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Category Archives: government

Troubling Trends for California’s State Teachers Retirement Fund (CalSTRS)

Guest Post by Neil Murphy

Recently, I reviewed the STRS Connections On-Line Newsletter and discerned some troubling trends.

Trend Number One (Contributions vs. Benefits Paid):

Contributions from STRS members (teachers), the State and school districts equaled $8,288.519 for 2016.  Benefits paid to retirees equaled $13,148.558 for 2016.  Contributions are not keeping up with benefits paid to retirees.

Trend Number Two (investment assumption):

STRS used to project a 7.5% rate of return on its investments; in the recent past it downgraded its rate of return to 7.25%; now it is 7.00%.  Because of the recent downgrade, the State just increased its contribution rate by 0.5%; this will not make taxpayers happy.  Also, new teachers, hired after January 1st, 2013, will see a 1% increase in their contribution rate probably beginning in the year 2018.

Trend Number Three (Global Equity):

The investment portfolio of STRS is diverse.  STRS invests in real estate, private equity, global equity, etc.  However, 54.8% of its investment portfolio is tied up in global equity.  This probably explains why STRS just downgraded its rate of investment to 7.0%.  Here are some issues that I have with Global Equity Stocks:

BRIC (Brazil, Russia, India and China) were hailed as the new super economic engines.  Newspaper article after article promoted the idea that these four countries would change the global economy so that it would move in an upward trend.  This was true for a while.  Unfortunately, Brazil’s economy has become anemic due to its vast political troubles (government scandal after scandal).  China’s growth has slowed dramatically.  Russia’s economy has been underperforming somewhat in part due to the economic sanctions placed on it; plus, its economy is too reliant on oil.

The European Union is still struggling.  Spain, Italy, Greece and other European countries are seeing debt choking the breath right out of their economies.  Germany is still performing extremely well, but France’s economy is sputtering.

Japan’s economy has not been strong since the early 1990s.  Moreover, Japan is going to have some serious economic issues in the near future.  Japan’s population is aging and Japan has negative population growth.  There won’t be enough workers to pay for the retirees.  Plus, the Japanese have the longest life span of any other group of people.  Overall, Japan’s economy is headed for disaster.

Based on the economies of other countries, it is my prediction that STRS won’t even reach its 7.0% forecast.  I wouldn’t be surprised if STRS reduces its rate of return from 7.0% to 6.75% within the next ten years.

Trend Number Four (U.S. Economy):

The $20 trillion debt and growing cannot be ignored. The U.S. cannot keep increasing the debt ceiling every year.  Once the U.S. stops increasing the debt ceiling, then the pain of the $20 trillion debt will settle in.  Taxes will increase and government services will be cut.  Trump promised he would increase the GDP like we have not seen for some time, but Trump’s rosy economic picture is full of thorns.  Unfortunately, he falsely raised the expectations of Americans; there is no way that he can deliver on4%, 5% or even 6% GDP growth.  His whole economic plan is based on unbelievable growth in the GDP.  This cannot occur because most foreign countries are not doing well if one digs below their economic facades (cannot buy enormous amounts of American goods).  Also, the $20 trillion debt is pounding on our door.  There are no more IOUs.

What does all of this mean? It means that STRS will have to reduce its pension obligations.  Sometime in the future, retirees won’t see any more automatic 2% COLA increases.  In fact, retirees might even seen their pensions reduced.  Teachers, who will be retiring within the next five to twenty years, will see their promised retirement reduced.  Teachers who just entered the profession, I feel sorry for them.

 Teachers must plan for a reduced pension.  They need to pad their own retirements!!!

Note from this blog’s host: I worked as a classroom teacher in one of California’s many public school districts from 1975 – 2005. During those 30-years, I contributed 8-percent of my gross pay into CalSTRS and the district where I worked contributed another 8.25 percent. I have been retired for 12 years. When I retired, I took a 40-percent pay cut and left with no medical coverage from that district or the state. If you want to know what that job was like, read my memoir “Crazy is Normal, a classroom expose” (link below).

The state of California made promises to its public school teachers.

  • What happens to retired teachers like me if the state breaks that promise?
  • How will those teachers pay their rent/mortgage, keep the water running, the electricity on, buy food?
  • Do billionaires and corporations expect retired teachers to go back to work at 75, 80, 90, or even 100, if we live that long, so those greedy autocrats with more money than God can pay little or no tax?
  • What happens to the hundreds of thousands of teachers still teaching if the state can’t pay for its promises to them?

I want to leave the readers of this Blog with one thought from Thomas Jefferson, who said, “The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants.”


