Pensions – Page 2 – The Burning Platform

Thoughts from the Frontline: Public Pensions: Live and Let Die

By John Mauldin

When you were young and your heart was an open book
You used to say live and let live…
But if this ever-changing world in which we’re living
Makes you give in and cry… Say live and let die.

– Paul McCartney, the Bond movie theme, performed by Wings

I am not sure if my heart was ever that much of an open book, but I like to think I’m still relatively young. Nevertheless, I must admit that sometimes I want to “give in and cry.” This is especially so when I look at our nation’s public pension funds.

It’s not as if no one saw the problem coming. Experts, including your humble analyst, have been harping on it for decades. Politicians at all levels of government knew very well that a train wreck was inevitable and still did nothing. In some places, like Illinois, the politicians actually did something worse than nothing: they bought votes with promises of future benefits. Even worse, many states had their pension funds sell bonds, thinking they would be able to profit on the difference. Then along came the Great Recession. Oops. Stellar timing.

Now the future is here. Where are the benefits?

In this week’s letter we’re going to return to the worsening problem of public pensions. I offer an analogy between what is happening in Greece today and what will soon happen in Illinois. There are no easy solutions when you kick the can down the road, as politicians are going to find out.

An Unexpected Decade

Ten years ago this week my topic was “Public Pensions, Public Disasters.” Here is how I started this letter on June 17, 2005:

This week we will look with fresh eyes at an old problem: US pension funds, both public and private, are underfunded; and the situation is getting worse. And the US taxpayer is going to get to fund the difference. The recent slew of data on pension funds suggests that little is being done to correct the huge and mounting problems I have written about for years. Even the recent market upturns of the past few years have not been as big a help as they should have been.

Continue reading “Thoughts from the Frontline: Public Pensions: Live and Let Die”

Kiss your Pension Fund Good-Bye

Guest Post by Martin Armstrong

I have been warning for some time that government was eyeing up pensions.The amount in private pension funds is about $19.4 trillion. The question that has been debated in secret behind the curtain is how to justify to the people taking that over. I have been warning that if this is seized by government, it will come after 2015.75. Just how that is to be accomplished was finally settled by the Supreme Court without any justification constitutionally.

The US Supreme Court ruled last week in the unanimous, 8-page decision in Tibble v. Edison holding that employers have a duty to protect workers in their 401(k) plans from mutual funds that are too expensive or perform poorly. That is simply astonishing since there is no constitutional requirement for even government to provide social benefits. The Supreme court held in HARRIS v. McRAE, 448 U.S. 297 (1980) it was explained that the constitution is negative not positive. There is no duty imposed upon the state to provide a program for that would convert the constitution from a negative restrain upon government to a positive obligation to provide for everyone.

If we take the fact that the constitution is NEGATIVE and was a restrain upon government, then this latest ruling is completely unfounded. Monday’s unanimous ruling sends a warning to employers that they now must improve their plans and it is now an obligation to project employees. This comes just in time for then the next step is government to seize private funds and prosecute employers who choose badly a fund manager. This fits perfectly just in time for the Obama administration’s next assault as they prepare a landmark change of its own by issuing rules requiring that financial advisers put the interest of customers ahead of their own. This creates a very gray area wide enough to justify public seizure of pension funds under management.

Continue reading “Kiss your Pension Fund Good-Bye”

PIGMEN WIN AGAIN

“The real owners are the big wealthy business interests that control things and make all the important decisions. Forget the politicians, they’re an irrelevancy. The politicians are put there to give you the idea that you have freedom of choice. You don’t. You have no choice. You have owners. They own you. They own everything. They own all the important land. They own and control the corporations. They’ve long since bought and paid for the Senate, the Congress, the statehouses, the city halls. They’ve got the judges in their back pockets. And they own all the big media companies, so that they control just about all of the news and information you hear. They’ve got you by the balls. They spend billions of dollars every year lobbying lobbying to get what they want. Well, we know what they want; they want more for themselves and less for everybody else.” – George Carlin

After the disgusting example of politicians of both spineless parties bowing down before Wall Street, the military industrial complex and corporate interests this weekend with the passage of a bloated pig of a spending bill totaling $1.1 trillion, how can anyone not on the payroll of the vested interests not admit there is only one party – and it serves only the needs of the wealthy business interests. Obama, champion of the common folk, signed this putrid example of political corruption and corporate capture of the American political system. For all the believers who voted for the red team in the November mid-terms, this is what you got – a bipartisanship screwing of the American people.

