Lessons from Well-Funded Public Pensions

[mickeyd]

I read this article because it referenced TRS which DW is a participant in and I wanted to know if we could rely on it's funding. Looks like we're Ok. Besides that, It's also a pretty interesting pension article even if you do not have a dog in the hunt IMHO.

“Lessons from Well-Funded Public Pensions” analyzed six state-level pension plans that vary in size and type of employee they represent in order to achieve a wide sample. The market value of assets in the plans in 2010 was approximately $300 billion, or 10% of total public pension assets.

Plans covered in the study include:

• Delaware State Employees Pension Plan
• Idaho Public Employee Retirement Fund
• Illinois Municipal Retirement Fund
• New York State Teachers' Retirement System
• North Carolina Teachers & State Employees Retirement System
• Teacher Retirement System of Texas

Despite two downturns in the 10-year period between 2000 and 2009 when the plans were studied, and even though they experienced less-than-expected investment gains, the plans remained well-funded through the recession.

Six Reasons These States Had Recession-Proof Pension Plans | Advisor One

 

[NatureBoy]

Doesn't Seem to Matter

My organization's DB pension fits the criteria almost perfectly: five highest years, no spiking, ad-hoc incrreases only, employee contributions, full actuarial funding, plus severe penalties for retiring before 63. Result---they are closing the plan to new members and adopting a hybrid plan to be developed in the next year.

Go figure.

 

[ERD50]

I'm not sure that reporter did her homework. She claims:

The plans shared the following features:

• Employer contributions paid the full amount of the annual required contribution and were at least equal to the normal cost.
  
• Employee contributions helped share the cost of the plan.
  
• Improvements in benefits were valued before implemented,
  and were properly funded upon adoption.
  
• Cost of living adjustments were granted responsibly.
  
  [*]Anti-spiking measures ensured actuarial integrity.
  
  
• Reasonable economic actuarial assumptions that could be achieved long-term.

Yet, I've heard plenty of 'spiking' stories, and the IMRF (Illinois Municipal Retirement Fund - one of the ones listed in the report) website says:

IMRF Online - About IMRF - Salary spiking to increase pensions: upcoming story in the Chicago Tribune

You may be aware of recent news stories covering local units of government that have spiked salaries which resulted in padding a member’s IMRF pension. Reporters across the state are uncovering cases where some employers colluded with employees to increase the pensions of highly compensated executives. For example,

Former Bellwood administrator Roy McCampbell received dramatic, late-career pay hikes that increased his pension to $252,689 a year.

Retired Park District of Highland Park executive director Ralph Volpe received $270,999 in bonuses in 2008, increasing his pension to $166,332 a year.

IMRF seems pretty toothless in doing anything about spiking. Their action is:

Feeds pension envy

IMRF employers are in the best position to reduce salary spiking. Not only does salary spiking burden the taxpayers of the local unit of government with high salary costs immediately and high retirement costs over the long term, it demonstrates a lack of understanding by governing boards of the long-term fiscal consequences of their actions.

Salary spiking feeds pension envy by the taxpaying public and may result in action by the General Assembly to scale back benefits for current members. It is in everyone’s best interest to stop salary spiking now.

Louis W. Kosiba
IMRF Executive Director

Sounds to me like 'pretty please, stop'.


-ERD50

 

[sundance]

City State & federal employees are a valuable part of this country. I am retired from a city job & I will go out on a limb and agree that salary spiking should be stopped! It's a form of Favoritism / Nepotism! Its just not right. It Hurts everyone!

 

[yakers]

From The Economist

Wrong number
Accounting for American public pensions is still flawed
Jun 30th 2011 | from the print edition


THERE is crazy and then there is accounting for American public-sector pensions. A proposed set of reforms from the Government Accounting Standards Board (GASB), the standard-setter for America’s state and local governments, is a step in the right direction. But it will still leave an unsatisfactory system.

The best way to illustrate the insanity is to compare the public and private sectors. When a private company switches its pension scheme from a final-salary, or defined benefit (DB), basis to a defined-contribution (DC) basis, the intention is to save money. The company’s exposure to a DC scheme is limited to the amount that it puts in; in a DB scheme, it must make up any shortfall in investment returns.

