"Out of hand" is the catchphrase of the season:
"This is the worst example of reckless borrowing I've ever seen," board Chairman Scott Kunka said just before the 3-2 vote of the five-member board. Kunka is also the city's finance director. (Trib, Bill Vidonic)
I'm told that Admiral Chris of Just Ducky spoke eloquently on the problems the Authority would have encountered in terms of facilities maintenance, and on its own clear lack of necessity or motivation for purchasing these assets at such a serendipitous price.
ANALYSIS: At least it refused to pay for a study it'd just wind up ignoring for its own reasons. Score one for the Authority in terms of financial stewardship right off the top.
NEXT UP: Likely the original Council-President Plan of simply having the City take out the debt will be revisited. That will be interesting. Also, this time next week some real-world pensions facts from PMRS will arrive -- which among other things, will clarify what a state takeover would feel like.
MORE: Trib, Bill Vidonic;
Nothing at all happening is looking like a better and better bet. Welcome to a system with too many veto points (see also: U.S. federal government).
ReplyDeleteNow do we get to find out what the city is holding that the state thinks is insufficiently liquid for a pension fund? My guess, 1000 gross of Pat Ford action figures and the contents of the "Lost and Found" box from the G-20 meeting.
ReplyDeleteMH - Yeah, I wrote to Secretary Allen a couple weeks ago to inquire after that illiquidity, and received a polite response asking for a little more time. Then I sent a follow-up reminder last week and received no response. Tea leaves read that PMRS may have the numbers and is turtled up in a fetal position until the date next week; even the ICA can't get anywhere, which would be nice for them as a new annual budget proposal will be arriving the day before. Suspicious minds might conclude that the data is so gobsmackingly bad it would DISCOURAGE any attempt to fill the pension fund in the meanwhile, so it is keeping quiet in hopes that Pittsburgh will futilely toss some money into the fund that it is about to take over.
ReplyDeleteThat's why some suspicious minds want a state takeover before we talk about how to fix the shortfall. Though, I suppose your way of asking for information is technically more fair that my unfounded speculation based on nothing.
ReplyDelete1. Raise non-fire/non-police city employee contributions (1/2 the workforce) from 5% to 7% (don't need to negotiate with non-union employees, other unions are weaker and may be understandably concerned enough with state of pension that they will voluntarily agree to increases in contribution rates) - this will yield $3-4 million; Why exactly are police paying 6.5% for what appears to be the same plan non-union employees have for just 5% anyway?
ReplyDelete2. Stop paying so much OT to firefighters, which is driving up the city's pension liabilities and hire new firefighters to fulfill mandatory staffing levels - yeah, we all get that this would raise the operations budget, but by my calculations, the operations budget is about $100 billion more flush w/cash than the pension fund. This way, you have more folks contributing to the fund and less coming out on the back end.
3. Fire the investment managers responsible for the city's irresponsible illiquidity problem - worth at least $1 million
4. Stop flying all over the world pretending to be an adult, stay home, hire some adults who will anticipate and manage these problems BEFORE things reach such a catastrophic stage. How do you eat an elephant? One bite at a time - chewing should've begun years ago. A $3 Million infusion of some sort 10 years ago translates to $100 Million today - neglecting to do anything until this year (seriously, running around screaming that the sky is falling/you have to agree to give more money to my financiers/sacrifice assets for 1/2 a century so that I can push the problem off until I finally have a chance to run for County Executive isn't good financial planning). It's really sickening to watch this kid scream like a howler monkey "raise property taxes!" "lay off employees!" when he should be acknowledging "I'm in over my head, I have no clue what to do, I've surrounded myself with idiots, we've all been focused 1000% on how to get me re-elected and how to pay my campaign contributors back and we've had no time to actually do our jobs, so maybe it's time for me to fall on my sword and do something to turn this ship around." The point is, even if you do the LAZ deal, there will still be a problem later on down the road if adjustments aren't made to the system.
Hi guys,
ReplyDeleteThe first viable solution to the Pension Fiasco was introduced, by a monk, in the year 1999.
Lamb, touched on "present value" of pensions calculation, recently.
It has been accomplished before, monk study,understood...converting from defined benefit plan to defined contribution plan required Lamb calculation.
Plan I suspect, is called hybrid...as it is voluntary.
It ia a 'Can Do Option', based in acutarial assumptions...
Council and Mayor need to be on same page...and, present to the State, a solution.
Local Unions have shown interest in picking up member "present value of contributions' and apply monies to Union Pensions.
Only option is to Municipal Employees Pension Fund Members (Union) not non-union or public saftey members- Police and Fire.
It is not the Mayor nor Council that inhibits City's future...instead, it is The State of Unawareness! Penns woods...?
chee
Why should Ravenstahl fear for the next reelection? By and large the folks who oppose him don't vote anyway - just ask Kevin Acklin, Doc Harris, Patrick Dowd...and ok, Peduto, even though he didn't actually have the balls to run.
ReplyDeleteAs for hiring folks who would anticipate and manage these problems...what mayor are you addressing? This problem certainly predates the current one. This administration has been working on this issue since day one.
