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News Items, by Subject

Government plans - state and local - misc

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Public Pension Funds Adopt Cost-Sharing Mechanisms to Stem Volatility
"[T]he collapse of the internet bubble and the Great Recession caused by the financial crisis of 2008 ... resulted in pension debt exceeding $1 trillion. Between 2003 and 2013 the cost of making required pension payments almost doubled... [S]ome pension systems have adopted formal cost-sharing mechanisms, adjusting contributions or benefits, instead of making unplanned benefit cuts or contribution increases. Almost 30 defined benefit pension plans in 17 states use cost-sharing mechanisms to manage risk[.]" (Pensions & Investments)
Present Consequences of Unfunded State Government Pension Liabilities and Ways Forward
"State governments with large unfunded pension liabilities are paying more to borrow from capital markets than are other states, according to [a paper by] Chuck Boyer of the University of Chicago Booth School of Business.... He asks two questions: [1] how are state governments' borrowing costs affected by unfunded pension obligations? and [2] do states with political constraints face higher borrowing costs?" (The Brookings Institution)
[Official Guidance] Text of OPM Final Regs: Federal Employees Health Benefits Program and Federal Employees Dental and Vision Insurance Program: Expiration of Coverage of Children of Same-Sex Domestic Partners
"Understanding that we have provided agencies with additional time for compliance given that overseas federal employees may not have been able to marry immediately following the Supreme Court decision, OPM is issuing a final rule removing references to domestic partners and domestic partnerships from the regulations. Based on the Supreme Court decision and the two additional year's lead time for domestic partners overseas to marry, the current language in the CFR is not needed and may be somewhat confusing. There is no change in coverage for children whose same-sex partners are married." (U.S. Office of Personnel Management [OPM])
What Explains the Differences in Public Pension Returns Since 2001?
"Investment returns for state and local pension plans varied over 2001-2016 from 6.3 percent for the top quartile to 4.6 percent for the bottom. The variation could be due to differences in asset allocation and/or to the returns by asset class. The analysis found that asset allocation -- in equities, fixed income, and alternatives -- was broadly similar across plans, while asset class returns showed more variation. Therefore, asset class returns turned out to be the primary reason for the disparities in overall returns." (Center for Retirement Research at Boston College)
How Do College Employees Choose Between Defined Benefit and Defined Contribution Plans?
"This study examines how faculty and staff at the University System of Georgia make this decision ... Mid-career, female, black and lower-paid employees all tend to prefer the defined benefit plan. Preference for the defined benefit plan rose for faculty during the period studied and fell for other staff. Those who choose the defined benefit plan often cite its perceived financial security. Those who choose the defined contribution plan often cite the likelihood of leaving their employer before the end of the defined benefit plan's 10-year vesting period." (TIAA Institute)
[Opinion] Pennsylvania's Pension Fury?
"Joseph Torsella, state treasurer, has accused Pennsylvania Public School Employees' Retirement System (PSERS) and Pennsylvania State Employees' Retirement System (SERS) of wasting $5.5 billion paid as fees to Wall Street investment managers whose funds performed poorly. The dispute follows similar rows in Maryland and California, where pension officials were forced to admit their failure over decades to disclose multimillion-dollar payments to private equity managers." (Pension Pulse)
[Opinion] What Is PEPTA and How Would It Impact Public Pensions?
