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California Rule and Public Pensions (w/ portfolio mismanagement we're up a creek w/ out a paddle)

Germinator

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w/ the pandemic seems public pension portfolio management is the last thing people and elected officials are thinking about,... but as I see things its a ticking debt bomb that needs to be addressed

'Pension spiking' is not protected by California law, top court rules

For two decades, it was a treasured perk for some county employees across California: the ability to boost their pensions by cashing out unused vacation or sick leave, or working extra hours, at the end of their careers.

In some cases, workers received more in pension payments than they earned while working.

But with the state's economy struggling and a pension crisis looming, then-Gov. Jerry Brown backed a sweeping reform measure in 2013 that prohibited county workers from 'pension spiking.' Labor unions sued to overturn the new law.

On Thursday, in one of several closely watched pension cases, the California Supreme Court sided with the state, unanimously upholding a provision of the 2013 law that prohibited pension spiking by county workers.

'''Pension spiking''' not protected by California law, top court rules - Los Angeles Times

The California Rule has its origins in a case from 1955 called Allen V. City of Long Beach. The idea behind the California Rule is simple: workers enter a contract with their employer on the day they begin work and the pension benefits they are offered as part of that contract cannot be diminished, unless replaced with similar benefits. To cut or reduce pension benefits without an equivalent benefit to offset the cut would be a violation of the employment contract. California courts have continued to uphold the precedent of the California Rule in multiple cases over the past six decades.

A dozen other states that also use a contract rights approach to public pension benefits have chosen to follow the principles of the California Rule. Those states are:

Alaska
Colorado
Idaho
Kansas
Massachusetts
Nebraska
Nevada
Oklahoma
Oregon
Pennsylvania
Vermont
Washington

What is the California Rule and why does it matter? - NPPC

4x6-PC-San-Diego-Debt-Bomb.png
 

gino

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Unfortunately, anyone with a calculator can see that state pensions in some states are on the brink of failing. Also unfortunately, the politicians aren't willing to work to fix those pension funds. This is going to get ugly really fast.
 

Practical

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Shhhh! Don't talk about the obvious right now! Wait until it can be properly politicized!
 

Moderate Right

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w/ the pandemic seems public pension portfolio management is the last thing people and elected officials are thinking about,... but as I see things its a ticking debt bomb that needs to be addressed





4x6-PC-San-Diego-Debt-Bomb.png
This is part of the reason Pelosi and the Dems keep on fighting for state and local stimulus relief, because they need to charge their mismanagement off to the Coronavirus.
 

joko104

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Of the decisive issues in this election is whether us in Florida have to pay for the pensions of California, New York and many other Democratic Party run states. Biden will punish red states by making them pay TRILLIONS of dollars to cover the ass of red state's absurd pensions.
With a Biden win, all states should start massively giving money to the citizens of their states since Biden sees this as a federal government responsibility to pay.
 

joko104

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Shhhh! Don't talk about the obvious right now! Wait until it can be properly politicized!
It already is. This is one reason Pelosi will not allow any more stimulus - the Republicans in the Senate will not agree to a trillion dollar bailout to blue states.
 

Germinator

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Unfortunately, anyone with a calculator can see that state pensions in some states are on the brink of failing. Also unfortunately, the politicians aren't willing to work to fix those pension funds. This is going to get ugly really fast.

if people think it is bad now,...

California Legislators Propose 0.4% Wealth Tax, Plus 16.8% Income Tax Rate


then there is prop 15 (a split roll property tax) which voters get to decide on this Nov


Every tax system has its inequities BUT a predictable property-tax system is superior to a volatile “market value” system. This is because it lessens bureaucracy and the associated perverse incentives like “fiscalization of land use” which was pointed out by bay area Democrats in a 2017 panel discussion.

Actually in 2014, San Francisco–based state Senator Tom Ammiano, a Democrat, proposed legislation to redefine “ownership change” for businesses that makes more sense than Prop 15 (which is on the November 2020 ballot).

Basically the legislative fix tackles “abuses” AND would have generated increased tax revenues

The issue is simply fixed by defining an “ownership change” as having occurred whenever at least 90 percent of a property shifts hands, regardless of whether any one owner ends up with more than a 50 percent stake in a property.

On the surface, the Ammiano bill seemed likely to pass: The GOP wasn’t averse to the reform, the California Chamber of Commerce came out in favor, and the Howard Jarvis Taxpayers Association made statements indicating the group could live with it. Yet the bill died—and not just, or even primarily, because of corporate opposition.

