in hiding the truth there is very little hope to avoid a crisis of biblical proportion.

nothing will be fixed for a long time (if at all) for the simple reason in order to fix a problem, first one must admit that there is a problem and have the mental ability to understand the complex nature of the system.

one only has to read the newspaper to see that local politicians share economic traits much in common with corrupt companies/official like in the ENRON corp

http://www.voiceofsandiego.org/topics/politics/more-ties-revealed-between-dumanis-and-accused-campaign-moneyman/

http://www.sandiegouniontribune.com/news/2015/aug/04/azano-appeals-fbi-jurisdiction-campaign-finance/

recall officials at Enron ordered destruction of to evidence

http://abcnews.go.com/WNT/story?id=130518

its not too hard to find that same thing was ordered here in town

http://www.kpbs.org/news/2014/feb/28/san-diego-begin-deleting-all-city-emails-older-one/

given all this, have to wonder if the problem I inherited was somehow related (i.e. another symptom of government corruption)

engineers_report_2675_bway.pdf
https://onedrive.live.com/redir?resid=B4A61592A33514F4%21114

which it points to a much larger problem no-one wants to admit exists

tax evasion – motive and means.pdf
https://onedrive.live.com/redir?resid=b4a61592a33514f4%21110

http://www.kpbs.org/news/2012/jul/03/citys-development-system-major-fraud-risk-says-aud/

actually the guy that helped me understand my sewer line issue told me stuff has been going on for years and over sights like a ex-council member who got a permit to build a garage (right on the property line, contrary to stated set-back rules which are clearly stated) in the neighborhood just after he was termed out and ran for higher office (years ago) is no different that what happened to me…

http://www.TinyURL.com/EnronByTheSea

government corruption is just like a fractal (because the pattern reappears over and over again, at different levels of government)

my own look at the data shows the system is corrupt and there is no economic incentive to admit there is anything wrong (which IMHO is going to play right into the hands of foreign powers that are playing the long “economic” warfare game against the USA)

http://www.cnbc.com/2015/11/30/china-could-see-2-3-trillion-inflows-after-yuan-enters-imfs-currency-basket.html

bottom line I can’t imagine foreign powers ignoring easy to exploit useful-idiots (as well as corrupt politician) who want to keep their unsustainable public pension (in play) as a diversionary tactic against the USA in the realm of geo-politics[/quote]

[bearishgurl]

Uh, the Federal TSP plan is technically a “457 plan.”

[bearishgurl]

[quote=phaster][quote=livinincali]The one benefit of defined benefit contribution plans, retention, isn’t worth the risks, the frauds, the vote buying, and everything else it enables. That’s the bottom line. The rewards (reduced training costs retention, etc.) don’t outweigh the risks and therefore they should be scrapped..[/quote]Agree! And after doing some research, seems the best way forward is to follow the example set by the Thrift Saving Plan (a federal government 401K style program, that can’t be corrupted/mismanaged like what happend at CalPERS or as what is happening with the SD pension program)

https://www.tsp.gov/investmentfunds/fund…

“The Thrift Savings Plan, used by millions of federal workers, is like a 401(k), except it’s a lot cheaper. Last year it charged an average expense ratio of a mere 0.03%. That means just $3 in fees for $10,000 in savings, or $30 for a $100,000 portfolio.

John Turner, an economist and director of the Pension Policy Center and a former federal worker himself, said “Unless they’re advanced investors, I think they should leave their funds in the TSP because it’s simple and it’s easy enough that most investors can do it and do it well”

http://money.cnn.com/2014/10/01/retireme…
[/quote]

W-a-a-a-ay back in the day, I was a payroll clerk employed by the Dept the Defense and can tell you with certainty that the TSP was the best plan in existence to supplement the DB plans for CSRS or FERS members (at that time). Any Federal employee who retires today (or in recent years) and elects to transfer their ENTIRE TSP investment to another vehicle upon retirement is a fool.

‘Nuff said.

[bearishgurl]

[quote=harvey]. . . Here’s an actual fact: I did have a position that offered a DB pension. I was an officer in the US Army, commissioned through a full ROTC scholarship – a process that requires a few qualifications! . . .[/quote]harvey, did you have the required number of years of service to actually vest in your DB pension?

If not, why not?

