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FYI, from today's Wall Street Journal: Bull Market Isn’t Helping Pensions BY HEATHER GILLERS Maine’s public pension fund earned double-digit returns in six of the past nine years. Yet the Maine Public Employees Retirement System is still $2.9 billion short of what it needs to afford all future benefits to all retirees. “If the market is doing better, where’s the money?” said one of these retirees, former game warden Daniel Tourtelotte. The same pressures Maine faces are plaguing public retirement systems around the country. The pressures are coming from a slate of problems, and the longest bull market in U.S. history has failed to solve many of them. There is a simple reason why pensions are in such rough shape: The amount owed to retirees is accelerating faster than assets on hand to pay those future obligations. Liabilities of major U.S. public pensions are up 64% since 2007 while assets are up 30%, according to the most recent data from Boston College’s Center for Retirement Research. Public pension funds have to pay benefits—their liabilities. They hold assets, which grow or shrink through a combination of investment gains or losses and contributions from employers and workers. Those assets generally rose faster than liabilities for five decades starting in the 1950s because government was expanding and the number of retirees was smaller.In the 1980s and 1990s, double-digit stock and bond returns convinced governments they could afford widespread benefit increases. But the value of their holdings— their assets—began to fall in the aftermath of the dot-com bust in the 2000s, and the 2008 financial crisis followed soon after. State and local retirement systems lost 28% in 2008 and 2009, according to the Boston College data. “The first thing you have to do is make up what you lost,” said Sandy Matheson, executive director of the Maine Public Employees Retirement System. “And it takes years. And then you have to make up what you didn’t earn on what you didn’t have. It’s a pretty steep climb.” Cities and states set out to ramp up their yearly contributions to public pension funds as a way of making up for their investment losses. Some were able to keep up with those payments. But others weren’t as they struggled with lower tax revenue and increased demand for government services in the aftermath of the 2008 crisis. New Jersey made less than 15% of its recommended pension payment from 2009 through 2012. It now has a little more than one-third of the cash it needs to pay future benefits— despite robust investment returns in recent years. State Treasurer Elizabeth Maher Muoio said New Jersey is on “the long road to addressing our unfunded liability after years of neglect.” “Some of the states allowed themselves to get so underfunded that the higher returns aren’t helping them enough,” said Michael Cembalest, chairman of market and investment strategy for the asset-management arm of JPMorgan Chase & Co. Mr. Cembalest is the author of an annual study on the financial health of cities and states. Some states, including New York, Wisconsin, Tennessee and South Dakota managed to keep assets roughly in line with liabilities through funding discipline, benefit cuts, or both. Many states and cities reduced benefits for new employees after 2008. But deeper cuts often met resistance from judges, unions and angry constituents— even in some of the most indebted states. The Illinois Supreme Court in 2015 threw out cuts by the legislature that were expected to save tens of billions of dollars. Kentucky’s legislature last year declined to approve the governor’s proposed cuts to cost-of-living increases for retired teachers after protests brought thousands to the state capitol and forced cancellations of classes in several school districts. Maine, which has made more progress than many plans in addressing its unfunded liability, did cut cost-of living increases for both retired and active state workers. They earn a median pension of $27,000 after 25 or more years’ service and don’t receive Social Security. But that cut shaved only $1.6 billion off the fund’s unfunded liability, which now stands at $2.9 billion. Demographics became another problem as baby boomers aged. The number of pensioners jumped thanks to longer lifespans and a wave ofretirees over the past decade, while the number of active workers remained relatively stable. Maine’s fund serves about the same number of active workers that it did in 2008—a little more than 51,000—while the number of retirees has jumped 32% to about 45,000. Many funds are experiencing the same trend. That pattern contributes to an increasing gap between pension fund inflows and outflows— before the funds earn a dollar on investments. Maine’s pension fund paid $982 million in benefits in 2018, $394 million more than the contributions it took in. For a plan trying to improve its funding status, that type of gap makes it harder to recover from investment losses. Many public pension funds have benefited from the 10year-long bull market. But now many are lowering their predictions of what they can earn in the future. That accounting change makes their liabilities look even larger, portending more strain in the coming decades. The Maine pension fund, which back in the early 1980s assumed a long-term investment return of 10%, now assumes a rate of 6.75%. If that rate were just 1 percentage point higher—where it was about 10 years ago—the projected $2.9 billion shortfall, most of which must be paid off over the next decade, would drop by more than half to $1.1 billion. The decision to lower the rate was based on discussions with the fund’s actuarial and investment consultants and a goal of keeping costs predictable, said Ms. Matheson, the system’s executive director. “There’s also an element of better safe than sorry.”
