More Absolutely Crazy Pension News

Authored by John Rubino via DollarCollapse.com,

“War” and “pensions” are conceptually about as different as it’s possible to be. But – in a measure of how far into Crazy Town we’ve wandered – they’re both taking the world in the same direction.

If a Middle East (or Asian!) war doesn’t spike oil prices and push the global economy into recession, then pensions will probably produce the same end result. Here’s an excerpt from a much longer New York Times article that should be read in its entirety for a sense of what public finance has become:

A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

A public university president in Oregon gives new meaning to the idea of a pensioner.

Joseph Robertson, an eye surgeon who retired as head of the Oregon Health & Science University last fall, receives the state’s largest government pension.

It is $76,111.

Per month.

That is considerably more than the average Oregon family earns in a year.

Oregon — like many other states and cities, including New Jersey, Kentucky and Connecticut — is caught in a fiscal squeeze of its own making. Its economy is growing, but the cost of its state-run pension system is growing faster. More government workers are retiring, including more than 2,000, like Dr. Robertson, who get pensions exceeding $100,000 a year.

The state is not the most profligate pension payer in America, but its spiraling costs are notable in part because Oregon enjoys a reputation for fiscal discipline. Its experience shows how faulty financial decisions by states can eventually swamp local communities.

Oregon’s costs are inflated by the way in which it calculates pension benefits for public employees. Some of the pensions include income that employees earned on the side. Other retirees benefit from long-ago stock market rallies that inflated the current value of their payouts.

For example, the pension for Mike Bellotti, the University of Oregon’s head football coach from 1995 to 2008, includes not just his salary but also money from licensing deals and endorsements that the Ducks’ athletic program generated. Mr. Bellotti’s pension is more than $46,000 a month.

The bill is borne by taxpayers. Oregon’s Public Employees Retirement System has told cities, counties, school districts and other local entities to contribute more to keep the system afloat. They can neither negotiate nor raise local taxes fast enough to keep up. As a result, pensions are crowding out other spending. Essential services are slashed.

“You get to the point where you can no longer do more with less — you just have to do less with less,” said Nathan Cherpeski, the manager of Klamath Falls, a city of about 21,000 in south-central Oregon.

Klamath Falls’s most recent biennial bill from the pension system, known as PERS, was $600,000 more than the one before. PERS has warned that the bills will keep rising. Mr. Cherpeski has had to cut back on repairing streets and bridges.

Oregon is a blue state, but in its restive red hinterlands, tax increases are politically off limits and financial distress has been severe since 1994, when logging was curtailed to save an endangered owl. Lately, things have been getting even worse.

When a man was reported yelling and firing his gun on the property of a school in rural Josephine County, it took two hours for a sheriff’s deputy to arrive, said Kate Dwyer, chairwoman of the board for the Three Rivers School District.

The county has cut sheriff patrols, closed its mental health department and kept its jail at less than half capacity because of a lack of guards.

Dave Valenzuela, the Three Rivers school superintendent, traces the latest woes directly to PERS. The system is run at the state level, but it is bankrolled in large part by obligatory contributions from local governments.

This year, Three Rivers was poised to receive its first increase in state education funding in years, a reflection of growing enrollment. But Oregon raised by more than 50 percent the amount that Three Rivers had to contribute to PERS. So Mr. Valenzuela had to lop five days off the school year, ask each school to cut its budget by 10 percent and lay off the district librarian and English specialist.

PERS sets the pension bill for each entity — local government, university system and the like — based on the pay and demographics of its workers. Just about everyone’s bills are getting bigger.

That includes the state, by far the system’s biggest contributor.

Oregon now has fewer police officers than in 1970, is losing foster-care workers at an alarming rate and has allowed earthquake and tsunami preparations to lapse. A 2016 survey turned up “a large number of bridges with critical and near-critical conditions” because of “longstanding inadequate funding.”

Even prosperous communities are being pinched. The Beaverton School District, outside Portland, had to get rid of 75 teachers last year when its mandatory pension contribution rose by $14 million. That was after shedding 340 teachers in 2012.

“I have town hall meetings, and the parents are just confounded by this,” said Mark Hass, a Democratic state senator from Beaverton.

A Golden Touch
Oregon’s unusual method for calculating pensions tends to generate lavish payouts.

For decades, PERS calculated pensions two different ways, and retirees could choose whichever produced the bigger numbers.

The first way was similar to what most states do, basing pensions on each worker’s final salary and years of service. But Oregon’s lawmakers included a golden touch, redefining “salary” to include remuneration from any source.

That was how Mr. Bellotti, the former football coach, came to be the state’s third-highest-paid pensioner, at roughly $559,000 a year.

How could something like this happen? Easy. Give humans a chance to game the system and we’ll take it every time. Public sector unions were allowed to capture the process by which state and local governments set pension terms, and politicians went along because higher pensions move current costs into the future, when someone else has to deal with them.

