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

17 Jul

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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Posted by on July 17, 2016 in government, media, politics, propaganda and lies

 

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Not a Burden on the Taxpayer

17 May

I taught in the public schools in California from 1975 – 2005 and contributed eight percent of my monthly gross pay into The California State Teachers Retirement System (CalSTRS). In addition, the school district where I taught matched my contributions. I also invested (rolled over) more than $100,000 from an IRA into CalSTRS to increase how much I would earn by about 9% annually.

Although critics of public education and teacher unions claim teacher retirement in California is a burden for taxpayers that is an outright lie.

CalSTRS is funded by the employees (working teachers), the teacher’s employer—school district, community college district, participating charter school or county office of education. The state of California currently contributes 2.541 percent of the annual earnings of all members—this is an insignificant burden on taxpayers.

For example, the budget for the state of California for 2013 was $477.8 Billion. However, total state contributions for the State Teachers Retirement Plan (STRP) increased by $109.2 million or 9.2 percent to $1.3 billion as a result of additional state contributions due to the unfunded obligation—that is 0.272% (about one quarter of one percent) of the total-state budget.

The video looks back at significant points in California history while chronicling the evolution of CalSTRS from its beginnings as the Public School Teachers’ Retirement Salary Fund to its current position as the largest educator-only pension fund in the world. The video was produced internally by members of the CalSTRS Communications staff.

CalSTRS was founded on the principle that hard-earned retirement benefits recognize decades of classroom service—now and for generations to come.

What pensioners get: The median annual benefit for new CalSTRS retirees represents 60 percent of a member’s final compensation earned while still teaching—that means the average teacher takes a 40% cut in pay when he or she retires—as I did.

The average age of retirees is 62. CalSTRS members do not receive Social Security benefits—even if he or she qualifies—as I did, because I worked outside of education for more than a decade—and most retired teachers do not receive health benefits from their employers.

For example, when I retired at age 60 in 2005, I left teaching with no health benefits. If I had not served in the US Marines and fought in Vietnam, I would have had no health benefits from age 60 until I qualified for Medicare.  However, because of my military service, my health care provider became the VA soon after I left teaching. Most teachers are not that fortunate and are not qualified for VA health benefits.

Without question, CalSTRS, like pension funds worldwide, took a hit due to the 2007-08 global recession, but it is not bankrupt, nor will it bankrupt the state. CalSTRS has historically been a sound system, and until the market collapse had consistently met or exceeded its assumed rate of return. Even under current economic conditions, CalSTRS is about 70 percent funded and has sufficient assets and projected contributions to pay benefits until 2044.

CalSTRS ended 2012 with a market value of $150.61 Billion. The average age of members who retired in 2011-12 was 62 years with a median of 24.4 years of service and the average monthly member-only benefit was $3,936.

For example, if I live to see the year 2044, I would be age 98. How many people live that long? So, who is it that hates teachers so much they are willing to lie to mislead the public?

Discover Razor Wire — “I was alone in my classroom the afternoon the boy’s father walked in unexpectedly. He cursed at me and accused me of incompetence, but I was the wrong teacher.”

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Lloyd Lofthouse, a former U.S. Marine and Vietnam Veteran, is the award winning author of My Splendid Concubine [3rd edition].

His latest novel is Running with the Enemy. Blamed for a crime he did not commit while serving in Vietnam, his country considers him a traitor. Ethan Card is a loyal U.S. Marine desperate to prove his innocence or he will never go home again.

And the woman he loves and wants to save was trained to hate and kill Americans.

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Posted by on May 17, 2013 in Education, Lloyd Lofthouse, politics, Public School, Teaching

 

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What the Numbers say about Creating Jobs in America – Part 3/4

01 Mar

My goal in Part Two was to show what caused the national debt, why it keeps growing larger and who bears the most responsibility of that debt.

