Archive for the ‘Pensions’ Category

Wrong-way Reed wants police chief to double-dip (Updated)

Update at 5:50 p.m.: City officials say Chief Turner is withdrawing his request to collect a pension while remaining on the job. The original post is as follows:

If you want this:

Officials in Atlanta Mayor Kasim Reed’s administration said Friday [April 23] they are preparing legislation to dramatically reduce pension benefits for city employees to the level of benefits a decade ago. The move would save millions for the city but is expected to set off an alarm among city workers and their unions.

then it seems to me that the exactly wrong thing to do is this:

Atlanta’s Chief Operating Officer Peter Aman is floating a proposal to the City Council that would allow [police chief George] Turner, 51, to “retire” on paper, but immediately be rehired as chief in order to start collecting his $100,000 pension.

Aman said that because Turner would have retired, he would collect his pension and the $200,000 salary that goes with being police chief. Although he commands perhaps the most …

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A ‘Race to the Top’ for Social Security

If you’re below a certain age, your annual Social Security statement is accompanied by a fact sheet titled “What young workers should know about Social Security and saving.”

The fact sheet explains that the Social Security Trust Funds are due to go broke by 2037 and that, as things stand now, payroll taxes won’t cover “the full benefit amounts scheduled.”

“However,” it says, “this does not mean that Social Security benefit payments would disappear. Even if modifications to the program are not made, there would still be enough funds in 2037 from taxes … to pay about $760 for every $1,000 in benefits scheduled.”

Benefits won’t “disappear”? Well, that’s reassuring!

The fact sheet presents this potential 24 percent haircut for Americans around my age as a worst-case scenario. Prudent souls will recognize that, with fewer workers and more beneficiaries who live longer, it may be the best case.

I fear the temptation to “fix” Social Security by giving Washington more authority is too …

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Kasim Reed and Atlanta’s fiscal crisis

This was going to be the column where I regretted not endorsing Kasim Reed last fall.

I would write about the visits that Atlanta’s new mayor has made to the AJC’s offices to talk about fixing the city’s finances, in particular the crushing unfunded pension obligations it faces. I would write that I was impressed with his new priorities and his resolve.

Reed would have gotten my vote, I would write, if he had talked this way during the campaign rather than putting first and foremost a plan to hire 750 more police officers. That was probably good electoral politics, for it no doubt matters to a great number of Atlantans.

I simply didn’t think then — and still don’t — that such a plan was feasible until the new mayor had gotten a grip on pension costs, which have come to consume about 20 percent of Atlanta’s general budget. I thought I heard Reed signaling that he now agreed.

Then came his first budget.

It includes 100 new police officers and a 3.5 percent raise for current …

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Public-sector unions are shaping up as a 2012 issue

Public labor-union members have been a key voting bloc for Democrats for years now, so it’s interesting to read this Politico story about bipartisan wariness over civil servants’ pay and benefits. Democrats in Illinois (Gov. Pat Quinn), New York (attorney general and gubernatorial candidate Andrew Cuomo) and California (left-of-center blogger and U.S. Senate candidate Mickey Kaus, not cited in the article) have acted or spoken against the growing disparity between the public and private sectors, something I’ve written about before here, here and here.

The story also quotes some Republicans who may be prime challengers to President Obama in 2012: Indiana Gov. Mitch Daniels, Minnesota Gov. Tim Pawlenty and, if you believe the early talk about GOP voters possibly going for an Obama-style fast-riser, New Jersey Gov. Chris Christie.

For whatever reason, the authors didn’t connect the 2012 dots. So, allow me.

Suppose that Daniels is the GOP nominee in 2012. Such a contest would pit …

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A fiscal black hole grows deeper

Add another half-trillion dollars to America’s debt.

No, Congress hasn’t been on another spending spree. (Yet.)

I’m talking about another $600 billion in debt — almost $2,000 for every man, woman and child — that state and local governments have racked up but don’t recognize.

I’m talking about money that we owe to just one category of retirees: Teachers. Money that we already would have known about if government followed the same accounting rules as private companies.

Add that money to the teacher-retirement debt we already knew about, and we’re talking about almost $1 trillion.

Whoever said “trillion” is the new “billion” wasn’t kidding.

These figures come from a new report, “Underfunded Teacher Pension Plans: It’s Worse Than You Think.” The authors argue the funds underestimate funding gaps by overestimating the rate of return on their investments. They say the funds could avoid this problem by following private-sector accounting rules, which require adjustments to account …

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Atlanta pension lawsuit is a first step

Call it the first shot of the pension wars.

After watching Atlanta’s pension costs nearly triple over the past decade, the Fulton County Taxpayers Foundation sued the city last week. The plaintiffs argue that the city didn’t follow its own procedures when it increased retirement benefits in 2001 and 2005, and they want a Fulton County judge to nullify those richer benefits.

This showdown between Atlanta’s employees and its taxpayers has been building for years, and it will be the No. 1 issue for the city until it is resolved. But it’s no accident that the hostilities began Monday.

One week earlier, a pension review panel appointed by the new mayor, Kasim Reed, reported its initial findings. The short version: Things are even worse than we thought.

The unfunded liability for the city’s three funds — for police, firefighters and general employees — is $1.5 billion. That hole is almost five times as large as it was in 2001, when the plans were considered well-funded; today, the …

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The pensions problem extends beyond Atlanta (Updated)

Kasim Reed has been quite active since taking office as Atlanta’s mayor last month, and one of the most important task forces he put in place — on the city’s exploding pension costs — releases its first public report today. There’s every indication that Reed understands this knot has to be untangled before the city can act substantially on any other area.

The panel will report on the current state of the city’s pension plans and will outline some possible paths forward. It will not, however, make recommendations about those possible paths forward. That’s a political question that has to be decided by Reed and the City Council.

That debate will certainly be a raucous one, with taxpayers pushing for reducing the city’s commitments while employees try to keep as much of what they have as possible. The taxpayers are right, because the city simply can’t keep the promises it made to employees when it increased benefits in 2001 and 2005.

Atlanta is far from the only city having this …

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