Paradoxically, many progressive politicians opposed it, as did organized labor and a large number of community groups who believed the bill was far too narrow in scope and worried it would take the wind out of a bigger and broader reform movement that was finally coming into its own—one that wouldn’t just change the definition of ownership, but would also require regular reassessments of the value of commercial real estate, both the buildings and the land on which they sit.

With covid-19 there is a very real problem that passage of Prop 15 is a high cost in lost jobs and leakage from businesses relocating out of state.

www.TinyURL.com/SplitRoll


 

Roadvirus

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You want a pension dumpster fire? Look at Illinois! Talk about a financial cluster****.
 

EMNofSeattle

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You want a pension dumpster fire? Look at Illinois! Talk about a financial cluster****.

government unions need to be broken up. And states should be constitutionally required to include future pension liabilities in balanced budgets
 

skeptic llc

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Of the decisive issues in this election is whether us in Florida have to pay for the pensions of California, New York and many other Democratic Party run states. Biden will punish red states by making them pay TRILLIONS of dollars to cover the ass of red state's absurd pensions.
With a Biden win, all states should start massively giving money to the citizens of their states since Biden sees this as a federal government responsibility to pay.
Wouldn't it be a nice change to see red states pay their fair share instead of being welfare queens?
 

skeptic llc

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government unions need to be broken up.

Is there any movement to prohibit government employees from unionizing? I get unions to counterbalance corporate power, but when it is taxpayers on the other side (represented by pols who have every incentive to kiss up to government workers), I don't see why unions are needed.
 

EMNofSeattle

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Wouldn't it be a nice change to see red states pay their fair share instead of being welfare queens?
What does that even mean?

no state in America except Hawaii has a lower GDP then federal expenditure
on top of that, this is not a valid reason to make the federal government responsible for state pensions
 

skeptic llc

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What does that even mean?

If you read much of anything, you know what it means. Red states mostly get out of the federal government far more dollars than they put in. They are welfare queens. No worries, though, if they just stop living off the federal teet made possible by blue state economic vitality, we can all just get along.
 

skeptic llc

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It occurs to me that you might not actually know that blue states generally subsidize red states. So here:

.
https://apnews.com/article/2f83c72de1bd440d92cdbc0d3b6bc08c (" High-tax, traditionally Democratic states (blue), subsidize low-tax, traditionally Republican states (red) — in a big way.")

If you want more cites, consult google. The topic is not seriously debated that I know of. Red states are "takers" -- unable to maintain their economic standards without welfare subsidies from a federal government that redistributes wealth from the more economically successful blue states to the politically powerful, but impoverished, empty states.
 

EMNofSeattle

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It occurs to me that you might not actually know that blue states generally subsidize red states. So here:

.
https://apnews.com/article/2f83c72de1bd440d92cdbc0d3b6bc08c (" High-tax, traditionally Democratic states (blue), subsidize low-tax, traditionally Republican states (red) — in a big way.")

If you want more cites, consult google. The topic is not seriously debated that I know of. Red states are "takers" -- unable to maintain their economic standards without welfare subsidies from a federal government that redistributes wealth from the more economically successful blue states to the politically powerful, but impoverished, empty states.
No, that is not subsidization. That is a pure measure of income tax dollars paid versus federal dollars disbursed. Most of that is non-discretionary federal spending, and is actually evidence that Republicans are right about the size of government.

If you compare GDP of a state to tax ependitures no state takes more federal dollars then the state economically produces.

as an aside, this argument is totally irrelevant to state governments and their pension obligations
 

skeptic llc

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as an aside, this argument is totally irrelevant to state governments and their pension obligations

Tell joko it's irrelevant if you want, he commented on states subsidizing each other and I replied. Not really into nitpicking word choice; it's about blue states carrying the load and red states not.
 

joko104

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The "wealth tax" is an entirely new taxing system in which every year you are required to inform the government in writing of everything you own so it can be taxed. This will apply to everyone.

The income tax was started by promising only 1% and only against the rich. That all was a lie. A personal property tax (ie wealth tax) would go the same way. You will have to report everything you own - everything - and be taxed on it. Audited. Anything can be summarily seized claiming you didn't pay enough taxes on what you own.
 

Germinator

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FWIW somewhat directly related to "public pensions and the California Rule" is prop 15 which will be voted on this November


for a primer on the issue overall there was a TV news report showing just one part of the damage that will be done to businesses in my home town


looking at the big picture found there is an ongoing outflow of jobs and capital from california

since a picture is worth a thousand words

Calif-Small-Business-prop-15.png


FYI the two URLs listed in the graphic image are redirects to PDFs I've posted on GoogleDocs


basically these PDFs are a collection of articles/studies on the topic (gathered info together so it's easy to confirm that diverse interest groups like small farmers, the association of CA assessors, etc. highlighted prop 15 aspects that are not well thought out)

guess all I can say is,...

