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Tuesday, April 02, 2013
It's Alright Ma (I'm only bleeding)
There are so many problems with this bill that despite Bill Gary's $500 per hour opinions on their legality, the legality is nearly immaterial to the damage they will do to the system, legal or not. First, the problem that motivates this "solution" is an Unfunded actuarial liabily that is $14 billion without employer side accounts, and $8.7 billion with the side accounts. While the savings from reducing the COLA payment obligation the present and future retirees works out to be approximately $400 million per biennium ASSUMING the savings accrue for the next 10 biennia. But the savings don't accrue at all under this bill. Instead, the $4+ billion savings in the next 20 years will be spent every year to keep employer rates artificially low, and at the end of 20 years, the system will be no better funded than it is now, unless the earnings approach Bernie Madoff levels. Second, the funds are supposed to prop up the K-12 budget with the governor insisting (pandering) that the money will be used to put more teachers in the classroom. That would be a noble gesture were it not for the inconvenient truth that nothing in this bill requires the employers to provide an audit trail that proves the money will end up in the classroom hiring new teachers, updating the curriculum with new books and possibly hiring a few teachers aides. I know way too much about how the educational system uses some creative accounting to hide the real purpose or placement of new funds, that without some serious checks and balances, perhaps accompanied by prison time for misuse of these funds, I'd be astonished if the net increase in teachers from this infusion of stolen cash leads to more than 50 genuinely new, full-time teachers.
Finally, we have the legislature buying into a scam previously reserved only for the PERS Board. If the legislature imposes an addition rate collar of $350 million so that money due to pay bills due now is allowed to drift unpaid for another two years, the increased costs just from that deferral alone will add another $60 million in interest costs to the deferred money, which will be added to the employer costs in 2015-17. Pushing the can down the road doesn't relieve employers of these current obligations. It just makes the next bill more expensive because the current costs that are deferred get added to the UAL and make the debt service on the UAL that much more expensive.
So, the logrolling of SB 822 has begun in all seriousness with public employee retirees being subjected to (probably) illegal cuts to their COLA benefit, with none of the savings retiring any portion of the UAL,none of the savings guaranteed via any mechanism to achieve its intended target - the children and their teachers, and accompanied by a deferral of mandatory payments by at least two more years and the UAL not declining, but rising by another nearly half a billion dollars.
If this is intelligent public policy, then I am the densest person on this planet. Don't look now ma, I'm only bleeding, just a little bit more. And the really encouraging piece of news is that after this bill goes into effect, we will all be back here again in two more years for the next round of cuts.