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Fran Govt Pensions MUST Go Into Debt and Higher Unfunded Liabilities
California Supreme Court Rules San Fran Gov't Pensions
Go Into Debt and Higher Unfunded Liabilities
June 19, 2015 By Stephen Frank ' Comment
Item PHI
06 -23 -2015
Distributed by Steve Barasch
The California Supreme Court has decided that if the voters and workers want to save
the govemment pensions system, that is not allowed. Instead the Court ruled that the
San Fran pension system must go belly up— harming tens of thousands of people and
families.
"On March 27, the 1 st District Court of Appeal ruled on changes in the pension fund's
supplemental COLA in Proposition C, which voters approved in November 2011. The
proposition included a rule that the pension fund must be "fully funded" based on,the
market value of assets the previous year in order to distribute the 3.5% supplemental
COLA."
In other words the Courts demand money that does not exist be paid to retirees. The
unions are happy; in a few years the workers will lose their pensions and wonder how it
happened.
CaIPLEDIC
California Sugreme Court denies hearing on COLA reform for San Francisco
Rension fund
By•Rob Kozlowski, Pensions & Investments, 6/18/15
The California Supreme Court on Wednesday denied petitions for review on a decision handed
down by a state court of appeals regarding supplemental cost -of- living adjustment changes for
participants in the $20 billion San Francisco City & County Employees' Retirement System.
The court denied petitions filed by both the city and the plaintiff, a political action committee called
Protect our Benefits.
On March 27, the 1 st District Court of Appeal ruled on changes in the pension fund's supplemental
COLA in Proposition C, which voters approved in November 2011. The proposition included a rule
that the pension fund must be "fully funded" based on the market value of assets the previous year
in order to distribute the 3.5% supplemental COLA.
The city appealed the courts decision to eliminate the funding requirement for participants who
retired after Nov. 6, 1996, when the supplemental COLA was enacted, while the plaintiff appealed
the court's decision to uphold the requirement for participants who retired before Nov. 6, 1996.
Matt Dorsey, spokesman for San Francisco City Attorney Dennis J. Herrera, did not return a phone
call seeking comment by press time; Larry P. Barsetti, chairman of Protect Our Benefits, could not
be reached by press time.
)n Foundation Pension Reform Newsletter, April 2015 hnps:H mail. aol. com /webmail - std/en- us /PrintMessage
To read the report, go -h=.
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GASB Changes Hit Public Pension Plans
By Tfuong Bui, Reason Foundation
Public retirement systems in the US have experienced the first wave of change
in the Governmental Accounting Standards Board (GASB) rules . Rolled out in
2014, GASB 67 requires a different treatment of the discount rate, making public
plans use a market discount rate to value the pension liabilities that are not
covered by projected performance. The resulting blended discount rate, for
many plans, is often lower than previously assumed.
According to a recent analysis by Governing, 28 out of the 80 surveyed pension
plans decreased their discount rates in fiscal year 2014. However, the average
funded status rose from 70 percent in 2013 to 74 percent in 2014, thanks to the
new accounting rule requiring plans to report the market value of assets, which
have recently seen large gains, instead of the smoothed value. Some plans did
see a significant drop in their funded status. For example, the Kentucky
Teachers' Retirement System had its funded ratio fall by 6 percentage points in
2014 after reducing its discount rate by two points to 5.23 percent. Similarly, the
funded status of New Jersey's state employee retirement plan sank to 28
percent from the previous 46 percent due to the plan's discount rate
adjustment.
The second wave of change will come later this year, with the new rule GASB
68 requiring cost - sharing employers to record their share of unfunded liability on
their balance sheet. The rule is expected to force governments to recognize the
role pension obligations play in their overall finances.
Despite these positive changes, the new GASB standards still have serious
limitations , and only structural reforms would bring long -term sustainability to
government pension systems.
To read the Goveming analysis, go here.
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Why Pre -fund? Why Fully Fund?
By Lance Christensen, Reason Foundation
i of 10 4/24/15 9:22 AM