Tag: Pennsylvania

PSERS hires two outside law firms to investigate $25 million error

Mary Pat Campbell

Link: https://www.pennlive.com/news/2021/03/psers-hires-two-outside-law-firms-to-investigate-25-million-error.html

Excerpt:

In December, consulting actuary Buck reported that PSERS had reached a 6.38 percent average annual rate of return across the prior nine years, just barely above the minimum threshold of 6.36 percent and thus averting a rate increase.

Those calculations were called into question at the time and, more recently, PSERS admitted that they may have been incorrect.

On Friday night, after a nearly 2-hour-long executive session with no public discussion, PSERS’ audit committee approved hiring two law firms to investigate the error and offer recommendations.

Author(s): Wallace McKelvey

Publication Date: 19 March 2021

Publication Site: PennLive

Pa.’s largest pension plan hires lawyers to probe its mistake

Mary Pat Campbell

Link: https://www.mcall.com/news/pennsylvania/mc-nws-pa-pension-plan-mistake-20210320-stmldhnvkzhrblhdy5wizltiay-htmlstory.html

Excerpt:

The board of the $62 billion Pennsylvania public school pension system on Friday hired a pair of law firms to look into what the fund is now calling a “misstatement” in its profit reporting.

The Anglo-American law firm Womble Bond Dickinson will investigate what the board had previously called an “error,” while Philadelphia-based Morgan Lewis will check the math and tax issues.

The mistake may have wrongly spared teachers a potential hike in their pension payments while simultaneously passing that burden onto taxpayers.

Author(s): JOSEPH N. DISTEFANO

Publication Date: 20 March 2021

Publication Site: The Morning Call

Pennsylvania’s largest pension system investigates possible $25 million error

Mary Pat Campbell

Link: https://www.pennlive.com/news/2021/03/pennsylvanias-largest-pension-system-investigates-possible-25-million-error.html

Excerpt:

In December, PSERS consulting actuary Buck reported that the system’s investments had netted a 6.38 percent average annual rate of return over the nine previous fiscal years between 2011 and 2020. That meant employees were spared a contribution rate increase by slimmest of margins. The investment benchmark was a 6.36 percent rate of return.

The risk mandate, of course, was a response to the system’s chronic underfunding. According to the most recent estimates, which themselves are fungible, the system reported an unfunded pension liability of at least $44 billion. That means it has just over 59 percent of the money necessary to meet current pension obligations.

On Friday night, the system’s board of trustees announced an audit, including the possible hiring of an outside firm to investigate, after it was “made aware of an error regarding the reporting of investment performance numbers.”

Author(s): Wallace McKelvey

Publication Date: 13 March 2021

Publication Site: PennLive

Early Warning Systems Can Help States Identify Signs of Fiscal Distress

Mary Pat Campbell

Link: https://www.pewtrusts.org/en/research-and-analysis/articles/2021/03/04/early-warning-systems-can-help-states-identify-signs-of-fiscal-distress?utm_campaign=2021-03-09+Squeeze+map&utm_medium=email&utm_source=Pew

Excerpt:

In a white paper for The Pew Charitable Trusts, Eric Scorsone and Natalie Pruett of the Michigan State University Extension’s Michigan Center for Local Government Finance & Policy assessed local government early warning systems through case studies in Colorado, Louisiana, Ohio, and Pennsylvania. Each of these states applies various financial ratios—an approach known as ratio analysis—and other indicators to identify signs of local fiscal distress. Ratio analysis uses fractions that capture financial or economic activity within a locality—such as total expenditures over total revenues—to measure solvency, the ability to pay debts and liabilities over the short or long term. Ultimately, the authors determined that there isn’t one optimal system and instead offer several recommendations for states to build or improve their early warning systems.

The authors present detailed descriptions of the four states’ systems and analyze trade-offs and implications of the indicators employed to measure different types of solvency. They offer a variety of recommendations for states to consider, including use of indicators for four types of solvency:

Author(s): Jeff Chapman

Publication Date: 4 March 2021

Publication Site: Pew Trusts

Gov. Wolf puts critic back on $60 billion pension board

Mary Pat Campbell

Link: https://www.inquirer.com/news/torsella-psers-garrity-muth-20210225.html

Excerpt:

In November, Democrat Joseph Torsella lost his position as an overseer of Pennsylvania’s $60 billion school pension fund when he lost reelection as state treasurer. But on Thursday, Gov. Tom Wolf tapped Torsella to return to the PSERS board as his representative.

The appointment, which requires majority approval by the State Senate, would restore Torsella to a growing reform bloc on the 15-member board for PSERS. That stands for Public Schools Employees’ Retirement System, which sends checks to about 250,000 retired teachers and other former school workers.

During his single four-year term as treasurer, Torsella, by dint of his position, served on the PSERS board and that of its smaller, $30 billion sister fund for state employees, known as SERS.

