Archives for category: Pensions

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.

 

 

Governor Andrew Cuomo complained recently that legislators were too concerned with protecting teachers’ pensions and unconcerned with protecting children in “failing schools.”

Station WGRZ says that the average pension for retired school employees is $41,000 and change. Cuomo thinks teachers will produce higher test scores if he threatens their pensions. Apparently he wants more test prep, more teaching to the test, more narrowing of the curriculum to eliminate the arts and physical education so there is more time for testing.

Please, someone, tell the governor that threats don’t improve teaching and learning. Tell him that carrots and sticks do not get “results.”

Tell him to read Daniel Pink’s “Drive” or the research of Edward Deci and Dan Ariely on motivation. What teachers need is not threats but support, encouragement, and the resources to do their job.

Peerless investigative journalist David Sirota writes that the state of Kentucky tells teachers and other public employees that they have no right to know where the state is investing their pension funds or what fees are charged by the investment firms.

 

If you’re a public school teacher in Kentucky, the state has a message for you: You have no right to know the details of the investments being made with your retirement savings. That was the crux of the declaration issued by state officials to a high school history teacher when he asked to see the terms of the agreements between the Kentucky Teachers’ Retirement System and the Wall Street firms that are managing the system’s money on behalf of him, his colleagues and thousands of retirees.

 

In rejecting the request from history teacher Randy Wieck, KTRS general counsel Robert Barnes said the terms of the agreements represent “trade secrets” and that disclosing them would provide “an unfair commercial advantage” to the firms’ competitors.

 

The denial was the latest case of public officials blocking the release of information about how billions of dollars of public employees’ retirement nest eggs are being invested. Though some of the fine print of the investments has occasionally leaked — and created an uproar — the agreements are tightly held in most states and cities. Critics say such secrecy has prevented lawmakers and the public from being able to evaluate the propriety of the increasing fees being paid to private financial firms for pension management services. They also say that the secrecy prevents the public from knowing if the deals comport with rules governing public pension investments.

 

The states of Illinois and Rhode Island have similarly refused to reveal where public pension funds are invested or what the terms of the investment are. They are “trade secrets,” they say.

 

If you are counting on your pension as retirement income, you must read this article.

Wall Street insiders, it says, pumped $300 million into the last election. In return, they get to invest your pension funds. Some of those investments are very risky.

“Illinois, Massachusetts, and Rhode Island all recently elected governors who were previously executives and directors at firms which managed investments on behalf of state pension funds. These firms are now, consequently, in position to obtain even more of these public funds. This alone represents a huge payoff on that $300M investment made by the financial industry, and is likely to result in more pension money going into investments which offer great benefits for Wall Street but do little for the broader economy.

“But Wall Street’s agenda goes beyond any one election cycle. It has been fighting to turn public pensions into private profits for quite some time, steering retirement nest eggs into investments that are complex, charge hefty fees, and that generate big profits for management firms. And it has been succeeding. Of the $3 trillion in public assets currently in pension funds throughout the country, almost a quarter of that has already found its way into so-called “alternative investments” like hedge funds, private equity and real estate. That translates to roughly $660 billion of public money now under private management, invested in assets that are often arcane and opaque but that offer high management and placement fees to Wall Street financiers.”

The leading advocates for privatization are funding Marshall Tuck’s campaign for State Superintendent of Education in California. If you want to get rid of public schools, Tuck’s the guy. If you want to improve public education, vote for Tom Torkakson.

From the Torlakson website:

Pension/School Privateers Invest in Tuck for Schools Chief

A handful of ultra-wealthy donors who support school privatization and cutting public pension systems are behind a flood of spending supporting former Wall Street Banker Marshall Tuck’s campaign for state schools superintendent, campaign disclosure records show.

Far from “Parents and Teachers for Tuck,” the $4.7 million collected so far comes instead from sources that support school vouchers, privatization of public pension systems and using disruptive business tactics to overhaul public schools.

Major funders include:

$500,000 from Carrie Walton Penner, whose family made its fortune running anti-union, low-wage paying Wal-Mart. The Walmart 1% website reports that Penner’s biography includes serving on the board of the Alliance for School Choice – a school voucher advocacy group.

$300,000 from John D. Arnold, a former Enron trader and funder of efforts to persuade governments to cut public employee pensions. In February, the New York Times reported that a public television station returned $3.5 million Arnold’s foundation had paid to underwrite a series examining the economic sustainability of public pensions.

$1 million from corporate CEO Eli Broad. He drew statewide attention when it was revealed he had donated $500,000 to a group with ties to the Koch Brothers to defeat Proposition 30 and pass Proposition 32.

