Experts Weigh in on Houston Mayor’s Pension Proposal

Leah Binkovitz | @leahbink | September 21, 2016

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Experts organized by the Kinder Institute for Urban Research weighed in Houston Mayor Sylvester Turner’s newly-unveiled pension reform proposal at a panel discussion Tuesday — the same say ratings agency Fitch concluded that Turner’s proposal “could improve the sustainability of the city’s pensions.”

Several measures in the proposal will produce significant cost-savings, according to Turner, but without buy-in from all three pension boards, warned the panelists, challenges to any reforms could be hard to avoid down the road. Notably, while the city’s police and municipal workers have backed Turner’s plan, the city’s firefighters plan has not.

Each of the city’s three pension funds are underfunded, to some degree, and their funding levels have worsened since 2000, in large part due to lower-than-expected investment returns and underfunding by the city, according to a report from the Kinder Institute for Urban Research.

A look at the unfunded ratio of each of the city's pension funds. Via the Kinder Institute for Urban Research.

A look at the unfunded ratio of each of the city’s pension funds. Via the Kinder Institute for Urban Research.

The mayor’s proposal includes both cuts to some retiree benefits and a lower assumed rate of return, as well as a set 30-year schedule to pay off the unfunded liability, which today is around $7.7 billion, according to the mayor’s estimates.

The city would also commit to paying the full contribution amount each year — something it hasn’t done for all three funds in over a decade. It includes $1 billion in pension obligation bonds, and a system of thresholds — right now, not publicly defined — that would trigger further negotiations between the city and the pension boards in the future, depending on changing financial conditions. Notably, the plan does not include a switch to the type of defined contribution plan that is offered to many private-sector employees.

The lack of support so far from the firefighters’ pension board is a potential roadblock that could prove critical for the plan, said Max Patterson, the executive director of the Texas Association of Public Employee Retirement Systems, during the Tuesday night panel.

But Patterson said Turner, with his relationships in both Houston and Austin, and his experience in the state legislature, is in a unique position to bring all three boards to the table and get the plan approved. “He has a great deal of respect in the legislature,” Patterson said.

“You don’t know until you get into the details,” he continued, noting that big costs like cost of living adjustments and the Deferred Retirement Option Program face cuts in the mayor’s plan. “You have to modify them to bring the costs down,” said Patterson.

Though Houston’s unfunded liability has soared in recent years, there are many other cities in similar positions, noted Liz Farmer, a public finance reporter with Governing magazine. “I wouldn’t characterize Houston as careening yet,” she said.

Turner’s plan includes several typical, proven steps that have been used by other cities that have sought to reduce their unfunded liabilities, she said, including lowering the assumed rate of return on investments to 7 percent instead of the current 8 to 8.5 percent, and closing the amortization period.

Others on the panel said they want to see more details about the plan. “We are excited about the mayor’s proposal,” said Marc Watts, chair of the municipal finance task force with the Greater Houston Partnership. But he expressed concern about the so-called corridor mechanism that would trigger new rounds of negotiations if the city’s contribution limits are reached. “The plan has some big uncertainties,” he added. “I wish the mayor had negotiated a little more for some savings.”

There were several notable items not included in the mayor’s reform, including a switch to a defined contribution plan as opposed to the defined benefit system used in Houston and many other cities. Watts argued that defined contribution plans were ultimately needed as an option to stop increasing costs, and he said they could help attract younger workers who want more flexibility in the early years of their careers. Defined contribution plans are generally more portable than defined benefit plans.

And the question of property taxes was also not addressed explicitly in the plan, though Turner called for a repeal of the property tax cap at the same time he pitched pension reform in his news briefing last week. “We need to see meaningful pension reform first and then we can talk about property taxes,” said Watts, echoing Turner’s own position that he will take up the city’s revenue cap after dealing with the pensions.

Others were skeptical of the usefulness of the $1 billion in pension obligation bonds the mayor says he wants the city to issue. “It really is just moving debt from one place to another,” said Jean-Pierre Aubry, associate director of state and local research at the Center for Retirement Research at Boston College, whose research formed the basis of the Kinder Institute’s pension report.

