Tag: Forbes

Even With Federal Aid, States Slashed Spending By $4.1 Billion To Avoid Shortfalls

Mary Pat Campbell

Link: https://www.forbes.com/sites/lizfarmer/2021/06/24/even-with-federal-aid-states-slashed-spending-by-41-billion-to-avoid-shortfalls/?sh=1a1c2ceb4a93

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Excerpt:

A total of 12 states had to cut a combined $4.1 billion from their budgets in order to balance out projected shortfalls before the end of their fiscal year, according to a new report released Thursday by the National Association of State Budget Officers (NASBO). (Most state fiscal years end on June 30.) Nevada, New Mexico and Washington state cut the most, accounting for 42% of the total.

Many of these states targeted staff for these cuts, including implementing hiring freezes, eliminating open positions, cutting salaries and ordering furloughs. They also turned to Medicaid, which saw more than $1 billion in combined cuts from the 12 shortfall states while higher education cuts totaled more than $500 million from the group. Washington State focused its cuts mainly on K-12 education, slashing more than $1 billion from the budget over the past year.

Author(s): Liz Farmer

Publication Date: 24 June 2021

Publication Site: Forbes

Will Your Life Be Shortened By The Pandemic?

Mary Pat Campbell

Link: https://www.forbes.com/sites/stevevernon/2021/06/25/will-your-life-be-shortened-by-the-pandemic/?sh=177b1c0f1952

Excerpt:

Now, because the pandemic produced higher death rates in 2020 compared to prior years, a period life expectancy calculated for 2020 produced lower life expectancies compared to period life expectancies calculated for prior years. That’s because it’s assumed that the elevated death rates we experienced in 2020 would apply to all future years. But if the death rates decline in 2021, then any period life expectancies calculated for 2021 would most likely be higher. And that’s certainly the hope, given that a large portion of the population has received a vaccine, which is already resulting in a dramatic decline in new infections and hospitalizations. 

If you’ve survived the pandemic with your health relatively intact and if you’ve also received the vaccine, then it’s highly likely the virus won’t shorten your lifespan. Of course, new deadly variants or future deadly viruses could change that conclusion, but for now, the outlook is positive.

“Cohort life expectancies” on the other hand, are calculated for a group of people reflecting their characteristics and the experience they might expect over their lifetimes. These life expectancies are calculated in the same way as period life expectancies, except that the death rates used to estimate someone’s remaining future years are modified to reflect anticipated future changes in death rates. If you want to estimate your own remaining lifespan, a cohort life expectancy is often most appropriate.

Author(s): Steve Vernon

Publication Date: 25 June 2021

Publication Site: Forbes

The Chicago Park District’s 30% Funded Pension Plan – And More Tales Of Illinois’ Failed Governance

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2021/06/07/the-chicago-park-districts-30-funded-pension-planand-more-tales-of-illinois-failed-governance/?sh=7ce1216054fa

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The Illinois legislature ended its regular legislative session on May 31, in a flurry of legislation passed late into the night. One of those bills was a set of changes to the 30% funded pension plan of the Chicago Park District. Were these changes long-over due reforms, or just another in the long line of legislative failures? It’s time for another edition of “more that you ever wanted to know about an underfunded public pension plan,” because this plan illustrates a number of actuarial lessons.

80% is not OK. Governance – who gets to set the contributions? Funded status can collapse very quickly and be very difficult to rebuild. Need to use actuarial analysis not just legislator’s brainstorms

Author(s): Elizabeth Bauer

Publication Date: 7 June 2021

Publication Site: Forbes

Biden’s Tax On Large Capital Gains At Death Will Catch A Few With Annual Incomes Of Less than $400,000

Mary Pat Campbell

Link: https://www.thewealthadvisor.com/article/bidens-tax-large-capital-gains-death-will-catch-few-annual-incomes-less-400000

Excerpt:

For a relatively small number of decedents, this plan could run headlong into Biden’s promise to not raise taxes on those with incomes below $400,000. Of course, the vast majority of decedents will have unrealized gains of far less than $1 million. Indeed, most will leave entire estates far below that threshold. Among people over 70, about 83 percent live in a household with total net worth of less than $1 million.

But some people with large unrealized gains will have been living on relatively low incomes. Imagine someone who is retired and living on Social Security, a modest pension, and some savings. But they still are holding that Microsoft stock they bought in 1987.  

