STUMP » Articles » Around the Pension-o-Sphere: Kentucky Lawsuit, Crazy Calpers, MEPs, and More

Around the Pension-o-Sphere: Kentucky Lawsuit, Crazy Calpers, MEPs, and More

by meep

11 May 2018, 16:55

Let’s start out with some happy!

GIANT UNFUNDED LIABILITIES ARE A RIGHT-WING CONSPIRACY

One major talking point from the right is that “unfunded liabilities” for public pensions are a horrible problem.

First, remember that these are the same folks who destroyed the pensions of privatesector workers by persuading bankruptcy judges to renege on millions of working families’ pension benefits.

Now they are after public pensions too. The right simply believes that working people need to work until they die—no pension benefits. So, “unfunded liabilities”—OMG. The right is simply fear-mongering to cause workers to agree to scuttle their own benefits. They cry “unfunded liabilities” with the implication that worker pensions are not affordable and financially unsustainable.

The person who wrote this, get this, is a public pension participant.

Musical interlude:

Okay, that isn’t really happy.

Public pension participants are not well-served by assuming that all is well.

via GIPHY

Reminder: Public Pension Watch: The Fragility of “Can’t Fail” Thinking

KENTUCKY PENSION LAWSUIT

There are two main lawsuits going on right now, but the one I’m eyeballing is the one of the Kentucky AG against recent KY pension legislation.

I assume the AG is going to win this particular fight, because he’s correct in that you can’t pass that law before doing some important stuff, like: getting an actuarial analysis of the proposal… AND CHANGING THE FRICKIN’ STATE CONSTITUTION.

Anyway, the governor is just throwing a hissy fit over the court proceedings, as if that made him like Trump.

Well, I guess I can see some parallels. Hmmm. Stuff to think about for later.

This bit is just a link dump. Here ya go:

Supposedly, this lawsuit will get done by July [before the appeals, obviously]… no clue.

CRAZY CALPERS

Seriously nutty things are going on in California pension governance.

I’m going to let Steven Greenhut kick this baby off: CalPERS board’s antics highlight political nature of nation’s largest pension fund | California Policy Center

The highly publicized dispute between CalPERS board members might at first sound like the antics at a small-town City Hall – or something out of a college student-council spat. The matter, however, is worth a close look because it reinforces that political aspect of the system and sheds light on the inner workings of the nation’s largest pension fund, which manages nearly $350 billion in public assets.

As the Sacramento Bee reported, a newly elected CalPERS Board of Administration member could not open her office door during a break from an April board meeting after the digital lock didn’t recognize her badge. Margaret Brown then “recorded herself failing to open the door, shared the video with a friendly financial blog and allowed it to be posted on YouTube under a headline calling the incident an ‘illegal lockout.’” She hired an attorney to communicate with the board and says she is being denied documents she needs in order to review the history of many board decisions.

Board President Priya Mathur has reportedly “disciplined Brown for bringing a friend into a restricted area in the CalPERS headquarters and enacted policies that effectively limited Brown’s ability to read confidential information,” the newspaper explained. The context: Brown is viewed as an outsider and watchdog candidate who beat an incumbent who was backed by almost all of the other board members. The long-simmering spat, despite its seemingly personal nature, raises several important issues about the pension fund.
…..
The fund’s apparent treatment of Brown is ironic given that CalPERS always is pushing for greater “diversity” on corporate boards. The CalPERS board is itself one of the least diverse boards imaginable. It’s dominated by government employees, retirees and politicians elected with the support of public-employee unions. The kind of diversity CalPERS pushes is of the ethnic/racial diversity variety, not of the “diversity of viewpoint” kind.

I’ve been reading about the brou-ha-ha via Naked Capitalism.

Let’s go check a piece from April on how Margaret Brown was being treated.

CalPERS Board Member Margaret Brown Still Illegally Locked Out, Given Only Highly Restricted Access to Transcripts
Posted on April 18, 2018 by Yves Smith

…..
Some readers asked whether Margaret Brown was making progress against the concerted campaign by CalPERS Board President Priya Mathur , aided and abetted by CalPERS staff under the supervision of CEO Marcie Frost, to undermine Brown’s performance of her duties of office. Since Brown is a fiduciary, this also means the Board President and CEO are putting their personal prerogatives ahead of performance of fiduciary duties.

