When a house is burning down, firefighters rush to save the occupants and put out the fire, often incurring personal risk in the process. Sometimes firefighters even die in the act of saving us. It’s a risk they accept when they take the job. That’s why we call them heroes. So why would firefighters participate in financial schemes that are, collectively, causing our civic budgets to go up in flames?

On September 12th, 2012, Governor Brown signed AB 340, “comprehensive pension reform” legislation that would, among other things, prevent the practice of pension spiking, where unused vacation payouts are added to the final amount of pay used to calculate a newly retired worker’s pension. But in Contra Costa County Superior Court, the International Association of Firefighters Local 1230, joined by the Deputy Sheriff’s Association, swiftly filed a lawsuit aimed at preventing the Contra Costa County Employees’ Retirement Association (CCERA) from implementing this provision of AB 340.

On November 29th, 2012, in an editorial entitled “Brown must defend pension laws he signed,” the Contra Costa Times explained the legal arguments on both sides. The firefighters contend their right to include unused vacation payouts in their final base pay in order to calculate their pension is a vested right. But the CCERA attorneys have argued differently – the Times writes:

“As the Contra Costa Employees’ Retirement Association’s own attorney pointed out in a legal memo three years ago, the promise violated past court rulings and consequently employees have been receiving improperly inflated retirement pay for years. The new law would put a long-overdue end to that practice.”

The point of the Contra Costa Times editorial is that nobody is stepping forward to defend this law. The CCERA does not intend to defend the anti-spiking provision of AB 340, despite their earlier positions that are consistent with the new law. Nor, at least so far, is the office of Kamala Harris announcing any plan to defend this provision of AB 340.

Then again, there’s the letter of the law, and there’s the spirit of the law. There’s the legal argument, and there’s the moral argument. Since when is cashed-out unused vacation supposed to be included as part of a base wage upon which to calculate pensions? And why are people who are sworn to protect our homes and our lives from fire willing to torch our attempts to balance our budgets and save our public institutions? Shall we immolate every public amenity we’ve built and cherish in order to pay firefighters? How much do they make, anyway?

Before launching into a recitation of just how unaffordable unionized firefighter compensation has gotten in California, it is obligatory to remind ourselves what they do. They work around the clock, risking their lives, to make sure we are safe. Whether or not firefighter unions have exploited this to manipulate the public and public officials into overpaying them, this remains a sobering fact. Witness one tragedy and witness their valor, and you won’t need reminding again. And life in America is safer and more secure than it has ever been. We put a higher value on our security, and have higher expectations of our public safety personnel, than we ever have. Life has never been so precious as it is today, and accordingly, the premium we ought to pay our firefighters has never been higher.

So how much do firefighters make?

It is still notoriously difficult to get good data on total compensation for public employees, but here’s a few facts we dug up. If you download this spreadsheet – Contra_Costa_County_Firefighter_Payroll_2011.xlsx – you will see two tabs. The first tab has data provided by the Contra Costa County Auditor Controller to a pension reform activist who passed it on to us. The second tab has data downloaded from the State Controller’s website. Both show 2011 firefighter payroll for Contra Costa County. Despite differences in formatting and information provided, the results between these two datasets are consistent. Here they are:

The average firefighter in Contra Costa County who earned more than $30,000 in base wages in 2011 (to eliminate volunteers, temp workers, and partial year hires) had an average base wage of $95,000, earned overtime of $37,000, collected “other earnings” (primarily health benefits) of $12,000, and collected an employer-paid contribution into their pension plan of $24,000 (far less than is necessary to properly fund their pensions, but that is another story), for average total compensation of $168,000. Bear in mind this is the average, meaning that the average pay at retirement is undoubtedly higher than that. Firefighters who work 30 years for Contra Costa County can reasonably expect to collect a retirement pension of around $100,000 per year. Is it necessary to pad this amount by another 15% by applying unused vacation to the final pay calculation?

Union spokespersons representing firefighters, along with those representing teachers, nurses and police, frequently say that compensation for their members must be elevated in order for them to be able to “afford to live in the communities they serve.” They are missing a key point: Nobody can afford to live in these communities. And the reason nobody can afford to live in these communities is because public sector unions, along with their allies in the environmentalist lobby and on Wall Street, have pooled their political influence to pass laws and regulations that have given California an unaffordable cost of living. Critics of right-to-work laws correctly point out that wages are lower in right-to-work states. What they ignore is the fact that the costs for everything – housing, water, gasoline, electricity, and taxes – are even lower. People make less in right-to-work states, but they have more disposable income. Perhaps that is an area where the allegedly conservative leaning public safety unions should focus their legal and political energy – a political agenda aimed at lowering the cost of living for everyone, instead of raising their own pay to unaffordable levels.

Why are they closing fire stations in Contra Costa County, when instead they could be simply paying firefighters less in wages, benefits, and pensions? Should firefighters really earn $168,000 per year in total compensation in return for working 2.5 (average for Contra Costa, including overtime) 24 hour shifts per week? Should firefighters really expect to retire with pensions of $100,000 per year after 30 years of work? Wouldn’t having more firefighters available to fight fires make their jobs safer, as well as the public? Why won’t firefighters of conscience, in Contra Costa County and throughout California, put their ideals of public service in front of their union’s inertia? When public sector compensation reformers attempt to extinguish the inferno of burning budgets, firefighters should be pitching in, not fanning the flames.

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    55 Responses to The Financial Arsonists of Contra Costa County

    1. marincountyman says:

      This is generational theft..pure and simple. This is not just a moral crisis of the first order, this is the moral crisis of our age. We are collectively endangering our children’s economic futures without giving them the slightest say in the matter. We are doing this systematically and with malice aforethought. Worst of all, we are pretending not to notice. Shame on the unions and their crony toady union politicians that have sacrificed our children’s future by consuming future budgets for the next 30 years.

      Los Angeles is predicted to be BANKRUPT by 2014, San Francisco by 2016, Marin County – 5,000 current and retired employees and the BOS allowed them to run up over $3 billion in unfunded obligations (that’s $600k per retiree and employees..most for the latter).

      Now we see the plundering by these union fiscal thugs throughout Orange County. It’s a Ponzi scheme worthy of making Madoff blush. Predictably, entire budgets are swept to pay the new $100k – 300k for life for folks retiring in their 50’s and on the take for 20 – 35 years plus free medical (that does a millionaire make and does not represent “middle class”) these unions have created the new elite – the new bourgeois – by clearly gaming and bribing the system to enrich themselves over our children and future. Pathetic.

      Shame on the politicians for enabling them and accepting public employee union bribes. The absolute power these unions have over all of us is frightening…for me, its simply stunning that these pirates have gamed this system so well, that even with bright flashlights of truth and excesses, they don’t blink, let alone run. They believe this is their right…they are worth it…and with a straight face tell taxpayers “good luck trying to change the rules…we made em.” Counties, cities, many States and perhaps our Country, have been hijacked by these government employees who, sadly, supposedly work(ed) for us. They don’t…our Legislators, City Councils and Governor (and President), work for them…..and the credit card bills they have racked up…is the undeniable evidence. Today, tragically, they are right.

      God help us and we owe an apology to our children for letting this fiscal abuse of the next generation by 4% (public employee unions) of the US population occur.

    2. Joe Fire says:

      This entire situation is so sad for our children that will bear the brunt of the current greed. The union’s corrupt political influence on elected leaders in all areas of public employee unions has created an unfunded liability that will surely bankrupt our municipalities that allow participation in such acts as spiking, retiring at more than 2/3rds of base salary, including vacation in retirement, including uniform pay in retirement, including saved up sick pay in retirement, etc. A firefighter who truly is dedicated to the career of public service should realize what he/she is doing to the end result of lessening public safety through the greed of taking immorally. The governor, the state attorney, the legislature, and the court systems should stop this crisis from continuing any further.

      • Tough Love says:

        Quoting …”The governor, the state attorney, the legislature, and the court systems should stop this crisis from continuing any further.”

        Point well made and something I have been advocating for for quite some time.

        More specifically, the FIRST step we must take NOW is to stop digging the hole we are in even deeper.

        To do so we must EITHER:
        (1) hard freeze the current excessively generous DB Plans and replace them for FUTURE service for CURRENT workers with a DC Plan with a MODEST Taxpayers “match” comparable to what Private Sector workers get, or
        (2) VERY significantly reduce (by AT LEAST 50%) the rate of pension accrual for FUTURE service for CURRENT workers.

        Even DOING SO leaves us to address what to do about the HUGE unfunded liability for PAST service pension accruals.

    3. Seriously? says:

      Your article fails to mention that the Firefighters in Contra Costa County not only pay their Pension Contribution, but also pay a large percentage of the Employers Contribution. Firefighters in Contra Costa County pay between 24 – 28% of their salary towards retirement. Compare that to 99% of other fire departments in the state that pay maybe 1/3 that amount. If you fact check at http://www.co.contra-costa.ca.us look at the “Pension 101″ tab and you will see a chart in the powerpoint that shows that the firefighters pay 65-67% of the the total contribution. You will not find a public employee in these United States that pay more towards their own pensions. The vacation sell back is actually figured (by Actuary) into the future formula and funded by the employee and employer. If you really want to contrast and compare, take a look at that same website and see how much less a Sheriff Deputy pays towards their own pension. No one should be allowed to retire at a higher salary than when they were working, and adding Car Allowances, educational incentives, differentials, etc, etc. should be absolutely illegal. Luckily the retirement board closed those loop holes after a couple of greedy fire chiefs spiked their pensions into the stratosphere.

      • Tough Love says:

        Quoting …” Firefighters in Contra Costa County pay between 24 – 28% of their salary towards retirement. ”

        Sounds fishy …. can anyone confirm that?

        • Tough Love says:

          YUP, the 24-28%INDEED is fishy … and phony, Read on from a 12/21 article:

          “Based upon approved Employer contribution rates by the Contra Costa County Employees’ Retirement Association (CCCERA) Board of Trustees on October 12, 2011, Con Fire’s employer contribution rate, which is paid by the taxpayers, will be 49.56% of salary while firefighters will pay 15.14% of salary for fiscal 2012-13.

          Firefighters claim they pay 9% of the Employer’s share, and while this is a technically correct statement, they fail to disclose all the facts. In late 2002 the Board of Supervisors approved the 2% at 55 for General members (2% of salary for each year worked), and 3% at 50 for Safety members (3% of salary for each year worked) enhanced retirement benefits.

          As part of the agreement, General members received pay raises of 2%-3% per year while Safety members were granted four annual pay raises of 5% less a 2.25% deduction for retirement benefits. In other words, the Board of Supervisors gave the firefighters the raise to pay for those enhanced retirement benefits (See Board Resolution 2002/608 dated October 1, 2002).”

    4. BOPRN says:

      Spiking needs to stop, as it was never intended in the first place; as CalPERS has not been funded for it. In addition, all those who have spiked pensions need to have them reduced today. They should have a payment plan put in place for any overpayment that they have received as a result of spiking (no interest).

      In most cases spiking is the result of purposeful manipulation of the system to take advantage of the taxpayer. These individuals will not only ruin their retirements, but all those who played by the rules. All retirees of the PERS should be demanding that these fraudulently spiked pensions be rescinded, and decreased to a non-spiked amount.

      • Tough Love says:

        Yes, and while we’re at it, we should rescind any retroactive pension increases resulting from SB400 … a clear theft of Taxpayers wealth.

    5. eatingdogfood says:

      Democrats + Unions = BANKRUPTCY !!!

    6. Kris Hunt says:

      In response to “Seriously?”: When discussing how much ConFire firefighters pay toward their pensions, the firefighters always forget to disclose the raise they received to cover the cost of the benefits. Oops, that counts!

      But arguing that point takes away from the central issue. ConFire cannot afford to pay for the benefits that are 103% of salary. The ConFire Board and the firefighters want to ignore the elephant in the room – pension expenses – but they cannot do so any longer.

      So “Seriously?”, arguing what portion you pay of an unsustainable amount is ridiculous. Focus on the “unsustainable” part.

      To make matters worse, the amount being paid now is understated because a 7.75% rate of return on money invested is used to reduce the cost of the pension benefit. That is unrealistic and will need to be reduced, which will increase the already unsustainable pension cost even more.

      Anybody have some peanuts for a hungry elephant?

      • Tough Love says:

        Public Sector workers believe that as long as there are (human or Corporate) Taxpayers, no pension nor benefit is too great and nothing is unsustainable.

        • David Peery says:

          Tough Love!
          Once again you conveniently overlook the real issue involved. Simply stated, one has to ask Why have the unions so frequently managed to obtain benefit levels now seen to be unsustainable?

          Our members negotiated the best contracts they could. Why would their opposing members in contract negotiations agree to proposals that were not appropriate?

          Why are we now throwing mud at only one side of the contractual agreements. Remember,…they ARE contractual agreements that have been codified in law and are legally binding upon all parties to these agreements.

          Were the representatives of the governing bodies (municipalities/states etc.) simply outgunned by their labor opponents? Seems a little hard to believe if you ask me.

          So,….there must be some other reason.

          Maybe there’s something wrong with the system itself. But whatever the reason, throwing stones at only ONE side of the mutually agreed upon contract seems a little,….one-sided?

          Those members who represent the interests of organized labor in contractual negotiations do their jobs to the best of their abilities. They look out for the percieved best interests of their members. We must assume that representatives for our employer agencies have the ability and the authority to do the same. We cannot and should not have to debate ourselves. If their isd a flaw, I would humbly suggest that you turn the spotlight on the other side of the negotiating table and excoriate them equally,……at least equally,..rather than laying the blame so conveniently upon the backs of labor.

          If contracts are now seen as unsustainable you should be asking yourself “why would anybody agree to such a contract?”

          As the saying goes,…follow the money. I feel certain that you will find a host of answers to that question. And the answers might also make evident the same problems that we citizens have with our own nationaly elected representatives. Those elected representatives appear not to be working for us, but much the other way around.

          follow the money,….follow the money.

          You stated “Public Sector workers believe that as long as there are (human or Corporate) Taxpayers, no pension nor benefit is too great and nothing is unsustainable”

          Perhaps members of Wall Street, Banking, Mortgage firms (and others) share a similar beleif?

          dave.