But perhaps most critical for the plan moving forward is its ability to win approval from all three pension boards. “Litigation is probably stop one of where it can go wrong,” said Farmer, drawing on the experience of other cities across the country. “That’s obviously a huge concern, particularly when you’re talking about a property tax,” she added, which some think may have to be raised along with the revenue cap to generate enough funds for the city. Even if all three pension boards sign on, litigation is still a possibility, she said.

Houston City Controller Chris Brown reassured residents that any increase in property taxes would translate to a minuscule bump for the typical homeowner. “I have a very high tax bill like the rest of them,” Brown said. “We’re all in this together,” he added, saying the growing city needs growing revenue to provide for its services.

More important to taxpayers than pension reform itself is the mayor’s ability to tie the plan — and any potential increases in taxes — to improved services for residents. “Voters care about getting their streets paved, things they can see and touch,” said Farmer.

Turner’s proposal will go before city council within the next few weeks, according to the mayor’s office, then it would need approval in the legislature.

“It’s a serious problem,” Patterson said. “It has been neglected for a long time. It’s going to get fixed one way or another.”

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Leah Binkovitz

Leah Binkovitz is Senior Editor with the Kinder Institute for Urban Research.

10 Comments

  1. Time for bankruptcy! Totally unsustainable. The city simply can’t afford to pay retired cops and firefighter $80K a year. THE. MATH. DOES. NOT. WORK.

    What’s more significant is the fact that few, if any, private sector employees receive the type of compensation cops/firefighters etc. are in line for.

    • Can you name 5 firemen or police officers retiring from the city of Houston that have retired making “$80k a year”? Not executives for those city departments and not including one time payments, just the bulk of their forces? Here’s a tip, HPD currently pays 45% of direct pay as the core pension benefit for employees that can start collecting it when they turn 55 years old, down from 55% as of 2004. HFD, in exchange for much lower direct pay their entire careers, gets 50% and that can go as high as 80% if they stay 30+ years.

  2. Quoting 3 paragraphs……

    (1) The city would also commit to paying the full contribution amount each year — something it hasn’t done for all three funds in over a decade. It includes $1 billion in pension obligation bonds, and a system of thresholds — right now, not publicly defined — that would trigger further negotiations between the city and the pension boards in the future, depending on changing financial conditions. Notably, the plan does not include a switch to the type of defined contribution plan that is offered to many private-sector employees.

    (2) And the question of property taxes was also not addressed explicitly in the plan, though Turner called for a repeal of the property tax cap at the same time he pitched pension reform in his news briefing last week.

    (3) Houston City Controller Chris Brown reassured residents that any increase in property taxes would translate to a minuscule bump for the typical homeowner.

    ——————————

    Houston’s Officials ought to name this proposal ….”WOW, we just hoodwinked the Taxpayers AGAIN ! ”

    Defined commitments FROM the Taxpayers (paying the FULL contribution each year, apparently with no limit no matter how burdensome that may be), and issuing $1 Billion in POB’s for which the Taxpayers are on the hook for repayment). And what commitments do the Taxpayers get FROM the Public Sector Unions/workers? NOTHING, just undefined criteria that would trigger “negotiations” When have “negotiations” with Unions EVER resulted in ANY material pension/benefit givebacks ?

    Oh, and then there’s the …”repeal of the property tax cap”. THAT my dear taxpayers is the way the Unions can FORCE the Taxpayers to pay the FULL contribution each year, apparently with no limit no matter how burdensome that may be.

    And don’t you just love the “reassurance” form City Controller Chris Brown that property taxes would translate to no more than a minuscule bump? Didn’t California’s CalPERS similarly “reassure” CA’s Taxpayers that in passing SB400 in 1999 (RETROACTIVELY raising pensions by 50%) would cost taxpayer nothing? How has THAT worked out?
    ——————————-

    Any Taxpayers that falls for this nonsense is either a complete fool or high on crack.

  3. Ooophs, I missed one additional item…………..

    Did you notice this paragraph ……

    “Turner’s plan includes several typical, proven steps that have been used by other cities that have sought to reduce their unfunded liabilities, she said, including lowering the assumed rate of return on investments to 7 percent instead of the current 8 to 8.5 percent, and closing the amortization period.”