Most if not all corporate charter schools do not have retirement plans for their teachers, those teachers have no Constitutional due process rights, those teachers are paid less and must work longer hours, and they do not pay into the retirement plans for traditional public schools.

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Lloyd Lofthouse is a former U.S. Marine and disabled Vietnam Veteran, with a BA in journalism and an MFA in writing, who taught in the public schools for thirty years (1975 – 2005).

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If you are a public or private sector worker with a future promised pension, is that pension safe?

Public pensions are allegedly guaranteed by each state and/or the federal government. After all, doesn’t it say so in many if not all state constitutions? That’s why public employees count on the fact that when they retire after working 20, 30, 40, or more years, they will receive the pensions they were promised.

A friend of mine who is still teaching attended a State Teachers Retirement System (STRS) Seminar in Irvine, California recently and asked if teacher’s pensions were safe. My friend was told that the California Constitution guarantees the State of California’s obligations towards the Teachers’ Retirement System. (My friend’s name will go unmentioned in this post because of the fact that in public education today no job is safe for teachers if you say the wrong thing in public.)

My friend thought, “What (the STRS representative) does not realize is if the money is not there, then the money is not there.  The State’s Constitution can be amended.  Also, if there is enough political pressure from voters, school boards, etc. then the State would definitely reduce the funding levels for STRS.”

In an e-mail my friend listed several examples of promised retiree benefits that have already been broken in both the private and public sector.

> Bethlehem Steel- declared bankruptcy in 2001, which affected the pensions of 120,000 retirees and their dependents.  – Your Incredible Vanishing Pension

What happened? Bethlehem Steel transferred its pension obligations to the U.S. Pension Benefit Guaranty Corporation (PBGC).  The PBGC did not cover the retirees promised health-care coverage in retirement.  When PBGC took over, the 30-years-and-out agreement was scrapped, and workers got the standard U.S. worker’s deal.  Some workers were planning to retire at 60, but they had to work until 62 to get their retirement under PBGC.  Also, PBGC only took over $3.7 billion even though the fund should have been funded at $4.3 billion.  Hence, retirees saw their pension reduced.

What happened? Pension checks will shrink by 6.7% or 4.5% for 12,000 Detroit retirees.  Two different sources contradict each other (6.7% vs. 4.5%).  Almost 11,000 retirees and current employees will have to repay $212 million in excess interest that they received when they received bonuses in some years for their annuity.  “U.S. Bankruptcy Judge Steven Rhodes ruled that Detroit’s pensions could be cut even though the state constitution prohibits reducing retirement benefits.”  Plus, cost of living adjustments were eliminated.

  • Stockton Bankruptcy (“Judge Christopher Klein conducted a hearing on the City’s proposed Plan of Adjustment, as amended (also known as the “Exit Plan”) on May 12-14, 2014. . . The City shared that the Plan of Adjustment would go effective by end of day-Feb. 25, 2015”) (“Chapter 9 Bankruptcy”).

What happened? “As part of the city’s bankruptcy plan, all retiree medical benefits—part of a program costing $544 million—have been eliminated. … Under the plan of adjustment, remaining pension benefits for new city employees will be lowered while individual employee contributions will rise.  However, the CalPERS pension benefit for retirees remained untouched during the bankruptcy, but Stockton might not be able to continue to fund the CalPERS pension benefits at their current levels.

What happened? Even though Vallejo did not cut CalPERS benefits to its retirees, the retirees’ benefits could still be in trouble.  “Moody’s recently warned that Vallejo’s pension obligations could force it to file for bankruptcy protection a second time. … Ballooning pension costs, which will hit more than $14 million this year, a nearly 40% increase from two years ago.”

What happened? San Bernardino failed to pay CalPERS’s contribution during the first two years of its bankruptcy.  This failure ended up in court.  What has emerged is “ … residents and businesses [will have] to pay an additional property parcel tax increase to fund $16 million in skipped payments, and interest payments of $602,580 a month for another two-year period”.  San Bernardino just decided to turn over its fire department to the county; essentially, San Bernardino just dumped future CalPERS pension contributions since it would have been required to pay 10% annual increases.  “The City of San Bernardino has voted to become the first participant to dump CalPERS after the state’s pension plan shocked participants by announcing contribution rates would rise by 61% over the next five years.”

