The Massachusetts Board of Library Commissioners has announced a list of municipalities that sought waivers for the FY2010 Municipal Appropriation Requirement (MAR) and will receive the certification that is required for state aid to libraries. Dartmouth was one of 96 communities that sought and received such a waiver although our town was one of four whose waiver was granted with reservation. The state Board considers a waiver with reservation to indicate that a significant gap exists between library funding and funding of other departments.
Only the Town of Hull had their waiver request rejected and lost certification.
One consequence of state certification is that the towns can continue to participate in the state's SAILS inter-library loan program. The amount of state aid that is provided in modest about $40,000 but the ability to access the collections across the state is valuable. Given the financial strains faced by municipalities ...
... across the Commnnwealth, it is likely that funding will continue to be an issue for a few years.
I posted about the certification requirements here back in 2008. If the 96 towns who were not able to meet the commissioners requirements formed their own inter-library lending association, or joined one other than SAILS, I think that the state might decide to change their requirements. Back when I wrote the linked article in 2008, there was some thought of privatizing library services. I am still not convinced that privatization would be a bad thing. I am certain that the state's funding requirements are going to be a problem for Dartmouth in 2011 and beyond. Make no mistake, the Dartmouth Library Trustees are doing the best that they can in a difficult situation but the deck is stacked against them. The funding requirements do not consider cost saving measures that may be taken. They require increased spending year over year.
Friday, February 5, 2010
Dartmouth Library receives certification (with reservations)
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37 comments:
Funny...Doesn't Hull have a Wind Turbine?
Two, I think. But they are all, everywhere, less than 100 meters, unlike those that Dartmouth will have. Bigger and better for us, of course!
Did they throw a blade that landed in the roof of the library?
Did'nt know they could get de-certified for that!
Just saw a report that California has $52 BILLION in unfunded pension benefits. It makes our number of $900 MILLION look like small potatoes but beware. We are on the same path to crisis. The result of not switching to defined contribution pensions will be the loss of services like the library as we know them.
The unfunded Pension Liability for Dartmouth alone is $25,245,160.00 Thru FY 2020 as of 4/9/08.
The GASB-45 Unfunded Healthcare Liability for Dartmouth stands at $59,273,000.00 as of 7/1/08
I just have not asked for updates to these numbers but I assure you they have not gone down ....
The unfunded Pension Liability for Dartmouth alone is $25,245,160.00 Thru FY 2020 as of 4/9/08.
Greg, that number is misleading. Yes the State doesn't help pay the 25 million, but the town saves the 6.2% employer share of social security taxes because of the pension system.
Care to share exactly what that 6.2% savings comes to for all employees through 2020? I would venture a guess it is awfully close to the so called unfunded mandate.
Total Dartmouth salaries in 2008 were 39,660,259.34. 6.2% which the town is SAVING by not paying social security is 2,458.936.08
2,458,936.08 x 10 yrs until 2020 = 24,589,360.80 out of 25,245,160. Can you still call it an unfunded mandate?
If you put the savings from paying ZERO into Social Security you have just funded the Pension system. Make sense?
Over the same 10 yrs employees will contribute more than 34 million into the system.
The pension liability is to the Bristol County Retirement system for town employees past & present exclusive of teachers. Teachers have their own retirement system at the State level.The salary number quoted by Annon 2:59 is mostly educator salaries. General Government salaries are around $13 mil annually including many part workers with no retirement benefits.
The law says that we must have on hand an amount of money that guarantees the payment of all pension benefits for our employees, past & present. In order to meet that standard through 2020 at current rates and life expectancies we need to add an additional $25 mil. This 'catch-up' is ongoing and is a part of the $3.3 mil annual appropriation we make for Pensions & Retirement.
A similar situation holds for the $59 Mil in Health Care Liability. The requirement to attain this standard is not yet law but a day of reckoning is in the future.
