School districts begin reporting pension debt

The latest financial statements of the state’s fifth largest school district, Elk Grove Unified, list a pension debt of $414.6 million, up from no pension debt in the statement for the previous year.

How did the debt go from zero to hundreds of millions in a year?

As you might guess, it didn’t. The change is how the pension debt is reported under a new rule of the Governmental Accounting Standards board that took effect last fiscal year.

School districts are required to begin reporting their share of a pension debt that previously had been reported only by the two big statewide retirement systems for teachers and non-teaching employees.

Elk Grove reported $335.7 million as its share of the “net pension liability” of the California State Teachers Retirement System and $78.8 million for the California Public Employees Retirement System.

Most employees in the 65 schools of the district in Elk Grove, a city of 160,000 near Sacramento incorporated in 2000 during rapid growth, are teachers eligible for CalSTRS. Non-teaching employees are in CalPERS.

The potential impact of the new accounting rule, GASB 68, may have played a role in the endgame for legislation that gave CalSTRS a long-delayed major rate increase signed by Gov. Brown in June 2014, only a week before the last fiscal year began.

Without a rate increase, actuaries said, the new accounting rule could require CalSTRS to report the nation’s largest pension debt, $167 billion, an amount so large some feared it might increase the cost of issuing school bonds.

Jack Ehnes, CalSTRS chief executive officer, told the board in September 2014 that while talking to school officials he found a mixed view about the impact of reporting a huge pension debt.

“Some arguing it would have no effect if people understood the basis for this,” he said, “others arguing that it would have a significant effect on the bond market for schools. So, the question was out there.”

After the rate increase was passed in the nick of time, the debt or net pension liability CalSTRS reported for the first year under the new accounting rule dropped to $58.4 billion.

But the new GASB reports (different from the way actuaries will continue to calculate funding requirements) are intended to not only put a spotlight on pension debt with a more prominent display, but also to more quickly show changes.

That’s already happened for CalSTRS. The first reports required under the new accounting rule were for fiscal 2014-15, when the CalSTRS net pension liability, $58.4 billion, was based on the fiscal year that ended June 30, 2014.

The next annual reports will be based on the CalSTRS net pension liability for the fiscal year that ended June 30 2015, which jumped to $67.3 billion mainly because pension fund earnings dropped from 18.7 percent in 2013-14 to 4.8 percent in 2014-15.

Elk Grove Unified financial statements for June 30, 2015, show pension debt, p. 31

Elk Grove Unified financial statements show pension debt, p. 31

The new accounting rule was adopted during a time when estimates of state and local government pension debt nationwide ballooned to alarming levels, notably $2.2 trillion by Moody’s, a Wall Street credit rating firm.

Pension fund investments had huge losses during the financial crisis. The CalPERS portfolio plunged from $260 billion in 2007 to $160 billion in 2009 and now, nearly a decade later, is $280 billion as some see warnings of a new recession.

Moody’s and others contended that public pension funds have overly optimistic earnings forecasts (7.5 percent a year for CalPERS and CalSTRS) that conceal massive debt and the need for higher employer-employee contributions, benefit cuts or both.

The new GASB rule is a compromise between the status quo and lower earnings forecasts used by Moody’s, 5.5 percent, or an even lower risk-free bond rate that some economists think should be used for risk-free guaranteed payments like pensions.

Under the new rule adopted by GASB in 2012 after a lengthy process that began in 2006, pension systems are allowed to continue to use their own earnings forecasts to offset or discount the cost of pensions promised in the future.

But if their projected assets fall short, the rule requires pension systems to “crossover” to a lower bond-based earnings forecast to discount the remainder of their future pension costs.

“I’m seeing a lot of media basically saying there is going to be sticker shock when these things come out,” Alan Milligan, CalPERS chief actuary, said in 2011 of financial reports under the new GASB rule. “I’m not so sure about that.”

One reason for new CalPERS actuarial methods adopted in 2013 was better alignment with the new GASB rule. More importantly, like most California pension systems, CalPERS can raise employer rates and stay on the path to full funding.

The great exception, CalSTRS, lacks the power to raise most employer rates. But as noted, the Legislature, after years of urging, approved a large CalSTRS rate increase (AB 1469 in 2014) shortly before the new GASB rule took effect.

So, the Elk Grove Unified financial statement for last fiscal year said that its CalPERS and CalSTRS debt were both calculated without a crossover to the lower bond-based earnings forecast.