[sarcasm on]

brilliant

[sarcasm off]
 

Tlrmln

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Unfortunately, anyone with a calculator can see that state pensions in some states are on the brink of failing. Also unfortunately, the politicians aren't willing to work to fix those pension funds. This is going to get ugly really fast.

Doesn't help that CA teachers can retire with a pension at age 55 at 60+% of their salary.
 

chuckiechan

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w/ the pandemic seems public pension portfolio management is the last thing people and elected officials are thinking about,... but as I see things its a ticking debt bomb that needs to be addressed





4x6-PC-San-Diego-Debt-Bomb.png
They are counting on Biden to bail out all the pension funds with the Covid relief bill Trump refused to sign. Trump wanted a clean bill, Pelosi wanted all or nothing. She refused to compromise on Covid relief. Many people suffered. Her reaction? DILLIGAF? “I didn’t want to give Trump a win.”
 

Ringo Stalin

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130 thousand dollars, that is, 9.5 million Russian rubles for one such shell... in Moscow, a very expensive city, you can buy an apartment in a good area, for this money... If you buy homeless people an apartment in an ordinary city of Russia and give them the rest of the money in their hands, they will be able to live comfortably there for the rest of their lives... Maybe this would be the better option?

EpOj7fAXYAAJXpj
 

Neomalthusian

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w/ the pandemic seems public pension portfolio management is the last thing people and elected officials are thinking about,... but as I see things its a ticking debt bomb that needs to be addressed

It doesn't go nearly far enough that a court says pension spiking isn't "protected." Pension spiking needs to be illegal. Pension spiking is literally theft of pension funds, and laws need to acknowledge this. It's still up to legislators and governors to pass laws that say so.

The design of pension benefit calculations are to blame, so up until this point, countless public sector workers have locked in a spiked pension benefit, and did so legally because nothing at the time found it illegal. The law should allow for identifying those who (in conjunction with their former employers) spiked their pensions, and those people's pension benefits should be cut. If that requires literally amending state constitutions, so be it. It's necessary. The feds should never fully bail out state and local pensions that were sabotaged by pension spiking.
 

Rudy

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Unfortunately, anyone with a calculator can see that state pensions in some states are on the brink of failing. Also unfortunately, the politicians aren't willing to work to fix those pension funds. This is going to get ugly really fast.

Is that because politicians spend the money on other things rather than the pension programs?
 

Germinator

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politicians spend the money on other things rather than the pension programs

more often than not politicians spend money unwisely on stuff that does not create lasting value,... as another poster in this thread pointed out

$130,000 for an 8-foot-by-8-foot shed? That’s what L.A. is paying in a bid to house the homeless

In other cities, 64-square-foot aluminum and composite sheds are being used as quick and inexpensive emergency shelter for homeless people.

Not in Los Angeles. Here, plans to employ the minimalist structures, known as “tiny homes,” have blossomed into expensive development projects with access roads, underground utilities and concrete foundations — and commensurate planning delays.

At the city’s first tiny home village, scheduled to open in January, each of the 39 closet-sized homes is costing $130,000, about 10 times what some other cities are spending. Five more villages are planned to open later.

Mayor Eric Garcetti announced the program in March, signaling that the concept of sheltering people in tiny homes, long neglected in Los Angeles, had emerged as a leading strategy in the city’s response to a federal lawsuit alleging it has done too little to get homeless people off the streets.



and here is what is happen in my home town

In total for November, San Diego taxpayers spent $5.7 million to temporarily house about 900 people — just over $190,000 a day


WRT pension programs voters/taxpayers need to consider is that politicians (and the bureaucracy) in my home town of San Diego (for example) is once again (for the holiday season) seem the no talent ass clowns voted to give themselves a 13th pension payment,... despite the portfolio underperforming the target benchmark and being billions in debt (this FYI is the same portfolio mismanagement that caused the city of detroit to declare they were bankrupt)

www.SanDiegoDebtBomb.com

AND the way "the california rule" is intrepid by the law, taxpayers (in many states, not just Californians) are legally responsible for mismanaged pension portfolios


basically w/ the pandemic we have a situation where political leadership is digging the debt hole even faster than before (essentially spending money on "huge" band-aids)
 

Vadinho

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I am for pensions but here in California, they are out of control. The local sheriff just retired after 30 years. 280 grand for life. Sorry but no one is worth that kind of scratch in a local government. Firefights, cops, parole officers, prison guards, all of them can get 100k or more routinely for life and retire in their 50s. I really don't agree with this kind of benefit plan especially since they all make good dough during their careers and then pad their overtime to ride the pension curve up at the end. its a joke.
 
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