MEMORANDUM June 12, 2017 TO: RPEA FROM: Marketplace Communications RE: Daily Media Clips Following are today’s news clips: DAT E PUBLICA TION TITLE & LINK AUTHOR 6.12 .17 Washing ton Examine r Democrats look to California for single-payer healthcare http://www.washingtonexaminer.com/democrats-look-to-california- for-single-payer-healthcare/article/2625408 Robert King 6.11 .17 Medium .com Jerry Brown’s Pension Loan Does NOT Pay Down Pension Obligations https://medium.com/@DavidGCrane/jerry-browns-pension-loan-does- not-pay-down-pension-obligations-616d4eeca0b3 David Crane 6.11 .17 Noozha wk Still Far Apart on Shortfall Solution, Lompoc Council Extends Budget Deadline 2 Months https://www.noozhawk.com/article/facing_deficit_lompoc_council_ex tends_budget_deadline_2_months_20170611 Janene Scully 6.11 .17 Noozha wk Social Services Layoffs Among Cuts Proposed in $1.07 Billion Santa Barbara County Budget https://www.noozhawk.com/article/social_services_staff_cuts_propos ed_santa_barbara_county_budget_20170611 Giana Magnoli 6.9. 17 Ventura County Star Port Hueneme police union files claim against city over Social Security, Medicare http://www.vcstar.com/story/news/local/communities/port- hueneme/2017/06/09/port-hueneme-police-union-files-claim-against- city-over-social-security-medicare/381817001/ Arlene Martinez 6.8. 17 Marin Indepen dent Journal Jury sees $1 billion shortfall in Marin public pensions http://www.marinij.com/general-news/20170608/jury-sees-1-billion- shortfall-in-marin-public-pensions Keri Brenner
Transcript
MEMORANDUM
June 12, 2017
TO:
RPEA
FROM: Marketplace Communications
RE:
Daily Media Clips
Following are today’s news clips:
DATE
PUBLICATION
TITLE & LINK AUTHOR
6.12.17
Washington
Examiner
Democrats look to California for single-payer healthcare http://www.washingtonexaminer.com/democrats-look-to-california-
for-single-payer-healthcare/article/2625408
Robert King
6.11.17
Medium.com
Jerry Brown’s Pension Loan Does NOT Pay Down Pension Obligations https://medium.com/@DavidGCrane/jerry-browns-pension-loan-does-
not-pay-down-pension-obligations-616d4eeca0b3
David Crane
6.11.17
Noozhawk
Still Far Apart on Shortfall Solution, Lompoc Council Extends Budget Deadline 2 Months
Washington Examiner Democrats look to California for single-payer healthcare
by Robert King | Jun 12, 2017, 12:01 AM Share on Twitter Share on Facebook Email this article Share on LinkedIn http://www.washingtonexaminer.com/democrats-look-to-california-for-single-payer-healthcare/article/2625408
The California state Senate passed the single-payer bill on June 1 by a vote of 23 to 14 with three members not present. The bill now heads to the state assembly and then, if it passes, to Democratic Gov. Jerry Brown for a final signature. (AP Photo/Rich Pedroncelli) Recommended for You
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A longtime goal of the Democratic Party for the government to take over health insurance may become a reality in California if it can get past major concerns about cost that could lead to its defeat.
The California Senate recently approved a bill that would create a single-payer healthcare program in which the state is the only payer for healthcare. California essentially would eliminate private insurance, with residents signing up for a state program that would give them access to healthcare with no out-of-pocket costs.
Single-payer, long a goal of Democrats, has received renewed energy this year in Congress, despite Republican control of Congress and the White House.
Advocates say there is broad support for single-payer, not just among Democrats.
"There is broad support for single-payer not only in California, but nationally, even among registered Republicans and Republican and conservative business leaders," said Charles Idelson, spokesman for National Nurses United and the California Nurses Association, which is pushing the California bill.
The California Senate passed the single-payer bill June 1 by a vote of 23-14 with three members not present. The bill now heads to the state assembly. If it passes there, it will move to Democratic Gov. Jerry Brown for his signature.
However, several hurdles remain.
