Category Archives: Retirement.Benefits

A NJ Pension Fund Bets on CoreCivic and GEO Group

Source: Max Siegelbaum, Documented, August 16, 2018

As state pension funds pull back from companies that profit from immigration detention, one New Jersey fund has sunk nearly a million dollars into the industry. According to U.S. Securities and Exchange Commission filings, the NJ State Employees’ Deferred Compensation Plan purchased 18,000 shares of CoreCivic stock and 20,000 shares of Geo Group stock. The total investment was $964,000, a small portion of the entire fund, worth $559 million. According to SEC filings, the shares were purchased sometime between June 30 and Aug. 2, around the height of the “zero tolerance” policy period. Geo Group runs Delaney Hall Detention Facility in Newark and CoreCivic runs Elizabeth Detention Center, a low slung building in Elizabeth that houses about 300 detainees and an immigration court.

… In 2017, New York City became the first municipality to divest from the private prison industry. … Other cities and states have followed in removing public retirement funds from private prison stock. Philadelphia sold $1.2 million last October. Nashville, Tenn., has also moved to sell its holdings. Other cities like Cincinnati, Ohio, Portland, Ore. and Minneapolis have either divested or moved towards it. Universities like Columbia, Princeton and Stanford have active student divestment movements. …


Editorial: UC should divest from companies linked with immigration crisis 
Source: Daily Bruin, August 19, 2018

President Donald Trump’s turbulent administration hit rock bottom following revelations that the federal government was separating families of asylum-seekers at the border. Among the list of offenses: caging children, coercing non-English speakers into signing esoteric forms and traumatizing minors seeking a place in this country. Californians have been crying foul ever since. The most prominent display of disdain has come from workers, who have called on state institutions to cut investments in companies linked to border detentions. American Federation of State, County and Municipal Employees Local 3299, a union representing University of California workers, called on the University in July to divest from contractors linked with the detention of immigrants at the border. And California teachers wrote a letter to administrators of the California State Teachers’ Retirement System earlier that month, demanding it divest from private prison companies and organizations involved in immigrant detention. …

Chicago teachers plan to divest private prison companies
Source: Meaghan Kilroy, Pensions & Investments, August 17, 2018
Chicago Public School Teachers’ Pension & Retirement Fund added private prison companies and businesses that operate immigration child detention centers to its list of prohibited investments, said Angela Miller-May, chief investment officer of the $9.8 billion pension fund, in an email. At its Thursday board meeting, the pension fund board directed investment staff to instruct the fund’s investment managers to “prudently liquidate public market holdings in (these) companies as soon as reasonably practical and in accordance with the managers’ fiduciary duties,” Ms. Miller-May wrote. The pension fund estimates it has approximately $548,000 invested in these companies. …

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IPERS considering in-house management of retirement funds

Source: James Q. Lynch, The Gazette, January 16, 2018
IPERS officials told Iowa lawmakers it likely will be next year before they ask for legislative changes to allow in-house management the $30 billion public employee retirement fund.  IPERS, Iowa Public Employee’s Retirement System, which paid out $2 billion in benefits last year, is in “preliminary discussion” of what they are calling internal investment management. Currently, IPERS contracts for outside management of its funds, but CEO Donna Mueller and Chief Investment Officer Karl Koch told the House State Government Committee Tuesday they believe millions of dollars could be saved annually through in-house management of investments.  However, they added, the change would require “significant” startup investment as well as trading, accounting and control infrastructure. …

Following NYC, Philadelphia Pulls Pension Stock in Private Prisons

Source: David Gambacorta, Governing, October 27, 2017
The Philadelphia Board of Pensions and Retirement voted Thursday to withdraw its investments in the for-profit prison industry, which has been dogged for years by health and safety problems.  Francis Bielli, the board’s executive director, said the board voted 6-1 in favor of liquidating the $1.2 million worth of stock it held in three companies: the GEO Group, CoreCivic, and G4S. The funds will be routed to other investments over several months.  In August, the Inquirer and Daily News published a report on the perils of the for-profit prison industry, which has been paid billions by the federal government since 1997 to house more than 34,000 inmates every year.  A multi-year study by the Justice Department’s Office of Inspector General found that for-profit prisons had higher rates of violence and lockdowns, and provided poorer access to medical care, than government-run prisons. …