Now I will return to the CalSTRS “Retired Educator Winter 2012” newsletter, which said, “Statewide, CalSTRS benefit recipients (I’m one of them, and there are more than 200,000) received $6.03 billion in payments in 2006.  The economic ripple effect in the form of job creation as those benefits were spent totaled $9.22 billion, according to a 2007 study by the Applied Research Center at California State University, Sacramento.”

None of this was borrowed money. Educators paid a percentage of their gross earnings into CalSTRS during their working years as I did. This money was invested and earned interest, which was more than $30 billion for 2011. This money does not contribute to the national debt.

In fact, California’s economy gained $6.71 for every single dollar committed to pensions by employees, employers and taxpayers and each dollar also generated 44 cents in government revenues.

Furthermore, according to the Pensionomics: Measuring the Economic Impact of State and Local Pension Plans, these pensions support 2.5 million jobs and $358.6 billion in economic activity.


Does this sound as if the wealthy are funding the start up of small businesses?

For example, in 2006 in California, 976,233 state residents received a total of $23.52 billion in pension benefits from state and local pension plans… The average pension benefit received was $2,008 per month or $24,097 per year… Retiree expenditures stemming from state and local pension plan benefits supported 205,221 jobs in the state. The total income to state residents supported by pension expenditures was $15.1 billion.”  Source: Pensionomics – National Institute on Retirement Security (and this was just public sector pensions)

Then, according to Retirement USA, one in five private-sector workers is covered by a traditional pension while 55% of people 65 or older rely on Social Security for half or more of their income—the median income for older households with Social Security and pension and annuity income was $32,105 in 2008, not including earnings from work.

In addition, CalSTRS ended 2011 with net assets of $155.34 billion and that money isn’t sitting around gathering dust. Those billions are invested and earning money. To earn money off those investments, means someone else made money too and this generated jobs.

The CalSTRS newsletter says 53% of those billions were invested in Global Equities, which is a category of mutual funds in which investments may be made in stocks of corporations throughout the world. A portion of the fund’s assets are usually committed to American markets, although the major portions are held in equities of developing countries

In addition, 17.6% of CalSTRS funds were in Fixed Income accounts, 14.8% in Private Equities, 12.1% in Real Estate, etc.  When CalSTRS earns money from those investments, that means those investments also earned money for businesses and created jobs for Americans and for the citizens of other countries depending on where the money was invested.

However, where do the wealthy that benefited from the Bush tax cut keep most of their money?

Continued on March 2, 2012 in What the Numbers say about Creating Jobs in America – Part 4 or return to Part 2

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Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

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Posted by on March 1, 2012 in American Public Schools, government, media, politics, Public School

 

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What the Numbers say about Creating Jobs in America – Part 2/4

29 Feb

It is a tragedy how fast most Americans forget the root causes of the current financial challenges in America.

Three lawmakers, all Republicans, introduced the Gramm-Leach-Bliley Act to the U.S. Senate.  During the debate in the House or Representatives, a democrat from Michigan argued that the bill would result in banks becoming “too big to fail” (sound familiar). At first, most democrats were against the bill but eventually, due to compromises, the effort of corporate lobbyists and deal making, many democrats were won over to vote for it.

Keep in mind that the Republicans won a majority position in both houses of Congress in the elections of 1994, and controlled both houses until 2006—except the Senate for most of 2001 and 2002, when the Democrats held the majority in that one House of Congress.

Therefore, in 1999, Republicans were the majority in both houses of congress. When the final Gramm-Leach-Bliley Act passed in the Senate, the vote was 90 to 8 (92%) and in the House 362 to 57 (86.3%)

Even if President Clinton had wanted to veto it, which he didn’t, he wouldn’t have succeeded since a two-thirds majority vote (66%) in both Houses of Congress is required to override a presidential veto. Since the Gramm-Leach-Bliley Act arrived at the White House for President Clinton to sign with more than a two-thirds majority vote in favor, there wasn’t much he could have done if he had wanted to.

