1.
CURRENT STATUS OF STATE AND LOCAL GOVERNMENT RETIREE BENEFITS:
The
U.S. Government Accountability Office, on September 24,
2007, issued “State and Local Government Retiree
Benefits: Current Status of Benefit Structures, Protections,
and Fiscal Outlook for Funding Future Costs.” State
and Local Retiree benefits are not subject, for the most
part, to federal laws governing private sector retiree
benefits. Nevertheless, there is a federal interest in
ensuring that all Americans have a secure retirement, as
reflected in the special tax treatment provided for both
private and public pension funds. In 2004, new government
accounting standards were issued, calling for the reporting
of liabilities for future retiree health costs. As these
standards are implemented and the extent of the related
liabilities becomes known, questions have been raised about
whether the public sector can continue to provide the current
level of benefits to its retirees. GAO was asked to provide
an overview of state and local government retiree benefits,
including the following: (1) the types of benefits provided
and how they are structured, (2) how retiree benefits are
protected and managed and (3) the fiscal outlook for retiree
benefits and what governments are doing to ensure they
can meet their future commitments. For this overview, GAO
obtained data from various organizations, used its model
that simulates the fiscal outlook for the state and local
sector, and conducted site visits to three states that
illustrate a range of benefit structures, protections and
fiscal outlooks. Cognizant agency officials provided technical
comments, which were incorporated as appropriate. The systems
for providing retiree benefits to state and local workers
-- who account for about 12% of the nation’s workforce
-- are composed of two main components: pensions and retiree
health care. These two components are often structured
quite differently. Importantly, state and local governments
generally have established protections and routinely set
aside monies to fund their retirees’ future pension
costs, but this typically has not been the practice for
retiree health benefits. A model GAO developed to simulate
the fiscal outlook for state and local governments indicates
that, for the sector as a whole, (1) estimated future pension
costs, currently about 9% of employee pay, would require
an increase in annual government contribution rates of
less than a half percent and (2) estimated future retiree
health care costs, currently about 2% of employee pay,
would more than double by the year 2050 if they continue
to be funded on a pay-as-you-go basis. Because the estimates
are very sensitive to the assumed rates of return and projected
rates of health care inflation, the model also indicates
that if rates were to fall below historical averages, the
funding requirements necessary to meet future pension and
health care costs could become much higher. Nevertheless,
state and local governments generally have strategies to
manage future pension costs. In contrast, many are just
beginning to respond to the newly-issued standards calling
for reporting of retiree health liabilities, and they generally
have not yet developed strategies to manage escalating
health care costs. Across the state and local government
sector, the ability to maintain current levels of retiree
benefits will depend, in large part, on the nature and
extent of the fiscal challenges that lie ahead -- challenges
driven primarily by the growth in health-related costs
for Medicaid, and for active employees as well as retirees.
In future debates on retiree benefits, policymakers, voters
and beneficiaries will need to decide how to control costs,
the appropriate levels of benefits and who should pay the
costs -- especially for health care.
2. IF DISTRICT COURT RESERVES RULING
ON MOTION FOR JUDGMENT OF ACQUITTAL, IT MUST DECIDE MOTION
ON BASIS OF EVIDENCE
AT TIME RULING WAS RESERVED :
Moore and his wife were convicted
of twenty-eight counts of theft of government property.
The factual basis for the charge was that they received
and converted to their own use monthly Veterans Administration
benefits that had been payable to Moore’s mother
after the death of her husband, Moore’s father. At
the time of the mother’s death, the benefits were
being paid by direct deposit into a joint account that
she and Moore had in a local bank. When she died, the deposits
should have stopped, because they were widow’s benefits,
not an annuity or asset that would continue after the widow’s
death. But payments did not stop after her death. Instead,
as before, every month a direct deposit in the amount of
her VA benefit was made into the same bank account, event
though her name was removed from the account shortly after
her death and Moore’s wife’s name was added.
The Veterans Administration finally discovered -- no thanks
to Moore and his wife -- that Moore’s mother had
died, and stopped the flow of payments, but not before
$73,000 or so had been erroneously deposited and spent.
The Moores have never denied that they received and spent
the VA benefit money after his mother’s death. Their
defense had been that they did not know, because no one
ever told them, that Moore was not entitled to the benefits
after his mother died. In legal parlance, they put the
government to its burden of proving the knowledge element
of the statute -- that they knew the funds belonged to
the government when they used them for their own purposes.
