Archives for category: Pensions

Bruce Rauner never held public office until he ran for Governor of Illinois as a Republican against Democratic incumbent Pat Quinn. Who is Bruce Rauner?

Ken Previti has a word for him: Sociopath. This is his word, not mine. Rauner cuts autism programs to pay for high-priced hires, like the new “education czar,” who will make a quarter million a year. Rauner loves charters. He even has one named for him. Previti quotes a conversation I had with Rauner in front of about a dozen people a few years back. I asked him if it bothered him that charters like his enroll small proportions of students with disabilities or ELLs. He said it didn’t bother him at all. He said that charters were for students who were highly motivated and eager to work hard. When I asked what he thought we should do about those other children, the ones rejected by charters, he said he didn’t care, it was not his problem. I would say Bruce Rauner is heartless. I would say he is indifferent to those he considers less worthy than himself.

Rauner is an equity investor. He made a lot of money managing pension funds for public employees. Forbes says he is worth nearly a billion dollars. That means he is very, very rich. Now that pension funds made him super-rich, he wants to get rid of them. Edward Siedle, who writes about pensions for Forbes, writes:

With an estimated personal net worth of nearly a billion and a stable of high-end residences, managing state workers’ retirement savings for decades– shielded from public scrutiny– has worked out very nicely for private equity titan Bruce Rauner.

You’d think he’d be thanking his lucky stars that public pensions have contributed generously to his lifetime of opportunity.

You’d be wrong.

Today Rauner is using some of the millions he garnered from workers savings to fund a run for governor of Illinois. As the Republican Gubernatorial Candidate he wants to “reform” state pensions and force public workers into the same poorly-designed 401(k)-style plans that have utterly failed to provide retirement security for private sector employees.

After having paid his firm, GTCR, and Wall Street billions in private equity asset-based and incentive fees, Rauner believes Illinois public pensions can’t afford the lavish $2,500 in average monthly benefits promised to workers.

Personally, I have never understood why someone who is “nearly a billionaire” (or in the case of former Enron trader John Arnold, is a multi-billionaire) wants to take away the pensions of working people who barely scrape by. I don’t get their motivation. It baffles me.

Because so mAny hedge-fund managers and corporate chieftains are in the “reform” camp, we Ssume that they must know a lot about financial and managerial matters, even if they are clueless about education and learning.

Jeannie Kaplan, who served two terms on the Denver school board, says that assumption of financial prowess is wrong.

She writes in a comment on the blog:

“Denver has been the victim of both education and financial reform. I have been remiss in not writing about financial failures here because of the complexity of the issue.

“But the bottom line in Denver is in 2008 then superintendent Michael Bennet and current superintendent Tom Boasberg, borrowed $750 million in a risky variable rate swap deal to supposedly fill the unfunded liability in DPS’ pension.

“How has that worked out? UAAL has risen from $400 million to over $700 million and the pension debt has risen from $300 million to $950 million. Yes that’s right, close to one billion dollars.

“The two were somehow able to get the Colorado legislature to write off (they call it an offset) bank and legal payments with the end result being less actual money is being paid into the pension. A legal defunding. Amazing, no?”

Jeannie Kaplan plays the game of “Where’s Waldo?” to describe the curious absences of Denver’s Broad-trained superintendent over the past few months. Crises were handled by subordinates. It turns out that Tom Boasberg was busy lining up votes in the legislatures to reduce funding for the teachers’ pensions.