"PEPTA would require state and local public pension plans to disclose their unfunded liabilities to the U.S. Department of the Treasury, but it would require them to calculate their liabilities using the rate of return on U.S. Treasury bonds. This would artificially inflate the unfunded liabilities to much higher levels than what the plans actually face.... The federal government has very little oversight of state and local pension plans.... These plans do report plenty of relevant information to the stakeholders in their states." (National Public Pension Coalition)
Fiduciary Standards for State and Local Government Retirement Plans
"To determine the responsibilities of trustees and other fiduciaries of state and local government plans, one needs to look to the statutes and regulations of the particular state. Interestingly, the language concerning fiduciary duties in many state statutes looks a lot like ERISA's.... A few states specifically incorporate ERISA provisions or DOL rules into their laws." (J.P. Morgan Asset Management)
New Jersey Pension Investments Guided by Social, Environmental Values
"The State Investment Council has withdrawn investments from a company that manufactures high-powered firearms, pressured two private-equity firms not to foreclose on Puerto Ricans displaced by Hurricane Maria last year, and urged Target not to do business with trucking companies that classify their drivers as contractors rather than employees.... [T]he investment council now is working on a formal policy on ... considering environmental, social and governance factors in deciding where to put pension investments." (
The Battle Over 'Vested Rights' in California
"From the beginning, the California Supreme Court, depending on the factual situation before it, has sent mixed messages.... The basic question comes down to: 'Can a California public agency make reasonable and necessary changes to the future pension benefits of current, active employees without providing something equivalent for anything taken away?' " (Best Best & Krieger LLP)
U.S. Public Pension Plan Mortality Assumptions (PDF)
"This study compares the mortality assumptions used for funding purposes by state-based and large-city public pension plans in terms of the annuity factors they produce ... Roughly one-third of the plans had adopted RP-2014 mortality base rates or a variation of them.... While 58% of plans use generational projection, about 37% of plans use static projection and 5% of plans do not project mortality.... Mortality assumptions for teachers tend to reflect longer life expectancies than for other job categories." (Society of Actuaries)
North Carolina Creates Solvency Fund to Pay Down Unfunded Employee Benefit Liabilities
"The Unfunded Liability Solvency Reserve Act creates a reserve that will be funded through several sources, including General Assembly appropriations, overflows from the state's rainy day fund, or savings from refinancing of general obligation bonds. Between pension and health care, the state has $50 billion in unfunded liabilities, $35 billion in health care alone. The solvency fund is believed to be the only one of its kind in the nation[.]" (Pensions & Investments)
[Opinion] The State Pension Model Isn't Working
"In theory, state pensions are stand-alone entities that collect contributions, invest them for growth, and then disburse benefits. Very simple. But in many places, all three of those components aren't working. Employers (governments) and/or workers haven't contributed enough. Investment returns have badly lagged the assumed levels. Expenses are more than expected because they were often set too high in the first place, and workers lived longer." (John Mauldin, in Forbes)
[Opinion] Stop Politicizing Pensions: The Sole Duty of Politicians Should Be to Deliver Maximum Return to Retirees
"In the latest movement to force political agendas into the management of public pension funds, [Mayor de Blasio and City Controller Scott Stringer] proposed in January 2018 to divest $5 billion in energy stocks from the city's pension funds.... New York City stands to lose $25 million immediately in frictional costs, and up to $1.5 billion over the next 50 years if it goes ahead with this plan." (Christopher Bancroft Burnham, via New York Daily News)
CalPERS Adopts 2019 Health Rates
"The CalPERS Board of Administration [has] approved health care rate and plan changes for 2019 that include an average 1.16 percent overall premium increase, marking the lowest health premium increase CalPERS has negotiated in over two decades.... Overall rates for seven of the nine HMO plans will be less than the 2018 rates.... A pilot program for reference-pricing pharmaceuticals will begin ... The PERS Select Basic PPO plan will adopt a value-based insurance design." (California Public Employees' Retirement System [CalPERS])