It should be noted that the Regional Land Fill at Crapo Hill does fund both of these liabilities, thus there will be no unexpected costs to either New Bedford or Dartmouth in the future.... something that can not be said for the Town itself.
Anon 2:59 , I wish I had the time this morning to correct your totally irresponsible post. Hopefully Greg Lynam can explain the numbers to you. Greg's liability numbers are for the town side employees only, not the school side which you have obviously and misleadingly included in the salary cost.
Bill, How about a post about pensions? Let's argue about something that matters instead of how people talk into microphones. I would love to make this a big issue that people like on our select board and finance committee have to take a stand on.
http://www.mass.gov/perac/report/stateofpension2009.pdf
The effect of the high employee contribution rates is that in Group 1 (general employees), an individual hired after 1996 is in fact financing most or all of his or her entire superannuation (normal) retirement benefit. For example, based on plan assumptions for a member hired after 1996 at age 25 with a starting salary of $30,000, contributions plus earnings will have accumulated to nearly $1.8 million to cover a benefit at 65 valued at approximately $1.5 million. The difference of $300,000 accrues to cover other plan costs of the employer. In other Groups, individuals
hired after that date will pay for a significant percentage of their benefit. In reality, for these employees,
the Massachusetts pension plan is a defined contribution plan with respect to funding and a defined benefit plan as far as the benefit structure is concerned.
So why do we need Pension Reform? Workers hired since 1996 are fully funding their own pension with 12% of their pay going towards their retirement yearly and an additional 2% on salary over 30,000.
Hopefully Greg Lynam can explain the numbers to you. Greg's liability numbers are for the town side employees only, not the school side which you have obviously and misleadingly included in the salary cost.
Are we not saving 6.2% (social security payment) on the teaching side too? Yes we are.
If we are saving almost 2.5 million per year on SS payments the numbers I posted are correct.
Weather or not teachers are included in Bristol County does not matter. The town has no obligation to pay the state for teachers retirement (or do they? I could be wrong)
Thus the savings of 2.5 million per year can be put into the Bristol County program eliminating the problem!
You also know the reason the the payment is so high is because the Retirement fund was underfunded by the towns and cities not the employees.
I am not sure how posting the facts is irresponsible. I am sure many people had no idea that the Town makes no payments into Social Security because of the "lucrative" pension plan.
Our town is saving millions per year by not making those payments and then complain when they have to put a "similar" amount into the retirement system.
This is outlandish to say the least. Make the payment and consider yourselves lucky!
I'm with 2:59pm. After all, he only had to add almost $30,000,000 to the town side salary cost in order to make his bogus social security savings argument work.
I think we are missing the point.
I did not mean to suggest that there was anything wrong or unfair about paying into the pension system. We pay over $3 mil a year into it now. I was merely giving you the numbers in support of Nostradamus.
The pension system we operate under is a pay-as-you-go plan. In other words each week the employee pays his / her share and the municipality pays its share. The problem is that, just like social security, the payments made by today's workers are paying for today's retirees benefits.
The 'catch-up' is designed to correct that situation by requiring municipalities to amass an amount of money sufficient to provide for the retirement benefits of all current retirees. It would also place us on a path so that those currently paying into the system will have amassed a sufficient amount of money at retirement to guarantee their own benefits.
This is the way it should have been all along and it is the way your own private retirement plans work.
If Social Security had been run this way we would not be in the crisis we are.
That said, the Unfunded Health Care liability is yet another very real problem that has yet to be addressed in the same manner.
We are self-insured. When a medical problem arises the bill comes back to the Town to pay. Blue-Cross merely processes the paperwork. This places the town in a position of never really knowing how much we may be called upon to pay in any one year. It all depends on how many people get sick and to what degree.
After all, he only had to add almost $30,000,000 to the town side salary cost in order to make his bogus social security savings argument work.
Not true, the town is NOT paying Social Security tax on the education side either. The ACTUAL savings per year is 2.5 million. Oh so sorry they have to invest that savings into a pension plan.
