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Topic: GOP targets pensions-teachers, cops, fire fighters,unions
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El Supremo

Michigan Capital Confidential
Delayed Payment On Granholm Early Pension Gambit Raises Costs To Taxpayers
Michigan pension office helped pass costs to future taxpayers
By Tom Gantert | Feb. 6, 2017 | Follow Tom Gantert on Twitter

In a 2010 gambit to reduce overall public school expenses, Michigan Gov. Jennifer Granholm proposed an early retirement incentive for the states highest-paid teachers. While the move would temporarily increase pension expenses, it would also reduce school payroll costs.

Specifically, the bill that ultimately passed was projected to add $1 billion in new pension liabilities, which would be paid off within five years.

Thats not what happened though. The state's Office of Retirement Services, which manages the school pension system, waited for three years to start making payments on the increased pension debt, greatly increasing the long-term burden. Then lawmakers eager to avoid spending cuts elsewhere in the budget extended the repayment period from five years to 10 years.

Delaying and lowering payments has caused this debt to increase. Even though the state has made roughly $275 million in payments, the total debt from the early-retirement incentive has increased by an additional $150 million to $200 million over and above the original estimate of $1 billion.

Despite three years of payments from 2012 to 2015, the state still owes about $1.2 billion on the maneuver, according to an analysis by James Hohman, assistant director of fiscal policy for the Mackinac Center for Public Policy. These added costs contributed to the $26.7 billion in unfunded liabilities the school pension system carried as of 2015, the most recent year for which numbers are available.

Among other negative effects, having to catch up on this debt is placing a heavy strain on the budget of every public school district in the state.

The Office of Retirement Services defends its decision to draw out the repayment of costs incurred by the 2010 school pension benefit sweetener:

The decision to lengthen the payoff period for the early retirement incentive was absolutely the right decision because it allowed the state to prefund retiree health benefits, said Kurt Weiss, spokesperson for the Office of Retirement Services, in an email. Prefunding future retiree health costs, rather than using the flawed pay-as-you-go method, is another example of the smart fiscal practices that have been utilized to put Michigan on the path to paying off its long-term liabilities in a fiscally responsible way.

Its also important to remember that these decisions are not made in a vacuum at the Office of Retirement Services; they are recommended in the governors budget and ultimately approved by the Legislature, Weiss said.

Hohman says he is not convinced the office did the right thing.

"The decision to defer payments on the early retirement incentive is unrelated to prefunding retiree health care," Hohman said. "It was a matter of budget prioritization. But it underscores that the Office of Retirement Services is happy to pass costs to future taxpayers, so long as new employees still get a defined benefit pension plan that lacks this protection."

Hohman also noted that the pension obligations the retirement office chose to delay funding are guaranteed by the Michigan Constitution. In contrast, the post-retirement health insurance benefits it gave priority to are not an enforceable taxpayer obligation and can be eliminated or trimmed at any time. They were cut in 2012.

The state has a long history of underfunding the Michigan Public School Employees Retirement System. Records reveal that in the 1970s, the state was using a 50-year amortization window, which is 20 years longer than what accounting experts recommend.

The state is perfectly happy deferring payments into the pension system to the future when it finds it convenient, Hohman said. Thats why the state ought to put new employees into a 401(k)-style plan that doesnt allow the state to put the costs on future taxpayers.

This is part of series of stories looking into how the public school employees retirement system has ended up with $26.7 billion in unfunded liabilities while under the stewardship of the Office of Retirement Services.
Post Thu Feb 09, 2017 8:21 am 
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El Supremo

Michigan Capitol Confidential

School Pension Iceberg: Beware Whats Under Budget Surface
Above or below the line, pension costs come out of education budgets
Feb. 9, 2017

Gov. Rick Snyder presented the details of his 2017-18 executive budget recommendation on Wednesday. They cover the fiscal year that begins Oct. 1.

Snyder proposes that the state directly deposit $1.1 billion to the school employees pension program known as MPSERS. Thats 7.7 percent of the $14.3 billion K-12 education budget. Its also more than the amount proposed for special education ($954 million).

ForTheRecord Says: That budget line-item is only part of the story. The $1.1 billion does not include additional contributions that come out of school district budgets. In the 2015-16 fiscal year, districts, community colleges, state universities and individual employees will have contributed a total of $3.97 billion. Most of the annual contributions go toward catching up on the systems $26.7 billion unfunded liability, accumulated from failing to adequately fund the system over many years
Post Sat Feb 11, 2017 7:12 pm 
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El Supremo



Home NEWS Days After DeVos Confirmation, GOP Lawmakers Planning To Take Away Teachers Sick...
Days After DeVos Confirmation, GOP Lawmakers Planning To Take Away Teachers Sick Days
Ron Delancer

Steven Singer, a teacher, blogger, and education advocate, recently sent an open letter to the Pennsylvania legislators, calling out their proposal to take away teachers sick days.

The letter, originally published on his website and later on The Huffington Post, reads:

Dear Pennsylvania legislators:

So now you want to take away teachers sick days.

Sabbatical, sick days, bereavement leaves the Senate Education Committee voted 7-5 to strip them from the law and make teachers bargain for them with their districts.

So the next time I get sick, you dont want to guarantee I can take the day off. If my mother dies, you dont want to protect my right to attend her funeral.

The full legislature still has to vote on it, but thats pretty cold.

Which brings me to my first question: Why do you hate public school teachers so much?

Seriously. What did teachers ever do to you? Did we give you a bad grade when you were kids? Did we give you detention? What did we ever do to earn such animosity?

You obviously must have something personal against teachers.