    Lowering the investment return assumptions (which is also used for discounting Plan liabilities and hence computing the annually required pension contribution) doesn’t “REDUCE the Plan unfunded liabilities”. It instantly INCREASES them which results in higher (MUCH higher) required annual contributions. It is those ADDITIONAL contributions that may eventually reduce the unfunded liability, not the act of reducing the interest rate.

    And with the employee’s annual %-of-pay contribution fixed at a certain %-pf-pay, who do you think is going to pick up that contribution increase …. the Taxpayers !

    And with your property tax cap eliminated, there will be nothing Taxpayers can do about it.

  4. Currently, the city spends $167 per resident on pensions, this being before any forthcoming employee concessions. One can argue that the city has no business expanding parks, duplicating services of other governmental bodies or offering tax abatement’s until it starts paying its bills each year, but I don’t think there is going to be a mass exodus of residents to places where core services cost much more (surrounding cities) or must be contracted at a significant premium (unincorporated portions of the county) for the amount of money needed to cover this problem.

    Even 20% of Fortune 500 companies still offer a defined benefit pension for new employees, many more for existing employees, on top of social security, profit sharing, stock options, and other perks that city employees do not get but as the low cost leader in employee compensation in all major Texan cities, Houston is no closer to credibly filing for bankruptcy than any of the other top ten cities of the state despite the desire by some to cheat employees of earned benefits.

    • Steve,

      Rarely do readers see so many false/misleading statements in one short comment ….

      (1) Even if there was ZERO unfunded liability, to fully fund (using appropriate and reasonable methodology/assumptions akin to those REQUIRED by the US Gov’t of Private Sector Plans) the Defined Benefit pensions typically promised Public Sector workers takes a LEVEL ANNUAL 20% to 40% of pay for non-safety worker pensions, and 40% to 60% of pay for Safety worker pensions.

      Using the midpoints of those ranges, that means a level annual $15,000 contribution for non-safety workers making $50K annually, and a level annual $37,500 contribution for a safety worker making $75K annually.

      I have no idea how much the City of Houston actually “contributed” in the past year or two, but what they ACTUALLY CONTRIBUTE (even if it WAS only $167) is meaningless. It the VALUE of each year’s new pension accrual that matters, the level annual cost of which I stated above.

      And a Plan (such as Houston’s) with unfunded liabilities must contribute ADDITIONAL amounts so as to be able to amortize that unfunded liability over a reasonable # years.

      Your $167, if not outright false, is (as presented), EXTREMELY misleading.

      (2) Quoting …… “Even 20% of Fortune 500 companies still offer a defined benefit pension for new employees”.

      VERY few (WAY below 20%) of Fortune 500 companies offer Defined Benefit plans of the type universally offered to Public Sector workers ….”Final Average Salary” Plans, where the pension is a monthly life annuity based on final (or final average) salary, years of service, and a “formula-factor” per-year-of-service.

      Such Plans are long gone in the Private Sector. Many large Corporations DO offer a pension Plan that for some strange reason is “legally” a Defined Benefit Plan, but is far closer in generosity to, and functions MUCH closer in operation to a 401k DC Plan. These Plans are called “Cash balance” Plans. So while you may “technically” be correct, I consider your above statement to be EXTREMELY misleading.

      ==========================

      I would bet dollars to donuts that you (or a family member) are now receiving (or expect to receive) a Public Sector pension, and your above comment is nothing but self-serving, doing your part to make Public Sector DB Plan costs look far smaller than they truly are.

      Taxpayer have been rapidly wising up to the HUGE financial “mugging” that has been perpetrated upon them by the insatiably greedy Public Unions/workers and the Elected Officials whose favorable votes (on pay, pensions, and benefits) have been BOUGHT with Public Sector Union campaign contributions and election support.

      I suggest you develop a “Plan B” for your retirement needs if your are counting on a generous Public Sector pension, as the odds of material pension reductions are rapidly growing.

