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The Chicago Public Schools — already facing a federal criminal investigation of its CEO and a projected $1.1 billion budget deficit next school year — now must pay a price for those problems through higher interest rates on a new $300 million bond deal. The rates lured investors to buy the bonds, which CPS says it will use to pay off recently completed construction projects. But they also mean Chicago taxpayers will pay more over the life of the borrowing deal, financial analysts said Wednesday. The main bond issue — for $280 million to be repaid over 25 years —...

I've done a lot of thinking about this and I'd like feed back

Scott Walker Wins the Accountants’ Primary - Wisconsin’s rock-solid pension system makes him presidential material. Wisconsin governor Scott Walker’s signature legislative achievement, Act 10, was one of the most polarizing and galvanizing pieces of state legislation in recent memory. The law, which severely weakens public-union powers and mandates public-pension sanity, is providing a blueprint for other Republicans around the country. Walker’s public-pension stewardship also demonstrates why he is on the short list of serious presidential contenders....... [snip] ...As states have become more sensitive to burgeoning pension costs in recent years, and with increasing regulatory scrutiny and media attention on possible...

To the outsider, CalPERS — the largest U.S. pension fund, created by California state law and run by an arm of the state of California — may seem like the champion of the working man, fighting for the rights of municipal employees and pensioners. But that perception may be undeserved, per the Chapter 9 bankruptcy of Stockton, Calif., where CalPERS sought to shift to taxpayers (an even larger and more sympathetic party than CalPERS) the financial burden to support what some consider CalPERS' outrageous costs. U.S. Bankruptcy Judge Christopher Klein openly opined, "CalPERS has bullied its way about in this...

Moody’s Investors Service on Friday announced it had reduced its rating on Chicago Board of Education debt to one level above junk bond status. Moody’s downgraded the rating to Baa3 from Baa1 on the board’s general obligation debt. That rating applies to a total of $6.3 billion in outstanding debt held by Chicago Public Schools. That lowered rating, according to Moody’s, “reflects CPS’s continued reliance” on its reserves to cover ongoing operating expenditures, “particularly pension contributions, which will steadily increase in the coming years.” ... the lowered CPS rating also takes into account the city’s own credit rating, which also...

Michigan House Republicans recently released a reform agenda that calls for closing the state-run school employee retirement system to new employees. Senate Majority Leader Arlan Meekhof, R-West Olive, reiterated the proposal. The necessity of closing the current defined-benefit pension system and instead offering new employees a defined-contribution plan is simple: the state underfunds pensions. According to the legislative auditor general, the system has been underfunded in all but one of the past 30 years. The system carries a $25.8 billion unfunded liability. Michigan taxpayers are now on the hook for 13 times more in unfunded school pension liabilities than the...

John Mauldin February 16, 2015We do not have to look to Greece to find massively underfunded obligations. Here in the US we can find hundreds of examples, willingly created by politicians and businessmen who proclaim they are working for the public good. We call them pension funds, but they’re just another form of unfunded debt. A sovereign bond is a promise to pay a certain amount of money over time. A defined-benefit pension fund is a promise to pay a certain amount of income over time. The value of either is determined by the ability of the government or the...

The University of California’s Board of Regents recently voted to increase student tuition up to 25 percent over the next five years. UC president Janet Napolitano said the tuition hike was necessary “to maintain the University of California in terms of academic excellence.” But the real reason for the tuition increase is that the UC system needs funds to bail out the mismanaged pension system that covers retired employees of its ten campuses. Let this be a lesson to the rest of the country: Public officials rarely take responsibility for the messes they make. Rather, they deny culpability and send...

EXCERPT—--the WH wants you to consider a retirement plan that will invest in nothing but US government debt. Any financial professional who advised this—would be sued for malpractice. But asset allocation is merely one of the problems with the new “myRA” fund rolling out this month. A form of Roth IRA that allows people to save after-tax dollars and watch them grow tax-free until retirement, the new myRA offers a single investment option. It’s a private version of the G Fund that is available to federal workers and has lately been delivering annual returns of about 2% on its portfolio...

California public employees now enjoy the highest benefits of any state in the nation. To pretend to fund this largess, California State Teachers’ Retirement System (CalSTRS) is an “outlier” among public pension plans in using creative accounting to blur its grossly underfunded status. This has allowed its school district clients and unionized employees to short-check their annual payment for the nation’s most lucrative teachers' pension benefits. But pressure from Moody’s credit rating agency is causing CalSTRS clients and unionized teachers to make big increases in pension and benefit funding. The latest “hokey-pokey” drama is the California State Teachers’ Retirement System...

