Big Brother: Meet the Parents

From Politico:

You’ve heard of Big Oil and Big Tobacco. Now get ready for Big Parent.

Moms and dads from across the political spectrum have mobilized into an unexpected political force in recent months to fight the data mining of their children. In a frenzy of activity, they’ve catapulted student privacy — an issue that was barely on anyone’s radar last spring — to prominence in statehouses from New York to Florida to Wyoming.

A months-long review by POLITICO of student privacy issues, including dozens of interviews, found the parent privacy lobby gaining momentum — and catching big-data advocates off guard. Initially dismissed as a fringe campaign, the privacy movement has attracted powerful allies on both the left and right. The American Civil Liberties Union is pushing for more student privacy protection. So is the American Legislative Exchange Council, the organization of conservative legislators.

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Medicaid rolls surge, but not everywhere

From Politico:

Medicaid enrollment is surging, but states shunning Obamacare’s huge Medicaid expansion are getting left behind, according to data released Wednesday by HHS. About 65 million people were enrolled in Medicaid and the closely related Children’s Health Insurance Program at the end of April, 6 million more than had been enrolled in the months leading up to Obamacare’s Oct. 1 launch. The numbers reflect a big spike in April, when 1.1 million additional people were enrolled in Medicaid compared to March.

The 6 million total came overwhelmingly from 25 states that had expanded their Medicaid programs under the health care law by April. Those states saw a 15 percent surge in sign-ups — led by Oregon, West Virginia and Nevada, where Medicaid rolls climbed more than 40 percent.

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Government Employee Unions – The Root Cause of California’s Challenges

Spokespersons for California’s government employee unions perpetuate a myth of staggering absurdity and tragic consequences – that they are protecting working Californians from wealthy corporations and wealthy individuals.

The reality is that government employee unions are focused on one thing: Expanding government employee pay, benefits and privileges. This requires expanding government, and that priority comes in front of everything else, including the cost to society at large. Expansive environmentalist regulations have made prices in California for housing and utilities the highest in the nation. Expansive compensation packages for unionized government workers have resulted in chronic deficits and accumulating state and local government debt that by some measures already exceeds $1.0 trillion. Expansive taxes and regulation have made California consistently rank as the most inhospitable place in the nation to run a small business.

california fireExactly how does any of this protect the poor from the wealthy?

It doesn’t, of course. But the deeper story is how government employee unions are not only failing to “protect” California’s aspiring multitudes, but are in fact enabling the wealthy special interests they claim to protect us from. The most entrenched and massive corporate entities are not harmed by excessive regulations, because they can afford to comply. An obvious example would be California’s impending $13 per hour minimum wage. Large corporate entities like MacDonalds will simply automate a few positions, tinker with the menu and recipes, incrementally raise prices, and go forward. Large corporations can hire attorneys and lobbyists, they have access to capital, and when the smaller players go out of business they gain market share. They benefit from over-regulation, but the consumer suffers.

Less obvious is how the financial sector also benefits from an overbuilt, financially irresponsible, unionized government. When excessive rates of pay and benefits consume government budgets, financial institutions step up to extend debt. Bond underwriters collect billions each year in fees in California to issue new debt and refinance existing debt. When excessively generous pension plans are granted to unionized government employees, pension funds pour hundreds of billions into Wall Street investment firms, earning additional billions in fees. As for “carbon emissions auctions,” now in its third year of implementation in California, as that ramps up, virtually every BTU of fossil fuel energy consumed will put a commission into the hands of a financial intermediary. Trillions are on the table.

Unionized government hides behind environmentalism to justify pay and benefits over investment in infrastructure – which after all is environmentally incorrect. As the cost-of-living inevitably rises through artificial constraints on the supply of land and energy, the unionized government workers negotiate even higher pay and benefits to compensate, and the corporate monopolies that control existing supplies of land and energy get more revenue and profit. And of course the resultant asset bubble is healthy both for pension funds and wealthy investors, even as low and middle class private sector workers are priced out of owning homes – or even automobiles – and struggle to make ends meet.

