Skip to comments.Shocker! LA Pension Gap Spirals Past $10 Billion
Posted on 09/17/2017 9:19:08 PM PDT by george76
California pension worries most often focus on CalPERS and CalSTRS, the states two multi-employer behemoths. But the state has many other underfunded plans, and these city and county systems pose significant challenges for governments that contribute to them.
The City of Los Angeles faces the largest municipal pension funding gap, measured in absolute dollar terms. According to the citys 2016 Comprehensive Annual Financial Report, Los Angeles Net Pension Liability totaled $8.2 billion. Curiously, this number does not appear on the citys government-wide balance sheet (called a Statement of Net Position). Instead, the $8.2 billion is reported as part of LAs long-term liabilities, resting in the footnotes of the city CAFR at pages 133 and 141.
But the citys pension debt is actually even worse than this reported $8.2 billion. Drilling down further into the CAFR, we find that the pension liability data is
The actuarial reports as of June 30, 2016 show that the combined pension debt from the public safety pension plan, the city employee pension plan, and the utilities employee pension plan have grown to almost $10.3 billion,
Also, the City of Los Angeles does a relatively good job of funding its retiree health insurance programs known in accounting-speak as Other Postemployment Benefits or OPEB.
As Los Angeles looks forward to hosting the 2028 Olympics, city leaders will be looking for opportunities to improve local infrastructure. But with such a high pension burden, LA could instead by facing a state of service insolvency in which it collects enough taxes to pay employees and meet bond obligations, but do little else. A better option for LA is to follow the example of San Diego, and take measures to reduce its crushing pension burden.
(Excerpt) Read more at citywatchla.com ...
All these publically funded retirement funds, are a holdover from a past era.
Companies are now offering 401k funds, which require an employee to build their own retirement funds.
Public retirement funds are an expensive, burdensome mess, left over from the past. They should be abolished.
The formula for peace officers was 2.5% times years of service X your highest year at 55. When Gray Davis wa sin office he raised the CHP and correctional officer to 3.0 at 50. Then you have LAPD and others saying hey we want what those guys get so we can recruit against them. Now most Pos and SOs have the tiger formula. Davis justified not on trumped up estimates and then of course the investments didn’t reach the estimates. now the state and many counties and cities have bankrupt system. Jerry Brown has ignored this problem and someday their will be an implosion.
The pensions were rooted in a time when the salaries were lower than private industry. Then unions came in and the salaries went up and so did the tensions. But the politicians were owned by the unions who raised dues when salaries one tup and bribed more politicians. And unending cycle.
It’s gonna be awesome! Kevin Williams
And some day I hope this example will lead the voters to switch SS to a similar system.
SS should have a pure insurance component to cover those truly disabled, and orphans. The retirement funding should be a 401k-type program where your money is invested in an account that belongs to you. And, where you can self-direct the investment within a reasonable range of choices.
If all of us had a retirement benefit that was directly related to the strength of American industry, instead of how much tax the government can extract from workers, the politics of our country would change dramatically.
Well I am not disagreeing with you.
But caution please, I’m not sure tying retirements to the strength of US industry, is necessarily a good thing.
We (defining “we” for purposes of this discussion, US industry) sent a huge amount of what (was) our industry, to the People’s Republic of China. Now Chinese are making a HUGE amount of what we buy every single day, across America. We are buying a massive amount of things, which are all made in the People’s Republic of China.
We run a massive, continual trade imbalance with them, and with other countries.
Why is the city stealing from John to pay Jeff not to work? Or is it Peter from Paul, or Mildred from Steve, or Jojo from Phyliss, or Evander from Holly... or......??????
And the Dems (supposed champions of the working man) not only supported it, they accelerated it. And not just to China, all over the world. How? I have never met a liberal who did not absolutely love the corporate income tax. This causes corporations to send work overseas to low tax and low wage countries. I think US productivity is pretty good, and in a non-union shop we can compete effectively against either low wages or low taxes, but the double whammy is too much for us and manufacturing flows overseas.
Give the average worker an ownership stake in the US economy and he will suddenly realize some of these economic truths.
Please, get that secession thing going and done fast.
It will end, and abruptly. These schemes lasted as long as cities continued to grow, supported by a growing tax base. But like Detroit, LA, Chicago and other cities will find out that their citizens will only take so much until they vote with their feet. The tax base evaporates, and then then bills can't get paid.
Municipalities in California are forbidden from carrying any debt aside from those which have issued bonds, and in most cases, are voted on by the people.
That’s a very important thing above. It means that no city is beholden to a contract promising future remuneration outside of the current and approved budget.
The state, at the behest of rather powerful unions (considering that nearly 20% of the population of California either works directly or one step removed from the government) has put in laws which state that any government body is responsible for the contracts, even those which pre-date the current elected (or appointed) body.
The state laws also obligate the people to make up any shortfalls that happen to these contracts, promises and unfunded plans.
Strangely, none of these have really faced much of a court challenge aside from token resistance (mostly as a negotiating tactic), especially to answer the most critical question: Can a body obligate future bodies to spend budgetary money in a particular fashion or for a specified function, or does the current body which has budgetary powers have the option of disregarding these unpaid and unbonded liabilities?
And if such a thing can take place, couldn’t a current budgetary body specify how all future spending shall take place and negate even the need for future budgetary bodies to meet since the budget has already been determined by people who are no longer elected or appointed members of that body?
City of Los Angeles is closer to 18 billion in the hole, county of Los Angeles is about 7 billion in the hole, Los Angeles Unified School District is nearly 12 billion in the hole. And under existing court rulings, all these debts are mortgages on the properties of private citizens.
Even my very liberal younger brother (lawyer) is making plans to get out in less than two years when he is 62. He likely voted for much of the problem, but sees it spirally out of control and is bailing.
Wife and I got out over eleven years ago, it was weird enough even then.
No Worries!! More and more illegal, trespassing invaders will get jobs and all will be well (until it’s not). Classic democRAT mathematics.
Please tell your brother to migrate to another Blue State. He likes those kinds of politics so he ought to enjoy living with the results. Stay to heck out of the remaining Red States or just stay in California. (California should be a little paradise soon, anyway. Completely unchecked Democrat Governor, Legislature and Judiciary.)
[It will end, and abruptly.]
That would be my guess, too.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.