Connecticut Municipal Pensions: The Affordability Gap (PDF)
16 pages. "What has been overlooked ... is the challenge that the state's five largest cities by population -- Bridgeport, New Haven, Hartford, Stamford, and Waterbury -- face in paying for their own retirement benefit promises.... All five of these cities have promised hundreds of millions of dollars in benefits, a promise that is backed, ultimately, by their tax base. With the exception of Stamford, however, they all have weak economies and elevated rates of poverty." (Manhattan Institute)
Judge Strikes Down Kentucky's New Pension Reform as Unconstitutional
"[The judge] ruled that the General Assembly didn't follow Kentucky law by giving the bill three readings on three separate days in each chamber.... The controversial bill ... created [a] 401(k)/pension hybrid, which would decrease the cost of living pay increases for state employees, including teachers. It would have required teachers who were hired after Jan. 1, 2019, to work longer before being eligible for retirement." [Commonwealth of Kentucky v. Bevin, Nos. 18-CI-379 and 18-CI-414 (Cir. Ct. Franklin Cty., June 20, 2018)] (The Hill)
Retired California Employees Must Pay Back Pension Overpayment
"The [California Appellate Court] affirmed a trial court decision that two retired officers must pay the San Diego City Employees' Retirement System more than $30,000 combined, finding that the overpayments had been a mistake, albeit a costly one for the former officers." [Krolikowski v. San Diego City Employees Ret. Sys., No. D-071119 (Cal. Ct. App. June 14, 2018)] (
[Opinion] The Pension Train Has No Seat Belts
"This is the base challenge: How can a shrinking group of working-age people support a growing number of retirement-age people? The easy and quick illustration to this question is to talk about the number of workers supporting each Social Security recipient. In 1940, it was 160. By 1950 it was 16.5. By 1960 it was 5.1.... [It] will be 2.3 by 2030." (Mauldin Economics)
Unwieldy Health Costs Often Stand Between Teachers and Fatter Paychecks
"Many teachers ... have traditionally accepted a trade-off: In exchange for relatively low salaries, they could expect relatively generous benefits, including pensions and low- or no-cost health premiums. But in an era of $100,000-a-year drugs and government budget cuts, school districts are struggling to find the money to keep up their end of the bargain ... Many cash-strapped school boards, cities and legislatures view health care benefits as an unpredictable budget-buster." (Kaiser Health News)
[Guidance Overview] What Are Creditable Benefits for New York's Wage Parity Act?
"The Act requires a minimum basic wage (cash) of the applicable New York State minimum wage plus additional wages or supplemental wages (i.e., benefits) equal to another $4.09 per hour in NYC or $3.22 per hour in Nassau, Suffolk and Westchester counties ... The goal for agencies is to deliver the WPA package in a way that is tax advantaged.... [which] requires complying not only with the WPA, but also with many other federal and state laws ... [F]or example, if a cell phone plan reimbursement program meets all the standards to be tax qualified under the Internal Revenue Code, it is not a creditable cost towards the WPA Package." (FordHarrison)
Latest Investment Return Assumptions for Public Employee Pension Plans
Chart shows latest distribution of investment return assumptions for over 100 state and local government pension plans. Updated May 2018. (National Association of State Retirement Administrators [NASRA])
Was Kentucky's Pension Bill Legal? Court Will Decide
"Attorney General Andy Beshear says Kentucky's new pension law illegally cuts benefits of public employees and was zipped through the General Assembly in rapid process that violated state law. Gov. Matt Bevin says the bill honors all contract rights of teachers and public employees and is a badly needed step toward dealing with the worst funded public retirement system in the country, with unfunded liabilities officially reported at more than $43 billion." (The Courier-Journal)
Oregon Stops Public Employee Retirement Investment Choices
"The Oregon Treasury is calling off -- for now -- an effort to give public employees a choice in how a portion of their retirement savings is invested. The Oregonian/OregonLive reports the decision came after the agency determined that the legislation prompting the move could leave investment managers open to lawsuits if things don't go well." (The Columbian)