If there was no pension plan for town/school employees the town would be paying 2.5 million into social security. That is not made up, nor is it voodoo math. Those are the facts.
You can't have it both ways. Saving 2.5 million because of pension plans and then whining about funding said pension plans.
My point is, maintaining the pension system is no more expensive than getting rid of it.
Calling it an unfunded mandate when the Federal Government does not collect 2.5 million dollars in SS tax is not accurate either.
2.5 million per year is pretty well funded!!!
I agree with the math. No more crying about paying paying for one pension system when Dartmouth is saving two and a half million dollars per year in Federal Taxes. One way or the other the money has to be paid.
Greg, the question is..... are we saving the 6.2 percent on the educator salaries too? Please don't duck the question because I am truly interested in the answer.
If you are going to include the teacher's salaries and social security savings in your formula, then you must also include their pension liability. That is part of the state pension liability which is $900mil for this year alone. I don't know what the dartmouth schools share would be but you can bet it is funded by reducing the amount of state money received by the town for education. You are mixing and matching different expenses to suit your argument and fooling nobody. On the town side alone, we are paying over 30% of payroll to fund the pension system. Standard private business practice is to pay 7% for social security and give a 3% match for a 401k. That's a total of 10% of payroll. The taxpayers are shelling out an extra 20% of payroll costs to support this archaic pension system. That equals about $2million this year for the town side alone. You could buy a lot of textbooks and computers with that kind of money.
The taxpayers are shelling out an extra 20% of payroll costs to support this archaic pension system.
The key word you left out is temporarily. As Greg said, once the "catch up" money is paid the retirees will fund their own retirement benefits with little/no contribution from the town. That is the same deduction made by the pension board.
When the retirement plan is fully funded in 10 years or so the town will not be paying even 10% into the retirement system.
Anon 10:26 would rather strip employees of their retirement and pay for more books!
I am in complete agreement on the heathcare issue. Costs are skyrocketing for both the employers and employees. There has to be a way to reduce the price of healthcare.
The town is not "saving" on pensions by not paying into Social Security. Town employees do not receive Social Security benefits because they and the town do not pay into the system. That does not mean the town is not paying as much or more into retirement accounts.
The real issue is that the retirement benefit for public employees is far and away more generous than most in the private sector. Long time town employees receive 80% of the top three years of their pay as a pension. If you earn $70,000 as a town employee, you will receive pension payments of $56,000 for life after retirement. Some public employees also receive a Cost of Living Adjustment on their pensions as well.
Most in the private sector have moved away from defined benefit plans, such as the town employees receive, to defined contribution plans. The defined benefit plans were too expensive and the costs too ill-defined.
Most defined contribution plans allow you to put a percentage of your income aside for retirement and the company matches that percentage up to some limit. To compare apples to apples, private sector employees pay 6.2% into Social Security and then some percentage to a retirement account. Let's say 6%. Assuming the company matches half (pretty typical), then the employee has put aside 9% of their salary for retirement and will get Social Security. Their contribution is 12.2% of their salary adding up the Social Security and retirement account. That is quite similar to what some public employees pay into their retirement fund. The difference is that the benefits paid to public employees is greater on whole than the private sector. If the private sector employee saved at the above 9% rate over the course of their work life and then withdrew at an 80% rate of their salary after retirement, their retirement account would be exhausted in about 7 years.
I think that the most equitable solution is to move the public employees to a defined contribution system which is what the private sector has done.
The illogical arguments coming from the teachers' union here are why town voters will not approve school overrides. These people, believing that they are so much smarter than the rest of us, think they can B.S. the public. Their problem is that their tactics turn people off who otherwise want to support our school system.
The town of Dartmouth, or any other city or town, does not directly pay into teacher retirement funds - we all pay as Anon 10:26 pointed out.
There are two basic types of retirement programs applicable here. The municipal retirement systems are defined benefit programs where Social Security is a defined contribution program.