Here’s how Parents Across America, a public school advocacy group, described Broad’s approach: “Broad and his foundation believe that public schools should be run like a business. One of the tenets of his philosophy is to produce system change by ‘investing in disruptive force.’ Continual reorganizations, firings of staff, and experimentation to create chaos or ‘churn’ is believed to be productive and beneficial, as it weakens the ability of communities to resist change.”

In an interview with “The Notebook,” civil rights attorney Michael Churchill of the Public Interest Law Center of Philadelphia explains why previous litigation failed and what should happen now to assure that all children get a “thorough and efficient system of public education,” as the law requires.

Here is a small part of a very informative exchange:

Q.: What other legislative or policy fixes could help settle the District’s long-term finances?

A. There are lots. The charter funding formula is absolutely crazy, one of the worst in the country.

But that’s small potatoes compared to our single biggest problem – the state puts in too small a share of funding. Pennsylvania appropriates about 35 percent of the cost of public education. Pennsylvania needs to get up to about 50 percent of the cost of education.

And while they’re figuring that out, they need to calculate real costs – like the cost of educating kids in poverty. When you do that, you’ll take care of the problems. Everything else is just cosmetic – moving around the deck chairs on the Titanic, as people like to say.

We do actually have a commission to look into a new funding formula that’ll start this summer. But we know the solutions. It’s not a mystery. What’s lacking is political will.

Q.: What about the city? Is it contributing enough?

A. Philadelphia used to be near the bottom of local contributions. Now we’re contributing above the median of the rest of the state. This is clearly now a state problem, not a Philadelphia problem.

Q.: Last time we had a funding formula, it didn’t last. Is there any way to compel legislators to use whatever they create?

A.: Most other states have found that the judiciary will step in and say that the constitution [which in Pennsylvania requires a “a thorough and efficient system of public education”] has to be upheld.

In the 1990s, Pennsylvania’s judiciary decided they would not step in. They had some reasons why, but many of those have changed.

For example, we don’t have local control at the level we used to. The state now sets graduation standards. The state sets testing standards. The state tells districts how they have to spend money.

Therefore, there are much stronger grounds for judicial intervention to make sure that the state is providing adequate funding. That’s my thought on the matter. We’ll have to see whether the judiciary agrees.

And here is another exchange:

Q.: Let’s go back to charter finances. What are some policy changes that could stabilize the whole system?

A.: There’s a whole range of numbers that need to be looked at so that there’s some relationship to cost.

For example, charters have been paid for special education at a rate that’s completely phony, year after year. Chester gets paid $36,000 per special-ed student. But most of them are getting “language and occupational therapy” once a week. That’s a minimal expense.

The cyber charters, which are the fastest-growing section of the charter movement, don’t have any of the same costs as brick-and-mortar charters, but they get the same money. The state hasn’t been able to fix that one, even though the auditor general has been writing reports about it for six years. It’s a complete waste of valuable resources.

And then, there needs to be a complete new set of transparency rules, so we know what charters are spending and accomplishing, and we don’t have the kind of waste and fraud we’ve seen.

Q.: What’s your plan to influence the governor’s race this fall?

A.: I believe that by the fall, we’ll be engaged in the kind of litigation like we talked about, to lay out the facts as to why 50 percent of the schools in Pennsylvania do not meet the standards the state has set for itself.

That’s a massive failure, and it’s closely related to underfunding – which has been known since 2007, when the state issued a report about real costs. We’ll bring that to the attention of the courts and the public.

Q.: The counter-argument is that we need to reduce costs, not spend more. Why shouldn’t Philadelphia be thinking about strategically increasing charter enrollment? Would that drive costs down?

A.: There’s no evidence that that really does, or that it’s sustainable over any length of time. That strategy relies on churn — lots of young teachers who turn over constantly. That is the enemy of a slow-and-steady progress model.

In Chester, for example, they have the largest charter population of any district in the state [by percentage], but they’re no further ahead than other students. But it does cost a great deal more, and a lot of that money is being funneled off into private payrolls.

I think everybody’s been surprised at some of the good things we’ve seen in charters that can be used in regular schools.

But we need to find ways that we adapt those, rather than create so much change that it sets back progress. We don’t want a two-tiered system. We don’t want public schools to be only for those who can’t figure out how to get out of them. What happens inevitably as you privatize is, things become stratified. To me, that would be far too high a price to pay.

Pennsylvania Governor Tom Corbett has stormed the state with the message that public pensions are bankrupting the state.

But Joe Markosek, Democratic chair of the House Appropriations Committee, says that Corbett is wrong.

Corbett’s $3 billion in education cuts has hurt every district in the state, far more than pensions, forcing districts to raise property taxes to keep their local schools open.

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