          • Tough Love says:

            David Perry, Since your comment above is essentially a repeat of your comment (made 1 hour ago) to me on Ed Ring’s Union Watch article, I’m repeating below my response to your comment there … for readers who did not see that discussion:
            ***********************
            David Peery, Since this discussion centers around CA issues, can we first agree that CA’s State and City police officers are “reasonably well paid” on a “cash Pay” basis ?

            Starting from that supposition, and because their pensions are SO MUCH RICHER than their Private Sector counterparts (formula-wise, earlier full retirement ages, inclusion of COLA increases, etc.), the Taxpayer paid-for share of the TYPICAL CA 30-year career Police officer’s pension if retiring today, is just about equal in value to the pension of a Private Sector executive with a salary of roughly $350.000 annually.

            Why is the TYPICAL Police office “entitled” to such a Taxpayer-funded pension ?

            So spare me the BS about how you are deserving of and “earned” such a pension. On the contrary, you were “granted” that pension because of the collusion between your Union and our elected officials, a collusion of trading campaign contributions and election support for favorable votes on pay, pensions, and benefits.

            RARELY is there an arms length “negotiation” (where TAXPAYER interests are appropriately represented), an even rarer would be deciders on the other side of the table who are not participants in the same or similar Public Sector Pension Plans and benefit from a continuation of this unnecessary excess.

            And yes, contracts so “negotiated” should NOT be “honored”.

            • David Peery says:

              Tough Love said:

              Why is the TYPICAL Police office “entitled” to such a Taxpayer-funded pension ?

              Response: Because they negotiated a legally binding contract with officials who had the legal authority to reach such contractual ageements. Why is that the problem of only one side to the contract? If thy eye offend thee, pluck it out.

              Tough Love stated:

              “So spare me the BS about how you are deserving of and “earned” such a pension. On the contrary, you were “granted” that pension because of the collusion between your Union and our elected officials, a collusion of trading campaign contributions and election support for favorable votes on pay, pensions, and benefits.”

              Grant: Consent to, or give,…concede (Websters dictionary)
              You appear to have a problem with definitions. There is a huge difference between “granting” and legally binding contractual agreements.

              I would adk again that you look at the problems that led to employing agency representatives willingly agreeing to contractual benefits that may be inappropriate.

              Without addressing the question of whether benefit levels are appropriate or earned, one should certainly take a close look at WHY these contracts were found to be mutually agreeable at some point in time by the representatives at the negotiations table

              Your apparent fixation with apportioning all the blame to labor representatives indicates that you have a blindness to the apparent underlying issue which is a system of political representation that has become mired in financial need to the point that elected representatives and their employees have come to be so dependent upon financial and/or political support that they no longer work for them that pays them.

              I would easily agree that that represents a problem. But to blame organized labor alone for figuring out how the system currently works does little to resolve that underlying issue.

              If you could redirect your anger at the unsustainablility of the current political system instead of simply railing at organized labor you might find that you are closer to solving the real problem. That would be a great benefit to everyone,…including organized labor.

              While I absolve no one from being complicit to some degree in that problem, I have found that those things that separate us are not in our interests.

              As the saying goes,….”Envy’s a coal come hissing hot from Hell.”

              Step away from the anger and envy for a bit and start asking some meaningful questions that address the underlying problem. And ask everyone to join the search for answers that will help us all instead of simply trying to demonize one side.

              I would point out that theonly ones doing well financially in this country are those who are self-sufficient or who have learned how best to represent their percieved interests. The problem is that rank-and-file citizens have people representing them in Congress who are either ineffective or who find their need for campaign contributions so overwhelming that they fall prey to …vested interests with the wherewithal to purchase support, influence and advantageous votes on issues of particular interest.

              Address the real problem, don’t simply spread hate. To a degee, we are all complicit. It’s a problem as deep as human nature and just as difficult to solve.

              Mull it over a bit.

              dave.

    7. Tough Love says:

      David Perry, A few thoughts …

      (1) While I know the comparison is accurate (that the Taxpayer paid-for share of the Typical PO’s pension is equivalent to that of s Private Sector executive making $350K) I indeed expected you to challenge that. By not doing so, perhaps you are in fact aware of the EXTRAORDINARILY generous deal you have been promised. When I said that you are not “entitled” to such a pension, I didn’t mean in the technical legal sense, but in a fairness sense to the Taxpayers who are called upon to pay for it. So I stand by that statement … you are not “entitled” to such an EXTRAORDINARILY generous pension on the Taxpayers’ dime.

      (2) You repeatedly note the “contractual” nature of these deals and that our elected reps were authorized to make these deals. I’ll pass on the technical issue of these deals being “contractual” since as we speak lawyers are arguing whether these pension arrangements are realty contractually or statutorily created. And yes, while our elected reps are granted the authority to negotiate such deals, clearly you too see the lacks of funds to fukky pay for them. So do you really believe the legal merits, the Constitutionality, the contractual or property rights arguments and eve court orders will matter when there is an extreme lack of funds to pay for them? The Shakeout from San Bernadino’s bankruptcy will likely shed more light on this issue next year.

      (3) Your 3 or 4 paragraphs starting with … “Without addressing …”, seem to be pointing out the problems of our political system so in need of contributions to function. I couldn’t agree more, and barring contributions from BOTH UNIONS and Corporations would be wonderful. Taxpayer would be far far better off by outright paying reasonable equal amounts to subsidize these campaigns.

      But where we depart company is that you don’t see that the Public Sector Unions workers (via their excessive pensions) are the RECIPIANTS of that monetary largess. Sure, the politicians making sure promises are deserving of the most blame, but the money (in the form of these excessive pension promises) isn’t going primarily to them (the politicians) but to ALLof the Public Sector workers …. so that’s where we (the TaxPAYERS) must go to reclaim it … by reneging on these promises to the extend that they exceed what would have been promised in the absence of the Union/politician collusion I mentioned in my earlier comment.

      (4) And no, not anger, not envy ….. fairness …. to Taxpayers.

    8. David Peery says:

      Tough Love!

      Thanks for your prompt response.

      You stated:
      When I said that you are not “entitled” to such a pension, I didn’t mean in the technical legal sense, but in a fairness sense to the Taxpayers who are called upon to pay for it. So I stand by that statement … you are not “entitled” to such an EXTRAORDINARILY generous pension on the Taxpayers’ dime.”

      Let me respond by pointing out that not all pensions are equal, not all municipalities are equal,….and not all politicians are equal. The pension that I earned and that I enjoy was well-earned and is fully funded. No one has had to pay into it for over ten years. It was designed to become fully funded by pension investments at a certain point in time and in fact reached that point about a decade ahead of schedule.

      I am greatful to the public for helping provide for my benefits and I agree that the medical benefits I enjoy should be available to everyone. A nation as rich and powerful as our own should be able to do so in a fashion that a vast majority of members are in agreement over.

      But bear in mind, we employees paid an equal share into that pension system, and while there were problems initially, the biggest problem was the unwillingness of the State to pay their agreed upon share into the system as they had promised.

      I think you will find that the current under-funding of many public safety (and public) pension systems results from under-funding by the employers and the states who are signatories to the pension agreements. Most of those cases resulted from overly rosy investment income projections made by legislators who kept kicking the fiscal shortfall can down the road and expected the growing economy to make up that shortfall “in the future”.

      Sadly, the financial house of cards came crashing down. And it was NOT the fault (at least not directly) of labor. Those municipalities that counted upon ever-growing revenues to bail out their underfunding were stuck with a huge bill for future benefits that they had failed to actuarily fund per agreement.

      That doesn’t make our members bad guys (and gals), just shines a little light on the underlying issues. Those states that managed their pension obligations in a responsible manner have done O.K. While some are a bit short, they will probably work out settlements that everyone can agree to in time.

      The real underlying problem here is simply the fact that policies that had worked reasonably well for the interests of top-level financial participants (wall streeters and corporate executives) could not be expanded to benefit all the other organizations that figured out how Wall Street, Congress, and corporate America worked. Those groups had used influence and corporate political support to meet their percieved needs quite well. But as other organizations attempted to use the same strategies it started to take too much out of the public’s purse.

      Part of the blame for our current fiscal problem lies at our own feet for failing to pay close enough attention to HOW our elected representatives operated. Human nature is a basic given and no one should be overly surprised to learn that otherwise decent people, when given the opportunity to dip into “other people’s money” do just that.

      Our problem now is to recognize the human frailties within each of us and seek to craft a political system that is more fairly representative than the one we find ourselves with now.

      What we don’t want is a hate-fest where we end up burning each other at the stake rather than directing our efforts towards addressing the underlying problems facing ALL Americans.

      Union management philosophies and practices fall all over the map, some good, some bad, just as management and just as political philosophies and practices.

      I’m getting to be an older guy, but one thing I do know is that the old truths still hold. United we stand, Divided we fall. Americans need to get past the frustration, anger, and resentment and begin asking elected leaders to begin crafting a system that IS fair to all. And we need to urge Congress and the Courts to do the same.

      If we pick out individual groups to focus our resentments upon we only succeed in further dividing ourselves and turning the spotlight away from potentially constructive resolution.

      We need each other as never before. We need more thoughtful citizens to ask for solutions to the real problems. The truth lies somewhere between extreme liberal solutions and extreme Conservative ones. We need elected officials who share that belief.

      I think you would find those police officers and fire fighters willing soldiers in a well-thought-out campaign to deal with meaningful political reform. They could be very effective were they to be approached with a solid proposal that holds a realistic chance to succeed.

      And in the bargain, I think you’d find that many of them would be more than willing to address issues of pension fairness with their current employers if everyone were to sit at the same table and share open and honest data.

      Thanks again for your participation.

      dave.

    9. Tough Love says:

      David Perry, You are certainly fortunate if your Plans “official” funding ratio is 100+%. That certainly is rare today. Of course when actuarially “smoothed” assets are replaced with assets marked-to-market, and more conservative interest rates are used to discount Plan liabilities (as is done in the valuation of Private sector Plans), the “official” funding ratios of most Public Sector Plans drop by about 1/4 to 1/3.

      Just FYI, when you say …”The pension that I earned and that I enjoy was well-earned and is fully funded. No one has had to pay into it for over ten years. It was designed to become fully funded by pension investments at a certain point in time and in fact reached that point about a decade ahead of schedule.” ……. it sounds like you are referring to you alone as a retired participant, not for the Plan in total. If that is what you mean, you likely do not understand how Defined Benefit Plans are funded.

      Quoting …”But bear in mind, we employees paid an equal share into that pension system”

      I almost choked when I read that …. The following is an accurate statement …. RARELY will ALL employEE contributions (including all the investment earnings on those contributions) accumulated to the date of retirement grow to a sum sufficient to buy more than 10-20% of the promised pension. The 80-90% balance is the responsibility of taxpayer contributions (and the investment earnings thereon).

      I agree that employer underfunding as well as much lower than assumed investment returns are a source of part of current Plan underfunding. But fully funding VERY VERY VERY rich Plans is very costly and very hard to do, so why are you surprised that cities/towns, etc. have difficulty funding such rich promises ?

      I agree that it is not the “fault” of labor (although your Unions have shown an insatiable level of greed), the fault primarily lies with the politicians that promised far more than they should have. But even though the workers are not “at fault”, those workers are the beneficiaries of these unfair (to Taxpayers) promises, so that’s where Taxpayers must go to rectify this unfairness.

      You sound like a retiree. As one ALREADY retired you are much less likely to participate materially in reform givebacks unless your city/town goes bankrupt. And in response to you last 2 paragraphs suggesting the many safety workers would be willing to participate in meaningful reform, I’ll believe that when I see offers to MATERIALLY reduce pension accruals for FUTURE service for CURRENT workers. While such reductions are routine in the Private Sector Plans under financial distress, it is indeed a rare Public Sector worker that is willing to materially so compromise. They always want to throw the NEW guy under the bus.

      Nice discussion …. thank you.

    10. David Peery says:

      Thanks for your thougthful response and additional questions/challenges. I find that I learn most when challenged to support or defend a position. Much appreciated.

      As to some of yor recent points, you said:

      “RARELY will ALL employEE contributions (including all the investment earnings on those contributions) accumulated to the date of retirement grow to a sum sufficient to buy more than 10-20% of the promised pension. The 80-90% balance is the responsibility of taxpayer contributions (and the investment earnings thereon).”

      I make no claim to being an actuary, accountant, investment guru of financial wizard. That said, I do know that the system that I am in has existed for over 40 years and is currently funded at over 120%. Depending upon future investment returns there may even be a sizable surplus when the last of us old-timers is gone. I would add that should that happy eventuality occur it will be used by the citiznes of the state for whatever needs their elected representatives see fit.

      I would also make the point that it was the state legislator’s failure to pay their agreed upon (or, in fact, ANY input to the system) for the first 6 years of its existence. What that means is, that for the first 6 years of its existence our retirees were getting their pension checks directly from funds provided by our employee contributions and the employer’s contributions. None came from “the state.”

      When the state did a study to determine their actuarial responsibility they panicked and ended our system and started a new plan that was less well-funded in some respects (medical especially). Those actions were not the “fault” of members of the original plan. The state tried to justify the change by blaming plan participants for abusing the plan. I would never go so far as to say that abuse did not exist,…it did…just as you will find some level of abuse in any plan. But the reality was that the state chose to not fund the plan..per agreement…during it’s intitial years thus building up a huge unfunded liabilty.

      Ours is certainly not an unusual scenario. Many states had (have) similar funding problems with their pension plans. Not always (and not even usually) the employees faults.

      In other cases, those entities responsible for properly managing the pension investment funds failed to honor practical, reasonable investment practices,…often because they had failed to actuarily fund their programs in the first place, then tried to make it up by using risky investment schemes to get to a full funded status.
      Some plan administraotrs were ill-equipped to manage thsoe funds and were hood-winked by investment advisors (mostly from wall street firms (my opinion)so the retirement portfolios simply are not up to the assigned task.

      These are all problems that MUST be addressed if the issue is to be put to rest in a progressive manner. Even if you reduced current pensions commensurate with currently available funding levels what guarantees are there that plan managers act in responsible and prudent fashion?

      I hope that the point I’m trying to make is becoming evident. There are many, many issues involved that make us all complicit to varyuing degrees in these problems. I advocate an approach that focuses more upon solving the underlying problems than in scapegoating,…especially if that scapegoating involves only one side of the parties involved.