Dartmouth belongs to the Bristol County Retirement System ; a defined pension program. " Membership is a statutory requirement for all listed member units working at least 20 hours per week. " Premiums collected from the employees are theoretically held in an account for that employee. These funds are then invested with the intent of generating enough money to guarantee the employee 80% of their pay at retirement for the remainder of their life; i.e. the benefit is defined at the start.
To the extent that yearly investment returns fall short of targets, the city or town is assessed an amount of money designed to put the fund back on target.
These programs went out of vogue during the 1980's because they have a fatal flaw. You can not guarantee with today's premiums, 80% of a future unknown salary for an indeterminate amount of time. What happened was that the gap between what was coming in, what was paid out, and ability of the company or municipality to make up the difference, grew ever wider as the number of employees paying into the system fell, pays rose and life expectancies lengthened. Companies and municipalities alike began reducing or deferring their contributions thus allowing a liability to grow with I.O.U's. Those statements employees receive show monies that are not actually there - but don't worry ; we owe it to you.
Many companies went out of business or reduced or eliminated promised benefits altogether. General Motors was brought to its knees as a result of this burden. Our current, and growing, liability of $25 mil is deferred to 2020 with plans to push it out even further adding more I.O.U's to the pot. This is necessary because the plan is unsustainable - the costs are far in excess of SS . Last time I asked, the shortfall for the Bristol County system itself was > $200 mil. It is a Ponzi scheme Bernie Madoff would be proud of.
Another ponzi scheme is Social Security. This is a defined contribution plan whose benefits are calculated on a formula based on what the employee contributes. The maximum benefit under SS is $2,346 / mo ; an average payout of $1,164 / mo. This is far less than the defined pension plan and thus far cheaper for the employer.
The problem is that even these benefits are predicated on hitting certain investment goals on which the formula is based. When those goals are not met the contribution must be raised or the benefit reduced ... neither has been found to be politically acceptable. As a result a gap of monumental proportions between projected income and outlays has materialized.
Dartmouth currently pays out $3.3 mil in pension costs for our share of the defined pension plans & the few on SS. If, as another suggests, we had paid the 6.2% SS tax on our $13 mil in payroll, those costs would be only $ 806,000 ; Don't we wish all employees were on Social Security, unfortunately the defined pension plan is a statutory requirement. This needs to change, as Bill suggests, or the system will collapse.
Anon - since you are all for not mixing apples and oranges the money saved could also buy an awful lot of snow plows too.
Did Bill and Greg miss the part from the state report that an employee hired in 1996 at 25 years old in group 1 would completely fund his normal pension with 300,000 left over for the pension plan which would cover someone who lives longer?
This is in no way a ponzi scheme. http://www.mass.gov/perac/report/stateofpension2009.pdf
For example, based on plan assumptions for a member hired after 1996 at age 25 with a starting salary of $30,000, contributions plus earnings will have accumulated to nearly $1.8 million to cover a benefit at 65 valued at approximately $1.5 million. The difference of $300,000 accrues to cover other plan costs of the employer. In other Groups, individuals
hired after that date will pay for a significant percentage of their benefit. In reality, for these employees,
the Massachusetts pension plan is a defined contribution plan with respect to funding and a defined benefit plan as far as the benefit structure is concerned.
Bill said The difference is that the benefits paid to public employees is greater on whole than the private sector.
Which benefits are those Bill? The minimum required heathcare 50/50 split? Surely it isn't the money. Vacation is absolutely on par with the private sector.
The illogical arguments coming from the teachers' union here are why town voters will not approve school overrides. These people, believing that they are so much smarter than the rest of us, think they can B.S. the public. Their problem is that their tactics turn people off who otherwise want to support our school system.
Don't be mad at the teachers union, I am in no way affiliated with the teachers, the school or their union. I am a voice of reason when town leaders (bill) submit that pensions should be eliminated.