Its understandable. Even though the majority of Pennsylvanians voted for Democrats, most of you are Republicans. You have gerrymandered the state so that you artificially have the majority, and as such you must espouse the most radical positions possible. Otherwise, youll be primaried by someone even farther right a Tea Partier, a plutocrat, an anarcho-capitalist, a fascist.

We see the same thing playing out nationally. Hello, Donald Trump!

So its no surprise that after stripping public schools of almost $1 billion every year for the past five years, after tens of thousands of teachers have been laid off, after youve given away millions of dollars to private corporations to run fly-by-night charter schools or through tax credits to religious schools well, its no surprise that you feel the need to continue the war on teachers.

Its paying off for you big time.

Not so much for our school children. They have had to deal with increases in class size, narrowing of the curriculum, reductions in extra-curriculars, cuts in tutoring just about every deprivation imaginable.

I wonder do you realize that every attack against teachers is also an attack against students? Making sick teachers come to school wont improve kids educations. Forcing educators to choose between work or seeing their loved ones off to their final resting places wont boost test scores. Do you understand that or do you just not care?

Follow-up, if I may: do you realize that most public school teachers are women? Does that factor in at all? Which do you hate more, the gender of most teachers or the fact that we are unionized?

Oh, and Pennsylvania School Boards Association, dont think weve forgotten you. We know you requested this mess, Senate Bill 229. Instead of standing with your teachers to fight for fair, equitable, sustainable funding, youve decided to ask the legislature if you can stiff teachers to make ends meet. Were there for your kids everyday, and this is how you thank us. Thats gratitude.

Its what we get for being one of the last workforces to be unionized. We have the temerity to demand fair treatment. You cant just do whatever you like with us, you have to actually sit down with us at the bargaining table and talk.

Legislators, we know its something that infuriates your base. No, I dont mean the people who vote for you. I mean your real base the corporations, millionaires and billionaires who pay your real salaries the unlimited and shadowy campaign contributions that, lets be honest, are really nothing less than legal bribes.

We shouldnt be surprised that you have prioritized taking away legal protections for teachers sick days. It is quite in line with what you want to do to the profession. You no longer want highly qualified teachers making a middle class income who then can stay in our schools for their entire careers. You want lightly trained temps who use teaching as a stepping stone to a job that pays enough to live.

After all, if we afford teachers the status of professionals, they might actually be able to jump all the other hurdles weve put in front of them and educate the poor.

That would be terrible.

Despite all the standardized testing, Common Core, value-added measures, budget cuts, and constant propaganda about failing schools, they might actually teach these kids to think. Thats the last thing you want.

A thinking public might see how much youre screwing them over. They might actually rise up and fight. They might refuse to accept the status quo that you are so desperately trying to protect.

Thats your real endgame. And though it makes me sick, I suppose I will no longer be able to take off.

Ill just spend the day, coughing and wheezing with the children.


Steven Singer

The Gadfly on the Wall.

Lets make sure legislators across the nation get this letter. Please pass it on!
Post Wed Feb 15, 2017 6:29 pm 
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El Supremo

Pension Funding Best Practices Remembered
But only when they serve bureaucrat Interests
By James M. Hohman | April 12, 2017
Last year, the states Office of Retirement Services testified against a plan that would offer new employees in the school retirement system 401(k)-style benefits. The office claimed that shifting employees would require increased costs in order to follow industry best practices. But state officials are already ignoring a large number of best practices when it suits them.

In a memo on the issue, the states actuaries note that the Government Finance Officers Association recommends, [F]or plans that are closed plans that still have active members, the continued use of a level percent of member compensation remains appropriate, but not for a long period (i.e. as the number of active members decreases).

Given that the state is paying off the retirement systems unfunded liabilities over the next 22 years, this seems to imply that it ought to pay more of the costs upfront. But this isnt the only best practice that the organization recommends. The report includes a number of practices that the state has ignored. These include:

The actuarially determined contribution should be calculated in a manner that fully funds the long-term costs of promised benefits while balancing the goals of 1) keeping contributions relatively stable and 2) equitably allocating the costs over the employees period of active service.

ORS is not doing this for the school retirement system. Contribution rates have not been stable and the costs of service are spread beyond employees working years. Contribution rates have steadily increased between 2000 and now, going from 12 percent up to 37 percent.

The average employee in the system is 46 years old, but the state is paying off unfunded liabilities over the next 22 years. This means that costs would be spread over the working lifetimes of the current workforce if its members worked until they were 68. But they wont: The state assumes that most employees will retire when they are between 57 and 62. In other words, the state is taking longer to pay off the costs of retirement than industry best practices recommend.

This is not the only best practice that the state ignores. The association of finance officials further recommends:

Every government employer that offers defined benefit pensions or other post-employment benefits should make a commitment to fund the full amount of the ADC each period.

In contrast, Michigan has put in less than the actuarially determined calculations in 7 out of the past 10 years and 20 out of the past 29. Sometimes this is due to decisions made directly by policymakers, and those overseeing the pension system do little to influence lawmakers violating these best practices.

The method used for asset smoothing should: Be unbiased relative to market. For example: The same smoothing period should be used for both gains and losses[.]

The state reset its 5-year smoothing of pension assets in 2007 so it could put fewer dollars into the pension system that year. It did the same in 1997.

Amortization of the unfunded actuarial accrued liability should: Use fixed (closed) periods that never exceed 25 years, but ideally fall in the 15-20 year range.

Michigans current schedule pays unfunded liabilities off over 22 years, which is a little above the recommendation. But when the state adopted this schedule in 1996, it was a 40-year schedule.

The evidence is clear: The states Office of Retirement Services ignores or claims best practices when it suits its interests. That attitude is why Michigans pension systems are tens of billions of dollars in debt.
Post Wed Apr 26, 2017 11:44 am 
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