A state that switches from DB to DC for new employees would find that its cash costs rise in the short term. New hires will make their contributions to the new DC scheme, not the old DB scheme, but the state still has to cough up for existing DB benefits. The current accounting rules force the state to recognise those costs more quickly once the DB scheme is closed to new members, dissuading some states from making the move. In Nevada a study by the Segal Group, a consultancy, found that employer contributions would have to rise by 10% of payroll, or $1.2 billion, over two years.
....
In the past, high-return assumptions have allowed the states to get away with making lower contributions. But when the strategy goes wrong, the taxpayer foots the bill. A recent study by the Centre for Retirement Research at Boston College found that states have a funding ratio (the proportion of assets to liabilities) of 77% on the official measure, but just 51% if a risk-free rate is used.

Not sure if this link will work for the whole article:
Buttonwood: Wrong number | The Economist

 

[Mulligan]

I am a public pension person. I am a person who probably learned more about the system after retiring , than before. All I ever heard from the system was "protected by law" and "safe". That being said I abhor pension spiking as it robs from both the tax payer and the system fund itself. My pension though is a "trust fund" so if it runs dry, I could be in trouble! Fortunately with 30 billion in assets it wont soon, and they are implementing changes to keep it financially solvent down the road. Seems I can't win, a dozen years ago I remember Forbes running a series of articles on how you were dumb to have a pension instead of a 401k. Now I'm feeling the guilt of having one!

 

[clifp]

I was not familiar with National Institute of Retirement Secuirty, it appears to be funded by unions, (AFL/CIO) and various state employee associations, with help from state pension plans.

I read and skimmed the study. The plans they single out do appear to be in better shape than most, but that is a relative term. For reasons cited in the Economist article and other calculations I've done and posted about in the past, I simple don't believe that levels of benefits paid out are supported by level of contributions.

All six of the plans allow a recent college graduate to work 30 years and then retire in his mid 50s with a pension ranging from 55-69% of final pay. All but Texas also allows somebody to collect SS. I don't have a big problem with benefits which tend to be on the low side of state pension plans. The problem is in the total contributions by the employees and employers is too low.

We often have young people post, "I am just starting out asking how much to I need to save to retire in my 50s". If the young person said my employer matches the first 4% of my 401K contribution. If I just contribute 4% will be able to retire when I turn 55? The resounding answer would hell no you need to save much more than that. Most of the people who are planned /took early retirement on this forum saved 20-30% and in some case close to 1/2 their salaries. Yet the combined contribution for that same college grad who went to work for state of Delaware is virtually the same <8.5%. Even the pension plan with the highest contribution, Idaho is only contributing 16.5% while promising to pay 60% of somebodies salary for life after working 30 years.

Another admittedly simplistic way of looking at this is to divided the total assets of the plan by the number of members to the plan (which includes those working, retired,and folks vested but not collecting). In the case of Delaware that number is $100K per member and the other plans have amounts in the 85-150K range. Now imagine if you have 10 members in your extended family, your parents, their kids and spouses, and grandchildren. Their ages range from 75 down to 18. The family pools their retirement saving and have save one million and each year you all contribute 10% of your salary to the savings, except for dad who is instead collecting a 30K pension. In two years your older brother Bill is going to retire at 55 and is eligible for 60% of his 75K salary or 45K in pensions. Would anybody feel comfortable that the 18 year old even if she has lots of kids is going to be able retire at 55?

 

[Mulligan]

The assumed rate of return on investment money is what scares me on a pension fund. A lot are assuming 8% per year.The previous flat return decade has exposed this. Most pension funds have to be diversified and if you are drawing significant portion of your fund in bonds drawing in 4% range, that puts unreasonable pressure on the equity side to get to the 8% rate of return. I could make an underfunded pension fund appear fully funded by assuming rate of return to be 10% or more (which I know is unreasonable). In today's investment climate, I believe rate of return should probably be lower than 8% , which would make things look even worse I'm sure for funding status of pension funds.

 

[ziggy29]

The assumed rate of return on investment money is what scares me on a pension fund. A lot are assuming 8% per year.The previous flat return decade has exposed this. Most pension funds have to be diversified and if you are drawing significant portion of your fund in bonds drawing in 4% range, that puts unreasonable pressure on the equity side to get to the 8% rate of return. I could make an underfunded pension fund appear fully funded by assuming rate of return to be 10% or more (which I know is unreasonable). In today's investment climate, I believe rate of return should probably be lower than 8% , which would make things look even worse I'm sure for funding status of pension funds.