She writes:

“What was the true importance of this bill? Well, one could always dream it was about restoring the educational opportunities “education reform” has stolen from our kids but in spite of Boasberg’s declaration about two or three more teachers per building, we who have followed this Broad trained superintendent know better. The reality of his appearances at the Capitol and the reality of his lobbying efforts are not really about more teachers. After all, “reformers” don’t believe in smaller class size, so they only mention it when they think it will score points with the public, and obviously politicians. What is and is not important to the superintendent has become abundantly clear in these last months: grade changing, weapons in schools, reorganizations, not so important. Defunding a public pension, politics and winning, pretty important. The reality is if you are a businessman and privatizer masquerading as an educator you really only care about the bottom line. If you can sell paying bankers and lawyers hundreds of millions of dollars instead of putting that money into your company’s pension plan and then sell that scenario to the public and state legislators as somehow having “saved” money, you will be regarded by the business world as a success. Forget about learning, forget about the people, forget about safety, forget about data. Just show me the money. And silly me. I thought the head of a public school district should care about delivering an equitable 21st century education, care about the welfare of his constituents, not just in theory but in reality. This superintendent’s absenteeism and abdication of leadership can now be explained. Who knew that finding Waldo would be easier than finding the DPS superintendent?”

Investigative reporter David Sirota says in Salon that Néw Jersey Governor Chris Christie’s presidential campaign will be derailed not by the George Washington Bridge lane-closing scandal but by a public pension scandal. As usual, follow the money.

Sirota writes:

“At issue are the fees being paid by New Jersey’s beleaguered public pension system to Wall Street firms. In recent years, Christie’s officials have shifted more of the retirement savings of teachers, firefighters, police officers and other public workers into the hands of private financial firms. That has substantially increased the management fees paid by taxpayers to those firms. Indeed, while Christie says the pension system cannot afford to maintain current retirement benefits, pension fees paid to financial firms have quadrupled to $600 million a year — or $1.5 billion in total since he took office in 2010.

“In recent months, details have emerged showing that Christie officials have directed lucrative pension management deals to some financial companies whose executives have made contributions to Republican groups backing Christie’s election campaigns. Additionally, Christie’s officials have admitted that they have not been fully disclosing all the fees the state has been paying to private financial firms.”

Ken Previti reports that the Illinois Supreme Coutrt unanimously struck down the law cutting teachers’ pensions. See:

“Justice Lloyd Karmeier writing for the court. ‘It is our obligation, however, just as it is theirs, to ensure that the law is followed. That is true at all times. It is especially important in times of crisis when, as this case demonstrates, even clear principles and long-standing precedent are threatened. Crisis is not an excuse to abandon the rule of law.’
(This) violates the state’s constitutional clause that pension benefits ‘shall not be diminished or impaired,’ the Supreme Court affirmed Friday.”

– “Pensions & Investments Online”

Open the link to see a picture of Ken and his wife celebrating.

This just in:

http://davidsirota.com/

** March 24, 2015
————————————————————

FYI:

I just wanted to share the good news – International Business Times’s investigative work has this morning been named the winner (http://www.ithaca.edu/news/releases/independent-journalists-naomi-klein-and-david-sirota-share-annual-izzy-award-39431/#.VRGM-VwxF5j) of this year’s Izzy Award, given out by Ithaca College’s Park Center for Independent Media. The award honors IBTimes’ pension-themed reporting about, among others, New Jersey Gov. Chris Christie, Chicago Mayor Rahm Emanuel, Rhode Island Gov. Gina Raimondo, Illinois Gov. Bruce Rauner and Social Security Commission chair Erskine Bowles.

The award judges named myself and journalist Naomi Klein the winners of the annual award this morning in a press release, which you can read here (http://www.ithaca.edu/news/releases/independent-journalists-naomi-klein-and-david-sirota-share-annual-izzy-award-39431/#.VRF03Ye9KrX) .

This prestigious award is named for investigative journalist I.F. Stone. Past winners include Glenn Greenwald, Jeremy Scahill and other investigative journalism icons. This is an amazing honor specifically for IBTimes and also generally for the kind of difficult, time-consuming and labor-intensive investigative work that too often goes unrecognized in today’s media environment.

Thanks to so many of you for doing that kind of work – and to those who have been so supportive of our work over this last year. As you well know, this kind of reporting often engenders hostility – and my hope is that this award offers some encouragement to everyone working in the trenches of investigative journalism.

