News Rhode Island: The Little State With a Big Mess

[Locrian]

Pardon the soap box but. . .

The US public is really this way about all capital requirements, loss reserves and other such funding. If you’d made me king in 2005 and I’d have regulated CDS similar to the same way traditional insurance was regulated – thereby pulling the plug on the housing boom that was powering the recovery after 2001 – I’d have been the bad guy for shutting the economy down. But then everything goes bust and 100% of our problems are the fault of Wall Street CEOs.

Ultimately loss reserves and pension funding just don’t register with the public as an expense that has to be paid, and the pressure to do something else with it is tremendous. It isn’t like the actuaries are allowed to choose a reasonable discount rate; that would require too much taxpayer money to be tied up where politicians can’t spend it. So the politicians pass laws that set the discount rate and then either lower taxes or increase benefits, depending on their political persuasion. You can’t stop them because you’d be taking away someone’s goody and locking it up in the cabinet where they can still see it. It’s just too much temptation and there’s too little to gain being the bad guy.

The US public is like that alcoholic college buddy. At the big party they’re their own person and you have no right to tell them what to do . Then the next day they’re all dude, why didn’t you stop me??

 

[rhody]

I found this.
http://blogs.wpri.com/2011/04/13/ris-unfunded-pension-liability-soars-by-nearly-2b/

WhoWee,

From the link you provided, at the bottom, on right under Ted Nesi:

People wonder why RI's pension fund can't match earnings of Harvard, Yale endowments; NYC's now aiming to emulate them: http://t.co/rgZaaGTA"

After reading my story about the Rhode Island pension fund’s “lofty” 7.5%-a-year investment goal, commenter Jake asked a good question:

Why have Harvard, Brown and Yale’s endowments performed so much better than Rhode Island’s pension fund investments? Is there anything to be learned from them that would help us?

Jake’s right: the universities have schooled us on the investment front over the last decade.

Yale’s endowment grew an average of 10.1% a year over the past 10 years, while Harvard’s earned 9.4% and Brown’s rose 7.7%. Rhode Island’s $7 billion pension fund increased a relatively paltry 5.7%, according to the treasurer’s office.

Rhode Island isn’t alone in lagging behind the Ivies: New York City’s far larger $120 billion pension fund averaged 2.7% a year over the last decade. Now Mayor Michael Bloomberg is taking steps to make the sort of changes Jake would like to see here, The New York Times reports:

I haven't looked into the reasons why RI's Funds are not performing as well, but I am sure it would take an actuary, CPA, or State Treasurer, Gina M. Raimondo to explain it.

http://www.bloomberg.com/news/2011-10-19/brown-investments-gained-19-in-past-year-lagging-behind-harvard-yale.html"

Brown, the last of the Ivy League schools to report, generated an average annual return of 7.7 percent over the past decade, compared with Yale’s 10 percent increase and the 9.4 percent gain of Harvard, in Cambridge, Massachusetts.

The Ivy League consists of eight private schools in the northeastern U.S. Columbia University’s $7.8 billion endowment was the best performer this year, with a 24 percent investment gain. Dartmouth College, in Hanover, New Hampshire, was the worst, with an increase of 18 percent.

To contact the reporter on this story: Gillian Wee in New York at gwee3@bloomberg.net

It seems little Rhody is very optimistic when it comes to projecting assumed return on investment. The last link I provided showed that other Universities returns were all over the map. Pretty hard to side with a winner, based on past performance. From the outside looking in, it appears a crap shoot at best.

Rhody...

P.S. Here is a map of RI by city with http://www.wpri.com/generic/target_12/pensions_probe/pension-liability-interactive-map?2" contribution changes, obtained from the first link above.

 

[WhoWee]

It seems little Rhody is very optimistic when it comes to projecting assumed return on investment. The last link I provided showed that other Universities returns were all over the map. Pretty hard to side with a winner, based on past performance. From the outside looking in, it appears a crap shoot at best.

The bottom line is this - investments have risk. When you consider the fluctuations in the stock market and near zero interest rates - why should an 8% return be guaranteed by taxpayers?

I recently filed a final expense life insurance claim on my Aunt. The policy was paid in full in 1986 and accumulated interest for 25 years. It returned the minimum interest payable of 2.25% (big surprise).

