Accounting

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…

Superintendents behaving badly

If a community can’t trust a public employee, can its elected representatives fire that person?
A lawyer defending a former Brookfied, Conn., superintendent on Tuesday argued the answer is no, not legally.
Recently, a number of superintendents in Connecticut have been sent to the principal’s office – …

The tie that binds public employee unions and Wall Street

Some people think that public employee unions can serve, as private sector unions once did, as a counterweight to wealthy business interests. However, when it comes to a hugely important area of public policy, pensions, the unions are more often allies than adversaries with investment …

House GOP floats its own pension gimmick

If there were any doubt whatsoever that pensions and politicians are a bad mix, just take a look at the maneuver that Republicans in the NoGimmicksHouse of Representatives are proposing to help bail out the nation’s troubled Highway Trust Fund. The proposal, coming at a time when state and local budgets are getting squeezed in many places thanks to a pension crisis prompted by similar moves, is a reminder that no amount of bad experience will deter politicians from the next fiscal gimmick, if they can use it to put off tough decisions…

Sorting through Alabama’s pension system

A recent paper of mine entitled, “Pension Reform in Alabama: A Case for Economic Accounting,” published by the Johnson Center at Troy University, took a look at the financials of Alabama’s Retirement System – the RSA, which manages and administers three pension plans for public …

Detroit pension debt under any other name is still…

… debt. That’s what Detroit emergency manager Kevyn Orr and city officials contend in their lawsuit which seeks to overturn a 2005 financial maneuver that pumped $1.44 billion into the city’s pension system.Playing hardball, Detroit has now subpoenaed The Bond Buyer trade publication, seeking records related to the publication’s subsequent decision to award the administration of then mayor Kwame Kilpatrick and the highly controversial transaction the Midwest Deal of the Year in 2005. Alas, there are a few others the city is probably also talking to who took bows back then for the deal…

Philly schools “inadequate” at $12,000 per student

The Philadelphia school system last month projected spending about $2.4 billion next year to educate about 200,000 students. The state commission that runs the city’s schools, however, wants millions of dollars in additional spending just to offer what it claims would still be an “inadequate” education. How is it that a school district that spends more than the national average per student can’t manage ? One look at its personnel costs and perks, including exploding pensions and legal services for union members, gives you an idea why…

Will NY lock in retiree health costs?

New York State and its government subdivisions have unfunded liabilities of $250 billion for promised public-sector retiree health coverage — a disproportionate share of at least $1 trillion in other post-employment benefits (OPEB) benefits promised by states and local governments throughout the country.
Incredibly, with days …

Jersey pension system beyond saving at any reasonable cost

For three years now PSI has been warning that New Jersey had neglected its government employee pension system for so long that the state’s 2010 and 2011 reforms were inadequate to save the system. At some point we said (numerous times) the state would have to admit it could not possibly keep to the refunding schedule it had set for itself. Yesterday Gov. Christie declared as much…

Softening tax collections plague state, local budgets

The slow but steady recovery of state tax revenues, which has had some newspapers sporting talk of new budget surpluses around the country, is rapidly disappearing as new tax numbers come in. In mid-April the Rockefeller Institute of Government reported a significant slowdown in tax collections in the last quarter of calender 2013. Then the institute delivered more bad news, this time for the first quarter of 2014…