I agree, but they refuse to change that, in part because setting more reasonable expectations (say 6.5%) would require two things politicians that make the rules don't have the guts to do -- tell pensioners and plan participants they have to accept lower benefits to align with the reduced expectations, or tell the taxpayers they have to pay a lot more to secure the retirement for other people when their own 401K-based retirement prospects look horrible.

 

[steelyman]

It seems to me that one of the most important features that hasn't worked is #1: employer contributions. Imagine if your assumed 401(k) match was taken away without warning.

 

[clifp]

It seems to me that one of the most important features that hasn't worked is #1: employer contributions. Imagine if your assumed 401(k) match was taken away without warning.

You realize disappearing employer matching has happened a lot in the private sector including to a number of forum members?

And when it is does people adapt, stuff happens.

 

[utrecht]

We often have young people post, "I am just starting out asking how much to I need to save to retire in my 50s". If the young person said my employer matches the first 4% of my 401K contribution. If I just contribute 4% will be able to retire when I turn 55? The resounding answer would hell no you need to save much more than that. Most of the people who are planned /took early retirement on this forum saved 20-30% and in some case close to 1/2 their salaries. Yet the combined contribution for that same college grad who went to work for state of Delaware is virtually the same <8.5%. Even the pension plan with the highest contribution, Idaho is only contributing 16.5% while promising to pay 60% of somebodies salary for life after working 30 years.

Another admittedly simplistic way of looking at this is to divided the total assets of the plan by the number of members to the plan (which includes those working, retired,and folks vested but not collecting). In the case of Delaware that number is $100K per member and the other plans have amounts in the 85-150K range. Now imagine if you have 10 members in your extended family, your parents, their kids and spouses, and grandchildren. Their ages range from 75 down to 18. The family pools their retirement saving and have save one million and each year you all contribute 10% of your salary to the savings, except for dad who is instead collecting a 30K pension. In two years your older brother Bill is going to retire at 55 and is eligible for 60% of his 75K salary or 45K in pensions. Would anybody feel comfortable that the 18 year old even if she has lots of kids is going to be able retire at 55?

I see these kinds of calculations all the time but there are plenty of things on the other side of the ledger that people dont think about. For example:

You would be surprised at how many people pay into a public pension system for 2 years, 5 years, 10 years and then quit and take their money out. They get ONLY their contributions back. All of the earnings on those contributions stay in the pension fund. Someone left last year with 18 years in the pension system and took all of their money out with no earnings and no future benefit paid to them. Why? Because people are dumb. The percentage of cops who actually stay until retirement age and collect full benefits is astronomically low.

When you run your numbers thru FireCalc, a large percentage of the time there are millions of dollars left over when you die. That money passes to your heirs and your individual retirement fund ceases to exist. In a public pension fund, that money goes back into the system to pay for future pensioners. I'm speaking only for cops here...a lot of cops die at an early age after retiring (or even before they were able to retire) and never collect any where near what they thought they would over their lifetime. If they are married, she probably collects half of what he would have. If hes not, all of his money stays in the system. Many never even collect the amount that they paid into the fund, let alone collect enough to become a financial burden on the fund.

Im not an actuary, but simple math tells me that these two factors make a huge difference in why funding of a pension plan can not be compared apples to apples to the funding levels of a individual persons 401k like some people try to do.

 

[Mulligan]

I see these kinds of calculations all the time but there are plenty of things on the other side of the ledger that people dont think about. For example:

You would be surprised at how many people pay into a public pension system for 2 years, 5 years, 10 years and then quit and take their money out. They get ONLY their contributions back. All of the earnings on those contributions stay in the pension fund. Someone left last year with 18 years in the pension system and took all of their money out with no earnings and no future benefit paid to them. Why? Because people are dumb. The percentage of cops who actually stay until retirement age and collect full benefits is astronomically low.

When you run your numbers thru FireCalc, a large percentage of the time there are millions of dollars left over when you die. That money passes to your heirs and your individual retirement fund ceases to exist. In a public pension fund, that money goes back into the system to pay for future pensioners. I'm speaking only for cops here...a lot of cops die at an early age after retiring (or even before they were able to retire) and never collect any where near what they thought they would over their lifetime. If they are married, she probably collects half of what he would have. If hes not, all of his money stays in the system. Many never even collect the amount that they paid into the fund, let alone collect enough to become a financial burden on the fund.

Im not an actuary, but simple math tells me that these two factors make a huge difference in why funding of a pension plan can not be compared apples to apples to the funding levels of a individual persons 401k like some people try to do.