Conclusion

What this means is that no matter what a state or federal Contusion or law says about a guaranteed promise, there is no guarantee for any pensions, because what happened with Bethlehem Steel, a private sector company, and public sector unions in Detroit, Stockton, Vallejo and San Bernardino for has set a legal trend for other corporations and/or municipalities to dump their pension obligations, which could spell major trouble for retirees who were counting on them in their old age. Support of the Elderly Before the Depression: Individual and Collective Arrangements by Carolyn L. Weaver reminds that “Before the Great Depression, the care of the poor of all ages was a responsibility assumed primarily by the private sector, generally through the extended family, friends and neighbors, and organized private charity.’ There were no federal programs (other than veterans programs) to assist the poor, whether young or old, disabled or unemployed. The role of the government in preventing poverty through the provision of pensions and insurance was even more limited.”

Words for Thought

Did you know that in 1900, 40 percent of Americans lived in poverty? Imagine the burden when a family that was already living in poverty and didn’t have the money to pay for medical care had no choice but to do their best to support their aging parents and/or grandparents and/or children and/or friends and neighbors when there wasn’t enough money to provide shelter or food for even themselves? Maybe that’s why Denmark, Iceland, Switzerland, Norway and Finland are the world’s happiest countries, because they all support strong social safety net programs, the majority feels a moral duty to have them, so no one suffers when friends and family can’t afford to help with food, shelter and medical care. Imagine what it must feel like not to have to worry about your next meal or being tossed out of your home because you can’t pay rent, the property tax, or the mortgage payment.

If you want to know the single most powerful force in the United States that is working hard and spending hundreds of millions of their own dollars to destroy the Social Safety net that supports most Americans in their old age, look no further than ALEC, an organization supported by David and Charles Koch and their so-called libertarian billionaire boys club. To learn more, I recommend Bill Moyers & Company’s The Kochs Are Ghostwriting America’s Story.

What do you want – a collective effort to support each other (for instance, through Social Security, food stamps, unemployment, Medicare and traditional pension plans) or an environment where everyone is responsible to take care of themselves with no collective support and if you can’t do it, just die quickly or miserably?

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Lloyd Lofthouse is a former U.S. Marine and disabled Vietnam Veteran, with a BA in journalism and an MFA in writing, who taught in the public schools for thirty years (1975 – 2005).

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We the CEOs of the United States, in order to form a more perfect Marketplace …

While reading Endgame: Disaster Capitalism, New Orleans, and the Charter Scam by Paul Thomas, I was reminded of another piece I have been reading from the National Geographic Magazine for May 2016 that focuses on Yellowstone as another perfect example of why there must be an honest and un-corrupted government to limit the greedy excesses of out-of-control capitalism where CEOs — according to Forbes being a CEO is the most popular profession of psychopaths — that worship at the altar of avarice, and are determined to turn a profit and grow fortunes at any cost no matter how many people suffer.

The United States government was not created through the U.S. Constitution to be a government for capitalism. The U.S. Constitution created a government and a republic to protect all the people, not to provide opportunities only for the Bill Gates, Donald Trumps, Kochs, Waltons, Zuckerbergs, Tim Cooks and Eli Broads of the world.

The preamble to the U.S. Constitution does NOT say, “We the autocratic CEOs managing private sector, for-profit corporations, in Order to form a more perfect Marketplace, establish unending profits for our shareholders, insure continued consumerism, provide mostly useless products and services, promote many methods of debt for losers that belong to the 99%, and secure the Blessings of Liberty to ourselves and our families—and no one else—do ordain and establish this Constitution for the United States of America that belongs to the 0.1%.”

Here is the real Preamble to the U.S. Constitution that was written to protect all the people from tyrants of all sorts, including psychopathic CEOs of autocratic, for profit, private sector corporations.

“We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

In Conclusion, I urge readers of this Blog to not only share the link to this post with everyone they know but also to heed a warning from Benjamin Franklin.

At the close of the Constitutional Convention of 1787 a lady asked Dr. Franklin, “Well, Doctor, what have we got—a Republic or a Monarchy?”

“A Republic, if you can keep it, “ Franklin allegedly replied. – Bartleby.com

What is closer to a monarchy, a for-profit corporation managed by an autocratic un-elected CEO that answers only to a board of directors and/or a few of the wealthiest and most powerful shareholders OR a republic with power divided between the appointed justices of the U.S. Supreme Court, the elected Congress and an elected president with a term limit of eight years after winning a second election for another four years to live in the White House and pledge: “I do solemnly swear (or affirm) that I will faithfully execute the Office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States.”?

Words for Thought – the Enlistment Oath of the U.S. Armed Forces: “I, (state name of enlistee), do solemnly swear (or affirm) that I will support and defend the Constitution of the United States against all enemies, foreign and domestic; that I will bear true faith and allegiance to the same; and that I will obey the orders of the President of the United States and the orders of the officers appointed over me, according to regulations and the Uniform Code of Military Justice. So help me God.”