" You are eligible to retire at age 55 or older if you have at least ten years of creditable service. If you have 20 years of service, you can retire at any age. "
So let's test Anon 6:46 math ....
First let us assume an employee is hired right out of college at age 25 as suggested. Let us also assume he works continuously for the next 30 years and retires at age 55.
Lets assume his starting salary of $30K increases at the average rate of inflation of 3% / yr. At retirement he is making $ 70,697 / yr.
Lets assume the pension fund averages a rate of return of 6% per year for all 30 years.
Lets assume he contributes 9% of his pay each year for the 30 years. With interest compounded over those years his retirement fund now totals $ 316,368.
Let us assume he lives another 25 years following retirement. He dies at age 80.
80% of his salary at retirement is ( $70,697 x 80% ) = $56,558 / yr
Q: How many years will his annuity last ?
A: 6.5 years
In order for him to receive his full benefits for 25 years he will need to have $ 731,510.
This means that in addition to his 9% contribution / yr, the Town would have to contribute another 15% of his salary each year; another $527,280.
All this assumes a 6% return ... it assumes he does not get any promotions that raise his salary faster than 3% / yr ... it assumes he retires after 30 years and does not live past 80.
If returns are different .. he is promoted or fired or quits ... or he works longer or less than than 30 years .... or lives a shorter or longer life ; throw all these numbers out the window and start over again.
This ignores any political promises for cost of living increases during retirement which would inflate the Town's requirement even more.
These plans are enormously expensive. The employees portion is fixed while the employers liability is open ended, subject to factors that are not able to be predicted.
In the example above, the employees portion actually shows up at the pension fund as a payroll deduction, the employers $527K is partially in the form of I.O.U's. In Dartmouth's case, $25mil worth. The fund is kept rolling along by using today's employees contributions to pay for yesterday's retirees benefits..... just like Bernie. After the employee retires, the town's liability to his pension continues to his death.
By contrast, under SS at a 6.2% contribution rate each would have paid $218K into the system for a total nest egg of $ 436K. When the employee retires,quits or is fired ... the town's liability ends.
For too long we have been complacent about the workings of Congress.
Many citizens had no idea that (1) Congress members could retire with the same
pay after only one term; (2) that they didn't pay into Social Security; and (3)
that they specifically exempted themselves from many of the laws they have
passed (such as being exempt from fear of
prosecution for sexual harassment.
Congress's latest game is to exempt themselves from the Healthcare Reform Bill
that is being considered. Somehow, this doesn't seem logical. We do not have
an elite that is above the law.
I truly don't care if members of Congress are Democrat, Republican,
Independent, liberal, conservative, progressive or whatever. The self-serving
must stop. The below-listed proposed 28th Amendment to the U.S. Constitution
would do that. This is an idea whose time has come.
Proposed 28th Amendment to the United States Constitution:
"Congress shall make no law that applies to the citizens of
the United States that does not apply equally to the Senators and
Representatives; and Congress shall make no law that applies to the Senators
and Representatives that does not apply equally to the citizens of the United
States."
This is fair, to the point and non-partisan. Who could be against it?
Congress, that's who.
Defined Contribution Plans vs. Defined Benefit Plans...Believe it or not DC plans can cost tax payers more in the end than paying for DB plans. Fiscal Rationale: Although DC plans have many positive attributes, if they are to serve as an employee’s pimary retirement benefit and provide financial security in retirement, they leave little margin for miscalculation: participants must consistently make sound investment choices, including allocating assets throughout their working and retired lives; they must remain in the workforce continuously, avoiding lengthy absences for such purposes as having children, raising a family,completing their education, or for illness; they must have a sufficient amount withheld from their pay; they must avoid spending or borrowing against their retirement assets, especially when changing jobs; and they must make appropriate decisions regarding withdrawal during retirement. Even then, if an employee makes all the right decisions, there remains a chance the employee will outlive or exhaust their assets. I see this everday in my line of work as many Americans are approaching retirement financially unprepared which ultimately impacts tax-payers through taxes paid to public assistence programs that these folks depend on to help support them or supplement income during their retirement.