As a retired pensioner who has paid on average over 13% (now it's 14.5%) of my salary (including contributing 13% of value of my healthcare insurance), I am definitely on your side. But what surprised me on at least my pension is the actual numbers. Having a system that takes that much out of your check and matched by the employer would make you think that that is what is funding the system. But reading the fine print actually 65% of the pension funds come from an assumed 8% return on investments, the other 35% being the money taken from paycheck and employer. I sure there are a lot of naive people like me, who do not realize that the rate of return is way more important than the amount they are taking from the paycheck.

 

[kyounge1956]

(snip) All six of the plans allow a recent college graduate to work 30 years and then retire in his mid 50s with a pension ranging from 55-69% of final pay. All but Texas also allows somebody to collect SS. I don't have a big problem with benefits which tend to be on the low side of state pension plans. The problem is in the total contributions by the employees and employers is too low.

Those public pensioners who are allowed to collect SS benefits in addition to our pensions are eligible because we paid into SS in addition to pension fund contributions. We are not getting something for nothing from the Social Security Administration.

We often have young people post, "I am just starting out asking how much to I need to save to retire in my 50s". If the young person said my employer matches the first 4% of my 401K contribution. If I just contribute 4% will be able to retire when I turn 55? The resounding answer would hell no you need to save much more than that. Most of the people who are planned /took early retirement on this forum saved 20-30% and in some case close to 1/2 their salaries. Yet the combined contribution for that same college grad who went to work for state of Delaware is virtually the same <8.5%. Even the pension plan with the highest contribution, Idaho is only contributing 16.5% while promising to pay 60% of somebodies salary for life after working 30 years.(snip)

The system I'm a member of has had a contribution rate through most of my employment history of a hair over 8% each from employer and employee. Add SS tax and the retirement savings rate of a public employee can be in the 20-30% range even before any individual savings in tax-deferred plans or IRAs.

 

[kyounge1956]

I(snip) You would be surprised at how many people pay into a public pension system for 2 years, 5 years, 10 years and then quit and take their money out. They get ONLY their contributions back. All of the earnings on those contributions stay in the pension fund.

In at least some systems (mine included) departing employees don't have the option of leaving their money in the system unless they have at least 5 years of service. In the system I'm a member of, a departing employee can also withdraw earnings, calculated at 5.75%/year. I'm pretty sure that's less than the actual earnings have been over most of the system's history. Not only does the difference between calculated and actual earning stay in the system, but the employer match and all of its earnings stay in the pension fund, too.

Someone left last year with 18 years in the pension system and took all of their money out with no earnings and no future benefit paid to them. Why? Because people are dumb. The percentage of cops who actually stay until retirement age and collect full benefits is astronomically low.

Let's hope they roll their withdrawn contributions into an IRA or other tax-privileged account—but I'm afraid not. From what I've read, people changing jobs in the private sector often spend their 401k balance rather than rolling it into an IRA. I don't imagine public sector employees are much different in this respect.

 

[GregLee]

I sure there are a lot of naive people like me, who do not realize that the rate of return is way more important than the amount they are taking from the paycheck.

I don't see why the assumed rate of return is especially important. It's just a budgetary device to let the state estimate what future state resources will be required to pay out pensions.

 

[steelyman]

In a public pension fund, that money goes back into the system to pay for future pensioners.

While I agree in spirit with what I think your sentiments are, I feel I should say that this is not true of all systems. Some (such as mine, or so they say) return contributions to named beneficiaries. Who knows if that will be true in the future...

 

[steelyman]

Thank you for your posts on this topic, kyounge1956.

 

[kyounge1956]

I don't see why the assumed rate of return is especially important. It's just a budgetary device to let the state estimate what future state resources will be required to pay out pensions.

That would be the case if pension benefits are simply a line item in the state's budget, but that isn't the way all government pension systems are set up. Some are run separately from the state's (or other government entity's) budget, and for those systems the assumed rate of return is very important, because if it's overly optimistic, there won't be enough money in the fund to pay the promised benefits when they come due. For independent pension systems, future state resources shouldn't be required—the employee contributions, employer match, and the investment returns on them are supposed to be sufficient to pay the benefits that have been promised. (Or were you being sarcastic? i.e. the assumed rate of return is only needed to estimate the size of the eventual pension fund bailout.)

 

[GregLee]

(Or were you being sarcastic? i.e. the assumed rate of return is only needed to estimate the size of the eventual pension fund bailout.)

