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States sinking in pension plan debt

Original post made by Arnold on May 29, 2013

"States must jettison the unnatural disaster that traditional retirement plans have become.

Taxpayers nationwide are staring down a swelling tidal wave of government pension debt. Recent estimates put the combined unfunded liability of state pension systems at $2.5 trillion. Nearly every state has tried to reduce these unsustainable costs, but most reforms have proven to be baby steps or worse -- leaving future generations up to their necks in waves of debt.

One inescapable fact remains: Without meaningful reform, paying down these liabilities would cost the average American household an additional $1,385 in taxes every year for the next three decades."

In Pleasanton the unfunded employee cost for pensions and retiree health care is ONLY about 200 MILLION DOLLARS. The payment terms are about to change and the cost is expected to increase dramatically. Of course nobody would know that based on city managements plan to increase to compensation for themselves, which also increases unfunded pension liabilities even further.

The school district is in big financial trouble - the reality is only a year or two away. In the meantime the district and unions are busy fighting over wage increases. You just can't make this stuff up!

As Rome burns...

The link to States sinking in pension plan debt: Web Link

Comments (14)

Posted by john, a resident of Another Pleasanton neighborhood
on May 29, 2013 at 10:05 pm

It is like a giant tidal wave that will soon crash over all of us!


Posted by Arnold, a resident of Another Pleasanton neighborhood
on May 29, 2013 at 10:21 pm

John, you are probably right. But, Pleasanton city management can help soften the blow. Instead they continue to exercize the same lack of restraint that created the problem in the first place.

City Management Grade: D-


Posted by Sam, a resident of Oak Hill
on May 29, 2013 at 11:03 pm

Much of the problem with underfunded pensions (both government as well as company pensions) has to do with the fact that interest rates are very low right now. The number of dollars in many (most?) pension plans is higher than ever because of the nice performance of the stock market during the past several years. However, current bond yield rates are used to calculate the amount of pension income that can be generated by the pension fund, and since interest rates and bond yields are currently very low many pension funds appear to be underfunded. Rising interest rates as the economy continues to strengthen will make the pension balance sheets look better.


Posted by Arnold, a resident of Another Pleasanton neighborhood
on May 29, 2013 at 11:03 pm

I think it best to liken the state to a ship of state that is on the high seas with a rogue wave bearing down upon it. There's a man, a very good man, who is up in the crow's nest who sees the Great tsunami raging toward the ship, but no one takes him seriously. Well, it will all be over soon. And I mean really, really soon.

Meanwhile, it is impossible to think that the state will bring in added revenues in the future. Because revenues are always static and rarely if ever change, and this is a scientific fact. And taxes, too. It's inconceivable that the state will raise taxes on the wealthy, so my scientifically deduced $1,385 tax estimate is based upon an average, that I've determined should be averaged because everyone should have to pay the same tax, because that is only fair. Like, why should a wealthy person have to pay more than a poor person just because he has more money? The roiling seas know no such distinction, and the Big explosion of water will soon come crashing over us.


Posted by Arnold, a resident of Another Pleasanton neighborhood
on May 29, 2013 at 11:12 pm

"Posted by Sam, a resident of the Oak Hill neighborhood, 5 minutes ago

Sam says: "Much of the problem with underfunded pensions (both government as well as company pensions) has to do with the fact that interest rates are very low right now"."

Sam, I'm giving you an "F". Only because you are clueless.


Posted by Kathleen Ruegsegger, a resident of Vintage Hills Elementary School
on May 30, 2013 at 7:41 am

Kathleen Ruegsegger is a registered user.

Sam, If PERS and STRS believe it is just a matter of interest rates being low (or "Arnold's" assurance that added revenues are just around the corner), why is PERS increasing the required contributions and STRS trying to get the legislature to do the same? There have to be at least a few at PERS AND STRS that know when you find yourself at the bottom of a big hole, stop digging.


Posted by resident, a resident of Another Pleasanton neighborhood
on May 30, 2013 at 7:56 am

Sam is clueless on this. The biggest reason for the mess with CalPERS is CalPERS told the state and cities during around 2000 that the pension benefits could be dramatically increased, and made retroactive to the time the employee started with the agency, and it would not cost anybody anything. Then the politicians blindly followed since most politicians have no common sense in math or actuarials. The CalPERS officials that made these statements should actually be put in jail for what they did.

One of the problems with CalPERS and CalSTRS is spiking. Administrators mostly have found out ways to spike their last year's income so that their pensions were WAY above what they should be based on the contributions they, and the employer, made into the system. The Pleasanton District administrators were masters of screwing the taxpayers on this. Our past superintendent even hired back his friend Clem after he retired to teach other administrators how to milk the system. To them, The Community of Character, was for others; not themselves.


