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Cypen & Cypen
APRIL 26, 2007

Stephen H. Cypen, Esq., Editor

Never Forget - September 11, 2001


The 2007 Social Security Trustees Report shows slight improvement in the projected financial status of the Social Security program from last year. The Trustees Report projects that the Social Security Trust Funds will be exhausted in 2041 -- one year later than last year’s projection. And, as they have done for over a decade, the Trustees recommend that projected trust fund deficits be addressed in a timely way to allow for a gradual phasing in of necessary changes and to provide advance notice to workers. In the annual report to Congress, the Trustees announced:

  • The projected point at which tax revenues will fall below program costs comes in 2017 -- the same as the estimate in last year’s report.
  • The projected point at which the Trust Funds will be exhausted comes in 2041 -- one year later than the projection in last year’s report.
  • The projected actuarial deficit over the 75-year long-range period is 1.95% of taxable payroll -- .06% smaller than last year’s report.
  • Over the 75-year period, the Trust Funds require additional revenue equivalent to $4.7 Trillion in today’s dollars to pay all scheduled benefits. This unfunded obligation is about $100 Billion higher than the amount estimated last year.

Other highlights of the report include:

  • Income including interest to the combined Old-Age and Survivors, and Disability Insurance (OASDI) Trust Funds amounted to $745 Billion ($626 Billion in net contributions, $17 Billion from taxation of benefits and $102 Billion in interest) in 2006.
  • Total expenditures from the combined OASDI Trust Funds amounted to $555 Billion in 2006.
  • Assets of the combined OASDI Trust Funds increased by about $190 Billion in 2006, to a total of $2 Trillion.
  • During 2006, an estimated 162 million people had earnings covered by Social Security and paid payroll taxes.
  • Social Security paid benefits of $546 Billion in calendar year 2006, an increase of $25 Billion from the year before. There were 49 million beneficiaries at the end of the calendar year, compared with 48 million beneficiaries at the end of last calendar year.
  • The cost of $5.3 Billion to administer the program in 2006 was a very low 1.0% of total expenditures, the same as last year. (Those who want to privatize Social Security should take note of this figure.)
  • The combined Trust Fund assets earned interest at an effective annual rate of 5.3%, down slightly from 5.5%.

The Board of Trustees comprises six members. Four serve by virtue of their positions with the federal government: Henry M. Paulson, Jr., Secretary of the Treasury and Managing Trustee; Michael J. Astrue, Commissioner of Social Security; Michael O. Leavitt, Secretary of Health and Human Services; and Elaine L. Chao, Secretary of Labor. The two public trustees are John L. Palmer and Thomas R. Saving. The entire report is posted at


In recent years, defined benefit plans have come under attack. Employer contributions to pensions have been characterized as a “drain on the taxpayer” that government can ill afford. Now, a study released by the Applied Research Center, California State University, measures the economic impacts created by the payment of retiree benefits. The money California Public Employees Retirement System and California State Teachers’ Retirement System pay retirees circulates through the economy, creating an economic impact. This impact is multiplied to create a broader stimulus to the economy and a “Footprint” on California. Specifically:

  • More than $13.7 Billion is paid annually to 675,000 retirees who live in California.
  • These pension payments generate an additional $7 Billion in economic activity each year.
  • Combined, the pensions and the ripple effect of spending those pensions contribute $21 Billion in overall economic activity.
  • This economic activity creates more than 139,000 jobs with an annual payroll of $4.8 Billion -- more jobs than in the biotechnology and trucking industries.
  • The CalPERS/CalSTRS “Footprint” exceeds the economic impact of the Forestry and Fishing Industry ($6.44 Billion) and is nearly equal to that created by the Hotel and Accommodations Industry ($10.3 Billion). It is more than the total value of export goods to four of California’s large trade partners.
  • Every taxpayer dollar invested for pensions at CalPERS generates a return of $8.55 to the California economy. Each dollar invested with CalSTRS generates $6.71.
  • State and local governments also gain revenues. They gain $1.4 Billion in revenues from payments and from the spinoff of payments, more than 1% of the state’s $103 Billion general fund.