No, I wasn't being sarcastic. It seems to me that for a state DB pension system, getting the promised benefits to pensioners is the state's responsibility, and if they can maintain the pension fund to accomplish that with no special adjustments, that's fine, but if circumstances require them to do it a different way, why should we care? The pension fund is a creature of the state. If the trustees/governor/legislature want to play fiscal games, where's the harm, so long as in the end they fulfill their responsibilities? Calling it a "bailout" seems odd terminology, to me, to refer to the circumstance when the state chooses to collect the required revenues later rather than sooner.

 

[clifp]

I see these kinds of calculations all the time but there are plenty of things on the other side of the ledger that people dont think about. For example:

You would be surprised at how many people pay into a public pension system for 2 years, 5 years, 10 years and then quit and take their money out. They get ONLY their contributions back. All of the earnings on those contributions stay in the pension fund. Someone left last year with 18 years in the pension system and took all of their money out with no earnings and no future benefit paid to them. Why? Because people are dumb. The percentage of cops who actually stay until retirement age and collect full benefits is astronomically low.

Most public pension allow people vest in much shorter period of time than 20 years. For instance CalPERs allows vestings in only 5 years. If you worked for 5 years in most California public jobs you are eligible for a reduced pension sometime in your 50s or a pension in the 10-15% of your final salary typically around 62. Even with less than 5 years you can leave your money in there and it earns 6% currently. Now the young teacher who works for 5 years or less and quits, helps the pension solvency, on the other hand there a many examples of folks in taking public service jobs as a second career in their 40 or 50s. They work 10-15 years retire in their 50s to early 60s, these folks make the financial situation worse for the pension since their/state retirement contribution have not had a chance to really grow.

When you run your numbers thru FireCalc, a large percentage of the time there are millions of dollars left over when you die. That money passes to your heirs and your individual retirement fund ceases to exist. In a public pension fund, that money goes back into the system to pay for future pensioners. I'm speaking only for cops here...a lot of cops die at an early age after retiring (or even before they were able to retire) and never collect any where near what they thought they would over their lifetime. If they are married, she probably collects half of what he would have. If hes not, all of his money stays in the system. Many never even collect the amount that they paid into the fund, let alone collect enough to become a financial burden on the fund.

Im not an actuary, but simple math tells me that these two factors make a huge difference in why funding of a pension plan can not be compared apples to apples to the funding levels of a individual persons 401k like some people try to do.

I agree there are lots of games you can play with the system. I will tell you how I do my calculations since I am trying to make Apples to Apples comparison. I calculate the total combined (employee/employer) contributions as percent of salary. Since generally speaking a junior cop/teacher/building inspector makes 1/2 of what a veteran with 30 years of experience makes I factor in a 2.5% merit/longevity annual pay raise. At the end of 30 years this results in pot of retirement money which obviously varies a lot based on rates or return. I take that pot of money and assume that the retiree purchases a SPIA annuity with a 50% survivor benefit for the spouse. Meaning that unlike a FIRECalc run there is no money left over to pass to heirs.

I am sure there are profession like cops which die young, but I doubt overall that public employee have lower life expectancy that private employees. Given that have better access to health care than private employes my guess is that actually live longer than average.

I'm not an actuary either, although I think I've learned enough over the past years posting about this stuff to play one on the internet. I will say that when I've read the annual reports of various pension plans, that forfeitures and even deaths are not huge factor. The Bureau of Labor Statistics tracks things like turnover, and average turnover for public employees is .5%/month 6% a year this is less than 1/3 the rate of private employee turnover 1.6%/month. This also implies the average tenure of a public employee is 16+ years well past the typical vesting period.

I'd also point that the 20 year vesting period of your pension plans, along with the very large contributions that your fellow police officers and city makes, puts your pension plan in way way better financial health than the average or even the so called good pension plans. The problem is most of the country is trying to provide pensions with about 2/3 of the benefits of your plan but only paying 1/3 the cost.

 

[kyounge1956]

No, I wasn't being sarcastic. It seems to me that for a state DB pension system, getting the promised benefits to pensioners is the state's responsibility, and if they can maintain the pension fund to accomplish that with no special adjustments, that's fine, but if circumstances require them to do it a different way, why should we care? The pension fund is a creature of the state. If the trustees/governor/legislature want to play fiscal games, where's the harm, so long as in the end they fulfill their responsibilities?