Put more simply, politicians and public sector unions changed the rules to enrich themselves, and got away with it for a whole generation. But now those bills are coming due and they still don’t seem to care. They’ve been “promised” insane amounts of money and by god they’re going to get it even if it means paralyzing crucial public services and bankrupting taxpayers.

If this sounds eerily reminiscent of the attitude the big banks displayed in the 2000s when they paid out record bonuses the year after getting a multi-trillion dollar taxpayer bailout, that’s because it’s basically the same aspect of our character playing out on different scales. Human nature as a fractal.

What happens next is also predictable: A growing number of pension plans will blow up as states and cities run out of cash, and the resulting chaos will lead the federal government to bail them out with another five-or-so trillion dollars of taxpayer money. Only this time around – with debt at every level of society twice or more as high as when the banks got their bailout — the result, especially in the currency markets, might be a lot less reassuring.

Comments

FireBrander Dickweed Wang Mon, 04/16/2018 - 11:56 Permalink

He's owed.

$$$$$$$$$$$

Local large High School.

1. Principal: $125k/year.
2. Two Vice Principals: $100k/year each.
3. Activities Director (football coach): $80k/yr

way down the list...
Math/Science teacher: $38k/year.

..and they all get a fat pension when they "retire".

$405,000 a year just for the salaries of FOUR people at ONE High School...with that shcools "drop-out" rate at 24%...and ~40% of the kids speak English as a "second language"...aka...Illegals!...no flicking wonder 50% of my property tax goes to the school system.

In reply to by Dickweed Wang

rosiescenario Stuck on Zero Mon, 04/16/2018 - 13:04 Permalink

Ditto up in Norcal.

 

Calpers short fall may be as much as $1 trillion. How is MoonBeam going to make up that shortfall? If he taxes businesses, more will move to Texas as is already happening due to the crazy level of regulation here. If he taxes people, those making money and supporting the economy are also going to leave.

 

But here we are.....supporting illegal aliens so the Dems can get more votes so that they can continue on in their financially irresponsible ways. The only good news is that they and their bureaucrats are not going to be getting the retirement they expect.

In reply to by Stuck on Zero

cheka Sages wife Mon, 04/16/2018 - 13:18 Permalink

most states dont have these outrageous deals - nor teachers unions.  a tx teacher retiring today will get about 2500/month and zero money for medical.  they are easily below 2k/month for living if they buy health insurance

this is more common than the headlines from the communist states that have teachers unions

In reply to by Sages wife

Vilfredo Pareto rccalhoun Mon, 04/16/2018 - 12:12 Permalink

Seeing the quality that usually comes out of education departments they are earning about at their maximum.  I can't imagine most of them making 44,000  to 55000 per year after 8 years in the private sector with such rich bennies and so much vacation time.  Teacher insurance is pretty damn good.  Better than what I have 

In reply to by rccalhoun

FireBrander Vilfredo Pareto Mon, 04/16/2018 - 12:16 Permalink

The teachers I know, would never make it in the "private sector". I had one try...sick of the "low pay" with teaching...he found a job that paid slightly more in the "private sector"...he stuck with teaching...

"Private sector" job:
>working 12 months a year, 8hrs a day and no pension...

"Teaching" job:
>working 8 months a year, 7hrs a day and a fat pension...

In reply to by Vilfredo Pareto

lunaticfringe divingengineer Mon, 04/16/2018 - 12:49 Permalink

I make exactly 44k a year. Not one cent is taxed and I live very well. Just marry poor.  And one other thing I might add....who the fuck wants to live in a city over 100,000? Like we are all looking for traffic, city taxes, some atrocious water, sewer, and trash bills and some crank shooting neighbors? 

I moved out of the city. No meth addicts, very peaceful. 

In reply to by divingengineer

Common_Law divingengineer Mon, 04/16/2018 - 17:09 Permalink

You can only evade taxes you're required to pay. Or in the case of most US federal citizens, taxes you are under contract to pay. Ever wonder why you need to sign you SS card? The terms and conditions aren't legally required to be presented to you, like agreeing to this site's terms and conditions simply by visiting the page (clickwrap contact).

How do the feds have jurisdiction to do this? It's not the commerce clause like most things. And the 16th only applies in federal jusistiction (internal in IRS). It's your right to freely contract. And you can forfeit you rights just like you sign an NDA and waive your freedom of speech.

www.sedm.org
http://sedm.org/Search/SubjectIndex.htm
http://sedm.org/Forms/10-Emancipation/CitizenshipDiagrams.pdf
https://famguardian.org/Subjects/Taxes/taxes.htm

In reply to by divingengineer

dot.dot rccalhoun Mon, 04/16/2018 - 12:56 Permalink

Right -and WHAT private business gives you a 2 paid weeks off for Christmas, a week and a half for Easter, snow days, its foggy days, it is really cold days, it is hot days, plus the entire fricking summer off?  Oh, and you get to clock-out before 3pm on the days you do 'work'

Problem is few of these fuckers ever had to toil in the private sector.  Frankly, their jobs are part-time given the hrs/yr they work.  WAY overpaid. 