      Time to close. Thanks for an opportunity to work on the issue. I appreciate the chance to force myself to make a cogent argument that, hopefully, makes sense to another interested party,.

      stay safe and enjoy the holidays

      dave.

    11. Tough Love says:

      David, Just one last comment on what you said here …”Even if you reduced current pensions commensurate with currently available funding levels what guarantees are there that plan managers act in responsible and prudent fashion?”

      Easily done…. the “reduction” can be done in an amount to require an average return of say 8% in all future years or as little as 3%. If the latter, safe gov’t bonds would cover the liabilities with almost no risk. On the other hand a lesser reduction consistent with the need for an 8% average annual return would entail risk equity investments. There are always “choices”.

    12. David Peery says:

      Thanks for the update. Not being an economist or investment expert limits my ability to assess the many and varied investment possibilities available.

      If I may be allowed to point out, there are apparently many pension systems managed by well-meaning individuals who may not be appreciably more experienced than I. In other words, some municipal representatives in small to medium cities may also lack the sophistication to manage pension investments in an agressive yet safe manner. that doesn’t mean that they’re bad people, just in above their head. In my sate, most public safety pensions are administered by a state agency and that agency has done a commendable job.

      With that as a back-drop, perhaps some of those pensions you find so objectionable should be reviewed to see how they have been managed, who managed them, whether there was any collusion between city leaders, union leaders, fund managers and investment fund advisors before blame is laid at the feet of pension members?

      I keep coming back to a point of wanting ALL the facts before making a decision to lay blame,…especially if it lies at the feet of only one entity.

      If we are trying to prevent future problems (and I hope we are) wee need to understand exactly what went wrong. Here’s a few questions I would encourage citizens to ask:

      Has this individual pension plan been reviewed by certified actuaries for fiscal balance?

      Does the underlying actuarial assumption upon investment return make sound business sense?

      Are there adequate safeguards in place to ensure that all plan participants meet their agreed-upon contributions in a timely fashion?

      Is this plan being reviewed by industry experts on an ongoing basis to help ensure compliance and the possible need of adjustments as appropriate?

      These are just a few of the questions that I think we could easily agree upon in a healthy review of any pension system, and certainly one that is funded in any fashion by citizens/taxpayers. A thorough and well-designed review would do much to instill confidence in the public minds about the appropriateness of such plans. There is an obligation that such plans be thoroughly reviewed by those participants who are part of the legally binding agreement. Perhaps the media have overlooked their role in shedding light on the problem in the past either because the issue(s) are difficult for average people to understand or because they (the media) also are un-educated about the many intracacies in pension and investment law.

      While a tend to agree that some pensions appear over-generous, I would caution that in each such case there should be a thorough review of all the components of each such system before assigning blame. Indeed, many of these individual systems might well have never become a concern if the real estate collapse had not occurred.

      I hold to the view that the rule of law should be honored as much as possible. Unilaterally changing contract law should only occur under extraordianry circumstances and in those cases it should be ascertained clearly what went wrong and who was responsible for overseeing the system for practicality and appropriate adherence to plan requirements.

      I beleive that such a close review would be a benefit to all participants in order to bring confidence and stability to issues that are near and dear to us all.

      Those members of public employment do not hold the view that they have the inherent right to bankrupt their citizens, municipalities or states in the interests of adherence to contractual pension entitlement. We DO have an expectation that all parties to these agreements adhere to the requirements regarding funding levels and meticulous plan reviews that reasonably protect all participant interests.

      When all is said and done, I would very much like our citizens to feel that their interests are assiduously protected, that their public servants are adequately protected and respected and that we all can work to address the many issues that we face in the world today. We need to work together. We cannot be competitive as a nation if we do not respect one another.

      Thank you for a very thoughtful, educational discussion.

      respectfully,
      dave.

    13. Tough Love says:

      Davis, The fees associated with a Plan of CalPERS huge size lends itself to many abuses. About 2 years ago there was a big scandal with fee kickbacks to middlemen arranging investment deals.

      Hindsight being 20/20 what looks like a good deal can sour quickly. E.g., shortly before the financial crisis, CalPERS took a large loan position in the sale of NYC’s Stuyvesant Town & Peter Cooper Village (a $5 Billion deal). They lost $500 million in just a few years.

      You bring up laying “blame”. Clearly the “blame” for the excessive Public Sector pensions in place everywhere today lies primarily with the elected officials that approved them. While there was great pressure (from the Unions & workers) to approve these excessive pensions, but nobody literally held a gun to their heads. But since the WORKERS are the beneficiaries of the monetary benefits of these arrangements, THAT’s where the Taxpayers need to go to rectify the situation … by reducing these excessive pensions.

      The Public Sector Unions have quite a hand in this as well. It’s THEIR campaign contributions and election support that BOUGHT the favorable votes (of our elected officials) to approve of these pensions.

      That and outright THREATS from Union officials to put “uncooperative” elected officials out of office. Perfect example: Play the the 3-rd video (labeled “SEIU Threat”) on the right sidebar to this blog. Too bad her threat was not considered criminal behavior.

      I too agree that laws are important … but that position become a bit tenuous when the laws and regulations have been structured to give Public Sector workers a better deal and better protections than those granted Private Sector workers.

      For example, under ERISA (the law that governs Private Sector Pension) it is perfectly legal (and commonplace for an employer in financial distress) for an Plan sponsor (generally the Corporation) to lower the pension accrual rate for FUTURE service of CURRENT workers, or even freeze the Plan so there is no future growth at all. In general (via Constitutional provisions, contract law or property rights arguments) pension accrual rates for FUTURE (as well as PAST) service cannot be reduced in Public Sector Plans. What justifies giving Public Sector workers a better deal ?

      It’s going to be VERY VERY VERY difficult to find solutions to the financial mess we are in (specifically the HUGE unfunded liability already accrued for PAST service) when VERY few Public Sector workers are even willing to discuss lowering the spigot for FUTURE service accruals.

    14. David Peery says:

      Tough Love said:

      “……..THAT’s where the Taxpayers need to go to rectify the situation … by reducing these excessive pensions.”

      Once again, I am compelled to ask under what authority legally binding contracts may be unilaterally ignored or rescinded? If we each had the power to ignore contracts that we no longer represented our best interests how many current mortgages would go unpaid?

      I will agree that in some circumstances it is appropriate to ask affected employees to come to the table to help resolve a finacial situation that may be dire. But just to keep everyone responsible for that dire circumstance demands a thorough investigation into how that occured. Was there misfeasance, malfeasance, theft, improper or illegal acts involved? How might that be avoided in the future? If there were illegal acts committed that resulted in pension underfunding (theft? undue risky investments?) then how did that happen and who was responsible and how might that be avoided in the future?

      Only after that has been addressed should any party to the financial distress be required to voluntarily give up benefits that were contractually agreed to.

      In the end, employees in many municipalities in the last few years HAVE agreed to longer hours, decreased benefits and other concessions because they realize that there are often limited options. That fact does not remove the neccessity for all those who are a party to such contracts to honor all there obligations thereto in a professional and responsible manner. If city leaders squandered pension investments on a grandiose city project that didn’t pan out why should employee pension benefits or pay be forfeit without a thorough, solid investigation into the possible misdeeds of those responsible?

      You also stated:

      “I too agree that laws are important … but that position become a bit tenuous when the laws and regulations have been structured to give Public Sector workers a better deal and better protections than those granted Private Sector workers.

      For example, under ERISA (the law that governs Private Sector Pension) it is perfectly legal (and commonplace for an employer in financial distress) for an Plan sponsor (generally the Corporation) to lower the pension accrual rate for FUTURE service of CURRENT workers, or even freeze the Plan so there is no future growth at all. In general (via Constitutional provisions, contract law or property rights arguments) pension accrual rates for FUTURE (as well as PAST) service cannot be reduced in Public Sector Plans. What justifies giving Public Sector workers a better deal ?

      In point of fact, you are at least partially mistaken in your assertion regarding ERISA.
      “The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for pension plans in private industry. ERISA does not require any employer to establish a pension plan. It only requires that those who establish plans must meet certain minimum standards. The law generally does not specify how much money a participant must be paid as a benefit. ERISA requires plans to regularly provide participants with information about the plan including information about plan features and funding; sets minimum standards for participation, vesting, benefit accrual and funding; requires accountability of plan fiduciaries; and gives participants the right to sue for benefits and breaches of fiduciary duty.

      ERISA also guarantees payment of certain benefits through the Pension Benefit Guaranty Corporation, a federally chartered corporation, if a defined plan is terminated.

      The Department of Labor’s (DOL) Employee Benefits Security Administration (EBSA) enforces ERISA.

      As you can see, the employees DO have some rights to their promised pensions and the employer cannot simply deny payment on a whim.

      that’s not to say that there are no instances where benefits are not paid, as in cases where corporations go bankrupt and the PBGC ends up paying a portion of those pensions.

      Unlike cities, counties and states, corporations do not have the legal authority to levy taxes to meet their obligatory obligations.

      You said:

      “The Public Sector Unions have quite a hand in this as well. It’s THEIR campaign contributions and election support that BOUGHT the favorable votes (of our elected officials) to approve of these pensions.”

      I hope and pray that you intend to hold those elected officials feet to the fire and demand that they account for their behavior. If they are party to influence peddling or have “sold out” to anyone who promised them support or funding for their vote(s) on issues affecting public funding I would ask that they be brought up on charges for so doing. That’s against the law.

      I would point out that it appears that members (both sides of the aisle) of Congress appear complicit in much the same manner. If you are willing to work to “remove the money” from politics I am willing to stand with you shoulder to shoulder to do so in a bipartisan way that should garner the support of a majority of the public.

      But if your argument is simply to remove the ability of labor to ustilize the same tools used by wealthy citizens and corporations, then I must object. If you are turly interested in what’s right and fair, then a level playing field would be nice.

      You also stated:
      “……That and outright THREATS from Union officials to put “uncooperative” elected officials out of office. Perfect example: Play the the 3-rd video (labeled “SEIU Threat”) on the right sidebar to this blog. Too bad her threat was not considered criminal behavior.”

      I watched the video. While I find it distaseful, I see little difference between that act and Grover Norquist’s threat to work to oust any Republican who fails to sign his “pledge.”

      This is an issue that transcends party. The current system that we are part of is ill-designed to provide unity and encourage a unified America able to respond with one voice, one clear intent and one determined effort to keep our nation productive and competitive. That requires a nation of people who have respect for one another, who share a vision and who beleive that the their system of government is fair.

      To attain those goals will require that we work together in a responsible and respectful manner. I beleive that it can be done. The truth is not hostage to any one party and appropriate resolution does not reside in one party alone.

      Sir,
      I wish you the best of holidays.

      dave.

    15. Tough Love says:

      David,

      Quoting …”Once again, I am compelled to ask under what authority legally binding contracts may be unilaterally ignored or rescinded? ”

      None. Reality and the Math will force that result in many Plans. The Constitution, Laws, Regulations, Court decisions and Court Orders cannot create the huge sums needed to make these Plans whole.

      I believe the political support for the Unions (in return for their block voting) will wither as the Taxpayers get further fed up with the these abusive pensions and the steady decline in services due to the growing appetite of the pension monster. Politicians are like chameleons. At the first whiff of being voted out of office, they will switch sides and throw their Union friends “under the bus”.

      The workers only hope is a Federal Gov’t bailout … one that I doubt will happen for many reasons.

      Sounds like you are suggesting we STUDY the causes before taking action. That the Union line ….. study study study analyze, analyze, analyze, delay delay, delay, … but do nothing material. We already know the culprits (the politicians and the Unions) and we already know the beneficiaries (the workers). It’s time to reduce the pensions, not study them.

      All that you quoted about ERISA is accurate, as I believe is all that I stated .. so please tell me what it is that I said that you believe is incorrect. I wasn’t giving a treatise on ERISA, just stating a few facts pertinent to the discussion.

      While I wouldn’t say I “support it”, I wouldn’t be too dismayed if the PBGC protections (WITH the current PBGC limits) were extended to Public Sector workers. Given the very young ages at which many Public Sector workers retire those caps won’t provide much protection and it’s highly unlikely existing Plan assets are insufficient to cover pensions capped at such low limits.

      On your later point, earlier in this series of comments (or perhaps elsewhere) I stated that I supported a ban on both Union and Corporate campaign contributions. The country would be FAR better off if the benefit of selling one’s vote to the highest contributor were eliminated … under threat of significant criminal penalty.

      And quoting … “I watched the video. While I find it distasteful, I see little difference between that act and Grover Norquist’s threat to work to oust any Republican who fails to sign his “pledge.””

      I wholeheartedly agree with you ….. and Norquist is an ass. While the Republicans are correct that increased revenues (via tax increases) alone would hardly make a dent in the annual budget deficit and that significant expenditure cuts are needed, that’s hardly a reason NOT TO accept with reasonable tax increases for the wealthy.

      Personally I feel much MORE is needed and that Corporate CEO’s have stolen a decades productivity increases all for themselves (with very limited trickle-down to keep those a rung or 2 below them in line). That average CEO compensation has increased from roughly 25 times that of the average worker 30 years ago to 300-500 times greater today is unconscionable. While reversing THAT is perhaps more justifiable than reducing the excessive Public Sector pensions, the not fixing the former will not bankrupt the nation, while not fixing the latter might indeed do so.

      SanBernadino may be the Frst in CA.Illinois,

    16. David Peery says:

      Tough Love said:

      David,

      Quoting …”Once again, I am compelled to ask under what authority legally binding contracts may be unilaterally ignored or rescinded? ”

      None. Reality and the Math will force that result in many Plans. The Constitution, Laws, Regulations, Court decisions and Court Orders cannot create the huge sums needed to make these Plans whole.

      In some cases that may well be true. Sadly, that will add to everyone’s woes and do little,..by itself,…..to remedy the issues that led to this flaw in our system of law, politics and social justice.

      To a degree, ther is blame enough for all. And as you point out, the massive incomes of those at the top of the economic pyramid may prove to have been the impetus to send our system careening down the road to apparent destruction.

      Yes, we need to remove as much money from politics as possible. And we need to establish a system of contractual negotiations that is fair, reasonable, sustainable and progressive that we may all (at least a large majority) can feel is appropriate and makes us all feel that we are a small part of a larger whole.