Hillary Clinton And Wall Street: Financial Industry May Control Retirement Savings In A Clinton Administration

Source: David Sirota and Avi Asher-Schapiro, International Business Times, October 19, 2016

While Hillary Clinton has spent the presidential campaign saying as little as possible about her ties to Wall Street, the executive who some observers say could be her Treasury Secretary has been openly promoting a plan to give financial firms control of hundreds of billions of dollars in retirement savings. The executive is Tony James, president of the Blackstone Group. … It is a plan that proponents say could help millions of Americans — but could also enrich another constituency: the hedge fund and private equity industries that Blackstone dominates and that have donated millions to support Clinton’s presidential bid. The proposal would require workers and employers to put a percentage of payroll into individual retirement accounts “to be invested well in pooled plans run by professional investment managers,” as James put it. In other words, individual voluntary 401(k)s would be replaced by a single national system, and much of the mandated savings would flow to Wall Street, where companies like Blackstone could earn big fees off the assets. And because of a gap in federal anti-corruption rules, there would be little to prevent the biggest investment contracts from being awarded to the biggest presidential campaign donors. … Rather than funneling the hundreds of billions of dollars of new tax revenue into expanding Social Security benefits, as many Democratic lawmakers have called for, James proposed something different: A decade after George W. Bush’s failed attempt to divert Social Security revenue into private retirement accounts, the Blackstone president outlined a plan to create individual retirement accounts, some of whose assets would be managed by private financial firms. …

El Camino Real Charter High School set to defend against ‘fiscal mismanagement’ claims

Source: Brenda Gazzer and Ryan Carter, Los Angeles Daily News, August 22, 2016

The Los Angeles Unified School District Board of Education is set to discuss several alleged violations by El Camino Real Charter High School — including fiscal mismanagement and open meetings violations — at its board meeting in downtown Los Angeles on Tuesday. Citing the Woodland Hills charter school’s “failure to meet generally accepted accounting principles and engagement in fiscal mismanagement, violations of law and breach of its charter,” LAUSD staffers will ask the board to issue a “notice of violations” to the Woodland Hills school, which is a step to revoking its charter, according to the district. … The school — which became an independent charter in 2011 — plans to address what it has called “arbitrary and specious allegations” at Tuesday’s board meeting, which starts at 2 p.m. If a violations notice is issued, the school will have until Sept. 23 to remedy all alleged violations. If it doesn’t fix those problems, the LAUSD board could issue a “notice of intent to revoke” the school’s charter and then hold another public hearing. The board would then decide whether or not to approve the revocation. …


L.A. Unified targets well-known charter school for possible revocation
Source: Howard Blume, LA Times, August 18, 2016

The well-regarded El Camino Real Charter High School faces a possible shutdown following an investigation by the Los Angeles Unified School District. Issues cited by the school system in a letter to the school this week include possible inappropriate spending, poor accounting and oversight, and violations of public-meeting rules. The L.A. Board of Education will consider a formal “notice of violations” at its meeting next week, the first action in an extended, multi-step process that could lead to the campus returning to district control. … Potential management issues involving El Camino came to light last year. In its latest documents, L.A. Unified accuses El Camino of demonstrating “an inability to determine how public funds are being used and identify specific instances of their use for personal expenses,” adding that “fatal flaws in judgment … call into serious question the organization’s ability to successfully implement the charter in accordance with applicable law and district requirements.” …

Retiree benefits become a flashpoint in the battle between charters and traditional schools
Source: Howard Blume, Los Angeles Times, April 17, 2016