It is not clear if Brown supports the effort, and the governor has questioned how the state would pay for it. A recent legislative analysis found the bill would cost the state $400 billion per year, more than double the current state budget of $125 billion.
Lawmakers want to add a 15 percent payroll tax to pay for it and hope to get about $200 billion from existing federal, state and local funding, according to the legislative analysis.
But even if California passed the bill, the Trump administration would have to approve a waiver that allows federal funds to be redirected to single-payer. The Department of Health and Human Services did not return a request for comment on whether it would be willing to give the state a waiver.
Activists on the Left have found renewed energy in pushing for single-payer, which several countries such as the United Kingdom and Canada use.
Grassroots activists have been emboldened by the popularity of Sen. Bernie Sanders, I-Vt., who advocated for a Medicare-for-all plan during his failed presidential bid last year.
A new Medicare-for-all bill was recently introduced in the House and co-sponsored by more than 100 Democrats. And New York's legislature also is considering the program.
Rep. John Conyers, D-Mich., told the Hill last month that he has never "seen more energy behind this issue of Medicare for all."
But despite their efforts, Democrats don't have a practical path toward nationwide single-payer. Congressional Republicans and President Trump are working to replace Obamacare and move toward a more free-market system that they say would lower premiums.
In addition, the grassroots energy for single-payer hasn't affected everyone in the Democratic Party. Some liberals have lashed out at Democratic incumbents skeptical of the idea.
Sen. Dianne Feinstein, D-Calif., up for re-election next year, felt the brunt of that anger during a town hall in April where she was booed for not endorsing the plan.
"Single-payer now," the crowd chanted, according to news reports.
Another state's effort to change to a single-payer system failed in November. Colorado voters rejected a ballot measure after activists failed to win key support from major Democratic players such as Gov. John Hickenlooper.
Hickenlooper said the state had already made strides under Obamacare and didn't want to disrupt them.
Medium.com Jerry Brown’s Pension Loan Does NOT Pay Down Pension Obligations David Crane Lecturer at Stanford University and president of Govern For California Jun 11 https://medium.com/@DavidGCrane/jerry-browns-pension-loan-does-not-pay-down-pension-obligations-616d4eeca0b3
In an opinion piece on June 8, State Treasurer John Chiang and State Senator John Moorlach provide an invalid analogy in support of Governor Jerry Brown’s proposal to borrow money in order to boost pension contributions. They write:
“[Brown’s] proposal is just as fiscally prudent as a family deciding to use some of its discretionary cash to pay off an expensive credit card.”
No, Brown’s proposal is not like using discretionary cash to pay off debt. Just read the language from the proposed bill: “This bill would require the Controller to transfer up to $6,000,000,000 from the Surplus Money Investment Fund and other funds in the Pooled Money Investment Account … to the General Fund as a cash loan, the proceeds of which would supplement the state’s employer contributions for the 2017–18 fiscal year.” As that language makes clear, Brown does not propose to use discretionary cash to pay down pension obligations. Instead, he proposes to borrow in order to boost assets that are invested to meet pension obligations. There is a big difference.
Think about it this way: Assume Jerry Brown personally owes $100 in pension obligations but presently has set aside only $65 with an investment manager to meet the future payments due on those obligations. Brown proposes to borrow $4 from a family member and contribute that $4 to the investment manager in the hope that investment earnings on that $4 will offset some of his future pension costs. In doing so, Brown wouldn’t be paying down any portion of his $100 in pension obligations. Instead, he would be borrowing in order to boost assets from $65 to $69 in the hope that the difference between what he pays on the borrowing and what his investment manager earns will reduce his future pension costs. If instead Brown wanted to use the $4 to actually reduce pension obligations he would offer payments to pension beneficiaries in exchange for extinguishing some of their future pension payments at a discount.
As frugal as Jerry Brown is, if his own money were at risk I can’t imagine that he would not grasp the difference between (i) using his own discretionary cash to pay down his obligations and (ii) borrowing from a family member to speculate on stocks in the hope of reducing future costs relating to his obligations. Presumably he would also notice the special danger of borrowing on a floating rate basis to speculate on stock markets when interest rates are low and stock prices are high. He might also notice the unfairness of covering up unfairly low past contributions by employees, the worrisome precedent set by borrowing from a non-discretionary special fund, and the mythology of designating another special fund as the source of the repayment of the loan when the obligations already payable by that fund dwarf that fund’s assets. If he drilled down further, he would also learn that the state’s future pension payments are coming due faster than they used to, which means CalPERS is increasingly unable to invest for the long term and increasingly at risk to the consequences of market volatility.
