Industry: Government
News
June 23, 2017

As we noted when California inaugurated this policy, American federalism is based on the agreement that different states can pursue different policies (within Constitutional bounds) while retaining equal status within the union. California’s decision to escalate the culture war with “sanctions” against states with different political orientations represents a direct challenge to America’s federal structure.

This new order could have a major symbolic impact—for example, by making it difficult or impossible for University of California sports teams to compete against the University of Texas. And could lead to retaliatory measures by the targeted red states: They could, for example, up the ante not only by enacting reciprocal travel bans but also by refusing to cooperate with California’s government in criminal investigations, declining to share tax data, or prohibiting companies from selling products to California’s state government.

How long before a coalition of liberal states begins to collectively and systematically impose sanctions on conservative ones, or vice versa? To state the obvious: This has nothing to do with the legitimate democratic debate over the merits of the policies California is trying to sanction in the first place. Maybe some of these policies are reasonable compromises between LGBT rights and religious liberty; maybe others are unacceptable forms of discrimination. These are debates that need to be resolved by the courts, by federal civil rights agencies, and by the voters in those states. California’s brazen offensive dangerously short-circuits this process.

News
June 23, 2017

Illinois is grappling with a full-fledged financial crisis and not even the lottery is safe – with Republican Gov. Bruce Rauner warning the state is entering "banana republic" territory. Facing billions in unpaid bills and pension obligations, the state is hitting a cash crunch that is rare even by Illinois standards. . . . But the problems are years in the making, caused in large in part by the state’s poorly funded pension system— which led Moody’s Investors Services to downgrade the credit rating to the lowest of any state. The state currently has $130 billion in unfunded pension obligations, and a backlog of unpaid bills worth $13 billion.

News
June 23, 2017

Contributions to public pension plans have increased in recent years, but their unfunded liabilities have increased more, according to an analysis by the Society of Actuaries released Wednesday.

Between 2006 and 2014, employer contributions increased 76%, up to $85 billion in 2014 from $48 billion, and employee contributions increased 30%, to $37 billion from $28 billion. Total unfunded liabilities increased 150% to $1 trillion in 2014 from $400 billion in 2006, and the plans studied were 73% funded by the end of 2014.

News
June 23, 2017

S. public pension funds' unfunded pension liabilities are expected to rise through 2020, even under positive investment return scenarios, said a report Tuesday from Moody's Investors Service.

In its report, Moody's ran a sample of 56 plans with $778 billion in aggregate reported net pension liabilities through three different investment return scenarios. Due to reporting lags, most 2019 pension results appear in governments' 2020 financial reporting, Moody's noted. The plans had $1.977 trillion in trillion assets.

Under the first scenario with a cumulative investment return of 25% for 2017-'19, aggregate net pension liabilities for the 56 plans fell by just 1%. Under the second scenario with a cumulative investment return of 19% for 2017-2019, net pension liabilities rose by 15%. Under the third scenario with a 7.2% return in 2017, -5% return in 2018 and zero return in 2019, net pension liabilities rose by 59%.

News
June 22, 2017

A class-action lawsuit against CalPERS filed on behalf of more than 130,000 California government workers and retirees can move forward to trial, a Los Angeles judge has ruled. The lawsuit challenges a sharp increase in fees that the California Public Employees’ Retirement System levied on people who bought insurance for long-term health care through the pension fund. It argues that the rate hike was different in scale and purpose than any previous fee increase on those policy holders.

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