And this behavior is persisting despite Brown objecting to it on March 19, as you can see at the end of this post, and Los Angeles Times reporter Mike Hiltzik depicting it as childish and a too-convenient distraction from what the board should be concerned about in a story yesterday.

Brown was still locked out of her office yesterday, even though it was board meeting week. Under the terms of her procedurally improper punishment she was still supposed to have access to her office then.

Moreover, Brown is not being given anything remotely resembling a reasonable opportunity to review transcripts of past “closed sessions,” meaning the portion of board meetings that are held in private.

This is Mickey Mouse shit for the largest public employee pension fund in the world.

You may be interested in who Margaret Brown is.

From her own Calpers board campaign website is her description of herself:

As a seasoned financial manager responsible for large scale capital projects I have worked on large bond measures including investment of proceeds.

For more than two decades I have administered the permissible and prudent expenditure of billions of dollars including the management of financial records for review by boards, State auditors, and independent citizens’ oversight committees.

As a lifelong public servant and steward of taxpayer funds I have fought tirelessly to eliminate waste, fraud and abuse in government.

I come from a family of public servants; my grandparents worked for the State, my father was a retired Naval Chief Petty Officer and USPS Letter Carrier, my mother a retired public school teacher, and my daughters are public school teachers in Contra Costa and San Bernardino counties.

So it’s not like she wants the pensions burned down.

Here is her Calpers official page [you may need the wayback machine for that in future years]

Margaret Brown is serving her first term on the CalPERS Board of Administration.

She has administered billions of dollars in school capital program expenditures for nearly 30 years and has managed financial records for review by boards, state auditors, and independent, citizen oversight committees.

Margaret currently serves as the director of facilities in the Business Services division of the Garden Grove Unified School District (GGUSD), where she is responsible for the planning, funding, and construction of large-scale capital projects. Under her leadership in capital planning and energy stewardship, GGUSD received in 2017 a Zero Net Energy Schools Leadership Award in the Visionary District category from the New Buildings Institute.

In the past Margaret has served on the board of directors for the Coalition for Adequate School Housing, a non-profit founded in 1978 to advocate for K-12 facilities funding and improve school facilities in California. In addition, she chaired the Facilities Professional Council for the California Association of School Business Officials.

She is an active member of the School Energy Coalition.

Margaret earned a bachelor’s degree in political science from the University of California, Riverside, and holds business and real estate degrees from Chaffey College.

She is on the board as a representative of Calpers participants – and it sounds like she is a Calpers participant herself. If you look at the board listing, she was elected by the grouping of all Calpers members (working and retired).

She beat incumbent Michael Bilbrey in 2017.

Excerpt:

This is a tremendous victory and Brown deserves all your congratulations. She won 53% to 47%, She not only beat an incumbent who had vastly more endorsements (Brown did have the support of two retiree organizations, as well as a police union), but with vastly less funding (a mere $28,000) and a non-secret ballot that looked designed to suppress votes by union members who might dare to oppose the official pick. Brown having unearthed dodgy election practices and raising alarms about them may well have played a role in her victory.

Another factor that Brown believes worked in her favor is that more and more beneficiaries are worried about CalPERS’ underfunding and see the board as too willing to coddle underperforming staff rather than ask tough questions.

Ahh, this reminds me of some of the battles between actuarial organizations. Hmmm.

More Calpers links:

It’s a pretty big problem, yes.

MULTIEMPLOYER PENSIONS UPDATE

What happens when your pension fund runs out of money

Harry Van Alstyne and his wife Susan used to go out to dinner every Saturday night — until his pension was cut by 29% last October.

Now, they’re thinking about selling their home and skipping their annual trip to Maine. They’ve already dipped into their savings.

This is not the retirement they planned for. After working for 30 years as a truck driver for UPS, Van Alstyne was promised $5,141 a month by the The New York State Teamsters Conference Pension and Retirement Fund.

“I hated the job from day one, but I stayed with it because I was promised a secure pension,” said Van Alstyne, now 64.

When he retired in 2006, he was receiving his full pension. But the fund was hit hard during the financial crisis and never fully recovered. A 2016 report projected it would run out of money as soon as 2026.