Then, during the Bush years (2001 – 2009), the United States launched three expensive wars: The Iraq War—based on false claims of Weapons of Mass Destruction—the war in Afghanistan, which was mostly neglected under Bush, and the global war on terrorism.

Due to these wars and the Bush tax cuts for the wealthiest Americans, the national debt exploded.

I’m sort of going off topic with this paragraph, but I saw “Act of Valor,” which is about the Navy Seals and the CIA fighting the global war on terror. I recommend “Act of Valor”. The acting may be a bit stiff but that is not the point. The realism makes this movie worth watching. This is no Rambo or Mission Impossible. “Act of Valor” is closer to the reality and what America’s Navy Seals face as they fight to protect America. Politicians and corporate lobbyists might be corrupt and greedy for power and money, but America’s men and women mostly from the working class serve in the military out of patriotism.

Back on topic—President G. W. Bush, with help from the GOP majority in both Houses of Congress, lowered taxes for the wealthiest Americans (the lowest rate in almost 80 years—the last time the rate was this low was before the Great Depression and experts say this contributed to that economic collapse).

On February 9, 2012, the official debt of the US government had reached $15.4 trillion—an increase of $5.9 trillion since President Obama moved into the White House. While the GOP blames Obama for that debt during an election year, we must not lose focus on how much Obama inherited when he was elected president.

According to the Huffington Post, lowering taxes for the wealthy costs the U.S. Treasure $11.6 million every hour.

Total, the cost of the Bush tax cut for the top 5% of income earners since 2001 is more than one trillion dollars, which is about $100 billion annually. Source: Cost of Tax Cuts.com

Interest from the national debt, which President Obama inherited from Presidents Reagan, H. W. Bush and G. W. Bush is about $400 billion annually. Source: US Debt Clock.org

On top of that $500 billion annually, the wars G. W. Bush started has cost more than $1.3 trillion since 2001—that’s another $130 billion. Source: Cost of War.com

However, the cost was more than just money. According to the Congressional Budget Office, since combat is being financed with borrowed money, the price tag for these wars is not over, and if Bush had not gone to war over false claims of weapons of mass destruction  in Iraq, 4,482 Americans would not have been killed; more than 32,000 would not have been wounded (medical care for these wounded combat veterans will costs hundreds of millions in the decades to come); about 114,000 Iraqi civilians would still be alive and Iraq has cost more than $800 billion so far.

In addition, CalSTRS probably would still be funded close to 100%, as it was in 2001, for future obligations to its 856,360 members, while the 429,600 active members paid about $3 billion dollars into the retirement fund in 2011—money taken from monthly paychecks of working educators.

Continued on March 1, 2012 in What the Numbers say about Creating Jobs in America – Part 3 or return to Part 1

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Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

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Posted by on February 29, 2012 in American Public Schools, government, media, politics, Public School

 

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What the Numbers say about Creating Jobs in America – Part 1/4

28 Feb

Since I’m a member of the California State Teachers’ Retirement System (CalSTRS), I receive the “Retired Educator,” a quarterly newsletter.  The topic of this series of posts was motivated by the 2012 Winter edition.

To earn my monthly CalSTRS check, I first had to work thirty years as a classroom teacher in California’s public schools while 8% of my monthly paychecks went into CalSTRS to help fund that retirement system, which proves that it is not an unearned entitlement as some might want the nation to believe.

In fact, according to the 2011 Summary Report in the newsletter, contributions from members, the State of California and the federal government, which is why we cannot collect Social Security, was almost $6 billion in 2011. About half came from working members.

In addition, I do not earn an annual six-figure income through CalSTRS. In fact, when I left teaching in 2005, I took a 40% pay cut, as most teachers do, and lost my medical plan, because I could not afford the cost of COBRA, which was more than $1,000 a month.  Add another 14 years working outside education, and the total number of years I worked for a pay check was forty-five.

