Posted on 01/13/2017 10:21:24 AM PST by Lorianne
Hawaii lawmakers are set to open the 2017 session on Jan. 18 with millions of dollars in projects and services on their respective wish lists. But the budget is getting whacked before they even begin.
They learned last week that the state is expecting to collect roughly $155 million less in tax revenues than expected.
And this week they found out that the state pension system, which covers more than 120,000 public employees and retirees, is not coming close to meeting its financial goals.
It would require hundreds of millions of dollars extra each year to get the Employees’ Retirement System back on track, largely due to weak investment earnings and people living longer in Hawaii.
The ERS Board of Trustees had expected 7.65 percent returns from its market investments in 2016. Instead, the investments lost 1.2 percent, the worst showing since 2009. The system averaged 5.7 percent over the past 15 years, according to a report released Monday by the state’s independent actuarial consultant, Gabriel Roeder Smith & Company.
The market value of the system’s assets is $14.1 billion. It’s deferring $929 million in losses from 2016, whereas the previous year it had $42 million in gains.
Meanwhile, life expectancy is steadily increasing, which means more years — and more money — for government employers to pay the retirement benefits promised to public workers.
Hawaii residents are living 81.3 years on average; they are among the nation’s longest-living.
All this means it’s expected to take the state twice as long to eliminate its unfunded liability, which stretched to $12.4 billion in 2016 from $8.8 billion the prior year.
The actuary determined it would take 66 years instead to make the system solvent. The funded ratio dropped to 54.7 percent, calculated by dividing the value of the assets by the liabilities.
Gabriel Roeder Smith & Company, the state’s independent actuarial consultant, projects the unfunded actuarial accrued liability to top $12 billion based on new assumptions, including longer life expectancy and lower investment returns.
In a letter Monday to the ERS Board of Trustees, the actuarial consultants said, “66 years is an inappropriate amount of time to allow for amortizing” the current unfunded actuarial accrued liability.
SNIP
Run by all Democrats...let em fail.
Just pay out at the level of funding and that is it.
Let’s define what a “shortfall” means when it comes to state pension systems. A “shortfall” is when politicians vote more and more retirement benefits to politically connected state workers and teachers’ unions without simultaneously implementing a realistic system to fund them. If the law stated that all pension increases had to be accompanied by an actuarially vetted funding plan, lawmakers would think twice about enacting them because it would mean immediate tax increases or forced employee contributions. But they don’t. They get to get away with the crime of promising benefits today and leaving the tab for the next generation.
Surf’s up!!!
Guess that’s why Steve McGarrett is still working after 48 years...
fine=find.
“Just pay out at the level of funding and that is it.”
Unfortunately, for both HI and CA that’s not going to get it, at least until the government entities go through a Chapter 9 Bankruptcy and actually have to cut the pension benefits they’ve handed out. Two cities here in CA ( Vallejo and Stockton) have gone through bankruptcy recently and they have elected to “fix” their fiscal problems while failing to deal with the pension deficit. This, even though a federal judge has told them that they COULD give PE pensions a haircut. But not to worry, they really have only kicked the financial can down the road once again, and they will go under again soon.
Their investments lost money in 2016? But the markets overall, as shown by Dow Jones, S & P, NASDAQ, showed healthy gains in the markets in 2016. How the heck are they investing their money? Are they paying someone to invest their funds and end up with losses??? Really????
It seems we hear this type of bad news from Democrat strongholds. Are Democrats just lousy at managing money, or taking advice from CPAs, actuaries, etc. regarding how public money including pension funds, needs to be dealt with so you don’t run out of money????
They lost 1.2% last year. That’s investment malpractice. Whoever is managing this pension fund is either incompetent, crooked, or both.
Suck it up brudda!
They probably invested it all in renewable energy companies or other so called socially responsible investments.
But on the bright side you don’t have to move anywhere when you retire.
What this really means is that there are some Retirement System Oversight teams who are probably living large and tall. Follow the damn money. There is corruption there somewhere.
Hawaii is the only state where liberals outnumber Conservatives according to Gallup polling.
They may have been directed by the legislature to do politically correct investments which can have a negative effect on return.
aloha hawaii retirement.
d’oh!
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