[Opinion] No, Illinois Hasn't Solved Its Pension Crisis
"[T]he pre-retirement lump sum buyout takes advantage of financially vulnerable people.... [T]he COLA buyout is an invitation to anti-selection.... [It] is not yet clear to what extent the calculation of the savings from these buyouts were the result of genuine actuarial analysis versus a back-of-the-envelope calculation.... [T]he projected savings is a drop in the bucket compared to the overall $130 billion shortfall." (Elizabeth Bauer, in Forbes)
Illinois Budget Bill Features Pension Buyout for State Workers
"Under the bill, current public workers can exchange the 3% compounded cost-of-living adjustments for a lump sum payment of 70% of the value and a 1.5% COLA that is not compounded. Also, vested former workers can opt to receive a lump-sum payment amounting to 60% of the value of their pension balance.... Up to $1 billion in pension obligation bonds would be issued to fund the accelerated pension payments[.]" (Pensions & Investments)
California Proposal Would Make Member Agencies Liable for Pension Obligations of Joint Powers Authority
"The California Legislature is considering legislation that would, if enacted, prohibit public agencies that form a Joint Powers Authority (JPA) from contracting out of liability for the JPA's pension obligations.... CalPERS appears to be more concerned with retroactive rather than future application of these JPA financial liability requirements.... CalPERS can already refuse to contract with an employer if neither the state nor a political subdivision is liable for its debts." (Hanson Bridgett LLP)
Assessing the Risk of Fiscal Distress for Public Pensions: A Stress Test Analysis of 10 State Funds (PDF)
147 pages. "This paper summarizes the results of a stress test simulation analysis on the largest government pension plans in 10 states under different economic scenarios and assumptions for policymaker behavior.... [S]tates with well-funded pension systems have achieved this result through a combination of fiscal discipline and adherence to policies specifically designed to manage the impact of market volatility in low-return scenarios." (The Pew Charitable Trusts)
State and Local Government Pension Funding: Moving in the Right Direction
"There are over 6,000 public retirement plans in the U.S. with about $3.7 trillion in assets supporting 10.3 million retirees.... Many states and local issuers have implemented some form of change to their pension plans to help improve future funding levels ... Investors should not expect funding levels to return to pre-recession levels in the near-term as most pension funds manage to a 20- or 30-year investment horizon." (BMO Retirement Services)
[Guidance Overview] Pension and OPEB Underfunded Status of Michigan Local Government Plans under the 'Protecting Local Government Retirement and Benefits Act' (PDF)
"[U]ntil the state treasurer publishes the first set of annual assumptions, considerable uncertainty remains as to what the impact will be on each plan's liability. In fact, it is possible that a particular plan might be considered fully funded under the current actuarial assumptions that are being used for determining contributions to the plan or for satisfying financial reporting requirements, yet be considered underfunded based on new mandated assumptions. This paper aims to help stakeholders of Michigan's many local government pension and other post-employment benefit (OPEB) programs develop informed expectations, based on the range of outcomes that could result from the state treasurer's decisions." (Milliman)
States Turn to New Tool to Sustain Pension System Funding
"Called stress test reporting, this new practice can show policymakers how adverse economic scenarios could affect retirement system investments and state budgets.... The stress testing model ... also allows states to account for the condition of their economy and tax collections, offering a broad look at the impact of pensions on their overall fiscal health." (The Pew Charitable Trusts)
[Guidance Overview] Impact of GASB 74/75 on Small Government Employers (PDF)
"[This article reviews] the Alternative Measurement Method (AMM), which is used by small government employers in lieu of an actuarial valuation. This AMM review is followed by a discussion of the important changes relevant to small government employers as GASB 74/75 takes effect." (Milliman)
[Official Guidance] Text of GASB Implementation Guide No. 2018-1: Implementation Guidance Update, 2018