Author(s): Howard Gleckman

Publication Date: 31 May 2021

Publication Site: The Wealth Advisor

Prediction: Biden’s Answer To The Medicare Trust Fund Insolvency Is Hidden In His Budget Proposal

Mary Pat Campbell

https://www.forbes.com/sites/ebauer/2021/06/01/prediction-bidens-answer-to-the-medicare-trust-fund-insolvency-is-hidden-in-his-budget-proposal/

Excerpt:

According to the most recent report, from 2020, the Medicare HI (Hospital Insurance, or Part A) Trust Fund is projected to be emptied in the year 2026. That’s well before the Social Security Trust Fund’s projected insolvency in 2034, and when that happens, Medicare will only be able to pay 90% of Part A benefits, dropping down to 80% in 2038.

…..

When it comes down to it, I’ll suggest to readers that they don’t really believe that it matters. And with the Biden administration’s 2022 budget proposal comes a fairly strong indication that this is their point of view as well, that they expect, when the Trust Fund well comes dry, to simply tap general federal revenues for the necessary funds, in exactly the same manner as is done for Parts B (doctors) and D (drugs).

…..

This single sentence makes it clear that’s not the case: the only premiums paid by Medicare recipients are partial-cost payments for Parts B and D. For Part B, this is 25% of the cost for most retirees; for those with income above $85,000/$170,000 single/married, premiums are higher, reaching as much as 85% of the total cost for the highest earners. For Part D, the premium is set to cover 25.5% of the standard drug benefit, plus any extra costs charged by particular private providers for enhanced benefit levels, and an extra flat charge for higher earners. The remaining cost, 75% of Part B and 74.5% of Part D, is funded by the federal government through its general revenues.

Author(s): Elizabeth Bauer

Publication Date: 1 June 2021

Publication Site: Forbes

Forensic Investigation Of Chicago Police Pension Fund Underway

Mary Pat Campbell

Link: https://www.forbes.com/sites/edwardsiedle/2021/05/25/forensic-investigation-of-chicago-police-pension-fund-underway/?sh=6f9aac8c3ed9

Excerpt:

The Chicago Policemen’s Annuity and Benefit Fund (PABF) —commonly referred to as the Chicago Police Pension Fund—is one of the worst funded public pension plans in the United States today, with a funding ratio of only 23 percent.

A group of retired and disabled officers, along with widows, has long questioned the trustees and management of the struggling pension. Dissatisfied with the responses they received, the group formed the CPD Pension Board Accountability Group.

Funds were raised to commission an independent forensic audit of the pension and an expert in pensions was retained recently to conduct the review. As Forbes readers will recall, in my recent book, Who Stole My Pension?, I encourage pension stakeholders to band together to fund independent forensic investigations by pension experts of their own choosing—to get a second opinion as to whether the pension fiduciaries and Wall Street “helpers” they have hired to manage investments are doing a good job.

Author(s): Edward Siedle

Publication Date: 25 May 2021

Publication Site: Forbes

Alternative Investment Looting Is Destroying Pension Funds

Mary Pat Campbell

Link: https://www.forbes.com/sites/edwardsiedle/2021/05/21/alternative-investment-looting-is-destroying-pension-funds/?sh=1e71137979c1

Excerpt:

Forensic investigations in Rhode Island, North Carolina, Kentucky and Ohio reveal that gambling 30 percent or more on high-cost, high-risk, secretive alternative investments has exposed pensions to massively greater risks and reduced net returns. The time is ripe for legislators, regulators, and law enforcement to act to stop the looting.

A recent New York Times NYT -3% article revealed that putting more than half of the $62 billion Pennsylvania state teachers’ retirement fund’s assets into risky alternative investments hadn’t worked out well for the pension and had spurred an investigation by the FBI. The FBI is investigating reporting fraud—returns allegedly falsified to avoid increased worker contributions to the pension.

Law enforcement investigations into public pension funds that lie about their returns are long, long overdue.

Author(s): Edward Siedle

Publication Date: 21 May 2021

Publication Site: Forbes

Days Ahead Of First Federal Stimulus Payments, Local Governments Still Don’t Know How—And In Some Cases If—They’ll Spend The Money

Mary Pat Campbell

Link: https://www.forbes.com/sites/lizfarmer/2021/05/06/days-ahead-of-first-federal-stimulus-for-governments-lawmakers-still-dont-know-how—and-in-some-cases-if–theyll-spend-it/?sh=2abe348711d8

Excerpt:

The first round of aid for state and local governments is set to go out next week, but with no guidance yet on the spending rules, leaders are becoming increasingly frustrated.