If those in charge of the pension fund mismanage the retirement system, but nevertheless pay the promised benefits in full, there's no harm done to the pension recipients, true. But if meeting the promised benefit level requires a tax increase, that's a harm done to the residents of the state as a whole, who end up paying the extra taxes. Or the government employer may find some way to wriggle out of part or all of their pension obligation. I think there was a thread some time ago here at E-R (or maybe bogleheads) about states investigating possible changes in bankruptcy laws that could potentially allow them to shed their underfunded pension plans. That would be a harm to the retirees, especially since public pension systems are not covered by the PBGC.

I think it's also possible that a city or county or state might find itself in a catch-22, where it is required to make up a pension fund shortfall and simply doesn't have, and can't raise, the money to do it. The city government I work for has had multi-million-dollar budget gaps the last three years, and looks like the same may happen again next year. County and State governments are just as strapped. Even though a state, county or city may be obligated by law to make up any pension fund shortfall, if they don't have the money, then they don't have the money.

Calling it a "bailout" seems odd terminology, to me, to refer to the circumstance when the state chooses to collect the required revenues later rather than sooner.

It might be odd in the case of some pension funds, where the sponsoring government entity has delayed or withheld the contributions they should have been making all along. In that case it really is just paying later rather than sooner. But some retirement systems are underfunded despite the fact that all contributions have been paid in as promised. The system I'm a member of is in just that situation. The fund got clobbered in 2008, and there is a high proportion of baby boomers in the workforce due to retire in the next decade or so. Both employee and employer contribution rates went up this year and will go up again next year. Maybe that will be enough to put the fund back in the black, but if it isn't, the retirement system will eventually have to go to the City (and the City to the taxpayers) to fill the gap between the promised benefits and the fund's ability to pay. I hope that doesn't happen, but if it does, I don't think "bailout" is an inappropriate term for additional money needed to make up a shortfall in what was supposed to be a self-funding system.

 

[clifp]

Those public pensioners who are allowed to collect SS benefits in addition to our pensions are eligible because we paid into SS in addition to pension fund contributions. We are not getting something for nothing from the Social Security Administration.

The system I'm a member of has had a contribution rate through most of my employment history of a hair over 8% each from employer and employee. Add SS tax and the retirement savings rate of a public employee can be in the 20-30% range even before any individual savings in tax-deferred plans or IRAs.

I didn't mean to imply there was anything wrong with this. I think it is actually a good thing most that state/local employes pay into SS like Federal employees. However when people on this forum talk about saving rates for retirement nobody includes the 12.4% combined employee/employer payments into SS so it is a far comparison.

Actually comparing your payments from social security check to your pension payments is a useful exercise. Now since SS also funds disability payments, and survivors, and the payments favor poorer people, it isn't exactly comparable to a pension plan. On other hand the bulk of SS money goes to fund retirement payments and it isn't in great financial shape either. So if the contributions to the pension plan is 16% vs 12.4% for SS, than logically your pensions should be larger at given age say 62 certainly 1/3 larger at perhaps 50% bigger. My guess is that your pension is probably twice as big as your SS check.

 

[GregLee]

I think it's also possible that a city or county or state might find itself in a catch-22, where it is required to make up a pension fund shortfall and simply doesn't have, and can't raise, the money to do it.

I can see how that is possible. What I don't see is how it can be avoided by putting more money into the pension fund previously. Wouldn't that just precipitate the fiscal crisis at an earlier time? The premise of this discussion about the soundness of pension funds seems to be that income from the fund is somehow free, while other moneys the state may use to pay pensioners are costly. I don't get that.

 

[clifp]

No, I wasn't being sarcastic. It seems to me that for a state DB pension system, getting the promised benefits to pensioners is the state's responsibility, and if they can maintain the pension fund to accomplish that with no special adjustments, that's fine, but if circumstances require them to do it a different way, why should we care? The pension fund is a creature of the state. If the trustees/governor/legislature want to play fiscal games, where's the harm, so long as in the end they fulfill their responsibilities? Calling it a "bailout" seems odd terminology, to me, to refer to the circumstance when the state chooses to collect the required revenues later rather than sooner.

I really don't care what we call it. I just want to know where the money comes from, as Kyounge points out if the states don't have the money they don't have the money. The choices are pretty A. simple raise taxes, B. cut benefits, C. or some combination. The problem is the for to long everybody (primarily politicians, but voters, and union leaders share some of the blame) has gone for option D. kick the can down the road, and now we have almost run out of road.