Riley: Elorza Purposely Underfunds Disastrous Providence Pension Plans
Tuesday, May 08, 2018
Elorza Purposely Underfunding Pensions
Elorza -- who touts himself as an “accountant” -- fully understands that overstating the assumed investment return reduces the amount of funding from the city to support the plan and its retirees.
Therefore, his behavior has been purposely underfunding the pension plan in order to spend money elsewhere.
From NASRA (National Association of State Retirement Administrators):
“The investment return assumption is the single most consequential of all actuarial assumptions in terms of its effect on a pension plan’s finances. The sustained period of low-interest rates since 2009 has caused many public pension plans to re-evaluate their long-term expected investment returns, leading to an unprecedented number of reductions in plan investment return assumptions. Absent other changes, a lower investment return assumption increases both the plan’s unfunded liabilities and cost. The process for evaluating a pension plan’s investment return assumption should include abundant input and feedback from professional experts and actuaries and should reflect consideration of the factors prescribed in actuarial standards of practice.”
There have been multiple warnings on this same issue that Mayor Elorza ignores and violates. Here is Gates once again explaining basic economics and investment return expectations yesterday morning May 7, 2018, with both Warren Buffett and Charlie Munger agreeing.
Raimondo Refuses to Audit Providence
It is clear that even in “Elorza world”, located somewhere outside “delusionville,” Elorza is well aware that his investment return assumptions for the last 4 years have systematically and purposely underfunded Providence which has gained the dubious distinction of the worst-funded municipal pension system of any state capital in the United States. It has taken place all under his watch and he has done it on purpose. If he knows that is the case, the question is why does he do it? It would be nice if he was ever asked that question by the media because according to him, finances are fine and there is no cash flow problem.
This complete disconnect from the reality of Providence's Mayor is why many think Governor Raimondo should demand an independent forensic accounting of Providence and the pension system. I suspect hundreds of millions of dollars of shady accounting, misleading reporting and misappropriated public funds over the last 12 years by Cicilline, Taveras and now Elorza. We know Elorza is a selfish politician interested only in survival, but Gina Raimondo has Presidential aspirations and for her to ignore the bankrupt state capital shows a lack of leadership and diligence that only adds to her poor record on 38 Studios.
Related Slideshow: GoLocal: Benchmark Poll, October 2017
Next year, in November of 2018, there will be a statewide general election for Governor and many other state offices. How likely is it that you will vote in this election?
Will you definitely be voting, will you probably be voting, are you 50-50...
Definitely be voting: 78%
Probably be voting: 13%
What would you say is the number one problem facing Rhode Island that you would like the Governor to address?
Jobs and economy: 21%
State budget: 9%
Corruption/Public integrity: .8%
Don’t know: .9%
Recently, a proposal has been made to permit the issuance of $81 million in bonds by the State to build a new stadium for the Pawtucket Red Sox. If there was an election today on this issue, would you vote to approve or reject issuing $81 million in financing supported moral obligation bonds to build the stadium?
Net: Approve: 28%
Definitely approve: 15%
Probably approve: 14%
Net: Reject: 67%
Probably reject: 19%
Definitely reject: 48%
Don't know: 4%
The next question is about the total income of YOUR HOUSEHOLD for the PAST 12 MONTHS. Please include your income PLUS the income of all members living in your household (including cohabiting partners and armed forces members living at home).
$50,000 or less: 27%
More $50,000 but less than $75,000: 13%
More $75,000 but less than $100,000: 13%
More $100,000 but less than $150,000: 17%
$150,000 or more: 13%
Don't know/refused: 17%
What particular ethnic group or nationality - such as English, French, Italian, Irish, Latino, Jewish, African American, and so forth - do you consider yourself a part of or feel closest to?
Black or African American: 6%
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