PENNSYLVANIA – KING OF UNFUNDED GOVERNMENT DRONE PENSION PLANS

The Wall Street shysters and their mouthpieces on CNBC have gleefully ripped Meredith Whitney and her prediction of thousands on municipal bankruptcies. Her timing was early. She didn’t realize that Bernanke would bow down to his masters and produce a 100% stock market gain by pumping $2.5 trillion of free money into the veins of the Wall Street addicts. His actions have solved nothing. Municipalities across the land have unfunded pension and health benefits in excess of $4.5 trillion. And this calculation is based upon annual investment gains of 8%. That’s hysterical when long term bonds yield 2.5% to 3.5% and stocks are priced to deliver 3% over the next ten years. Using a true investment rate of 3% to 4% reveals a true unfunded liability in excess of $6 trillion.

It seems Pennsylvania is ground zero for unfunded pensions and my Township is one of the worst examples of governmental incompetence in the state. How could one state account for 25% of ALL the public pension plans in the entire country? I guess we’ve cornered the market on dumbass public officials, greedy government union drones, and a delusional populace that can’t understand basic math. The Governor and the legislature know that government pension obligations are a looming fiscal disaster. What actions did they take when they passed the 2014 budget last week? NOTHING!!! There are elections coming up in November. You can’t get re-elected by telling voters the truth or getting government union employees mad. This is why we’re doomed. No politician has courage. Greedy government drones will never willingly give up what was promised them by slimy politicians. The average voter thinks money grows on trees. When the next financial crisis hits and wipes 30% to 40% out of these pension plans, accounting fraud and underfunding of these pensions will come home to roost. Meredith’s predictions will come true as municipalities declare bankruptcy and government workers end up with 20% of what they were promised.

My township of Towamencin is singled out in this article as an example of a municipality that has screwed its 17,600 residents by promising its police, firemen and other government workers more than they can ever deliver, without jacking up taxes significantly on the citizens. I pulled up the details of the Towamencin pension plan and annual budget at these links:

http://www.auditorgen.state.pa.us/Reports/Pension/munTowamencinTwpPPP071012.pdf

http://www.towamencin.org/documents/finance/2013_Proposed%20Budget.pdf

According to these reports the Towamencin pension plan is only 61% funded. A township with a $16 million annual budget owes $9.5 million to its workers. It’s assets have an actuarial value of $5.8 million. Of course, all of these figures are complete bullshit because they are based on an 8% annual return on the invested assets. Using the 3% they will actually achieve, the plan is underfunded by $5 to $6 million. That is $800 per household in the township. What is it with politicians and promising public employees gold plated benefits that far exceed what people in the real world receive? In the early 2000’s the annual pension payments for Towamencin were in the $100k per year range. Then Tom “code red” Ridge and the idiots in Harrisburg passed the “No Government Drone Left Behind” law and set in motion a future fiscal disaster of epic proportions.

The population of Towamencin has not budged since 2000. The annual pension payment has gone from less than $100k per year to over $900k per year. It now accounts for 6% of the annual budget and 11.5% of the general fund budget. It is on automatic pilot and will exceed $1.2 million in three years. This is before the inevitable stock market implosion. After the 30% to 40% losses, the annual required contribution will ramp up to $1.5 million as their tax revenues contract. The politicians that run this township have a history of delusional fantasies. They borrowed millions and used eminent domain to build a $500,000 bridge to nowhere. They wiped out five baseball fields and a quaint antique mall with the delusion of a retail paradise. The bridge is beautiful. It leads from one massive vacant weed infested parcel to another vacant parcel. They did build a massive brand new municipal building for the government drones. They poured millions into a pool that losses patrons every year and operates at a loss. These brilliant financial moves have led to annual debt service of $1.7 million, or 11% of their budget. By 2015 the pension and debt service costs will account for over 20% of the annual budget.

Math is hard. Politicians are toadies. Government union employees are greedy. The taxpayers are on the hook for the promises made by toadies to greedy government drones. Reality will smack all of these delusional morons. The obligations cannot be honored because it’s mathematically impossible. Taxes would need to double in order to honor the unfunded liabilities. If the government drones don’t accept large cuts in their pension and health benefits, municipalities will go bankrupt and the drones will be screwed even worse. The parable of the scorpion and the frog will play out because unions NEVER accept reductions in their benefits. It’s their nature.

 

 

IT’S NOT FAIR – TOUGH SH%T!!!

One of my Dad’s favorite phrases was “Tough Shit”. If you told him he was being unfair or unreasonable, his answer was usually “Tough Shit”. It’s tough to argue with that logic. The phrase came to mind as I read the Op-Ed in my local paper yesterday from a teacher in the North Penn School District. He seems like a decent fellow who cares about the students he teaches. His arguments in favor of reasonable pay and reasonable workloads have validity. I’d also agree that the demotions of 36 young teachers is unfair. But at the end of the day, I’d have to tell the guy TOUGH SHIT!!!

You see, life isn’t fair. The school district asked the teachers union to accept a one year salary freeze in order to balance the budget. The union said NO. So, the school district demoted the 36 teachers to make up for the budget shortfall. There are two sides to the issue. The union contracts for teachers are too rich. The administrators who run the school district were delusional fools.

When housing was booming 5 years ago and real estate taxes were rolling in at a tremendous rate, the administrators decided to build a beautiful new football stadium and an Olympic size pool, while signing gold plated contracts with the teachers union. They added more teachers and more administrators. It was a glorious future. Well guess what? The tax revenue plunged as home prices and real estate transactions cratered. You can’t undo a new football stadium and new Olympic sized pool. You can’t renege on a five year teacher contract with guaranteed 4% salary hikes, huge pension promises, and gold plated healthcare guarantees.