      Certainly any of thsoe labor contracts that were illegally bargained, or were bargained on bad faith, hidden maneuvers and one-sided data ARE inappropriate and should be addressed in a manner satisfactory to those who must abide by the results of those bady bargained contracts.

      But I choose to differ in my view and in my approach. I would hold those entities responsible that took unfair advantage or who knowingly crafted unsustainable contracts and ask that members of those contracts to step forward and renegotiate in good faith contracts that are fair, sustainable and that meet the needs of the communities served. I know that many union members have done that willingly for, as you say,..there are few options.

      but in the bargain, I would ask that the media, participants, and the public become better educated upon THEIR obligations to keep track of what is done in their names and with their tax dollars. The political system IS broken,….but it is what it is and must be dealt with openly and fairly.

      Those politicians who operate under the current reality of interest politics are not neccessarily bad people. At least a portion of the problem we find ourselves in is that human nature has led us to make mistakes in designing and monitoring a system that does not depend upon unlimited funds to work.

      You also stated:
      “I believe the political support for the Unions (in return for their block voting) will wither as the Taxpayers get further fed up with the these abusive pensions and the steady decline in services due to the growing appetite of the pension monster. Politicians are like chameleons. At the first whiff of being voted out of office, they will switch sides and throw their Union friends “under the bus”.”

      I would make the observation that you seem disenchanted with all parties to American life today; workers, unions, politicians, the wealthy.

      To a degree, I share your frustrations. But I also beleive that though there are flawed people within those ranks it is within those same ranks that we must seek solutions. And it is within the ranks of labor, corporate America, conservatives, liberals and independants alike that we have to craft resolutions that will rejuvenate and invigorate America for we cannot stand as a single nation if we hate one another.

      You stated:
      “…..Sounds like you are suggesting we STUDY the causes before taking action. That the Union line ….. study study study analyze, analyze, analyze, delay delay, delay, … but do nothing material. We already know the culprits (the politicians and the Unions) and we already know the beneficiaries (the workers). It’s time to reduce the pensions, not study them.”

      Yes, I think it would be foolish to make blanket assumptions about the failure of pension funding, whether public or private so that shortcomings may be positively addressed that a majority of the people find reasonable and acceptable.
      The ERISA law was passed in no small part because some corporations chose to loot the employee pension plans before filing for bankruptcy.
      Perhaps we need to sit together and find out if there is a better way to fund pensions that provides appropriate converage for all workers without being an undue burden upon individual employers.

      You stated:

      “On your later point, earlier in this series of comments (or perhaps elsewhere) I stated that I supported a ban on both Union and Corporate campaign contributions. The country would be FAR better off if the benefit of selling one’s vote to the highest contributor were eliminated … under threat of significant criminal penalty.”

      I agree!
      You closed with:
      “That average CEO compensation has increased from roughly 25 times that of the average worker 30 years ago to 300-500 times greater today is unconscionable. While reversing THAT is perhaps more justifiable than reducing the excessive Public Sector pensions, the not fixing the former will not bankrupt the nation, while not fixing the latter might indeed do so.”

      I partially agree, but I would make the observation that it might well be the enormous wealth (temporary is appears) created by Wall Street with their convoluted financial instruments was very much a result of the money they stood to earn by designing and using that process. One could make the assertion that it was this very accrual of massive wealth that led us all down the garden path in expectation of all becoming wealthy by virtue of our homes and related real estate which,…sadly,..resulted in the economic collapse that dashed those hopes as well as destroying many pension fund investments that led us ……….to this very discussion.

      I choose to be optomistic and to beleive that there are solutions to be found by men and women of character, honesty and determination. I hope that America has the wisdom to invite open and meaningful debate that may help us all start over in a manner that once again shows the world that we are a nation of great ability and deep caring.

      Thank you for your input. It is much appreciated and I hope that together we have shed a little light upon a difficult and divisive issue.

      Peace be with you my friend.
      dave.

    17. Tough Love says:

      David, I got 1/3 of the way through your last comment and couldn’t agree more … until I reached this:

      You said …”I would hold those entities responsible that took unfair advantage or who knowingly crafted unsustainable contracts and ask that members of those contracts to step forward and renegotiate in good faith contracts that are fair, sustainable and that meet the needs of the communities served. I know that many union members have done that willingly for, as you say,..there are few options.”

      I disagree with your last sentence above. With VERY few exceptions, the Union “givebacks” have, in almost all instances, impacted ONLY NEW workers, which will save nothing for 20-30 years until they retire, and even then, the new formulas remain far greater (usually double+) than their Private Sector counterparts. While they have accepted increased contributions, in the context of what’s “necessary”, those increases are marginal at best and contribution increases without benefit decreases won’t cut it.

      The ONLY financially materially givebacks have been COLA freezes, and generally, they have been forced upon the Unions followed by Union lawsuit challenges. That didn’t surprise me one bit. The Unions hire expert advisers and know far better than the politicians what’s “valuable” (pension-wise) and what’s not. They never offer to give up anything of material value.

      I’m not bashful about calling for complete & immediate reform. By that I mean future service Public Sector pension accruals must come ALL THEY WAY down to the level comparable to what Private Sector workers typically get … and that requires in almost all cases at least a 50% reduction in the Pension accrual rate (and more for safety workers). It’s not just the very rich formulas. I’m guessing that you know that retiring with an unreduced pension at 55 (vs 62 or 65 for the comparable Private Sector pension) adds VERY considerably to Plan costs.

      Quoting ..”I would make the observation that you seem disenchanted with all parties to American life today; workers, unions, politicians, the wealthy. ”

      Gee, I didn’t realize I come across as to glum to so many groups. I would agree with all the listed groups but the workers. Individually, they did nothing wrong, but there is no getting away from the fact that THEY are the beneficiaries of these unnecessary and unfair (to taxpayers) excessive pension promises.

      And history-wise, the looting of pension Plan assets generally came post-EISA implementation. Although it took quite a while from first discussions to the enactment of ERISA, the impetus for ERISA was Studebaker Corporation’s bankruptcy and it’s failure to honor promised pensions.

      As to the cause of the the financial crisis of 2008 and particularly the real estate collapse, I believe the blame falls squarely on the lack of Gov’t regulation. Sure the wall street pigs abused the process, but that was only BECAUSE they no longer had any “skin in the game” by NOT being required to maintain a reasonable share of each mortgage in-house. Had that requirement not been eliminated by regulators, you can be sure they would have underwritten those mortgages MUCH more carefully.

      I too hope solutions will be found. If they are, it will certainly follow a raucous battle between the stakeholders… primarily the workers who want to give up as little as possible, and the taxpayers who are increasingly becoming fed up with the financial rape being perpetrated upon them.

    18. David Peery says:

      Tough Love stated:
      “Gee, I didn’t realize I come across as to glum to so many groups. I would agree with all the listed groups but the workers. Individually, they did nothing wrong, but there is no getting away from the fact that THEY are the beneficiaries of these unnecessary and unfair (to taxpayers) excessive pension promises.”
      with the emphasis upon “the workers did nothing wrong” I must add a caveat; the DID do something wrong. They forgot to personally remain aware of and educated about the issues involved and the peole they helped elect. Their (our) failure to do so has allowed, aided and abetted the problems we now all face. I hold the news media to task in that condemnation as well. Truthfully, we are all to blame. Our schools have not done the job they should have (again, we’re all partly to blame there) the media have succumbed to the incessant desire to grab market share by giving the public what it thiks the public wants,…and we,..the rank and file citizens (and workers) failed to remain vigilant about what was done in our names and with our money. That is a large part of the price of democracy.

      That’s why I insist that “studies must be done to somehow re-engage all parties to this erosion of social responsibility and the falling away of responsibility.” It’s all our problem, not just democrats or republicans or corporate America or union America,……ALL of America needs to re-engage and take on the burden of control and responsibility that we allowed to be lifted from our shoulders by vested interests who had their own interests in mind and who understood that without oversight, they could turn legislation to their favor while we all looked elsewhere to tend to our own other interests.

      There was a saying back in hippie days regarding hitchhikers (female) “ass, grass or cash; nobody rides for free!”

      I think that’s a bit crass, but it gets the point across…..nobody rides for free. Democracy does not absolve us of the responsibility to pay attention and to provide meaningful oversight to what was (or was not) being done in our names and with our money.

      On that point I’m sure you and I can agree. I would also urge you to consider the value of studying individual pension systems on a case-by-case basis. Each and every one should be viewed under a microscope by industry experts in order to determine if they went wrong and why with the eventual goal of correcting those errors in a manner that convinces all parties to those contracts that they are fair, reasonable and well-regulated. We all deserve that scrutiny to ensure the fairness that you desire and that is appropriate.I think you would be amazed at how differently many of these programs are structured and how poorly they were funded by those responsible for that funding.

      The reason that most troubled systems choose to simply chage to new plans and close old ones is because of the heavy obligation to follow contract law. We may not like the way some of these pensions are structured, but absent voluntary agreement, they are the law and cannot unilaterally be changed without challenging the very basis of law.

      For those intities that face unavoidable bankruptcy due to the burden of pension rights I would point out that in many of those cases pension recipients are willing to sit at the table and discuss alternatives since, in the end, few cities will be required to service pension benefits at a price that is unsustainable. Again, I beleive that some of the municipalities facing that challenge should look to their own leaders and demand to know why they ended up in that predicament. As they say,…trust,..but verify.

      none of us has all of the answers but all of us have some of the answers.

      Take care,

      dave.

    19. Tough Love says:

      avid said …” I would also urge you to consider the value of studying individual pension systems on a case-by-case basis. Each and every one should be viewed under a microscope by industry experts in order to determine if they went wrong and why with the eventual goal of correcting those errors in a manner that convinces all parties to those contracts that they are fair, reasonable and well-regulated. ”

      You certainly do not see the urgency for immediate reform that I do… stopping the problem from growing (by a continuation of FUTURE service pension accruals at the current excessive rate), and addressing how the existing unfunded liability for PAST service will be addressed (and specifically, in what proportions each of the stakeholders will pony up with cash or givebacks).

    20. David Peery says:

      Tough Love said:
      “You certainly do not see the urgency for immediate reform that I do… stopping the problem from growing (by a continuation of FUTURE service pension accruals at the current excessive rate), and addressing how the existing unfunded liability for PAST service will be addressed (and specifically, in what proportions each of the stakeholders will pony up with cash or givebacks).”

      I am very much in favor of reform. But first, one has to determine where the system failed so that reform may be directed effectively.

      IF those representatives who negotiated pension benefits were duly appointed/elected by the affected agencies for whom they worked and IF they had the authority to sign legally binding agreements perhaps the reforms should begin where the problems began.

      But even then, perhaps those representatives DID their jobs to the best of their abilities and WITH the appropriate authority to represent their employers (and thus the tax-payers to whom they should be ultimately accountabl) then one must assume that something happened post contractual signing that caused the inability of that agency to make good on their portion of the contractual agreement.

      If THAT proves to be true,…why look any further? You have the problem defined, those responsible illuminated,…and the reason to amend the current policy in order toprevent future problems of a similar nature.

      What you do NOT have is the unilateral right to ignore components of legally binding contracts simply because you find them inconvenient.

      If representatives of parties engaged in legally binding contracts do not have the authority to sign those contracts perhaps they should step aside and allow educated adults to fill there spot(s) at the negotiating tables.

      If you beleive that contracts that were signed may be unilaterally ignored, how do you expect those agencies to conduct business in the future? Who would feel comfortable in dealing with such agencies?

      So as I see it, you’re in a bind. If municipal entities wish to do business, they must have financial credibility. That means they must have a record of honoring legally binding contractual obligations.

      If there are employee groups who “went overboard” in their contract requests then shame on them. But that does NOT give the employing agencies to cry foul and refuse to honor those contracts that met all legal requirements. Let those agencies investigate the entire process for any signs of illegal acts collusion, influence peddling or whatever else thay may be able to prove in a court of law, but otherwise it’s time for them to wise up and find representatives who are willing to pay attention to the people for whom they work (the tax-payers).

      If you’re NOT willing to address this issue then please quit harping about how unfair the system is and find people who have an interest in improving the system in the future.

      You will find that in a vast majority of the cases that the underlying problem has been one of state and local legislators who are willing to sign binding agreements but then fail to provide funding sources for those agreements. They have all-too-often simply failed to put the neccessary funds into the pension systems as actuaries told them were needed to meet their contractual obligations.

      If you want to solve THAT problem I will repeat my willingness to stand shoulder to shoulder with you and the rest of the public to demand that the system be adjusted in a manner that meets our needs.

      As to whether these pension benefits are reasonable, I would assume that, had all signatories to the agreements met their obigations that the funds needed would be there when needed. That’s what actuaries, investment counselors and economics experts are for, to advise and adjust systems as needed.

      What they are UNABLE to do is to force those employing entities to make the needed contributions to the pensions systems in a timely fashion.

      So, if you want to change the system in a manner that follows the rule of law, there’s a rudimentary outline as I see it.

      If you just want to point fingers and complain about how unfair it is then I suggest you find another forum to do it in. The issue is actually pretty simple. The resolution will take meaningful input from adults who are willing to do the heavy lifting and, I assure you, few people will be totally satisfied with the resolution, but the rule of law will have been preserved, lessons learned and our futures will be better for it.

      Freedom isn’t without its own obligations.

      dave.

    21. David Peery says:

      Correction!

      I was incorrect in one point. “What they are UNABLE to do is to force those employing entities to make the needed contributions to the pensions systems in a timely fashion.

      That is not true, or certainly not always true. The problem is rather that these binding agreements cannot guarantee that ALL signatories meet their financial obligations in a timely fashion. Usually it is the state (in statewide pension plans that cannot seem to bring legislators to meet required contributions in a timely manner.
      My apologies to those employing agencies who have met their obligations as required. They are to be contratulated for being responsible participants.

      thanks

      dave.

    22. Tough Love says:

      David, Your repeated calls to “study” the issue rather than taking swift action, is such a classic Public Sector Union tactic that I decided to see what your affiliation might be.

      Might you be the David Peery listed as a Board member of LEOFF 1 … “The LEOFF 1 Coalition, Law Enforcement Officers and Fire Fighters, Washington, Board Members”, and a retired Seattle Firefighter ?

      I know you’re just doing what’s expected of you (in that position) but significant change must come … as there will never be sufficient money to pay for all the excessive “promises” that have been made.