The power of public employee unions starts with the fact they collect and spend more money than any other special interest. In California they collect well over $1.0 billion per year in dues and fees. About one-third of that money is reported as explicitly political spending – that’s over $600 million per two-year election cycle. The rest of it is still spent indirectly on politics, since all of their negotiating and public education campaigns concern how we manage our public institutions. The portion of this billion per year that goes to entirely nonpolitical activity is negligible.

With the best academic studies, political consultants, public relations firms, and lobbyists that money can buy, with political action committees that extend down to the most obscure local elections, government employee unions make or break candidates at every level in California.

It is crucial to perceive the irony. Government unions empower the worst elements of the capitalist system they persistently demonize. The crony capitalists and speculative financial interests benefit from an overbuilt, over-regulating, state and local government populated with overpaid unionized workers. Those virtuous capitalists who want to compete without subsidies are successfully lumped together with these robber barons, discrediting their support for reform. Those small business owners who want to grow their enterprises are harassed and marginalized.

If government employee unions were illegal, the most powerful political force in California would cease to exist. But it wouldn’t “turn California over to the corporations and billionaires.” Quite the opposite. It would take away the ability of those corporations and billionaires to collude with local and state government unions who currently control the lawmakers. It would force them instead to compete with each other, lowering the cost of living for everyone. It would restore balance to our debate over environmental policy, energy policy, and infrastructure investment.

Government unions have taken over California. Their agenda is inherently in conflict with the public interest, their rhetoric is compelling and formidable and utterly deceptive, their financial power is immense. They are turning California into a feudal state, where the anointed and compliant corporations build monopolies, government workers lead privileged lives, the rich get richer, the middle class diminishes, and the poor become dependent on government. Nobody who is serious about reversing California’s decline – or America’s potential decline – can ignore the fundamental enabling role unionized government is playing in its demise.

Ed Ring is the executive director of the California Policy Center

New step to expose hidden retiree health debt

A decade ago new accounting rules directed state and local governments to begin calculating and reporting debt owed for health care promised retirees, which for state workers turned out to be more than the debt owed for pensions.

In a new step to expose hidden debt, the Governmental Accounting Standards Board last week proposed that retiree health care debt or “unfunded liability” be reported on the face of government financial statements, not buried inside.healthcare obamacare

The board chairman, David Vaudt, said in a news release retiree health care is “a very significant liability for many state and local governments, one that is magnified because relatively few governments have set aside any assets to pay for those benefits.”

Most government retiree health care is pay-as-you go, covering part or all of annual insurance premiums. No money is set aside, as in a pension, to invest and yield earnings, lowering long-term costs and cutting debt passed to future generations.

State Controller John Chiang, who in 2007 issued the first estimate of state worker retiree health care debt, said in a new report last March the unfunded liability for pay-as-you-go state worker retiree health care is $64.6 billion.

In contrast, the unfunded liability for state worker pensions is $49.9 billion as of last June 30, a CalPERS valuation said in April. State worker pensions have a low funding level, 66.1 percent of the projected assets needed for full funding.

State worker retiree health care is unusually generous. A 12-point pension reform plan issued by Gov. Brown in 2011 mentioned “the anomaly of retirees paying less for health care premiums than current employees.”

The state pays 100 percent of the premium of the retiree (the average of several large plans) and 90 percent of dependent premiums. For active workers, the state usually pays 80 or 85 percent of the worker premium and 80 percent of dependent premiums.

The governor mentioned retiree health care at a news conference last month while proposing a revised state budget plan that includes a long-term funding solution for the troubled California State Teachers Retirement System.

“Now this doesn’t handle it all,” Brown said. “We still have retiree health. We have the judge’s retirement system. We have got lots of other stuff here, and we will handle it. But this (CalSTRS plan) is taking a big bite out of our long-term obligation.”

