Where's The Independent Audit Of NY Pensions?

   The independent audit overview of New York Pension funds is here at this blog for now.  So as the relentless hounds of economic reality circle in on Cuomo and New York State Pension Finances, here are some of the latest reports:
1.  E.J. McMahon, a senior fellow at the conservative Manhattan Institute for Policy Research, said the asset levels of virtually all public pension funds are below 2007 levels despite the recovery of the market in 2009 and 2010.  "Pension funds promise returns on investments -- 7 percent to 8 percent or more a year ...They still think there is a 'long-term norm,he said of fund managers. The events of the last two months are a reminder of how wrong that might be."

2. "Because so many government pension systems are underfunded, their managers have been chasing high returns by betting heavily on volatile investments ...Even with the run-up in the market earlier this year, New York’s pension assets were still some $9 billion lower than their peak in 2007 — before the financial crisis."

3. Teacher pension fund joins California auditor's high risk list

      While California has an independent auditor making a report, in New York we have the Pension Fund Manager, DiNapoli, making his own audit.   The New York Controller claims he can make safe investments with a 7.5% return and his own audit confirms it?   Can the Comptroller walk on water, too?

See in regard teacher's pensions:  Smoke And Mirrors As DiNapoli And Cuomo Hide Pension Costs While Schools Will Need Contribute 54% Of Salary To Pension Funds

See in regard NYS pension costs: New York State Will Likely Default And Rating Agencies Will Be Liable If They Fail To Properly Rate NYS Bonds

And NY State's pensions are a Madoff style Ponzi scheme where NYS promises a 7.5% "safe return" when that is impossible

Cuomo's Dog And Pony Show Is Run Over By A Herd Of Elephants

  "Knowing how to count is important for a Prince."  

      Governors Cuomo and Christie ran their Port Authority Sideshow Act where a $4 toll increase is announced and the two governors come to the rescue and lower it to a $1.50 increase.   Yeah for our heros, Cuomo and Christie, and their script writers.  The play acting continues in New York as the heroic Cuomo struts triumphant after "members of New York’s largest union of state employees, in a begrudging acknowledgment of the increasingly hostile mood toward public workers, have agreed to accept major wage and benefits concessions sought by Gov. Andrew M. Cuomo."

      "Savings from the five-year contract are expected to total $73 million this fiscal year, part of the $450 million in cuts that Mr. Cuomo’s budget counted on extracting from the state work force."   But, "A day after his members ratified a new five-year contract, Civil Service Employees Association President Danny Donohue said his crew has sacrificed enough - and opposes Gov. Cuomo's drive to reduce long-term pension costs."

      So Cuomo has a $450 million dollar saving, while NY State has not funded its retiree health benefits of $56.3 Billion In Unfunded Liabilities   and NY State's pensions are a Madoff style Ponzi scheme where NYS promises a 7.5% "safe return" when that is impossible with losses of up to $7.3 trillion dollars.   Poor Andrew may have had difficulty with arthimetic in school and not learned that there are a thousand millions in one billion and a million millions in a trillion.

$450 million is 0.8% of $56.3 billion.     $450 million is 0.006% of $7.3 trillion.

Smoke And Mirrors As DiNapoli And Cuomo Hide Pension Costs While Schools Will Need Contribute 54% Of Salary To Pension Funds

 "The sky is falling and the taxpayers fleeing"  ~ Economic Grim Reaper on impending fiscal collapse.

   Could Andrew Cuomo be arithmetically challenged in regard the NY Pension underfunding and other impending disasters with his budget?   Yes.  Could Andrew be a silver spoon fed son of Mario whose head is swelled with dreams of his coming Presidency? Yes  Could Cuomo believe he lives under different rules of ethics because his father Mario anointed him, Governor and President?  Yes, because that explains how Cuomo took a $45,000 campaign check from a law firm while Cuomo's deputies were probing one of its attorneys for his role in the pay-to-play pension scandal.