This 25-page Implementation Guide addresses new questions about application of the Board's standards on pensions, other postemployment benefits, the statistical section, regulatory reporting, and tax abatement disclosures. The Implementation Guide also includes amendments to previously issued implementation guidance on relevant topics. (Governmental Accounting Standards Board [GASB])
CalPERS Unveils Direct Investment Model for Private Equity
"CalPERS Direct would be governed by a separate, independent board to advise on allocation and longer-term capital market perspectives. It would consist of two separate funds. One would focus on late-stage investments in technology, life sciences, and healthcare, and the other on long-term investments in established companies. These would operate alongside CalPERS' existing private equity structure that typically invests in co-mingled private equity funds." (CalPERS)
[Opinion] Colorado Makes Changes to Public Pensions
"The original legislation introduced by Republican legislators in the state senate would have expanded the choice of a defined contribution (DC) plan for all PERA members, a dangerous first step toward eliminating the defined benefit structure of the plan.... [T]he alternate version of the legislation introduced in the state house did not include expansion of DC plan choice. The house-passed legislation also maintained the principle of 'shared sacrifice' more fully than the Senate-passed version." (National Public Pension Coalition)
Public Pension Funded Ratio Falls Back in Q1, Down to 71.4% (PDF)
"The robust gains of Q4 2017 have essentially been washed away in Q1 2018 as a sharp increase in volatility for equity markets caused a $93 billion setback in the estimated funded status of the 100 largest U.S. public pension plans ... From the end of December 2017 through the end of March 2018, the deficit grew from $1.332 trillion to $1.425 trillion. As of March 31, the funded ratio stood at 71.4%, down significantly from 73.1% at the end of December." (Milliman)
How Scaling Back Public Pensions Puts Government Revenues at Risk (PDF)
24 pages. "[This research examines] the broader question of state and local revenues generated by public pensions, and whether these revenues exceed taxpayer contributions....[In 2016,] investment of pension fund assets contributed $587.5 billion to the economy, which in turn yielded $125.7 billion in state and local revenues.... $303.1 billion paid to retirees in pension checks during 2016 contributed $757.8 billion to the economy and $151.9 billion to state and local revenues.... [P]ublic pensions in 2016 contributed $1.3 trillion to the economy and $277.6 billion to state and local revenues." (National Conference on Public Employee Retirement Systems [NCPERS])
CalSTRS Funded Status Declines Following Rate-of-Return Decrease
"CalSTRS' funded status fell to 62.6% on a smoothed actuarial basis as of June 30, 2017, down from 63.7% a year earlier ... [T]he pension plan's unfunded actuarial obligation is up to $107.3 billion as of June 30 from $96.7 billion at the June 30, 2016, valuation." (Pensions & Investments)
Wells Fargo Improperly Kept a Pension Fund's Fee Rebates
"The bank owned up to the problem in late April after the Chattanooga Fire & Police Pension Fund had spent months questioning Wells Fargo officials about fee practices in its institutional retirement and trust unit, according to the correspondence. The bank said in the correspondence that the improperly retained fee rebates resulted from 'a system set-up error.' " (The Wall Street Journal; subscription may be required)
CalSTRS Discusses Collaborative Investing Model with Other Asset Owners
"Officials at the $222.5 billion California State Teachers' Retirement System, West Sacramento, expect to spend the fiscal year studying alternative investment models, including what the collaborative model means for each asset class, the challenges of embarking on a collaborative, direct investment approach and the opportunities[.]" (Pensions & Investments)
[Opinion] Rising Pension Costs are California's Biggest Problem
"Over the next seven years, rising pension costs will require cities to nearly double the percentage of their General Funds they pay to CalPERS.... Without fundamental changes, cities will have to choose between cutting services or raising taxes.... There are three things we should do now ... First, cities and the state should set aside 2 to 3% of their budgets to pay down their unfunded liabilities. Second, cities and the state should look for cuts and new revenue sources now, not wait until pension costs begin to crowd out funding for basic services. Third, and most importantly, we must revise the California Rule." (Fair Observer)
