Tag: Forbes

Facebook International Man Of Mystery And GoFundMe Fraudster Disrupt $115 Billion Ohio Pension Forensic Investigation

Mary Pat Campbell

Link:https://www.forbes.com/sites/edwardsiedle/2021/12/20/facebook-international-man-of-mystery-and-gofundme-fraudster-disrupt-115-billion-ohio-pension-forensic-investigation/?sh=3ef0ed262c78

Excerpt:

Who is Facebook international man of mystery Robert Parkle and why is he advising Ohio Public Employees Retirement System stakeholders not to follow through with an expert forensic investigation of their state pension? Why did Kasandra Ward from Aurora, Colorado create a fraudulent OPERS Forensic Investigation GoFundMe page apparently to divert funds from the real project? Our nation’s public pensions have never been more precarious and there are powerful interests working hard to keep pension stakeholders in the dark.  

Earlier this year, a forensic investigation of the $90 billion-plus State Teachers Retirement System of Ohio commissioned by the Ohio Retired Teachers Association and performed by my firm, was completed. The damning preliminary findings were reported to Ohio legislators, regulators and law enforcement in a 100-plus page report entitled The High Cost of Secrecy.

….

In conclusion, I won’t speculate who may be seeking to derail the proposed forensic investigation of the $115 Billion Ohio Public Employees Retirement System on behalf of pension stakeholders, or why. One thing is for certain: One or more persons is seeking to disrupt the investigation into potential mismanagement and malfeasance at the massive pension.

Stakeholders in all 5 Ohio public pensions, including OPERS, should be alarmed and securities regulators and law enforcement ought to investigate any apparent violations of law through social media.

Author(s): Edward Siedle

Publication Date: 20 Dec 2021

Publication Site: Forbes

Washington State’s Celebrated Long Term Care Program Is Headed Towards Trouble

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2022/01/09/washington-states-celebrated-long-term-care-program-is-headed-towards-trouble/

Excerpt:

A requirement to have paid into the system is characteristic of a social insurance program, and the 10 year contribution requirement is essentially the same as the eligibility requirement for Old Age benefits in Social Security. However, true social insurance programs pay out benefits to those eligible regardless of residence — again, once you’ve paid into Social Security long enough to have earned your benefit, you can collect regardless of where you live, even if you have moved abroad. In fact, even noncitizens who worked in the United States long enough to have accumulated sufficient Social Security credits, can receive benefits after having moved back to their home countries. What’s more, many social insurance systems provide some sort of refund mechanism for workers who do not accumulate enough contribution years to be eligible.

And this hybrid system will likely prove to be unsustainable politically. Even if ordinary Washingtonians are not well-versed in social insurance concepts and theories, it will not sit right with them that those who retire with 10 years of payroll taxes have “earned” their benefits but those with 9 years have not, and, likewise, that those who have “earned” benefits would lose those “earned” benefits merely by moving out of state. How precisely this will play out over the long term remains to be seen, but the new bills are not likely to be the end of the story.

In any case, these problems will not be easy to remedy.

Author(s): Elizabeth Bauer

Publication Date: 9 Jan 2022

Publication Site: Forbes

Revisiting The ‘Retirement Crisis’ And Retirement Legislation In 2022 – What’s In Store In The New Year?

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2021/12/31/revisiting-the-retirement-crisis-and-retirement-legislation-in-2022whats-in-store-in-the-new-year/

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Excerpt:

First, we need to keep a distinction in mind between efforts to ensure the elderly do not suffer actual material deprivation, whether that’s lack of nutritious food or adequate housing or medical needs, for instance, and efforts to help Americans plan for retirement and alleviate their expressed worries about the unknowns of retirement.

Second, issues of well-being, such as social isolation, and larger questions of the “right” form of provision of long-term care assistance, are not simple issues of finances but are nonetheless important as Americans age, and these topics should not be drowned out by a “retirement crisis” narrative. It should also go without saying that we will urgently need to turn our attention to the Medicare system as well.

And, third, in one crucial respect our models may fail us: experts have worked out a set of recommendations for asset allocation and income spend-down in retirement, and a set of projections for building those models, which fall apart if our new low-interest world continues, Japan-like, rather than being a temporary situation that resolves itself as we recover from the pandemic. Whether this is a result of government policies or an inevitable consequence of the changing economy, this could upend both Biggs’ projections of retiree well-being and the path to retirement security envisioned by legislation like the SECURE Act 2.0.

