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A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

nytimes.com

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Re: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

#31

Post by rayiner »

acdha wrote: post #27
bartart wrote: post #10

Earlier quoted context omitted.

In California "More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay for as long as they lived." http://www.latimes.com/projects/la-me-pension-crisis-davis-d... This seems like a pretty big budget item, especially since most CA governme…

> This seems like a pretty big budget item, especially since most CA government pension funds haven't achieved their expected 7.5% return consistently for years if not decades. That seems like the big story: making plans assuming such a high average is simply malpractice. There are employee behaviors worth changing (e.g. the common problem of juicing final salary using overtime) but most of the blame should go to the…

They’re the same people. These policies were heavily lobbied for by public unions.

Re: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

#32

Post by pessimizer »

tantalor wrote: post #18
rootusrootus wrote: post #3

My mom is a PERS retiree. Not one of the rich ones, though she did retire at the perfect moment and she has a livable retirement income. One thing a lot of people (who do not work in gov't) don't recall is that while the economy was roaring back then, Oregonians working for the gov't went for years without so much as a cost of living adjustment. Some of the perks they got from PERS were in lieu of getting a raise. So…

Borrowing from the future is not a good strategy.

You always borrow from the future.

Re: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

#33

Post by refurb »

megaman22 wrote: post #20
bartart wrote: post #10

Earlier quoted context omitted.

In California "More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay for as long as they lived." http://www.latimes.com/projects/la-me-pension-crisis-davis-d... This seems like a pretty big budget item, especially since most CA governme…

The way most pensions work, you collect a percentage of your 3-5 highest salaries ever, assuming you've been there long enough. A good reason department heads in education shuffle every three years

Plus those 3-5 highest years include overtime.

Bust your ass with overtime for 3 years and you can reap the benefit for the rest of your life.

I also recall the NYCFD had a problem with that and with people claiming disability right before retirement. The rate was something like 90%.

As a result a fireman who made a base of $100K per year (just a guess), might end up with a full pension at 50 that pays him/her $150k per year until death.

Re: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

#34

Post by [deleted] »

rayiner wrote: post #22
rootusrootus wrote: post #3

My mom is a PERS retiree. Not one of the rich ones, though she did retire at the perfect moment and she has a livable retirement income. One thing a lot of people (who do not work in gov't) don't recall is that while the economy was roaring back then, Oregonians working for the gov't went for years without so much as a cost of living adjustment. Some of the perks they got from PERS were in lieu of getting a raise. So…

For the most part, government work does not pay poorly.[1] For example federal employees without advanced degrees earn a lot more in government than in the private sector: https://www.google.com/amp/s/www.washingtonpost.com/amphtml/... [1] I’m willing to entertain the idea our economic system as a whole undercompensates secretaries and overcompensates executives. That’s a different issue.

[deleted]

Re: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

#35

Post by toomuchtodo »

pessimizer wrote: post #32
tantalor wrote: post #18

Earlier quoted context omitted.

Borrowing from the future is not a good strategy.

You always borrow from the future.

This is a profound comment, even if off the cuff. Consider tens of trillions of fiat in worldwide liabilities, and how the entire world is relying on people yet to be born to carry the torch through taxes to pay for the debts we’ve amassed.

Re: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

#36

Post by pessimizer »

ebbv wrote: post #6

What a pathetic ploy to divide the working class against each other. The reason states are short on cash is the race to the bottom we’ve all been participating in since the 1980s when government policy and general economic policy moved from focusing on keeping the middle class healthy to massive tax breaks and cuts for corporations and the wealthy. For the last nearly 40 years every state has been playing the game of…

The worst part is citing the clearly outrageous pensions of a handful of well-connected elites, knowing they'll be used as stand-ins for the pensions of teachers and DMV clerks.