Posted by Arnold, a resident of Another Pleasanton neighborhood
on May 30, 2013 at 8:19 am

Just for the record, I never stated that increased state revenues are just around the corner. It's best just to assume they are stable and will always be stable. Then, when they're low, it's easier to envision the enormous wall of debt that will hit us like a typhoon. If I were a ship's captain, I'd take my boat out of the harbor. Next best thing is to decertify unions and rescind all pensions to public servants who are supposed to be serving us. Now they're just going through the motions of bailing us out when meteorologists, actuarials, and bookkeepers all know that the tsunami is inevitable. Higher taxes, which means an enormously Big explosive catastrophe for tax payers. We're already sinking.


Posted by Kathleen Ruegsegger, a resident of Vintage Hills Elementary School
on May 30, 2013 at 11:09 am

Kathleen Ruegsegger is a registered user.

Maybe you can work in a few other natural weather phenomena like blizzards, cyclones, hailstorms, hurricanes, floods, tornadoes, droughts, and heat waves to keep it interesting.


Posted by Arnold, a resident of Another Pleasanton neighborhood
on May 30, 2013 at 1:48 pm

Calpers is increasing the amount of required contributions. Ergo, Sam's claim is refuted. Low interest rates really have nothing to do with the catastrophe that faces us all.

Kathleen, I'm disappointed in your spurious accusations and snide innuendos. I am that man in the crow's nest, looking out to the horizon, seeing the troubled seas that will eventually swallow us all. I am truly sorry you do not appreciate my imagery. You may want to go to californiatsunamiiscomingBig.com in order to see what I mean. It isn't my metaphor, I'm just going with what the scientists are predicting.

Let me ask you, Kathleen. Do you have any inkling at all of how $1,385 in additional taxes are going to impact your grandchildren or their own grandchildren and their great grandchildren? I didn't think so. It is almost beyond human comprehension. We are right now staring at the Largest catastrophe in California history; a tax increase of gargantuan proportion that will make child's play of previous blizzards, cyclones, and hailstorms. Or perhaps you don't care where your great, great, grandchildren's money goes to?


Posted by Kathleen Ruegsegger, a resident of Vintage Hills Elementary School
on May 30, 2013 at 2:14 pm

Kathleen Ruegsegger is a registered user.

The problem actually is I can't tell who the real Arnold is (or at least it appears you are not the real Arnold). I absolutely am on the side of pensions being fully funded--and not by my children or any of the heirs.


Posted by Arnold, a resident of Another Pleasanton neighborhood
on May 30, 2013 at 7:45 pm

"Let me ask you, Kathleen. Do you have any inkling at all of how $1,385 in additional taxes are going to impact your grandchildren".

Kathleen, that comment is obviously from the union rep that once went by the name of YAT (Yet Another Teacher). He/she has adopted my name for his/her own reasons - probably to provide credibility to the flawed argument that "RICH" Pleasanton residents should be happy to pay whatever amount can be extorted.

Going back to the original quote, it is not an additional 1,385 dollars as the union rep/fake arnold would have one believe.

It is, "One inescapable fact remains: Without meaningful reform, paying down these liabilities would cost the average American household an additional $1,385 in taxes every year for the next three decades.""

And that number is probably understated.


Posted by Arnold, a resident of Another Pleasanton neighborhood
on May 30, 2013 at 7:47 pm

And that doesn't even include the unfunded PENSION liability of the Pleasanton Unified School District. It would be nice to see the parents of school aged children asking the tough questions.


Posted by resident, a resident of Another Pleasanton neighborhood
on May 30, 2013 at 7:53 pm

You don't know who the "real Arnold" is?

OMG, I did not realize there was only one person with a name of Arnold in Pleasanton. And now their name has been hijacked?

We have a funding drought now where money is being siphoned off and not used to pay the actuarial correct amounts of the pension. At some time things will heat up and we will be flooded with messages that we have to pay more in taxes or we have an avalanche of school closures as all the funding will then evaporate to pensions with nothing left for education. Both CalPERS and CalSTRS assume a ridiculously high guaranteed rate of return in order for things to work out. Any attempts to reform this is countered with a cold front and a snowstorm of misinformation from union leadership that everything is ok and the only reason we have a problem is from the previous bubble and the problem has gone away. They don't want us to rain on their parade.

Then you have the tornado caused by administrators spiking their salaries at the end so they can immensely increase their retirement payout with pensions at PUSD over $100K per year and some near as high as $200K per year. The retired administrators have many sunny days ahead of them, at our expense. Then they get to double-dip into our pool as 'consultants' to take even more money.

I feel a wind chill advisory coming in as replies to this posting.


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