Here is a reply to a news article in a Tucson, AZ paper yesterday. The same applies for gov pension funds:
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Date: 03/11/09 - CAFR1 NATIONAL POST
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WJB REPLIES TO A NEWS ARTICLE PER A DEFICIT - TUCSON, AZ SELF INSURANCE FUND -
www.azstarnet.com...
POSTED IN THE COMMENT SECTION (Comment #51& 55)
regulus2.azstarnet.com...
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The use of the word "deficit" is not accurate and in fact inappropriate.
Here is why: Say if I filed a court action against you for five million dollars because I thought you looked at me in the wrong way. Well, if you took
the liability as five-million dollars, (which you don't have). You could say you had a deficit of five million dollars even though I would probably
have a zero chance of getting a judgment in my favor let alone collect on it.
I would strongly suggest looking at those who have gotten large payouts from this fund over the last ten years to see if there are a few attorneys
networking with the local judges to get awards of $$$$$$$s on fronted up cases.
Additionally, per employee coverage, say if the actual payouts were say $150,000 per year but the fund said we will use an actuarial projection that
we need to pay out $500,000 per year. These types of funds are set up like pension funds. So, if $500,000 is the actuarial "projection" used, this
means that x amount of dollars will be put aside whereby the return will equal as in this example $500,000 generated per year. So, "if" on the
actuarial projection used is a 10% rate of return, that means $5,000,000 will be put aside and at a 10% rate of return that equals the $500,000 annual
"projected" liability.
Now if, for example they changed the "projected" rate of return to 5%, that would require $10,000,000 put aside to equal the $500,000, or if 2.5% is
used then $20,000,000 put aside. If the balance of the fund was $10,000,000 and they used a projected rate of return of 2.5% then they would say they
had a $10,000.000 deficit. If they used a 10% projected rate of return then they would have a $5,000,000 surplus..
So there are only four issues here:
1. What have the actual payouts been from the fund each year for the last 15?
2. Should they pay costs right from cash payments or build a wealth base (as they do now) by investment to pay the payouts from the return?
3. Are they fudging the actuarial projections over actual payouts and real rate of return?
4. Over the last 15 years, have some of the inside player been greasing their pockets from "fixed" court resolutions on claims made against the
fund?
Hope the above helps.
WJB - CAFR1.com
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Sent FYI from,
Walter Burien
P. O. Box 2112
Saint Johns, Arizona 85936
CAFR1.com...
Tel. (928) 445-3532
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Any local government can be restructured to meet their annual budget needs "Without"
taxes.TRF (Tax Retirement Funds) paying for every City, County, State’s annual budgetary
needs!
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PS AboveTopSecret Readers: There are a lot of crackpots out there and most of them want you to believe government is your friend and never breech the
void in your comprehension to ask three basic questions per your local government:
1. What is the gross income for the year from, taxation, investment, and enterprise?
2. What is the consolidated totals from "all" investment funds held by that local government?
3. What has the growth been of the local government over the last 5, 10, 15, 20, 25 years.
Any chatter outside of addressing these issues is moot.. Break the void of comprehension you were intended not to know - DUE TO THE MONEY AND CONTROL
INVOLVED!
[edit on 11-3-2009 by CAFR1]