https://www.americancityandcounty.com/wp-content/themes/acc_child/assets/images/logo/footer-logo.png
Banking Technology
  • NEWSLETTER
  • Home
  • Expert Insights
    • Back
    • Expert Insights
    • Commentaries
    • Smart Cities Council
    • Co-op Solutions
  • News
  • In-Depth
  • Multimedia
  • Resources
    • Back
    • Resources
    • Webinars
    • White Papers
    • American City & County Awards
    • Events
    • Municipal Cost Index – Archive
  • Magazine
    • Back
    • Digital Editions
    • Reprints & Reuse
  • About Us
    • Back
    • About Us
    • Contact Us
    • Privacy Statement
    • Terms of Service
  • Administration
  • Economy & Finance
  • Procurement
  • Public Safety
  • Public Works & Utilities
  • Smart Cities & Technology
  • Home
  • Co-op Solutions
  • Expert Insights
    • Back
    • Commentaries
    • Smart Cities Council
  • News
  • In-Depth
  • Multimedia
  • Resources
    • Back
    • Webinars
    • White Papers
    • American City & County Awards
    • Events
    • Municipal Cost Index
  • Magazine
    • Back
    • Digital Editions
    • Reprints & Reuse
    • Subscribe to AC&C
    • Manage AC&C Subscription
    • Subscribe to GovPro
    • Manage GovPro Subscription
    • Advertise
  • About Us
    • Back
    • About Us
    • Contact Us
    • Cookie Policy
    • Privacy Stament
    • Terms of Service
  • newsletter
  • Administration
  • Economy & Finance
  • Procurement
  • Public Safety
  • Public Works & Utilities
  • Smart Cities & Technology
acc.com

Administration


Editor’s Viewpoint: When out on a limb, don’t grasp at straws

Editor’s Viewpoint: When out on a limb, don’t grasp at straws

States with problems funding their pension plans should be cautious when choosing a remedy, says Editorial Director Bill Wolpin.
  • Written by Bill Wolpin (bill.wolpin@penton.com)
  • 1st September 2010

With evidence that Social Security is in the ICU, you just have to wonder why Maine is considering turning to it for help with the state’s pension problems. Maybe it has something to do with having the state’s employee pension fund lose $2.25 billion in value in the past couple of years. Even if Maine officials decide to allow Social Security to become part of their employees’ exit package, the fiscal relief won’t be immediate. But, at least it will take some of the heat off the pension fund’s current responsibility for its employees’ retirement nest egg. Keep in mind that the state’s losses are the result of investments made by financial professionals, and it actually was making contributions to its pension fund in recent years. Maine is one of only a few states that does not participate in the Social Security system.

Pension problems have been building for decades, and thanks to the recession crushing the value of many funds and baby boomers headed for the exits, communities have been trying to address their shortfalls. However, while desperate times may demand desperate measures, some have taken unscrupulous or unintelligent paths, which have come back to haunt them.

For example, New Jersey officials perpetrated a double whammy on the state’s pension fund, adding new benefits for its employees a decade ago and then falsely claiming that money was being set aside to pay for them from 2001 until 2007. After the charade was uncovered, the Securities and Exchange Commission (SEC) accused the state of securities fraud in August, saying that it sold $26 billion worth of bonds over the six years it was misrepresenting the health of its pension fund. The SEC and New Jersey ended the dispute with a cease and desist order and no prosecutions. (Uh-uh, what?)

Denver picked another poison when trying to close a pension gap to pay its retired teachers: gambling. In 2008, it agreed to issue $750 million in 30-year pension certificates with variable interest rates and a derivative attached. (Again, uh-uh, what?) Denver officials must have gone into the arrangement with little or no understanding of the downside of such a deal, including the onerous charges to refinance or terminate the debt. They have since learned their lessons after the nation’s financial collapse and must be living in a level of hell that Dante couldn’t even create.

The SEC has formed a new unit to review public pension disclosures and said it wanted to send a message to local and state governments, probably concerning the use of accounting tricks or outright deceit to confuse bond investors. My advice to those who find themselves out on a limb and looking for a way down: Be careful grasping at straws, because you’re likely to wind up in the drink.

What do you think? Tell us in the comment box below.

Related Stories

  • States lack $1 trillion for pensions
  • Hatching new ideas

Tags: Administration Economy

Leave a comment Cancel reply

-or-

Log in with your American City and County account

Alternatively, post a comment by completing the form below:

Your email address will not be published. Required fields are marked *

White Papers


What is Your Plan for Cybersecurity?

5th February 2019

5 Best Practices for Utilizing GIS Data

5th February 2019

City of Stamford Saves $1-Million Via Car Sharing

1st February 2019
view all

Events


Twitter


AmerCityCounty

A new #report ranks the 52 American #metropolitan areas with over 1 million residents based on their… twitter.com/i/web/status/1…

14th February 2019
AmerCityCounty

Today, we announced the six winners of American #City & #County's 2018 Crown Communities awards! Congratulations to… twitter.com/i/web/status/1…

12th February 2019
AmerCityCounty

The @CityOfNOLA #CityCouncil is calling for the @NFL to review its rules after the @Saints lost the… twitter.com/i/web/status/1…

29th January 2019
AmerCityCounty

Is your #city among #UHaul's top 25 #GrowthCities for 2018? buff.ly/2S8hptr https://t.co/rI4x0Lcdql

25th January 2019
AmerCityCounty

The personal information for approximately 1,470 #Knoxville, Tenn. #government employees was inadvertently posted o… twitter.com/i/web/status/1…

25th January 2019
AmerCityCounty

““Seconded” staffers, or temporary #procurement professionals at #DallasAreaRapidTransit handle varying heavy workl… twitter.com/i/web/status/1…

23rd January 2019
AmerCityCounty

As the longest #GovernmentShutdown in U.S. history continues with no sign of abating, city governments are stepping… twitter.com/i/web/status/1…

15th January 2019
AmerCityCounty

Florida Governor @RonDeSantisFL formally suspended #BrowardCounty, Fla. Sheriff Scott Israel on Jan. 11, following… twitter.com/i/web/status/1…

15th January 2019

Newsletters

Sign up for American City & County’s newsletters to receive regular news and information updates about local governments.

Expert Insights

Learn from experts in the public and private sectors about best practices and how to optimize your government’s operations.

Municipal Cost Index

Updated monthly since 1978, our exclusive Municipal Cost Index shows the effects of inflation on the cost of providing municipal services

Media Kit and Advertising

Want to reach our digital and print audiences? Learn more here.

American City and County

© American City and County 2019. All rights reserved.

  • About Us
  • Contact Us
  • Cookies Policy
  • Privacy Statement
  • Terms of Service

Related Links

  • IWCE’s Urgent Communications
  • IWCE Expo

Follow us

Websites are now required by law to gain your consent before applying cookies. We use cookies to improve your browsing experience. Parts of the website may not work as expected without them. By closing or ignoring this message, you are consenting to our use of cookies.
X