History Does Not Repeat Itself, But It Does Rhyme
*The above date is not a typographical error. It was designed to grab your attention, and hopefully hold it for a little while.
In that first newsletter issue, 22 years ago, we said that we would deal with subjects of direct and indirect interest to public pension trustees. We believe we have done that and more. We said the newsletter would be issued from time to time or when special events dictated. And, we began issuing monthly newsletters, but soon found out that monthly was not frequent enough. Also, we had a few dozen subscribers; now we have almost one thousand. Then, newsletters were prepared manually and distributed by mail. Now we have come into the computer age. The following represent some items from that time long ago.
- One piece dealt with a little-known statute that was a subject of controversy. First adopted in 1939, Section 112.048, Florida Statutes, provides that any elective officer of a city or town who has held elective office of such city or town for a period of twenty or more consecutive years shall be entitled to a life annuity equal to one-half of the full amount of his annual salary, at the time of retirement, under certain circumstances. That statute is still on the books.
- Employers are experiencing an increase in the amount of leave their employees are taking as a result of the Family and Medical Leave Act of 1993. That Act is a continuing subject of interest.
- The then - $97 billion California Public Employees' Retirement System (CalPERS) was planning to increase its holdings of foreign stocks and bonds from 14% to 20%. Already, almost 30% of its total equity portfolio was invested overseas. By the way, CalPERS now boasts assets of over $350 billion!
- The Institute of Management and Administration reported that Standard & Poors 500 gained over 37% for the year 1995. Even the average domestic equity manager gained more than 33%. International money managers, however, reported average returns of just 10%.
- New Jersey, one state recently turning from outside managers to in-house managers, experienced annual administrative expenses of just .01% of assets.
- The State of New York established an early retirement incentive for public employees. Through the program, certain employees who have at least 10 years of service would receive one month’s additional service credit for each year of service, up to a maximum of 36 months. The program may be offered at different periods of time. A similar program last year saw over 5,000 people take advantage of the early retirement package.
- The National Conference of Public Employee Retirement Systems presented its Model Ethics Code, a fifty page document.
- The New York State Teachers’ Retirement System announced its intent to sell some of its tobacco stocks because of concern with their long-term viability. The fund will still have hold over a quarter of a billion dollars in such stocks after the reduction. (Do the letters ESG ring a bell?)
- A statute of limitations generally bars a claim after a period of time, regardless of a subsequent change in the law. Thus, an appellate court ruled that a taxpayer who erroneously paid taxes on his Army disability severance pay could not claim a refund just because he subsequently learned that a recent case supported his position. The law has not changed.
- How about this one: The Controller of the Currency says certain derivative investments – for example, collateralized mortgage obligations that derive their value from an underlying asset such as a pool of mortgage loans – may not be acceptable fiduciary investments for national banks. As with any other fiduciary investments, banks must use the prudent person standard and have a full appreciation of the risks involved, including difficulty including in determining accurate market values.
- The Los Angeles County Employees Retirement Association has decided to drop its assumed rate of 6% salary increases to 5.5%. The old rate, in use since 1983, was made up of 5% for inflation and 1% real wage increases: the new rate lowers the inflation to 4% but increases the real wage to 1.5%.
A Belated Acknowledgment
In 1968, fresh out of school, a bright young woman named Judi Stark joined Cypen & Cypen as a legal assistant. When Judi hung up her paraphernalia in 2013, she had completed a great career of 45 years. From the beginning in 1996, Judi was responsible for the newsletter, and basically was an assistant editor.
In 1989, Annette Catalfamo came aboard as Judi’s assistant, and in 1996 she became part of the newsletter team. Annette was an important part of the newsletter until her untimely death last year.
We honor and thank Judi and Annette for making the newsletter possible.