      • “Tough”, rather than make personal attacks or jump through hoops to mislead, you might garner greater traction in your comments if you had clear cut recommendations that were in line with similar organizations and their methods of compensation.
        1) The $167 is simple math; the amount the city spent divided by the number of residents. Take exception with that number as you see fit but it is not misleading to put it in perspective for readers.
        2) Public sector employees, on average, have more education and qualifications than their private sector counter parts as shown in study after study by independent researchers, yet when comparing total levels of compensation, they are paid less. Take exception to any single study for some methodological flaw but the aggregate truth is clear and not subject to your individual perceptions.
        3) Dance around the variations of “defined benefit” plans all you like, the truth is that a sizable number of private sector employers STILL OFFER THEM, which is contrary to the rhetoric being espoused. I suggest to you that the type of plan is less important than the specific details though and you appear to agree with me.
        4) I am not employed by the government though I pay all my taxes faithfully and most in my extended family that are so employed are in the military or VA Hospital system serving our vets. Do you suggest we stop paying those who have served this country in uniform out of the inconvenience you appear to have? I have career military cousins that signed on when they were 17 and spent 20 years earning free medical for life, free travel, 50% of their pay, and much more at the age of 37. Of course I also have family that never made it that far but the principle is the same.
        5) Pensions are negotiated by pension trustees, not union officials, at least in Texas where the law prohibits union officials from serving on pension boards or negotiating pension benefits. Pension funds almost never make political campaign contributions and when they do, it amounts to a drop in the bucket compared to the corporate big wigs. It sounds more like you are trying to distance yourself from the candidates that not only were elected by the PUBLIC, but locally were elected by the public EVERY SINGLE TIME that term limits allowed them to be.
        6) On a related note, every city pay raise and pension increase/decrease over the years has been made in the public eye, not in smokey backrooms. Those negotiations were then voted on by city council and the state legislature, the governor signing off on them. If you feel your elected agents did not do as good a job as you would have liked, remember that the rest of the city saw fit to continue electing the same people which is usually seen as supporting what those agents have done. Houston has about 23k employees and 2.2 million residents too so I just don’t see how those few employees could elect anyone against the majority wanted, even if they all lived inside the city.
        7) In this case, the city is negotiating give backs from employees. That means that those employees EARNED every penny of what they were expecting yet some of you are willing to steal it away from them like common criminals because even the billions they gave in the past were not enough to allow you to enjoy the fruits of their labors, you want more. If you compare total compensation to other cities such as Austin or San Antonio, you will find they value their workers much more than Houston does, by all means see fit to educate yourself on the differences.
        8) On a related note, compensation for any job can involve all sorts of factors, we saw retirement rates more than triple during the last round of cuts for the cops, few of their academy classes filled since 2004 as the better qualified applicants went elsewhere. As a result, qualifications were lowered, thousands of dollars were offered to new applicants, and all sorts of proposals were made yet here we are with almost the same number of cops as 12 years ago despite a proven need for a few thousand more per the independent study the city commissioned, the rate of employees leaving sooner has grown accordingly too. Those in HFD have warned us about that but we just don’t listen.
        9) All I am advocating is that the public decide how much of each service they are willing to pay for and then pay the amount your agents negotiate. Don’t be the sleazy little jerk trying to rip off employees of what they were contractually promised. If you want more, prepare to pay for it and if you want to offer less for new employees, watch how that works out for you.

        As I said, I don’t work for anyone but myself, though one might argue that I work for the government by paying so much in taxes every year, and those who think moving is going to net them better services for less money are in for a shock. Pay them what is owed and negotiate a deal for the future that will indeed be less, but make no mistake that until every other city, county, state, and other employer is paying less than Houston, you’re going to find out how being the low cost employer works.

  5. Steve,

    Me jumping through hoops to mislead …. or is it you? Addressing your numbered points in order:

    (1) Yes, the $167 “per resident” is just math, but your choice of the unit “per resident” is very unusual and appears to have been chosen to mislead or at least make relevant comparisons near-impossible. The cost of Pensions in BOTH the Public and Private Sector are almost always expressed as a %-of pay per worker. Perhaps you do not favor that unit of measure because it would be difficult to hide the FACT that the true (properly measured) cost Public Sector pensions (as a %-of-pay per-worker) is OFTEN 10 times what Private Sector workers typically get in contribution to their retirement Plans from their employers.

