Why public pension plans are left unfunded

Public pension plans remain massively underfunded, but the standard explanations of the problem-egregious benefits, loopholes and abuse – are the effects, not the root causes, of failures that run much deeper. Pliable accounting rules and weak or non-existent funding mandates are what truly jeopardize the …

Warren Buffett: Call your city council

Warren Buffett might be considered one of the world’s savviest investors, but his warnings aren’t being heeded in his own hometown. Buffett has called the public pension nightmare a “gigantic financial tapeworm” eating away at city and state finances, and he’s criticized funds for their optimistic investment assumptions. His own Berkshire Hathaway uses a modest 6 percent annual projected return on investments in its own pension funds…

How pension debt drives down borrowing costs

The Wall Street Journal reported this morning that favorable conditions in the muni market have allowed World Trade Center developer Larry Silverstein to issue tax exempt bonds to finance his thinly-leased new building. At $1.6 billion, the deal will set a record for unrated debt. Like …

Election 2014 in Pennsylvania: what are the real adult issues?

Observers of Pennsylvania governor’s race have been treated to a lot of adult-themed content in recent weeks. Pornographic emails sent and received by former officials in the state Attorney General’s office; an actor from  ultraviolent, gross-out films who also appeared in a campaign ad; racy …

New York State Comptroller’s office evades questions about recent Goldman Sachs deal

With much fanfare, the Office of New York State Comptroller Thomas DiNapoli announced last month a “strategic partnership” between the Common Retirement Fund (CRF) and Goldman Sachs Asset Management (GSAM) to invest $2 billion in global equity strategies.
The CRF manages the assets of the New …

Philly: More dubious budget reporting from NYTimes

The NY Times finally decided to jump in with its take on the controversial story of Philadelphia’s school reform commission cancelling the teachers’ contract. Not surprisingly, in a story largely sympathetic to teachers (pointing out, for instance, that they make less in salary than neighboring suburban teacher) the Times ignores most of the relevant fiscal facts…

Health care + pensions equal insolvent NJ

New Jersey has gotten a lot of publicity lately because Chris Christie has balked at meeting the state’s extraordinary pension burden, arguing that further reform of the system is necessary. But as a recent NJ report makes clear, Jersey really has a problem of expensive health care for workers and retirees on top of bulging pension debts, which have raised the cost of employee benefits in NJ well above the norm for states. The reason Jersey isn’t paying all of its benefit costs is because it couldn’t possibly afford to…

Election 2014 in Illinois: scant cause for optimism

The next Illinois governor better like a challenge, because the winner of the November 2014 gubernatorial election is going to get one.
Illinois suffers under some of the worst government finances in the nation.  Truth in Accounting’s latest analysis shows Illinois with a “Taxpayer Burden” (a …

Unreformed public pensions keep eroding Pennsylvania’s credit

On September 25th, Standard & Poor’s became the last among the Big Three credit-rating agencies to downgrade Pennsylvania’s general obligation (GO) debt. The state was taken down a notch to AA- with a stable outlook – still in safe “investment-grade” territory.  In explaining the downgrade, …

Watch door to bankruptcy slam shut to protect pensions

In the wake of Judge Klein’s ruling last week that Stockton could cut pension debt in bankruptcy, fiscal reformers and conservative commentators where quick to assume, somewhat naively, that this ruling changed everything and would force recalcitrant unions to the negotiating table. The truth, however, is that many states put up numerous roadblocks to municipal bankruptcy and the real import of the ruling was that states where public unions dominate were likely to throw up even more blocks. Now we’ve seen the first indication of this…