Career public employees like we have in Dartmouth with a DB plan as their primary retirement
benefit, are less likely to face these problems in retirement and are less likely to rely on public assistance programs that you and I pay for anyway. The devil is the details. A classic case that it is sometimes easier to make financial decisions based on what's tangible and what we can see, which is then driven by public perception, opinion and politics.
Looking at the 'big picture' I agree 100% with my fellow committee member, Stephen Mitchell.
There is absolutely no argument that the defined pension plan now enjoyed by municipal employees is far superior to the benefits they would earn under Social Security. In my example above the pension plan guarantees 80% of your salary at retirement [ $56,557 in this example ] where the SS option would pay out a maximum of $28,152 / yr or about 40% of your ending salary ( spousal entitlements ignored ) .
But looking at it strictly from an employers, in this case the town of Dartmouth's point of view, they are unaffordable. Stephen is right to say that in the end we all pay for it but individually each city, town or employer has to balance his / her own yearly budget with the revenues available at the moment.
Looking at the Bristol County Retirement fund report [ http://www.mass.gov/perac/08annualreport/bristol08.pdf ] over the last 24 years asset growth has averaged 8.39% ... but over the past 9 years to 2008 it has earned only 2.51%. From 2004 - 2008 the rate of return was 1.4% with 2008 returning a negative - 26.22% .... yet the payouts continue to steadily rise at 4.5%. At the end of 2008 it was only funded to 65.8% [ an unfunded liability of $201 mil ] , up from only 40% funded back in 1989 as we continue to 'catch-up'.
Because we can never know what the actual benefit payout will be, or the length of time it is to be paid out, or the rate of return over any defined period of years, we can never accurately budget for more than one year at a time. This is troubling because it denies the town the ability to plan for our future by making it impossible to calculate the real cost of labor contracts over the long haul. The same holds true for Health Care costs.
First let us assume an employee is hired right out of college at age 25 as suggested. Let us also assume he works continuously for the next 30 years and retires at age 55.
Nice try Greg, you know group 1 employees DO NOT get 80 percent if they retire at 55 years old. 55 years old and 30 yrs of service gives an annual rate of 45% (generous huh?)care to redo the math with the 45% figure Greg?
To Max out at 80% a group 1 employee must have 40 yrs of service and be 60 years old.
Additionally it WAS NOT my math, it is the math of the Commonwealth of Massachusetts...Public Employee Retirement Administration Commission.
Found here. http://www.mass.gov/perac/report/stateofpension2009.pdf
" You are eligible to retire at age 55 or older if you have at least ten years of creditable service. If you have 20 years of service, you can retire at any age. "
55 years old with 10 yrs pays 15%.
55 with 20 yrs pays 30%
50 with 20 yrs pays 20%
None of these are anywhere near the 80% maximum on which you base your argument.
Anon 6:37
PERAC sets the standards for all state retirement boards. We belong to the Bristol County Retirement Board who comes under those standards. The facts I used come from the FAQ at BCRB visible at the following URL :
http://www.bristolcountyretirement.org/faq.asp?show=members#9
For some reason I can not access the document you reference [ http://www.mass.gov/perac/report/stateofpension2009 ] .
Could you please double check that URL so I can see what you are referring to.
Thanks,
Greg
Here is another intangible that is related to pensions. Happy employees are an essential ingredient for a productive work environment. With defined benefit pensions, unhappy employees cannot change careers without unfair consequences. People with defined benefit pensions can feel trapped in a job that they hate more with each passing day. This can deteriorate morale throughout the workplace.
Those with defined contribution pension plans have the freedom to move from one job to another and take their retirement money with them.
I once had a job with the US postal service. Hired in 1986, under the first contract with defined contribution pensions, many of my co-workers thought I was crazy to start my own business and quit. Many of them understood and even envied me when I explained the difference between our pension plans and the employment freedom it gave me. Having a defined contribution pension plan was one of the best things that ever happened to me.