I discovered from that “Retired Educator” newsletter that CalSTRS lost $53.95 billion between 2007 – 2009 while President G. W. Bush still lived in the White House, but earned back $36.92 billion (2009 – 2011) with President Obama.  Note: CalSTRS did not receive bail out money from the federal government. That money mostly went to big private sector banks—not retirement programs such as CalSTRS.  If you want to know where the money went and how much, CNN.com shows you.

I’ve read that total losses globally were in the trillions. One financial Website set the total at more than $60 trillion US dollars. In China, alone, about 20 million people lost manufacturing jobs leading to labor unrest in 2008 and 2009. In the US, that number of job losses was about nine million.

Even though the CalSTRS newsletter didn’t say so, I learned that the wealthy do not create most jobs as Republicans claim—the working class creates most jobs by spending what little they earn, while the wealthy hoard most of their money in safer investments than those needed to create jobs as you shall learn from this series of posts.

However, I have an old friend that keeps telling me we cannot raise taxes on the wealthy one percent and/or the top twenty percent (those earning $55,000 or more annually—6.24% earn more than $100,000), because it will stop job growth.  He also happens to be a neoconservative-libertarian, evangelical Christian.  He despises liberal and progressive politics and policies.  He has said more than once that he believes G. W. Bush may have been America’s greatest president, and if anything bad happens in America, it is the fault of those evil liberal-progressive Democrats.

It doesn’t matter what the facts reveal. Anything that does not match his opinions/beliefs are liberal lies. He also listens faithfully to the conservative  Dennis Prager radio talk show and belongs to and attends Dennis Prager Fan Club meetings.

Conservative talk radio in the United States is a phenomenon that got its start in the 1980s when the Fairness Doctrine was allowed to expire under President Reagan (he vetoed it after both Houses of Congress voted it into law). This veto then allowed broadcasters to present a political opinion or point of view or pundit (mostly lies, exaggerations and misinformation) without being required to allow equal time for alternative views or rebuttals. The ideology that benefited the most from the loss of the Fairness Doctrine was conservative talk radio shows such as Dennis Prager’s.  See Prager’s Parrots to learn more.

My old friend and Prager fan has also said that he wouldn’t mind if Social Security were repealed as long as the government refunded him the money he paid into the system—and this comes from a guy that lost a half million dollars in the stock market after saving that money in tax sheltered retirement accounts. Later, he had to do battle with the IRS for years because they came for their share of that tax-sheltered money that he borrowed from his tax shelter and gambled away.

No matter what this old friend believes and preaches as if it were one of the Gospels, I’ve learned that what put America on the road to ruin causing the 2007-2011 global financial crises has more to do with the Gramm-Leach-Bliley Act repealing the Glass-Steagall Act of 1933 (this was the final nail in the coffin), which deregulated banking, insurance, securities, and the financial services industry, allowing financial institutions to “grow very big”.

The repeal of the Glass–Steagall Act of 1933 effectively removed the separation that previously existed between investment banking, which issued securities, and commercial banks, which made money through deposits.

The deregulation also removed conflict-of-interest rules that had prevented investment bankers from serving as officers of commercial banks.

It was the repeal of these prohibitions that was later claimed by many to have contributed to the 2007 global financial crises by allowing depositors’ money to flow into risky investments, and according to the Huffington Post, in the first 15 months after the start of the 2007 global financial crises, American Retirement Accounts Lost $2 Trillion and the federal government did nothing to slow the tide of those losses as they bailed out banks and the auto industry.  By the middle of 2009, those losses may have climbed as high as $4 trillion, which is much more than the $54 billion CalSTRS lost.

Continued on February 29, 2012 in What the Numbers say about Creating Jobs in America – Part 2

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Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

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Posted by on February 28, 2012 in American Public Schools, government, Public School

 

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The Private-Sector, Jealousy-Misery Media Factor – Part 4/5

18 Dec

It is 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 Journalism in Don Thompson’s Associated Press [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,” AP’s Thompson wrote.