      As I stated in another post, if we don’t, we will be Greece in 5 years.

      Merry Christmas.

    23. Dave Peery says:

      Tough Love said:
      “I know you’re just doing what’s expected of you (in that position) but significant change must come … as there will never be sufficient money to pay for all the excessive “promises” that have been made.”

      No, TL, you don’t know. And you seem never to answer questions about the accountability of ALL signatories to pension contracts.

      You seem totally fixated upon one half of the issue without caring if ALL members of these agreements are meeting the obligations that they agreed to abide by.In far too many cases, they are not and that is not the fault of the public employees who HAVe met the obligations that they agreed to.

      It appears to this writer that you have made this a very personal vendetta against organized labor.

      care to comment?

      dave

      And just so you’ll know, the system that I am in happens to be fully funded and is of little threat to the public’s purse as a result of careful funding, appropriate oversight and wise investments. In fact, the greates threat to our system, and those of workers across America results from the disaster visited upon us by Wall Street.

      So, TL,…what’s YOUR background? Or do you simply prefer to lob grenades from the trenches without offering any substantive suggestions that would have some chance of improving pension funding issues?

      And I am compelled, once again, to point out the fact there is a vast distance between a “promise” and a legally binding contract. Look it up. It’s in the dictionary.

      It’s Christmas eve.

      enjoy.

      dave.

    24. Tough Love says:

      Quoting Dave …”You seem totally fixated upon one half of the issue without caring if ALL members of these agreements are meeting the obligations that they agreed to abide by. In far too many cases, they are not and that is not the fault of the public employees who HAVe met the obligations that they agreed to. ”

      When the Unions and the politicians collude (via the trading of campaign contributions and election support for favorable votes on pension legislation), the result is a VERY rich pension, both due to the rich formula itself, and expensive provisions (e.g., very young full retirement ages, COLA increases, liberal definitions of “pensionable compensation”, etc.).

      Funding requirement calculations reflect the specifics of the pension and a variety of assumptions. So a VERY RICH pension implies VERY HIGH funding. Subtract the modest (if any actual) employee contributions and you are left with VERY HIGH Taxpayer contributions. When the Taxpayers are the balancing item, it’s easy to say they aren’t … “meeting the obligations that they agreed to abide by”.

      I’m sure you’ll challenge me here, but the following statement is accurate … RARELY will the workers’ contributions (INCLUDING all the investment earnings thereon) accumulate to a sum at retirement sufficient to buy more than 10-20% of the promised pension. The Taxpayers are “responsible for” (via contributions from them, and the investment earnings thereon) the 80-90% balance. So when you say that “members of these agreements are meeting THEIR obligations”, is the modest proportion that THEY pay a really big deal ?

      I put “responsible for” in quotes because indeed many States/Cities are not fully funding the share that they are “responsible for”. Might that be because these Plans (“negotiated in collusion between the Unions and the politicians with nobody looking out for Taxpayer interests) are simply too generous and therefore VERY hard to fund when the workers are only paying for 10-20% of Total Plan costs?

      Saying that a 3-rd party (the Taxpayers) financially responsible in a deal negotiated (in collusion) by 2 OTHER parties (the Unions and Politicians) clearly not looking out for Taxpayers interests (if not intending to financially screw them) is not “meeting their obligations” is disingenuous to put it mildly.

      If your pension Plan is fully funded, that’s great news for Plan participants, but I wouldn’t go by the Plan’s “official” funding percentage. The official percentages tend to get reduced by 1/4-1/3 when actuarially smoothed assets are marked-to-market and Plan liabilities are discounted at more appropriate interest rates (such as those RQUIRED in Private Sector pension Plan valuations).

      As to that disaster (particularly the mortgage crisis)… “visited upon us by Wall Street”, while the Wall Street titans were certainly very greedy, the ROOT CAUSE of that mess lies more with our government than with them. Our regulatory authorities royally dropped-the-ball, requiring absolutely no “skin-in-the-game”. Had these firms been required to hold a reasonable share of each mortgage in-house, they would have MUCH MUCH more carefully underwritten each loan.

      And while I agree that … “there is a vast distance between a “promise” and a legally binding contract”, the difference is semantics when the money isn’t there to pay either.

      As to my background …. professional financial service.

    25. Dave Peery says:

      It’s Christmas eve.

      have a glass of whatever your favorite beverage is and relax a bit.

      Time for a little family celebration.

      enjoy and take a break.

      dave

      • Tough Love says:

        Agreed … and Happy New year.

        Hopefully in the new year we will find solutions at least “acceptable” to all stakeholders. Nobody is going to walk away “happy”.

    26. David Peery says:

      POGO: I HAVE SEEN THE ENEMY AND HE IS US!

      Those of us old enough remember when fire and police pensions were matters for “local boards.” Each hiring agency, whether it be city, county, or state level, if it had an employee pension system it was its’ own unique retirement program.

      Some of these plans worked relatively well, overseen, managed and administered by groups or departments assigned to that task. The basic problem with those plans was one of size, financial expertise and the risk of local financial catastrophe or mismanagement.

      In reading about the current problems facing brother and sister fire fighters, police officers and related public employee groups, it became evident fairly quickly that the similarities in pension problems across America appear to primarily hinge on lack of adequate required contributions into the system.

      To a very large degree it appears that the primary offender in the short-funding has been plan administrators. Decades ago, it was primarily the employing agencies that managed system funding, assigned staff to monitor compliance and provide whatever level of oversight deemed appropriate.

      As a person with a background in finance, you certainly must be familiar with the basics of pension management, actuarial assessments, timely, regularly scheduled reviews to help ensure compliance by all parties and the need to occasionally adjust contribution rates as needed.

      The problems currently encountered by municipalities unable to pay current pensions from available funding and actuarily inadequate funding for future pension obligations appears to generally be a problem of their own making.

      In far too many instances, while the employees paid into their pension systems as required, it was their employing agencies that failed to do the same. While there are a host of reasons that those agencies may have been unable to meet their financial obligation, that failure does not alter their responsibility to honor their contractual obligation.

      If the covered employee groups were aware that there future pension benefits were in jeopardy and failed to act they may be criticized for failing to call attention to the problem.
      If they DID call attention to the short-funding issue and were brushed off , ignored or simply assured by management that “they’d make it up later” then the finger of blame must be directed at those responsible for ensuring compliance,…..those signatories to the legally binding contract who were failing to meet the requirements of those contracts.

      I have been told that, technically, as long as the timely payments of earned benefits are met, retirees have no legal standing in a court of law.

      That tells this writer that the obligation to adequately fund the system lies equally with each party to that specific agreement. That does not relieve beneficiaries from the prudent review of pension system status on a timely basis, but limits their ability to “force” compliance.

      Again, in far too many cases management avoided reasonable and required timely contributions by claiming that future income on pension investments would make up for any short-fall in current funding levels.

      If you look at individual cities now facing extreme funding problems because their pensions are woefully ill-prepared to meet their legal obligations you can pretty much bet that the problem was caused by their own failure rather than that of covered employees who met their obligations as needed.

      While there are exceptions, in general, that is the situation to be found across America. Municipalities that resorted to “creative bookkeeping” and irresponsible estimations regarding pension investment income simply got hammered when the economy failed to generate the necessary returns needed to meet their obligatory responsibilities.

      When that became evident to plan administrators, some realized that one of their few options was to place their pension funds in ever-riskier investments in the hope s of bailing themselves out. Sadly, that proved not too successful for the majority of plan administrators and resulted in additional plan losses and even larger unfunded future liabilities.

      Those cases are certainly NOT the fault or the responsibility of those members who met their obligations to plan funding. They paid their share when due. Or, in some cases, their employers paid for both their share and the employee share as agreed in contract negotiations. The problem with those scenarios is evident. Even if the employers agree to make contributions into the plan on the member’s behalf, they may not always do so.

      Since the employee suffers no loss until a pension check bounces, they have little standing in court to demand that their employers meet actuarial plan requirements.

      Many municipalities agreed to pay both the employee and the employer’s share of pension funding as an alternative to giving employees a cash increase in current pay levels during contract negotiations and had the added benefit of having pensions based upon base pay which did not include the amount that the employers paid into the pension on their behalf. The criticism that employees didn’t even have to pay into their own pensions is a bogus argument.

      While those employee groups that negotiated high retirement benefit levels approaching or even exceeding one hundred per cent of pay after twenty five or thirty years, I can only say that while those contracts are legally binding(in most cases) they are not necessarily in anyone’s best interests,….including, and especially, their own.

      I will be content with letting them deal with the inevitable repercussions of their agreements in whatever fashion they, their employers and the courts may decide.

      Do I ask for too many “studies” to find resolution? My confident answer is a resounding NO!

      The Census Quarterly Survey of Public Pensions collects data from state and municipal pension funds representing 89.4 percent of “financial activity.” The Census estimates there are 3,418 state and municipal pension funds in the U.S.

      With that high number, and with the varying levels of size and complexity, it is incumbent upon all parties to closely examine each legally binding contract to see why they are in non-compliance or why they may become in non-compliance in the future so that corrections may be made. There is no single magic bullet that will prove an adequate answer or response in every case.

      NOT to provide due diligence in resolving each case is a slap in the face to the rule of law and, if ignored, threatens the foundations of the rule of law that our society is based upon

      In fact, by looking at several sites as well as my own personal experience, I understand that there are many pensions that are in relatively good shape, Our own LEOFF 1 plan is currently above 100% witha reasonably adequate cushion. There are others Washington State has been blessed with plan administrators who have done a pretty good job over the years. Our state is in the top three for pension funding, so I know that it can be done.

      That’s a short position paper on the problems we now face as I understand it. As the cartoon character Pogo said, “We have met the enemy, and he is us.”

      There is adequate blame for us all. There are lessons for all as well and there is an opportunity to learn from those lessons.

      I believe that the vast majority of union members are honorable, hard-working and decent members of their communities. They did not fail in their responsibilities to meet their pension requirements. But as members of their communities, perhaps they (we”) should have kept closer track of the funding levels of our respective pensions and spoken out in a louder voice when funding levels appeared not to be appropriate.

      Management needs to be responsible and accountable. Currently, many are not. Citizens (tax-payers) should be more aware of what is,…or is not,..being done in their name and with their tax dollars.

      Make no mistake, the lessons learned here hold the possibility of shedding light upon the very same issues at the national level. The problems are much the same and for much the same reason.

      Tough Love! I will close with this observation. I stumbled upon this website as I looked to get a better grasp of the magnitude of the pension funding problems nation-wide. There are many sites that deal with the issue from differing perspectives. I have to say that this site is very much simply an anti-union screed.

      Your repeated frustration with my insistence upon “further study” along with your demand that “unions just give us our money back” shows a lack of desire to actually solve the problem and spotlights a desire to force unilateral change by management.

      If you and I were to face one another in a court of law on this issue based upon our stated positions herein you would lose in two ways. You would lose badly and you would lose quickly.

      Your entire position is based upon allegations and innuendo, neither carries much weight in a court of law. Your position also comes across as being personal , angry and inflexible. Again, courts of law demand more.

      If you are the site administrator then you have my condolences. It must be a lonely and demanding job. If you are simply the assigned “cyber pit-bull” charged with attacking any who challenge conservative orthodoxy then, again, you have my condolences.

      Conservatives have much to be proud of,…just as liberals and independents. What our great nation needs more that anything at this trying time is unity. Those who still preach divisiveness and hate place democracy itself at risk. We all deserve better. Any solution that holds the possibility of uniting this country must come from us all, not simply 51% of the citizens.

      You appear to me to be an educated person. I’ve enjoyed the discussion, it forced me to challenge may own position and your responses allowed for a continued dialogue.

      Thank you.
      There is hope.

      Stay well and ask questions.
      With regards,
      Dave peery

    27. Tough Love says:

      David, You sure are persistent ….. LEOFF 1 sure has a keeper on it’s Board. You remind me of Steve Forbes when he ran for President. EVERY question asked of him, no matter what the subject was “answered” with the need for a “Flat Tax”.

      I’ll summarize your position:
      (1) the problem is the lack of employer (meaning Taxpayer) funding
      (2) repeating …”it’s a legally binding contract”
      (3) the employees paid into their pension systems as required,
      (4) repeating … “(the failure) to meet their financial obligation does not alter their responsibility to honor their contractual obligation.”
      (5) then the finger of blame must be directed at those responsible for ensuring compliance,…..those signatories to the legally binding contract who were failing to meet the requirements of those contracts.
      (6) “It is incumbent upon all parties to closely examine each (of the 3,418 state and municipal pension funds in the U.S.) and the legally binding contract to see why they are in non-compliance or why they may become in non-compliance in the future so that corrections may be made.”

      And my thought on each:
      (1) that’s the tail wagging the dog. Dig deeper and ask WHY.
      (2) neither party to the “negotiation” that resulted in those contracts appropriately represented Taxpayer interests. Contracts so negotiated should not be honored.
      (3) yes they did … 10-20% of the total cost of their VERY VERY rich pensions. Big deal.
      (4) perhaps not, but the collusion between your Unions and the politicians “should”. And if not, reality and the math will anyway.
      (5) so go after those signatories and get out of the Taxpayers’ pockets.
      (6) Since I don’t think your just nuts, I attribute that ridiculous suggestion to just doing your Union’s bidding to delay delay delay any and all reforms.

      You are focusing on the secondary effects not the ROOT CAUSE …. that the promised pensions are simply multiples too generous (when compared to similarly situated Private Sector workers).

      And lastly you said …”your demand that “unions just give us our money back” ”

      You’ve got that wrong. Under a proper valuation many Public Sector Plans are roughly 50% underfunded (including CalPERS). The Taxpayers certainly don’t expect you to GIVE US anything. What the Taxpayer certainly won’t be doing is making up for that shortfall.

      And yes, the Taxpayers may lose in Court, but that won’t really mater when the funds to top them up simply do not (and short of an economic miracle) never will.

      Till another day and another discussion ………….

      P.S. I’m not the site administrator and I’m not a cyber “pit-bull”, just someone very knowledgeable in pension design and funding and trying to head off America turning into Greece in 5 years.

    28. BOPRN says:

      Ah, Tough Love.

      Hope the holiday season is treating you in the manner you deserve!!!

      You were so kind to summarize (in your view) the views of another. Aren’t you special? It never ceases to amaze me how special you really are. BUT – to your points!!!

