STUMP » Articles » Stupidity Round-Up: Funded Ratios and Racial Proportions » 21 April 2016, 12:01

Where Stu & MP spout off about everything.

Stupidity Round-Up: Funded Ratios and Racial Proportions  

by

21 April 2016, 12:01

Tomorrow is my birthday, and I don’t feel like covering idiocy then.

I want to be happy.

Or at least less peevish.

So two items for today: on the meaning of funded ratios and on how white is too white for a white privilege conference.

WHAT DOES THE FUNDED RATIO ACTUALLY MEAN?

This is a particular lie I’ve seen creeping in more and more to try to downplay the seriousness of public pension underfunding.

This is the latest example:

For members who have been paying into KPERS, that money cannot legally be touched; that 67 percent just means that if everyone in the system retired today, the state would only have two-thirds of the money it has promised to employees.

At the Actuarial Outpost I had the gut reaction THAT’S NOT WHAT THAT MEANS DAMMIT and somebody laughed.

It’s not funny.

So what does the funded ratio mean?

It’s a particular measure comparing the assets you have on hand with the accrued liabilities at a particular point in time. It’s a simple fraction, assets over liabilities.

One of the AO users described it as “the ratio of current assets to the portion of future benefits attributed to past service”.

Here is what the Public Employee Retirement Administration Commission in Massachusetts says:

The funded ratio of a system represents the actuarial value of plan assets divided by the actuarial accrued liability. When the funded ratio reaches 100%, a system is said to be “fully funded.”

In no actuarial method that I know of do we assume that everybody is going to retire tomorrow in setting the value of that liability. There is a set of assumptions, one of which is the distribution of ages at which people will retire.

Now, those assumptions can be wrong, but nobody uses the “everybody retires tomorrow” assumption unless something really bizarre is happening.

It’s not quite the same, but it would be equivalent to “everybody dies tomorrow” assumption for an actuary valuing life insurance reserves or “everybody is in a car accident tomorrow” for an actuary setting personal auto reserves. It’s absurd… and would make the funded ratio look much, much worse.

By the way, in the particular story being linked, the funded ratio is 67% at its most recent measurement. This is for Kansas trying to do some accounting tricks to make their budget look balanced. (ugh)

Remember that funded ratios are point-in-time measurements. They change. And it’s usually not only the level one should be concerned about, but the trend: 67% and the ratio is increasing? Not fabulous, but not necessarily concerning. 67% and decreasing? Troubling.

Let’s see which one Kansas comes out on:

That’s a little older than the 67%, but that’s just struggling to stay level. Let’s look at what contribution pattern we’re looking at:

Okay, that’s definitely concerning.

And stop with the accounting tricks.

Prior appearances of “everybody retire at once” lie:

The key part of the February 2015 post:

“That means if everybody retired today, we would come up $50 billion short,” explained Representative Glen Grell (R-Cumberland), one of the House’s acknowledged pension gurus. “Now, everybody is not gonna retire today and you have to pay this over time, but still $50 billion is a really big number.”

I kind of lost it yesterday, but now that I am in a calmer frame of mind, I say:

No. That’s not what that means.

Dumbass.

Someone needs to be calling these idiots out.

WHITE PRIVILEGE CONFERENCE TOO WHITE

No, I’m not going to point out whether or not a White Privilege conference is a good idea.

I just wanted to point out a key fact:

White Privilege Conference Attendees Complain Conference Is Too White

The Daily Caller News Foundation attended the 17th Annual White Privilege Conference in Philadelphia, held April 15-17. The following is part of a series of articles concerning events at the conference.

Disaffected participants in the 2016 White Privilege Conference (WPC) have taken to Twitter to complain that the conference was, ironically, too white and was actually filled to the brim with white supremacy.

…..
TheDCNF estimates about 70 percent of attendees were white.

You know what is also about 70% white?

The United States. Right now.

No, wait, it’s more than 70%:

The White, non-Hispanic or Latino population make up 62.6% of the nation’s total, with the total White population (including White Hispanics and Latinos) being 77%

Many Hispanic/Latino people look like regular old white people. I assume TheDCNF made their estimate by looks alone.

If we restrict the population to those only of the age to attend a professional conference, say between 25 and 64 (I didn’t pick this arbitrarily), then it’s definitely supermajority white. Go to current estimates, pick Annual Estimates of the Resident Population by Sex, Age, Race, and Hispanic Origin: April 1, 2010 to July 1, 2014; choose the July 2014 estimates and remember to pick Hispanic/not Hispanic.

For those age 25 – 64, 78% are white (whether Hispanic or not); it’s 63% non-Hispanic white in that age group.

Just like the overall population.

I think people get a false impression of racial proportions in our society (for example, only 13% of the U.S. population is black) because these proportions are not uniform. Two key places for media/entertainment: NYC and LA have much different mixes. Both places have higher proportions of foreign-born people than most of the country, for example.

In any case, yes, there are loads of white people in the U.S. You would think this wouldn’t surprise anybody, but there you are.


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