Maybe it is time for the U.S. Military to step in and defend America against its domestic enemies who are spending billions to Subvert the American government and trample the U.S. Constitution and the Republic it created.

I also suggest reading A Brief History of the Corporation: 1600 to 2010 to learn more about how corporations manipulate our world and our lives.

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Lloyd Lofthouse is a former U.S. Marine and Vietnam Veteran, with a BA in journalism and an MFA in writing, who taught in the public schools for thirty years (1975 – 2005).

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Who do you think should pick the elected leaders of the United States?

Lloyd Lofthouse

My old friend did it again. He’s a good bellwether for far-right conservative thinking, because he is a born-again fundamentalist Christian, far-right libertarian who thinks abortion is murder and that women should be ruled by men because, well, women are women, and the Bible supports what he thinks.  He reads far-right writers, and he watches and listens to far-right media. If he thinks something, you can easily guess where he is getting his ideas.

Anyway, he recently wrote in an e-mail: “You’ve probably heard Churchill’s comment on democracy – ‘It’s the worse form of government except for all the others.’ This can be said about money and elections also – ‘The rich are the worse ones to choose our leaders except for all others.’ Society can be looked at as composed of various groups – rich, poor, artists, criminals, theologians, those living on welfare, students, men, and woman – a…

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David vs Goliath: Threatened Grade School Principal Stands up to Chicago’s Corrupt Political Machine

> UPDATES <

Former Chicago Public Schools chief to plead guilty to bribery scheme – Chicago Tribune – October 8, 2015

http://www.chicagotribune.com/news/local/breaking/ct-barbara-byrd-bennett-chicago-public-schools-charged-met-20151008-story.html

Mayor Emanuel must answer for SUPES contact scandal – Chicago Tribune – June 1, 2015

http://www.chicagotribune.com/news/opinion/editorials/ct-barbara-byrd-bennett-supes-rahm-emanuel-edit-0602-20150601-story.html

New light shed on City Hall’s ties to CPS scandal – Chicago  Tribune – May 7, 2015

http://www.chicagotribune.com/news/local/politics/ct-school-contract-investigation-swanson-20150507-story.html

> THE ORIGINAL POST ABOUT THE GRADE SCHOOL PRINCIPAL FIGHTING CORRUPTION IN CHICAGO STARTS HERE <

“Principal known as Emanuel critic reprimanded by mayor’s school board.” – Chicago Tribune, August 29, 2015

http://www.chicagotribune.com/news/local/politics/ct-troy-laraviere-principal-warning-vote-met-0828-20150827-story.html

We Dont Need Heroes Troy L

Troy LaRaviere’s Blog: A place to discuss a better school system for all Chicagoans

http://troylaraviere.net/

Troy LaRaviere: My Statement on CPS’ “Warning Resolution”
CONTEXT AND BACKGROUND
I’ve been asked for my thoughts in response to the Chicago Public Schools (CPS) Board of Education issuing a “warning resolution” against me for opposing their backward education policy and corrupt fiscal management of our school district. Before responding, I have to write a few words about who I am. …

http://troylaraviere.net/2015/08/28/my-statement-on-cps-warning-resolution/

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HEY, LET’S BLAME IT ON THE TEACHER AS USUAL

Lloyd Lofthouse is a former U.S. Marine and Vietnam Veteran, with a BA in journalism and an MFA in writing,
who taught in the public schools for thirty years (1975 – 2005).

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What the FACTS Reveal about Teacher Retirement Programs—Part 6 of 6

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When I retired, the school district stopped paying me and saved the tax payers money since most teachers that retire after teaching 30 years or more are replaced by younger teachers that are paid much less.

Keeping older, higher paid teachers working longer will only cost the taxpayer more in the long run since those same teachers that are working longer will end up with a larger monthly pension check since the longer a teacher spends in the classroom, the larger the pension.

I’m impressed when a reporter does their job properly and balances the news instead of feeding the mob that bellies up to the slop-trough of Yellow Journalism, which is based on sensationalism and crude exaggerations.

Don Thompson’s misleading AP piece, Public retirement ages come under greater scrutiny did not impress me.


This is the summary of Retirement Heist: How Companies Plunder and Profit from the Nest Eggs of American Workers by Ellen E. Schultz.

However, Kevin G. Hall did.  Hall writes for the The McClatchy Company, the third-largest newspaper publisher in the United States with 31 daily newspapers in 15 states. Hall provided a more realistic, honest balance of Why employee pensions aren’t bankrupting states.

In his piece, Hall wrote, “From state legislatures to Congress to tea party rallies, a vocal backlash is rising against what are perceived as too-generous retirement benefits for state and local government workers. However, that widespread perception doesn’t match reality.”