CalSTRS has a single plan and does not provide a net pension liability for school districts and other employers. Guidance on a website shows them how to calculate their share of the CalSTRS debt under the new rule.

CalPERS has more than 2,000 state and local government plans and has calculated a net pension liability for each, charging $2,500 per plan. The big system passed its first test to avoid a crossover to a lower bond rate and expects that to continue.

A look at two CalPERS plans shows little difference between the old “unfunded liability” debt, reported under the actuarial rules used to set annual employer contribution rates, and the new “net pension liability” debt reported under the GASB rule.

As of June 30, 2014, the San Bernardino police and firefighter unfunded liability was $162 million and the net pension liability $167.7 million; the Sacramento police and firefighter unfunded liability $375.2 million and the net pension liability $373.9 million.

A GASB rule adopted in 2004 told state and local governments to begin reporting the cost of retiree health care promised workers, a major long-term debt that often had not been calculated.

The new focus under the accounting rule was followed by a trend toward pension-like “prefunding” of retiree health care, making annual payments to an investment fund to help pay for benefits promised in the future.

A CalPERS retiree health care fund established in 2007 had investments from 471 local governments valued at $4.6 billion at the end of last year. The Brown administration is negotiating retiree health care prefunding with state worker unions.

Last year, GASB followed up by directing government employers to begin reporting their retiree health care debt in 2018 much like pension debt is reported under the new accounting rule.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. More stories are at Calpensions.com. Posted 1 Feb 16

39 Responses to “School districts begin reporting pension debt”

  1. Tough Love Says:

    The GASB “caved” under enormous pressure from the Public Sector pension Plans to NOT require valuation methods comparable to that which the US Gov’t REQUIRES of Private Sector Plans….. and quite similar to the methodology Moody’s now uses in it’s evaluation of the creditworthiness of the Gov’t entities that it reviews.

    Had it done so, CalPERS wouldn’t be allowed to continue (the absurd) discounting liabilities using the 7.5% rate on ANY portion of it’s liabilities (funded or unfunded).

  2. Michael C Genest Says:

    Today’s Bee reported school districts working hard to recruit more teachers. The impact of these reporting requirements should be to sober school boards and push them to make more sustainable deals with new teachers so that, at a minimum, they do not add to unfunded liabilities. I realize that, in theory, current contributions are enough to cover future liabilities for all new hires, but how’s that theory worked out in the past? New contracts should be based on more realistic discount/earnings rates or allow for hybrids or just go with DC’s. But, blithely replacing retirees and expanding the workforce without any sort of reform (and PEPRA doesn’t stack up to what’s needed) can only ensure that we keep adding to the problem.

  3. john m. moore Says:

    “..Calpers can raise rates and stay on a path to full funding.” Really? Two trillion using an ambitious income rate of 5.5%! Even CaLPERS has not contended that its raises would lead on such a path. I’m really worried about your incredible CaLPERS bias.

  4. John Bosch Says:

    What if….teachers and staff paid into Social Security and saved for their later years via a 401K account? It’s the law for those who pay their services. What is it about what they do that entitles them to pay, perks and pensions not available to the average citizen?

  5. jskdn Says:

    Could someone answer this?

    “CalSTRS net pension liability, $58.4 billion, was based on the fiscal year that ended June 30, 2014.The next annual reports will be based on the CalSTRS net pension liability for the fiscal year that ended June 30 2015, which jumped to $67.3 billion mainly because pension fund earnings dropped from 18.7 percent in 2013-14 to 4.8 percent in 2014-15.”

    So if all the normal costs were paid in full, and the funds assets earned the target discount rate of 7.5%, what would the net pension liabilities have been after one year? How much of that $8.9 billion increase would have not occurred?

  6. Ken Churchill Says:

    GASB makes three really big changes to how governments report their pension liabilities.

    1. Pension liabilities and eventually healthcare liabilities will finally be placed on the balance sheet and not a foot note. This will lead to a lot of balance sheet insolvency.

    2. They will eliminate the ridiculous allowance of pension obligation bond funds being listed on a balance sheet as a pension asset while at the same time using the money to pay down the unfunded liability.

    3. They will as this article states, require a treasury bond rate on the return for the unfunded liability. This is to adjust for the current practice of discounting the pension liability no matter what the funding ratio is. For example, if a pension is 75% funded (as most in California), then you need to earn not the 7.5% discount to break even, you need to account for the 25% of the funds that are not in your investment account. So if you are 70% funded you actually need a 9.4% return for your unfunded liability not to increase. So as now when bond returns are at 4% this means your stocks need to earn something around 14%. Anyone think the S&P will double every 5 years?

