Have you ever heard of Michael Johnson?
The Wall Street Journal certainty has. After working so many years for Solano County, in California, he probably had one heck of a retirement party.
Since leaving, he has overcome all the financial hurdles that all of us retirees face. Michael has managed to survive on his “meager” California state pension of $30,920.24.
Of course, the “free” health-care benefits really help. Oh, I forgot to mention one “minor” point – $30,920.24 is his state-pension payment each month!
Is that possible? You bet it is. Just in case you didn’t go to Stanford, I’ll do the math for you.
Michael Johnson is receiving his state’s highest pension payment, $371,042.88 dollars per year, each and every year, for life! And if this wasn’t a big enough drain on California’s already sinking pension system, he is joining the 12,338 other retired California state-workers who are each making over $100,000 per year. “Life ain’t easy”, joining this exclusive $100,000 a year retirement community.
Some young parents want to spend whatever school taxes it takes to get their little genius into Yale, Others resent paying their school taxes, since they don’t have kids in the system.
But, the one question everyone should be asking themselves, before they vote on May 21, is not if our school budget falls within Gov. Cuomo’s maximum 2 percent tax cap or how our school-dollars compare with other districts.
The most pressing question is how much will it cost us to fund the future pensions of our retiring teachers and administrators? This expenditure may not be evident to non-CPA’s but its damage is already bankrupting both California and Illinois.
Last month, federal bankruptcy judge Christopher Klein allowed the city of Stockton, Calif. to file chapter 9 bankruptcy. Stockton is the first of seven California cities who similarly will be asking the courts for bankruptcy protection.
Did you say seven? Really?
Can this happen in New York? You bet it can.
1 – Teachers are staying on the job much longer these days, so they will be receiving a much higher pension.
2 – We are currently paying 16.26 percent of the school district’s entire payroll to fund teacher’s retirement benefits! And, to make it much worse, 16.26 percent doesn’t even cover it all.
3 – New York State’s pension funds lost money in the crash of 2008 and with interest rates at an all time low, they will not be earning adequate returns for some time.
But the most important hidden secret of all, is, 4 – the estimated “rate of return.”
This is what the state says they hope to earn this year, in order to fund their retirees pensions. The difference, of course, between what they say they will earn and what they need to pay out, must be made up by the taxpayers! That’s us! Got it?
The State of California “expects” to earn 7.5 percent. Illinois predicts 8.18 percent
Are they crazy? That’s nuts! In the era of 1.74 percent US Treasury bond yields, no one can safely earn an 8 percent return on their investment.
Three percent is a more realistic goal. By the way, do you have any idea how bad Illinois is doing?
Both Standard and Poor’s and Moody’s have given Illinois the lowest credit rating of any state.
Why? Ready for this one? Illinois had a pension shortfall of $96.8 billion dollars! That not their body temperature either. It’s how much they currently owe!
Because of this, Illinois doesn’t even have enough money to pay its current bills. The final coup de gras is directed at all the teachers who still think that their pensions are always guaranteed.
You better rethink your position, because some experts predict that the Stockton bankruptcy judge may rule that this city can default on its own pension obligations.
Before you vote, you should be asking your school board:
1 – how much did New York State earn last year in their pension funds and what do they project they will earn this year?
2 – What percent of our pension obligations have been already set aside to pay for our current and future pension obligations? What about 10 years from now ? or 30 years? And, most important,
3 – demand that your school board tell us exactly how much we will owe in the future to pay for these promised benefits.
Then, hold your breath!! Don’t blame the teachers union! Don’t blame the school board ! Blame those who came up with those unaffordable, budget-busting, benefit packages.
Voting against our school budget because it pierces the 2 percent tax cap, is certainly a legitimate reason to vote it down.
But, the fact that we have not been told, in advance, exactly what our pension and healthcare obligations are, is a more important reason to vote against it.
Face reality. And please, don’t make those ridiculous, unaffordable pension and healthcare promises ever again!
Dr. Stephen Morris, DDS
North Hills