Perhaps Moorlach, Chiang and Brown are confused by accounting, just as a number of municipal governments have been confused by pension obligation bonds. Like Brown’s proposal, POB’s allow governments to boost contributions, thereby allowing them to report smaller unfunded liabilities (ie, the difference between assets and liabilities), but that’s an accounting fiction because all the prior pension liabilities remain in place and the new debt is elsewhere on the balance sheet (see eg, Stockton’s POB). Ie, the municipality (or the state in Brown’s case) gets to report more pension assets and thereby a smaller unfunded liability (in my example above, the unfunded liability would drop from 35 to 31) and in a separate spot report the borrowing that provided the money to boost the assets. But net net, there’s no reduction in amounts owed and now there’s also interest due on the new borrowing. What Brown proposes is no different than Lehman Brothers proposed to Stockton except that, unlike Stockton, he
doesn’t need an investment banker to issue bonds to the public. Instead he and the legislature would authorize the state to issue a note to a special fund.
California has already gotten into deep hot water as a result of uninformed legislation and projections involving pension economics (see eg, SB 400) and pours more hot water every day by failing to fund new promises at adequate levels. Brown’s scheme — nothing more than a leveraged boost to assets in the hope and prayer there will be a positive spread between the cost of the loan and earnings on the assets — will just add more hot water. It’s a very un-Jerry-Brown-like proposal that he should withdraw.
NB: Chiang and Moorlach also invalidly analogize Brown’s proposal to “[making] an extra mortgage payment.” It is no such thing. Mortgages are obligations secured by assets. An extra mortgage payment that reduces the principal balance of a loan secured by an asset would boost the payer’s equity in that asset. In contrast, there is no equity to be gained from an extra pension payment. Also, in both cases the extra payment would reduce total interest expense if obligations were reduced but as explained above, Brown’s proposal would not pay down pension obligations.
Noozhawk Still Far Apart on Shortfall Solution, Lompoc Council Extends Budget Deadline 2 Months
By Janene Scully, Noozhawk North County Editor | @JaneneScully | June 11, 2017 | 11:45 p.m. https://www.noozhawk.com/article/facing_deficit_lompoc_council_extends_budget_deadline_2_months_20170611
Wrestling with a big budget deficit, Lompoc City Council members gave themselves a two-month
reprieve to continue reviewing whether to make spending cuts, ask voters to raise taxes or adopt some
combination of solutions.
The council met Thursday night for a nearly four-hour special budget meeting, after taking up the topic
during Tuesday night’s regular council meeting. Plans call for continuing the discussion during a June 20
regular meeting and a June 26 special meeting.
On Thursday, with the budget woes far from being solved, the council voted 5-0— a rare unanimous
outcome— to extend the deadline through August for adopting a spending blueprint.
Noozhawk Social Services Layoffs Among Cuts Proposed in $1.07 Billion Santa Barbara County Budget
Board of Supervisors begins finalizing 2017-2018 budget, with higher pension costs and lower reserves on the way
By Giana Magnoli, Noozhawk Managing Editor | @magnoli | June 11, 2017 | 8:35 p.m. https://www.noozhawk.com/article/social_services_staff_cuts_proposed_santa_barbara_county_budget_20170611 The Santa Barbara County Board of Supervisors will make final decisions this week for the 2017-2018 budget, which will include escalating pension costs and laying off 60 or so Department of Social Services staff members.
County Executive Officer Mona Miyasato told Noozhawk the proposed $1.07 billion balanced budget
strikes a balance between making the necessary reductions, fulfilling the county’s needs and planning
for the future.
Board priorities are funded, including the Northern Branch Jail (expected to open in 2019), pension
payments, paying down unfunded pension liabilities, and keeping reserves at a strategic level.
