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Report: Public pensions flagging financially in three Southeastern states | Alabama

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www.thecentersquare.com – By Steve Wilson | The Center Square – 2023-08-02 05:34:00

(The Center Square) — A new report says public pension systems in Alabama, Mississippi and South Carolina are struggling financially and need reforms to avoid taxpayer bailouts or riskier investments.

The Equable Institute, which authored the report, is a bipartisan nonprofit that helps policymakers solve funding challenges with public pensions.

The authors, Executive Director Anthony Randazzo and research Vice President Jonathan Moody, say most state and municipal pension plans are distressed or fragile based on their analysis of their funding ratios, which is defined as the share of future obligations covered by current assets. 

Regionally, South Carolina is in the worst position with a funding ratio of only 58.3%. Its unfunded liabilities would gobble up 9.21% of the Palmetto State’s gross domestic product.

According to the report, officials in the Palmetto State have increased their taxpayer contributions for the South Carolina Retirement System starting in 2018 with a 200-basis point increase from the previous 11.56% rate and 100 basis points after that. 

Mississippi’s funding ratio is at 59.9% and its unfunded liabilities would eat up 14.88% of the state’s GDP.

Alabama’s funding ratio hovers at 61.7% and its unfunded liability represents 8.88% of the state’s GDP.

Most of the Southeastern states have well-funded pension systems, led by Tennessee (97.4% funding ratio), followed by North Carolina (84.1%), Florida (82.2%), Georgia (72.3%) and Louisiana (71.5%).

The authors singled out Mississippi over what they consider to be an excessive predicted rate of return. Mississippi is the only state nationally with a 7.55% investment forecast, but the Public Employee’s Retirement System of Mississippi’s governing board is planning to eventually lower that to 7%.

The study’s authors also say that many pension funds have predicted rates of return for their investment that are too high. According to their data, the average rate of return for pension investments nationally is 6.88%, a figure they say is still too optimistic.

According to their data in 2020, 54 pension funds had a predicted rate of 7.5%, but 65% of those funds have lowered those expectations. 

Pension funds are also investing more in riskier parts of their portfolios, which includes stock markets, real estate and hedge funds due to lower interest rates. According to Equable’s data, this type of investment is the largest in history, both in terms of the dollar figure ($1.63 trillion) and the 34% share of pension investments. 

According to the report, taxpayers (with the employer contribution) are paying a bigger slice, as unfunded liability payments have increased by 64%.

Unfunded liability payments have increased 2,089%, going from less than $5 billion in 2001 to more than $100 billion in 2022.

Demographics are also playing a role in the unraveling of pension funds. In 2001, according to the report, 12.6 million active public sector workers supported 7.6 million retirees and beneficiaries. In 2015, the number of retirees eclipsed the number of active employees, with the latest data showing 14.2 million workers supporting 18.2 million retirees and beneficiaries. 

Nationally, the report says unfunded liabilities slightly decreased from $1.57 trillion to $1.49 trillion, while it predicts the average funding ratio of state and local pension plans will improve from 75.4% to 77.4%.

The report also says these gains aren’t enough to improve the long-term financial outlook of these pension funds, requiring policymakers to increase the amount paid by state and local government employees, the taxpayer contribution or both. 

The five states with the largest unfunded liabilities – Illinois, California, New Jersey, Texas and Pennsylvania – have a shortfall of $787.3 billion. This figure is slightly larger than the rest of the nation’s unfunded pension liabilities combined ($778.6 billion). 

Also, the report says 33.7% of the unfunded liabilities in the five biggest states belongs to Illinois and California. 

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Taxpayers covering California rents over $7,000 near Mexican border | California

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www.thecentersquare.com – Kenneth Schrupp – (The Center Square – ) 2025-03-31 17:01:00

(The Center Square) – According to federal data, taxpayers may now be helping cover California rents of up to $7,030 near the Mexican border.

Under the federal Section 8 housing voucher program, families are expected to dedicate 30% of their incomes to housing costs, while a federal voucher covers the rest. Vouchers are portable, with the Department of Housing and Urban Development aiming to provide tenants with “greater ability to move into ‘Opportunity Neighborhoods’ with jobs, public transportation, and good schools.”

In San Diego County, there are three ZIP Codes where fair market rents covered by Section 8 exceed $7,000 per month for a four-bedroom home: swanky coastal Del Mar, whose notable homeowners include Microsoft founder Bill Gates and football star Aaron Rodgers, and neighboring Rancho Sante Fe, whose residents include Bill Murray and Phil Mickelson, is joined by Chula Vista, a more modest community that adjoins the California-Mexico border.

The San Diego County income limit for a family of five to qualify for Section 8 is $49,500, meaning that family would be expected to contribute up to approximately $1,237.50 per month towards the up to $7,030 fair market rent authorized for Section 8 vouchers of up to $5792.50 per month. 