Are you currently collecting military retirement, and if so, at what age did you begin collecting it?

If not, will you collect military reserve retirement at age 60?

YOU are one of the biggest complainers (if not THE biggest complainer) on this board regarding others’ DB pensions they earned over decades of service. Or any other gubment benefit someone else is eligible for, for that matter. The Piggs need to know whether to consider you the pot ….. or the kettle.

Yes, YOUR personal situation is absolutely relevant here! Not sure if your continual attacks on gov workers’ pay and pensions are just envy rearing its ugly head … or what exactly …. It’s just weird.

[FlyerInHi]

BG, it’s not envy. The reason for complaining is that services are cut while salaries and pensions are not; all the while budgets are growing.

There are better, more efficient ways of rendering services to citizens, which which what reforms is all about.

It’s not all government. Private health care needs reform too so the sector doesn’t keep taking a larger share of the economy.

[Anonymous]

[quote=bearishgurl]harvey, did you have the required number of years of service to actually vest in your DB pension?[/quote]

On multiple occasions you have claimed that I and others were not able to qualify for job that offered a government pension. You previous post makes the claim once again:

[quote]You COULD have elected to “jump thru the proper hoops” in attempt to get hired … alas but you didn’t![/quote]

I did “jump through the hoops” – I even jumped out of airplanes!

So I’ve proven you wrong (not that it’s much of an accomplishment, nor do I expect you to comprehend…)

[quote]YOU are one of the biggest complainers (if not THE biggest complainer) on this board regarding others’ DB pensions they earned over decades of service.[/quote]

Uh, no.

I’ve never “complained” about your pension, or any individual’s personal financial situation on this forum.

My position is that government defined benefit pensions are bad policy. It’s not personal. It has nothing to do with my vesting or your vesting or anybody in particular.

The ongoing pension discussions here are a political debate concerning government policy.

[quote]Yes, YOUR personal situation is absolutely relevant here! Not sure if your continual attacks on gov workers’ pay and pensions are just envy rearing its ugly head … or what exactly …. It’s just weird.[/quote]

No, NOBODY’s personal situation is relevant here.

This is a real estate and economics forum. Government pension costs are a relevant and timely topic of discussion here. Read the title of the OP for this thread. Discussions about the impact of pension costs on local real estate are entirely appropriate.

What’s not appropriate are false claims about my personal situation.

Your posting history in this thread alone demonstrates that you are not capable of understanding the difference between substantive policy debate and ad hominem arguments.

Here’s what’s weird: The fact that you’ve been sharing personal details of your life and career while posting detailed yet unfounded speculation about others for so many years.

[bearishgurl]

So, in reading between the lines, here, harvey, if YOU’RE actually collecting a gubment pension yourself, do you feel it’s “bad policy” to pay YOU every month if the Federal Gubment is trillions of dollars in debt??

What you DIDN’T answer here is very telling.

[Anonymous]

[quote=bearishgurl]So, in reading between the lines, here, harvey, if YOU’RE actually collecting a gubment pension yourself, do you feel it’s “bad policy” to pay YOU every month if the Federal Gubment is trillions of dollars in debt??

What you DIDN’T answer here is very telling.[/quote]

I don’t have a government pension. Go ahead and speculate otherwise. Fabricate my entire life story if it makes you happy. I really don’t care what you choose to “read between the lines.”

Your fixation on other poster’s personal situations is pretty creepy.

[bearishgurl]

[quote=harvey][quote=bearishgurl]So, in reading between the lines, here, harvey, if YOU’RE actually collecting a gubment pension yourself, do you feel it’s “bad policy” to pay YOU every month if the Federal Gubment is trillions of dollars in debt??

What you DIDN’T answer here is very telling.[/quote]

I don’t have a government pension. Go ahead and speculate otherwise. Fabricate my entire life story if it makes you happy. I really don’t care what you choose to “read between the lines.”

Your fixation on other poster’s personal situations is pretty creepy.[/quote]

I don’t have to “fabricate” anything about you, harvey. You’ve laid it out here for us, yourself. You just posted that you accepted a gubment position with a defined benefit plan and now you’re essentially saying that you either didn’t vest in the plan or are not yet eligible to collect the pension you will be due.

If you didn’t vest in that DB plan for which you took a position which required your highly specialized skillset, I’m sorry to hear this, harvey.