Author(s): Joseph N. DiStefano

Publication Date: 25 February 2021

Publication Site: Inquirer

Tax Hikes for High Earners Are on the Table in Some States

Mary Pat Campbell

Link: https://www.wsj.com/articles/tax-hikes-for-high-earners-are-on-the-table-in-some-states-11614162600

Excerpt:

Budgetary pressures vary greatly, despite calls for more federal aid in general and tax hikes in some locales. In New York, state revenue collected from April through December 2020 was 4.1% lower than in the year-earlier period, according to data from the Urban Institute think tank.

In New Jersey, the drop was 2.4%. With tax revenue outperforming earlier projections, Democratic Gov. Phil Murphy on Tuesday proposed making a full payment to the state’s pension system for the first time since 1996. California has done even better, with revenue collections growing 1.2%.

While a governor can call on lawmakers to raise taxes, the odds of success for the various proposals depend partly on which parties control state legislative chambers. Additionally, Democrats in Congress have pushed to include money for cities and states in an economic-recovery package, which could shift the equation.

Author(s): Karen Langley

Publication Date: 24 February 2021

Publication Site: Wall Street Journal

Errors in covid data reveal unreliable tracking system for nursing homes

Mary Pat Campbell

Link: https://triblive.com/news/pennsylvania/errors-in-covid-data-reveal-unreliable-tracking-system-for-nursing-homes/

Graphic:

Excerpt:

Case and death counts on the Department of Health’s website often mismatch what facilities report independently, or what is reported by the Centers for Medicare & Medicaid Services, a federal agency within the U.S. Department of Health and Human Services. Sometimes, the number of cases or deaths reported in a facility exceeds the number of residents altogether. Occasionally, the cumulative totals will fluctuate up and down from week to week, as if deceased residents are coming back to life. Often, the fields show “no data” at all.

“It’s not getting any better,” said Zach Shamberg, president and CEO of the Pennsylvania Healthcare Association. “We’ve lost faith, unfortunately, as an industry, in much of the data that’s been collected, reproduced and distributed on a state or federal website. We just don’t trust it at this point.”

While facilities are inundated with information, the state Department of Health also is struggling with an overload of covid-19 data, a health department spokesman said. The workload is compounded by an understaffed team of workers who all have other responsibilities. But at the end of the day, he said, the data is provided for the public’s benefit.

Author(s): Teghan Simonton

Publication Date: 3 January 2021

Publication Site: Trib Live

Pa. Treasurer Joe Torsella tried to reform the state’s biggest pension funds. Then he lost his job.

Mary Pat Campbell

Link: https://www.inquirer.com/business/joe-torsella-treasurer-pa-pennsylvania-psers-pensions-teachers-lost-harrisburg-20210220.html

Graphic:

Excerpt:

As treasurer, Torsella automatically got a board seat on Pennsylvania’s two massive pension plans, the $60 billion PSERS for public school employees and the $30 billion SERS for state workers. (The letters stand for the Public School Employees’ Retirement System and the State Employees’ Retirement System.)

Everything about them is supersized. Together, they serve more than 700,000 retired and working Pennsylvanians. Taxpayers pay $7 billion into the funds annually, up from near zero in the early 2000s, and five times what employees contribute. Despite that, the plans are hugely underfunded — collectively short $65 billion.

Their health is heavily dependent on their investments. Once on board, Torsella asked to see investment contracts and fee deals with outside money managers — and was told they were not public. It was as if they were somehow more confidential than a town paving contract or a sanitation worker’s salary.

Author(s): Joseph N. DiStefano

Publication Date: 19 February 2021

Publication Site: Philadelphia Inquirer

States Are Finally Going Bold with Progressive Tax Efforts

Mary Pat Campbell
States Are Finally Going Bold with Progressive Tax Efforts

Excerpt:

As the COVID-19 pandemic began, and again as 2020 drew to a close, we repeated our hope that these trying times would awaken and embolden state leaders to enact lasting solutions to emergent and long-standing needs in their states. Lawmakers in New Jersey and voters in Arizona helped set an example by taking progressive action in 2020.

…..

Thought leaders in Connecticut are making waves with progressive revenue solutions of their own. Connecticut Voices for Children released a major report in December, highlighting several tax policy options with the potential to “ensure that Connecticut’s tax system works to advance economic justice rather than continue to contribute to economic injustice.” Those options include: income tax increases on households with incomes over $500,000 ($1 million for couples) that could raise $504 million to $1.72 billion per year; estate tax improvements to reverse cuts and raise $108-162 million per year; a surcharge on capital gains and other similar income to raise $167-334 million per year; and a mansion tax on homes valued over $1.5 million that could raise $331-663 million. These ideas are already being reflected in bills to be considered by lawmakers this year.

Author(s): Dylan Grundman O’Neill

Publication Date: 4 February 2021

Publication Site: Institute on Taxation and Economic Policy