News

A First Look at Alternative Investments and Public Pensions
Source: Center for State & Local Government Excellence

Since the financial crisis, public pension plans – like other large institutional investors – have moved a significant portion of their portfolios into investments outside of traditional equities, bonds, and cash. These alternative investments include a diverse assortment of assets – private equity, hedge funds, real estate, and commodities. This shift reflects a search for greater yields than expected from traditional stocks and bonds, an effort to hedge other investment risks, and a desire to diversify the portfolio. The Public Plans Database (PPD), which covers nearly 95 percent of pension assets, shows the allocation to alternatives more than doubling (from 9 percent to 24 percent) between 2005 and 2015.

This brief begins to explore the implications for state and local pension plans of moving away from traditional stocks and bonds to other types of assets. The scope of the inquiry is narrow; it does not address fees, disclosure, or administrative issues. Nor does it assess how these alternative assets are utilized within each plan’s overall investment strategy.

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U.S. Public Pension Plan Contribution Indices, 2006–2014
Source: Society of Actuaries

This study explores contribution indices—metrics developed by the SOA that compare pension plan contributions to benchmarks that represent the contribution level needed to pay down unfunded liabilities—for contributions among 160 state and large city public sector pension plans in the United States. Using the assets and liabilities reported under Government Accounting Standards Board (GASB) guidelines for financial disclosure, the study spans 2006–2014. Key observations include:

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First Responder Days
Source: Arlington Park

To celebrate our honorable first responders, Arlington will be celebrating First Responders Day.  Enjoy first responder perks and fun activities for the entire family. A big thanks to our local heroes – EMT, Fire, Military, and Police!

Free General Admission with Valid ID.

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House Democrats outline budget, will vote Wednesday on pension reform
Source: The State Journal-Register

Illinois House Democrats on Tuesday outlined a $36.5 billion spending plan for the fiscal year that begins July 1, but did not offer details of how they’d pay for it.

House Speaker Michael Madigan, D-Chicago, also said the House will take votes Wednesday on pension reform, workers’ compensation changes, property tax relief and government consolidation, all items that Gov. Bruce Rauner and other Republicans have said must be addressed before they’ll consider higher taxes to balance a budget.

However, House Republican Leader Jim Durkin of Western Springs said negotiations on those issues are continuing and taking votes on them Wednesday “isn’t healthy for this process.”

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Employer-based retirement system failing middle-class Americans, says ARA’s Graff
Source: Employee Benefit Adviser

The employer-based retirement system is not working well for middle income Americans, Brian Graff, CEO of the American Retirement Association, a Washington-based trade group, said Wednesday at a retirement symposium.

Forty-two percent of Americans have less than $10,000 in total savings and 83% of Americans don’t have a retirement plan, according to recent research by the Employee Benefit Research Institute. Graff adds that 60% of middle income American families aren’t saving for retirement because they don’t have a plan offered through their employer. “You can’t get off the bench if you have no playing field,” he said at the event sponsored by AFS 401(k) Retirement Services in

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A look at Illinois’ budget mess as lawmakers head to Capitol
Source: The State Journal Register

 Already holding the title for longest state budget stalemate, Illinois is poised to enter a third year without a spending plan as the feud between Republican Gov. Bruce Rauner and Democrats controlling the legislature drags on.

Lawmakers blew past a budget deadline last month, triggering a requirement that any new budget vote be by three-fifths instead of a majority.

They’re expected to return to Springfield for a special session starting Wednesday facing higher stakes to get a budget for the fiscal year that begins July 1.

Unpaid bills are piling up. Rating agencies are threatening to downgrade the state’s credit to “junk.” Uncertainty about schools, transportation projects and social services grows. And campaigning for the 2018 election is well under way in what some predict could become the most expensive governor’s race in U.S. history.

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Registration Now Open for the 2017 IPPFA MidAmerican Pension Conference
Source: IPPFA

Click Here to Register

For over 30 years the IPPFA has offered Public Pension Trustees the best and latest in trustee training. With the recent far reaching changes in pension law and with the difficult challenges yet to come, the IPPFA strives to prepare pension trustees for the future. Please join us for training in Ethics, Investment Procedures, Fiduciary Responsibilities, Legal and Legislative Updates, and more and all with nationally renowned speakers.

2017 IPPFA MidAmerican Pension Conference Summary Page.

 


 

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How Illinois became America’s failed state
Source: Politico

Illinois has compiled $14.6 billion in unpaid bills. It’s running a deficit of $6 billion, and its pension liability has soared to $130 billion.

That’s not the worst of it. The state’s nearly two-year failure to pass a budget has sent its bond ratings careening toward junk level, downgraded a staggering eight notches below most other states.

With university enrollments plummeting, large-scale social service agencies shuttering and the Chicago Public Schools forced to borrow just to stay open through the end of this school year, Illinois is beginning to devolve into something like a banana republic — and it’s about to have the most expensive election the state has ever seen.

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Statehouse Insider: Another nail in the fiscal coffin
Source: The State Journal Register

Comptroller SUSANA MENDOZA warned the day of reckoning was coming when it came to paying state bills, when all of those court orders, consent decrees and state laws requiring automatic payments would outstrip the cash available to meet them all.

That day effectively came Wednesday when a federal judge said Medicaid providers needed to get paid more and faster than they have been. She didn’t say how it should be done. She left that to Mendoza to work out with attorneys for the Medicaid providers.

The state is paying in full for pensions and debt service, and also a large part of K-12 spending. Any of those areas could be possibilities for coming up with money to meet the latest court order. Or maybe they’ll figure out some other way to shift money into payments for Medicaid.

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Pa. pension bill: No taxpayer relief and other things you need to know.
Source: Pennsylvania Politics

Pennsylvania’s two major public pension systems are in for a real shake-up under the legislation that the Legislature is expected to send Gov. Tom Wolf by the end of this week.

Starting in 2019, only hazardous-duty state employees, such as state troopers and corrections officers among others, will be eligible to participate in the current defined benefit system that has been part of public school and state employees’ compensation package for decades.

State employees hired after Jan. 1, 2019, and school employees hired after July 1, 2019, will be forced to move into a new plan that offers them three retirement savings options. Employees hired before that date will have the option of making a one-time switch to one of the new retirement savings plan options.

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