These pension funds receive money from public agency employers and their employees, and then invest those dollars to provide a secure retirement at the end of these employees’ careers. (CalPERS earned a 9.3% rate of return during the past decade.) Over the same period, these earnings paid an average 76.8% of retirees’ monthly checks. This report is well documented, and provides lots of ammunition in the defined benefit/defined contribution debate. WE ASSUME ANALYSES OF THIS NATURE IN ANY STATE WOULD YIELD SIMILAR RESULTS.


According to International Foundation of Employee Benefit Plans’ Benefits & Compensation Digest, most private employers provide a defined contribution plan or no retirement plan at all. DC plans put choice and responsibility in the hands of the employee. As retirement dollars accumulate, the employee chooses how to invest them. When employees leave employment, the account balance goes with them and they choose how to manage it to provide retirement income. On the other hand, 90% of government employees are covered by a defined benefit plans providing few choices, but a stable monthly payment for the rest of their lives. The state or trustees decide how assets will be invested and the employer takes responsibility to make sure the employees receive the promised payments. DC plans are generally a supplemental source of retirement income for public employees. However, in the last six years a growing number of states have begun letting their employees choose between a DB and a DC plan. This choice is perhaps the ultimate one: Do public employees want the choices a DC plan provides or do they prefer the security of monthly payments guaranteed to last a lifetime? There are many questions that can be addressed using DC experience in the public sector. When given the choice, public employees have overwhelmingly chosen DB over DC plans. There are models showing how death and disability protection can be provided in a DC environment, but they require supplemental contributions. Employees managing their own accounts earn less on average than DB assets but this situation can be overcome if the choice of how to invest the DC assets is given to the sponsor. Changing from a DB plan to a DC plan does not solve funding problems. In the final analysis, it is a question of accumulation and distribution. The accumulation of contributions and investment earnings determines available retirement income. A plan that maximizes investment earnings maximizes the benefits provided by contributions. Public employees are choosing plans that provide lifetime distributions. The article focuses on experience, and there is not yet much experience on how many DC members have been able to make their assets last a lifetime. This information will be important. The distribution phase and loss of longevity risk pooling in retirement is probably the hardest obstacle for DC plans to overcome. The consequences of outliving one’s assets are severe. There are many unanswered questions. If the market stays strong, will more public employees choose DC plans? How many employees can be adequately educated and empowered to navigate the risks of preretirement accumulation and postretirement distribution? There is still much to be learned from the future experience of DC plans in the public sector. Although it will be interesting to observe, hopefully the retirement needs of the members are well served by the experience.


In a workers’ compensation appeal, Alvarez, who claimed sustaining workplace accidents, appealed an order of the Judge of Compensation Claims that denied her claim for benefits on the ground that she knowingly and intentionally made a false or misleading statement for purposes of securing workers’ compensation benefits, in violation of Section 440.09(4), Florida Statutes. She argued that she was entitled to workers’ compensation benefits until the date that the Judge of Compensation Claims found that she did make a knowing and intentional misrepresentation or misstatement. On appeal, Alvarez did not dispute the judge’s findings and cited no authority for holding the judge erred in not awarding benefits for the period prior to entry of the order. In affirming, the appellate court found nothing in its prior decisions that required an award by the Judge of Compensation Claims for a period preceding determination of a violation of Section 440.09(4), Florida Statutes. People just don’t seem to take responsibilities for their own actions. Alvarez vs. Unicco, 32 Fla. L. Weekly D1031 (Fla. 1st DCA, April 19, 2007).


Garrison brought an action under Florida’s Public “Whistle-Blower’s Act,” Section 112.3187-112.31895, Florida Statutes, against her former employer, Florida Department of Education. The Department challenged final judgment in favor of Garrison, claiming that her failure to satisfy the pre-suit notice requirements of Section 768.28(6), Florida Statutes, was fatal to her claim. In a case of first impression, the appellate court affirmed, guided by a recent Florida Supreme Court decision that held the pre-suit notice requirements Section 768.28(6), Florida Statutes, have no application to a cause of action under the Florida Civil Rights Act of 1992, a statutory provision similar in many respects to Florida’s Public Whistle-Blower’s Act. Florida’s Public Whistle-Blower’s Act is a remedial statute that is to be given liberal construction in favor of granting access to the remedy provided therein. It clearly waives sovereign immunity independent of the waiver contained in Section 768.28, Florida Statutes. The Act also contains its own detailed administrative pre-suit notice requirements, sets forth a plethora of other conditions that must be satisfied before a claim can be successfully brought under its provisions and explicates the particular remedies available to an aggrieved employee (including the filing of a civil cause of action, once certain prerequisites have been met). There is no demonstration that the Legislature was unaware of Section 768.28, Florida Statutes, when it drafted the Public Whistle-Blower’s Act in 1986 (Section 768.28, Florida Statutes, having been enacted in 1973) or that it somehow lacked the ability to make a specific reference to Section 768.28, Florida Statutes, had it so desired. Rather, the appellate court viewed this situation as indicating no legislative intent that any of the provisions of Section 768.28, Florida Statutes, apply to a cause of action under the Public Whistle-Blower’s Act, which is a “stand-alone statutory scheme” designed to provide an aggrieved party with a remedy against the state or its agencies or subdivisions under certain specified conditions. Florida Department of Education v. Garrison, 32 Fla. L. Weekly D1029 (Fla. 1st DCA, April 19, 2007).