According the Hall, “Pension contributions from state and local employers aren’t blowing up budgets.” They amount to just 2.9 – 3.8 percent of state spending, on average.

In addition, Hall says, “Nor are state and local government pension funds broke. They’re underfunded …”

With those facts, we should ask what the real reason is why the far-right hate groups are turning on public-worker sector pension plans.

The answer may be Wall Street, Hedge Funds and US bank private-sector greed, the same risk-taking greed with someone else’s money that caused the 2007-08 global financial crises.

According The Council on State Governments, in 2006 before the crash, the total amount of money held by these federal, state and local public-pension plans was almost $6 trillion dollars, and greed—it seems—has no limits.

If you do not believe me, ask people such as Bernard Madoff [who robbed his victims of $50 billion], Scott Rothstein [$1.2 billion], Tom Peters [$3.7 billion], Allen Stanford [$8 billion], March Dreier [$400 million], Lou Pearlman [$500 million], Michael Kelly [$428 million], the Greater Ministries International Church [$500 million], Scientology minister Reed Slatkin [more than $600 million], and Nicholas Cosmo [$370 million].

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Lloyd Lofthouse is a former U.S. Marine and Vietnam Veteran,
who taught in the public schools for thirty years (1975 – 2005).

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Lofthouse’s first novel was the award winning historical fiction My Splendid Concubine [3rd edition]. His second novel was the award winning thriller Running with the Enemy. His short story A Night at the “Well of Purity” was named a finalist of the 2007 Chicago Literary Awards. His wife is Anchee Min, the international, best-selling, award winning author of Red Azalea, a New York Times Notable Book of the Year (1992).

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What the FACTS Reveal about Teacher Retirement Programs—Part 5 of 6

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Critics of public pension plans like CalSTRS will claim that the cost of these plans are bankrupting states, but that is false—in fact it is a damn lie. For instance, the current annual budget of California is about $156 billion. The state’s annual contribution to the CalSTRS pension plan is usually about $1.4 billion or 0.89% of the total state budget. With the 30-year plan from AB 1469 to stabilize the funding gap to uphold the state’s promise of a secure retirement to teachers, the state will be paying $1.9 billion annually to CalSTRS (instead of $1.4 billion) or 1.12% of the total annual state budget of California. – ebudget.ca.gov

It’s a fact that misery loves company and when the accountants, carpenters, clerks, plumbers, reporters, salesmen, and secretaries, and many other professions in the private sector, read the Yellow/Hate Journalism in Don Thompson’s AP piece, Public retirement ages come under greater scrutiny, many of these people in the private sector will say, “It isn’t fair. If we have to work longer and suffer, so do they.” In fact, that is already happening. Due to pressure from the private sector, this has led to: “Earlier in New Jersey, part of a legislative deal struck between Democrats and Republicans raised the normal retirement age from 62 to 65,” Thompson wrote.


Is Your Pension Safe? States Struggle With Pricey Challenges

On the other hand, when given a choice, many private sector employees do not save toward retirement other than Social Security. Many do not put money into 401 (k) plans or pay into tax deductible IRAs.  Many that own homes take out equity loans to finance vacations, purchase new cars, pay off credit card debts, or go on spending sprees.

The result is that the average family in America cannot afford to retire as early as many public employees that paid into employer-based defined benefit pensions.

For example, total U.S. consumer debt was $2.43 trillion as of May 2011. Average credit card debt per household was $15,799. Average total debt in 2009 (including credit cards, mortgage, home equity, student loans and more) of U.S. households was $54,000. Source: Credit Card.com

As for me, instead of paying into Social Security while I taught, I paid 8% of my gross monthly pay for thirty years into CalSTRS, and the school district where I taught contributed a matching amount of about 8%. That means if I get any Social Security from the jobs I had outside of teaching, it isn’t going to be much.

In fact, to force public educators in California to work more years may cost more than it will save.

Continued in Part 6 on June 11, 2015 or return to Part 4

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_______________________

Lloyd Lofthouse is a former U.S. Marine and Vietnam Veteran,
who taught in the public schools for thirty years (1975 – 2005).

Crazy is Normal promotional image with blurbs

Lofthouse’s first novel was the award winning historical fiction My Splendid Concubine [3rd edition]. His second novel was the award winning thriller Running with the Enemy. His short story A Night at the “Well of Purity” was named a finalist of the 2007 Chicago Literary Awards. His wife is Anchee Min, the international, best-selling, award winning author of Red Azalea, a New York Times Notable Book of the Year (1992).

To follow this Blog via E-mail see upper right-hand column and click on “Sign me up!”

 

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