WHY JOSEPHINE COUNTY IS BROKE
By Fred Starkey
January 27, 2015
Josephine County, Oregon - Josephine County is now engaged in deceiving the taxpaying citizens by the omission of facts regarding the costs of Josephine County. The proposed tax increase is necessary because of the Public Retirement Costs known as PERS. After 15 years of trying to expose this fraud, very few, if any, understand the cost of this egregious Retirement System.
Today, State and Local pension plans over the entire USA have an unfunded liability of more than 4 TRILLION. “They have employed methodologies that Federal Law prohibits in the Private Sector from using.” Fact: 16% of the Federal Budget goes to the States, and 22% of total state and local revenue comes from the Federal Government. *
“Several state and local pension plan are expected to fully exhaust their funds in 10 years.” Oregon PERS from my research [See Oregon’s Grand Delusion] is the most expensive plan in the USA. Moreover, Oregon State Taxes are in top three in the USA of the total tax burden. We need more taxes?
According to Moody’s Debt Medians of 2011, Oregon spends $3.25 for every $1.00 of tax revenue: #1 in the USA. Moreover, Oregon’s Net Tax supported Debt is up over 500%
In the last 12 years: #1 on the USA. In addition, Oregon sold over 7 Billion of Pension Obligation Bonds to fund PERS, which went unofficially bankrupt in 2002. The interest cost on all this debt is over ONE BILLION per year. Oregon is credit card junkie.
Commissioner Keith Heck, recently stated “the county government is not only nearing a dreaded fiscal cliff, it is, hanging over the edge by its fingernails.” (Daily Courier, January 8, 2015) Of course all counties in Oregon claim they need more tax revenue. But, what do they do with all the tax revenue from the Federal and State Government? Fact: For every $100 of tax dollars received the first $21 of that $100 dollar goes to PERS: not to public safety, police, fire fighters, and other employees, but to the pension plan: PERS is 21% of payroll. It’s much higher for other PERS employers.
Total Payroll cost is 14.9 million for 300 employees. This does not include benefits, of which the state average per Employee is $57,000.00. The average salary of a state worker is $57,014. The average salary in Josephine County is $49,667.00: 21% of that equals $9,758.07, which goes into the PERS Pension plan. Josephine County puts in 15%, the employee puts in 6%. The majority of PERS are Tier One: guarantee of 8% return, 2% COLA, and exemption from State Income Taxes when retired.
The contribution for 30 years at 8% equals: 1,105, 422.11. The money is then doubled.
Equaling $2,210,844.22. This times 8% = $176,867.54 yearly benefit. Then you add a 2% increase each year and pay no state incomes taxes. Find that in the private sector!
Wonder why the county is out of money?
Recently Rosemary Padgett, (Tier one PERS recipient) County Financial Officer (CFO) retired. She will receive a pension 38% more than her final salary of $147,000 a year. That would be a yearly retirement pension of $202,860.00 plus a 2% COLA (Cost of Living Adjustment) each year until death, which means that her 5th year pension will be $233,973.83. Why be in free enterprise?
Also, on top of PERS, Rosemary will receive her Social Security, and be exempt from state income tax like all other retired governmet employees!
According to Fidelity Investments the capital requirement for a single female at age 60.
For a $150,000 a year pension without a COLA costs: $2,833,000.00!
Reality: The book “The Millionaire Next Door” by Thomas Stanley, reports that only 3.5% of all Americans are Millionaires and only 2.8% are “First Generation”. Moreover,
The top 20% of all Americans, after home equity have $60,000.00. The remaining 80% have $15,000.00 or less.
Ms. Pageant is now a Multi-Millionaire from tax payer money subsidized by the taxes paid to the Federal and State Government.
Frederic Bastiat* might have summed it best: “When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies it.” This is the Oregon PERS.
According to Milliman Actuaries PERS cost is projected to cost 7 Billion in 2034: double the cost of today. Moreover, PERS costs will not start decreasing until 2038. *
As Thomas Jefferson stated, “the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.” That is PERS: placing debt on the next generation.
If Mr. Heck was on honest person he would be telling the citizens and the children at all the schools the kind of debt that they will be obligated to pay.
This is not the whole story. It is against Federal Law to guarantee an 8% return in the private sector: do that and you go to prison. By Law the private sector must use a return which is equal to the AAA Corporate Bond Rate, which now 3.00 – 5.00%. This is done so the pension can be paid. When PERS falls short they raise taxes. The private citizen becomes the insurance company: they meet the margin call.
What is not understood is when you discount your liabilities at 8% the capital requirement to fund the pension is about 50 – 60% less as compared to the private sector. So, when they say they are 80% funded, they are really only 35 – 50% funded as compared to the private sector.
When I tell people this they respond that PERS is paid over time: that, my fellow citizens, is known as a Ponzi Scheme.
A Ponzi Scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. They invest funds in opportunities claimed to generate high returns with little or no risk. Moreover, Ponzi Schemes require a consistent flow of money from new investors to continue.*
This is why they need more money: more money to pay the current retirees and keep a partial base for the future retires: hoping to catch up later. They will always be out of money until you shut down PERS. And, more tax measures will be coming each election.
Since the late 1990’s I have challenged over 100 people to a public debate on PERS.
No one has accepted that challenge: Government. Officials’, TV people, Radio people, Newspaper editors and columnists, School Boards, and others from Medford to Portland, and others. Why do they turn me down?: because they don’t want the truth out.
Oregon PERS is possibly the largest Swindling Scheme in the history of this country. It is destroying the future of every family and their children. Citizens lose their homes, drive old cars or ride bikes, shop at Goodwill and the Day-Old Bakeries. More and more citizens are on Food Stamps and can’t find jobs above minimum wage.
Taxes + Bureaucrats = Poverty
Savings + Investment + Productivity = Prosperity.
The Retired [PERS] County Assessor [Schnieder} was recently seen out soliciting signatures for a NEW TAX, to help fund PERS.
Chief Petitioners Linda Scott and Scott Draper of "Community United For Safety" PAC, are circulating a petition for a public safety measure to be placed on the May ballot. If their measure passes it will raise property taxes considerably, which will then be passed on via higher rent. Pictured here and above is retired Josephine County Tax Assessor and PERS recipient Mike Schneider gathering signatures. If their levy passes in May it will raise approximately $10 million annually. The money will go into the county's general fund. The Commissioners will take 10% off the top for the internal service fund (Administrative Cost). After that, approximately 22% will be subtracted for Public Employees Retirement System (PERS). What's left will go to public safety. Some folks believe that this Public Safety Levy is a smoke screen to save government retirees retirement (PERS) which is bankrupt.
If you would like me to speak on PERS: please contact me.
© 2015 Fred Starkey - All Rights Reserved
Fred M. Starkey is a former Lead Long-Term Analyst for Shearson Lehman and American Express out of NYC. After turning down a lead analyst position with Merrill Lynch and Pru Bache/NYC, he was recruited by Stoltler and Company and moved to Oregon. He is now a private consultant to many firms involved in commodities and those involved in trading and investing: Banks, S&L’s, Mortgage Companies, Grain Elevators, Cotton Mills, Growers, Merchants, Duck Farms, Soybean Crushers, Bullion Buyers, and much more. His financial acumen and 12 years of research into PERS have revealed the real truth behind what he calls Oregon State’s “PERS Ponzi.” A long-term resident of Springfield, Oregon, Fred has been married 43 years and is the father of six.