 

[rhody]

Thought I would pass this along from Kiplinger: http://portal.kiplinger.com/tools/retiree_map/"

Funny, RI did not make the top 10 of the most tax unfriendly states to retire in.

Here they are according to http://www.kiplinger.com/slideshow/TaxUnfriendlyStatesRetirees/2.html#top":

1. Vermont
2. Minnesota
3. Nebraska
4. Oregon
5. California
6. Maine
7. Iowa
8. Wiscousin
9. New Jersey
10. Connecticut

Rhody...

 

[BobG]

WhoWee,

And the Unions have the nerve to say the "rich" are ripping the system off. Sounds like is is stacked in their favor to which I say: to the double dippers, and: to the triple dippers.

What's the problem with double dippers, triple dippers, etc? They worked, earned the retirement their employer promised them as part of their compensation package, and then kept working even after earning a retirement, and then earned the retirement their employer promised them as part of their compensation package.

Setting up multiple sources of income for a retirement just sounds like smart planning to me.

What would your solution be? A person could only earn retirement from one source? And would that include social security? After all, any retiree collecting money from both social security and their own retirement plan is a double dipper.

In fact, I guess I'm pretty much guaranteed of being a triple dipper. I'll have a military pension, social security, plus 401(k) from a post military career in civilian jobs.

Or does it only anger you when someone earns two retirements from the state government? What if they retired from state government and earned a second retirement from a non-government employer?

And since someone had to perform those government jobs, would it be more acceptable if the state government had paid the same retirements to two completely separate individuals for two completely separate jobs than paying the same retirements to one individual that happened to have two completely separate jobs during his career?

I think the article just tossed the term "double-dipper" and "triple-dipper" into the article because their terms that sound nice as long as a person doesn't put much thought into how that person earned those retirements.

Colorado isn't such a bad state for retirees, either. The first $20,000 of my military retirement isn't taxable when it comes to state income tax - or at least wouldn't be if my ex didn't receive half of my retirement. Pleasantly, her half of my retirement is fully taxable by the state she lives in. (Oh, the stupid things one takes pleasure in for no reason except bitterness.)

 

[Oltz]

When people say things like this, what they’re saying is ”It’s okay to mismanage a pension plan so long as it’s on small enough a scale that it doesn’t break the bank”. By reducing their pension benefits and/or lowering their pay and/or hiring fewer of them, you reduce your overall liability, but you don’t change the basic structure of the problem. You just make it small enough to swallow.

And to be fair there are people who would agree with them.

I’m just not one of them.

That is not what I was saying at all.

I was saying that yes mismanagment is a problem.

But the BIGGER problem in my opinion was the structure and volume of Benefits. The Government is paying to much and the workers contribute to little. thus making the system unblanaced so any perturbance in the investments is felt long term by the state with no ill effects on those "paying" into the plan.

If my 401 K looses money I up my contribution to recoup. If the state pension plan looses money the tax payers need to kick in the extra.

The public unions took advantage of a good benefit and expanded the pay outs beyond what is reasonoable for a government to support with the limited contributions from the workers.

A pension plan that is 98% funded by your emloyer is asking to put that emloyer underwater eventually.

 

[rhody]

In fact, I guess I'm pretty much guaranteed of being a triple dipper. I'll have a military pension, social security, plus 401(k) from a post military career in civilian jobs.

Or does it only anger you when someone earns two retirements from the state government? What if they retired from state government and earned a second retirement from a non-government employer?

I am not angry at all, in fact you are more likely to NOT be a drain on the system, and have planned for retirement and taken every advantage you could to have a financially comfortable retirement. (if your retirement funding is sound, and I hope for your sake it IS).

The financial times we find ourselves in have broken all the rules in the past four or five years. Things that used to follow a plan of gradual increased growth in wealth have been thrown out the window. We are dealing with the chaos. How it will all shakeout is not certain. I predict little Rhody will be worse for wear (tax wise) by the end of 2013 based on their track record (state and local gov't financial decisions) over the past 27 years. It may hasten my decision to leave the state. The only choice left is to vote with my feet.

Rhody...

 

[WhoWee]

Or does it only anger you when someone earns two retirements from the state government?

To summarize with a single word - yes.

