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Greenspan RIP
by Anonymous

I am a faculty member, at the higher education level, in the State of Arizona. As such I am a member of the Arizona State Retirement System—a defined benefit pension plan.

The actuarially determined funding level of this plan on June 30, 2000 was 120.4%. At that time, members and their employers were each required to contribute 2.17% of their gross pay into the fund.

Flash forward to the current year. As of June 30, 2007, the funding level is at 82.8% and the contribution rate for both members and their employers is 9.1%. With such a high contribution rate by the employers, there�s nothing left for current cost of living adjustments. Make mine 1.5% for next fiscal year.

With such a high contribution rate coming out of our checks, members of this plan are seeing their current standard of living compromised.

That 82.8% funding level only holds water if you assume that the fund will achieve an 8% annual rate of return, after expenses—with 30% of their funds sitting in fixed income. The only way out—to fully fund the plan —is to cut benefits and/or raise the age to retire. Not since 2006 has a retiree from this plan seen an increase in their benefit check. The fund states that it will be until �at least� 2012 before a cost of living increase is possible. Naturally, the price of a gallon of gas and milk remains constant, in sympathy with the retirees.

Mr. Irrational Exuberance and his failed experiment to eliminate the business cycle have destroyed current workers� standard of living and their retirement dreams. Those that have already retired are watching their standard of living methodically being eaten away. This is happening not only in Arizona, but in all fifty states.

Mr. Magoo has successfully administered the death blow to defined benefit pension plans and it should be duly noted on his tombstone.

A substantial chunk of funding for schools comes from property taxes. We will make it through next year due to one last year of property appreciation.

Unfortunately, property tax statements have already been mailed—to allow folks time to protest—for the 2010 fiscal year. Yes, property values for that year have been reassessed downwards on average by a double digit percent. How does a school system plug that hole? Reduce its biggest costA—labor—is one alternative. If folks didn�t enjoy 1.5% cost of living increases, they really won�t like what comes next. Those that rely on property taxes and charge tuition—community colleges, to be specific—may be forced to make punitive increases in tuition to balance the books. Mr. Bubbles won�t get the assist for destroying much of education, he will get the goal. If there�s not room left on his headstone a larger one should be purchased so that feat could be duly noted.

In short, he has destroyed good folks� current and future life. And, Bernanke, his brother from a different mother, is only exacerbating the problem.