  7. mvojy Says:

    If education systems are to report these unfunded liabilities on their balance sheets is it THEIR liability? The education pension system is a state plan for which the state is bound. Local taxpayers would be mislead to believe that they themselves have created that liability and are responsible for funding it.

  8. Tough Love Says:

    Quoting John Bosch …………. ” What is it about what they do that entitles them to pay, perks and pensions not available to the average citizen?”

    They’re “special” and deserving of a better deal (on the Taxpayers’ dime)……… just ask them.

  9. Michael C Genest Says:

    mvojy, you raise an interesting point. CalSTRS is a state creation, but the teachers’ employers are the districts, not the state. Under the legal structure as understood by state attorneys who have studied this carefully, the state is only on the hook for what statute specifies and any shortfall from that is not a state obligation. But, this is a murky area. What if neither the state nor the districts paid up to cover a future cash shortfall? Can CalSTRS plead for bankruptcy? My guess is that it can because it is NOT a state (states don’t have access to bankruptcy), but a political subdivision (they do have access to bankruptcy, except school districts do not). So, CalSTRS is required by law to make the payments and neither the state nor the district can plead bankruptcy, but it’s not clear that either the state or the districts can be forced to pay more than they do now. So, maybe the end result would be CalSTRS bankruptcy, which the state could pass a law to prevent. In short, it’s a mess.

  10. Bob Says:

    Michael C. Genest, you state “New contracts should be based on more realistic discount/earnings rates or allow for hybrids or just go with DC’s”.

    Before we take you seriously, Mike, how about you lead the way and show your commitment to reform by giving up some of the lavish $125,000 pension you currently receive from CALPERS. Surely you could get by on tens of thousands less dollars less per year, as you believe future employees should.

    Oh, and ask your buddy Dan Pellissier to give up some of his lavish pension check, which he boosted by the purchase of five years of “air time”–ie, purchased service credit for work he never performed.

  11. Michael C Genest Says:

    Bob, I understand the sarcasm. While I was still working, I did everything I could to push for pension and retiree health care reform. Neither then, nor now, however, would I advocate for reneging on existing pension promises. Of course, it wouldn’t matter if I or anyone else advocated for that since it can never happen. We need to do a better job going forward of accurately budgeting for those long term commitments. That’s why I have advocated for various ideas that would reduce the costs of future accruals, or better price them in current budget terms.

    This is not an argument for how much total compensation to provide government employees. It is an argument to accurately budget for whatever compensation we choose to provide. If we did that we might be inclined to provide less, or alternatively allocate more to that purpose from current revenue. Of course, I would tend to be on the side of the former, as I was most of my career. But, I’m amazed that anyone would advocate for the third alternative, which is imposing those costs on future budgets, which is what we do now, in effect.

    I know that those of us who have accumulated benefits under current terms are always going to be envied by those who haven’t. Fair enough. But, I don’t think that has anything to do with this policy discussion.

    p.s., there are public employees (not state or school district employees) who are at risk of having their already accrued benefits being reduced in some future bankruptcy. Those folks should be advocating for pension reforms.

  12. Tough Love Says:

    Quoting Michael C. Genest ……

    “Neither then, nor now, however, would I advocate for reneging on existing pension promises.”

    Does NOT “reneging” on “existing pension promises” mean that you do NOT support material reductions in the FUTURE Service pension accruals of all CURRENT workers (noting such reduction are both Legal and quite routine in Private Sector pension Plans) …… sufficient to bring FUTURE Service Public Sector “Total Compensation” (pay + pensions + benefits) in line with those of Private Sector workers in reasonably comparable jobs.

    If you are NOT supportive of such reductions, please state your reasons.

  13. Michael C Genest Says:

    TL, I should have been more precise. I meant that once benefits are accrued, they should not be taken back. Of course, in some cases they are taken back in bankruptcy, as in Detroit. But, I certainly do not favor “the California rule.”

    Also, as a general rule, I think government workers total compensation should not exceed that of similar employees in the private sector, although for some of the categories that’s pretty hard to do, there aren’t really private cops or even firefighters. So, for those we should let demand for the jobs inform compensation decisions. The fact that most public jobs are very easy to fill says a lot about our current total compensation packages.