According to the U.S. Department of Housing and Urban Development, which administers the Section 8 program, FMR is set by the 40th percentile rent, as determined by the results of the American Community Survey conducted by the U.S. Census Bureau. 

As of March 31, there are four four-bedroom homes for rent in Chula Vista’s 91914 ZIP code listed on Zillow, ranging from $3,800 per month to $10,000 per month, with two of the rentals under the $7,030 threshold. 

According to the Center on Budget and Policy Priorities’s January 2025 report, 2.3 million households receive Section 8 vouchers, which are expected to cost federal taxpayers $32.8 billion in fiscal year 2025.

Because maximum voucher amounts are set by local rents, expensive, densely-populated coastal regions receive a disproportionate share of voucher funding.

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News from the South - Louisiana News Feed

Town of Montgomery fails audit, lacking payment documentation, budget | Louisiana

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www.thecentersquare.com – By Emilee Calametti | The Center Square – (The Center Square – ) 2025-03-31 15:37:00

(The Center Square) — A recent audit showed the town of Montgomery lacked several supporting documents, including vendor payments, operating losses, and meeting minutes for the Board of Aldermen.

After failing to complete an audit report before the deadline and reconcile financial accounts, the Louisiana Legislative Auditor’s Office released an audit summary on March 26 detailing its findings for Montgomery’s 2023 fiscal year.

The independent auditor did not provide an opinion due to the findings.

“We do not express an opinion on the accompanying financial statements of the governmental activities, business-type activities, and each major fund of the town,” the report said. “Because of the significance of the matter described in the Basis for Disclaimer of Opinion section of our report, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the financial statements.”

The auditor could not perform necessary procedures due to the lack of documentation concerning transactions and bank reconciliations. An analysis by management showed that the town overlooked adopting a budget for the audited period.

No meeting minutes for the Board of Aldermen were recorded, for the year ending Dec. 31, 2022, concerning budget. The lack of minutes is reported by the auditor to be an administrative oversight. Failing to adopt a budget violates state law and the Home Rule Charter.

The schedule of findings provided by the independent auditor states no documentation was available to support various vendor payments for the first quarter of 2023.

Findings also showed the utility system reported substantial operating losses, which resulted in a depletion of finances. Rates were not adjusted to offset costs, resulting in a significant decrease in funds. Montgomery officials submitted the audit late in violation of state law.

There were also cases of reconciliation issues and payroll documentation. According to the auditor, the bank accounts operated by the town had not been properly reconciled. As for payroll, employees recorded their timesheets but there is no record of supervisor approval for some. 

The different findings were originally reported in 2021, some in 2022, and now again for the 2023 audit. 

Montgomery, population 620, is located in north central Louisiana on the west bank of the Red River. 

Emilee Ruth Calametti serves as staff reporter for The Center Square covering the Northwestern Louisiana region. She holds her M.A. in English from Georgia State University and soon, an additional M.A. in Journalism from New York University. Emilee has bylines in DIG Magazine, Houstonia Magazine, Bookstr, inRegister, The Click News, and the Virginia Woolf Miscellany. She is a Louisiana native with over seven years of journalism experience.

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News from the South - North Carolina News Feed

Carolinas wildfires battle helped by rain | North Carolina

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www.thecentersquare.com – By Alan Wooten | The Center Square – (The Center Square – ) 2025-03-31 15:21:00

(The Center Square) – Wildfires continued to burn Monday in the Carolinas, though a sign of optimism arose with a burning ban lifted in 41 South Carolina counties and measured rainfall in both states.

Largest of the fires is Table Rock in Pickens and Greenville counties of South Carolina. The Black Cove fire is burning in North Carolina’s Polk and Henderson counties, the Rattlesnake fire is burning Haywood County, and the Alarka 5 fire is in Swain County.

South Carolina’s Horry County at the Atlantic Ocean and North Carolina border, and the northwestern counties of Spartanburg, Greenville, Pickens and Oconee remain under a burning ban. In North Carolina, all 100 counties have a ban in effect.

The Table Rock fire size is about 13,191 acres in South Carolina and 574 in North Carolina, the Forestry Commission of the former said. Containment is about 30%.

The Persimmon Ridge fire is 2,078 acres in size with 64% containment. Rain Sunday into Monday measured nearly 1 inch.

The Covington Drive Fire in Myrtle Beach is about 85% contained and in mop-up and strengthened firebreaks stage.

In North Carolina, the Black Cove complex of fires are 7,672 acres in size. It includes the Black Cove (3,502 acres, 36% contained), Deep Woods (3,971 acres, 32% contained) and Fish Hook (199 acres, 100% contained) fires. Rainfall overnight into Monday helped the battle.

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