There is a reason for everything. I’ll just leave it at that.

[all]

[quote=bearishgurl]
There is a reason for everything. I’ll just leave it at that.[/quote]
No! Not another cliffhanger!
Let me guess, John Snow’s spirit lives through his pup?

[FlyerInHi]

[quote=bearishgurl]So, in reading between the lines, here, harvey, if YOU’RE actually collecting a gubment pension yourself, do you feel it’s “bad policy” to pay YOU every month if the Federal Gubment is trillions of dollars in debt??

What you DIDN’T answer here is very telling.[/quote]

Actually, this issue is like the paradox of thrift. What is good for individuals is bad policy.

Intellectually honest people are able to separate their own interests from policy. Warren Buffet is a billionaire who does that pretty well.

[phaster]

[quote=FlyerInHi]BG, it’s not envy. The reason for complaining is that services are cut while salaries and pensions are not; all the while budgets are growing.

There are better, more efficient ways of rendering services to citizens, which which what reforms is all about. [/quote]

Déjà vu!!!

I don’t know what I was thinking not believing what politicians/lawyers said in a press release about [FILL IN THE BLANK], because those professions have always been known for being pillars of integrity and deep intellect

[quote=TIMESOFSANDIEGO.COM]
Financial Outlook Shows San Diego’s Revenue Will Grow

Revenues to the city of San Diego are projected to “modestly improve” over the next five fiscal years, while expenses will continue to rise, according to a financial outlook to be delivered Thursday to the City Council’s Budget Committee.

The five-year outlook, released annually in November by the mayor’s financial staff, projects steadily increasing general fund surpluses through Fiscal Year 2021.

The anticipated surpluses begin at $200,000 for the next fiscal year, and grow in subsequent years to $7.9 million, $25.1 million, $46.4 million, and $73.7 million.

THE PROJECTIONS DON’T INCLUDE FACTORS THAT OCCASIONALLY POP UP, like increases in contributions to the employee pension system.

http://timesofsandiego.com/politics/2015/11/18/financial-outlook-shows-san-diegos-revenue-will-grow/%5B/quote%5D

any one care to guess how much longer the “can” can be kicked down the road…

PUBLIC “Pension liabilities must be included on the balance sheets of the agencies responsible for funding their employees’ pensions. Until now liabilities have been buried in arcane footnotes that few read and even fewer understood”

http://articles.latimes.com/2014/apr/09/opinion/la-oe-fritz-pension-liability-california-20140410

[CA renter]

“Standard And Poor’s Gives San Diego County Its Highest Rating
San Diego County has earned the highest possible rating from all three of the top credit agencies—Fitch, Moody’s, and Standard and Poor’s.”

http://patch.com/california/encinitas/s/fmbxd/standard-and-poors-gives-san-diego-county-its-highest-rating?utm_source=article-mostrecent&utm_medium=rss&utm_term=politics%20&%20government&utm_campaign=recirc&utm_content=aol

[phaster]

[quote=CA renter]“Standard And Poor’s Gives San Diego County Its Highest Rating
San Diego County has earned the highest possible rating from all three of the top credit agencies—Fitch, Moody’s, and Standard and Poor’s.”

http://patch.com/california/encinitas/s/fmbxd/standard-and-poors-gives-san-diego-county-its-highest-rating?%20government
[/quote]

ever consider a “AAA bond rating” is just a variation on a theme of information requested for a mega-super-sized-jumbo STATED INCOME LOAN (application)?

you know like stuff from the news a few years ago, where there was wide spread reports the various mortgage lenders did not verify the borrower’s income!

Déjà vu!!!!! because I seem to recall that all the stated income loans were then packaged in a CDO and like wise given the “HIGHEST RATING” from all three of the top credit agencies (Fitch, Moody’s, and Standard and Poor’s).

http://www.bloomberg.com/news/articles/2007-05-31/cdo-boom-masks-subprime-losses-abetted-by-sp-moodys-fitch

….just pondering out loud the various “incentives”

http://freakonomics.com

so is the news-release in a small “public” community rag, for some kind of loan application propaganda – in other words is it to assure/calm bond investors (i.e. an economic PR job)? perhaps since there was a quoted a political figure in the news article perhaps is it to assure/calm “local” taxpayers/voters (i.e. a political PR job)??

looking ahead, given all the parallels really have to wonder are SD muni-bonds destined to be the subject of the big sort sequel??? anyone else like the award winning writing style in the movie where mortgage bonds were described as dog$hit AND CDOs were likened to dog$hit wrapped in cat$hit

(analysis based on supporting data)

[quote=NPR]
After the stock market crash of 1929, the agencies began to also rate bond investments for banks — at the request of the U.S. government. But things began to change in the 1960s and 1970s. Instead of charging investors for their ratings information, the agencies began to charge the bond issuers themselves for the ratings.