I have 2 friends that worked their way through 8 years of college at the post office - night shift - and retired (with a small pension). Upon graduation, they went to work for the IRS - one will retire from the IRS and the other is now a practicing Attorney.

 

[Locrian]

I haven't looked into the reasons why RI's Funds are not performing as well, but I am sure it would take an actuary, CPA, or State Treasurer, Gina M. Raimondo to explain it.

Well, most funds everywhere have performed poorly over the past decade or so, with few exceptions. I know my state is running only a few percent over that time. With a couple of stock market crashes and the fed pushing down interest rates, it's really to be expected.

But one thing people need to keep in mind is that pension funds shouldn't be getting the kind of returns lots of other investments should because they have cash flows to manage and dealing with liquidity risk appropriately brings your return down. That's actually part of the problem for some plans; they are heavily into investments with a lot of variance and while they may pay off well in the future, they're hurting now.

Private plans are typically using discount rates of 5.5%-6.5%.

 

[Locrian]

The bottom line is this - investments have risk. When you consider the fluctuations in the stock market and near zero interest rates - why should an 8% return be guaranteed by taxpayers?

Well, they aren't getting a guaranteed 8% return, exactly. It's just that 8% is what the plan is assuming they'll receive on investments, and they're setting their contribution based on that. If an individual retires and dies before they get a payment, they got a -100% return. Others will live past the pack and do better. Some individuals will do better and others worse depending on the way the plan is structured. The group as a whole may do better or worse depending on experience.

Assuming a higher discount rate results in less taxes being taken from current taxpayers. But if they don't actually meet it, someone's going to pay the difference in the future, either through cut benefits or higher taxes.

Which leads me to another issue I have with DB plans - you don't really know what people receiving them are getting, so you can't really calculate their pay very exactly. Where I live the teacher compensation has so many perks (early retiree medical, fat pension that starts at retirement instead of 65, etc.) that really nobody knows how much money they make, including the teachers and the state.

 

[WhoWee]

Well, they aren't getting a guaranteed 8% return, exactly. It's just that 8% is what the plan is assuming they'll receive on investments, and they're setting their contribution based on that.

It seems they are getting a guaranteed return - at taxpayer expense.

from the OP - my bold
"After decades of drift, denial and inaction, Rhode Island’s $14.8 billion pension system is in crisis. Ten cents of every state tax dollar now goes to retired public workers. Before long, Ms. Raimondo has been cautioning in whistle-stops here and across the state, that figure will climb perilously toward 20 cents."

 

[BobG]

Or does it only anger you when someone earns two retirements from the state government? What if they retired from state government and earned a second retirement from a non-government employer?

And since someone had to perform those government jobs, would it be more acceptable if the state government had paid the same retirements to two completely separate individuals for two completely separate jobs than paying the same retirements to one individual that happened to have two completely separate jobs during his career?

To summarize with a single word - yes.

I have 2 friends that worked their way through 8 years of college at the post office - night shift - and retired (with a small pension). Upon graduation, they went to work for the IRS - one will retire from the IRS and the other is now a practicing Attorney.

Whoever took those jobs was going to get those retirement benefits. The cost to the state is the same whether it's two completely different people that earned those retirements or if one person worked one of those jobs, then the other.

The issue is really the cost of those retirements, regardless of who earned those retirements.

Perhaps getting upset by one person earning two separate retirements from the same employer does touch on the real feelings about government employees. There's a feeling that employees working for the government are less qualified than employees working in private businesses and don't deserve to make as much money as we pay them.

Is there a reason all of the better qualified employees would go to work in private businesses instead of work for the government? Especially if the government is really setting up all of its employees for life regardless of whether they do their job or not?

Or are both a myth and governments pay out roughly the going rate for employees, whatever that might be, because they need qualified employees just as badly as private businesses do?

Regardless, waiting until after the fact - after the employee retires - and then saying, "You know what, I changed my mind and you weren't worth that much after all, so I'll just change our agreement to what I think is fair now" is criminal. Now it's too late for the employee to say, "The hell with that deal - I'll go get a better paying job with someone else."