  14. Tough Love Says:

    Michael C Genest , Thank you for the response, but I did note your qualified answer (“Also, as a general rule”), not be able to SPECIFICALLY say …………. yes, I support material reductions in the FUTURE Service pension accruals of all CURRENT workers …… sufficient to bring FUTURE Service Public Sector “Total Compensation” (pay + pensions + benefits) in line with those of Private Sector workers in reasonably comparable jobs.

    As for Police and Firefighters, aren’t their pensions & benefits (by FAR) the MOST generous, and hence the MOST costly and the MOST egregious ?

    Of course there are no Private Sector Police (although there ARE a few private Sector companies providing fire-fighting services) but simply ending the discussion with … “So, for those we should let demand for the jobs inform compensation decisions.” …. is hardly sufficient or appropriate.

    Safety worker jobs risks as well as the education, experience, knowledge, and skills required are well-established and can CERTAINLY be compared to occupations in the Private Sector with similar jobs risks and requirements….. Private Sector occupations where compensation is truly “market-rate” as determined by employers freely competing for talent WITHOUT the VERY apparent compensation-distortions introduced into the PUBLIC Sector via the Public Sector Union’s BUYING of the favorable votes (on pay, pensions, and benefits) of our Elected Officials with Campaign contribution and election support.

    It is beyond disingenuous to simply say (for Safety positions) …….”So, for those we should let demand for the jobs inform compensation decisions.” Is not one City comparing it’s excessive safety wages to other Cities with equally excessive compensation, ALL of which results from a betrayal by our self-interested, contribution-soliciting, vote-selling, Elected Officials?

    The “Total Compensation” packages of CA’s Safety workers are RARELY less than $200K annually (and often $250+K) when pensions and benefits are PROPERLY valued, not with the extremely rosy assumption/methodology CalPERS employs (so as to minimize true Plan costs), but using the SAME assumptions/methodology that the US Government REQUIRES of Private Sector Plan Sponsors.

    Given the MODEST risks (as substantiated by the BLS) and quite typical employment requirements (as to education, experience, knowledge, and skills) this level of Safety-worker compensation is beyond absurd.

  15. Dan Pellissier Says:

    “Bob”, I just want to make it very clear that government employees should receive all of the retirement benefits they have earned and paid for. Yet in order to keep those retirement commitments, future earnings by current and new employees must be reduced. If the political system cannot balance these growing costs against the obligation to provide essential government services, eventually bankruptcy courts will make these changes.

    Someday government employees will recognize they are better off accepting reduced future benefits in exchange for improved retirement security. It is just math.

  16. Bob Says:

    BMike, “Bob, I understand the sarcasm.”

    Nope, Mike, not sarcasm. Your statement “Neither then, nor now, however, would I advocate for reneging on existing pension promises” speaks volumes about you. In short, screw everybody else, I got mine.

    You say “I know that those of us who have accumulated benefits under current terms are always going to be envied by those who haven’t. Fair enough. But, I don’t think that has anything to do with this policy discussion.”

    Nope, sorry, don’t accept your point. You contend the system has been badly underfunded in the past because of too low employer and employee contributions and unrealisitc assumption rates enabling those inadequate contribuitions. Of course, not that you are retired, you have escaped the obligation to pony up what would have been the “correct” contribution amount.

    So, how about making up for your past “sins” of undercontributing and showing the courage of your convictions. Take just a small–say 20%–cut in your pension, to lead the way. Surely you can struggle on by with only $100,000 per year, which will still be multiples more than most CALPERS employees will get.

    Or, just maybe, is your goal it “screw everybody else, jack up the current contribution rates and give lower benefits in the future— so I can be sure the system will have enough money to pay me”?

  17. Tough Love Says:

    Dan Pellissier,

    I couldn’t agree more that the FUTURE Service pension accruals of all CURRENT workers must be reduced …… but I’ll add, reduced ALL THE WAY down to what current Private Sector workers typically get in retirement benefits from their employers, a 3%-4% contribution int0 a 401K Plan, and the employer’s 6.2% of Pay Social Security contribution on their worker’s behalf. And for retire healthcare, nothing more than a modest annual ($300-$500) contribution into a Retiree healthcare HSA. EQUAL ….. but not better.

    However, I disagree with your statement …… “I just want to make it very clear that government employees should receive all of the retirement benefits they have earned and paid for.”