The entire episode has been nothing but Kabuki Theater. Both parties have proven to be puppets marching to the tune of Wall Street moneyed interests, while further entrenching the status quo by voting to allow more corporate influence over the election process. Each side of the aisle allowed just enough dissent to make it appear they might not reach an agreement. But at the end of the day Pelosi, Boehner, Reid and McConnell joined hands and gave it to the American public good and hard. And of course we had the candidates for president in 2016 Warren and Cruz playing to their constituents with speeches and maneuvers designed to make them look like fighters for the common man. It was nothing but a show, as they did nothing substantive to stop the bill from passing.

What this entire debacle has proven is that voting doesn’t matter. Your vote is meaningless. Political parties are nothing more than a front for the vested interests. The corrupt politicians are bought and sold by Wall Street and corporate interests. The bills are written by lobbyists for the vested interests. When a spending bill is over 1,700 pages, the purpose is to obscure, hide and insert provisions that will benefit those with money to influence the process at the expense of average Americans. None of the perpetrators in Congress actually read this bill. The public had no say regarding this bill. If this is what bipartisan cooperation looks like, I’ll take gridlock. The system has been so completely captured by those pulling the wires, they no longer even pretend to care what we think. They keep winning and care not about the consequences of their ruthless despicable pillaging.

Politicians decry money in politics when they are paraded onto the mainstream media talk shows. They profess to be men and women of the people, fighting for our rights. So how do they go about getting money out of politics? They dramatically expand the amount of money wealthy political donors can inject into the national parties, drastically undercutting the 2002 landmark McCain-Feingold campaign finance overhaul. A wealthy donor who could only give a maximum of $32,400 this year to the Democratic National Committee or Republican National Committee can now give ten times as much – a total of $324,000. Do you think these wealthy donors might have ten times more influence over government policies, laws, regulations, and tax codes? Do you think these donors are contributing these funds to fight for the rights of average Americans making $50,000 per year? This change just further entrenches the rich vested interests. Your vote just became even more meaningless.

The most outrageous provision in the spending bill is Wall Street putting the American taxpayer on the hook for when their $250 trillion of derivatives of mass destruction blow up the worldwide financial system again. Elizabeth Warren, playing her part in this farce, feigns outrage, knowing it will pass anyway:

“Mr. President, Democrats don’t like Wall Street bailouts. Republicans don’t like Wall Street bailouts. The American people are disgusted by Wall Street bailouts. And yet here we are five years after Dodd-Frank with Congress on the verge of ramming through a provision that would do nothing for the middle class, do nothing for community banks, do nothing but raise the risk that taxpayers will have to bail out the biggest banks once again. You know, there is a lot of talk lately about how Dodd-Frank isn’t perfect. There is a lot of talk coming from CitiGroup about how Dodd-Frank isn’t perfect. So let me say this to anyone listening at Citi —I agree with you. Dodd-Frank isn’t perfect. It should have broken you into pieces. If this Congress is going to open up Dodd-Frank in the months ahead then let’s open it up to get tougher, not to create more bailout opportunities.”

Senator Warren does hit at the heart of the matter. The Too Big To Fail banks should have been made too small to matter after they created the 2008 worldwide financial collapse. Congress should have reinstated Glass Steagall, the insolvent Wall Street banks should have been liquidated or sold off piece by piece, and the American taxpayer shouldn’t have had to pay one dime. Instead, those banks became bigger, more powerful, more arrogant, and more reckless. And now they are writing the laws supposedly regulating them. Regulatory capture at its finest.

Dodd-Frank was already a behemoth mess of a law, written by bank lobbyists, and so complex it was always destined to fail. The law that set up America’s banking system in 1864 ran to 29 pages; the Federal Reserve Act of 1913 went to 32 pages; the Banking Act that transformed American finance after the Wall Street Crash, commonly known as the Glass-Steagall act, spread out to 37 pages. Dodd-Frank was 848 pages long. One of the few beneficial sections of the law was the provision that required banks to “push out” their derivatives trading into separate entities not backed by the Federal Deposit Insurance Corporation. Essentially, this provision prohibited the Too Big To Trust Wall Street Banks from using the deposits of customers to gamble on derivatives, with no capital behind the gambling. Any Wall Street bank that wanted to trade derivatives had to do it in non-insured subsidiaries, and when these trades blew up in their faces, the banks would be solely on the hook. They prefer the they win you lose method.