However fair it might be, it is true that most state governments missed the boat when it came to retirement planning. The military's compensation plan is the best. They give a low base pay, but supplement it with tax free allowances - keeping in mind that the lower enlisted ranks will be among the 47% of the population that pay no federal taxes once deductions and earned income credit gets added in (oh, wait, those allowances and the value of military provided housing get added back in when it comes to earned income credit, but the lower ranks still pay little in federal income tax). When military members retire, their retirement is based only on their base pay; not their allowances. The result is that the effective percentage of retirement benefits are always lower than advertised.

Ironically, even with a very good retirement model, retirement benefits are too expensive - especially when you toss in the medical benefits for retirees. As with everyone else, those rising costs for medical benefits blow everyone's plans out of the water. The response is the same: "We promised retirees free medical insurance for life, but now that's too expensive, so you'll have to pay something for that insurance. But don't worry. The amount you have to pay is a lot, lot less than people working for private employers have to pay." (And it is, but it's not what was promised during the time those people were in the military.)

 

[Locrian]

It seems they are getting a guaranteed return - at taxpayer expense.[/I]

No, they are not, and the quote you have doesn't support the statement. I gave examples showing why they are not getting an 8% guarranteed return.

 

[WhoWee]

No, they are not, and the quote you have doesn't support the statement. I gave examples showing why they are not getting an 8% guarranteed return.

Good news rhody - according to Locrian (see above). On the other hand - if there's no guarantee (real or implied) - why are they prepared to double taxes and/or cut essential services?

 

[Locrian]

The issue is really the cost of those retirements, regardless of who earned those retirements.

Well I would argue there are two issues. First, the cost of the retirements. But secondly, the management of the plans. The reason why I dwell on the discount rate used so much is because using a high discount rate can effectively hide the actual cost of the retirements being promised. Politicians have used the discount rates and other funding schemes to give out benefits when times are good, and then someone else pays the cost when things don't pan out.

Ironically, even with a very good retirement model, retirement benefits are too expensive - especially when you toss in the medical benefits for retirees. As with everyone else, those rising costs for medical benefits blow everyone's plans out of the water.

Medical benefit cost inflation is definitely an issue. But note that a lot of pension plans are sunk without including medical benefits. A defined benefit (DB) pension plan is basically an annuity and there's just no excuse to be as behind as some states are in their funding (IL, NJ, RH).

But overall I agree with you. Double dipping and spiking may or may not be reasonable things to allow in a plan, but they can both be planned for, and don't explain the funding problems plans are in right now.

 

[WhoWee]

Whoever took those jobs was going to get those retirement benefits. The cost to the state is the same whether it's two completely different people that earned those retirements or if one person worked one of those jobs, then the other.

The issue is really the cost of those retirements, regardless of who earned those retirements.

Perhaps getting upset by one person earning two separate retirements from the same employer does touch on the real feelings about government employees. There's a feeling that employees working for the government are less qualified than employees working in private businesses and don't deserve to make as much money as we pay them.

Is there a reason all of the better qualified employees would go to work in private businesses instead of work for the government? Especially if the government is really setting up all of its employees for life regardless of whether they do their job or not?

I have no problem with the examples I cited where the individuals grew in their positions/career.

The teacher who retires on a pension - then rehired to teach in the same classroom (instead of hiring a new person) are very troubling to me.

 

[Locrian]

Good news rhody - according to Locrian (see above). On the other hand - if there's no guarantee (real or implied) - why are they prepared to double taxes and/or cut essential services?

False. I said there is not an 8% guaranteed return, not that there's no guarantee. There's a guaranteed cash stream. The return for both the individual and the group will depend on mortality, plan design, return on investment and actual salary levels (versus forecasted).

Either you don't understand how to calculate the return on an annuity with a variable number of payments or you're being dishonest. Either way consider cutting back the snark.

 

[WhoWee]

False. I said there is not an 8% guaranteed return, not that there's no guarantee. There's a guaranteed cash stream. The return for both the individual and the group will depend on mortality, plan design, return on investment and actual salary levels (versus forecasted).

Either you don't understand how to calculate the return on an annuity with a variable number of payments or you're being dishonest. Either way consider cutting back the snark.

When I posted this:
"It seems they are getting a guaranteed return - at taxpayer expense.

from the OP - my bold
"After decades of drift, denial and inaction, Rhode Island’s $14.8 billion pension system is in crisis. Ten cents of every state tax dollar now goes to retired public workers. Before long, Ms. Raimondo has been cautioning in whistle-stops here and across the state, that figure will climb perilously toward 20 cents.""