    While I will leave it up to “the math” and the specific financial circumstances of each City/Town to see if PAST as well as FUTURE service pension accruals need to be reduced, calling PAST service pension accruals both “earned” and “paid for (by the employees)” is quite lacking once the details are looked into.

    As to “earned” ……. sure, they were promised pensions that were granted by our Elected Officials, but weren’t the decisions of those Elected Officials colored by (a) accepting Public Sector Union campaign contributions and election support, and (b) their participation in the same or similar DB Plans …. knowing that the the more that they grant the rank & file, the More THEY will also get? And can you deny that current Public Sector pensions are typically MULTIPLES greater in “value upon retirement” (taking into account BOTH the richer formulas AND the MUCH more generous provisions, such as very young full/unreduced retirement ages and COLA increases … unheard of in Private Sector Plans) than comparable Private Sector workers (who retire at the SAME age, with the SAME pay, and the SAME years of service)? And if “negotiations” were involved in the determination of such pensions, exactly who at that negotiating table was truly looking out for the Taxpayers’ best interests …. anyone, at all ?

    As for the workers “paying for” their pensions …. really? It is a SIMPLE exercise to demonstrate in an Excel Spreadsheet that if all of the workers actual contributions were accumulated to their date of retirement (INCLUDING all the expected investment returns thereon), that RARELY would the accumulated sum be sufficient to buy more than 10%-20% of the VERY generous pensions that they have been promised. The other 80%-90% is foisted upon the beleaguered and betrayed Taxpayers. And please, don’t embarrass yourself with the magical argument that interest pays for most of the balance. No, the worker’s haven’t and don’t “pay for” their pension, they pay a VERY SMALL share of total Plan costs.

    Where we agree, is in your final paragraph …..”Someday government employees will recognize they are better off accepting reduced future benefits in exchange for improved retirement security. It is just math.”

  18. Bob Says:

    Dan Pellissier: “I just want to make it very clear that government employees should receive all of the retirement benefits they have earned and paid for.” Of course you do, Dan–you got yours, how dare anybody take it away.

    “Yet in order to keep those retirement commitments, future earnings by current and new employees must be reduced.” Oh, aren’t you just precious. All the current employees that have relied on court cases saying their future accruals can’t be reduced—let’s reduce them, because “Airtime Dan” has his credits and how dare anybody reduce his pension check.

    Just like your buddy Mr. Genest has been challenged—how about you give back your five years of airtime credit (worth $13,000 a year in pension) you bought for $75,000 in 2004, Dan? Hey, we can be fair, we will give you back your principal AND also give you, on that principal, the rate of return that CALPERS made on your deposit for your five year airtime purchase. Deal????

    “Someday government employees will recognize they are better off accepting reduced future benefits in exchange for improved retirement security. It is just math.” What a lovely thought. Not, of course that you would ever contemplate leading the way by agreeing to a reduction of your future pension checks by giving up the $13000 per year you get courtesy of your airtime purchase.

  19. SeeSaw Says:

    Right on, Bob! Workers entering the public-sector in CA now cannot aspire to the same benefits that Genest and Pellissier enjoy as retirees. Fact is–some public entities are employing new workers with “hybrid” plans–benefits with no DB pensions. If one is so lucky not to be hired at one of those entities and entered into a DB plan, the formulas have been lowered by PEPRA; the final calculation is based on three years average highest salary instead of one year; it is no longer possible to buy air time; and there is a cap on pensionable income. PEPRA was as good reform as you are going to get–we will not throw out the baby with the bath water!

  20. Tough Love Says:

    No SeeSaw, NOT …”Right on Bob”.

    While Bob is correct that Dan got much more than he (or any other Public Sector worker) should have ….. when rightfully compared to similar jobs in the Private Sector …. Bob is really arguing that he too should get no less than Dan.

    So what make him any better than Dan. Aren’t BOTH insatiably greedy and sticking the Taxpayers (who get soooooo much less) with the bill?

    Neither (nor should any OTHER Public Sector worker …. you included) get retirement benefits (pensions AND Retiree healthcare promises) ANY better than those typically granted comparable Private Sector workers.

  21. john m. moore Says:

    See-Saw: PEPRA grants pensions up to 2.7% of compensable salary x number of years at age 57. 2%@55 plans have created hundreds of millions of unfunded deficits and will continue to do so. PEPRA was a football “clip” blocking and making real reform more difficult. It is a classic Jerry Brown scheme where he put on a “skit” like a true reformer, but buried us. Now, except for Charter cities, new hires are under PEPRA–a terminal pension cancer, with no way out except Chapter 9 in bankruptcy. Go chapter 9!