    (2) Quoting ….. “Public sector employees, on average, have more education and qualifications than their private sector counter parts as shown in study after study by independent researchers, yet when comparing total levels of compensation, they are paid less. Take exception to any single study for some methodological flaw but the aggregate truth is clear and not subject to your individual perceptions.”

    If when you say ” total levels of compensation” you mean ONLY “wages” there indeed are studies that show LOWER Public Sector “wages” for those in “professional” occupations or in jobs requiring higher-level degrees….. but that also show HIGHER Public Sector wages in many blue-collar jobs.

    However, when “Total Compensation” (wages + pensions + benefits) are properly measured and factored into the comparison, it is indeed a rare situation where Public Sector Total Compensation is not MUCH greater than that of their Private Sector counterparts……. due to the MULTIPLES-GREAT pensions & Benefits. E.g., VERY VERY few in the Private Sector get employer-sponsored retiree healthcare today ?

    (3) Quoting … “Dance around the variations of “defined benefit” plans all you like, the truth is that a sizable number of private sector employers STILL OFFER THEM, which is contrary to the rhetoric being espoused. I suggest to you that the type of plan is less important than the specific details though and you appear to agree with me.”

    That comment is so far afield, it shows how clueless you are as to the details of the ONLY DB Plan common in the Private Sector today….the “Cash Balance” Plan. You should Google it for the long answer, but in short, the workers get a fixed annual %-of-pay contribution (usually about 5% of pay), and a fixed/guaranteed annual return of about 4% interest on the account balance.

    Such Plans typically cost Private Sector employers 1/5 to 1/10 the TRUE (properly measured) cost of the TYPICAL Public Sector “Final-Average-Salary” DB Plan.

    (4) I have no objection to Federal Military pension or benefits. As bad a reason as it may be, the Federal Gov’t still has a (money) printing press. However, our States and Cities are RAPIDLY going broke due to the grossly excessive pension & benefit promises granted their workers …. essentially having been BOUGHT from our Elected Officials in exchange for Public Sector Union campaign contributions and election support.

    ALL such State/City DB pensions should be frozen (zero future growth) for the FUTURE Service of all CURRENT workers….. and replaced for future service with a DC (401k-style) Plan with a Taxpayer %-of-pay contribution EQUAL to what Private Sector workers typically get from their employers (3% of pay).

    Public Sector workers are NOT “special” and deserving of a better deal (a MUCH better deal as is the case today) …….. on the Taxpayers’ dime.

    (5) Who “negotiates” on behalf of the workers if not their Union representatives?

    And of course …”Pension funds almost never make political campaign contributions ” But I’m certain your Unions make hefty political contributions to those who hold sway over Public Sector pay, pensions, and benefits.

    (6) Here, you’re correct. The Taxpayers are INCREDIBLY stupid in repeatedly re-electing those who act with self-interest and AGAINST the needs and reasonable wishes of non-Public-Sector-worker taxpayers.

    (7) Earth to Steve, …. grossly excessive (by any and every reasonable metric when compared to the pensions typically granted comparable Private Sector workers) pensions are NOT “earned”. They are stolen form the Taxpayers via collusion between the Public Sector Unions and our Elected Officials who trade their favorable votes for campaign contributions and election support.

    (8) Well, that (poor funding with the REAL possibility of not being able to pay all that has been “promised”) is an unfortunate consequence of granting too much (and way more than is necessary, fair to Taxpayers, or affordable in the first place).

    The BEST (and eminently justified) answer of course is a State-wide freeze of ALL Public Sector DB Plans for all CURRENT workers …… then there is no benefit to moving.

    (9) quoting …..”All I am advocating is that the public decide how much of each service they are willing to pay for and then pay the amount your agents negotiate. ”

    “Negotiate”? Who of those sitting at the “negotiating table” is truly looking out for the Taxpayers’ interests ?

    BOTH sides, (a) the Unions reps, and (b) City management agents, are looking to give away AS MUCH AS POSSIBLE. The City’s management agents are themselves City employees, participate in the SAME or similar pension Plans, and KNOW that the more they grant the rank-and-file, the more THEY get.