I was not making a specific interest rate claim - was I? The word "seems" implies opinion. Your response:

"No, they are not, and the quote you have doesn't support the statement. I gave examples showing why they are not getting an 8% guarranteed return."

My post supported itself - they are considering a 100% tax increase to meet (or guarantee) the under-funded pensions.

Your personal attack
"Either you don't understand how to calculate the return on an annuity with a variable number of payments or you're being dishonest. Either way consider cutting back the snark."
is quite unappreciated. Please save us both time and energy next time by not over-reacting to the word "seems".

 

[BobG]

Returns on investments are never guaranteed. The issue is who assumes the risk - the state or the employees. With 401(k), etc, it's the employee that assumes the risk of a bad economy reducing the growth of their funds. With definied benefits, the employer agreed to assume that risk.

That's not a position about whether the employer should have offered to assume the risk in the first place. It's a position about making an agreement and then modifying it after the fact when it didn't turn out as well as you hoped.

 

[WhoWee]

Returns on investments are never guaranteed. The issue is who assumes the risk - the state or the employees. With 401(k), etc, it's the employee that assumes the risk of a bad economy reducing the growth of their funds. With definied benefits, the employer agreed to assume that risk.

That's not a position about whether the employer should have offered to assume the risk in the first place. It's a position about making an agreement and then modifying it after the fact when it didn't turn out as well as you hoped.

Again - it "seems" they are getting a guaranteed return - at taxpayer expense. The taxpayers need to replace their management team - IMO - with problem solver/reformer types.

 

[Locrian]

My post supported itself - they are considering a 100% tax increase to meet (or guarantee) the under-funded pensions.

Increasing taxes for higher contributions to maintain benefit levels does not imply a guaranteed rate of return. It doesn’t even seem like one.

This is because the actual return for both the individuals and groups will depend on many factors including their mortality, plan design, final salaries and even the tax code. The final return will vary by individual, and it will vary over time for the group.

Do some calculations for a given annuity with different numbers of payments and see how the return varies.

 

[Oltz]

Increasing taxes for higher contributions to maintain benefit levels does not imply a guaranteed rate of return. It doesn’t even seem like one.

This is because the actual return for both the individuals and groups will depend on many factors including their mortality, plan design, final salaries and even the tax code. The final return will vary by individual, and it will vary over time for the group.

Do some calculations for a given annuity with different numbers of payments and see how the return varies.

He is referencing the fact that the TAx payers are paying into the system now at a rate of 10 cents of every dollar the state has and that it is expected to double.

The contributions of those in the system and those recieveing benefits will be unchanged.
The growing payments on the tax payers will supplement the growth to maintain the same level of benefits. Thus guaranteeing the rate of return seen by the recipients.

This is not a 401K where everyone is treated differently this is a state pention plan with a guaranteed pay out regardless of how the market did or does with your contributions. Any losses or short comings are paid out of the general fund currently using 10% of the entire state budget.

They get a percent of the pay they earned the final year at the position it has nothing to do with the actual returns contributions made by them or for them by the state.

IMO this is the problem with all tax payer funded pensions when they run short the people just pick up more of the tab.

 

[Locrian]

Returns on investments are never guaranteed. The issue is who assumes the risk - the state or the employees. With 401(k), etc, it's the employee that assumes the risk of a bad economy reducing the growth of their funds. With definied benefits, the employer agreed to assume that risk.

Very true. And in the private sector, you could, theoretically, point at the employer and tell them to pony up. Private sector pensions are much more heavily regulated than public sector pensions, only sometimes for the better.

But in the public sector it’s different because telling the employer to pony up is just telling the current taxpayers to pony up and current taxpayers often weren’t even able to vote when the agreements were made and the funding problems occurred. They may not have lived there. They may not have received any benefits from the promises, and taxing them may be even more unpopular than taxes usually are.

Asking them to step up brings up questions of fairness, but it also can lead to other consequences such as emigration and tax avoidance. The second is more a problem in other countries, but in states such as RI and NJ, the first may be a problem. As is true of most taxation, those the government can most easily tax to support current benefits might also be those who can most easily leave.