D

P.S. To follow IBTimes growing newsroom and investigative unit, I encourage you to follow these folks on Twitter: @PeterSGoodman (https://twitter.com/petersgoodman) ,

@NancyCooperNYC (http://www.twitter.com/nancycoopernyc) ,

@MarkFBonner (https://twitter.com/markfbonner) ,

@ThinkSimons (http://www.twitter.com/thinksimons )

, @MattCunninghamC (http://www.twitter.com/mattcunninghamc) ,

@AndrewPerezDC (https://twitter.com/andrewperezdc) ,

@ChristopherZara (http://www.twitter.com/ChristopherZara) ,

@of_davis (http://www.twitter.com/of_davis) ,

@GingerGibson (http://www.twitter.com/gingergibson) ,

@ColeStangler (http://www.twitter.com/colestangler) ,

@Learmonth (http://www.twitter.com/learmonth)

Bloomberg News reports that Néw York City’s public employees’ pension fund is considering an investment in a hedge fund managed by one of Eva Moskowitz’s key backers.

“The board of the $54 billion pension for civil employees, including lunchroom workers and other school aides, plans a vote Tuesday on whether to invest in Joel Greenblatt’s Gotham Asset Management LLC, according to a copy of the executive agenda. Greenblatt is co-founder of Success Academy, New York’s biggest charter-school network. Its director, Eva Moskowitz, a former city councilwoman, helped block Mayor Bill de Blasio’s bid to cut aid to charter schools.”

Newly elected Governor Bruce Rauner unveiled his budget proposal, which includes $6 billion in cuts to universities, health care, and public sector pensions (except police and firefighters).

Rauner, a private equity investor until he ran for governor, proposed no new taxes on the wealthy.

““This budget is honest with the people of Illinois, and it presents an honest path forward,” Mr. Rauner said as he laid out what he deemed a “turnaround budget” before lawmakers in Springfield, the state capital. “Like a family, we must come together to address the reality we face. Families know that every member can’t get everything they want.”

“The fate of Mr. Rauner’s $31.5 billion spending plan, however, is uncertain, particularly given that Democrats hold veto-proof majorities in both chambers of the legislature. Democrats said it would harm middle-class families and the poor, while asking little more from wealthy residents. The proposed budget calls for no tax increases or new taxes.

“Governor Rauner’s plan includes proposals that will undermine access to health services, child care, affordable college and retirement security for working- and middle-class families,” said John J. Cullerton, the Democratic president of the State Senate, adding that the contents of the plan raised “significant questions about its viability” in the legislature.”

A teacher in Connecticut, signing in as Linda, wrote the following comment:

 
Brace yourself Rhode Island…it is worse than you think. Hide your children and warn the teachers. He is coming to charterize, privatize, monetize your schools. See Pelto research here:

Gina Raimondo’s husband Andy Moffitt was Cory Booker’s roommate.
Moffitt is a member Stand for Children Board of Directors

Moffit is a Senior Practice Expert and member of core leadership team for McKinsey & Company’s Global Education Practice.

“Since co-founding the Global Education Practice in 2005, Andy has worked with multiple large urban districts, state education departments and charter management organizations to markedly improve system performance and close achievement gaps.

He co-authored a recent book, Deliverology 101: A Field Guide for School System Leaders (Corwin Press, 2010), which describes key success factors and steps in driving results in global school system reforms.

Before joining McKinsey, Andy was an elementary school teacher in an inner-city school in Houston, Texas as a corps member of Teach For America.”

From my recent article in the Progressive:

The Corporate Education Reform Industry effort to buy control of Public Education

This year’s election season provided a series of textbook examples of how corporate education reformers used their personal fortunes to contaminate the democratic process.

Let’s begin with the little state of Rhode Island, where former hedge fund owner and charter school champion, Democrat Gina Raimondo was elected governor with 40 percent of the vote in a three-way race—one in which there was an unprecedented level of campaign spending.