      (1) that’s the tail wagging the dog. Dig deeper and ask WHY.

      So special one, what is the reason WHY? You pose the question as if you have some special information that those of us who are not as wise/smart as you could never comprehend. Perhaps you could put it in a manner which we lowly PERS members could understand?

      (2) neither party to the “negotiation” that resulted in those contracts appropriately represented Taxpayer interests. Contracts so negotiated should not be honored.

      Ah, your opinion that nobody represented taxpayer interests. It is your opinion, as you were not there. In the state of California (I’m supposing in Jersey Shore also), people are elected to represent the taxpayers. If people don’t like the way they are represented, then they are voted out. It is called a democracy – perhaps you have heard of it? Of course we should all do it Tough Love’s way, and THEN it would be a democracy.

      (3) yes they did … 10-20% of the total cost of their VERY VERY rich pensions. Big deal.

      The original poster says he contributed to his pension as required. You respond with “VERY VERY rich pensions. Big deal.” It must be sad to be you. You don’t like contracts, as a pension is basically a form of deferred compensation per contract. On top of it you scream VERY VERY rich. Most pensions aren’t all that rich, but don’t let that stop you from SCREAMING!!!!!

      (4) perhaps not, but the collusion between your Unions and the politicians “should”. And if not, reality and the math will anyway.

      The original poster speaks of (your words) ‘failure to meet financial obligations’. You respond with collusion. Well, the financial obligations that were not met were various forms of government not funding, as required by law, their respective ends of various PERS. This goes back to the original agreements that states/governments made with the fed at the time SS was in-acted. Many governments (state and smaller) said they could do a better job than SS, and opted out of SS. The fed in essence said ‘OK’ – but you are required to appropriately fund the PERS so the fed won’t have to bail you out sometime in the future. Isn’t that the ‘failure to meet financial obligations’ that is in question here? But you would rather push it in another direction to berate yet another poster.

      (5) so go after those signatories and get out of the Taxpayers’ pockets.

      Ah, but per law the taxpayers are on the hook for funding PERS across the country. You often like to say that taxpayers are funding 80 to 90% of PERS. In truth taxpayers are funding 100% because all money that goes to PERS is from the taxpayer in the end, isn’t it? It’s just that we say 10% is from the employee – but it is still from the taxpayer. PS – really 70% comes from investment gains, but let’s not let that fact get in the way!

      (6) Since I don’t think your just nuts, I attribute that ridiculous suggestion to just doing your Union’s bidding to delay delay delay any and all reforms.

      How you can connect that to a union shows how truly mentally ill you are. To make such leaps of ‘logic’ shows either a complete disregard for others (personality disorder) or a complete disassociation from reality (mental illness). Tracking your comments over the years, I have come to the conclusion that you are a bit of both. I would offer professional help, but distance prevents that.

      Have a nice day!

    29. Tough Love says:

      BOPRN, DAVID PEEVY and I were having a rather spirited discussion. So before I answer any of your questions you’ll first have to go back to the Calpens article on which you and were trading comments.

      I did respond to your accusation of sloppy and inaccurate statements with 2 rather lengthy comments. So before I respond to you here, you’ll need to respond to me there and point out some specific sloppiness and inaccuracy.

    30. Tough Love says:

      BOPRN, I RARELY correct peoples grammar or spelling as frequent off-the-cuff errors in a blob commentary are expected, but in your case (and considering the myriad of insults you’ve unfairly thrown my way), I’ll make an exception.

      I particularly like your use of “in-acted” in your sentence … “This goes back to the original agreements that states/governments made with the fed at the time SS was in-acted. ”

      I suggest your use a dictionary to look up “enacted”.

      No doubt one of the Public Sector’s “best & brightest”.

    31. Tough Love says:

      Now see that …. I did it myself. blob=blog and your=you (just in case you missed that).

    32. BOPRN says:

      Tough Love -

      I did give you an example of your sloppiness on the other forum. The response you gave was so poor, that I didn’t bother writing again. As for the spelling, well, that is Firefox auto-correct. I did make a typo, and FF made a mess of correcting it. That said I was fighting a ‘stop script’ action all the way through that post. I’m sure you know FF has spell correction built in, as you use it – version 16.0 to be precise. That was another clue (couple actually)! Isn’t this fun!!!

    33. David Peery says:

      Tough Love responded;

      “P.S. I’m not the site administrator and I’m not a cyber “pit-bull”, just someone very knowledgeable in pension design and funding and trying to head off America turning into Greece in 5 years.”

      I will respond with….yet another question. If you are so knowledgable regarding pension design and funding why are you so unconcerned about the specifics of these contracts? You suggest that “neither party to the negotiations represents the interests of the taxpayers” and thus the contract “should not be honored”!

      To that observation I would add that if you feel that the public’s interests weren’t appropriately defended then I suggest that you may be at least partially correct. It is not the primary duty of labor’s side to negotiate both for and against their interests as they percieve them. And while I recognize the value of being “reasonable” in what pay and benefits are being asked by labor, it is still the prime responsibility of those people who represent taxpayer interests to do exactly that.

      Further, since our own union/management pension is currently funded well above required levels, I KNOW that it can be done when actuarial standards are finally met. In point of fact, our system is viewed as a potential funding source for the State’s other needs when the last of us are gone. So your refusal to study each program to figure out which ones are currently failing and why makes little sense,….and would doom your case in a court of law.

      Your 3rd point about how little workers pay into the system puzzles me. In the case of my pension, and the pensions of every other successful one, the monies paid in are paid in by the employee,…and on behalf of the employee, by other parties to the agreement. And, as is usually the case, the interest earnings on the amounts paid in are calculated into the contract language based upon assessments made by plan actuaries, investment guides and others hired and paid by earnings on fund investments,…or as agreed in contract language.

      It does not matter how much is paid in as long as the actuarial assessments are anywhere near accurate. The cost to taxpayers has already been factored into the calcualtions. Pensions and annuities have many things in common. Our LEOFF 1 pension was DESIGNED to be fully funded by the year 2008. In fact, it reached a point of overfunding by 1998 that indicated no further contributions were needed.

      There were attempts to close the system that I am a menber of, pay each LEOFF 1 member a “share” of the overfunded amount (with the State taking the lion’s share) but we older members of our system were suspicious regarding the calculations regarding the funding status and remembeered that it was the State that had failed to pay ANY of their agreed upon contributions into the system during the first 7 (?) years of its existence. With that level of distrust we threatened a lawsuit to keep the money in the system “just in case”.

      Turns out we were wise to have done so. With the economic downturns of the dot-com crash and the real-estate bubble, we have been well served to have kept the purported surplus in the system earning money thus guarding aginst the need to ask taxpayers to pony up more funds for a system that ahd been fully funded according to state calcualtions.

      So, because we refused to be cashed out, which could only legally be done by ending our system and creating a new system for those remaining LEOFF 1 members, the State decided that no further contributions were needed. That allowed the State and LEOFF employers (and LEOFF 1 members) to NOT pay any more into the pension plan.

      That was in about 2001. Now, here we are, nearly in 2013, and despite NO contributions by the remaining active members, employers or the state in the last 12 years, our system is still funded above the actuarial recommended level of 120%.

      I know a system properly designed, funded and managed CAN meet the intent of the plan without bankrupting the public purse.

      I CANNOT guarantee that each of the pension signatories will pay their share of agreed to funds into a system in a timely fashion. Generally speaking, the immediate employers do because it is a legal requirement that they do so. If the State is the overseeing manager/responsible party then they often have the legal authority to “skip a payment” as they feel the need without suffering immediate consequences.

      As you so firmly point out though, in the end, the debt comes due. The money must be found.

      So I would again make the assertion that a close examination of these 3 thousand plus legally binding contracts will show that the lack of adequate funding USUALLY lays with the plan management people. Should it then NOT be they who are deserving of your wrath and the covered members frustration and dismay?

      Doesn’t the possibility of major flaws in pension management merit the close scrutiny of system members, plan management teams?

      If we ignore the people who were (are) responsible for one of the larger expenses of civic life (police/fire/public workers)pay/benefit/pensions) we’re letting a potential problem fester in the dark.

      The only ground I will not defend openly is that claimed by some systems wherein covered members attempted to ensure over 100% of salary in retirement after a 3o year (+/-) year career.

      And even in THOSE cases, I would demand that a review be made of the specifics of the contract to see if it made actuarial sense and somehow was not out of line. My reluctance to defend such a system results from a view that, even if actuarily reasonable, the system would be deemed to be “overkill” by rank and file citizens.

      A friend said it best, “we should not expect to be an island of prosperity in a sea of austerity.”

      I would still demand a close, microscopic examination of all these individual plans with a clear intent to discover why some work and why others fail. I beleive that to have been done to some extent already. Rhode Island made a credible attempt to discern the problems and potential solutions. Their report recommendations did indeed show that in those cases where funding deficits had already reached unsupportable levels that few members of covered emplyees or the general public were going to be happy with the suggested solutions.

      I see this issue as simply a smaller version of whats going on at the national level.We can challenge members of Congress to stand up to vested interests and demand that they begin to pay more attention to the public’s interests. They should be challenged to find out what caused to real-estate bubble and collapse and help find a resolution that we can all live with even if we don’t like it.

      As hard as I try,…and as much as I would like to point at a single entity to blame for “our” problems I cannot in good conscience conclude that we are all free of blame. As Pogo said, “I have met the enemy and he is us.”

      You suggest that we “go after the signatories”. I agree with all my heart and soul. And so should you.

      TL:
      You closed with ;

      “P.S. I’m not the site administrator and I’m not a cyber “pit-bull”, just someone very knowledgeable in pension design and funding and trying to head off America turning into Greece in 5 years.”

      There are both differences and similarities. Greece has a history of not honoring their tax system. In America, the vast majority of working members pay theirs because the law requires it and the taxes are deducted from their pay before they get it. Compliance at the top of our income structure appears to work about as well as in Greece.

      I’m glad you’re not tha ssigned pit bull. A thankless job and often demoralizing. But I challenge your assertion to be “very knowledgable about pension funding.”

      Care to elaborate?

      dave.

    34. Tough Love says:

      BOPRN, Oh, so you thought my 2 long responses (in response to your charges of sloppiness & inaccuracy) on the Calpens site were (s you said) … “I did give you an example of your sloppiness on the other forum. The response you gave was so poor, that I didn’t bother writing again.”

      Now now .. you know that’s not true.

      What, cat finally got your tongue and couldn’t find anything at all in those long comments to challenge. ?

    35. BOPRN says:

      TL -

      Alright, I just went over to the CalPension site, and INDEED you have posted over there. I hadn’t looked in the last day or so, figuring we were kind of done there. Thought we would meet (and go at it) on another site. Why don’t we just continue it here, as I’m not quite the forum stalker that you are. You may get some amusement out of this – I asked Ed Ring to put a new article on his CivFi site so you and I could go argue in peace over there. He declined. LOL. Don’t blame him, as I’m sure he gets tired of seeing you get owned by me, but it was worth a try.

      Oh – as you said, it is not good to point out spelling/grammar errors in posts. That said, you may want to look at several of the posts you have put in this thread. Remember, like mom said – for every finger you point, four are pointing back.

      =]

      Hope Santa brought you that lump of coal you were so hoping for!!

      • Tough Love says:

        BOPRN, Quoting …”You may get some amusement out of this – I asked Ed Ring to put a new article on his CivFi site so you and I could go argue in peace over there. He declined. LOL. Don’t blame him, as I’m sure he gets tired of seeing you get owned by me, but it was worth a try. ”

        Mr. Ring has put out some very useful spreadsheets that demonstrate what I have been saying (the extraordinary richness of Public Sector pensions). In fact, on some of his earlier ones, I pointed out some improvements to make them even more useful and easier to work with.

        I’m surprised you even reference Mr. Ring, as (while he may prefer pension reform advocacy a bit more toned down than mine), I’d be rather surprised if he disputed any of my facts.

        I’d think MR. Ring is providing a wonderful educational service with his articles (and especially the inclusion of spreadsheet demonstrations).

        Oh … and as far as my being concerned that Mr. Ring …gets tired of seeing (ME) get owned by (YOU).

        That’s absolutely hilarious … always good to go to bed after a good laugh.

    36. Tough Love says:

      David, If we cut through the fluff we both now why the elected officials don’t appropriately represent the Taxpayers …. the influence of Union cash on elections and the threat of (Union member) block voting to oust anyone who opposes the Union platform (more pay, more pensions, more benefits, more jobs … even when not needed). And yes, Corporate money sometimes moves things in the other direction.

      Too bad ALL campaign contributions can’t be outlawed. While the special interests would hate it, the country would be far better off if campaigns were publicly funded with all legitimate candidates getting the same amount.

      You said …”the monies paid in are paid in by the employee,…and on behalf of the employee, by other parties to the agreement. ”

      Is it THAT HARD to say “the TAXPAYERS” ?

      Quoting ..”It does not matter how much is paid in as long as the actuarial assessments are anywhere near accurate. The cost to taxpayers has already been factored into the calculations.”

      Did you forget that I’m in the financial service business (and know a great deal about pensions and the specifics of their funding). Your quote is simply financial gobbledygook …. says nothing meaningful.

      Ok, sounds like LEOFF 1 may indeed be overfunded and that’s great news for LEOFF 1 members.

      While (as I’ve stated) I advocate for pension reform rather than studying or analyzing specific Plan issues. But I must admit, (being in this business) it does peak my interest in how YOUR plan is so well funded with …”NO contributions by the remaining active members, employers or the state in the last 12 years”. That’s certainly a rare bird.

      You said …”As you so firmly point out though, in the end, the debt comes due. The money must be found.”

      No, if I said anything like that it would be a bit longer such as …”As you so firmly point out though, in the end, the debt comes due. The money must be found or the benefits must be reduced.”

      Quoting …. “So I would again make the assertion that a close examination of these 3 thousand plus legally binding contracts ….”

      Still at it ?????

      Quoting …”Doesn’t the possibility of major flaws in pension management merit the close scrutiny of system members, plan management teams?

      If you really want to “study” them, fine (who knows, we might learn something)… but AFTER we’ve turned off the spigot.

      Quoting … “The only ground I will not defend openly is that claimed by some systems wherein covered members attempted to ensure over 100% of salary in retirement after a 3o year (+/-) year career.”