Author(s): Elizabeth Bauer

Publication Date: 31 Dec 2021

Publication Site: Forbes

States Are Seeing Steep Income Tax Revenue Growth. Will It Last?

Mary Pat Campbell

Link:https://www.forbes.com/sites/lizfarmer/2021/12/01/states-are-seeing-steep-income-tax-revenue-growth-will-it-last/

Excerpt:

States collected nearly $455 billion in total income tax revenue in fiscal 2021—an astounding 14.7% increase over the prior year. That’s according to the latest report from the National Association of State Budget Officers (NASBO), which covers spending through June 2021. Over two years, income tax revenue is up 15%.

However, these numbers are highly influenced by unusual economic times. For starters, states delayed their tax filing deadline by several months when the pandemic began. For most, this pushed their 2020 income tax revenue into the next fiscal year. This artificially deflated 2020’s numbers while inflating 2021 collections.

The federal stimulus has also played a role. Since March 2020, the feds have doled out $867 billion in cash to households via three Economic Impact Payments. While those payments weren’t taxable, they could indirectly increase state tax liability for some. (The New York Times NYT +1% has a good explainer on that.) Plus, unemployment insurance — which most states do tax — received a massive boost for about 15 months.

Author(s): Liz Farmer

Publication Date: 1 Dec 2021

Publication Site: Forbes

Call Your State Securities Regulator And NASAA, Demand To See Public Pension Prospectuses

Mary Pat Campbell

Link: https://www.forbes.com/sites/edwardsiedle/2021/11/30/call-your-state-securities-regulator-and-nasaa-demand-to-see-public-pension-prospectuses/?sh=d277a077f881

Excerpt:

State securities regulators and NASAA have historically had very little to say about Wall Street looting of these pensions. That’s not altogether surprising given that state securities regulators almost universally serve at the whim of elected politicians—politicians who depend upon Wall Street campaign contributions. If a state securities regulator aggressively pursues Wall Street pension looting, she may be swiftly out of a job.

However, since NASAA believes “every investor deserves protection and an even break” the organization should focus upon the disturbing fact that today public pension stakeholders in all 50 states are routinely denied prospectuses and other material investment information related to their pension assets—the very same information which is widely disseminated globally to wealthy individuals. In the absence of prospectuses, public pension stakeholders cannot possibly evaluate whether pension assets are prudently invested.

…..

Recently I filed a complaint with the Ohio Department of Commerce, Division of Securities regarding the State Teachers Retirement System of Ohio which has failed since February to provide prospectuses and other offering materials related to the teachers’ pension investments in response to my public records request filed on behalf of 19,000 Ohio teachers. Not a single page of a single prospectus has been released to me by STRS Ohio since February. The Division is investigating my complaint at this time.

In Rhode Island, my request for the prospectuses regarding that state’s pension investments was also denied by Treasurer Seth Magaziner last week as the pension perversely asserts, on behalf of Wall Street, that widely distributed prospectuses can somehow be “trade secrets.” I intend to file an appeal and a lawsuit challenging Magaziner’s secret pension dealings in Rhode Island.

Given that public pensions in all 50 states today refuse to provide some or all prospectuses to stakeholders, including both participants and taxpayers, publci pension secrecy is a national problem that needs to be addressed.

Author(s): Edward Siedle

Publication Date: 30 Nov 2021

Publication Site: Forbes

19,000 Retired Ohio Teachers Want Pension Prospectuses, Wall Street Wolves Say No Way

Mary Pat Campbell

Link:https://www.forbes.com/sites/edwardsiedle/2021/11/09/19000-retired-ohio-teachers-want-pension-prospectuses-wall-street-wolves-say-no-way/

Excerpt:

For nearly two decades, alternative investment managers have been permitted to handle public pension money while they refuse to play by the rules applicable to these funds and submit to public scrutiny.

Wall Street alternative managers have successfully argued that the very same investment information widely distributed to wealthy individuals somehow amounts to “trade secrets” exempt from public records laws… when requested by state workers.

While it’s not surprising Wall Street’s biggest gamblers want to keep investors in the dark as to their misdeeds, it’s unconscionable that STRS Ohio and other public pensions around the nation are willing to abandon transparency, exposing workers to unfathomable risks and jeopardizing their retirement security.