       Meanwhile, Comptroller DiNapoli still touts his achievement that "in September 2010, the Fund [teacher's] lowered its assumed investment rate of return to 7.5 percent." No honest retirement fund can safely earn 7.5% in today's market, except if you are Bernie Madoff.   A private pension manger would be spending time in jail for such lying fraud.   But Dinapoli wasn't done with misleading and fraudulent claims of solvency for pension funds he managed.  He was touting the great returns his funds earned in a one year period such as "Domestic public equities returned 17.6 percent, while international public equities returned 14.3 percent. Real estate investments yielded a 26.7 percent return, while private equity investments generated an 18.9 percent return. The Fund’s emerging markets equities returned 16.1 percent, while Treasury Inflation-Protected Securities yielded 9.7 percent and core fixed-income investments returned 8 percent."   But DiNapoli forgot to mention that those returns were from huge earlier losses in 2009 recession.  "John Cardillo, a spokesman for the teachers' retirement fund, said the fund is still trying to make up for a steep decline two years ago." 

       Even worse for those teacher funds, the schools now are paying based on DiNapoli's phoney improved safe rate of return which he lowered from 8% to 7.5%.     The schools complain that "in 2010, the pension rate was 6.2 percent of payroll and forced schools to collect about $926 million. Now at 11 percent, schools will have to pay nearly $1.7 billion, according to preliminary estimates."   Wait till the schools and ultimately the taxpayers discover that an honest safe rate of return for pension funds would be slightly above the 10 year treasury bond rate or very generously 3%.   Doing the arithmetic: going from 8% -3% =5%  is ten times greater than going from 8%-7.5% = 0.5%.     So a 3% safe rate of return would require the schools pay ten times the present increase of  (11%-6.2% =) 4.8% to an increase of 48%, which must be added to the prior 6.2% for 54.2% of salary to be contributed to the pension funds.    And wait, Cuomo and DiNapoli forgot to tell schools they have to fund retiree health benefits.

     How will schools do it with Cuomo's budget cap law?  Will more taxpayers flee?   Wanna buy some NYS bonds?

NY Like NJ Forgot To Fund Retiree Health Benefits And NY Adds $56.3 Billion To Its Unfunded Liabilities

   The Ithaca Journal falsely reports,"New York's [pension]plans aren't underfunded."   They must be comparing with the pending NJ disaster of a $120 billion dollar pension shortfall.  But NY pensions assume a 7.5% return on pension assets when they only earned 1.1%.  NY's unfunded pension debt is estimated at $143 billion dollars.   When NJ defaults, NY would soon follow.

     But what about funding retiree health benefits liability.  Pew reports, "States had only about $31 billion, or 5 percent, saved toward their obligations for retiree health care benefits."    NY had $56.3 billion dollars in retiree health benefits unfunded and according to Pew had 0.0% in its retiree health benefits funding account.   While NJ had $66.7 billion in retiree health benefits, also funded at 0.0%.

     New Yorkers now have another $56.3 billion dollars divided by 19.4 million NY population = $2,902 debt per person to add to the already calculated $24,195 State and local debt per person (link). We have a new higher total of $27,097 State and local debt per person or $108,388 for a family of four.

      Is the NY pot blacker than the NJ kettle?   Will investors want NY bonds or NJ bonds?  Neither NJ or NY can't withdraw from the USA like Greece and issue their own worthless currency to pay off its bondholders. 
  
      But in Albany, the thinking is, "What debt crisis?  Our pensions are 100% funded, aren't they?  We can fund retiree health benefits next year, right?  Andrew Cuomo has brought Hope and Change and balanced the budget, right?" Although, Andrew Cuomo had promised to throttle lobbyists in NY, "Spending on lobbying in New York tops $200 million in 2010."   And lobbyists are controlling his committees. 

  Meanwhile out in the cruel dark financial world outside Albany, China is reducing its holding of US debt.  link to China and NY debt      link to NY bondholders lose big in NY bankruptcy/default

And now the Chinese Debt Master holds the ball, and now he lets it go,

And now the air is shattered by the force of Cuomo's blow.

Oh, somewhere in our favored land the sun is shining bright;

The band is playing somewhere, and somewhere hearts are light,

And somewhere men are laughing, and somewhere children shout;

But there is default in Albany,  the mighty Cuomo has struck out.


link to poem