Correction:
ReplyDeletePresent Value Actuarial Assumption would apply to non union as well..
Conversion to defined contribution plan makes sense to some, those not vested or moderatly vested...
Senior Employees would not opt out under normal circumstances...
But each life circumstansce is different.
Forced conversion is contaray to PA Constitution. Volutnary is permissable.
need spell check
good with numbers, however
monk
Anon 4:01 concluded - "The point is, even if you do the LAZ deal, there will still be a problem later on down the road if adjustments aren't made to the system."
ReplyDeleteMy understanding was, this was doubly true of the late Council-Controller plan and is similarly true of the Harris plan. (True, the mayor's first budget draft did not put all the lease overage into pensions, but the Reichbloom-Briem-Burgess plan did just that and it it was paired with a voluntary takeover. Like that or not for several reasons, that was the ONLY plan that actually stood us a realistic chance of NEVER having to hear the phrase "pensions crisis" again in our lifetimes.)
Sorry, I digress. Is what you outline above part of the "menu" of cuts that has been proposed? I agree it is silly to ignore doing what we can and should do on our end when it comes to expenditures and operations. Of course, I've heard rumors of smacktalk recently about the outcome of the Peduto-Lamb budget savers of the 2010 budget, but I guess only the ICA may hold forth on that credibly.
Defined contribution plans are illegal in PA, although given the state of the younger members of the workforce and the fact that they'd be better served by a retirement vehicle that is portabe, I'm unsure why we can't move in that direction, but I'm absolutely sure it has something to do with the General Assembly.
ReplyDeleteSomeone is making an assumption about the said illiquid assets. Are they things Mercer invested in, or are they things they have not been able to get rid of from earlier? Not knowing that is the issue... but if someone knows the answer, then they are ahead of the rest of us and should disclose what they are.
ReplyDeleteDid any of you ever hear of the Fun-tastic Plan?
ReplyDeleteWrite me off as a nut...
Lamb, needs no shepard.
He thinks both plans suck!
Short-term infusion of cash is catalyst for change. Fundemental change is...work in progress.
'Present Value Figure', is something that needs to be done.
If Mayor promised all money from parking lease be applied to unfunded pension liabilities, not just the mininmum required to stave State Take-Over, would Council have supported?
The Rank and Foul, believe all monies recieved from lease should be apllied to pay down debt. To do otherwise weakens his 'no debt' position.
They only hear that Council tabeled Mayors proposal because of lenght of lease...
They also, the rank and foul, understand that borrowing $200 million and paying back $600 million plus is reason that pension fund is Bankrupt.
Mayor Murphy, has tread this path before...
Does the Mayors lease, ackowledge the Lamb 'Present Value Calculations" in preperation for conversion from 'Defined Benefit Plan to Defined Contribution Plan", and should Council excerise legislative jurisdication based on Home Rule Charter.
WE must Stand United and embrace the law as it applies to eachs expertise!
We must fight an oppressive State, that looks down it's long and slopped nose... and calls us a Second Class City.
It is time to unite and be recognized as the Truly Best City of the Commonwealth of Pennsylvannia...
F**k'n A
monk
I'm afraid to ask ... the State's "long and sloped nose"? You didn't just insert some phrenology into your militantly populist workers' tirade, did you?
ReplyDeleteBram
ReplyDeleteFor my own edification and all other 'Stooges'...
Define: Phrenology?
I am sure answer lies at end of "Long and Slopped nose".
When laws were written, Pittsburgh was Frontier.
Rank and Foul...
monk
phre·nol·o·gy (frĭ-nŏl'ə-jē): n.
ReplyDeleteThe study of the shape and protuberances of the skull, based on the now discredited belief that they reveal character and mental capacity.
Are they things Mercer invested in, or are they things they have not been able to get rid of from earlier?
ReplyDelete1,000 gross of Pete Flaherty dolls, the contents of "Lost and Found" box from Super Box X, and a working scale mode of Skybus?
"model of Skybus"
ReplyDeleteand "Super Bowl X"
ReplyDelete"This is the worst example of reckless borrowing I've ever seen," board Chairman Scott Kunka said just before the 3-2 vote of the five-member board. Kunka is also the city's finance director.
ReplyDeleteApparently, Scott Kunka was blindfolded when he and his buddies at JP Morgan exposed ratepayers to this recent borrowing
Ted:
ReplyDeletePerhaps he's learned his lesson.
Apparently, Scott Kunka was blindfolded when he and his buddies at JP Morgan exposed ratepayers to this recent borrowing
ReplyDeleteSpeaking of the PWSA debt referenced there. There are new problems on that front. The variable rate debt just had the rating on its letter of credit downgraded a couple weeks ago. Could prove to be a problem again as it was a year and a half ago when JP Morgan (some other division at JPMorgan no doubt) and Dexia refused to back up the debt. Complicated, but potentially costly, problem. I do emphasize just potentially, bescause it is all such a mess who really knows.
Rex said: Perhaps he's learned his lesson.
ReplyDeleteIs this really a time for on-the-job training?
Ted:
ReplyDeleteI suppose we should ask City Council the same question.