The American Rescue Plan Act (ARPA) included $350 billion in direct aid to states and localities and the law requires the U.S. Department of Treasury to distribute the first tranche by May 10. Since it passed on March 11, the department has been developing guidance on the spending rules with input from government organizations. The ARPA law says governments can use the money for public health crisis expenses and for budget deficits, but more specifics are needed because governments are required to track and report on their spending.

Now, with just days to go until the first round of aid is to be delivered, the rules still aren’t out and frustrations are mounting. This is particularly true for those governments who are receiving direct federal aid for the first time since the pandemic began.

Author(s): Liz Farmer

Publication Date: 6 May 2021

Publication Site: Forbes

Your Pension Board Thinks It’s Smarter Than Warren Buffett—It’s Not

Mary Pat Campbell

Link: https://www.forbes.com/sites/edwardsiedle/2021/05/01/your-pension-board-thinks-its-smarter-than-warren-buffett-its-not/?sh=b3fdc2611302

Excerpt:

Buffett has a consistent history of blasting Wall Street firms for charging high fees for actively managed investments and has recommended pensions invest in low-cost passively managed index funds.

You might think that underfunded pensions struggling to pay benefits would heed Buffett’s advice and seek to cut the fees they pay Wall Street.

Embrace austerity. Tighten their belts. Trim the fat. 

In fact, every forensic investigation I’ve ever undertaken has exposed that the nearer a pension is to insolvency, the higher the fees and the greater the risks the pension takes on.

Author(s): Ted Siedle

Publication Date: 1 May 2021

Publication Site: Forbes

Pressure Intensifies On Biden To Restore A Tax Break Weakened By Trump

Mary Pat Campbell

Link: https://www.forbes.com/sites/lizfarmer/2021/04/21/pressure-intensifies-on-biden-to-restore-a-tax-break-weakened-by-trump/

Excerpt:

Mayors in blue states are lining up with Democrats in Congress to pressure the White House into restoring a tax break that was significantly reduced by former President Trump’s tax reform.

On Wednesday, Rep. Thomas Suozzi (N.Y.) joined officials from Albany; Columbia, S.C.; Philadelphia and San Diego to call for a repeal of the rule that limits state and local tax (SALT) deductions. They are calling for President Biden’s $3 trillion infrastructure proposal to include the repeal.

“No SALT, no deal,” Suozzi said on a conference call hosted by the U.S. Conference of Mayors.

Author(s): Liz Farmer

Publication Date: 21 April 2021

Publication Site: Forbes

No, ‘Infrastructure Of Care’ Is Not Infrastructure – And Three Reasons Why It Matters

Mary Pat Campbell

Link: https://www.forbes.com/sites/ebauer/2021/04/18/no-infrastructure-of-care-is-not-infrastructureand-three-reasons-why-it-matters/?sh=25de6d53721c

Excerpt:

First, as I referenced in passing in my prior column, the long-lasting nature of infrastructure is what justifies paying for it over time. This proposal’s spending is meant to be accomplished over 8 years, with the tax increase funding it over 15 years. That could be justifiable for some types of infrastructure, when it is something new rather than ongoing maintenance, but is not at all appropriate for ongoing day-to-day spending.

Author(s): Elizabeth Bauer

Publication Date: 18 April 2021

Publication Site: Forbes

Canada’s Largest Federal Pension Plan Divests From US Private Prisons

Mary Pat Campbell

Link: https://www.forbes.com/sites/morgansimon/2021/03/29/canadas-largest-federal-pension-plan-divests-from-us-private-prisons/?sh=7f5ed23c230b

Excerpt:

In late 2020, Canada’s Public Sector Pension Investment Board (PSP), which invests $170 billion worth of pensions belonging to federal government employees like public service workers and employees, bought over 600,000 shares of US private prison companies GEO GEO -1% Group and CoreCivic. According to a February 12th 2021 report filed with the SEC, that totaled about $4.7 million to the companies who have been found to be key players in family separation and continued detainment of migrants suffering from Covid-19.

On March 15th, however, the public learned that PSP pledged to fully divest from the industry amidst public pressure — a financial blow to two companies who have already lost financial support and credibility from major bank financers over the past few years. This announcement by PSP adds them to the list of pension funds who have made an explicit commitment to no longer fund private prisons; joining New York City’s public pension system, The Philadelphia Board of Pensions Retirement, New Mexico Teachers’ Pension Fund, the California Public Employees’ Retirement System, The Canadian Pension Plan Investment Board, and many more who have also taken a stand against the industry. 

Author(s): Morgan Simon

Publication Date: 29 March 2021

Publication Site: Forbes