(An element of the defense is that the defendant acted “knowingly
and willfully with the intent either temporarily or permanently
to deprive the government of the property.”) At close
of the government's case, Moore and his wife each moved
for a judgment of acquittal, pinpointing the willful, knowing
and intentional requirements of the offense. The district
court reserved ruling on their motions. Federal Rule of
Criminal Procedure 29(b) specifically provides that if
the district court reserves ruling on a motion for judgment
of acquittal, the court must decide the motion on the basis
of the evidence at the time the ruling was reserved. Before
the amendment, a defendant deprived of an immediate ruling
on sufficiency of the evidence had to decide between freezing
the evidence at that point in order to preserve the issue
or presenting additional evidence in his own case and risking
filling any holes in the government’s case that had
existed up until then. The amendment, entitling defendant
to a snapshot of the evidence at the point when the court
reserves its ruling, frees defendant to present additional
evidence without fear of doing himself harm on the sufficiency
issue. So, Moore testified that he had believed he was
entitled to the funds after his mother’s death, because
she had told him payments resulted from an annuity his
father had purchased, which would go to Moore after her
death. The jury convicted Moore and his wife on all counts,
and the court finally denied their motions for judgment
of acquittal. On the Moores’ appeal, the government
urged that the court consider the testimony of Moore and
the adverse credibility determination the jury obviously
made regarding it. However, because Rule 29(b) applies,
the court reviewed sufficiency of the evidence only as
it stood at end of the government’s case. Considering
only that evidence, the appellate court concluded the government
failed to present enough to prove beyond a reasonable doubt
that either Moore or his wife knew they were not entitled
to the continuing VA benefits after his mother’s
death. What was not established by the evidence was that
either Moore or his wife had any knowledge that they were
not entitled to keep receiving his mother's VA benefits
after her death. There is no evidence that the Veterans
Administration ever notified Moore and his wife they were
not entitled to continue receiving his mother’s benefits
after she died or that they were required to notify the
agency of her death. Instead, the government's evidence
merely established that the monthly direct deposits into
the joint account Moore and his wife shared had continued
until the Veterans Administration discovered the mother's
death and terminated the benefits. Considering only the
evidence admitted during the government's case, and viewing
that evidence in light most favorable to the government,
there was insufficient evidence for a reasonable jury to
have found beyond a reasonable doubt that Moore or his
wife knew that they were not entitled to continue receiving
VA benefits that his mother had been receiving before she
died. The district court should have granted the motion
for judgment of acquittal that each defendant filed. Thus,
the appellate court reversed the convictions. United States
of America v. Moore, Case No. 07-10237 (U.S. 11th Cir.,
October 26, 2007).
3. NFL OWNERS ADD $10 MILLION FOR NEEDY
EX-PLAYERS:
NFL owners voted unanimously to commit
$10 Million to a program
that will help pay for joint replacements, cardiovascular
screenings and assisted living care for retired players
in financial need. The New York Times reports that the
money is in addition to the $7 Million given in May by
a coalition of teams, the players union, the Pro Football
Hall of Fame and the league’s alumni association.
That coalition, known as the Alliance, was formed to address
concerns about medical care for retirees, particularly
those who did not make a lot of money during their playing
careers and now endure the devastating physical effects
of their sport. The medical-care fund will be supplemented
by players’ fine money and by other contributions.
The NFL and the players union have been criticized by a
number of former players over their treatment of retired
players in need. The former players have especially criticized
the union chief for focusing too much on current players.
The program approved was created to try to help players
who could not afford top-notch care for an array of problems
that frequently afflict them. The joint replacement operations
for hips, knees and shoulders will be available at no cost
to retired players without insurance or with financial
need. The money does not affect funds for players’ pensions
(a separate point of contention).
4. IS RAISING EARLY RETIREMENT AGE AN
OPTION FOR SOCIAL SECURITY REFORM?:
A working paper from
Center for Retirement
Research at Boston College examines how changes in worker
capabilities and job requirements over the past few decades
affect ability of older workers to work past the Social
Security Early Retirement Age of 62. The issue arises
because a possible reform of Social Security would raise
the early
retirement age. This change might be made in conjunction
with raising the Normal Retirement Age in order to offset
reduction in annual benefits that workers would receive
when retiring at the Early Retirement Age. Fairness is
one aspect of the issue of raising Social Security's
Early Retirement Age. Would such a change be fair to demographic
groups with relatively short life expectancy, to people
with physically demanding jobs or to people at older
ages
unable to work or to find work? The issue of fairness
can be addressed in terms of cross-sectional equity or
intergenerational
equity. Because workers worked to older ages early in
the history of Social Security, the past becomes a natural
comparison. The paper focuses on intergenerational equity,
comparing different demographic groups over time. The
intergenerational
question has two parts. First, have older workers' capabilities
changed over the last few decades in ways that would
affect continued employment? Second, have job requirements
changed
in ways that would affect continued employment for older
workers? The paper examines changes over the past several
decades in worker capabilities and job requirements.