State and local governments are actually 25 years slower to convert to defined contribution pensions than Snail Mail. That's right, 25 years slower than Snail Mail and still counting.
Fot those who are irresponsible with their 401k's, there is a safety net. It's called social security. My own parents who saved a reasonable amount of money for retirement, have chosen to live a lifestyle that is supported almost completely with SS. They only use savings for things like a new furnace. Their house is well maintained and very warm, they have two vehicles, and they eat quite well. Ah, the virtues of the greatest generation.
When considering the financial planning advantages for the town of defined contribution plans, it seems like a no-brainer to me. Having said that, converting to defined contribution will take many years to be advantageous. We would need to honor our commitments to those who are already in the defined benefit program.
Sure Greg, the .pdf was missing from the link here it is
http://www.mass.gov/perac/report/stateofpension2009.pdf
Also here is the chart defining payment percentages for group 1.
http://www.mass.gov/Ctre/docs/retirement/retirementchart.pdf
I want to thank Anon 6:28 for his / her persistance - It forced me to gain a better understanding. You are absolutely right, but for one fact.
[ http://www.mass.gov/perac/guide/mainguide11.htm ]
Yes ... a 55 year old with 30 years of service would receive 45% ... my appology. I should have used a 65 year old with 32 years of service to max out at 80%. The formula goes like this : (Age related multiplier) x ( Highest salary for last three years ) x ( Number of credible years of service ) . At age 55 that multiplier is 1.5 ... for age 65 it maxes out at 2.5.
Re-working my original scenerio for 65 years old and 32 years of service : ( 2.5 ) x ( $75,002) x ( 32 ) = $60,000 or 80%. If the employee worked 40 years there would likely be a surplus [ I did not calculate out that far ] , but few work that long and in all other cases, including this one, there is a significant shortfall that must be made up for by the employer. This shortfall varies by hundreds of thousands of dollars with even small changes in longevity and interest actually realized. The underlying problem has not changed. .
As shown in the BCRB annual report [ http://www.mass.gov/perac/08annualreport/bristol08.pdf ] over the past 9 years to 2008 it has earned only 2.51%. From 2004 - 2008 the rate of return was 1.4% with 2008 returning a negative - 26.22% .... a loss of $125 mil 07 - 08 that must be made up for by someone.
We can argue numbers all day but the fact remains that past payroll deductions failed to keep pace and has resulted in a $200 mil shortfall at BCRB ; the State teachers retirement system is $8 BIL underfunded. The reasons are as I stated way above.
Salaries at retirement, or the rate of rise in salaries, can not be known initially .... the rate of future returns on asetts can never be known .... the rates of COLA's as applied in the future can not be forcasted and the longevity of retirees can not be calculated along income lines. Abuses of the system have contributed to these shortfalls by pushing vacation and sick day buyouts into final salary. In some cases awarding promotions in the final three years of service that carry large pay increases throws the numbers deeper into negative territory.
There are proposals to address some of these areas but until they are fully addressed the assessments will continue to be high and unstable with existing liabilities being push out ever further, with the year 2030 now seriously under consideration.
All of these unknowns make it very difficult to plan present and future labor costs.
Greg, my pleasure to have debate with you here without name calling.
I am not saying the system cannot be tweaked. There are certainly abuses as you mention and they need to be dealt with accordingly.
The part that bothers me is those who want to throw the system in the trash instead of fixing it.
The recent stock market volatility has certainly not helped the bottom line of the pension fund but over a longer period of time the rate of return has been in the 8-9% area.
Reform is a good thing, stopping the abuses of the system should be a priority.
Anon 12:57,
My pleasure as well.....
Anyone who knows me knows how much I like a good and civil debate. It is the way I deepen and broaden my own understanding of issues.
Thank you ....
Greg Lynam
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