      First, I’ll point out that that a 100%-of-pay-pension, COLA -adjusted, is just about equivalent to a 133%-of-pay-pension WITHOUT COLA adjustments. So all I can say to your statement is …. my, how generous of you to concede that point when it is a RARE Private Sector pension that pay more the 50% of pay. Like I said, I’m in this business and can’t be fooled easily.

      Quoting …”A friend said it best, “we should not expect to be an island of prosperity in a sea of austerity.””

      Maybe that mentality IS the problem. I ask you, if the Private Sector (which pays YOUR bills) is “in a sea of austerity”, why should the Private Sector pay ANYTHING towards your being in ANY better position than them … let alone “an island of prosperity” ?

      And MORE call for …”microscopic examination of all these individual plans ” ? You certainly are single-minded.

      Quoting …”You suggest that we “go after the signatories”. I agree with all my heart and soul. And so should you. ”

      Surely you jest ? You bought them off for their votes and not you want to go after them ? If you took all their assets perhaps the 50% unfunded liability could be reduced to 49.999%.

      Lastly you said …”There are both differences and similarities. Greece has a history of not honoring their tax system. In America, the vast majority of working members pay theirs because the law requires it and the taxes are deducted from their pay before they get it.”

      Very true. And Greece’s downfall is it overstaffed and over-pensioned Public Sector workforce. More than America today … but we’re headed in that direction rather quickly … and it’s a HUGE problem.

      Quoting …”But I challenge your assertion to be “very knowledgable about pension funding.” ”

      I can live with that.

    37. David Peery says:

      TL posted:
      “David, If we cut through the fluff we both now why the elected officials don’t appropriately represent the Taxpayers …. the influence of Union cash on elections and the threat of (Union member) block voting to oust anyone who opposes the Union platform (more pay, more pensions, more benefits, more jobs … even when not needed). And yes, Corporate money sometimes moves things in the other direction.”

      TL, you’ve just highlighted a problem facing both sides of the political ailse. It’s not a Democratic problem or a Republican problem, it’s an American problem. Your focus upon only half the problem indicates a blatant bias and an unwillingness to consider alternatives that hold more promise. You appear to be locked in a debate that would not serve America or Americans well. A world of labor without power, influence or a place at the table would merely speed up an eventual collapse of American greatness.

      I’m getting tired of saying the same thing to you over and over. The solution has to come from near equal numbers of liberals and conservatives. As we’ve seen in the past few decades, if decisions are made by 51% of the public from only one end of the political spectrum the system is likely to fail far lack of popular support by majority.
      The 51% of votes should come from the middle of the political spectrum, NOT from one end or the other.

      TL said:
      “Did you forget that I’m in the financial service business (and know a great deal about pensions and the specifics of their funding). Your quote is simply financial gobbledygook …. says nothing meaningful.”

      After reading your responses I have to conclude that either you are not well versed in pension specifics or you are hopelessly blinded by ideology and/or party loyalty. Your consistent and determined desire to ignore the rule of law only serves to make you look one-dimensional in a three dimensional world.

      TL said:
      “Ok, sounds like LEOFF 1 may indeed be overfunded and that’s great news for LEOFF 1 members.

      While (as I’ve stated) I advocate for pension reform rather than studying or analyzing specific Plan issues. But I must admit, (being in this business) it does peak my interest in how YOUR plan is so well funded with …”NO contributions by the remaining active members, employers or the state in the last 12 years”. That’s certainly a rare bird.”

      Not all that rare when plan participants follow agreed upon actuarial recommendations and plan contribution practices. Washington is one of at least three states that have few pension funding problems.

      The real problem is underfunding of plans (usually by legislatures) who choose to use their contributions for other purposes. While I would agree that some of the purposes that politicians use those funds for are laudable, still it is contrary to pension funding requirements and results in plans becoming further and further under-funded. And in the end, as we’ve seen, partisan politicians choose to blame plan recipients rather than those responsible for meeting their contractual requirements,……..but we plowed that ground once or twice already.

      I’ve heard nothing in your unchanging position to indicate that you have any desire to find a multilateral resolution acceptable to a majority of people while protecting the rule of law. Your apparent desire to force your version of pension law upon participants speaks ill of you and offers no room for continued positive dialogue.

      Daddy used to say “Son, never argue with a fool in public. The public may not be able to tell which of you is the fool.”

      I’m starting to feel like dad was right. If we continue plowing the same tired ground, one (or both) of us would have to be foolish.

      Thanks for the dialogue.

      Wish you the best.

      dave.

    38. Tough Love says:

      David, Since further repeatition of differing positions makes little sense, and you purport to support change to which the workers need to be part of, I say prove it.

      Suggest several financially MATERIAL givebacks from the workers. And to head off the obvious, Changes only for NEW workers or a few % increase in contributions from the workers doesn’t cut it in the context of the extreme richness of current Public Sector DB Plans and the large underfunded liabilities associated with most (but apparently not your) Plans.

    39. Tough Love says:

      David,

      Nothing material to offer ? Surely if you are SERIOUS about a shared need to reform Public Sector pensions you must have financially MATERIAL givebacks to offer.

      If not, what can the reader conclude but that you’re just following the well-traveled Union mantra of give-no-ground, play the “binding contract” card, simply demand more Tax dollars, and the Taxpayer be damned.

      And of course roll out the full playbook of delaying and stalling tactics…. like your repeated calls “to study” “to analyze” … and calling for (in your words) “close examination of these 3 thousand plus legally binding contracts” and “microscopic examination of all these individual plans”.

      How absurd and pathetic.

      You speak of things your “daddy” used to say. Did he encourage you to be a Union mouthpiece when you grew up ?

    40. David Peery says:

      The following comes from a website with something to offer besides tired misinformation and outight hatred to offer.

      The site is called pensionpulse.blogspot.ca/

      Drop in for an interesting view of current financil issues affecting Americans and citizens around the world. It even has a few paragraphs about uinon pension funding that I tend to agree with. take a look!

      The real pension cliff is with corporate, state and local pension plans, which are being underfunded and looted by financial managers. The shortfall is getting worse as the downturn reduces local tax revenues, leaving states and cities unable to fund their programs, to invest in new public infrastructure, or even to maintain and repair existing investments. Public transportation in particular is suffering, raising user fees to riders in order to pay bondholders. But it is mainly retirees who are being told to sacrifice. (The sanctimonious verb is “share” in the sacrifice, although this evidently does not apply to the 1%.)

      The bank lobby would like the economy to keep trying to borrow its way out of debt and thus dig itself deeper into a financial hole that puts yet more private and public property at risk of default and foreclosure. The idea is for the government to “stabilize” the financial system by bailing out the banks – that is, doing for them what it has not been willing to do for recipients of Social Security and Medicare, or for states and localities no longer receiving revenue sharing, or for homeowners in negative equity suffering from exploding interest rates even while bank borrowing costs from the Fed have plunged. The dream is that the happy Greenspan financial bubble can be recovered, making everyone rich again, if only they will debt-leverage to bid up real estate, stock and bond prices and create new capital gains.

      Realizing this dream is the only way that pension funds can pay retirees. They will be insolvent if they cannot make their scheduled 8+%, giving new meaning to the term “fictitious capital.” And in the real estate market, prices will not soar again until speculators jump back in as they did prior to 2008. If student loans are not annulled, graduates face a lifetime of indentured servitude. But that is how much of colonial America was settled, after all – working off the price of their liberty, only to be plunged into the cauldron of vast real estate speculations and fortunes-by-theft on which the Republic was founded (or at least the greatest American fortunes). It was imagined that such bondage belonged only to a bygone era, not to the future of the West. But we may now look back to that era for a snapshot of our future.

      The financial plan is for the government is to supply nearly free credit to the banks, so that they can to lend debtors enough – at the widest interest-rate markups in recent memory (what banks charge borrowers and credit-card users over their less-than-1% borrowing costs) – to pay down the debts that were run up before 2008.

      This is not a program to increase market demand for the products of labor. It is not the kind of circular flow that economists have described as the essence of industrial capitalism. It is a financial rake-off of a magnitude such as has not existed since medieval European times, and the last stifling days of the oligarchic Roman Empire two thousand years ago.

      The website has a lot to offer. Plan on spending a bit of time going through the blog bit by bit. There are some interesting proposals that deserve your review.

      pensionpulse.blogspot.ca/
      thanks,

      dave.

    41. Editor says:

      David Peery: When you make a comment that begins with this sentence “The following comes from a website with something to offer besides tired misinformation and outright hatred to offer,” you are implying that what we are offering on UnionWatch.org is “tired misinformation and outright hatred.”

      That is an unfounded allegation, and if you are as interested in a productive dialogue and intellectually honest exchange of information as your preceding comments made it appear, you might consider retracting that remark.

      While we do not strictly regulate the tone of the pieces submitted by our many contributing writers, we take pains to ensure they are well researched and offer useful, accurate facts and commentary. And our policy is to allow posting of all comments offered, other than to screen out profanity and spam.

      You may be directing your frustration at ToughLove, a frequent commenter on UnionWatch.org, who tends to be a relentless debater. But ToughLove is obviously a financial professional who has studied the issue of pension sustainability in great depth, and he generally writes with a high level of accuracy. And if HE becomes frustrated and adopts a tone you find offensive, you may rest assured that (1) that tone is not the tone of UnionWatch or its editorial staff, and (2) his frustration is understandable given the hundreds of billions of dollars that are being expropriated each year from taxpayers and mismanaged by public sector unions and Wall Street pension funds – in partnership – to provide retirement security to government workers that is many times greater than that of the taxpayers they supposedly serve. Not only is this profoundly inequitable and un-American, but the scale of the unfunded public employee pensions threatens our nation’s overall economic health.

      If there is a preponderance of “misinformation,” Mr. Peery, it is coming from the unseemingly well-funded side of the public sector unions and their partners in the Wall Street pension funds, not from the reformers.

      • Tough Love says:

        Editor, Thank you for your supporting statements. I was just about to reply to David Peevy’s comment by simply pointing out that he still refuses to address the root cause of the problem (the overly generous pensions promised all Public Sector workers), when your response to him appeared.

        Instead, I will simply respond to Mr. Peevy by re-posting (a comment I prepared several years back) demonstrating that excess in considerable detail.

    42. Tough Love says:

      To David Peevy (Board member of LEOFF 1, Coalition, Law Enforcement Officers and Fire Fighters, Washington, Board Members, and a retired Seattle Firefighter).

      I’m sure the readers would like your thoughts on the following demonstration of the excessive generosity of Public Sector pensions:
      ****************************************

      Even if you take (the now rare) Private sector worker who still has the old style (ala what Civil Servants have) Defined Benefit Pension, the “formula benefits” NEVER EVER approaches the Richness of what Police & Fireman get. The REAL costs are well hidden in the “details” as I will demonstrate ……..

      A 30 year Private career worker just “might” get a pension annuity of 40-50% of base pay, with NO Post-retirement COLAs, and, if they retire at 55 (vs the more standard 60-65), a 25% “actuarial reduction” in benefits for starting to collect at this earlier age. Also, overtime is NEVER included in pensionable salary in the Private Sector.

      So lets work up a comparison for a California Policeman or Fireman (with base salary of $100,000, $50,000 of overtime, 30 years on the job and now retiring at age 55, with a 3%x30 years = 90% of final pay pension), vs the Private Sector worker.

      The Private sector worker gets a life annuity (with NO COLAs) of (we’ll use the higher 50% figure) 50% of $100,000 = $50,000 reduced to .75x$50,000 = $37,500 due to actuarial reduction associated with payment beginning at age 55. Using an actuarial table of Life Annuity factors, the Present Value (think of this as the up front money it would take to buy this payout annuity from an insurance company) is approximately $37,500 X 14.24 =$534,000. That’s it, there is nothing else.

      The Policeman/Fireman get a life annuity (WITH COLA, the incremental cost of which we will address later) of 90% of ($100,000+$50,000 overtime) = $135,000 annually. With NO post-retirement COLAs, a similar calculation for the Policeman/ Fireman yields (noting that there is no reduction for payment beginning at age 55) $135,000 x 14.24 = $1,922,400.

      So, so far (were aren’t done yet) the “Cost” of the Civil Servant’s pension is $1,922,400 vs $534,000 for the Private sector worker MAKING THE SAME PAY.

      Now lets address the value of the COLA. The mathematics is quite complicated, but a life annuity of $135,000 to a 55 year old WITH post-retirement COLAs (with an assumed inflation adjustment of 3% per year) is roughly equal to a NON-COLA life annuity of $169,800. Therefore, on a apples-to-apples comparison with the Private Sector worker (whose pension is NOT inflation adjusted via a COLA) the upfront cost of the Policeman/Fireman’s pension is $169,800 x 14.24 = $2,427,952 (since the 14.24 Life Annuity factor is applicable to a non-COLA-adjusted pension payout)

      We aren’t done yet …… since we haven’t considered the ENORMOUS cost of (free or VERY heavily subsidized) RETIREE healthcare afforded to the Policeman/Fireman, but RARELY the Private Sector worker. This cost for someone age 55 (10 years before being eligible for Medicare) is truly HUGH. Rough estimates (with 8-10% inflation in medical costs) for Family coverage typically put this cost at approximately $500,000 (more if subsidized coverage continues post-Medicare age).

      So far we have (for the SAME PAY)…..

      COST of the Private Workers Retirement benefits = $534,000

      Cost of the Policeman/Fireman’s Retirement benefits = $2,427,952 + $500,000 = $2,927,952.

      In fairness, Policeman/Fireman contribute a percentage of pay toward their pension (but not retiree healthcare). I could work up an estimate based on assumed year-by-year pay over a career, but for brevity (and since I’m tired of writing), lets assume the accumulated value of these contributions at retirement is $500,000.

      We are STILL left with a TAXPAYER FUNDED $2,927,952-$500,000 = $2,427,952 “cost” for the Public Servant vs a $534,000 EMPLOYER FUNDED “cost” for the Private Sector worker …… BOTH with the SAME PAY.

      Another way to look at this is that TAXPAYER’S are FORCED to pay $2,427,952/$534,000 = 4.55 TIMES as much as the typical Private Sector employer is willing to pay in retirement benefits……… or alternatively …… TAXPAYERS are FORCED (via their TAXES) to provide a pension to Policeman/Fireman EQUAL IN VALUE (i.e., “cost”) to a Private Sector worker making 4.55 TIMES as much pay.