Thanks for sharing your experience, Steve. I can only imagine how much worse it could’ve potentially been if you were riding an electric scooter. E-scooters seem to be Lime’s and other dockless bike sharing operators newfound focus:
Toggle Commented Feb 19, 2019 on Lime Scooter Economics at The Burlingame Voice
Doesn’t look like we’ll be getting scooters to replace the Lime bikes that are on their way out. See comments under item 10b (starting on page 4) from the minutes of this December city council meeting:
Toggle Commented Feb 18, 2019 on Lime Scooter Economics at The Burlingame Voice
What happened to Yaprak Doner, the relatively new Middle Eastern restaurant on B’way? Did it permanently close?
Toggle Commented Dec 28, 2018 on Dine Broadway at The Burlingame Voice
The City Council will be deciding this coming Monday whether to extend Burlingame’s contract with Limebike for another 6 months. Below is a link to the associated staff report, which includes the results from a recent community survey. One major complaint among respondents, not surprisingly, is safety related - specifically, folks riding Limebikes without helmets. Indeed, a staggering 75.4% of the respondents admitted that they do NOT wear a helmet when riding a Limebike (see point #4 on page 4)!! And the way point #7 is worded can be a bit misleading - in that it states that “most Lime riders (69.7%) are adults.” Instead, what that really means is that 69.7% of the SURVEY RESPONDENTS (607 total) were adults. I’ve seen a lot of teens riding Limebikes around town, and I doubt many are signed up for the city's email list-serve and participated in the survey. Most importantly, I can’t recall seeing any kid wearing a helmet when riding a Limebike. And presumably its impossible for Limebike, itself, to know whether a teen is riding one of their bikes, as the teen is most likely using their parents' - not their own- credit card to activate the ride. I do like the notion of bike sharing in theory, but I don’t know how a city or bike sharing company can realistically address this safety concern - particularly with teens. I don’t think our own city should be facilitating their (or anyone’s, for that matter) ability to ride bikes around Burlingame without wearing a helmet. Public saftey should take top priority.
Toggle Commented Nov 30, 2018 on Scooter Dangers at The Burlingame Voice
Congrats on the 15th anniversary, and thank you for continuing to provide a valuable resource for our community!
Here is the San Mateo County Grand Jury report on local cities’ pension obligations, which was highlighted/referenced in today’s SM Daily Journal cover story. Interesting to compare data for Burlingame vs. other local municipalities:
Measure I sales tax, which is being used in large part to help fund the new rec center, goes into effect this Sunday, April 1. It's actually a sales and USE tax - which means online purchases of goods delivered to/consumed in Burlingame are theoretically subject to the tax, as well (i.e., Amazon). See the actual ordinance, sections 10.060 and 10.070 (on the 7th page of this 13 page PDF):
FYI, it appears the current estimate for a new rec center, as currently envisioned/designed, has risen to $51.5-$56.7 million (see link below to staff report for this coming Monday's Council study session). The city is exploring two options/modifications to bring the overall project cost down; this would entail additional consulting/design work costing between $50,000-$100,000.
FYI, here's additional interesting perspective on the current dockless bike phenomenon:
Toggle Commented Mar 1, 2018 on Biking Around B'game at The Burlingame Voice
With regard to safety (in particular, kids' use without helmets, which I'm seeing a lot of), for what it's worth here's what appeared in the Dec. 4, 2017 staff report when the Limebike pilot program agreement was presented to Council: LimeBike will also partner with the City to enhance bicycle and helmet safety education in Burlingame. LimeBike has committed to the following: - LimeBike will offer an initial 100 free helmets to be distributed in Burlingame. - LimeBike will provide additional free helmets based on the program’s usage and success. - LimeBike will coordinate with Burlingame High School on providing bicycle safety information and training. - LimeBike will provide bicycle safety information to the City to distribute in various locations including at the Main Library and by police officers.
Toggle Commented Feb 14, 2018 on Biking Around B'game at The Burlingame Voice
Addendum: Meant ANNUAL debt service cost for $30 million (rec center bond issuance) is $2 million.