The chart shows retiree health care has been the fastest-growing state retiree cost, doubling in a decade. Nearly all of the $1.8 billion retiree health payment next fiscal year comes from a $108 billion general fund that pays for schools and other programs.

Department of Finance chart shows growing state retirement costs

An example of the disregard for long-term retirement debt that the accounting board is trying to change: Legislation in the early 1990s created an investment fund for California state worker retiree health care, but lawmakers never put money in the fund.

The rule change in 2004 telling governments to phase in the calculation and reporting of retiree health care debt was followed by the controller’s initial report on state worker debt three years later.

After a year of hearings and study, the top recommendation of the governor’s Public Employee Post-Employment Benefits Commission in 2008 was “prefunding” retiree health care, setting aside money to invest and help pay for future obligations.

“The best way to ensure that government promises are kept is to provide prefunding for these benefits,” the chairman, Gerald Parsky,said in the opening message of the commission report.

For local governments choosing to prefund retiree health care, the California Public Employees Retirement System in 2007 established an investment fund, which had 375 employers last August with total investments worth $3.6 billion last week.

The CalPERS retiree health care fund (the California Employers Retiree Benefit Trust) lets employers choose among three conservative investment strategies with varying risk and returns.

The median 20-year return expected for the three strategies ranges from 4.61 percent a year to 3.39 percent. That’s roughly similar to recent yields on 20-year municipal bonds used in the new GASB proposal to report retiree health care debt.

An employer’s report could use the expected return on a retiree health care investment fund to pay long-term debt. But if that falls short, or there is no investment fund, the remaining debt would be reported as if paid with a 20-year municipal bond.

A “crossover” from the expected investment return to a high-quality municipal bond, the presumed cost of borrowing, may not be much of a change for employers in the CalPERS retiree health care fund because of little difference in the yields.

But a similar GASB reporting rule is taking effect for pension funds that critics say have an overly optimistic expected return on their investments, 7.5 percent a year for CalPERS and the California State Teachers Retirement System.

Closer alignment with the new accounting rule was one of the goals mentioned when CalPERS adopted a new actuarial method for pensions last year, aimed at reaching full funding in 30 years rather than decades later under the old method.

Now CalPERS expects little if any “crossover” to a lower-yielding bond rate under the new pension rule, and therefore little change in its reported unfunded liability. But without a costly funding solution, the CalSTRS investment fund is expected to be depleted in about 30 years.

The CalSTRS board was told last September that under the new rules a $71 billion unfunded liability could soar to a $166.9 billion “net pension liability,” an estimate since outdated by another year of investment returns and other factors.

Whether big new pension debt would be reported by school districts next year, possibly lowering credit ratings and increasing borrowing costs, is not clear. Legislation enacting a CalSTRS funding solution this year would avoid much of the problem.

Part of the reason that retiree health care has not been prefunded like pensions may be uncertainty about whether the health benefit, unlike pensions, can be cut or even eliminated.

Under a series of court decisions dating back to at least 1955, pensions offered on the date of hire are widely regarded as a “vested” right, protected by contract law, that can only be cut if offset by a comparable new benefit.

A benchmark ruling on retiree health care by the state Supreme Court in 2011 said a contract with vested rights “can be implied under certain circumstances from a county ordinance or resolution” if an intent to do so can be shown by evidence.

Since then there have been several retiree health court rulings, one in Los Angeles finding a contract and others in San Diego and Orange and Sacramento counties allowing cuts. Last month the state Supreme Court declined to hear a San Diego decision appeal.

A GASB fact sheet last week, using the governmental term for retiree health care (Other Post-Employment Benefits), broadly defined liability as a social, legal or moral requirement.

“The possibility that a government could change or end the OPEB it has promised in the future does not change the fact that, as of the date of the financial statements, it had a present obligation to fulfill its promise to provide OPEB,” said the fact sheet.