      Isn’t it time for a change ????

    43. David Peery says:

      Editor stated:

      “……you are implying that what we are offering on UnionWatch.org is “tired misinformation and outright hatred.

      That is an unfounded allegation, and if you are as interested in a productive dialogue and intellectually honest exchange of information as your preceding comments made it appear, you might consider retracting that remark.”

      Sir! (or Madam)
      I will retract the comments insofar as they may pertain to yourself or other writers herein. I have “plumbed the depths” of Tough Love and found there to be much “tough” and precious little “love”. I choose to utilize my time as wisely as possible and speaking to deafness offers little in the line of useful dialogue.

      While there appear abundant examples of public employee pension pension excess, there appears little review of average public employee pensions in well-managed systems that adhered to actuarial standards.

      As I stated in a previous posting, I will not spend a great deal of time defending pensions that bring in over 100% of final average salary I must still object to a blanket condemnation of all public safety employees as greedy charlatans etc.

      And, in point of fact, without a clear understanding of all the specifics of pension funding levels, investment returns, actuarial assessments and all other relevant components of individual contracts one cannot even make the blanket statement that a pension is “over-generous.”

      It may well be that in certain circumstances individual contracts were in major surplus status due to high investment portfolio returns, and, if contract language spoke to that issue in a manner dictating that surpluses be dedicated to increasing benefit levels for pension members then actions to increase benefit levels would have been reasonable and legally correct. I repeat, from a strictly acutarial view, if contribution levels previously agreed to were such that increased benefits were possible then there should be little concern to citizens. When the economy collapses, or suffers significant down-turns, contract language SHOULD have been writted to address that eventuality.

      Further, should there be even a hint of collusion or illegal acts resulting in pension payments that were unearned or otherwise fraudulently obtained noe would most certainly hope that an investigation would be forthcoming and if guilty parties were found that they be prosecuted in a manner appropriate and any failures within the system corrected.

      In point of fact, there is ample evidence to the fact that there are many systems within the nation that are adequatley funded. My system, happily, is an example.

      As I have stated numerous times, investigations of pension funding problems more often than not reveals that the shortfall is NOT the fault of actives or retirees but rather a failure of plan administrators to fund their share as previously agreed and as recommended by plan actuaries.

      The monumental levels of blame placed upon union members and public employess for “bankrupting America” speaks ill of the news media and those signatories to legally binding contracts whose failure to fund the system resulted in ever-growing unfunded liabilities.

      While local municipal and state leaders ask our members for political support and we decide to actively provide said support we are providing service to those individuals. In exchange, we ask for nothing more or less than appropriate consideration in contract negotiations including issues of safety, hours, and working conditions. Often, the negotiations are successful to the degree that we obtain a portion of our contractual requests as may be agreed to by those members representing the interests of our employing municipalities.

      Admittedly, the system is far from perfect, but it is the system that we are left to deal with. The point I would like to make is this; those individuals seeking our support get their support most usually in a matter of days, weeks, months and, sometimes, years.

      We, on the other hand, often get our benefit enhancements in the form of increased pension benefits in the distant future.

      As you may well imagine, any contract that benefits one party immediately and the other party much later, can be a great risk and a poor bargain for the latter if the former member fails to ensure that contractual elements are adequately provided.

      That, in a nutshell, is one of the major problems with public employee pension shortfalls today, Far too many legislators chose to under-fund or simply not fund at all, those pensions that had been written and guaranteed by them.

      If that sounds much like the same issue that ALL Americans are having with our national Congress it is indeed.

      If all that is focued upon is public safety “give-backs, then those responsible members of state legislatures responsible for the adequate funding of pensions who choose to use those funds for other purposes will not have been brought to task for their failure.

      And should pension benefits/pay be reduced unilateraly the rule of law will be at risk and the door opens to the potential collapse of the entire legal system.

      I challenge those individuals who feel that union, public employee, or ANY contracts are fraudulent or signed improperly for any reason to bring suit to prove their case. We should all applaud any such reasonable attempt to shine the spotlight on such potential illegal acts, find out who is responsible and bring them to justice so that those acts do not again occur.

      And by calling for close examination of “all 3400 national publice employee pensions” I am suggesting that interested parties might learn valuable lessons in pension management that would serve to improve that very management process.

      There is ample evidence that small municpal systems are often ill-equiped to adroitly manage pension funding, investment and management. It’s a slap in the face to all those who do a decent job of pension management, no matter their size, to lump them in with a few bad apples,…….especially when the main problem is underfunding by legislators who simply kick the can down the road and then profess surprise when funds are not availalble to keep the system sound inthe near future.

      There is also ample evidence that the repeated request to change to a defined contribution system leads to an equally bad resolution. Australia is an example, Canada has some experience with that issue, and there are studies that show that self-managed 401-K plans simply do not provide adequate retirement funds for individuals.

      Rather that ending defined benefit systems we should all be looking at ways to improve that model, ensure adequate funding, ensure adequate over-sight and expand the system to include a majority of the population.

      Studies have shown that defined contribution systems may end up costing society more than current defined benefit plans.

      Endless examples of “top-step fire/police pensions vs private sector workers” is meaningless,…absolutley meaningless,…without a close examination of the underlying issues that may have made one pension or the other “reasonable under the circumstances or unreasonable under any circumstances.”

      And when you say that “…his tone is understandable given the hundreds of billions of dollars that are being expropriated each year from taxpayers each year and mismanaged by public sector unions and Wall Street pension funds – in partmnership-……” tell this writer that you yourself either dont’s care about the underlying causes or that you have some other reason to ignore common sense.

      Those funds that you refer to as “expropriated” are actually accessed as legally required by contractual agreement. If you find that unacceptable perhaps you should do a bit of study to find out who is responsible? Again, I will emphasize; if you beleive that illegal acts have occured, bring suit. You would do every well-managed fund a favor. And I can assure you, to my knowledge there is NO collusion between labor and Wall Street.

      In point of fact, I beleive that our current financial condition is a result of illegal acts by Wall Street, bankers, mortgage writers and others that have resulted in the current fiscal crisis.

      I hear precious few attacks upon those groups in the rhetoric of this website.

      I take the view that those systems that are well funded and well managed should be used as examples that others may emulate. Those systems that are under-funded should also be studied to find the root causes and then seek appropriate corrections. To toss them all in the same hopper and perpetuate sophistic arguments against them all serves no positive purpose.

      You also stated:

      “If there is a preponderance of “misinformation,” Mr. Peery, it is coming from the unseemingly well-funded side of the public sector unions and their partners in the Wall Street pension funds, not from the reformers.”

      I beleive that your “reformers” should be seeking union support in opposing the theft of American hopes and dreams with their financial instruments that have served only themselves. We should be partners, not opposing entities. It is Wall Street and a do-nothing Congress that has failed American interests.

      I would make the observation that the tenor of a website often results in a broad dialogue or simply a few die-hards who forestall any productive and respectful responses.

      Thanks for your thoughtful response.

      d. peery

    44. Tough Love says:

      David Peery, I was surprised UnionWatch didn’t call you on the carpet sooner. Apparently the Editor missed your earlier insult wherein (towards the end of your 12/26 @ 12:58 comment) you said … “I have to say that this site is very much simply an anti-union screed.”

      As to your just-posted response to The Editor, surely you expected a reply to this repetition of the same “tired misinformation”, using your accusatory words to describe UnionWatch….

      (1) You said …”As I stated in a previous posting, I will not spend a great deal of time defending pensions that bring in over 100% of final average salary I must still object to a blanket condemnation of all public safety employees as greedy charlatans etc.”

      Considering that my earlier response to this statement should have sufficiently embarrassed you drop that issue, I’m quite amazed you are repeating it. Repeating my earlier response to you …

      I’ll point out that that a 100%-of-pay-pension, COLA -adjusted, is just about equivalent to a 133%-of-pay-pension WITHOUT COLA adjustments. So all I can say to your statement is …. my, how generous of you to concede that point when it is a RARE Private Sector pension that pays more the 50% of pay.

      (2) You said …”And, in point of fact, without a clear understanding of all the specifics of pension funding levels, investment returns, actuarial assessments and all other relevant components of individual contracts one cannot even make the blanket statement that a pension is “over-generous.””

      Your lack of understand seems to have few bounds. Over-generous has nothing to do with funding or any actuarial considerations. Over-generous exists when “Total Compensation” (cash pay plus pensions plus benefits) is greater (in comparable jobs) for Public vs Private Sector workers. This over-compensation of Public Sector is typically not via much greater “cash pay”, but via FAR FAR greater pensions and benefits.

      (3) You said …” I repeat, from a strictly actuarial view, if contribution levels previously agreed to were such that increased benefits were possible then there should be little concern to citizens. ”

      An increase in future service year pension accruals that CANNOT be reduced (even prospectively) if developing mortality and/or investment experience is poorer than Plan assumptions, is INDEED a cause for great concern to Taxpayers … because THEY are responsible for all Plan shortfalls.

      (4) You said …”As I have stated numerous times, investigations of pension funding problems more often than not reveals that the shortfall is NOT the fault of actives or retirees but rather a failure of plan administrators to fund their share as previously agreed and as recommended by plan actuaries. ”

      We addressed that before as well. Plans that are VERY VERY generous are VERY VERY difficult for employers (i.e., the Taxpayers) to adequately fund, especially when taking into account that the Taxpayers are responsible for all but the 10-20% of Total Plan costs typically paid for by the workers’ contributions (INCLUDING all the investment earnings thereon).

      (5) You said …”While local municipal and state leaders ask our members for political support and we decide to actively provide said support we are providing service to those individuals. In exchange, we ask for nothing more or less than appropriate consideration in contract negotiations including issues of “safety, hours, and working conditions. . ”

      Interesting how you enumerated “safety, hours, and working conditions”, but left of PAY, PENSIONS, and BENEFITS as thought increases in such are not your PRIMARY objective. And you can consider that you-scratch-my-back-and-I’ll-scratch-yours anything you want. But an accurate interpretation is collusion, a trading of campaign contributions and election support for favorable votes on pay, pensions, and benefits. In any other venue, it would be considered bribery and criminal racketeering.

      And THEN, amazingly you said …”The point I would like to make is this; those individuals seeking our support get their support most usually in a matter of days, weeks, months and, sometimes, years. We, on the other hand, often get our benefit enhancements in the form of increased pension benefits in the distant future.”

      Does this not indeed sound like horse-trading and collusion on the Taxpayers’ dime ?

      (6) You said …” Far too many legislators chose to under-fund or simply not fund at all, those pensions that had been written and guaranteed by them.”

      Our elected representatives are indeed self-interested and vote for what is generally in THEIR best overall interests. Part of that is promising FAR greater pensions than are necessary (to attract and retain a qualified workforce), reasonable, and affordable. It it hardly surprising that the same elected officials cannot find sufficient money to fully fund such excessive promises (that.

      (7) You said …”If all that is focued upon is public safety give-backs…”

      While the pensions of “safety workers” (police & fire) are MORE excessive than those of other workers, at every pay level, all Public Sector worker pensions RARELY have a value at retirement (for which the Taxpayer paid-for share of which is) less than double that of the similarly situated Private Sector workers …. and often 4x greater.

      (8) You said …”And by calling for close examination of “all 3400 national publice employee pensions” I am suggesting that interested parties might learn valuable lessons in pension management that would serve to improve that very management process.”

      Just MORE call for the same … delay, review, analyze … but DO NOTHING, the standard Union mantra.

      No, the spigot must be shut now … for CURRENT, not just NEW workers.

      (9) You said …”Rather that ending defined benefit systems we should all be looking at ways to improve that model, ensure adequate funding, ensure adequate over-sight and expand the system to include a majority of the population.”

      DB Plans with REASONABLE benefit levels can be designed and the few that remain in the Private Sector have much lower benefits that those typical of Public Sector Plans. That being said, I firmly believe that the traditional DB Plans (like yours) simply cannot function appropriately in the Public Sector arena BECAUSE our politicians simply cannot be trusted. That’s rather unfortunate because there ARE merits to the morality-sharing characteristics inherent to all DB Plans.

      And as if you were not aware, expanding to the entire population, DB Plans with the SAME (extraordinarily generous) level of benefits Public Sector workers typically enjoy is not only financially impossible, but would bankrupt AMERICA VERY VERY VERY quickly.

      While it is likely true (give the greed of Corporate America) that Private Sector retirement security could be enhanced to some degree, to a MUCH MUCH MUCH larger extent, the problem is the grossly excessive Public Sector Pensions rather than the shortfall in employment-related Private Sector pensions.

      (10) You said … “Endless examples of “top-step fire/police pensions vs private sector workers” is meaningless,…absolutley meaningless,…without a close examination of the underlying issues that may have made one pension or the other “reasonable under the circumstances or unreasonable under any circumstances.””

      I am assuming that you are commenting on my detailed comment comparing the pension of a career CA Police Officer with that of a similarly situated Private Sector worker.

      The workup I provided, rather than being “nonsense” and meaningless”, is right-on-point by a controlled caparison … with BOTH workers making the SAME cash pay, having the SAME years of service, and retiring at the SAME age. With the Public Sector worker earning no less in “cash pay” there is ZERO justification for ANY greater pension let alone one that is 4.55 times greater.

      (11) You said …”And when you say that “…his tone is understandable given the hundreds of billions of dollars that are being expropriated each year from taxpayers each year and mismanaged by public sector unions and Wall Street pension funds – in partmnership-……” tell this writer that you yourself either dont’s care about the underlying causes or that you have some other reason to ignore common sense.”

      The “cause” is eminently clear; self-interest and greed. Self-interest on the part of our elected officials who approved this excess to garner the votes to either get elected or say in office, and insatiable greed on the part of Public Sector Unions and workers … and a Taxpayer-be-damned attitude.
      **************************************

      Lastly, you have offered nothing new, just layer upon layer of attempts delay reform and to distract the reader from the ROOT CAUSE of the problem … the grossly excessive pension and benefits afforded virtually all Public Sector workers.

      And I’m still waiting …..

      You purport to support change to which the workers need to be part of. I say prove it. Suggest several financially MATERIAL givebacks from the workers …. beyond changes only for NEW workers or a few % increase in contributions from current workers.
      ***********************************

      And Happy New Year to all readers !

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