The recommended budget does cut into the reserve funds, bringing it below the goal of 8 percent, to
make matching funds for some emergency storm damage repairs, Miyasato said.
While the recession was obviously a big hit to pension investments, the five-year increase in costs the
county is now facing is mostly due to a change in assumptions, according to county officials.
The Santa Barbara County Employees’ Retirement System thinks the rate of return will be more like 7
percent, not 7.5 percent, so the county will end up paying more into the system for an estimated five
years before the contribution rates level off.
The county is paying an additional $7.3 million in pension costs next year, Miyasato said, and plans to
reopen labor negotiations, specifically regarding pensions, in the fall.
Ventura County Star Port Hueneme police union files claim against city over Social Security, Medicare Arlene Martinez , [email protected], 805-437-0262 Published 1:07 p.m. PT June 9, 2017 | Updated 12:28 a.m. PT June 10, 2017 http://www.vcstar.com/story/news/local/communities/port-hueneme/2017/06/09/port-hueneme-police-union-files-claim-against-city-over-social-security-medicare/381817001/
Port Hueneme's police union filed a claim against the city, alleging it violated the most recent contract.(Photo: STAR FILE PHOTO)
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Helped by overtime, Port Hueneme's police officers were on average the highest-paid law enforcement agency of any in the county in 2015, according to the most recent report from the state controller's office.
The Port Hueneme Police Department, which serves the city of roughly 22,000, is also the only public safety agency in Ventura County whose employees receive Social Security and Medicare benefits.
Now, the police union has filed a claim against the city because employees must help pay for those benefits, even as the city's finances have improved, it alleges. A claim can be a precursor to a lawsuit against a government entity.
The Port Hueneme Police Officers' Association is in the midst of contract negotiations but meanwhile has been operating under the terms of the contract that expired June 30, 2016. That contract calls for the union to pay Social Security and Medicare taxes "until such time as the city has a balanced general fund budget without utilization of reserves" or savings that come from the union contributions.
The claim, filed April 28, alleges union members began paying 50 percent of the employee's share of the Social Security and Medicare benefit after the contract was approved, which occurred in January 2016. Starting in late June 2016, members began paying 100 percent of the employee's share, the contract notes.
Prior to that, the city paid for the entire benefit, which is made up of both an employer and employee portion. Each share is 7.65 percent — 6.2 percent for Social Security and 1.45 percent for Medicare, according to the city.
Years ago, government agencies that offered defined pensions could choose whether to also provide Social Security coverage. Port Hueneme opted to offer it, and now it can’t leave the Social Security system. The benefit must extend even to new hires.
Amy Morgan, a spokesperson for the California Public Employees Retirement System, or CalPERS, said 76 percent of its members offer some type of Social Security benefits.
In some cases, a Social Security payment is reduced if a person is also receiving a government pension, but not always. If a person has at least 30 years of "substantial earnings," which this year means they earned at least $23,625, Social Security benefits are not reduced, according to the Social Security Administration.
A police offer who retires from Port Hueneme after at least 30 years could receive a CalPERS pension equal to 90 percent of their highest-earning year on top of a full Social Security payment.
"What was happening in the past, compensation and the benefits were very generous that had been negotiated here over the years," City Manager Rod Butler said. "Once things began to turn financially, we had to require some significant concessions through our two bargaining units."
Police union President Baltazar Tapia said members already contributed to CalPERS, and they had no say in the city's decision to be part of Social Security and Medicare.
"The fact that they want us to pay for Social Security and Medicare, that's something we had no control over," he said.
The claim alleges the city continued charging police union members even after its financial situation improved.
"However, at some point thereafter, the city had a balanced general fund budget without utilization of reserves of the city savings derived from city employees paying the employee Social Security and Medicare taxes," the claim states.
Tapia said the city's comprehensive annual financial report is a more accurate economic indicator than the budget, and it shows the city has a strong bond rating and deep reserves. The city saying it has no money is like someone saying they have no money in their checking account because it’s all in savings, Tapia said.
The city will also see economic gains from marijuana dispensaries and increased sales tax revenues from the recent sale of properties. Both of those will be sources of unrestricted funds, meaning the city can spend them on anything, Tapia said.