Let me do some math. He retired in 2006; he is 64 years old in 2018.

He retired when he was about 52 years old. Making about $60K/year in pension.

52 years old is really really young to retire, whether for a truck driver, a cop, or even a firefighter.

You can read the whole thing here, but here are a few other things to consider:

- the amount he gets after the cuts is higher than what PBGC “guarantees” for MEPs (that’s one of the conditions to allow these cuts before the money completely runs out)
- he’s covered by Social Security

Those two items do not hold for public employees. There is no “guarantee” for when public pension fund cash runs out. (the PBGC “guarantee” may also be ephemeral, of course)

Many public employees are not covered by Social Security (of course, that was in exchange for not having to make FICA contributions… and of course, private sector employees may find the Social Security promises fairly lacking).

I understand having such a large cut when you are in retirement is really tough. But here’s the deal: if you retire at age 52, and are expecting to live about as long in retirement as in your working years… you have to contribute a whole lot to make sure that promise will hold.

The New York Teamsters (and other Teamsters unions & their pension funds) did not contribute enough.

Yes, I understand that these people are hurting, but a lot of people are hurting in retirement, and have nothing but Social Security… and the average benefit is more like $12,000 per year, not $60,000.

So why bail out these guys (other than the politics to win votes in key states), and not do something for the elderly poor?

We can’t do it all without ending up like Greece. So. What’s it gonna be?

Additional MEP links:

As John Bury writes, it sounds like all the congresspeople involved want a bailout… of at least the politically-critical funds.

But it may end up, when they start to dig, to sound more and more untenable. We’ll see what they put out there later this year.

PUERTO RICO

Puerto Rico is kind of a financial black hole. Money goes in, no information comes out.

Here is something on the crappy state of Puerto Rico’s infrastructure:

NY Times Interactive: How Storms, Missteps and an Ailing Grid Left Puerto Rico in the Dark

It took months to restore electricity in Puerto Rico after hurricanes dealt a one-two punch. Many homes are still without power, and the system’s future is far from certain.

YABUCOA, P.R. — Rafael Surillo Ruiz was on the way to San Juan when he noticed that all the traffic lights had gone out. Mr. Surillo is the mayor of Yabucoa, among the first communities struck by Hurricane Maria last September, and for months he had been lobbying federal officials, local officials, utility officials — anyone who might help the thousands of his constituents still waiting to get their power back.

Now, as he headed north for yet another meeting, the phone calls from home confirmed the worst: Not only was his city of spiky mountains, lush green marshes and rugged coastline totally powerless again; the entire island was blacked out.

It was a rudely inauspicious omen, even for a man sunk seven months deep in frustration and disbelief.

“You have to understand that half our population still does not have power,” Mr. Surillo said the day after the April 18 blackout, recalling the morning after Maria when he emerged from his operations center to see the Yabucoa city hall devastated, houses smashed and downed power lines and poles littering the streets and countryside. The realization that the island has been left with such a flawed and fragile system after so much time and money spent on recovery, he said, “hurts in our hearts and souls as Puerto Ricans.”
…..
On the mainland, much of the coverage of the recovery has focused on the struggles of the island’s beleaguered power authority and its politically disastrous hiring of Whitefish Energy Holdings, a tiny and inexperienced Montana contractor linked to the Trump administration’s interior secretary. Here in Puerto Rico, the perception of a condescending and under-responsive government in Washington has been fed by the enduring image of President Trump seeming to minimize the catastrophe while tossing paper towels into a crowd.

But an examination of the power grid’s reconstruction — based on a review of hundreds of documents and interviews with dozens of public officials, utility experts and citizens across the island — shows how a series of decisions by federal and Puerto Rican authorities together sent the effort reeling on a course that would take months to correct. The human and economic damage wrought by all that time without power may be irreparable.

Additional Puerto Rico links:

So…. it’s not going well.

Um.

Have a great weekend!

via GIPHY

STUMP » Articles » Around the Pension-o-Sphere: Kentucky Lawsuit, Crazy Calpers, MEPs, and More » 11 May 2018, 16:55

Around the Pension-o-Sphere: Kentucky Lawsuit, Crazy Calpers, MEPs, and More