“People were quite critical of this and said it could create a conflict of interest,” Partnoy says. “You can imagine what the difference between ratings of restaurants and movies might be if instead of the Michelin Guide or the Zagat guide, if the restaurants or movie companies themselves were paying the raters to be rated, it’s an obvious conflict of interest. And now it’s very commonplace that companies and GOVERNMENTS — anyone who wants to borrow money — THEY ARE THE ONES WHO ARE PAYING FOR THE RATING.”

http://www.npr.org/2011/08/17/139675717/rating-the-wall-street-ratings-agencies
[/quote]

[quote=CA renter]
December 14, 2014 – 5:09pm

Don’t be a a useful idiot. If you’re not being paid, you should definitely demand payment from [Strike]the Privatization Movement[/Strike] [mismanaged entities like SDCERS and/or all three of the top credit agencies] for your services. They expect to reap great rewards from the work of people like yourself; make sure to get your piece of the pie.

http://en.wikipedia.org/wiki/Useful_idiot
[/quote]

[quote=CA renter]
January 10, 2016 – 3:21am

There are far too many people walking around who think that they know what they’re talking about when they really have no clue.
[/quote]

translate.google.com: (bond rating = pay to play bull$hit)
translate.google.com: (CA renter = useless dumb$hit)

[bearishgurl]

People who are retired don’t need to live in the “manner they were accustomed to” in the height of their careers. Their expenses are much less by then and almost everyone I know who is 65 or older has a paid off house. Example: most “retirees” around me use one tank of gas per month (max), like I do (unless I’m on a road trip). I don’t understand what all the discussion akin to “boomers are going to be living on the street,” is about. Nothing could be further from the truth. Retirees are not big “consumers,” especially in SD County. Most of them don’t travel much because they don’t feel they need to and never even traveled much when they were working. Their families are here and this is the best place in the country to live.

None of them are going anywhere except to relative’s homes to visit, the grocery store, church, the Lion’s club, their volunteer gig at the library/hospital and out to putter in their gardens.

Financially, this group can outlast all of us and will likely die in their homes, at which time their “heirs” will swoop in and clean the place out and rent it or occupy it. Very few of these homes will ever hit the market.

All this “hoopla” about boomers (esp CA boomers who have greatly benefited from Prop 13 and its progeny) becoming destitute and dependent on public aid is a crock of sh!t. It’s never going to happen.

[bearishgurl]

Gen X and Y’ers would do well to focus on their own financial situations (present and future) and not worry so much about the “boomer” generation becoming a “liability” to them. All their angst over us poor boomers is for naught.

[FlyerInHi]

phaster, you’re sounding the alarm a bit much.

The unfunded municipalities will have to declare bankruptcy and work out their finances. There’s a process for that.

[phaster]

FlyerInHi,

I guess its up to me warn of the economic danger(s) since none of the old hands on this forum were able to connected the dots to paint the big picture of a parallel situtation as described in the big short prologue

…long story short

“public pensions and muni bonds” have mutated into a monstrosity that could chaotically collapse the economy and very, very, vary few of the experts, leaders or talking heads in the wider world seem to have a clue

I’m guessing most of you still don’t know what most likely will happen AND truth be told its impossible to predict the future w/ 100% accuracy

yeah you might have some soundbite you repeat so you don’t sound dumb about the state of public finance, but come on (is it actually possible for the “average” taxpayer to trust/verify the figures?)