  22. SeeSaw Says:

    Its not a matter of public vs.private, TL. Its apples vs. oranges. You keep trying to mix them. The two have not ever and will not ever be mixed because they are different from each other.

    Yes, I will repeat–“Right on Bob”. Air-time is not available any more and Bob knows that. He is just saying, “Don’t kick your own in the teeth!”

  23. SeeSaw Says:

    TL, the question should be, “Why don’t private-sector workers get pensions as good as those of the public-sector workers?” At least I am sustainable!! I can pay the electric bill when it comes, and there have never been any food stamps at my table. I am grateful–I don’t resent the size of another worker’s pension, as long as it was legal.

  24. Tough Love Says:

    SeeSaw, Why wouldn’t you be grateful ….. being part of the Public Sector who ROUTINELY get pensions 3 to 4 (4 to 6 for safety workers) greater in value upon retirement than those of comparable Private Sector workers who retire at the SAME age, with the SAME pay, and the SAME years of service.

    While “you” didn’t create the problem, YOU are one of the MANY unjust BENEFICIARIES of this perverse and grossly unjust system.

    And THAT is where the Taxpayers must look to right this wrong …. by taking the money back (by ending these unjust pensions) from the BENEFICIARIES.

  25. SeeSaw Says:

    I am one of the many……….unjust beneficiaries………….????? At present, my pension is $54,000, after eight full years of retirement which culminated a public-sector tenure of 41 years! Call that excessive if you want–it is just your opinion. Other than calling your talk what it is–I am secure in the belief that nobody is coming to take anything back from me, because there is nothing to take that is or was received unjustly!

  26. Tough Love Says:

    SeSaw, the pertinent question is what would your pension have been if you were a Private Sector worker retiring at the same age, with the same pay, and also with 41 years of service.

    Answer: A LOT less, and you neither earned nor “deserved” more …. on the Taxpayers’ dime.

    Given your age (mid-70’s from past comments ?), I agree that the likelihood is quite low that your pension will be reduced ….. although as things worsen, your COLAs may end and your retire healthcare subsidy will likely be reduced.

    What seems a MUST is that eventually future service pension accruals for CA’s CURRENT (as well as NEW) workers WILL be reduced, notwithstanding all the legal barriers CA’s self-interested Legislators & Judges have erected to make that so difficult.

    The MATH will leave no other option…… and I’m VERY good at math.

  27. SeeSaw Says:

    Not every public employee works in LE Mr. Moore. In my world, the miscellaneous worker category, PEPRA allows a maximum formula of 2.5% X total service credit, X compensable salary, at age 67. So how is that not pension reform, since the pre-PEPRA maximum formula for miscellaneous was 3% at age 60?

    “Go Chapter 9″………………………..Odd chant

  28. Tough Love Says:

    SeeSaw, It is not true pension reform because TRUE pension “REFORM” would bring PUBLIC Sector Pensions ALL-THE-WAY down to the level typically granted comparable Private Sector workers.

    And with Private Sector workers TYPICALLY getting no more in retirement than 3% to 4% of pay into a 401K Plan and their employers 6.2% of pay Social Security contribution on their behalf, the NEW CA pension you describe is STILL 2 to 3 times MORE generous.

    EQUAL …… but NOT better.

    Public Sector workers are NOT “special” and deserving of a better deal …. on the Taxpayers’ dime.

  29. SeeSaw Says:

    I worked in the private sector when I came to CA–a defense contractor–engineering division for manufacturer of reconnaissance cameras. I had a security clearance. I resigned after one year because I got married–people actually did that in those days . If I had stayed and worked in that industry for 41 years, I definitely would have made more than I ultimately received in the public sector. When I went to work in the public sector after a ten-year hiatus to have children, there was no SS and no pension plan–I just wanted a job. I am satisfied now that I did OK. You need to get off that soap box and do something positive with your life.. After you are soon gone, as we all will be, like in a puff of smoke–it will be said, “He was good at math”.

  30. john m. moore Says:

    Before PEPRA, all agencies could and many did adopt 2@50 for new hires for safety; 3%@50 was 50% higher.Now they can’t. Are you comfortable with your age 67 number?