In addition, “An initiative circulating for California’s 2012 state ballot seeks to increase the minimum retirement age to 65 for public employees and teachers and to 58 for sworn public safety officers.” [California’s teachers may retire at 55 now but those that retire early also will earn about 30% of gross pay and most will have to go without medical coverage.].

I know where the money comes from that funds CalSTRS. Part of it was from the monthly contribution from my paycheck for thirty years and when I retired, the taxpayer money that was used to pay me as a teacher stopped.

Moreover, I was a public school teacher in California for thirty years but I do not qualify for Social Security.  I also retired without medical benefits because I was unwilling to pay $1,400 a month for COBRA insurance until I qualified for Medicare.


“The Teacher Pension Blues” tells the story AP’s Don Thompson did not!

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 401k plans or pay into tax deductable IRAs.  Many that own homes take out equity loans to finance vacations, purchase new cars, pay off credit card debts, or to have money to 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 with credit card debt: $15,799. Average total debt in 2009 (including credit cards, mortgage, home equity, student loans and more) for U.S. households with credit card debt: $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%.

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

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 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.  [Note: Part 1 explains how this works.]

In fact, I know three teachers that worked more than 42 years in the classroom and all three retired with a raise, while my annual retirement is about half of what it was the last year I taught.

Continued on December 19, 2011 in Part 5 or return to The Private-Sector, Jealousy-Misery Media Factor – Part 3.

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Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

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Posted by on December 18, 2011 in American Public Schools, Education, government, Journalism, media, politics, Public School, Teaching

 

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The Private-Sector, Jealousy-Misery Media Factor – Part 3/5

17 Dec

Another example of how misleading Don Thompson’s AP piece, Public retirement ages come under greater scrutiny, was: “With Americans increasingly likely to live well into their 80s, critics question whether paying lifetime pensions to retirees from age 55 or 60 is financially sustainable. An Associated Press survey earlier this year found the 50 states have a combined $690 billion in unfunded pension liabilities and $418 billion in retiree health care obligations.”

What Thompson doesn’t mention is that some states managed their pension funds better than others did.

A March 2011 report on the Best and Worst State Funded Pensions by Adam Corey Ross of The Fiscal Times offers a more balanced picture.

Ross writes, “State pension programs across the country have undergone a major transformation, as more and more of them are cutting back the amount of money they set aside for retired workers, gambling that they can meet their obligations through investments instead of savings…”

In fact, Ross lists the best fully-funded state pensions, which are: New York, Wisconsin, Delaware, North Carolina, Washington, South Dakota, Tennessee, Wyoming, Florida and Georgia. He also lists the worst state pensions where the gamble did not pay off.

California falls between the two lists and is struggling to fill the funding gap. The following video explains why.

In addition, nowhere does Ross or Thompson mention that California has two state pension plans.  There is CalPERS and then there is CalSTRS.

The California State Teachers’ Retirement System [CalSTRS], with a portfolio valued at $148.2 billion as of October 31, 2011, is the largest teacher pension fund and second largest public pension fund in the United States. CalSTRS administers a hybrid retirement system, consisting of a traditional defined benefit, cash balance and defined contribution plan, as well as disability and survivor benefits. CalSTRS serves California’s 852,000 public school educators and their families from the state’s 1,600 school districts, county offices of education and community college districts.

How well funded is CalSTRS to meet its future obligations?

CalSTRS makes it clear that “It’s important to understand that the risk of facing depleted assets exists approximately 30 years from now versus actually facing insolvency today.”

Note: Due to losses from investments during the 2008 global financial crises, the CalSTRS retirement “fund took an enormous hit to its stock portfolio when the market plunged during the heart of the recession, losing nearly $43 billion — roughly 25 percent of its value — from June 2008 to June 2009.”