GASB plans to post an “exposure draft” of the new retiree health rules on its website by the middle of this month, seeking comment from stakeholders by Aug. 29. Public hearings are scheduled Sept. 10, 11 and 12 at locations not yet announced.

Reporter Ed Mendel covered the Capitol in Sacramento for nearly three decades, most recently for the San Diego Union-Tribune. Originally posted on Calpensions.com

Immigrant-rights advocates seek to erase ‘stain’ of Prop. 187

From the O.C. Register:

Nearly 20 years after California voters approved a ballot measure that would have prevented undocumented immigrants and their children from accessing education and health care, immigrant rights advocates are moving to erase what they call the “stain” of Proposition 187 from the state’s books. On Wednesday, leaders of the state’s Latino Legislative Caucus and others gathered to announce a bill that would repeal it and remove its provisions from California code books – provisions that a court ruled unconstitutional and were never enforced.

Those legislators say the words serve as an ugly reminder of a measure that would have required schools and doctors to check the immigration status of their students and patients – and to notify federal immigration officials if they suspected a parent or child was not in the country legally.

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Dangerous President

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Dems back fight on voter rules

From Politico:

House Democratic leaders are backing a lawsuit that fights efforts in two states to add stricter requirements to federal voter registration forms. The case, Kris W. Kobach et al. v. United States Election Assistance Commission, centers on a request from Kansas and Arizona to add proof-of-citizenship requirements to the federal voter registration form that matches their state laws.

The House Democrats, led by Committee on House Administration Ranking Member Robert Brady of Pennsylvania, argue in an amicus brief released on Wednesday that providing that proof would limit voting rights.

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Photo courtesy of secretlondon123, flickr

Photo courtesy of secretlondon123, flickr

Election: Dems could lose 2/3 Assembly control

From Calwatchdog.com:

Democrats, who seized two-thirds control of the California Assembly in 2012, will have a tough time repeating the task this November. In Tuesday’s low turnout primary election, more than a half dozen members of the State Assembly — all Democrats – fell below 50 percent in their re-election bids. Known as the incumbent rule, derived from a 1989 article by Nick Panagakis, incumbents who poll under 50 percent are expected to lose late deciding voters. In recent years, data guru and FiveThirtyEight blogger Nate Silver has questioned the rule as it applies to polling. However, the 50 percent threshold still offers a guide to incumbents that must work in November.

Topping the list of seven Democratic incumbents in danger of losing their seats this fall is Assemblyman Steve Fox, D-Palmdale. The first-term incumbent barely eked out a victory in 2012 — only pulling ahead of his GOP opponent after late absentee and provisional balloting. Fox will face a tough challenge this November from Palmdale Councilman Tom Lackey, the top vote-getter in Tuesday’s primary.

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Photo courtesy of DB's travels, Flickr.

Photo courtesy of DB’s travels, Flickr.

 

The American Dream is out of reach

From CNN Money:

The American dream is impossible to reach in this country. So say nearly 6 in 10 people who responded to CNNMoney’s American Dream Poll, conducted by ORC International. They feel the dream — however they define it — is out of reach.

Young adults, age 18 to 34, are most likely to feel the dream is unattainable, with 63% saying it’s impossible. This age group has suffered in the wake of the Great Recession, finding it hard to get good jobs. Younger Americans are a cause of great concern. Many respondents said they are worried about the next generation’s ability to prosper.

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Problems found with 2 million ObamaCare sign-ups

From Fox News:

More than 2 million people who got health insurance under President Obama’s law have data discrepancies that could jeopardize coverage for some, a government document shows. About 1 in 4 people who signed up have discrepancies, creating a huge paperwork jam for the feds and exposing some consumers to repayment demands, or possibly even loss of coverage, if they got too generous a subsidy.

The 7-page slide presentation from the Health and Human Services department was provided to The Associated Press as several congressional committees are actively investigating the discrepancies, most of which involve important details on income, citizenship and immigration status.

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