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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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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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With Illinois approaching a third straight year without a state budget, there were fresh signs Thursday that the effects of the unprecedented stalemate will worsen for residents statewide.

Illinois’ credit rating took another major hit, hours after lawmakers adjourned their regular session for the third year without a budget agreement for the fiscal year beginning July 1. The Illinois comptroller, who controls the state’s checkbook, declared the crisis “unconscionable.” Social service agencies — who’ve estimate over 1 million people including seniors and domestic abuse victims have felt the pain — took stock.

Here’s a look at some of the fallout of the ongoing budget fight between Republican Gov. Bruce Rauner and Democrats controlling the Legislature

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Considerations for Pensions Given the IRS’s Delay in Implementing RP-2014

Longevity risk, the risk that plan participants live longer than assumed, gained widespread attention in October 2014 when the Society of Actuaries released its draft of updated mortality assumptions (called RP-2014). Because this was the first update to the standard assumptions in over a decade, the change from the previous tables was noticeable: a boost of life expectancy of two to three years, on average. By 2016, accounting auditors largely required defined benefit plan sponsors to use the updated assumptions on their financial statements, resulting in an average drop in reported funded status of 4%–8%.

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This volume describes major savings and reform proposals included in the 2018 President’s Budget. It includes both discretionary and mandatory savings proposals that bring Federal spending under control and return the Federal budget to balance within 10 years. These proposals encompass a common sense approach to redefine the proper role of the Federal Government, and curtail programs that fall short on results or provide little return to the American people.

In total, this volume highlights 2018 savings of $57.3 billion in discretionary programs, including $26.7 billion in program eliminations and $30.6 billion in reductions. The volume also describes the major mandatory proposals summarized in Table S-6 of the Budget volume.

Going forward, the Administration will build on these proposals in order to implement the President’s charge to create a leaner, more accountable, less intrusive, and more effective Government.

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The brief’s key findings are:

• One option for helping address Social Security’s long-term financial health is to shift a portion of its trust fund reserves into equities.
• Of course, equities would expose the program to greater financial risk.
• However, in terms of financial risk, both retrospective and prospective analyses suggest that equities would improve Social Security’s finances.
• In terms of critics’ concerns:
  • little evidence exists that trust fund equity investing would disrupt the stock market;
  • the experience with the Thrift Savings Plan for federal employees provides a road map for separating the government from investment decisions; and
  • accounting for returns on a risk-adjusted basis would avoid the appearance that substituting stocks for bonds provides magic money.

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Illinois’ budget mess is the stepchild of Illinois’ pension mess, and for that perhaps nothing incites more steam-coming-out-of-the-ears fury from critics than the volume of six figure annual retirement payouts—topped by one at $581,000—pledged to former public workers.

Yet a BGA analysis of 2017 data from major pension funds for state and municipal employees vividly illustrates the disconnect between high-rolling pensions, legally protected but irksome as they may be, and the deep financial plight experienced by many of those funds.

Simply put, the state’s 17 largest pension funds are slated to pay out more than $17.3 billion in benefits to some 483,000 retirees and survivors this year, totals that underscore the broad reach of pension checks for former public employees. Those payments do not come direct from tax money, though there is indirect correlation that can render the public confused and budgetmakers dyspeptic.

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This paper uses a simulated public pension system to examine the sensitivity of actuarial input changes on funding ratios and contribution requirements. We examine instantaneous and lagged effects, marginal and interactive effects, and effects under different funding conditions and demographic profiles. The findings emphasize the difficulty of conducting cross-sectional analyses of public pension systems and point to several important considerations for future research.

The financial condition of public pensions has drawn significant scrutiny in recent years. Much of that attention focuses on the effect of actuarial assumptions and methods on the accuracy of pension liabilities and the adequacy of sponsor funding practices. For example, there is an active debate on whether public pensions should continue to use discount rates that reflect historical investment returns (NASRA 2015) or select actuarial discount rates that reflect the certainty of future benefit payments (Biggs 2012; Novy-Marx and Rauh 2011). In 2013, Moody’s Investor Services adopted its own actuarial procedures to evaluate the financial condition of public sector pension systems, rather than rely on valuations reported under generally accepted accounting principles (Moody’s 2013). And, the Governmental Accounting Standards Board recently revised pension accounting standards (GASB 67 and 68) to significantly change the way actuarial inputs affect financial reporting (GASB 2012).

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Attorney Aaron Maduff on the Constitutionality of the Legislature’s New Effort to Control Pension Costs.

From Springfield:  We talk with attorney Aaron Maduff, one of the lawyers who argued before the Illinois Supreme Court, when the Court ruled the legislature’s effort to diminish pensions was unconstitutional.

Now as the Illinois legislature attempts a new approach to control pension costs, we hear Mr Maduff’s views of whether this effort is constitutional, and if not… what if anything can be done to control the state’s rising pension obligations.

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Other Postemployment Benefits (OPEB) is an umbrella term that characterizes retirement benefits, other than pensions, that are offered to employees of state agencies and participating political subdivisions who meet designated age and/or service related eligibility criteria. The most significant costs associated with OPEB benefits are for employer-subsidized health care for retired employees.

Nearly every state and most local governments provide access to health benefits to retired employees, and, in most cases, this coverage includes spouses and dependents. This employer-subsidized coverage typically serves as the primary health coverage until the retiree reaches age 65, when it becomes secondary to Medicare. The level of benefits, and their associated costs, depends on an assortment of factors including eligibility requirements, benefit type, and the plan’s actuarial assumptions and methods.

In 2015, approximately 80 percent of state government units offered health insurance to retirees under age 65 and approximately 70 percent offered the benefit to those over age 65. These percentages are essentially the same for large local governments (over 10,000 employees), with smaller local governments less likely to offer insurance for either

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