A Woodland Hills charter school recently made an unusual offer to its veteran teachers: We’ll give you $30,000 if you return to the Los Angeles Unified School District before you retire. It wasn’t the teachers that El Camino Real Charter High School wanted to get rid of. It was the cost of their retirement benefits. The school’s cost-shifting strategy is one of many flashpoints between traditional public schools and the independent charters they compete with for students and money. In this case, it’s a battle over who should pay for an employee’s health benefits after retirement — the charter school or the larger school district. … The El Camino plan would add from $2.5 million to $4.2 million to that deficit, based on district estimates. The idea is that teachers would spend their careers in the charter school, but later transfer to LAUSD to qualify for the huge institution’s retirement benefits. Except the district has decided not to play ball. Teachers who return to the district, simply to retire, are not entitled to district retirement benefits, general counsel David Holmquist said. … As the teacher’s five-year window to return to the district drew near, El Camino administrators concluded that it was now or never to lighten its retirement burden. Teachers with 17 or more years of experience could get $30,000 if they left and retired through L.A. Unified rather than El Camino. Teachers with fewer years of service qualified for reduced amounts. According to L.A. Unified, 10 individuals with teaching credentials have submitted paperwork to return to L.A. Unified. Eight of those also indicated that they plan to retire. Other employees also were eligible for smaller buyouts. Two administrators and two nonteaching staff members took advantage, according to El Camino. …

Detroit picks firm to help fix $195M pension shortfall

Source: Matt Helms and Matthew Dolan, Detroit Free Press, May 22, 2016

The city in March put out requests for proposals seeking national firms with expertise in public pension plans to advise the city on how best to address a $195-million payment to the city’s two pension plans that comes due in 2024, under terms of the city’s exit from the nation’s largest Chapter 9 municipal bankruptcy. John Naglick, the city’s deputy chief financial officer and finance director, told the Free Press that a committee of top officials in the Duggan administration  reduced a pool of proposals to three and  recently recommended one firm to the city’s CFO, John Hill, who approved the suggestion. Naglick didn’t name the firm, saying it would be revealed later this month when a contract is presented to the City Council. … Detroit’s bankruptcy exit plan, approved in December 2014, gave the city breathing room before it had to make payments to its two pension plans — the General Retirement System and the Police and Fire Retirement System — on the assumption that the city would be better able to pay once its tax base recovered post-bankruptcy. The bankruptcy blueprint called for Detroit to begin making pension payments with a $112.6-million installment in 2024. The city now says that actuarial assumptions used in the bankruptcy were inaccurate and outdated. City officials said that new actuarial reports last year by the Gabriel, Roeder, Smith & Co. firm project Detroit may have to pay $491 million over a 30-year period beginning in 2024, including the $195-million payment the first year. … Those numbers are not expected to be set until the new consultant hired by the city has a chance to test the assumptions made by Gabriel, Roeder, Smith  in its reports last fall. Gabriel, Roeder, Smith is also expected to provide the pension funds a new valuation report by next month that comes up with an updated estimate of the city’s unfunded pension liability. …

Editorial: Fix formula for privatization

Source: Lansing State Journal, February 19, 2017

The State of Michigan has nearly 1,700 privatization contracts. Undoubtedly, many of them are beneficial for taxpayers and for government. But not all privatization makes sense, which is why there is a process by which the Civil Service Commission determines whether privatization will result in significant savings. What happens, however, if the state’s system of vetting privatization opportunities relies on faulty math? In the case of several Michigan contracts, the projected savings don’t even come close to the actual realized savings. A Lansing State Journal analysis of 23 privatization deals approved last year showed the state saved nearly $61 million less than projected. That’s because the current formula is flawed, allowing agencies to include savings on retirement debt. The catch, however, is that debt must be paid whether the jobs remain with the state or move to a contractor. … The cost of the state’s pension and health care liabilities is a problem independent of privatization of services. But the fact that current calculations tip the scales in favor of privatization is troubling. The state, and Civil Service Commission by proxy, must make decisions in the best interests of taxpayers on the issue of privatization. That review must begin with a formula that makes sense – one that acknowledges long-term retirement costs don’t go away when state jobs do.  Privatization is not bad. Neither are state-worker jobs. It’s incumbent on the state to use clear, defensible metrics to determine which option is best in each circumstance.  The current formula is broken. Michigan must fix it.


Michigan’s privatization savings overstated
Source: Justin A. Hinkley, Lansing State Journal, February 17, 2017

State guidelines on privatization allow agencies to count savings on retirement debt that has to be paid whether or not the jobs are outsourced. If that debt were not factored in, a State Journal analysis showed three contracts OK’d by the state Civil Service Commission last year — worth more than $92 million — would never have been approved because they didn’t actually save enough money to meet the commission’s threshold for privatization. Those contracts affected 265 state-worker jobs. The State Journal analysis was based on what Roland Zullo, a University of Michigan researcher working with state-employee unions on this issue, said is the more accurate calculation.