Butler, who was hired in November, disputes the union's conclusions. The budgets for fiscal years 2017-18 and 2018-19 are expected to rely heavily on general fund reserves. It isn't a trend that can continue, he said.
"Reserves are one-time money and are not being replenished," he said. "It would not be wise to take that money and apply it to salary and benefit increases."
The audit also considers enterprise fund reserves, even though that money must be spent in the area to which it is directed, for example, water or wastewater, he said.
The union's consultant also failed to consider rising pension costs, for which the city must prepare, Butler said.
Read more: Pension costs soar for Ventura County cities
"If we start increasing salaries now, that's only going to make the problem worse. Down the road, it will create more of a crisis when those rate increases kick in," he said, referring to the recent decision by CalPERS to reduce the presumed return rate on its investments.
Read more: Four cities tackle growing pension costs
Port Hueneme is part of CalPERS, which pays out pensions to employees. A city's payment to CalPERS is based on two things: a percentage of payroll, known as "normal costs"; and money owed for benefits already earned, known as the "unfunded accrued liability."
In addition, employees contribute based on their contracts. Currently, Port Hueneme's police union members pay 6 percent of the 9 percent employee portion of CalPERS, Butler said.
How much a CalPERS member pays depends on how well the market does. When investments fall short, taxpayers make up the difference in the form of higher payments, which typically come from a city's general fund.
Port Hueneme's unfunded liability for police and non-police employees is expected to be roughly $1.3 million for 2017-18, according to CalPERS actuarial reports. That could climb to $3.1 million by 2022-23, factoring in the change in assumption rate from 7.5 percent to 7 percent. Normal costs will add hundreds of thousands more.
Police union members in Port Hueneme who were hired before 2013 receive a CalPERS pension based on their highest year of pensionable income. Per the most recent contract, that income can be boosted in multiple ways. For example, a union member who works 10 years will get 6 percent more in pay for experience; a member with a bachelor's degree gets a 10 percent bump; and a member who has an advanced peace officer standards and training certificate gets a 15 percent bump.
The city also pays up to $1,141.70 per month in medical, dental and vision insurance, and offers post-retirement health benefits, per the contract.
Press Democrat PD Editorial: Pension loan needs more scrutiny BY THE EDITORIAL BOARD | June 10, 2017, 12:11AM http://www.pressdemocrat.com/opinion/7080155-181/pd-editorial-pension-loan-needs In the late 1990s, California’s state and local lawmakers bet that a booming stock market would cover the cost of enhanced retirement benefits for public employees. But the tech bubble burst, with the Great Recession following about a decade later. Today, the state’s major retirement fund has less than two-thirds of the assets needed to fulfill its obligations, and its unfunded liabilities are counted in tens of billions of dollars. Reducing retirement benefits and increasing payroll contributions for employees hired since 2012 produced some marginal savings, but a recession of any significant magnitude and duration would be devastating for the California Public Employees Retirement System. Against that backdrop, Gov. Jerry Brown and state Treasurer John Chiang are proposing a pension wager of their own in the upcoming state budget. They want to borrow $6 billion from one of the state’s reserve accounts to make a one-time, advance payment on the state’s pension obligations — a maneuver that has been likened to a homeowner making an extra mortgage payment to reduce the outstanding principle. The loan would be repaid over eight to 12 years at an interest rate slightly higher than the current return on money in the pooled investment fund. The fund holds surplus cash as the state tends to get infusions of revenue on a quarterly or annual basis while expenditures are spread more evenly across the calendar.
