Monday, May 01, 2006

Monday Open Forum

This morning I finally got around to reading the Connecticut section of the NY Times. There are two articles that might be of interest here one on state pensions and one on Stem Cell research. If you're not already a registered user Bugmenot.com will provide a temporary handle and password.

Concerns Increase Over State Pensions

Standing By for Stem Cells

What else is going on today?

5 comments:

GMR said...

Pensions and retiree benefits are a huge problem for many older companies and municipalities. New companies rely mainly on 401(k) plans and similar programs: defined contribution plans. In this scheme, the employer and/or employee contributes money to an account. This account then is essentially the property of the employee (if the employer contributes there may be some sort of vesting schedule, but if the employee contributes, that is his right away). Employee contributions are tax deductible, and there's about a $15,000 limit each year. Depending on how the account is structured, the employee can choose various mutual funds or stocks to invest the money in. Hopefully, that money will be enough to allow the employee a good retirement. If not, then that's tough for the employee. If on the other hand, the employee dies before the money is gone, then that money becomes part of the estate.

Older companies like GM and United Airlines, and most municipalities, have defined benefit plans. Basically, they promise to pay the employees a certain amount each month after the employee reaches a certain age. The amount is usually dependent upon last salary, number of years served, etc. Now, in this case, the retired employees don't really have to worry how the money is invested, they just have to hope that they don't die too soon. Many pensions also include health care.

The trouble with defined benefit plans is that figuring out how much a 25 year old teacher is going to cost in retirement benefits isn't easy. There are actuaries that can estimate, but life expectancy, health care costs, interest rates, stock market returns, and the number of years that 25 year old is going to stay at his or her job are going to be, at best, good guesses. If the stock market averages 8% returns when you thought it would return 9%, or if the average person lives to be 79 years instead of 76 years, can have a huge impact on your financial status.

Most private companies realized that defined benefit plans were incredibly risky, and have switched over to defined contribution plans. The public sector unions would certainly protest this, but this is going to become a huge problem for many municipalities in the future, as well as for Social Security. Social Security, however, is a little different, as it invests solely in federal government bonds (the so-called trust fund, which is really just a bookkeeping entry), and is really reliant on current employees paying for current retirees.

MikeCT said...

Two Democrats are vying to replace retiring Rep. Joe Mann (D-Norwalk).

The Danbury paper confirmed that Lew Wallace will not seek re-election this year.

Diane Farrell is once again challenging Chris Shays to a debate. Shays says he is too busy holding community meetings this week and next. Go and ask Shays how well the war is going and when he'll debate Farrell.

You can meet Diane Farrell on Wednesday evening in Norwalk, Joe Courtney on Thursday evening in East Hampton, and Ned Lamont on Wednesday evening in Glastonbury.

The Norwalk Hour reports "Confidence wearing thin in Shays' camp"
With U.S. Rep. Christopher Shays, R-4, in possibly the toughest race of his political career, even his campaign manager has expressed uncertainty about both the outcome and the strategy for re-election victory in November.....

"Am I going to say [our strategy is] going to be a success and we're going to win? No... but do we feel that it's the right path to take? Yeah," said Michael Sohn, 31, who has run Shays' last three congressional campaigns.


Democrat Callie Sullivan has withdrawn from the race for state rep in the Darien/Norwalk 141st district, and Dems are looking for a replacement.

Chris MC said...

Kevin Rennie is once again revealed to be a hack on a soapbox. His rumor mongering column, perhaps attempting to water down the Zarella debacle was, contrary to the assertion made in an earlier thread, another cheap shot at political opponents.

You would think a guy who had been through the chairs as Rennie has would have picked up some basic feel for the day-to-day of Hartford. But Rennie appears to have as much insight as any armchair observer might.

Reading the Stamford Advocate's report on the matter exposes Rennie's objective was his usual. No surprise, nothing new.

Rennie's philosophy appears to be "hey, everybody does it". Well, Kevin, not so much.

Wolcottboy said...

From Waterbury Republican American's Editorial:

Three questions for Gov. Rell

Tuesday, May 2, 2006
Before Gov. M. Jodi Rell signs the bill gutting the powers of Waterbury's oversight board, she needs to ask herself three questions:
Do you agree Waterbury is more financially stable than it was in 2001, when the legislature gave the newly formed state oversight board the authority to arbitrate municipal union contracts?


Do you believe the oversight board would have been able to restore Waterbury to fiscal health without this power?

Are you satisfied that the legislators who voted for this bill analyzed its implications for Waterbury and other municipalities that might come under state oversight?

In fact, no such analysis has been done, and it's simply irresponsible to go further without one. That's why Gov. Rell must -- not should, must -- veto a bill that would reverse five years of progress in Waterbury and erase a proven model for reviving the fortunes of ailing cities.

bluecoat said...

WB: see my post next one up linking Governing Magazine and you wll see that the rational decision making process what you ask for is not what CT often does.