You see, we’ve elected people who promised us lots of free shit in order to get themselves elected. This is true at the local, state and federal level. We have lived our lives depending upon those promises to be kept. We didn’t need to save for a rainy day. We could retire on the huge equity in our houses. The stock market would always go up. And life would be full of unicorns and rainbows. Well it was all a lie. The money is gone. It wasn’t real. The promises can’t be kept. You can’t borrow your way to prosperity. Your standard of living has been about 40% too high for the last two decades and it is coming to an end. And you know what?

TOUGH SHIT!!!

It is what it is. It isn’t fair, but that doesn’t matter. Get over it. You are going to get screwed, one way or the other. Below is a picture of a beautiful bridge in my township. My town spent millions to build this bridge. They borrowed the money. The used eminent domain to get rid of ten houses so they could build the bridge five years ago. They knocked down and flattened an old antique shop and wiped out 5 little league baseball fields where my kids played baseball for this bridge. They assured us that there would be a huge retail complex on one side of the bridge and hotels, condos and townhouses on the other side of the bridge. We call it the bridge to nowhere. Nothing has been built on either side of that beautiful bridge. NADA!!! There is no hint of a retail complex. No condos. No townhouses. Just debt and a bridge too far.

Towamencin can’t sell the bridge. The money is gone. Wasted. Pissed down the drain. The clueless morons we elected have moved on to greener pastures and left us a bridge to nowhere. It’s not fair. But guess what?

TOUGH SHIT!!! 

This has gone on at every level of government for decades. Social Security isn’t solvent. It isn’t in a lockbox. The thieves in Congress spent the money on wars and tax breaks for hedge fund managers and for public housing in West Philly. The major cost saving part of the Gang of Six debt ceiling plan is to change the CPI calculation so that they can pay you less money in your retirement. They already understate the CPI by about 5%, so what’s another 2% or 3% among friends. This isn’t fair to senior citizens or people who will retire over the next 20 years. But guess what?

TOUGH SHIT!!!

Look at the chart below. We have spent tens of trillions on our war industry over the decades and what has it achieved? Did it keep us from being invaded by a foreign enemy? Have we ever been at risk of being attacked? NO!!! We have spent trillions meddling in other people’s business and creating enemies so the military industrial complex could enrich itself and their captured politicians. The trillions are gone. Wasted. Pissed away for no good reason. You can’t sell off the aircraft carriers and thousands of fighter planes. The money is long gone.

We are $14.4 trillion in debt. We will be $20 trillion in debt by 2015. Our unfunded promises exceed $100 trillion. The promises won’t be kept. The country will undergo a once in a lifetime purge over the next ten years. Since 90% of the people in the country are delusional, the purge will be forced upon the country by outside forces. We won’t willingly reduce our standard of living by 40%, but it will happen. It’s not fair, but guess what?

TOUGH SHIT!!!

YOUR SAY: Teacher speaks out about North Penn

By Jonathan Alba
Conshohocken resident

Is it not beautiful that we have the right to free speech in this country? I hope so.

I am concerned. I am concerned about the current direction in which the North Penn School District may be headed. Surely nothing too bad can happen anytime soon; I mean, we just did get a national ranking.

But a drastic change is now on the horizon, at least from my perspective. Also, this drastic change, as I have chosen to put it, is exactly where my aforementioned concern resides.

In fact, the school board has chosen to demote 36 teachers at the secondary level. Please don’t be mistaken. The demotion carries with it a remarkable advantage. Doubtless, the board has found a simple solution to its financial consternation.

Unfortunately, the disadvantage in my mind must be brought to the attention of the public, just in the event that it has not quite been made clear.

What is the disadvantage? Well, in my department, a youthful teacher who is absolutely relentless in his attempts to improve his craft has been given a difficult decision. Stay, and make 40 percent of his salary, or leave and learn to manage another school system (they’re all different, you know … just like snowflakes).

Additionally, two of my colleagues will be asked to teach six classes. I did that in the beginning of my career, and I suppose you could say that it’s surprising that I’m still here in some respect. I stayed and kids … thank you so much as so very many of you have rewarded me, and each of you in a unique way.

In truth, I witnessed bright and capable young teachers leave North Penn in search of greener pastures. Translation: teaching six classes is hard. Additionally, I found out that at other districts they compensate for the extra workload.

As an example, at the time I was in my initial years of teaching, in Abington High School a high school teacher instructing six classes rather than five were given a fifth of their salary as extra pay. I believe in the business world they call that motivating your employees.

Though our school board appears to treat these demotions as just business, I am not certain that the demotions are good business. Actually, increasing class size and worsening work conditions, in my mind, can likely lead to a decline in the quality of our education at North Penn. Wait, what is our business? It is quality, right?

I understand that the decisions to cut the budget were not easy. Nor could they have been. However, can there not be another way? I plead, and understand that I wish it to be the most humble of pleas, that we as a community reconsider all of our options before casting your next vote for the school board. I do not mean to take advantage of rhetoric, but nonetheless, I say it is our children’s education at stake.

Kids don’t always learn from our words; but I do think they do learn from our actions more often than not. Should we be concerned about what the action of demoting the teachers conveys to the kids? I cannot answer that question; quite literally, I am not capable. But I am concerned.

I like my job. I am looking forward to my teaching schedule next year and it is one that I am greatly anticipating. Might all of that be in jeopardy with my comments? I suppose. However, I would sacrifice that in order to promote awareness.

Jonathan Alba is a resident of Conshohocken.