By making the advance payment, Brown and Chiang estimate that the state would save $11 billion on its pension obligations over 30 years. That’s where the gamble comes. The estimate assumes that CalPERS would earn money by investing the advance payment and that interest rates don’t drive up the cost of borrowing from the pooled-money funds. A sharp correction in the market, or a sustained recession, could upend the projections. So is this a bad idea? Not necessarily. The state still needs to pursue additional pension reform, and this mechanism isn’t a substitute. But the state is legally obligated to cover its unfunded liabilities, which almost certainly will require making additional payments into the fund. Some cities, most notably Newport Beach, already are taking steps to cut their unfunded liabilities with extra payments. But the governor’s proposal needs more scrutiny than it’s likely to get in the run up to the June 15 deadline to complete the state budget for 2017-18. And, as the state’s nonpartisan legislative analyst pointed out in an analysis of the proposal, there isn’t any reason why a decision must be made prior to the budget deadline. The analyst’s report described the proposal as promising, but it also identified several issues that require careful consideration, including the legality of borrowing without voter approval, the precedent that would be set by the loan and whether it would be consistent with the fiduciary duty of the pooled money investment fund. Legislators should take whatever time is required to explore each of those issues in order to make an informed decision. If this mechanism would save the money in the long run, and it wouldn’t violate other laws and duties, it would still be a viable option after the state completes its due diligence. Marin Independent Journal Jury sees $1 billion shortfall in Marin public pensions By Keri Brenner, Marin Independent Journal Posted: 06/08/17, 4:49 PM PDT | Updated: 1 day ago http://www.marinij.com/general-news/20170608/jury-sees-1-billion-shortfall-in-marin-public-pensions
Marin public agencies are short $1 billion in ‘unfunded pension liability,’ according to a new grand jury report. (IJ photo/Frankie Frost)
Marin public agencies have a $1 billion unfunded pension liability — the amount of future pension obligations guaranteed public workers but not currently held in reserve, according to a new Marin County Civil Grand Jury report.
The 61-page report — “The Budget Squeeze: How Will Marin Fund Its Public Employees Pensions?” — calls the $1 billion shortfall “disturbing” and says leaders need to take immediate action, such as forming a special citizens panel, to prevent county agencies from sliding further into pension red ink.
PENSIONS > MORE COVERAGE
“Marin Board of Supervisors should empanel a commission to investigate methods to reduce pension and debt and to find ways to keep the public informed,” the report says. “(The new commission) should be allowed to engage legal and actuarial consultants to develop and propose alternatives to the current system.”
Marin Supervisor Judy Arnold, board president, said she had not yet had a chance to fully review the grand jury’s report.
However, she said she was “not opposed to their recommendation to establish a citizen advisory committee. As a matter of fact, I discussed this issue recently with the League of Women Voters.”
County Administrator Matthew Hymel said he was glad to see that the county was acknowledged in the report for its progress in reducing pension liability. Over the past five years, he said, the county has been able to reduce its pension liability by $93 million.
“The county has agreed for a long time that pension liability is a serious issue,” Hymel said. “One example (of county efforts on the issue) is that we made a $32 million accelerated payment to our pension fund in 2012-13 — that helped to reduce the ongoing payments going forward.”
According to the grand jury, Marin County “is in a strong financial position, spending 7.9 percent of its revenues on pension contributions,” the report says. “The county of Marin’s balance sheet has assets of nearly $2 billion, yearly revenues of over $600 million and cash of over $400 million.”
Given that scenario, “the county does not currently appear to be financially strained by its pension obligations,” the report says.
In contrast, the grand jury found that San Rafael and Ross had the highest contribution percentages, with San Rafael contributing 19.2 percent to its pension fund and Ross contributing 14.5 percent.
“The city of San Rafael’s contribution rate has been consistently high for the last five years,” the report said. It noted that the Marin County Employees Retirement Association, San Rafael’s pension administrator, “projects that contributions will remain high, with only a slight decline over the next 15 years.”
Belvedere and San Anselmo had the lowest contribution percentages of 4.2 percent and 2.4 percent respectively, the grand jury said.
Liabilities listed
The report, which was released Monday and is available online, pegged the net pension liability for last fiscal year at $204 million for the county of Marin, $142 million for San Rafael, $32 million for Novato and $25 million for Mill Valley. Among school districts, it was $61 million for Novato Unified and $61 million for San Rafael high school and elementary districts, $58 million for Tamalpais Union and $46 million for the College of Marin. The Marin Municipal Water District had a $70 million net pension liability, according to the report.
Jody Morales, founder of Citizens for Sustainable Pension Plans, said she appreciated the grand jury’s attention to detail.
“Marin County is fortunate to have such dedicated, intelligent, concerned citizens,” she said. “I hope all of our local officials will read this report and respond to its findings.”