The result is that the only option may be cutting benefits. This is something I like to stress to relatives who will be getting DB plans: they may not be as shielded from market risk as they think. In my state investments are earning (and have been for over a decade) about 5% below what the discount rate is. Eventually, someone is going to eat the difference.

 

[WhoWee]

This news report from 2008 should be viewed by anyone interested in the problem in RI.

http://www.wpri.com/generic/target_12/probing

 

[Locrian]

Since it is of central importance to this discussion, here are some comments on the term “discount rate” as it is being discussed here.

The discount rate is used to determine how much money the plan needs to set aside for its current enrollees. There are many other variables considered that are also important, but this one has attracted a lot of attention lately. A higher discount rate suggests the plan sponsor has to set aside less money now, since the investment will accumulate quicker. A lower rate suggests the opposite. However the benefits are the same in both cases. I should note that if you talk to actuaries they will argue for a subtle difference between what the discount rate represents and what future investments are expected to be. It doesn’t have much impact on this conversation, but we could discuss it more if someone had questions.

The discount rate does not directly determine the benefits that the recipients receive, nor does it directly impact their return on their contribution. If you increase the discount rate to %40 or lower it to 0%, unless you change their benefit structure (ie plan design), their benefits are the same.

If the actuaries (or, in the case of public pensions, the politicians) that set the discount rate knew the future –meaning investment returns, mortality, etc. - (and were honest about it), the result would be that the money contributed & set aside for future beneficiaries would be exactly enough to support them after they retire. Thus if you had a group of people in a plan and they all retired at the same time, no new contributions would need to be made after they retired, and no money would be left over after they all passed away.

In this perfect scenario the retirement benefits of workers are paid entirely while they’re working by the company or tax payer, thus matching the expense with those (hopefully) receiving a service. In a properly funded pension plan, there’s no spike in costs when everyone retires because you’ve set aside money for that time. This is very different from a pay-as-you-go plan (pay-go) such as social security, which can see huge swings in expenditures depending on the number of those retired. While public and private pension plans are typically fully funded, retiree medical is sometimes funded differently - not quite pay-go, almost more of a hybrid system.

Since we live in the real world, the discount rates that are chosen are not perfect. A discount rate that turns out to be too high (investments came in lower) will mean the plan will be underfunded as people begin to retire. This means that future taxpayers are paying for a service that was rendered in the past. A discount rate set too low means the opposite – the fund will end up with extra dollars and past taxpayers subsidize future retirees.

What the discount rate should be and how it should be set is subject of some debate now. The primary issue is that public pension plans – those run by a government entity – are using discount rates far higher than private ones. This leads to claims (which I have made in this thread) that the discount rate has been pushed up for political reasons to benefit past constituents at the expense of future voters. Many actuaries feel the same. However there are actuaries that feel these discount rates are justified. Unsurprisingly, the difference largely depends on who they work for, with those working in pensions being in the latter group. Similarly, there are economists (such as Dean Baker) who will defend the high discount rates of public plans, and some that won’t. The ones that do are almost inevitably on the more liberal side of the spectrum, but there are likely exceptions (I’m not aware of one).

The discount rate doesn’t determine benefits, but it is certainly used in initial plan design to help determine what they should be, and changes in the discount rate can be used to justify increasing or decreasing benefits. Furthermore, changing the discount rate directly impacts current financials. This could be one reason for arguing to legislatively set the discount rate in public entities, as opposed to actuaries choosing a new one each year – it helps avoid big swings in contribution levels. I don’t find that convincing, but some do.

Some disclosure: I have worked in insurance as an actuarial analyst for several years. I do not work in pensions. I am not an actuary, though I will likely be one early next year (here's hoping. . .). I posted a link earlier in this thread where there are many other opinions worth considering, including a few that are very different than mine.

 

[turbo]

Returns on investments are never guaranteed. The issue is who assumes the risk - the state or the employees. With 401(k), etc, it's the employee that assumes the risk of a bad economy reducing the growth of their funds. With definied benefits, the employer agreed to assume that risk.

That's not a position about whether the employer should have offered to assume the risk in the first place. It's a position about making an agreement and then modifying it after the fact when it didn't turn out as well as you hoped.