Using Zullo’s method, the State Journal analysis showed the 23 privatization deals approved last year saved nearly $61 million less than what state officials reported, though most contracts still would have saved enough taxpayer money to be approved. No state employees were laid off through privatization last year; many of the 23 deals approved last year were re-analyses of previously approved outsourcing. That’s because, when Civil Service compares the cost of state employees against the cost of a potential contract, it includes on the state employees’ tab what the government pays into its employee pension system, which was closed to new hires starting in 1997. However, as the Senate Fiscal Agency explicitly warned in a 2013 white paper, the debt to that system “must be funded regardless of whether employees remain directly hired by State or local government, or privatization occurs.” Currently, Civil Service guidelines claim privatization saves departments about 50 cents of retirement costs for every $1 in state employee wages. Zullo says the true savings is only 9 cents on the dollar, the amount the state chips in to employees’ 401(k) plans and retiree health care. Only one employee affected by the 23 deals approved in 2016 was on a pension plan. …

Opinion: Privatization does not Work
Source: Ron Bieber, Michigan AFL-CIO President, Detroit News, March 9, 2016

Six years ago, Republicans swept into Lansing after promising to “make government run like a business.” It was a catchy slogan. The trouble is, we as voters didn’t do such a great job asking hard questions about what running government like a business actually meant. For Gov. Rick Snyder and the Republican-controlled Legislature, it meant privatizing vital public services in our schools, prisons and a state-run home for veterans. The goal of privatization, we were told, was to save taxpayers’ money. The truth is the state’s two biggest experiments with privatization have been huge failures.

First came the prison food contract with Aramark. The trouble started when the Legislature rigged the bidding process by giving Aramark a do-over after its initial bid came in too high, allowing it to low-ball competitors. The state approved Aramark’s contract even though it had a terrible track record — including a prison riot in Kentucky and rampant contract violations in Florida. Then came a steady stream of horrible news. There were persistent food shortages, maggots repeatedly found in food, drug smuggling, sexual contact with inmates and even a murder-for-hire plot. …

What happened at the Grand Rapids Home for Veterans was even worse. In 2011, the governor and Legislature privatized 150 nursing assistant jobs and awarded the contract to J2S, a company founded by two brothers — Tim and Chris Frain — who had no background in health care. The complaints of chronic staff shortages started immediately. One former J2S employee told a local TV station “there definitely were times where a member would sit in their urine or feces for extended periods of time because we were shorthanded.” A scathing report from the auditor general last month found employees routinely failed to respond to alarm checks, and J2S failed to investigate complaints of abuse and neglect. …

Unfortunately, Lansing Republicans might not have learned their lesson yet. Right now lawmakers are considering legislation to privatize mental health services, making it harder for people to get access to needed treatments and medications. This would be a big handout to insurance companies, and it’s another privatization disaster waiting to happen.

Private firms offer to run state retirement plan

Source: Ed Mendel, Calpensions, November 2, 2015

A board working on a proposal to enroll most small business employees in a state-run retirement savings plan, unless they opt out, was told last week that small technology-focused financial firms could do the job. The founders of three firms that offer 401(k)s and other retirement plans to small businesses did not object to competition from the state. They offered their services, acknowledging that several small firms may be needed due to the size of the job. … The Secure Choice program was created to provide a job-based retirement savings plan for about 6.3 million California workers without access to one. Only 45 percent of workers age 25 to 64 have an employer plan, less than the 53 percent national average.


Editorial: Consider privatizing services
Source: Press-Enterprise, July 30, 2015

With local government budgets set, it is time for all city and county governments to evaluate what services they provide in-house and, at the very least, consider alternative means of providing services. In a problem seen throughout the state, local governments in the Inland Empire are all too often faced with the specter of rising expenditures and lagging revenues. And as public safety costs and pension contributions escalate, options are running out. … For example, a report released by the Manhattan Institute in April, entitled “California Crowd-Out: How Rising Retirement Benefit Costs Threaten Municipal Services,” discussed how the rapid growth of public employee retirement costs imperils the provision of services. With greater portions of budgets devoted to pensions alone, there is less room for actual, tangible service delivery.

