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September 12, 2014 at 3:44 PM in reply to: How will unfunded “pensions” affect the local economy? #777986
CA renter
Participant[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.
September 12, 2014 at 3:36 PM in reply to: How will unfunded “pensions” affect the local economy? #777985ParticipantLivinincali,
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.
Participant[quote=njtosd][quote=FlyerInHi]Ridiculous to suggest that you have to do everything yourself.
You can help by writing a check, or morally and politically supporting other people whose mission is to affect progress. Speaking up is also progress.[/quote]
Maybe. But money and words don’t actually get anything done. Best example I can think of is Mother Theresa. Lots of people were willing to send money for her cause (and those people were definitely doing a great service) but very few were willing to live and work among the poor and the sick. If everyone supported the causes that they liked, but actually personally worked for one (bagging food at the food bank, for example), it would be great. And, brian, I am sure that there are things that you could do that wouldn’t require interaction with fat germy people.
PS – and speaking up is often just wanting to hear yourself sound like a nice guy/girl.[/quote]
Adding to this very good point, many homeless shelters have some sort of literacy program for homeless people. Sign up, Brian!
September 12, 2014 at 12:26 AM in reply to: How will unfunded “pensions” affect the local economy? #777967Participant[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.
Yup, an independent fact check concluded the numbers were “Misleading”:
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
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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.
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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.
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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.
September 12, 2014 at 12:24 AM in reply to: How will unfunded “pensions” affect the local economy? #777966ParticipantWall 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.
September 10, 2014 at 6:03 PM in reply to: How will unfunded “pensions” affect the local economy? #777951Participant[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.
Participant[quote=moneymaker]I am alright with legalizing all drugs. To me it is the government trying to interfere with personal choice. If you think about it there is not a whole lot of difference between drugs and herbs, yet herbs are not regulated at all. Hold people accountable for their actions and stop micro managing with laws that are selectively enforced. Alcohol and tobacco probably kill more people than any of the illegal drugs. We already have way too many people in prison, we have 50% more people in prison than China even though there population is 10 times bigger. P.S.- Like FlyerInHi I have never done any illegal drugs, my recruiter never believed me, I’m sure I’m one of the few.[/quote]
Pharmaceutical drugs are one of the biggest problems. Ask anyone who deals with OD patients, and you’ll hear that “legal” drugs are some of the worst…right up there with heroin and meth.
Participant[quote=scaredyclassic]It is so blindingly obvious that how we have dealt with drugs is wrong that it is impossible to see.
This is certainly an issue that will seem as bizarre as may an human sacrifice some day. Soon.[/quote]
Could not agree more.
Participant[quote=FlyerInHi]I do eat lots of raw food.
I’ve been watching cooking shows and have adapted recipes to my healthy eating. Thai food with lots of veggies is good (but too salty).
In a big bowl, put in a lot of spring salad mix. Use scissors to cut to compress the salad so it doesn’t take up that much volume, and so you can eat more without thinking you’re eating too much.
Garnish with protein such as grilled chicken, steak, fish. Pre-slice for ease of eating.
Add sliced in-season fruit, avocado, red radishes, whatever you have…
Infuse light salad dressing with some interesting flavors, such as wasabi, Thai lemon grass, ginger, etc…
Top off with some Ikura or real caviar for a luxury touch.
Presentation is key for enjoyment. Always use nice dishes.
Think of a Chipotle bowl but with lots of raw veggies and well presented. You are what you eat!
Throw everything in the dishwasher and run. Done![/quote]
Awesome! 🙂
September 10, 2014 at 3:50 AM in reply to: How will unfunded “pensions” affect the local economy? #777934Participant[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.
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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.”
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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.
ParticipantThought this was interesting…
A coalition of former international leaders gathered in New York City on Tuesday to discuss the release of their new report calling for a complete overhaul of drug policies around the world, including legalization of psychoactive substances like marijuana.
In a discussion moderated by The Huffington Post’s Washington bureau chief, Ryan Grim, 10 members of the Global Commission on Drug Policy urged all governments to embrace models that include decriminalization of consumption, legal regulation of drug markets and strategic refocusing of criminal enforcement.
http://www.huffingtonpost.com/2014/09/09/global-drug-policy_n_5791240.html?icid=maing-grid7|maing7|dl28|sec1_lnk3%26pLid%3D527103
ParticipantA good article about the problems plaguing South Africa:
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This is why people who want simplistic solutions to complex problems need to do far more research before they back any particular theories. Study different cultures and sociopolitical structures across different countries and over time to see what did and didn’t work. The information is there, but too few people are ever willing to do even a minimal amount of research. Because of this failing, we are forced to endure one ineffective and horribly damaging policy after another as special interests seek to brainwash the masses via propaganda spread through the mainstream media. People desperately need to be more informed.
Participant[quote=FlyerInHi][quote=Blogstar] More black cops would lead to a tendency for corruption or lower desire to actually fight crime. Not because black people are inherently corrupt, but because that is the way the stimulus and pressure would guide them. The problem is how the people function much much more than how the police function. The situation is that overwhelming.
[/quote]You’ve suggested that blacks should not get proportional representation in law enforcement and perhaps in government generally.
Similar argument was made about South Africa – law and order would go to shit, and the economy would crash. The country is doing better than ever.[/quote]
No, it’s not.
When South Africa buried apartheid with its first all-race election in 1994, the Rev. Desmond Tutu danced with joy as he cast his ballot. He called it “a religious experience, a transfiguration experience, a mountaintop experience.”
As the country votes Wednesday, here’s what he recently told the Sunday Times newspaper: “I didn’t think there would be a disillusionment so soon. I’m glad that (Nelson Mandela) is dead. I’m glad that most of these people are no longer alive to see this,” a reference to a host of chronic problems such as corruption and poverty.
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Until we are able to honestly and openly define the problem, there will be no solution.
Participant[quote=FlyerInHi]I eat at least 2 lbs of raw fruit and veggies everyday.
2 oranges is 1 lb.[/quote]
That’s with the peel, no?
Just messing with you, Brian. 😉
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