The jury, in researching the study, gathered fiscal information from 46 Marin public agencies from 2012 to 2016. Data collected included net pension liabilities and yearly contributions of each agency, as well as key financial details from balance sheets and income statements.
Those 46 agencies are required by law to respond to the report’s findings. In addition, five lawmakers and pension officials are also asked to respond: Assemblyman Marc Levine, state Sen. Mike McGuire, Gov. Jerry Brown, CalPERS CEO Marcie Frost and CalSTRS CEO Jack Ehnes.
Report findings
Among findings of the report:
• All of the Marin public agencies in the report had pension liabilities that exceeded their pension assets as of fiscal year 2016.
• A prolonged period of declining global investment returns has led pension plan assets to under perform their targeted expected returns.
• The three public employee retirement systems that cover Marin public employees — MCERA, CalPERS and CalSTRS — have lowered their discount rates, which will result in significantly higher required contributions by Marin County agencies in the next few years. The discount rate is the interest rate used in present value calculations.
• If pension plan administrators discounted net pension liabilities according to accounting rules used for the private sector, increases in required contributions would be vastly larger than those required by the recent lowering of discount rates.
• The required contributions of Marin school districts to CalSTRS and CalPERS will nearly double within the next five to six years due to mandated contribution increases.
• Pension contribution increases will strain Marin County agency budgets, requiring either cutbacks in services, new sources of revenue or both.
• Taxpayers bear most of the risk of Marin County employee pension plan assets under performing their expected targets.
• Retirees’ pension benefits would be reduced if an agency were unable to meet its contribution obligations.
“As bad as this report may make things look, they will almost certainly look worse in the next few years because of the lowering of discount (interest) rates by pension administrators,” the report states. “We believe that these actions by CalPERS, CalSTRS and MCERA are well-founded and prudent, but they will result in increases to the (net pension liability) of every agency, necessitating higher payments in the near term to amortize the higher (liability).
“The result will be,” the report concludes, “that budgets, already under pressure, will be squeezed further.”
About the Author
Reach the author at [email protected] or follow Keri on Twitter: @KeriWorks.
Trumpcare would be devastating for millions of American families, but perhaps no one will bear the brunt of its cruelty more than older Americans. This harmful legislation raises costs and imposes a crushing age tax on older Americans right when they need the money the most ― just before retirement. The Affordable Care Act (ACA) prevented insurance companies from charging older enrollees more than three times the rate charged to their youngest enrollees. This ensures coverage is affordable for older Americans. However, under Trumpcare, states could choose to allow insurance companies to increase premiums for older Americans as high as they like, exposing older Americans to exponentially higher premiums. AARP estimates that allowing insurance companies to charge older Americans five times more than younger enrollees would add an average of $3,200 annually to premiums for adults age 60 or older. The nonpartisan Congressional Budget Office also confirmed that older Americans could see their premiums increased by over 800 percent under Trumpcare. About half of households age 55 and olderhave no retirement savings and these pre-retirement individuals can’t afford more health costs shifted onto them.
In addition to skyrocketing premiums, Trumpcare also unravels protections that older Americans want and need in their health coverage. The ACA currently requires health insurance companies to cover ten categories of essential health benefits in Marketplace plans, including mental health treatment and prescription drug coverage. Trumpcare strips away this guaranteed coverage, potentially leaving millions of older Americans without access to the coverage or the medications they need. We know that three out of four adults age 50 and over take at least one prescription medication on a regular basis. Losing access to quality and comprehensive coverage, including for prescription drugs, would be devastating to older Americans.
That’s not all. Trumpcare frees insurers to set premiums for enrollees, including older Americans, based on their health status. This would take us back to the days when health insurance coverage was unaffordable for individuals with pre-existing conditions ― especially for the 25 million older adults with pre-existing conditions. Exorbitantly high premiums and coverage that excludes certain conditions, such as hypertension, are, in practice, no different than coverage denials. If an insurer wanted to deny someone coverage, they could simply offer a plan with an overly expensive premium or a plan without the kind of coverage needed.
All in all, Trumpcare is a bad plan for older Americans.
Representative Raja Krishnamoorthi (IL-08) is a member of the Committee on Education and the Workforce.
Related... • Let’s Gut Trumpcare, Not Health Coverage
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