This spending bill included language written directly by Citigroup and inserted by the politicians in the back pocket of Jamie Dimon and the rest of the Wall Street cabal. Dimon showed no shame as he personally called lawmakers to insist they pass this bill with the gutting of Dodd Frank. Wall Street bankers can now gamble with the deposits of their clients with impunity generating obscene insider profits, and when they inevitably blow up the financial system again the American taxpayer will be on the hook for the losses. In a shocking development, the members who voted for the spending bill had received vastly more political contributions (bribes) than those who voted no. Simon Johnson, former chief economist of the International Monetary Fund and a professor at the MIT Sloan School of Management, concisely sums up the goal of this provision:

“It is because there is a lot of money at stake. They want to be able to take big risks where they get the upside and the taxpayer gets the potential downside.”

And there will be downside. Like Captain Renault in Casablanca, Jamie Dimon and the rest of the Wall Street CEOs will be shocked to find there has been gambling going on in their upstanding institutions of finance, as they cash their $10 million bonus checks. The markets are already overvalued, built on a foundation of debt, and rigged by the Wall Street scumbags. They make Bernie Madoff look like an upstanding citizen. It seems awfully coincidental this provision was inserted into the 1,700 page bill just as the markets have begun to tremor. Wall Street wouldn’t be preparing for another earthquake, would they? The fact that Obama signed this bill is a reflection of him being a spineless toady figurehead, doing the bidding of the ruling class.

The Republicans have run against Obamacare since the day it was passed in 2009. They have threatened to overturn it, de-fund it, and scale it back. This spending bill fully funds Obamacare just as it was passed. Dozens of Republicans voted for a spending bill that fully funds the program they despise. Obama recently subverted the U.S. Constitution once again with his latest executive order allowing illegal immigrants to stay in the U.S. and enjoy our wonderful welfare system. The Republicans were morally outraged and their response was to fund Obama’s executive order to the tune of $2.5 billion. There’s $948 million for the Department of Health and Human Service’s unaccompanied children program — an $80 million increase. The department also gets $14 million to help school districts absorbing new immigrant students. And the State Department gets $260 million to assist Central American countries from where of the immigrant children are coming.

So much for principles, ethics, and courage. You see bipartisanship in Congress means that one side will agree to fully fund the welfare state as long as the other side will fully fund the warfare state, while both sides do whatever Wall Street instructs them to do. Neither side cares that the National Debt increases by $2.5 billion per day. That’s what the Fed is for. The neo-cons in the Republican party were happy, as their dreams of World War III come closer to fruition. There’s $1.3 billion for a new Counterterrorism Partnership Fund; $5 billion for military operations to combat the Islamic State, including $1.6 billion to train Iraqi and Kurdish forces (I thought we already trained them once before); $500 million for a Pentagon-led program to train and equip vetted Syrian opposition fighters; $810 million for ongoing military operations in Europe, including requirements that at least $175 million is spent in support of Ukraine and Baltic nations. And you were worried about Defense cuts. The military industrial complex will never allow their profits to decline. If we run out of real enemies, we just make them up out of thin air – ISIS, or go back to the Cold War playbook and declare Russia to be an imminent threat to our safety and security.

Despite running $800 billion actual (not the BS reported deficits) annual deficits, the political hacks of the ruling party still funnel $3.1 billion per year to Israel, $1.3 billion to the dictator in Egypt, and $1 billion to our puppets in Jordan. This hyper-interventionism in the affairs of countries around the globe, either through military intervention, supplying arms, overthrowing elected leaders, or funding dictators has destabilized the entire world. Russia is not the aggressor on the world stage, as portrayed by the mouthpieces for the state in the mainstream corporate media. The American empire has created the conditions for havoc, disarray and war to flourish. Someone will ultimately do something stupid and the fury of hell will be unleashed across the globe. And it is our fault.

You’ll be happy to know the trucking industry still has some pull in Congress. Their drivers will be allowed to work 82 hours per week, versus the far too restrictive 70 hours per week. When you are driving your economy car on the interstate and that 18 wheeler is barreling down on you from behind, thank Congress when the drowsy dude behind the wheel is working his 81st hour of the week. And if you were a hard working middle income blue collar worker in businesses such as trucking, construction and supermarkets and were promised a pension, tough luck. Hidden inside the bill was a haircut for pensions. This provision allows the promised pension benefits of up to 1.5 million workers and retirees to be cut. It affects the pooled pension plans — called multi-employer plans — of mostly union workers across a bunch of companies, where it looks like the plans won’t be able to cover full benefits in coming decades.

Could it be any clearer that we are nothing but lowly peasants and the aristocracy inhabiting the protected luxury skyscrapers suites in New York City and the government buildings in Washington D.C. have nothing but contempt and scorn for our plight, as they gorge themselves like pigs at the trough of working people’s wealth? They use taxes and inflation to siphon your savings and earnings, rig the markets so they always win, write the laws to favor themselves, and use the mass media and the police surveillance state to crush dissent, control the message and intimidate the masses. The ruling class fears the masses and continues to prepare for a coming conflict. Within the Intelligence Authorization Act for FY 2015, passed this week, was written a new section that grants the executive branch virtually unlimited access to the communications of every American.

Sec. 309 authorizes “the acquisition, retention, and dissemination” of nonpublic communications, including those to and from U.S. persons. The section contemplates that those private communications of Americans, obtained without a court order, may be transferred to domestic law enforcement for criminal investigations. Sec. 309 provides the first statutory authority for the acquisition, retention, and dissemination of U.S. persons’ private communications obtained without legal process such as a court order or a subpoena. The administration currently may conduct such surveillance under a claim of executive authority, such as E.O. 12333. However, Congress never has approved of using executive authority in that way to capture and use Americans’ private telephone records, electronic communications, or cloud data.

The majority of American people still believe they live in a democracy where their vote matters. Sadly, they are living in a delusional fantasy world, as they actually live in a corporate fascist welfare/warfare surveillance state run by one party of vested corporate interests. Until consent is withdrawn and the pigmen are violently confronted, nothing will change. The existing social order will be swept away within the next fifteen years as this Fourth Turning reaches its bloody conclusion. You may think we are all equal under the law, but Orwell knew that some are more equal than others. Can you distinguish the pigs from the men?

“The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which.” ― George Orwell, Animal Farm

“Democracy is the theory that the common people know what they want and deserve to get it good and hard.” ― H.L. Mencken

BAILOUT NATION

If the economy is growing and corporate profits are at all time highs, why did the cumulative deficit of the PBGC double in the last year? This fake corporation (aka Fannie & Freddie) is bleeding cash to the tune of $62 billion. You are on the hook. Even though Obama and his minions report declining deficits, these numbers are nowhere to be found in the deficit numbers, even though they will need to be bailed out by the Federal government. Imagine the losses when the financial system cracks again.

So the company that bails out defunct pension plans needs a bailout. Of course, as you can see by the truly shocking charts below, the entity bailing them out is also insolvent. Who bails out the entity that bails out the pension bailout entity?

Do you see what a farce this has become?

I think it is time to bailout on this fucked up system.

US Pension Insurer Needs a Bailout

By Pater Tenebrarum

A Growing Shortfall

The Pension Benefit Guaranty Corporation is insuring the pensions of more than 40 million Americans employed in the private sector that have defined benefit pensions. We hadn’t been aware that it has run deficits for 12 years running, but it apparently has – and it is adding up. At the moment, the fund has a cumulative deficit of $62 billion. It has reportedly doubled just over the past year:

“The deficit run up by the federal agency that insures pensions for about 41 million Americans has nearly doubled, to $62 billion. And the agency says that without changes, its program for pension plans covering 10 million of those workers will be insolvent within 10 to 15 years. It was the widest deficit in the 40-year history of the Pension Benefit Guaranty Corp., which has now run shortfalls for 12 straight years. The gap grew wider in recent years because the weak economy triggered more corporate bankruptcies and failed pension plans.

If the trend continues, the agency could need an infusion of taxpayer funds to pay retirees, who are guaranteed their pensions by law. The PBGC said Monday that the increased deficit was due to worsening finances of some multi-employer pension plans, which are pension agreements between labor unions and a group of companies, usually in the same industry. The $62 billion deficit reported for the year ended Sept. 30 compared with $36 billion in the previous fiscal year. Labor Secretary Thomas Perez said fixing the problem is vital to the retirement security of the nation’s middle-class. Agency officials called for Congress to enact legislation submitted by President Barack Obama designed to shore up the program’s finances. The PBGC was created in 1974 as a government insurance program for traditional employer-paid pension plans, which have become much less common in recent decades as most employers turn to retirement accounts such as 401(k)s.

The traditional plans are most prevalent in industries such as auto manufacturing, steel and airlines. If an employer can no longer support its pension plan, the PBGC takes over the assets and liabilities, and pays promised benefits to retirees up to certain limits. The agency didn’t name the multi-employer plans that it expects to run out of money or how many are involved. It said they represent a minority of the total 1,400 or so multi-employer pension plans, which cover about 10 million workers. “Plans covering over 1 million participants are substantially underfunded, and without legislative changes, many of these plans are likely to fail,” PBGC Acting Director Alice Maroni said in a statement. The agency said in its annual report that it has “sufficient liquidity to meet its obligations for a number of years.”

The agency said the deficit in its multi-employer insurance program jumped to $42.4 billion in the budget year that ended on Sept. 30, from $8.3 billion in 2013. By contrast, the deficit in the single-employer program shrank to $19.3 billion from $27.4 billion as the economy strengthened. The PBGC reported that its pension obligations grew by $30.9 billion in fiscal 2014, to $151.5 billion. Assets used to cover those obligations increased by only $4.9 billion, to $89.8 billion. Rep. John Kline, R-Minn., chairman of the House Education and Workforce Committee, called the multi-employer insurance program “a ticking time bomb that will inflict a lot of pain on workers, employers, taxpayers and retirees if Congress fails to act.”

(emphasis added) To summarize: in spite of its $62 billion deficit, the insurance fund will only be insolvent in another 10 to 15 years, ceteris paribus. Although this qualification is not mentioned above, it is an important one. What if the economy suffers another severe downturn, which seems a nigh certain outcome of the many years of bubble blowing by assorted central banks? Even in the muddle through scenario currently assumed to continue, the fund will require a tax payer bailout (this is what “Congress needs to act” means). We wonder how the fund invests its assets, given the rather paltry growth of same (after all, it also receives fees from the companies the pension plans of which it insures).

Conclusion:

We actually come across stories bemoaning the underfunding of pension plans on a regular basis. This is a problem that not only concerns defined benefit plans. Now we learn that the insurer of these pension plans is actually busy going down the drain as well. However, the government, which is supposed to bail the insurer out, has also begun to bleed red ink in its social security fund – and that deficit is going to grow and grow for many years to come.

Social security: from a surplus that was spent, to a deficit that is growing inexorably year after year – click to enlarge.

If one adds the projected medicare deficits to this, things look a lot worse still:

Social security and medicaid deficits combined – click to enlarge.

And now there is yet another hole that needs to be plugged. Charts by: Heritage Foundation, Wikipedia

PHILA. TELLS TEACHER’S UNION TO F#@K OFF

This might be the first rational action taken by the City of Philadelphia in the last 30 years. These idiots convinced the slimy politicians in Harrisburg to pass a $2 per pack cigarette tax a few weeks ago to supposedly raise $80 million per year to fund the bloated Phila School District budget. Now the government drones have admitted the tax won’t raise $80 million and they are still projecting a $7 million deficit for this year and a $71 million deficit for next year. The teachers’ union salary, benefits and pensions are gold plated and will surely bankrupt the City of Philadelphia.

It looks like someone grew some balls and out of the blue, the School District revoked the union contract and is now implementing reasonable sharing of healthcare costs to reduce annual expenditures by $44 million. It’s a great first step, but the pensions are where the real money is going. Someone at the state level has to grow a pair to fix the pension problem. And by fix I mean cut the gold plated benefits of all government workers.

The greedy corrupt unions should willingly work with the corrupt politicians to reduce their gold plated benefits now or face getting 20 cents on the dollar when these municipalities declare bankruptcy within the next five years.

Instead the teachers’ union drones will strike, protest, and sue the city. The liberal rag newspapers will write stories about the poor children. Same shit, different day. It’s time to tell all government unions to fuck off.

SRC revokes teachers’ contract, changes health benefits, redirects $44 million to schools

by on Oct 06 2014

Photo: Kimberly Paynter/WHYY

School Reform Commission Chair Bill Green (left) and Superintendent William Hite speaking to the media after Monday’s meeting.

After 21 months of fruitless labor talks, the School District made a bold move Monday to unilaterally restructure teachers’ health benefits and send $44 million in savings directly back to schools.

At a special meeting that was barely publicized until hours before its 9:30 a.m. start, with no public testimony before acting, the School Reform Commission unanimously voted to cancel the contract with the Philadelphia Federation of Teachers in order to rework its health-care provisions. The District also filed a legal action in Commonwealth Court to establish its right to rewrite the contract based on special powers granted to the SRC.

“This is our attempt to bring teacher contributions to health care in line with other local and national norms in a way that will allow us to remain able to serve students and avoid layoffs,” said Superintendent William Hite in an interview before the meeting. “If we don’t find additional savings, our children will continue to face inadequate resources. And there’s nothing else to cut from our central office or school budgets.”

On his wish list of what he hopes principals will restore, Hite included sufficient counseling services, enough personnel so teachers can meet and plan, more aides to monitor cafeterias and recess, teachers to offer more advanced classes in world languages, additional reading specialists for young children who have fallen behind, clerical help, and materials and supplies.

PFT spokesperson George Jackson said this was a union-busting action, denouncing the stealth move to hold the meeting with virtually no publicity.

“The manner that they did it in is outrageous,” he said. “We’re going to fight this.” The union learned of the planned action this morning.

The meeting was sparsely attended. One speaker, retired teacher Lisa Haver, was allowed to give public comment after the SRC’s vote. She denounced the body for acting without publicizing the meeting.

The District will require teachers and other PFT members to pay up to 13 percent of the cost of their medical premiums and reduce their choice of plans, starting Dec. 15. Now, most PFT members pay nothing toward health premiums. The payments will amount to $27 to $71 per month for single coverage biweekly paycheck, according to the District. For family coverage, the cost is $77 to $200 per month.

The SRC will also stop underwriting the union’s Health and Welfare Fund, which provides prescription, dental, vision and other benefits to active members and retirees. The District, which now pays $4,352 per member per year to the fund as required by the PFT contract, plans to provide the coverage directly to current employees but end benefits for retirees.

District officials said these two actions will allow for the redirection of savings of $44 million — plus a possible $10 million in federal funds – that will be sent back to schools in a series of three installments starting this month. The first installment will be $15 million, Hite said.

The action will help give the District the funds it needs to operate next year, SRC Chair Bill Green said. Next year the anticipated savings from health care costs will be $49 million.

However, spokesperson Fernando Gallard cautioned that the District is now anticipating a deficit of $8 million this year, due to a reduced estimate of cigarette tax revenues, and $71 million deficit next year. The financial supplement to schools may need to be adjusted, officials said.

With this move to redirect funds to schools, the SRC is clearly trying to win back the perception that it, not the union, has the best interest of the students at heart. The PFT had been building sympathy in the two-year contract stalemate by emphasizing how teachers are coping with difficult conditions and dipping into their own pockets to buy supplies despite a pay freeze.

While teachers work very hard, Hite said, “This is the notion of sharing in the sacrifice as we’re trying to navigate tough fiscal times so we are able to provide children with the resources they need right now.”

Union leaders have repeatedly pointed out that Philadelphia teachers earn lower salaries on average than their suburban counterparts; one study put the figure at 19 percent less.

The District had for months called for a pay cut on top of the benefit changes, but recently backed off that demand.

Hite said that he and the SRC “wanted to do this through an agreement,” and that despite Monday’s action, “we are still committed to reaching a negotiated settlement” covering economic terms and work rules. He has no plans to impose changes to other “economic provisions” of the contract. The last PFT contract expired in August 2012 and was extended for a year.

The 217 District-run schools will get varying allocations according to a formula that takes into account size and need, said Gallard. On average, the amount comes to about $200,000 per school.

The SRC and Hite took the action in the midst of one of the worst budget crises in the District’s history, one that has had devastating effects on schools. The PFT negotiations have dragged on over two shaky starts to a school year and during a period when thousands of District jobs have been eliminated.

In both 2013 and 2014, Hite wasn’t sure until late summer that he could even open schools on time.

Class size has grown. Northeast High started off the year with a science class with 62 students and Central with an English class of 50. Students have had to raise money themselves to put on a play, print a newspaper, or run an afterschool club. Most schools have art or music instruction, but few have both. Parents donate copy paper. Restaurants invite patrons to add a few dollars to their bills to send to the District.

Throughout the crisis, the union has been willing to absorb thousands of layoffs rather than give up benefits won over decades of hard-nosed, often bitter bargaining. Since fiscal 2011, PFT membership has dropped 25 percent, or by more than 4,000 people, according to District figures, although not all due to layoffs.

PFT president Jerry Jordan has said publicly that the union offered changes in health-care benefits to save money that were rejected by the District.

Chief Financial Officer Matthew Stanski has said that the union proposals would net only about $2 million in savings.

And providing retiree benefits, he said, “was never the intent of the [Health and Welfare] fund, and something we don’t believe we can afford.”

The union has firmly resisted letting go of its Health and Welfare Fund, long under the management of union treasurer Jack Steinberg and then his son, Arthur. The fund lent money to the District several years ago during a prior crisis, and is now sitting on a $45 million balance, District officials said – money they are now pointedly trying to demonstrate is more urgently needed in classrooms.

After months of public criticism of union contract provisions by District officials, it was noteworthy that the District’s action on Monday was strategically targeted only at the health benefits.

In September, Jordan responded to District demands for concessions by saying that the union is the one defending children’s needs by insisting that the contract include class size limits and staffing requirements, including that every school have a counselor, nurse, and librarian.

SRC Chair Bill Green has said the District doesn’t want those guarantees to remain in the contract. “We can’t agree to that, because that’s not good for kids,” Jordan said after a general membership meeting at which American Federation of Teachers president Randi Weingarten came to Philadelphia to bolster morale.

Weingarten told the teachers that “the path forward is to elect a new governor who believes in education and is willing to take responsibility” for the District instead of just “ideologically blaming” teachers for its fiscal troubles.

In the face of the crisis, other District unions, including principals and blue-collar workers, have agreed to historic concessions including pay cuts. But the PFT has stood firm in the position that teachers “are not a funding source.”

Jordan has said repeatedly that the state is at fault, having failed to live up to its constitutional mandate to provide all students with a “thorough and efficient” education.

Over the last two years, the District’s quest for long-term, stable funding from Harrisburg has not yielded enough to put it on firm financial footing. And in parrying the District’s effort to extract more money from the state, Gov. Corbett and Republican legislators openly cite the union as an impediment.

For instance, in an Oct. 1 debate, Corbett’s Democratic challenger, Tom Wolf, accused him of being “no friend to education. Corbett retorted, “I’m no friend to the unions.”

Philadelphia has borne the particular brunt of state policies and funding decisions under Corbett. Of a $1 billion reduction in state and federal aid sent to local districts in 2011, Philadelphia lost $250 million, triggering the current crisis.

And in answer to pleas for more recurring sources of funds, the Republican-controlled legislature has largely placed the burden on Philadelphia itself, through sales and cigarette taxes that it had to approve but that only apply to the city.

But Corbett is trailing Wolf in the polls with just a month left before the election, largely due to education policies that have left many districts, not just Philadelphia, short of cash. Across the state, hundreds of districts are cutting programs, raising property taxes, or both.

For the PFT, it is a case of holding out in hopes that better times are coming. The union has been working hard to elect Wolf, who has promised to tax natural gas extraction and increase the income tax rate on higher wage-earners to raise more money for education.

The union is also is fighting hard to abolish the SRC and return the District to local control.

But District officials believe that those hopes are misplaced – that the cost of running the District the way it is now, whoever is in charge, will continue to exceed reasonable projections for available funds in the future.

“We’ve been trying to convince the PFT of the need for structural change,” said one District source. “We’ve met with them hundreds of times, and given them thousands of pages of documents, different versions of the budget, scenario after scenario.”

By default, structural change has occurred, the source said, “but by reducing the head count,” instead of rethinking compensation and benefits.

Between the proliferation of mostly non-unionized charters, the closing of District schools, the conversion of others to private management, and layoffs caused by the budget crisis, the PFT’s active membership has shrunk from 16,408 in 2011 to 12,232 today, according to District data.

The layoffs have occurred according to seniority – “last in, first out” – and so affect the newest members, who are not the PFT’s core constituency. The District’s demand to change the layoff rules to include performance and give principals more leeway in deciding who goes has been another point of contention in the bargaining.

Whether the SRC actions will hold up in court is in question. The SRC was given special powers as part of the 2001 state takeover of the District – done, by the way, due to fiscal instability – but the parameters and extent of those powers are still uncertain. It tried earlier this year to get the state Supreme Court to clarify the issue, but the court declined to do so.

Still, the SRC has already ignored provisions of the expired contract. In summer 2013 it stopped paying teachers for so-called “step” and “lane” increases, which accrue automatically based on experience and advanced degrees earned. It also says it wants to move permanently to a “pay-for-performance” model that would be jointly worked out with the union.

It has already suspended other parts of the contract, including those on class-size limits, saying it doesn’t have the money. The union has filed individual grievances over many of these actions. But that is a time-consuming process that has yet to result in rulings with far-reaching impact.

WTF CHARTS OF THE DAY – WHERE THERE’S NOT SMOKE, THERE’S FIRE

I was watching some new sitcom last night that takes place in a NYC bar. A bunch of NYFD dudes came into the bar and women swarmed around these heroes. One of the skeptical characters in the show walked up to them and pointed out the number of fires in this country were 85% lower than 50 years ago. He told them he had likely put out as many fires as they had in the last year. They got bent out of shape by him using facts to pop their hero balloon. Later in the show he told them rain could do their job.

The episode made me curious and lo and behold checkout this chart. Thirty five years ago we needed 225,000 career fire fighters to handle 2.4 million fires. Today, with much better equipment and technology, we somehow need 340,000 career fire fighters to handle 1.37 million fires. That’s 50% more firefighters for 40% less fires. I smell something and it’s not smoke. It’s the stench of another government union scam.

The government and the firefighters’ unions know these drones sit around the firehouse 99.8% of the time collecting high pay, gold plated benefits and retirement with full pay at 50 years old. They get more false alarms than actual fire calls. There was only one way to pretend they are useful and needed. Whenever an ambulance call comes in they send a fire truck just for shits and giggles. You’ve all seen fire trucks at the scenes of minor car accidents or other medical emergencies. Whenever you see six firefighters standing around at a fender bender accident scene remember that it costs you the taxpayer approximately $3,500 every time a fire engine leaves the station.

Who could possibly question the gold plated pension of a firefighter who has never fought an actual fire? This entire country is a scam.

THEY’RE COMING FOR YOUR SUPERBOWL POOL MONEY

The Federal, State and local government leeches are in desperate need of more blood to fund their bloated bureaucracies, gold plated pensions, vote bribing entitlement schemes, and overall crony machinery. The State of PA is effectively insolvent if they used GAAP accounting . So is virtually every state and municipality in the country. The PA government pension liability alone will drive the state into bankruptcy. Rather than address the real problem with honesty and courage, the weasel politicians and bureaucrats solution is to defer, delay, tax and pretend. The weasels increase the gas tax, tolls, fees, and anything else they control to pay for their incompetence.

Earlier in the week, I heard another story about PA expanding gambling to fill their gaping budget hole. The Phila Inquirer described the situation:

As budget discussions unfold over the next few months, it is widely expected that the GOP-controlled House and Senate, along with the Corbett administration, will seriously consider a proposal to expand lottery gambling and, possibly, one to legalize online gambling. Both measures could mean hundreds of millions in annual tax revenue at a time when the state is in the red. The administration says Pennsylvania could be facing at least a $1.2 billion budget gap for the fiscal year that begins July 1.

These bozos already have a $1.2 billion budget shortage, COMPLETELY due to the mandatory government pension payments required to fund the retirements of government drones who retire at 50 years old. Instead of addressing that issue, they milk the cows for more revenue. The morons think they can generate another $200 million from keno and on-line gambling. Of course, all the other states have the same plan. You can’t get blood from a stone. The real people living in real houses across the state are making less real money than they did in 1989. But the clowns in Harrisburg think they can extract another $200 million per year from these people. None of these lowlife politicians mention the FACT that it is mostly senior citizens, the poor and the ignorant who are lonely, bored, and stupid enough to gamble. PA is taxing the poor and stupid to fund their pensions.

And now they are coming for your Superbowl pool. The Pennsylvania State Police are out to get you.

Two government drone politicians crafted Act 92 to, among other things, allow nonprofit clubs to run pools, as long as it is structured so any wager is an entry fee, not a bet on a specific outcome, with the house taking the other side. Wagers are capped at $20. But State Police Commissioner Frank Noonan said Act 92 specifically says it cannot conflict with federal law, and Noonan said placing any kind of wager on sports violates the federal Professional and Amateur Sports Protection Act. State Police had its legal team review Act 92, and found the federal law doesn’t leave any wiggle room for Super Bowl or March Madness pools, Noonan said.

We are seeing the heavy hand of government getting heavier by the day. Every State and municipality will be growing increasingly desperate as their un-payable entitlement promises come due. Everyone is seeing gas taxes, sales taxes, income taxes, real estate taxes, car registration fees, sewer fees, water fees, utility fees, cell phone fees, cable fees, and tolls increased. Government is bleeding us to death. The time is coming when we say we’ve had enough.

Reduce your footprint. Drive less. Cancel services that are taxed. Work for cash under the table. Barter. Buy less stuff. Don’t ever participate in state sanctioned gambling. Starve the beast until it collapses.