Alternative investment managers may seek to keep secrets, but it’s no secret what’s often in these well-guarded documents: excessive and illegal fees; outrageous conflicts of interest and self dealing; fiduciary breaches and outright violations of law—even criminal conduct. For example, eight years ago the SEC staff found that a majority of private equity firms inflate fees and expenses charged to companies in which they hold stakes.

Author(s): Edward Siedle

Publication Date: 9 Nov 2021

Publication Site: Forbes

Private Equity’s Mighty Battle Against Public Pension Transparency

Mary Pat Campbell

Link:https://www.forbes.com/sites/edwardsiedle/2021/11/15/private-equitys-mighty-battle-against-public-pension-transparency/

Excerpt:

Private equity firms widely distribute their prospectuses and offering materials to prospective wealthy investors as they trawl globally to raise capital for their costly, high-risk funds. Yet when state and local government pension stakeholders request prospectuses of the funds in which their pensions invest, PE firms claim these very same broadly disseminated documents are “trade secrets” exempt from disclosure under state public records laws. On the one hand, PE risks, fees, and questionable business practices are fully disclosed via prospectus to wealthy investors who can afford to gamble. On the other, government workers in severely underfunded pensions (many of whom have already seen their retirement benefits cut) and taxpayers who are on the hook for any public pension gambling losses, are intentionally kept in the dark. SEC and state securities regulators should demand that every PE investor, including public pension stakeholders, be provided with all material investment information related to these risky investments and end PE secret fleecing of government workers’ pensions.

Author(s): Edward Siedle

Publication Date: 15 Nov 2021

Publication Site: Forbes

Biden’s Falling Approval Ratings Are Bad News For The Municipal Market

Mary Pat Campbell

Link:https://www.forbes.com/sites/lizfarmer/2021/10/16/bidens-falling-approval-ratings-are-bad-news-for-the-municipal-market/?sh=7c3aed496a80

Excerpt:

Advanced refunding bonds allowed governments to refinance debt earlier, thus letting them take advantage of lower interest rates years sooner and save taxpayer money. The 2017 tax reform eliminated their tax-exempt status which effectively nixed their cost-saving value for governments. But the move increased federal government revenues by billions of dollars each year. Reinstating the bonds, according to a report from the Joint Committee on Taxation (JCT), would cost $11 billion over the next five years.

A federally subsidized taxable bond — what market watchers are calling BABs 2.0 — works differently. Unlike tax-exempt municipal bonds, BABs are taxable, and, as a result, open up the municipal market to new investors, such as pension funds or those living abroad. More buyers is a good thing, but BABs are also more expensive for governments. So to defray the added cost, the federal government in 2009 offered a direct subsidy of 35% of state and local governments’ interest payments on BABs.

That is, until sequestration in 2013 dramatically cut the subsidy and left state and local governments scrambling to fill the void.

BABs 2.0 would work similarly, but also lock in the federal subsidy — a much better deal for governments. They’re expected to cost the federal government more than $22.5 billion between 2022 and 2031, according to estimates from the JCT. 

Author(s): Liz Farmer

Publication Date: 16 Oct 2021

Publication Site: Forbes

Who’s Missing From The ‘Build Back Better’ Reconciliation Bill? The Elderly And Disabled Poor

Mary Pat Campbell

Link:https://www.forbes.com/sites/ebauer/2021/10/10/whos-missing-from-the-build-back-better-reconciliation-bill-the-elderly-and-disabled-poor/

Excerpt:

In recent articles, I have lamented poorly designed components of the Reconciliation Bill, from a poorly-designed “free childcare” program to a family leave plan that’s designed to be “free” rather than funded by the workers who benefit, to a Medicare drug benefit that’s planned to be implemented at the same time as Part A Medicare is facing insolvency, to a mandate that employers provide retirement plan access that leaves virtually all of the specifics up to a bureaucratic agency. And this just scratches at the surface of the expansive programs on tap if the bill is passed as currently drafted. But there’s one piece of legislation that advocates have been calling for, for years, which didn’t make the cut: an increase in the benefits for the poorest of the poor elderly and disabled who receive Supplemental Security Income, or SSI.

…..

So why didn’t SSI make the cut, when the Democrats compiled their list of programs for the “American Family Plan”? Do some of these changes go too far, increase benefits too much? Did they want to avoid opening up a can of worms with respect to larger plan design issues with the system, for example, concerns that the children’s benefits have become an “alternative welfare system” providing benefits for children equal to those for adults, even with mild conditions such as ADHD, that mean no one wants to touch the system?