    More importantly, all pensions at any of the above levels, including 2%@50 lead to cash insolvency. Most are insolvent on an accrual basis with market assumptions. Any agency that is close to cash insolvency has a fiduciary duty to file a chapter 9 and reject its defined pension plan. Thereafter social security and a defined contribution plan. Its time to grow up and stop the silly comparisons. The math defines what has and will continue because of the defined benefit pension scam. Chapter 9 is the game changer that will save Ca.

  31. Tough Love Says:

    Sorry SeeSaw, but it’s not a “soap box” …… there is ZERO (yes ZERO) justification for compensating Public Sector workers MORE than what that same worker would typically be compensated (in total in pay, pensions, and benefits) if working in the Private Sector.

  32. SeeSaw Says:

    Its not “my” age 67 number, Mr. Moore. Its the maximum age that a miscellaneous public-sector worker hired in CA after Jan. 01, 2013, must reach in order to attain the maximum pension amount. The comparisons that you evidently refer to are continually thrown out by TL and I keep responding in attempt to placate him. Yes, it is a useless exercise, but you are telling the wrong person to grow up. I am grown up and way past the age that I need to be told to do that. I recall reading in the CA State Constitution that the pension provider has a fiduciary duty toward the members–didn’t see anything regarding a fiduciary duty to file Chapter 9 and reject the DB plan if the cash got low. The three large cities that recently filed Chapter 9 in CA did not reject their DB plans. The state cannot claim Chapter 9. What a destiny to wish on others though……….

  33. SeeSaw Says:

    Its really stupid to sit around and proclaim that the “math” is going to swoop down like a tornado. The stakeholders in the DB plans, along with the actuaries, and other principals in the, respective, agencies should sit down and bargain until they determine ways to operate with the required numbers. Anyone who is not a resident of CA should just stay in their own state and tend to their own math problems!

  34. john m. moore Says:

    Your proposed method has ruined this once great state. After June 30, 2016, the last day of the fisal year, even sceptics will question whether there is any choice for cities and counties except chapter 9. The deficits as of that date will make it clearer that Brown and his govt. unions are Maddoff like. I understand that you don’t want to believe it, but that is the nature of irreversible bubbles.

  35. Tough Love Says:

    SeeSaw, When you have VERY material financial problems, those “bargaining” have toGIVE UP things of VERY material value.

    When have Public Sector Unions/workers EVER been willing to do so ? And no. PEPRA didn’t do so, by giving up things that are material value TODAY, not in 20 or 30 years (if at all).

  36. SeeSaw Says:

    Yes they have. The FF union in my former entity offered to have its own current 3% at 50 formula changed to 3% at 55. You can scoff all you want–such action would save my city money. They cannot do it at present though, because new state legislation must be passed to allow such. Public employees are decent human beings TL and were not born and bred for the purpose of working in the public-sector, so they will become greedy, as you continue to portray them. Trying to reason with you is useless. I don’t have to do anything more now than sit on the sidelines. Thankfully, I don’t have an urge to poke my nose into the discussions regarding all the problems you have in New Jersey.

  37. Tough Love Says:

    Quoting SeeSaw ….. “Yes they have. The FF union in my former entity offered to have its own current 3% at 50 formula changed to 3% at 55. ”

    The FF max out at 90% of final pay after 30 years. To do so under the 3%@50 formula, they needed to start at age 20 to do so by 50. Most stay to max out their pensions (@90%) and hence only a small percentage retired before 55 even under the 3%@50 formula.

    So no SeeSaw, this is by no means a MATERIAL give-back …. no matter how loud the FF and their Unions proclaim that it is.
    ———————–
    Quoting …… “Public employees are decent human beings”

    I agree, but there is ZERO (yes ZERO) justification for the current structure of gross overcompensation….. relative to their Private Sector counterparts (who via their taxes pay the wages, pensions, and benefits of Public Sector workers).

    ———————–

    Quoting …. “I don’t have an urge to poke my nose into the discussions regarding all the problems you have in New Jersey.”

    Poke all you want. It’s a rat-hole of Politician/Union scum, just like in CA.

  38. SeeSaw Says:

    You are right–it would have cost them nothing. But, it would have helped the finances of the City, which in the end is what counts. Who are you to demand that the blood of a public employee–any public employee–must drip before you can be satisfied!

  39. Tough Love Says:

    SeeSaw,

    It’s called “fairness”……. not …….. “blood-dripping”.

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