Writer did not mention the crazy pay 'Superintendents' receive.  Our local School Superintendent retired w/ a pension of $200,000 (His last salary) and the school board retained him to 'work' for another $180,000 / YR.  (So he now makes $380,000/yr)  They sold this idea to the tax-payers as saving $20,000 yr.  I have no idea what this clown does to deserve all this $$$ in such a small district.  Seriously, WTF do all these school administrators do?

In reply to by rccalhoun

divingengineer dot.dot Mon, 04/16/2018 - 13:18 Permalink

School Superintendent is essentially an executive. If they are going a good job they deserves executive pay, if they are not getting it done, they should get the boot.  The Superintendent's pay is usually reflective of how big of a district they administer, $100,000 to $250,000 is common. These are just my observations in my area, competent executives don't work for peanuts and incompetent executives can do way more damage than the money you'd save on their salary, many multiples of damage. Pulling in grant money and securing resources for the school district is an important job that affects every student to some degree, their role should not be overlooked.  The problem is that ineffective or incompetent Superintendents, Principals and Assistant Principals are sometimes not removed, sometimes for political or PC reasons, that is a big problem. Gaming the pension system to get outsized annuity payments is also a big problem. 

In reply to by dot.dot

dot.dot divingengineer Mon, 04/16/2018 - 13:27 Permalink

I know a lot of very smart and capable people who do much more, have much more responsibility and earn far less than these school administrators make.

Don't get me started on executive and CEO pay.  Many/most of these people do not bring talent commensurate with their pay packages.  The whole thing is out of whack.  While working for HP I saw them constantly cutting my pay and benefits all the while Mark Hurd and his posse was stuffing their pockets full of gold.

In reply to by divingengineer

chubbar dot.dot Mon, 04/16/2018 - 13:27 Permalink

Protect their jobs and those of other "administrators". Remember the good ole days when each school had a principal, vice-principal, secretary, janitor and every other job was a teacher? Not any longer. The unions feather nested their jobs until the chiefs out number the Indians. Fucking pathetic.

In reply to by dot.dot

Pollygotacracker chubbar Mon, 04/16/2018 - 13:54 Permalink

I was employed at two school districts in Oregon. The craziest title for an administrator...'curriculum director'. Why would you hire someone for $100,000+ per year to explain to teachers what to teach? The redundancy is astounding. Another idiotic tactic of school districts...they are always broke. They always need more money. Pathetic.

In reply to by chubbar

Snaffew rccalhoun Mon, 04/16/2018 - 13:13 Permalink

the united states education system is a socialist program.  Anyone that says this country isn't socialist needs to look at that and the fact that 20 percent of the entire US workforce is employed by the state or federal government...again, a socialist program.  23 percent of all government jobs are the post office---the most fiscally irresponsible of them all.  The current tax system is illegal to boot.

In reply to by rccalhoun

Antifaschistische rccalhoun Mon, 04/16/2018 - 14:27 Permalink

The "public servant 'sacrifice'" is no longer applicable.  ALL public sector jobs today justify salary grades based on "comps" (comparable) pay scales in the private sector.   So an accountant, working for the "city of X" is to make a comparable salary to an accountant working for a private organization.   There are no public "servants" any more.

Do teachers want comparable pay and benefits to teachers who teach in private schools?

Do policemen want comparable pay to 'security' guys working in the private sector?

NO!!  In fact, both of these two position make about 3x what the comparable private sector job would pay...AND they get a fat pension, AND they get a larger SS payout because of their higher income!!

It's a scam in every direction.

In reply to by rccalhoun

adanata ZippyBananaPants Tue, 04/17/2018 - 13:43 Permalink

Part one: Please consider.... the Fed ZIRP program was initiated not only to wildly profit their sibling banks but also to sink the interest rates pension funds were dependent upon. Destruction of the pension fund system has been fully intentional.

Part two: Means testing is on it's way.

 

In reply to by ZippyBananaPants

Throat-warbler… ZENDOG Mon, 04/16/2018 - 12:46 Permalink

Oh, believe me when I tell you that these people's pensions are the most important things on the planet.  When they run out of money, the bail-ins will start from the honest people who saved into their 401k accounts for decades.  It's only fair since these public "servants" worked their rear-ends off on our behalf.  /sarc

"civil servant" is an oxymoron (or maybe just moron)

In reply to by ZENDOG

Law97 Agent P Mon, 04/16/2018 - 12:37 Permalink

Exactly. It's not so much as all public pensions being wrong, it's just these HUGE windfall payouts that have to be stopped.  I don't have a problem with a retired teacher, policeman, or fireman receiving $40K-50K per year after several decades of service.  And some states' pensions systems are run reasonably without these huge payouts and mismanagement.  Those responsible states shouldn't have to shoulder the burden for the other states that got crazy with their pensions. 

In reply to by Agent P