19 August 2012 0 Comments

Liberty Index 2012 Appropriations Acts Part 1 – Act 1A of 2012 SERS Administrative Funding

 

   Appropriation Act 1A of 2012  SB 1472 funds the State Employees’ Retirement Board which administers the multi-billion dollar SERS Pension Fund.

   Appropriation Act 1A of 2012  is scored AGAINST  LIBERTY AND AGAINST THE FORGOTTEN TAXPAYER because, even though, this fiscal year’s appropriation is less than last fiscal   year’s appropriation, the SERS and PSERS boards have not come close to addressing the Pension Bomb and have continued a unproductive and fiscally destructive bureaucracy. See news and policy analysis below from Bloomberg, PaIndependent, and the Commonwealth Foundation. Act 1A of 2012 and Act 2A can be read together as adding to the ever escalating costs of government and, in particular, the union driven public pension fiscal burden.

 

 

Pension Problem.

“The increase in pension contributions is estimated to be about $500 million per year for the next several years,said Mark Ryan, deputy director of the IFO.According to the report, those costs will consume 9.6 percent of the state budget by 2017 – up from 4.2 percent of the budget this year.  READ MORE PaIndependent   15 November 2012 Eric Boehm

The Pension Underfunding Problem marches inexorably and unavoidably forward.

Appropriation Act 1A Fiscal Year 2011/2012         $27,320,000

Appropriation Act 1A Fiscal Year 2012/2013         $23,660,000

Decrease from last fiscal year                                   ($ 3,660,000 )    READ MORE FISCAL NOTE HOUSE COMMITTEE ON APPROPRIATIONS:  Appropriation Act 1 makes a[decreased] appropriation from the State Employees’ Retirement Fund to provide for the expenses incurred by the State Employees’ Retirement Board for the administration of the system for the fiscal year July 1, 2012, to June 30, 2013, and for the payment of bills incurred and remaining unpaid at the close of the fiscal year ending June 30, 2012.

Municipal pension crisis — ‘$6B is still a big number’  PaIndependent 27 July 2012 Eric Boehm New figures show municipalities in Pennsylvania are facing more than $6 billion in unfunded liabilities. That total is actually a slight improvement over where things stood two years ago, but the state and its municipalities have a long way to go.

The new numbers provide a snapshot of Pennsylvania’s roughly 1,400 municipal pension plans at the end of 2011.  Pennsylvania State Public Employees Retirement Commission, which oversees and analyzes state and local pension plans in Pennsylvania, compiled the report.

The Corbett Administration’s internal budgetary guidelines warn of cost increases, declining federal dollars READ MORE August 23, 2012  Eric Boehm  PA Independent

Pennsylvania, home to a quarter of all U.S. public pensions, has spent at least $2 billion since 1985 to help pay for managing the retirement plans, including thousands that cover no more than 10 municipal workers. READ MORE Pennsylvania’s pension problems cost taxpayers Poorly monitored administration costs, underfunding add up August 27, 2012  Romy Varghese / Bloomberg News

The unfunded liability for the two main government worker pension systems, the Public School Employee Retirement System (PSERS) and the State Employee Retirement System (SERS), currently exceeds $40 billion READ MORE Union Leaders Misrepresent Pension Reforms AUGUST 15, 2012   Commonwealth Foundation 15 August 2012  Priya Abraham 

Pittsburgh’s pension system is only 62 percent funded, but that’s way better than it was just two years ago PaIndependent 27 July 2012 .

Walter Russell Meade The American Interest: “The biggest scam going in American financial life may be the collusive effort by Wall Street, the political class, and public sector unions to use union retirement money to prop up Wall Street speculation. American Interest Occupy the Pension Funds 25 June 2012

Looking for examples? Head to Pennsylvania:

The Pennsylvania State Employees’ Retirement System, for example, has more than 46 percent of its $26.3 billion in assets invested in riskier alternatives, including private equity funds and real estate. Over the last five years, the system paid roughly $1.35 billion in management fees – over 5 percent of the total value of the fund over a five-year period – while realizing an annualized return of just 3.6 percent, well below the 8 percent it needs to meet its financing requirements and also lagging behind the 4.9 percent median return for all public pension systems.

There’s bad news for Pennsylvania’s teachers, too:

The $51.4 billion Pennsylvania public schools pension system…which has 46 percent of its assets in alternatives, pays more than $500 million a year in fees. It has earned 3.9 percent annually since 2007. READ MORE 25 JUNE 2012 Walter Russell Meade The American Interest.

State Net reports on ‘alternative investments’: “Those two retirement systems represent the opposite ends of the spectrum, with Pennsylvania among those with the highest percentages of assets in alternative investments and Georgia among those with the lowest percentages of assets in such investments. But funds with over a third of their money in alternative investments had return rates more than a percentage point lower than those of funds that avoided such investments and paid nearly four times more in fees. “READ MORE Risky Pension Investments Not Paying Off   State Net  16 April 2012

Commentary Contentions John Steele Gordon 30 August 2012 make the point that “If States Were Treated Like CorporationsEasy, [the State] cooked the books because, unlike corporations, it doesn’t have to conform to Generally Accepted Accounting Principles or have its books certified by an independent authority

Tier 3 Against Liberty and Against The Forgotten Taxpayer 50 points deducted from grade

 

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