A common refrain these days is that those "greedy unions" are causing this problem. In our "liberal" media, we rarely hear that actuaries failed to properly calculate the long-term costs of such defined benefits. We also don't hear about how the Wall Street's machinations stripped the future value out of the investments that were supposed to provide the income to support the defined benefit plans. Nope, in the major media outlets, those greedy unions caused this.

I realize that the attention-spans of most citizens are too short (and perhaps their comprehension of basic economics is too limited) to make such a story compelling. Still, the major networks ought to cover this. It's pretty easy to blame the unions covering teachers, firefighters, police, state clerical staff, etc, because some people at both the top and the bottom of the economic spectrum are resentful of defined benefits promised to them.

 

[WhoWee]

A common refrain these days is that those "greedy unions" are causing this problem. In our "liberal" media, we rarely hear that actuaries failed to properly calculate the long-term costs of such defined benefits. We also don't hear about how the Wall Street's machinations stripped the future value out of the investments that were supposed to provide the income to support the defined benefit plans. Nope, in the major media outlets, those greedy unions caused this.

I realize that the attention-spans of most citizens are too short (and perhaps their comprehension of basic economics is too limited) to make such a story compelling. Still, the major networks ought to cover this. It's pretty easy to blame the unions covering teachers, firefighters, police, state clerical staff, etc, because some people at both the top and the bottom of the economic spectrum are resentful of defined benefits promised to them.

Who do we blame for a $3.6 Billion obligation funded with $27 Million?
http://www.wpri.com/generic/target_12/probing

 

[DoggerDan]

Anyone checked here, yet? http://www.usdebtclock.org/state-debt-clocks/state-of-rhode-island-debt-clock.html

They've about the same figures as CA and CO, but the number of people on food stamps is twice the ratio of CA.

 

[rhody]

Anyone checked here, yet? http://www.usdebtclock.org/state-debt-clocks/state-of-rhode-island-debt-clock.html

They've about the same figures as CA and CO, but the number of people on food stamps is twice the ratio of CA.

DoggerDan,

I did a little digging and found the source of the Debt Clock here, from ZFacts.com. BTW, How did you happen to find this, google search ?

Who’s behind zFacts, oil companies or what? Nope. I’m Steve Stoft and this is my web site. I’m building it with a little help from my friends and volunteers, but so far, it’s mostly my work. I’m a Ph.D. economist and my day job is consulting for electricity markets—California, PJM, ISO-NE. That provides 99.9% of the funding for this site. (Google ads are now providing about $12 / day). My professional website is stoft.com, my blog is zReason.

What are your biases? At heart, I’m a scientist; that means I’m a skeptic. I don’t trust easy answers especially from politicians. I also don’t trust extremists, either left or right. But I don’t think these are biases; they’re based on observation. It’s hard to know your own biases, but I believe openness, information, and clear thinking are helpful—maybe those are my bias.

Why are you building zFacts? I like to figure things out, and I don’t like deceptions or misunderstandings, especially ones that harm people. So with zFacts, I get to investigate many of my interests and perhaps expose some deceptions and clear up some misperceptions

and

Who's Helping with zFacts?
Steve Stoft: Site owner, programmer, site organizer. National debt, neocons, social security, unemployment, ethanol, gas prices, hurricanes, global warming. (CA, MA)

Pamela: Project strategist. Retirement policy specialist and lawyer. (CA, MA)

Sarah: Quotes, scandals, global warming. (CA)

Dan: Environmentalist, programmer and economist. (CA)

Al Marshall: Physicist and Nuclear Engineering, recently retired from Sandia National Laboratory. (NM)

Peter: Animator, editor. (OR)

They also have state and world debt clocks, available http://www.usdebtclock.org/index.html" :

Rhody...

 

[Locrian]

In our "liberal" media, we rarely hear that actuaries failed to properly calculate the long-term costs of such defined benefits.

Because there's very little reason to think this has contributed to the problem. You have some isolated cases where courts have decided there were errors made in the past, but there is often a great deal of grey area around them (who is responsible for misinformation that was given to the consulting shop twenty years ago, for instance), and they don't add up to anything significant in the scheme of things.

Maybe you should expand on this statement and see if you can create an argument it is true (edit, really we want to know if it is significant. Of course someone somewhere made a mistake once. The question is, can you create an argument it matters).