Berkeley City Audit Report Cash Handling 4/1/2014
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SEVERAL ARTICLES ABOUT OUR UNFUNDED LIABILITIES THAT ARE NOT GOING AWAY!
We have gathered below a representative sampling of links where you can read about our looming unfunded liabilities disaster. Of particular concern is the unfunded public pension obligation. Why should taxpayers and future retirees care?
Well, if “The money coming in is nowhere near enough to keep up with the money that will need to go out”, then the future will not be as good as any of us would like.
Tilden Newt of spring, photo by S. Robey
PENSION COLLAPSE IN BIG D: The retirement fund for Dallas’s public-safety workers is nearly ruined.
During the last year, as the nation has been consumed by a presidential election focused on issues like immigration and trade, our government-employee pension woes have continued to fester. Though it’s developed largely out of view, this crisis threatens to undermine our fiscal future. Dallas is a reminder that no magical incantations exist that can make insane pension math suddenly rational.
City Journal December 13, 2016
$1.6 MILLION BILL TESTS TINY TOWN AND ‘BULLETPROOF’ PUBLIC PENSIONS
The California Public Employees’ Retirement System, or Calpers, said Loyalton had 30 days to hand over $1.6 million, more than its entire annual budget, to fund the pensions of its four retirees. Otherwise, Loyalton stood to become the first place in California — perhaps in the nation — where a powerful state retirement system cut retirees’ pensions because their town was a deadbeat.
New York Times OCT. 9, 2016
STUDY FINDS PUBLIC PENSION PROMISES EXCEED ABILITY TO PAY “If you owed student loans of $44,000, and the bank called you up and said, ‘actually you owe $134,000,’ you’d fall off your chair,” said Charles E. F. Millard, head of pension relations at Citigroup. “That’s what this is.”
One of the report’s recommendations was that governments start disclosing the amounts promised to retirees, “so that everyone can see them.” Government officials are in many cases loath to do that because they believe it will harm their credit ratings, driving up borrowing costs. And the unions that represent public workers believe calls for full disclosure mask a broad anti-labor campaign to cut benefits.
The report discussed possible solutions, such as “collective defined contribution plans,” in which workers’ nest eggs are pooled and professionally invested, but retirees are not promised a predetermined benefit, and taxpayers are not required to replace money lost on Wall Street.
New York Times MARCH 17, 2016
THE PENSION GAP
It was a deal that wasn’t supposed to cost taxpayers an extra dime. Now the state’s annual tab is in the billions, and the cost keeps climbing. CalPERS had projected in 1999 that the improved benefits would cause no increase in the state’s annual pension contributions over the next 11 years. In fact, the state had to raise its payments by a total of $18 billion over that period to fill the gap, according to an analysis of CalPERS data. Today, the difference between what all California government agencies have set aside for pensions and what they will eventually owe amounts to $241 billion, according to the state controller.
L. A. Times SEPT. 18, 2016
The nation's largest pension fund, the California Public Employees’ Retirement System, earned a mere 0.6% in the last year, significantly below its 7.5% target. Its sister fund, the California State Teachers Retirement system, which also aims for a 7.5% annual return, instead notched a 1.4% gain for the year.
Why Is Calpers Underperforming?
“Even under the (Governmental Accounting Standards Board) method, they [the Public Pension Plans] show significant unfunded liabilities. Using the method we propose in the task force paper, unfunded liabilities are significantly larger and the cost to the plans significantly larger.”
Financial Times July 31, 2016, Retirement healthcare could bust the budgets of many US cities, Robert Pozen
Court ruling opens avenue for pension reform
PENSION SPIKING DECISION BY THE COURT OF APPEAL of the State Of California, Ruling Filed August 17, 2016: The practice known as “pension spiking,” by which public employees use various stratagems and ploys to inflate their income and retirement benefits, has long drawn public ire and legislative chagrin. Effective January 1, 2013, the Legislature amended Government Code section 31461, a provision of the County Employees Retirement Law, with the aim of curtailing pension spiking by excluding specified items from the calculation of retirement income...
“California’s pension plans are dangerously underfunded, the result of overly generous benefit promises, wishful thinking and an unwillingness to plan prudently. Unless aggressive reforms are implemented now, the problem will get far worse, forcing counties and cities to severely reduce services and layoff employees to meet pension obligations.” … “The money coming in is nowhere near enough to keep up with the money that will need to go out.”
The http://transparentcalifornia.com/ website shows compensation and benefits for Berkeley employees and retirees through 2015. Retiree pensions can be seen here: