We need to spend more on college football ... for retirement options!

$40,000 per month in retirement. WTF, eh!

I wonder if students ever think about how this misplaced priority is screwing them!

The consolation here: at least he wasn't a Paterno! 

Oh, BTW, Click here to get astounded by the gazillions that college coaches earn. 

An analysis by USA TODAY found that in 2006 the average pay for major-college coaches was $950,000. ...

The average compensation in 2011 is $1.47 million, a jump of nearly 55% in six seasons.

In the six conferences with automatic Bowl Championship Series bids, the average salary rose from $1.4 million in 2006 to $2.125 million in 2011. That's a jump of about 52% — meaning salaries at schools in the other five major conferences are going up at roughly the same rate as they are at higher-profile schools.

"The hell with gold," higher education lawyer Sheldon Steinbach says. "I want to buy futures in coaches' contracts."

Critics find it troubling that this rapid rise for coaches comes at a time when instructional spending at many schools has slowed or declined amid economic struggles and shrinking state education budgets.

Ha!  I am willing to sell you a Taj Mahal for about 20 mil :)

The pension problem ...

First, here is what Nick Gillespie notes that the:

split between private and public-sector workers is one of the biggest issues in contemporary America. We are, as Matt Welch has noted again and again, broke. There's no money left anymore people. We need a fundamental re-do of public sector financing on every level, from entitlement spending to employee compensation. Most clearly, the public sector needs to shift to self-financing of its retirement, just like the private sector has done over the past generation. There are not enough private-sector workers to pay the taxes necessary to continue what's going on in Ohio and elsewhere.

Now, you might dismiss this because Gillespie is, after all, a staunch libertarian with Reason.
But, then here is a report from our capital city's newspaper, the Statesman Journal:

PERS has to increase the contributions to make up for investment losses that occurred during the stock market free-fall of 2008.
"The market downturn dug a huge hole in PERS that needs to be made up," said Brenda Wilson, the city of Eugene's intergovernmental relations manager and PERS consultant to the Oregon League of Cities. "Even though there were positive earnings last year, the hole is bigger than that. Not every single employer will see a rate increase, but the vast majority of them will."
The increase will cost Oregon governments participating in PERS a total of more than $1 billion in additional employer pension contributions, according to information provided by PERS after public-records requests from the Statesman Journal. To cover that expense, cuts to classrooms, parks, libraries and myriad other community services will have to be considered. Some local governments might lay off workers.

Oh well, .... this will be another one to add to the earlier posts related to pensions.  I bet this will not be the last one either.

The Trillion Dollar Pension Gap

Slowly there is an increasing awareness and, hence, a discussion of the huge crisis that has been kind of ignored for a while--the gazillion dollar deficit in public sector pension funds.  I have blogged about this before (the first one was in July 2008!) and I getting back to it because of this news item in the NY Times:

States may be forced to reduce benefits, raise taxes or slash government services to address a $1 trillion funding shortfall in public sector retirement benefits, according to a new study that warns of even more debilitating costs if immediate action isn't taken.

A billion here, a billion there, and soon you are talking real money, eh!  a trillion dollar shortfall. But, guess what?  That does not account for all the public sector pensions.  Did that make you sit up?

The study did not include many city, county and municipal pension plans, which are thought to have similar underfunding.

Cue that Twilight Zone score :(

Here in Oregon?  Here is the Register Guard on that very topic:

As employer contribution rates rise, school boards, city councils and legislators will feel the pinch. Even if state and local revenues rise as a result of an economic recovery, much or all of the increase will be claimed by rising PERS obligations. Oregonians will notice that even as budgets get bigger, they’ll be pedaling harder to stay in the same place — their classrooms will be no less crowded, their police forces no better manned and their social services no more comprehensive. And if public agencies’ budgets stagnate or decline, the erosion of public services will accelerate.

The projected increases in public employers’ PERS contributions should be a prominent issue in this year’s election campaigns. Oregonians will need to resist demagoguery and public-employee bashing — but at the same time, they should demand candid appraisals of the problem and leadership in addressing it.

Public pension crisis slowly unfolds

Basing my thoughts on different analyses I had read, even more than a year ago I was worried that public pensions could be in serious--I mean serious--trouble.  But then the curse of Cassandra's was that nobody would listen to her, how much ever her predictions were correct.  A lesser mortal like me would obviously fare worse than her; but then is there anything worse than what Cassandra experienced? :-)

Consider this news item about the small little state where I live:

State and local government agencies, school districts and municipalities across Oregon face a major hike in their pension costs because of last year's financial market meltdown.

How big? Contribution rates to Oregon's Public Employees Retirement System differ widely by employer. But systemwide, they will increase by an average of 8.4 percentage points starting July 1, 2011, according to a new report from the system's actuary.

It is just one tiny example of how public pensions are n serious trouble.  Multiply this story across the country and across the millions of currently retired and soon to retire public employees, and this Washington Post story becomes a statement on the obvious:

Within 15 years, public systems on average will have less half the money they need to pay pension benefits, according to an analysis by Pricewaterhouse Coopers. Other analysts say funding levels could hit that low within a decade.

After losing about $1 trillion in the markets, state and local governments are facing a devil's choice: Either slash retirement benefits or pursue high-return investments that come with high risk.

So, is anybody listening to Cassandra?

Pensions: what is bad for GM is bad for the country too?

In the op-ed piece in the NY Times, Roger Lowenstein offers a compelling argument on a major reason why GM is on the edge of bankruptcy: retirement/pension benefits. He then ends it with:
Responding to the same temptation to offload expenses into the future, public employers have committed to trillions of dollars in future liabilities. In New Jersey, a huge pension liability has created a budgetary nightmare for the state. The city of Vallejo, Calif., burdened by police pensions, recently filed for bankruptcy.

Just as G.M.’s shareholders bore the burdens of its pensions, states and cities will have to force taxpayers to sacrifice in the form of service cuts, tax increases or both.

It is too late to restore G.M. to its former grandeur. But if public officials do not show courage by quickly funding the pensions they have promised to their workers, taxpayers will soon find themselves in an even worse crisis than the one G.M.’s shareholders are facing now.