The paper looks back over the past twenty to 40 years,
depending
on availability of data, focusing on people in their
late fifties and sixties because those are the ages where
increased
years of work would occur.
5. PUBLIC PROBLEMS?:
Amid disagreement
over the depth of public pension underfunding, defined
contribution plans
represent the camel’s nose under the seat of government,
according to a PlanSponsor article. State and local governments
have been forced to act more like Corporate America now
that they are required to account for retiree medical benefits
on an accrual rather than pay-as-you-go basis under Governmental
Accounting Standards Board’s Statement 45. However,
a larger question remains about whether the public sector
could be under the gun to follow the lead of private enterprise
when it comes to transitioning from the old-line defined
benefit pension model to the more transparent and adaptable
defined contribution approach. If so, the trick would be
to offer retirement benefits that are still palatable enough
to recruit and retain top talent without a high price tag
that might anger taxpayers. While a substantial number
of state legislatures have considered replacing their DB
plans with DC plans over the past two decades, only two
have made the switch for new hires: Michigan and Alaska,
both of which have frozen their DB plans for new hires.
More common has been the movement of several states --
including Florida, South Carolina, Ohio, Montana, North
Dakota and Kansas -- to restructure their retirement plans
by adding a DC option to the mix. While the move is viewed
by many as more benevolent than phasing out a traditional
pension, it brings with it the same employee education
and communication challenge that the private sector has
experienced since the 401(k) plan was introduced. The Florida
Legislature paved the way for a 401(a) plan offering for
Florida Retirement System employees, just as economic recession,
plummeting stock market and the largest corporate bankruptcy
in U.S. history took hold. With about 692,000 actives and
250,000 retirees in Florida, the nation’s fourth
largest pension plan and second largest public DC plan
introduced the DC option between June 2002 and February
2003. An alternative option was made available for employees
with five or more years of prior FRS service who preferred
a hybrid option featuring elements from both plans. The
DC plan was offered to benefit short-term employees, as
well as give the entire workforce an ability to manage
their own retirement benefits. Also, it was allegedly introduced
as a way to provide better budgeting for more than 900
employing agencies and to be used as a recruiting tool.
FRS officials concede that most new hires, particularly
younger employees, consider retirement planning a low priority
-- as evidenced by the reality that 60% of this segment
neglects to take action and, thereby, defaults into the
traditional pension plan. Twenty six percent chose the
DC plan and 16% chose the DB plan. (There is proposed legislation
to change that situation, so that those not taking any
action will be thrown into the DC plan. Nice little move.)
Let’s face it: defined benefit plans provide employers,
employees and retirees with significant advantages over
defined contribution plans. For us, the bottom line will
always be that you can never outlive your defined pension
benefit.
6. NEW YORK CITY TO SETTLE LONG-STANDING
PENSION DISPUTE:
Plansponsor.com reports that New York
City will pay $160 Million to about 40,000 retired and
active
teachers to
settle a dispute over whether the City was making proper
pension contributions. By the way, the matter has been
pending for 37 years!
7. STEP RIGHT UP AND GET YOUR PHONY
DOCTORS’ NOTE:
Ever feel like playing hooky, but nervous
about getting caught? Well, the Excused Absence Network
has got you covered,
according to Associated Press. For about $25, students
and employees can buy excuse notes that appear to have
come from doctors or hospitals. Other options include a
fake jury summons or an authentic-looking funeral service
program, complete with comforting poem and list of pallbearers.
Some question whether the products are legal or ethical,
but the company’s owners say they are just helping
people do something they would have done anyway. The company’s
customers receive templates so they can print the notes
after typing the name and address of a local doctor or
emergency room. Those who choose jury duty as an excuse
to miss work enter their county courthouse information
on the form. Although the company’s disclaimer advises
the notes are “for entertainment purposes only,” its
website shows pictures of people sunbathing and playing
golf, using the fabricated excuses. This piece reminds
us of the young boy who was absent and the next day brought
in a written excuse from his mother. When the teacher asked
him why he had been absent, he replied, “I don’t
know. I didn’t read the note.” 8. QUOTE OF THE WEEK:
“Charm has a way of getting
the answer yes without asking a clear question.” Albert
Camus
9. ONE OF LIFE’S RULES:
I don't approve of political
jokes. I've seen too many of them get elected.
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