    ——————————————–
    ——————————————–
    Lastly, you stated …” I am not employed by the government though”.

    From your comments to me, and your first response to Greg Egan, I believe you ……. that you are not NOW “employed by the government”.

    However, I believe you are already retired from gov’t work and collecting a Public Sector pension* …. likely as a Policeman or Fireman.

    * AND free or heavily subsidized retiree healthcare benefits, at great cost to the City’s Taxpayers ( who VERY rarely get such benefits from their employers).
    ——————–

    Granted ……………. but NOT ‘earned”.

    • Tough, I suspect you are either very young or very old given the abusive manner in which you respond, the lack of civility not making your remarks any more persuasive. That said:
      1) The $167 figure is taken from the city budget itself, a document very few, even self proclaimed “experts” apparently ever read. It is not used to confuse readers so much as to put things in better perspective. If the number confuses you so much, by all means don’t worry about it but it is common in public policy discussions to use that kind of math so readers can understand exactly how much something is costing “them” rather than allow some hack to mislead using percentages.

      2) There are many studies that cover “wages” or other special aspects of pecuniary income just as there are many that cover total compensation. As you seem so fond of public safety compensation, it should be noted that they are among the most studied in recent years as a result of the fact that they negotiate based in part on comparisons to others in their fields from different agencies. While I disagree with you that “very few” in the private sector get some form of subsidy in retirement medical coverage, it should be noted that historically, government sector positions virtually always have though the city of Houston broke from that tradition years ago.

      3) I believe you are over stating the costs of public sector versions versus private sector versions of defined benefit programs but again, it is a frequent comment by pension hawks to suggest the private sector no longer has such programs or maintains such programs when in fact they do offer them in a great many cases.

      4) $20 Trillion in debt later, you have no problem with pension systems that are funded out of current budgets with no provision to save money/use investment returns to fund the bulk of benefits yet you are steaming over systems that fund the bulk of their own benefits? Wow!

      5) Your supposition is wrong. Unions are far more limited in what they donate to political campaigns, at least locally, Here’s a number you can gnash your teeth at: the top seven mayoral candidates spent just under $10 million dollars combined. Given the pittance Houston’s three unions contributed compared to huge, well financed foundations and business interests, I’m surprised you’d even bring up the “buying” of influence. For that matter, it should be noted that the unions often pick different candidates for office, neither the cop or fire union picking Parker in 2009, and HFD’s union hadn’t endorsed a winning candidate in recent memory (they endorsed Sanchez over Brown and then Sanchez over White yet have the best pension benefits of any city workers). To follow your narrative, a union’s contribution of a few grand in an election cycle nets them luxurious pay and benefit increases yet the numbers prove the opposite, even the cop union’s foolish support of White resulting in them receiving billions in benefit cuts, followed by Parker cutting medical subsidies.

      6) Are they stupid or are they faced with a lesser of two evils scenario? Regardless, they elect agents to handle the running of government and seem to keep said agents as long as term limits allows them to so suggestions that the minuscule number of city employee’s that are voting residents having any major sway in elections is also not supported by the numbers.

      7) As stated above, employees do not vote in a large enough bloc nor do they contribute a large enough amount of money to place someone in a city wide office. Since the voters get to pick who becomes mayor, and that mayor negotiates whatever contracts come up with employees (pay or pension), your continued assertion that low level employees steer the elections is simply false. But given the compensation is provided in the form of a contract, they are “EARNED” benefits by definition, your personal approval of the rates not a factor, nor evidence of stealing.

      8) The state of Texas has many billions in unfunded pension liabilities, far more than cities like Dallas or Houston, yet I don’t think you will find more than a handful of extremists to agree with you on freezing anything statewide. Still, if you want to credibly cut compensation in one place to any major degree, you will have to cut it across the board everywhere, not just Texas, as employees will only go so far before they leave for greener pastures. If you want a handful of volunteers working fire suppression, security guard level cops, high school educated water treatment experts, or other such employees, by all means go in front of city council to suggest it. Be sure to wear your tinfoil hat when you do so everyone can at least get a chuckle while they roll their eyes at you.

