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Kentucky Democratic Gov. Andy Beshear has signed into law a measure barring asset managers handling the state's retirement systems from considering environmental, social, and governance (ESG) factors when making investments with state funds. Beshear signed House Bill 236 on Friday, requiring that such asset managers only consider financial factors and the interests of the fund's beneficiaries. It further explicitly bans "actions on nonpecuniary interests including environmental, social, political, and ideological interests," a summary of the bill explains. State Treasurer Allison Ball celebrated the law's signing, saying "Kentucky now has the strongest anti-ESG legislation in the nation." "For many years, pension...

When Major League Baseball postponed the opening of its season, teams also closed their spring training camps. That’s a $25 million hit to the Arizona economy, where many clubs train, local experts say. Meantime, every NBA game that the Chicago Bulls don’t play because the league has suspended its season will cost the Windy City and Cook County $228,000 in local amusement taxes alone. These are just a few of the many ways that the closing down of large sections of the American economy, along with the plunge of stock markets, is likely to undermine state and local budgets and...

Kicking pension problems into the future is popular with politicians, enabling them to make promises and let voters worry later about borrowing costs. But large, unfunded state pension liabilities are a costly problem—and the cost is already reflected in current bond prices, research by Chicago Booth PhD candidate Chuck Boyer suggests. “The public pension funding crisis is not merely about future insolvency,” he writes. “Future obligations are having an effect on debt spreads right now.” To many Americans, it may seem unimaginable that states would fail to fully pay pensions promised to teachers, firefighters, and other public-service workers. It has...

After years of wrangling with its creditors, Puerto Rico disclosed a plan Friday for resolving the biggest governmental bankruptcy in United States history, by cutting $129 billion in debts to about $86 billion — a reduction of 33 percent. SNIP

No excerpt allowed from Bloomberg, story here

A recent report from Moody’s states that “US public pensions funds’ adjusted net pension liabilities (ANPLs) surpassed $4 trillion nationwide in 2016”. The report also indicated that this increase in Unfunded pension liabilities was a result of “poor investments” and “declining discount rates”. Three different investment return scenarios are offered in the report- base, upside and downside- to project pension liability debt levels in 2020. According to the report, the downside scenario places public pension debt at dangerous new levels with a expected 59% increase in total liabilities. In order to stave off this possible forecast, pension would have stabilized...

Earlier today the Kersten Institute for Governance and Public Policy highlighted an updated pension study, released by the Stanford Institute for Economic Policy Research, which revealed some fairly startling realities about California's public pension underfunding levels. After averaging $77,700 per household in 2014, the amount of public pension underfunding for the state of California jumped to a staggering $92,748 per household in 2015. But don't worry, we're sure pension managers can grow their way out of the problem...hedge fund returns have been stellar recently, right? Stanford University’s pension tracker database pegs the market value of California’s total pension debt at...

According to a first-of-its kind pension-tracking website created by a team at Stanford’s Institute for Economic and Policy Research, America’s unfunded pension liabilities—the difference between the value of state pension funds and the amount owed to public sector workers—totals over $4.8 trillion, or $41,219 per household. The Stanford team arrived at number assuming a three percent rate of return—far lower than the 7.5 percent “actuarial” rate many pension funds rely on, but rarely meet. (Even if the actuarial basis were accurate, state pension funds would still owe a combined $1.04 trillion, or $8,872 per household).

the public pension debt for the 50 states and the District of Columbia jumped 84 percent in recent years, from $2.625 trillion in 2008 to $4.833 trillion in 2014. ... The highest pension debt/household is in Alaska, with an estimated $113,137 figure; Illinois and California are in the second and third highest rankings at more than $77,000 per household.” The lowest state pension debt per household is in Tennessee at $17,761. Illinois has the lowest “market funded ratio” (value of pension assets divided by market liability), at 23.3 percent. The other 49 U.S. states and Washington, D.C. have a market...

A credit bubble is created when the amount of money borrowed exceeds the capacity of the borrower to pay it back. This concept is easy to understand, but the financial foundation of borrowing has been manipulated to an historic extreme by government. Not just through the national debt but through the agreements to create debt through public sector union contracts and municipal bond issuance.

The Illinois Supreme Court on Friday struck down a 2013 law that sought to fix the nation's worst government-employee pension crisis, a ruling that forces the state to find another way to overcome a massive budget deficit. In a unanimous decision, the seven justices declared the law passed 18 months ago violates the state constitution because it would leave pension promises "diminished or impaired." The decree puts new Republican Gov. Bruce Rauner and Democrats who control the General Assembly back at the starting line in trying to figure out how to wrestle down a $111 billion deficit in what's necessary...