2018 Report on State Retirement Systems: Funding Levels and Asset Allocation (PDF)
10 pages. "[T]he aggregate funded ratio was 70.2% at fiscal year-end 2017, which represents an increase of 2.8% from the end of FY 2016 and reverses two consecutive years of aggregate funded ratio declines. A primary driver of the improvement was the increase in global equity values for the twelve-month period ending June 30, 2017[.]" (Wilshire Associates)
L.A. Police Chief Calls for Change to Controversial Retirement Program
"Police and firefighters who have reached the age of 50, and have at least 25 years' experience, can enter the program, which allows them to keep working and collecting their salaries while also collecting their pensions -- up to 90% of their salary -- for five years. DROP has cost the city more than $1.6 billion in extra, early pension checks, ... more than $220 million of which went to employees on injury leaves or out sick." (The San Diego Union-Tribune)
Colorado Pension Reform Bill Shifts Higher Contributions to Employers
"As amended by the House, ... on July 1, and again on July 1, 2019, the monthly employer contribution to PERA on behalf of members would increase by 1 percentage point of employees' salaries. When both increases are fully implemented, the total contribution would be 12.15% of salary for most employers contributing to PERA, 14.85% for employers who employ state troopers, and 15.66% for contributing judicial employers." (Pensions & Investments)
[Opinion] Puerto Rico's Pensions Are Still Threatened; System Only 3% Funded
"The last publicly available valuation of the pension plan had the funding ratio at 3 percent.... The Puerto Rico Government Employees' Retirement System has over 125,000 active members, who contribute 10 percent of every paycheck toward their pension. There are 107,848 retirees who are receiving benefits. The average annual pension benefit in Puerto Rico is ... $12,708 -- significantly lower than most pension benefits on the mainland U.S." (National Public Pension Coalition)
Stagnant Growth in Pension Contributions to Intensify State Plans' Pension Burdens
"For state plans reporting their fiscal year 2017 data, the median actuarially determined contribution rose 3.5%. Actual contributions, meanwhile, rose faster, increasing 3.7%. Recent increases are well below the post-recessionary peaks, when the median ADC rose 8.6%, in fiscal 2011, and actual contributions rose 8%, in fiscal 2014." (Pensions & Investments)
California Senate Committee Kills Bill Allowing Employees to Opt Out of CalPERS
"The committee also rejected a bill that would have ... allowed the employer to be able to reduce its employees' and retirees' benefits, terminate its CalPERS contract without paying the amount necessary to ensure payment of pension obligations for its employees and retirees, or transfer the money to an outside pension provider. [A] third rejected bill would have barred state pension plans from providing retirees cost-of-living adjustments for employees hired on or after Jan. 1, 2019 ... for any year in which the unfunded actuarial liability of the pension fund is more than 20%." (Pensions & Investments)
[Opinion] The 'Pension Palace' for Illinois Lawmakers
"When he retired from the General Assembly, [Illinois State Senator John Friedland] received a one month full-time pay spike at the water district for $8,000 -- causing his legislative pension to start at $80,856 instead of $30,312. Today, Friedland is pulling down $172,981 per year, due to lucrative 'cost of living' adjustments. Although the 'Friedland loophole' was closed, Illinois state legislators still have one of the sweetest retirement deals in the country -- and it's at an amazing cost to taxpayers." (Forbes)
Puerto Rico Board Certifies Fiscal Plan, Pension Reform
"On pension reform, the commonwealth plan calls for freezing pension benefit accruals by July 1, 2019, and enrolling all employees in defined contribution plans, as well as Social Security. Benefits would be reduced progressively to an average cut of 10%, with no cuts for participants whose combined pension and Social Security benefits are below the poverty level of $1,000 per month." (Pensions & Investments)
CalPERS Releases New Pension Rates for State and School Employers
"While the rates will increase compared to the previous FY, the funded status improved for both the state and school plan. The rate increases primarily are driven by the lowering of the discount rate (assumed rate of return), continued phase-in of the effect of investment losses during the two-year period ending June 30, 2016, and various demographic changes." (CalPERS)
[Opinion] U.S. Pension Fund Collapse?