Once upon a time, the world's biggest government pension fund, Japan's $1.1 trillion Government Pension Investment Fund, or GPIF, was apolitical, and merely focused on preserving the people's wealth. Then everything changed, and with the reckless abandon of a junkie on a crack cocaine binge, aka Abenomics, the GPIF management was kicked out, and its entire mandate was flipped from preserving wealth, to gambling on #Ref! P/E stocks, in hopes of recreating the wealth effect of the super-rich (the only problem: Japan has reached its breaking point and the higher the USDJPY, and thus the Nikkei rises, the more...

When the November election was still a long way off, Sacramento-area streets were already plastered with campaign signs for a little-noticed political race: candidates are running to serve on the board of the California Public Employees’ Retirement System, better known as CalPERS. While not as high-profile as the statewide and congressional races, these seats are arguably of equal importance to Golden State taxpayers. CalPERS, the largest state pension fund in the country, not only manages more than $257 billion in assets, but also loves to use its political muscle to prod corporate America into “socially responsible” (read: leftist-friendly) investing. Sacramento,...

Colorado’s schools and governments have about $10 billion in hidden pension and health-care benefit liability, a “sinkhole” that could cost many individual taxpayers $10,000 or more to fill, a report from the Chicago-based nonprofit Truth in Accounting found. Sheila A. Weinberg, TIA founder and CEO, said the Colorado Public Employees Retirement Association hasn’t collected enough from school districts and local governments to cover retirement costs for all the local employees. “It is pushed off year after year until these plans don’t have enough money to pay for retirees,” she said. “They’re either going to have to raise taxes or cut...

Pension debt in the Land of Lincoln is a big problem. So big, in fact, that it would take three years of a complete government shutdown, during which the entire general fund went toward pensions, just to break even. No funding for schools, no money for public safety and nothing for health care and human services. Illinois’ unfunded pension liability grew to more than $111 billion this year, according to official estimates. That’s a $48 billion increase just since 2009. ... That $111 billion pension shortfall means the state now has only 39 cents of every dollar it should have...

A decade ago, many of California's public pension plans had plenty of money to pay for workers' retirements. All that has changed, according to a far-reaching package of data from the state controller. Taxpayers are now on the hook for billions of dollars more to cover the future retirements of public workers, with the bill widely varying depending on where they live. The City of Los Angeles Fire and Police Pension System, for instance, had more than enough funds in 2003 to cover its estimated future bill for workers' retirement checks. A decade later, it is short $3 billion. The...

Gov. Tom Corbett blasted the General Assembly and line-item vetoed more than $70 million from the budget but signed the rest of it into law Thursday. The line-item veto removed $65 million in proposed spending from the General Assembly's own funding, which he said was equivalent to the legislators' surplus, as well as $7.2 million from general appropriations. (snip) Corbett reserved more ire for the General Assembly in what he said was its failure to address the public-pension crisis, an issue he has campaigned for big changes including a move toward a 401(k)-style system for new state employee and public...

This summer, Montreal residents witnessed a strange sight: local police abandoned their traditional uniform pants and instead donned casual attire, ranging from camouflage and fluorescent-colored trousers to multicolored slacks. Some cops bizarrely even donned skirts. The dressing down was all done to show cops’ anger at the Quebec provincial government’s proposals to cut the costs of municipal pensions by getting workers to contribute more toward their retirement. Call it Canada’s summer of pension discontent. Governments throughout the country are grappling with as much as $300 billion in unfunded government-worker retirement debt. In a country of just 38.5 million people, that’s...

In a potentially groundbreaking decision, a federal bankruptcy judge today struck down the sanctity of government pensions in California, saying the city of Stockton has the right to sever its contract with CalPERS. The verbal ruling from U.S. Bankruptcy Judge Christopher Klein, two years after Stockton filed for bankruptcy, was the decision CalPERS longed to avoid.

the 25 biggest systems by assets averaged a 7.45% return from 2004 to 2013, but liabilities tripled over the same period leaving them facing a $2 trillion shortfall as investment returns can’t keep up with ballooning obligations. The top 25 funds account for 40% of the entire US public pension system with Illinois, Kentucky, Connecticut, and Louisiana at the top of the 'most underfunded' list. .... the New York-based credit rater’s calculation of liabilities tripled in the eight years through 2012, ... liabilities are crowding out spending for services, roads and schools.

When Steven Jones is sitting in prison (and I’m pretty sure the despicable abuse of his judicial powers will persuade a federal judge he’s unworthy of probation), don’t feel too sorry for him. He probably won’t have money woes when he gets out. While he’s pumping iron behind bars, he can rest assured he might be able to get up to 75 percent of his $200,000 a year salary as a judicial pension, at least at some point. That’s the way the system works. A pension is an earned benefit, so you can be a teacher convicted of molesting children...