Or does an enhancement of SSI benefits simply fail to meet the Democrats’ objective of making voters happy with broad outlays of cash benefitting the middle class as well as the poor?

Author(s): Elizabeth Bauer

Publication Date: 10 Oct 2021

Publication Site: Forbes

Everyone Is Urging SEC To Stop Public Pension Mismanagement, Looting By Wall Street

Mary Pat Campbell

Link:https://www.forbes.com/sites/edwardsiedle/2021/10/07/everyone-is-urging-sec-to-stop-public-pension-mismanagement–looting-by-wall-street/

Excerpt:

An investigation of the Chicago Policemen Annuity and Benefit Fund was funded by members of the Chicago Police Department Pension Board Accountability Group. According to the report, the CPABF is one of the worst funded public pension plans in the U.S. today with a funding ratio at year-end of only 23%. According to the report, “The toxic mix of defunding the police pension, conflicted and high-risk investments, and poor management of the pension cry out for greater transparency and accountability.”

As Arthur Levitt, Chairman of the SEC stated back in 1999 in connection with the Commission’s review of pay-to-play practices at public pensions, “Today, public funds hold more than $2 trillion of assets. These assets do not belong to the elected officials, and they do not belong to the trustees. They belong to the tens of thousands of firefighters, ambulance drivers, city clerks, bus drivers and other public employees who make our communities work. “Their interests,” as my father said twenty years ago, “must be paramount in investment of that money.”

The tremendous importance of public funds demands that they be managed with complete honesty and integrity and for the sole benefit of their beneficiaries.”

Author(s): Edward Siedle

Publication Date: 7 October 2021

Publication Site: Forbes

No, Lightfoot’s Chicago Budget Does Not Make An ‘Actuarial’ Pension Contribution

Mary Pat Campbell

Link:https://www.forbes.com/sites/ebauer/2021/10/10/no-lightfoots-chicago-budget-does-not-make-an-actuarial-pension-contribution/

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Excerpt:

Now, what she identifies as an “accomplishment,” having finished the climb up the pension ramp, is actually a state law that left her no choice in the matter. But that’s not the only incorrect part of her statement. Even having finally left the ramp behind, the plans are not funded on an “actuarially determined basis.” They are funded based on the Illinois legislature’s decision of a funding schedule which, for the police and fire plans, is sufficient to attain 90% funding in the year 2055, and for the Municipal and Laborers’ plan, not until 2058. Yes, if you do the math, that’s 34 and 37 years from now.

In fact, the plans’ actuarial valuations calculate a figure that’s labelled the Actuarially Determined Contribution. For the Fire plan (19% funded), the city’s contribution was only 79% of the ADC; for the Police plan (23% funded), the city’s contribution was only 75% of the ADC. And these are the two plans which reached the top of the ramp last year!

Author(s): Elizabeth Bauer

Publication Date: 10 Oct 2021

Publication Site: Forbes

How Will The Biden Medicare Dental Plan Affect The Trust Fund Solvency?

Mary Pat Campbell

Link:https://www.forbes.com/sites/ebauer/2021/09/20/how-will-the-biden-medicare-dental-plan-affect-the-trust-fund-solvency/

Excerpt:

Among the changes coming if the Democrats succeed in their $3.5 trillion reconciliation bill would be the inclusion of dental, vision, and hearing coverage through Medicare, possibly in 3 – 5 years due to implementation challenges, and with suggestions of a voucher/cash payout in the meantime. There is not yet an official cost estimate as the details are still being negotiated, but a similar proposal in 2019 would have cost $358 billion over 10 years.

At the same time, late last month, the latest Trustees’ Report for Medicare determined that the Medicare Part A Trust Fund will be exhausted in the year 2026, which, if you do the math, is a mere five years from now. At that point, Medicare would have to cut reimbursement rates for doctors by 9%, increasing to 20% in 2045, or even more if the report’s assumptions don’t pan out.

How will the new dental benefits — assuming they remain in the bill — affect Medicare Part A and its trust fund? Strictly speaking, not at all. The new benefits would be a part of Part B of the program, that is, doctors’ charges, rather than Part A, which covers hospital charges. In one respect, it would be its own benefit structure entirely, since, unlike “regular Part B” Medicare, the proposal would have the federal government pay 100% of the benefit’s costs, rather than requiring participants to pay a 25% cost-share premium. It would, in a way, become Medicare Part E.

Author(s): Elizabeth Bauer

Publication Date: 20 Sept 2021

Publication Site: Forbes