Raimondo, who as Rhode Island’s state treasurer won national acclaim from conservatives for successfully dismantling the state employee pension fund, raised hundreds of thousands of dollars from donors associated with funding the education reform movement and profiting from the charter school industry. Her running mate, Cumberland Mayor Daniel McKee, one of the state’s most vocal supporters of charter schools, was elected lieutenant governor with help from many of the same donors.

Over the course of her gubernatorial campaign, Raimondo collected checks from many of the major players in the charter school and “education reform” movement, including donations from billionaires Eli Broad and members of the Walton Family. (The Broad Foundation and Walton Foundation, along with Gates Foundation, are the primary funders behind the overall education reform movement.)

Another billionaire, former Enron executive John Arnold along with his wife, not only donated directly to Raimondo’s campaign and her political action committee, called Gina PAC, but the couple’s $100,000 check made them the largest donors to the American LeadHERship Council, a Super PAC affiliated with Raimondo. The second largest donor to the Super PAC was Eli Broad with $15,000.

A proponent of doing away with public employee pensions, Arnold also donated as much as $500,000 to an advocacy group called Engage Rhode Island, which spent approximately $740,000 lobbying for Raimondo’s successful assault on public employee pensions. Over the past three years, the John and Laura Arnold Foundation has donated more than $100 million in support of charter schools and entities involved in the corporate education reform industry, including being one of the largest contributors to Jeb Bush’s Foundation for Educational Excellence.

Raimondo’s success in raising funds from the charter school industry includes at least $50,000 from the members of the board of directors of Achievement First, Inc., the large charter chain that recently opened a school in Rhode Island, adding to their existing schools in Connecticut and New York.

Jonathan Sackler, an investment manager and heir to the Purdue Pharma fortune, is not only a founding member of Achievement First, Inc, but a founder of a national charter school advocacy group called 50CAN. One of 50CAN’s related entities, 50CAN Action Fund, dumped $90,000 to run TV commercials to help Raimondo’s running mate win his primary race.

There is no public pension crisis in New York City or New York State, writes Harris Lirtzman,  former Director of Risk Management for the New York City Retirement Systems in the NYC Comptroller’s Office from 1996-2002 and former Deputy State Comptroller for Administration from 2003-2007, on the blog Perdido Street School. Anyone who is trying to conjure a “pension crisis” is willfully ignoring facts, writes Lirtzman.

 

He says:

 

New Jersey, Illinois, Michigan and Rhode Island are the states with the most significant actual pension problems, verging on “crises,” caused almost entirely by years and years of the state failing to make mandated minimum employer contributions to keep their pension systems solvent. New York State and New York City are awash in cash as tax revenues from soaring sales of residential and commercial properties roll in and personal income and sales tax proceeds exceed every recent projection and are making current contributions to their pension plans.

In 2013, the New York City Teachers Retirement System (TRS) was funded at approximately 63% of accumulated retirement benefit obligations and earned 11.9% on its $38.3 billion investment assets. In 2013, The New York State Teachers Retirement System was funded at approximately 88% of accumulated pension obligations and earned 13.7% on its $82.7 billion investments assets. There is no pension “crisis” in New York City or New York State that would warrant, even by the Post’s own credulous standards, the sort of panic that such an article will engender.

No politician in New York City or New York State will take on public pension fund systems directly by attempting to reduce the benefits paid to current retirees or accruing to current employees. They cannot do that because pension benefits are a constitutional obligation of the State of New York and a contractual obligation of the City and State as employers.

The only time that a state constitutional protection has been abrogated other than by some change in the constitution itself occurred two years ago in Detroit, when a federal bankruptcy judge, relying on long-standing precedent, ruled that the Michigan State constitutional protection against the diminishment of already accumulated pension benefits does not apply when a municipality of the State, in this case, Detroit, declares bankruptcy.

 

Neither New York City nor New York State is approaching bankruptcy, and there is no pension crisis in the city or state. Period.

 

 

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