Continued on December 18, 2011 in The Private-Sector, Jealousy-Misery Media Factor – Part 4 or return to Part 2

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Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

To subscribe to “Crazy Normal”, look for the “E-mail Subscription” link in the top-right column.

 
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Posted by on December 17, 2011 in American Public Schools, Education, government, Journalism, media, politics, Public School, Teaching

 

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The Private-Sector, Jealousy-Misery Media Factor – Part 1/5

15 Dec

During my full-time university days on the GI Bill [1968 – 1973] before I graduated with a BA in journalism, I learned how easy it was for the media to make mistakes while practicing what is known as Yellow Journalism to boost profits.

And Yellow journalism [based upon sensationalism and crude exaggeration] is what Associated Press [AP] did when it ran Public retirement ages come under greater scrutiny by Don Thompson on December 14, 2011.

For example, how would you feel if you read, “Patrick Godwin spends his retirement days running a horse farm east of Sacramento, Calif., with his daughter? His departure from the workaday world [he worked thirty-six years in public education and was the superintendent of one of California’s 1,600 school districts] is likely to be long and relatively free of financial concerns, after he retired last July at age 59 with a pension paying $174,308 a year for the rest of his life.”

That previous quote was in the second paragraph of Thompson’s AP news piece and it is extremely misleading because of what it doesn’t say.

How many in public education do you think will earn that kind of money in retirement?

What AP doesn’t tell us is that in 2010 the average member-only benefit for retired public school educators in California was $4,256 a month before taxes [less than a third of what Godwin earns in retirement] and that only 16% of educators that retired in 2010 worked as long as Patrick Godwin did.  The median years of service was 26.6.

For example, if you were one of the educators that retired after 26.6 years of public service [the median] and was only 55 years old [the earliest you may retire and collect], using the CalSTRS retirement calculator, that person would earn about $2,130 a month before taxes—much less than the $14,525.66 that Godwin earns each month.

I calculated once that if a public school teacher in California taught for 42 years or more, his annual retirement income would equal what he earned the last year he worked.  In public education, less than 4% retire in the 100% category.

In fact, 9% retired in 2010 with 10-15 years of service in public education, 11% with 14-20 years, 15% with 20-25 years, 12% with 25-30 years, 23% with 30-35 years, and 16% with 35-40 years. Source: CalSTRS

The reason that AP’s Don Thompson ran with Patrick Godwin’s retirement income as his example is called sensationalism designed to cause an emotional response so people will talk about it. Word of mouth attracts readers and an audience.

In addition, Godwin was a school district superintendent at the top of the public education pay scale, which represents about 0.2% of the total.  That means 99.8% of public educators in California do not earn as much as Godwin did while working as a school district superintendent.

The result is that many readers may believe that most public educators in California will retire with Patrick Godwin’s annual retirement income.  However, this is far from the truth since most will not come close, but Thompson’s piece doesn’t say that.

The reason AP’s Thompson distorted the facts so much is because of audience share, which determines how much a media source [TV, newspaper, talk show, magazine, Blog, etc] may charge to advertisers, and balancing the news and telling the truth often does not achieve this goal because profits are the foundation of the private sector media.

It’s a simple formula: if you don’t make a profit you go out of business and everyone working for you loses his or her job so almost everyone plays the same Yellow Journalism game, and then there is the politics of money.

To understand why Thompson wrote such a misleading news piece, it helps to understand the trend away from private-sector pensions that were once similar to current public sector-pensions and the answers are in the numbers.

Continued on December 16, 2011 in The Private-Sector, Jealousy-Misery Media Factor – Part 2

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Lloyd Lofthouse is the award-winning author of The Concubine Saga. When you love a Chinese woman, you marry her family and culture too. This is the love story Sir Robert Hart did not want the world to discover.

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Posted by on December 15, 2011 in American Public Schools, Education, Journalism, media, politics, Public School, Teaching

 

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