Some of the worst public-sector pension problems in America are playing out in states and cities where legislation or local court rulings have granted extraordinary protections to workers’ retirement benefits—far beyond those enjoyed by private-sector employees. ... One can see a glimpse of Illinois’s possible future in Arizona. Last year, the state’s Supreme Court overturned 2011 pension reforms that, among other things, sought to curb expensive annual cost-of-living increases for judges, legislators, and ... The predicament faced by Illinois and Arizona should be a warning, especially to other states where government pensions enjoy extraordinary legal protections. Raising benefits or shortchanging...

First in Detroit, then in Stockton, Calif., and now in New Jersey, judges and other top officials are challenging the widespread belief that public pensions are untouchable. Gov. Chris Christie of New Jersey delivered the latest blow on Tuesday, when he proposed to freeze that state’s public pension plans and move workers into new ones intended not to overwhelm future budgets or impose open-ended demands on taxpayers. The first crack came in Detroit, where a judge ruled that public pensions could, in fact, be reduced, at least in bankruptcy. Then, just a few weeks ago, an opinion by the bankruptcy...

This year, judges in California and Michigan approved the exit plans of two of the largest municipal bankruptcy filings in the country’s history. In California, Stockton upheld its obligations to the state’s pension system behemoth, Calpers, while paying its other creditors as little as pennies on the dollar. Detroit, meanwhile, was able to restructure its obligations to all of its creditors, including city pensioners. While the exit plans differed, both judges ruled similarly: public pension obligations could be shortchanged like any other debt. Stockton and Detroit aren't alone. Cities and states across America are facing catastrophic budget shortfalls. After decades...

Chicago residents who are worried about a $250 million property tax hike because of the pension bill Gov. Pat Quinn is weighing don’t know the half of it. Or maybe three-quarters of it. It’s time Chicagoans confront the fact that there’s a nuclear property tax time bomb already set and ticking away here. There’s the potential for another $600 million property tax increase coming in December to fix police and fire pensions. And then maybe another $696 million needed next year for Chicago Public School pensions. Back to police and fire. Public Act 096-1495, passed in 2010, reads, in part,...

Bridgewater Associates did an analysis of pension funds recently and concluded 85% of them will fail if returns average 4%. Bridgewater notes that public pensions have just $3 trillion in assets to invest to cover future retirement payments of $10 trillion over the next many decades. It would take an investment return of roughly 9% a year to meet those obligations. With the 30-Year long bond yielding a mere 3.5% and with stock valuation through the roof, I expect negative returns for 7-10 years. Stretched out over 30 years, 4% seems about right. 9% is out of the question. CNBC...

State Senate Democrats say borrowing nine billion dollars is the best way to address the state's rising public pension debt. It's a shift from a caucus that has previously supported a wait-and-see approach with the 2010 law that reset scheduled payments into the pension systems. Those payments are set to increase by hundreds of millions of dollars over the next several years, eating up precious funding for other government programs, only to decrease again in 20 to 30 years. Now they Senate Democrats say a $9 billion bond could refinance some of the pension debt. Sen. John Blake (D-Lackawanna) said...

Detroit’s municipal pension fund made undisclosed payments for decades to retirees, active workers and others above and beyond normal benefits, costing the struggling city billions of dollars, according to an outside actuary hired to examine the payments. The payments included bonuses to retirees, supplements to workers not yet retired and cash to the families of workers who died too young to get a pension, according to a report by the outside actuary and other sources. How much each person received is not known because payments were not disclosed in the annual reports of the fund. Detroit has nearly 12,000 retired...

ALBANY, N.Y. — As a lobbyist in New York’s statehouse, Stephen Acquario is doing pretty well. He pulls down $204,000 a year, more than the governor makes, gets a Ford Explorer as his company car and is afforded another special perk: Even though he’s not a government employee, he is entitled to a full state pension.

Gov. Jerry Brown, who will travel to Los Angles on Wednesday to sign legislation reducing public employee pension benefits, said today that the measure, though less sweeping than he proposed, is "the most that could be gotten" through his negotiations in Sacramento. "What I got was the most that could be gotten," the Democratic governor said in an interview with the Bay Area News Group's editorial boards. "Is it enough? No." The pension changes, approved by the Legislature despite opposition from labor unions and Republicans, will reduce benefits for future hires and require increased retirement contributions from current employees.