"How bad are things in Illinois? Last June, Illinois Policy cited the state's $250 billion pension debt as the main reason why Moody's Investor Service downgraded Illinois' credit rating to Baa3, just one notch above a noninvestment-grade, or 'junk,' rating.... Illinois has a $130 billion pension shortfall.... [N]obody wants to really slay this pension dragon. To do so requires serious compromise from the state, public-sector unions, and maybe even Illinois' taxpayers." (Pension Pulse)
Puerto Rico Board Ready to Certify Fiscal Plan, Pension Reform
"[A] fiscal plan for Puerto Rico that includes comprehensive pension reform and fiscal sustainability measures will be certified [April 19], the Financial Oversight and Management Board said... Covering a period of six fiscal years from 2018 to 2023, the plan provides a framework for economic growth that would allow the government to fund pension payments and restructure Puerto Rico's debt 'in a sustainable fashion,' the board statement said." (Pensions & Investments)
CalPERS Faces Steep Climb to Rebuild Its Funding
"Last year was one of the best ever for the CalPERS investment fund, a gain of $47 billion that boosted the total to $350 billion. But pension funding only increased from 68 to 71 percent of the projected assets needed to pay future costs.... That a $47 billion investment gain only makes a small change in pension funding shows the difficulty CalPERS still faces in recovering from a $100 billion investment loss a decade ago, when the funding level nosedived from 101 percent to 61 percent." (Calpensions)
The State Pension Funding Gap, 2016
"In 2016, the state pension funds in this study cumulatively reported a $1.4 trillion deficit -- representing a $295 billion jump from 2015 and the 15th annual increase in pension debt since 2000. Overall, state plans disclosed assets of just $2.6 trillion to cover total pension liabilities of $4 trillion.... The median public pension plan's investments returned about 1 percent in 2016, well below the median assumption of 7.5 percent -- a disparity that added about $146 billion to the debt." (The Pew Charitable Trusts)
How Have Pension Cuts Affected Public Sector Competitiveness for Employees? (PDF)
"[The authors find that] workers hired after benefit cuts had earned less in the private sector than similar workers hired before the cuts occurred.... [P]ension cuts appear to reduce the ability of public sector employers to compete with private sector employers for workers.... [T]he finding does indicate that states and localities should at least consider how pension cuts might affect recruitment and retention." (Center for State & Local Government Excellence)
Kentucky Governor Signs Pension Reform Bill; State Attorney General, Two Employee Groups File Lawsuit
"Kentucky Gov. Matt Bevin signed into law Tuesday a pension reform bill ...[under which] teachers hired after Jan. 1, 2019, will be enrolled in a cash balance plan instead of the existing defined benefit plan at the $18.1 billion Kentucky Teachers' Retirement System, Frankfort.... Wednesday's lawsuit ... condemns lawmakers for passing a bill that lacked an actuarial analysis at the time and was not subject to public comment or testimony ... [T]otal unfunded liabilities for KRS, KTRS and the $327 million Kentucky Judicial Form Retirement System, Frankfort, [are] $64 billion." (Pensions & Investments)
When a City Goes Broke: Pensions, Retirees, and Municipal Bankruptcies (PDF)
"This [article] first explains how, under current bankruptcy law, Chapter 9 debtors have significant freedom to modify their outstanding pension obligations through the bankruptcy process. The [article] then explores proposals to alter the legal principles governing the adjustment of municipal pensions in bankruptcy." (Congressional Research Service [CRS])
Yours, Mine, Ours: Are the Individuals Working for You Your Employees?
"CalPERS continues to investigate and challenge a number of 'staff leasing,' management service contracts, and JPAs established to provide management personnel to local government on an independent contractor basis.... [O]nly the common-law employer counts for CalPERS and other employee benefit purposes. Therefore, such 'leasing' agencies, if not the common-law employer, cannot be the CalPERS employer." (Best Best & Krieger LLP)
CalPERS May Join Union Foes of 401(k) Option
"Many of the union opposition letters mention the shift of investment risk to employees, potential problems created by a five-year vesting period and a 401(k) employer contribution limited to the pension normal cost, and questions about investment fees and management.... A California Faculty Association letter said the bill 'would promote 401(k)-style retirement plans over more state-run pension plans' and would set a 'dangerous precedent' by allowing state employees to opt out of CalPERS." (Calpensions)
Puerto Rico Governor's Latest Plan Still Leaves Out Pension Reforms
"Puerto Rico Gov. Ricardo Rossello submitted a revised fiscal plan ... that repeats his refusal to consider pension benefit cuts and more shifting to defined contribution plans.... [Financial Oversight and Management Board] documents call for freezing pension benefit accruals by July 1, 2019, and enrolling all employees in defined contribution plans. Benefits would be reduced progressively to an average cut of 10%[.]" (Pensions & Investments)
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