Toggle Commented Jan 26, 2018 on Growth by the numbers at The Burlingame Voice
Also interesting to see the agenda item re: the proposed allocation of Measure I (recently passed sales tax). In particular, the new community center is estimated to cost a minimum of $40 million. The proposal is to float $30 million of debt to pay for it. The debt service cost for $30 million is $2 million. Measure I sales tax was originally expected to raise $2 million annually, but is now projected to bring in $1.75 million annually. The city is proposing allocating $1 million of this Measure I revenue to finance half of the bond issue, and dedicate $1 million from the general fund (really, the same pot) to finance the other half. The other portion of the total $40 million project cost would be covered by using funds from the Capital improvements reserve.
Toggle Commented Jan 26, 2018 on Growth by the numbers at The Burlingame Voice
FYI, per last week’s City Council meeting, the following new add-on will be part of Burlingame’s contract with Granicus (which is currently being used to live stream/archive meetings for the Council, planning commission and traffic/parking/safety commission). Citizens will be able to post comments/feedback on specific agenda items prior to council meetings, and I trust these will be visible to the public. Kudos to the city for this additional benefit/citizen engagement mechanism:
A draft environmental impact report was due this Fall, but I haven't seen anything, either via the link I provided earlier above, or this one on the city's website:
Latest update on this project seems to have been 6 months ago (unless I'm missing something per this link??):
Here is a recording of yesterday’s Burlingame School District board candidates forum, hosted by the League of Women Voters and the Burlingame PTA Council:
Here’s a new link for tomorrow evening’s school board candidates forum. It will be streamed live, with the recording also posted at the same site:
Toggle Commented Oct 24, 2017 on Kendall for School Board at The Burlingame Voice
The Burlingame PTA will be live streaming the school candidates forum on October 25, and posting the recording here:
Toggle Commented Oct 20, 2017 on Kendall for School Board at The Burlingame Voice
Here’s the full Daily Post article which Joe references above, re: Burlingame’s pension costs and the continued strain this is having on our general fund:
And on another note: The Burlingame PTA Council is co-sponsoring a public forum for all Burlingame School Board candidates. A moderator from the League of Women Voters will time prepared speeches and facilitate a Q&A. There are three seats open and four candidates. Take this opportunity to educate yourself and cast an informed vote on November 7th. What: Burlingame school board candidate forum When: 7pm, Wednesday, October 25, 2017 Where: Burlingame Intermediate School Auditorium, 1715 Quesada Way, Burlingame
Toggle Commented Oct 10, 2017 on Kendall for School Board at The Burlingame Voice
Glad we're back on topic :) FYI, with specific regard to Ms. Kendall and Mr. Luftman, both of them were among four applicants who sought to be appointed to former trustee (now San Mateo Union High School District trustee) Greg Land's seat, when he had to step down in 2015. One of the other four applicants was Michael Jarrett, who posted in this string above and also deserves gratitude for his willingness to serve -as do each of the applicants, as well as the four candidates in this election. For more background/info on Ms. Kendall and Mr. Luftman, see BSD board agenda/minutes (items 7.1, 7.2 & 7.3) below, including PDFs of the respective letters of intent they wrote to BSD when seeking appointment, followed by each of the trustees’ subsequent votes & rationale at the time:
Toggle Commented Oct 10, 2017 on Kendall for School Board at The Burlingame Voice
Just as a quick follow up to my post above: I subsequently contacted both BCE and the Burlingame PTA Council (umbrella group for the individual school PTA groups) to see if they might be able to host a League of Women Voters school board debate (like the one in San Carlos). The proverbial ball is in their court.
Toggle Commented Oct 6, 2017 on Kendall for School Board at The Burlingame Voice
Just as a quick follow up to my earlier post above, I inquired with the League of Women Voters of North & Central San Mateo County, and here was the reply: "We provide volunteers as moderators, time keepers and ushers when a sponsor contacts us that they are organizing a candidates' forum for a particular election. We don't initiate the events. Usually the sponsor is a Chamber of Commerce, a PTA or a School Board who is interested in promoting an election. If you would like us to assist in a candidates' forum in the future, please contact us. We will be happy to assist you."
Toggle Commented Oct 3, 2017 on Kendall for School Board at The Burlingame Voice
It would be great if our community had a candidates forum, just as San Carlos is having for their school board race:
Toggle Commented Oct 3, 2017 on Kendall for School Board at The Burlingame Voice