[quote=CA renter]“Standard And Poor’s Gives San Diego County Its Highest Rating
San Diego County has earned the highest possible rating from all three of the top credit agencies—Fitch, Moody’s, and Standard and Poor’s.”

http://patch.com/california/encinitas/s/fmbxd/standard-and-poors-gives-san-diego-county-its-highest-rating
[/quote]

so while most in this country are distracted by political horse$hit (i.e. soap opera media coverage of TRUMP for president)

http://donaldjdrumpf.com

http://www.npr.org/2016/03/03/469005685/evangelical-leaders-question-why-their-movement-supports-trump

http://www.npr.org/2016/03/04/469149226/trump-attacked-from-all-sides-in-bitter-chaotic-gop-debate

an honest outsider and math-centric weirdo might just see the giant lie at the center of the economy… by just PAYING ATTENTION!

[quote=NPR]
After the stock market crash of 1929, the agencies began to also rate bond investments for banks — at the request of the U.S. government. But things began to change in the 1960s and 1970s. Instead of charging investors for their ratings information, the agencies began to charge the bond issuers themselves for the ratings.

“People were quite critical of this and said it could create a conflict of interest,” Partnoy says. “You can imagine what the difference between ratings of restaurants and movies might be if instead of the Michelin Guide or the Zagat guide, if the restaurants or movie companies themselves were paying the raters to be rated, it’s an obvious conflict of interest. And now it’s very commonplace that companies and GOVERNMENTS — anyone who wants to borrow money — THEY ARE THE ONES WHO ARE PAYING FOR THE RATING.”

http://www.npr.org/2011/08/17/139675717/rating-the-wall-street-ratings-agencies
[/quote]

[quote=TIMESOFSANDIEGO.COM]
Financial Outlook Shows San Diego’s Revenue Will Grow

Revenues to the city of San Diego are projected to “modestly improve” over the next five fiscal years, while expenses will continue to rise, according to a financial outlook to be delivered Thursday to the City Council’s Budget Committee.

The five-year outlook, released annually in November by the mayor’s financial staff, projects steadily increasing general fund surpluses through Fiscal Year 2021.

The anticipated surpluses begin at $200,000 for the next fiscal year, and grow in subsequent years to $7.9 million, $25.1 million, $46.4 million, and $73.7 million.

THE PROJECTIONS DON’T INCLUDE FACTORS THAT OCCASIONALLY POP UP, like increases in contributions to the employee pension system.

Financial Outlook Shows San Diego’s Revenue Will Grow

[/quote]

[quote=LATIMES.COM]
PUBLIC “Pension liabilities must be included on the balance sheets of the agencies responsible for funding their employees’ pensions. Until now liabilities have been buried in arcane footnotes that few read and even fewer understood”

http://articles.latimes.com/2014/apr/09/opinion/la-oe-fritz-pension-liability-california-20140410
[/quote]

[phaster]

FYI

[quote=abcnews.go.com]
California Pension Fund CEO Sentenced for Bribery

A federal judge Tuesday sentenced the former head of the nation’s largest public pension fund to four and 1/2 years in prison in a case in which the pension fund CEO acknowledged accepting more than $200,000 in bribes and trying to steer investments to help an associate.

Senior U.S. District Court Judge Charles Breyer called the case against Federico Buenrostro, the former chief executive of the California Public Employees’ Retirement System, “seriously troubling” and said it reflected a “spectacular breach of trust for the most venal of purposes, which is self-enrichment.”

http://abcnews.go.com/Politics/wireStory/california-pension-fund-ceo-sentenced-bribery-39503326
[/quote]

[quote=forbes.com]
Puerto Rico, Illinois And California: Public Pension Dominoes

In good times, lawmakers at the state and local level are more than happy to give raises to government employees along with generous benefit increases. The future costs for higher retirement benefits are assumed to be covered by the booming stock market investments held by pension funds.

This happened in California in 1999 after government union-backed candidates won both the governor’s mansion as well as the state treasurer’s race and then pushed through a massive increase to pension benefits on the financial strength of what turned out to be the ephemeral froth of the ’90s tech boom. After the promises were made and the market returned to more reasonable valuations, the state’s public pension contribution obligations jumped five-fold from $611 million in 2001 to $3.5 billion in 2010. California’s unfunded pension liability totals $25,325 per capita, the fourth-highest in the nation, when assuming a market rate of return.

http://www.forbes.com/sites/chuckdevore/2016/05/31/puerto-rico-illinois-california-public-pension-dominoes/#310d9bde2f86
[/quote]

[quote=mercatus.org]
A new study for the Mercatus Center at George Mason University ranks each US state’s financial health based on short- and long-term debt and other key fiscal obligations, such as unfunded pen­sions and healthcare benefits.