The Florida Attorney General recently issued an opinion concerning law enforcement officers’ photographs and Section 119.071(4)(d)1., Florida Statutes, which provides in pertinent part:

The home addresses, telephone numbers, social security numbers, and photographs of active or former law enforcement personnel, including correctional and correctional probation officers, ... the home addresses, telephone numbers, social security numbers, photographs, and places of employment of the spouses and children of such personnel; and the names and locations of schools and day care facilities attended by the children of such personnel are exempt from s. 119.07(1). (Section 119.07(1), Florida Statutes, generally provides that all public records are subject to inspection and copying.)

The above statute refers to “law enforcement personnel” rather than “law enforcement officer.” It does not, however, define the term. The Florida Attorney General reaffirmed the conclusions in a prior opinion that, in absence of legislative clarification, an agency should consider utilizing the definition in Section 784.07(1)(a), Florida Statutes, which includes law enforcement officer, correctional officer, correctional probation officer, auxiliary law enforcement officer, auxiliary correctional officer, county probation officer and law enforcement personnel of the Fish and Wildlife Conservation Commission, Department of Environmental Protection or Department of Law Enforcement. In addition, while Section 119.071(4)(d)1., Florida Statutes, makes photographs of law enforcement personnel exempt rather than exempt and confidential, in determining whether such information should be disclosed, the custodian of the records, or his designee, must determine whether there is a statutory or substantial policy need for disclosure. In the absence of a statutory or other legal duty to be accomplished by disclosure, the agency should consider whether the release of such information is consistent with the purpose of the exemption. Photographs of employees of the department who are not law enforcement personnel, however, would be subject to disclosure in the absence of another statutory exemption. AGO 2007-21 (April 24, 2007).


People looking for jobs that bring satisfaction and happiness should concentrate on professions that focus primarily on serving other people, according to a new report from the University of Chicago, which found clergy to the happiest and most satisfied of American workers. The survey is the most comprehensive of its kind to explore satisfaction and happiness among American workers. The survey asked a large variety of questions of a representative sample of Americans in face-to-face interviews. In the 1988-2006 surveys, interviewers asked people how satisfied they were with their jobs. The interviewers also asked them about their general level of happiness and then correlated those general happiness findings with the jobs people held. People’s feelings about their work usually have a significant impact on their happiness. Across all occupations, on average, 47% of people said they were very satisfied with their jobs and 33% said they were very happy. The top three jobs for satisfaction were clergy (87%), firefighters (80%) and physical therapists (78%). Other top jobs, in which more than 60% of the respondents said they were very satisfied, were education administrators, painters/sculptors, teachers, authors, psychologists, special education teachers, operating engineers, office supervisors and security/financial services salespersons. The least satisfied jobs were held by roofers (we wonder why), with only 25% of them saying they found their job satisfying. The other low satisfaction jobs were held by waiters/servers, laborers (except construction trades), bartenders, hand packers/packagers, freight/stock/material handlers, apparel clothing salespersons, cashiers, food preparers (excluding cooks and chefs), expeditors (customer service representatives), butchers/meat cutters and furniture/home furnishings salespersons. Sorry, no data on law enforcement officers.


“There’s always something about your success that displeases even your best friends.” Mark Twain

Copyright, 1996-2007, all rights reserved.

Items in this Newsletter may be excerpts or summaries of original or secondary source material, and may have been reorganized for clarity and brevity. This Newsletter is general in nature and is not intended to provide specific legal or other advice.

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