Weekly News – Nov. 25, 2013

They blame you, not Wall Street
Mike Shedlock, writing from the perspective of the financial industry, discusses municipal bankruptcy. He places blame firmly on politicians and unions, with commentary like “it certainly is not fair to ask taxpayers to pick up the tab, given the threats, coercion, vote buying, and backroom deals under which politicians rewarded their friends and themselves jobs with ridiculous pensions.” He also claims that “unions are behind the demise of every one” of the cities he has discussed filing bankruptcy. Ron DeLord, one of the leading police union contract negotiators in the country, calls this article “a road map on how the anti-public employee forces are planning their attacks.”

Pulido Pulls Out of Reed Initiative on Pension Reform
Santa Ana Mayor Miguel Pulido has decided to withdraw support for a state ballot initiative that threatens the pensions and benefits of public employees throughout the state. This ballot initiative (“The Pension Reform Act of 2014”) would allow municipalities to reduce employees’ pensions and benefits going forward.

Vallejo council member joins pension reform fight
In related news, Vallejo City Councilwoman Stephanie Gomes has decided to support the ballot initiative, saying “I know the unions won’t agree with this, but I fully believe this is a way to ensure that their retirement is there in the future.” Supporters still need to gather the required 800,000 signatures to get the initiative on the ballot.

Koch brothers’ group attack Florida pensions
In spite of Florida having one of the better-funded public employee pension plans in the nation (86%), the Koch-funded group “Americans for Prosperity” have launched what they refer to as a “campaign to educate” voters. Jordan Marks, executive director of the National Public Pension Coalition, responded: “There’s a broad ideological attack by these right wing groups. The Florida pension system is sustainable. It shows how ideological these attacks are and the Koch brothers are a great example of that.”

Why pension reform finally may happen in Illinois
Illinois may have some meaningful pension reform on the horizon – they have one of the worst pension liability situations in the nation, and it’s a problem not easily solved. The main savings will come from lowering the cost-of-living adjustments for retirees. Projections indicate that the savings would cut their liabilities by $150 billion in the next 30 years.

Pension results in Mississippi mixed based on accounting
In Mississippi, there is good and bad news for the pension system. On the upside, fund investments gained 13.4% in the most recent year, and the funding percentage (using market value) has increased to 61%. But using actuarial methods, which spread gains and losses out over five years, they had to book over a billion dollars worth of losses this year, left over from the 2008 stock market crash, which caused the funding percentage (using actuarial values) to slip down 0.3%. The losses from 2008 are now fully accounted for, so next year may see much better numbers.