#44 California
#45 Hawaii
#46 Kentucky
#47 Illinois
#48 New Jersey
#49 Massachusetts
#50 Connecticut
#51 Puerto Rico

http://mercatus.org/statefiscalrankings
[/quote]

(CA public pensions) + (CA DROUGHT) = “tick, tick, tick”… CA BOOM!

[EconProf]

Phaster, you are largely correct in your analysis and I commend you for so thoroughly documenting your opinions.
The root of the problem, of course, is the fact that public sector unions have been able to control politicians with their contributions and lobbying while the hapless taxpayer has no one seriously representing them at the bargaining table. The unions are enhancing their members’ long-run economic interests, the bill for which will come due long after the politicians move on.

[phaster]

[quote=EconProf]
Phaster, you are largely correct in your analysis and I commend you for so thoroughly documenting your opinions. The root of the problem, of course, is the fact that public sector unions have been able to control politicians with their contributions and lobbying while the hapless taxpayer has no one seriously representing them at the bargaining table. The unions are enhancing their members’ long-run economic interests, the bill for which will come due long after the politicians move on.
[/quote]

FWIW the physics concept of “equivalence principle” seems applicable

said another way… the end result will happen because of bureaucrats/politicians corruption/mis-management which might be viewed as actions of “economic warfare” against ordinary people

hapless taxpayer(s) VS [(politicians) + (public sector unions)]

(politicians) + (public sector unions) ~ ‘War of a Thousand Cuts’

where

‘War of a Thousand Cuts’ = “tick, tick, tick”… bankrupt USA

and san diego (because of “critical mass” w/ in california) is ground zero???

supporting data…

[quote=cnn.com]
Bin Laden: Goal is to bankrupt U.S.

“We are continuing this policy in bleeding America to the point of bankruptcy. Allah willing, and nothing is too great for Allah,” bin Laden said in the transcript.

http://www.cnn.com/2004/WORLD/meast/11/01/binladen.tape/
[/quote]

[quote=washingtonpost.com]
Bin Laden’s war against the U.S. economy

Bin Laden, according to Gartenstein-Ross, had a strategy that we never bothered to understand, and thus that we never bothered to defend against. What he really wanted to do — and, more to the point, what he thought he could do — was bankrupt the United States of America.

https://www.washingtonpost.com/blogs/wonkblog/post/bin-ladens-war-against-the-us-economy/2011/04/27/AFDOPjfF_blog.html
[/quote]

[quote=theatlantic.com]
Bin Laden’s ‘War of a Thousand Cuts’ Will Live On

Al-Qaeda’s strategy of low-level warfare, meant to drain the U.S. economically, will continue to pose an underestimated threat long after its leader’s death

…A key facet of bin Laden’s anti-American warfare has always been economic. It’s a lesson he drew from the Afghan-Soviet war, in which he first served as a financier of mujahidin efforts and then as a fighter.

http://www.theatlantic.com/international/archive/2011/05/bin-ladens-war-of-a-thousand-cuts-will-live-on/238228/
[/quote]

[quote=nytimes.com]
As California goes, so goes the nation

…a sluggish economy, high unemployment, budget shortfalls, a shaky electrical grid and an abiding distrust in politicians’ ability to do much of anything about such problems — are pulsing through the bloodstream of American democracy more broadly.

…Are state governments becoming increasingly out of sync with the governed,’ then you could look at the situation in California as yet another instance in which California gets there first, because it’s larger, less disciplined, less tradition-minded, and the function that it so often seems to fill in national life is of acting out things.

…And Californians — like the rest of the country, only maybe a little bit more so — want it all, all the time: lower taxes and smaller classrooms; tighter pollution controls and bigger S.U.V.’s; cheap labor and fresh produce but tighter limits on immigration and provision of social services.

[/quote]

lastly…

be careful of what you wish for

because

we have met the enemy and he is us

[quote=CA renter]
October 1, 2014 – 9:23pm

I have also worked with negotiating committees and have done research for public employee unions.

http://piggington.com/how_will_unfunded_pensions_affect_economy?page=3#comment-247382
[/quote]

[Author]

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