Re: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

#37

Post by racecar789 »

rootusrootus wrote: post #3

My mom is a PERS retiree. Not one of the rich ones, though she did retire at the perfect moment and she has a livable retirement income. One thing a lot of people (who do not work in gov't) don't recall is that while the economy was roaring back then, Oregonians working for the gov't went for years without so much as a cost of living adjustment. Some of the perks they got from PERS were in lieu of getting a raise. So…

Part of the blame lies with GASB (Governmental Accounting Standards Board).

Prior to around 2006, GASB allowed governments to avoid reporting pension liabilities on the balance sheet. Instead, pension liabilities were reported in the footnotes.

From 2006 onward, GASB started to tighten-up requirements, and eventually brought governmental accounting in-line with private sector accounting (aka liabilities are reported in full).

Once the new regs took effect...news reports about cities declaring bankruptcy started increasing.

Re: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

#38

Post by ams6110 »

bartart wrote: post #10
dasil003 wrote: post #4

Without actually showing some statistics on the pension payments and how the overall budget breaks down, I can't help but feel manipulated. Yes it's easy to paint an ugly picture of the privileged outliers, but I suspect the correlation between school and infrastructure cuts and money going straight into rich pensioners pockets is not quite as cut and dried as NYT would have us believe.

In California "More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay for as long as they lived." http://www.latimes.com/projects/la-me-pension-crisis-davis-d... This seems like a pretty big budget item, especially since most CA governme…

A 7.5% return seems irrationally optimistic for something like a pension fund. Is that really what they budgeted on?

Re: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

#39

Post by charleslmunger »

bartart wrote: post #10
dasil003 wrote: post #4

Without actually showing some statistics on the pension payments and how the overall budget breaks down, I can't help but feel manipulated. Yes it's easy to paint an ugly picture of the privileged outliers, but I suspect the correlation between school and infrastructure cuts and money going straight into rich pensioners pockets is not quite as cut and dried as NYT would have us believe.

In California "More than 200,000 civil servants became eligible to retire at 55 — and in many cases collect more than half their highest salary for life. California Highway Patrol officers could retire at 50 and receive as much as 90% of their peak pay for as long as they lived." http://www.latimes.com/projects/la-me-pension-crisis-davis-d... This seems like a pretty big budget item, especially since most CA governme…

In addition, it's not necessarily salary of the last year - it's income from the state. Which, until a few years ago, included overtime and unused sick/vacation days. The incentives were totally crazy - cities and counties paid salaries up front, but the state generally paid pensions. So it was common practice to divert all overtime to employees who were going to retire that year, to spike their income and get them a higher pension. With sick days and overtime, it was not unheard of for the calculated pension to end up paying more than the actual salary did before retirement.

To add insult to injury, Senate Bill 400 under Gray Davis (who was later recalled in a special election) retroactively increased pension payments for people who had already retired and started drawing pensions. And CALPERS keeps two sets of books, dramatically overstating the actual performance of their investments. [1]

It's a horrible mess - nobody wants to strip the earned retirement away from retirees, but the math just doesn't work out. When the market provides better-than-predicted returns, employee contributions are reduced and benefits are increased. When all of those extra returns are wiped out by a bubble popping, everything stays the same and the difference is made up by taxpayers. And it's incredibly attractive for politicians to buy the support of unions and their membership, when the cost won't be paid until long after they're termed out of office.

[1] https://www.nytimes.com/2016/09/18/business/dealbook/a-sour-...

Re: A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

#40

Post by Scoundreller »

cma wrote: post #29
dasil003 wrote: post #4

Without actually showing some statistics on the pension payments and how the overall budget breaks down, I can't help but feel manipulated. Yes it's easy to paint an ugly picture of the privileged outliers, but I suspect the correlation between school and infrastructure cuts and money going straight into rich pensioners pockets is not quite as cut and dried as NYT would have us believe.

The numbers I found: Oregon population: 4,000,000 Pension deficit 2017: $25,000,000,000 Per-capita share: $6,250 Assuming a large portion of the pensions will get spent on goods, services, and donations in state, it doesn't seem like a huge disaster, depending on how it grows.

Assuming the pensioners stay. Why stay completely when you can spend change your domicile to a zero-tax sunshine state or WA?
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