      9) As addressed above, the reality given the far, far better compensation elsewhere in the state, is that local unions and pension boards do not appear to hold much sway with elected officials, even now groups supportive of the elected Mayor about to give up billions in compensation. And lastly, former mayor Parker removed medical subsidies to retirees years ago when she decided to raise their rates in excess of 300%, many moving to a spouse’s coverage by their PRIVATE SECTOR employer, or dropping it altogether because they could do better on the free market.

  6. Steve,

    Responding by numbered point ….

    (1) I stand by my last comment. Taxpayers should be able to see how much more they are actually now paying (and annually accruing in additional unfunded amounts not paid that THEY and future taxpayers are supposedly responsible for) and be able to COMPARE that to what THEY get…… because there is no reason to overcompensate Public Sector workers.

    Pension contributions as a %-of-pay is indeed the common unit of measure. You don’t see Private Sector Corporations reporting their workers’ pension contributions as an annual amount per customer or as a percentage of annual revenue.

    (2) nothing new here …. my # (2) above is a correct picture of wage and “Total Compensation” studies.

    (3) Either you still haven’t Googled “Cash Balance Plans”, or perhaps you have, but discussing them accurately deflates you position ?

    (4) so are you complaining about (or advocating to reduce ?) our military’s pensions …. all while you support the GHROSS EXCESS now granted State/Local Public Sector workers ?

    Quoting … “….. .you are steaming over systems that fund the bulk of their own benefits”

    “Funding” is a red- herring. A given level of promised pension benefits costs the EXACT SAME whether they are pre-funded or not.. Funding is simply an accounting mechanism to assign the cost (theoretically) to those who benefited from the services provided. For THAT (and ONLY that) reason, funding is a good idea.

    Public Sector Unions/workers like to say that the lack of fully funding is the CAUSE of the pension mess in which our Sates & Cities now finding themselves. However, those Unions/workers conveniently ignore the fact that funding requirements move in lock step with the generosity of the Plans, and a VERY generous Plan will require VERY high funding. The lack of full funding is not the CAUSE of the mess we are in, bit is a CONSEQUENCE of the real root cause ……… grossly excessive pension generosity.

    (5) Anyone who thinks that those who seek election or re-election don’t court the Unions ….for their campaign contributions and block-voting support, is a fool. And once in office, they RETURN that support ……. betraying the City’s taxpayers …. by granting raises and pensions/benefits greater than necessary, fair to Taxpayers, or affordable.

    (6) Taxpayers (as a group) are both stupid and disengaged. I believe this WILL change as they are squeeze for more and more taxes (while getting less and less services), all so that their Public Sector workers can continue to accrue their currently promised grossly excessive pensions (AND benefits).

    (7) Public Sector workers (AND their families) represent about 1/3 of all registered voters. With pointed self-interest, they vote in very high percentages, unlike the general voting population. Elections are OFTEN swayed by the block voting of Public Sector workers and their families.

    The grossly excessive pensions (and benefits) in place in the Public Sector today (almost everywhere) are undeniably the result of COLLUSION between the Public Sector Unions and our self-interested Elected Officials (BOUGHT with Union campaign contributions and election support). In any other venue such horse-trading would be considered bribery and racketeering.

    Such unjustly obtained pensions/benefits are certainly NOT “earned”.

    (8) The reason we have not yet seen more demand for a Statewide freeze of current Public Sector DB pensions is because few have sufficient financial training to understanding the enormity of the financial tsunami bearing down upon them. ….. the root cause of which is grossly excessive pension/benefit promises.

    When properly valued, Public Sector pension are ROUTINELY 3 to 4 times (4 to 6 times for Safety workers) greater in “value upon retirement” than those typically granted comparable Private Sector workers who retire at the SAME age, with the SAME pay, and the SAME years of service. And COST is directly proportional to generosity….. with the workers RARELY contributions more than 10% to 20% of total Plan costs (INCLUDING all the investment return on their own contributions).

    The absurdity of this situation is palpable.

    (9) MATERIAL reforms ARE on the horizon …………. there is no alternative.

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