Referenced Report:
California Crowd-Out: How Rising Retirement Benefit Costs Threaten Municipal Services
Source: Stephen D. Eide, Manhattan Institute, Civic Report No. 98, April 2015

Executive Summary: In recent years, California municipalities have seen retirement benefit costs grow at a rate above that of taxes, fees, and charges. “Crowd-out” is the term given to this condition by some public officials forced to deal with the resulting fiscal strain. Balanced budget requirements mandate that when costs grow more rapidly than revenues, something must give. All too often, this has meant reductions in core government services, most of which—police, fire, libraries, parks, and street and sidewalk maintenance—are delivered at the local level in California. Retirement benefit costs have caused California localities to underfund basic infrastructure maintenance needs, even in affluent areas such as Sonoma County. Teachers in Los Angeles are threatening to strike over stalemated contract negotiations, as the school district has found itself unable to satisfy union demands for increased personnel and salaries, as well as its long-term benefit commitments. This paper takes a broad look at California crowd-out, documenting the phenomenon across the local government sector. It will compare rates of growth between revenues and retirement costs and examine workforce levels, salary trends, infrastructure spending, and other service indicators.

Comedian-Activist Calls On State To Divest From Private Prisons

Source: Karen DeWitt, WSKG News, October 1, 2015

A New York comedian, who is also an activist on prison rights issues, is drawing attention to the state’s practice of investing a small amount of its pension fund in the private prison industry. Stand-up comedian Randy Credico, who helped bring about reform of the state’s Rockefeller Drug Laws,  is now setting his sights on the New York state comptroller’s office, where he is protesting against state pension fund investments in the private prison industry. He says the prisons’ business model is dependent upon large groups of young men, primarily African American, becoming inmates. … A spokeswoman for the state Comptroller’s office confirms that the state’s pension fund holds investments in the two largest private prison companies, Corrections Corporation of America, and the GEO group. It’s difficult to place a specific dollar amount on the investments because they are part of larger mutual- type  funds that invest in numerous companies. The total for the three funds is around $12.5 million, out of the  $184.5 billion pension fund. …

KPERS hit: ALEC-driven lawmakers will target retirement fund.

Source: The Garden City Telegram, September 9, 2015

Brownback has bought into the American Legislative Exchange Council’s “model” legislation on privatization and other fronts, with the Koch-supported Kansas Chamber and Kansas Policy Institute aggressively pushing numerous ALEC “free market” initiatives. … Consider that in the last legislative session, Brownback and his legislative supporters thought it wise to pay down the KPERS debt by selling $1 billion in bonds at an interest rate of 4.69 percent, in spite of serious concern in the invested funds not generating the projected return. Financial experts likened the move to borrowing from the bank to pay off credit cards. …


Gov. Sam Brownback declines to give clear direction on KPERS privatization, says options will be reviewed
Source: Jonathan Shorman, Topeka Capital-Journal, September 4, 2015

Gov. Sam Brownback on Friday declined to provide clear direction on whether he plans to pursue privatization of the state’s pension program as he touted the recent sale of $1 billion in bonds to boost the underfunded system. … On Friday, Brownback also said the state sold $1 billion in bonds for KPERS at an interest rate of 4.69 percent. KPERS director Alan Conroy, who accompanied Brownback at the news conference, said the proceeds from the bond sale have already been invested. The Legislature passed a bill this past spring authorizing the sale of the bonds. Conroy also said recent market volatility likely wouldn’t affect the pension system’s financial situation.

No easy fix for KPERS unfunded liability, lawmakers are told
Source: Peter Hancock, Lawrence Journal-World, May 6, 2015

Kansas lawmakers who are looking for ways to rid themselves of a $9 billion unfunded liability in the state pension system were told Wednesday that privatizing the system is probably not one of their options. But local officials in Lawrence and Douglas County said persistent talks in the Legislature about overhauling the Kansas Public Employees Retirement System has already become unsettling to many workers. …. State officials began discussing the idea of privatizing the system last fall. During an interim committee meeting in December, Secretary of Administration Jim Clark urged lawmakers to consider a process called “annuitization,” whereby the state would transfer the obligations of KPERS to a private company in exchange for an annual premium. But during a joint meeting of three legislative committees Wednesday, a representative from Prudential, one of the companies that offers such services to private-sector pension plans, said that probably was not an option for Kansas, at least not now. “We cannot take on underfunded obligations,” Prudential’s Glenn O’Brien said. ….

Private retirement plans might cost state workers more, lawmakers hear
Source: Jonathan Shorman, Capital Journal, May 6, 2015

State workers would potentially have to contribute more of their income under private retirement plans, lawmakers heard Wednesday as they mulled changes to the state’s pension system. ….

Lawmakers to hear about privatizing KPERS
Source: Peter Hancock, Lawrence Journal-World, Statehouse Live blog, May 4, 2015

The Kansas Public Employees Retirement System, or KPERS, holds about $16 billion in assets. But its long-term “unfunded liability” — the difference between its assets and obligations already incurred — is estimated at $9.77 billion, according to KPERS spokeswoman Kristen Basso. In April, though, Brownback signed a bill authorizing the state to issue $1.5 billion in pension obligation bonds. Once issued, proceeds of those bonds will be deposited into the KPERS fund and will slightly reduce its unfunded liability. The process being discussed at that time was called “annuitization,” or selling off the pension system’s assets and liabilities to an outside company. Officials have not said how such a process might affect the retirement benefits of KPERS’ 289,000 active and retired members. Sen. Ty Masterson, who chairs the Ways and Means Committee, said the meeting will include presentations by four companies that offer annuitization services: Prudential Financial; Security Benefit Group; Fidelity Investments; and Dimensional Fund Advisors. ….

Senate gives early nod to KPERS bond proposal /Legislation would authorize $1 billion in bonds
Source: Jonathan Shorman, Capital-Journal, February 26, 2015
The Senate gave an early nod Thursday to a proposal to issue $1 billion in bonds to help fund the state’s pension system. The legislation, Senate Bill 168, would increase the funded ratio of the Kansas Public Employees Retirement System from 60.7 percent to 66 percent. In addition, it would decrease KPERS’ unfunded liability from $7.26 billion to $6.28 billion. …

Editorial: Gov. Sam Brownback’s plan won’t help solve Kansas’ latest pension crisis
Source: Kansas City Star, January 4, 2015
Workers have borne much of the burden of trying to restore the Kansas Public Employees Retirement System to better financial health. Their contributions have moved from 4 percent of pay in 2013 to 6 percent this year. Unfortunately, Gov. Sam Brownback recently announced he planned to cut $58 million in taxpayer contributions to KPERS in the current fiscal year. It’s part of a desperate scheme to balance this year’s budget.

Study of privatizing Kansas public pensions sought
Source: John Hanna, Associated Press, December 19, 2014
Two top aides to Republican Gov. Sam Brownback proposed Friday that Kansas study privatizing the pension system for teachers and government workers. Budget Director Shawn Sullivan and Secretary of Administration Jim Clark told a joint legislative committee on pensions that “reform options” for bolstering the public pension system’s long-term health should be examined. Their list included converting pension benefits into annuities managed by a private insurer. …. The governor said last week that he is working on proposals for ensuring the long-term financial stability of the Kansas Public Employees Retirement System. His comments followed bipartisan criticism of his diversion of nearly $41 million in state funds from KPERS to general government programs to help close a projected $279 million shortfall in the current budget. …..

Kansas coalition pressing conservative agenda
Source: Tim Carpenter, Capital-Journal, November 29, 2013

An umbrella organization for Kansas political conservatives and tea party enthusiasts crafted a 10-issue manifesto to shape debate in the upcoming legislative session on taxation, fluoride in water, immigration, foster care, education and abortion. Craig Gabel, president of Wichita-based Kansans for Liberty, said pieces of the 2014 agenda would be championed in Topeka by tea party chapter members, as well as people affiliated with the Kansas Republican Assembly, which views the state party apparatus as moderate, and “fair tax” lobbyists who believe the state income tax ought to be replaced by a sales tax. ….. Elements of the coalition platform: ….. Privatize the Kansas Public Employees Retirement system and prohibit collective bargaining by public employees.