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Cypen & Cypen
SEPTEMBER 17, 2009

Stephen H. Cypen, Esq., Editor


Raymond T. Edmondson, chief executive officer of Florida Public Pension Trustees Association has responded to a Miami Herald editorial entitled “How to fix pension mess,” which Edmondson asserts was a collection of hyperbole and insinuations about government pensions.  The entire rest of the piece is reproduced below: 

Only about 10 percent of public-sector employees can retire before age 50 -- typically public-safety employees -- and most of them hardly retire “long before” that age.  Even public-safety employees must serve 20-25 years before retirement.  The editorial implied that public pensioners receive almost their full working salary.  However, most top out at about 80 percent of their salary and then only after 25-30 years on the job.  Many don't receive that much, and since public-sector salaries still lag those in the private sector for the same jobs, the idea that 80 percent of a public salary is overly generous is a stretch.  In fact, the average public pension in Florida is $1,354 a month, which is hardly lavish.  The editorial also stated that “cost-of-living adjustments go far beyond the national average,” when in fact 50 percent of Florida’s plans do not have COLAs.  What does “far beyond the national average” actually mean?  Overtime pay included in salary calculations for pension benefits was represented as an excessive perk.  Public-sector workers labor in notoriously understaffed departments that require them to exceed the productivity expectations of their private-sector counterparts and oblige them to spend too much time away from their families to serve the public, a daily condition of work for which they deserve to be paid.  The statement that “most businesses were turning to 401(k) plans, in the 1980s and 1990s” is a misrepresentation.  Defined-benefit plans still are prevalent among Fortune 1000 companies.  Small employers, or those who have gone bankrupt, have steadily moved in the direction of defined-contribution plans.  Cities certainly face challenges in meeting pension funding obligations during a down market.  Reduced revenues caused by the housing slump hurt.  However, during strong stock-market years, many cities made no contribution to their employees’ pension plan.  In fact, approximately 80 percent of public-pension payouts nationally come from earnings on investments and employee contributions, not taxpayer dollars.  If there are problems with public pension plans, then let’s fix them.  If there are abuses, let’s stop them.  We oppose enhancing pension benefits without added funding.  To fix the problems, we should engage in honest discussions with real facts and figures.  Hyperbole won't solve any problems. 

Ray is right:  the continual “sniping” at public pensions is hardly productive.  Working together, as always, is the best solution. 


Pension plan executives are probably spending more time in the office these days because of the current financial markets.  Yet a recent poll reported by Employee Benefit News shows that many are putting out administrative fires and monitoring investment managers, instead of focusing on new investment strategies.  Defined benefit directors report that half of their time is spent on administrative activities (27%) or monitoring investment managers (23%).   Executives, however, are spending less than one-fifth of their time doing homework necessary to develop new investment strategies, which entails evaluating investment managers and researching new asset classes.  Other key findings from the poll include: 

  • More than two-thirds (68%) of respondents said there is an increased focus on managing pension assets in association with pension liabilities. 
  • More than one-half (54%) of pension executives said the organization has an increased interest in risk management and a goals-based approach to pension management. 
  • Recent market conditions have caused pension plans to have a negative impact on overall corporate finances for more than one-half (56%) of participating companies.  
  • Nearly one-quarter (23%) said they either had proactively to ask their consultant for advice during market turmoil or that they felt there should have been a higher level of proactive communication from their consultant (24%).

It’s not realistic to expect success at better aligning assets and liabilities if resources are spending half their time on administrative functions and monitoring performance of managers.  Plan sponsors are realizing that success will only be brought about by changes to the current process. 


 Halpert appealed a judgment of the United States District Court granting Manhattan Apartments’ motion for summary judgment as to his claim under the Age Discrimination in Employment Act.  The U.S. Court of Appeals for the Second Circuit held that an employer may be liable for discrimination by third parties, including independent contractors, that the employer authorizes to make hiring decisions on its behalf.  Because the question of whether Manhattan Apartments actually or apparently authorized a third-party to make hiring decisions for it with respect to Halpert turns upon issues of material fact, the court vacated the lower court judgment.  ADEA makes it unlawful for an employer to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions or privileges of employment because of an individual’s age.  Brooks, who  interviewed Halpert and allegedly told him that he was “too old” for a position showing rental apartments, was an independent contractor and not an employee of Manhattan Apartments.  The district court held that ADEA does not apply to independent contractors.  However, the reviewing court held that ADEA’s prohibition applies regardless of whether an employer uses its employees to interview applicants for open positions or whether it uses intermediaries, such as independent contractors, to fill that role.  If a company gives an individual authority to interview job applicants and make hiring decisions on the company's behalf, then the company may be held liable if that individual improperly discriminates against applicants on basis of age.  Halpert v. Manhattan Apartments, Inc., Case No. 07-4074 (U.S. 2d Cir., September 10, 2009). 


ust as it was for the rest of the country, the period of 1999 through 2005 was a time of exponential growth for Prince George's County, Maryland, due in large part to a booming housing market.  In 2005, however, the County's housing market began to decline.  The decline was widespread and grew in scope well into 2008.  The market decline was not unique to Prince George's County.  In fact, the entire state of Maryland, and virtually every state in the country, experienced a severe economic downturn as a result of a chain of events set into motion by a flailing housing market.  The downturn led to a significant decrease in revenue for the County, which then caused a budget shortfall.  In response to the budget shortfall, the County furloughed approximately 5,900 employees. Various Prince George’s County unions brought a federal court action against County for declaratory, injunctive and monetary relief as a result of adoption and implementation of the furlough plan.  The district court judge was mindful of the present state of the economy.  He recognized that many state and local governments had experienced and will continue to experience drastic revenue shortfalls.  Prince George’s County like other counties and municipalities, was struggling with budget deficits and was searching for alternatives to layoffs in midst of a global recession.  While adequate deference must be accorded to the fiscal decisions of government officials, the court could not merely give lip service to the fundamental principles that undergird the Contract Clause of the United States Constitution.  To do otherwise, even in these severe economic times, would sanction the county running roughshod over the unions, which in good faith, negotiated a binding contract with the County.  The court found that the County’s actions, while permissible under County Personnel Law, violated the Contract Clause of the United States Constitution because the County exceeded its discretion and chose substantially to impair its contractual obligations to address an arguably foreseeable budget shortfall when, in light of the surrounding circumstances, other more moderate alternatives would have served its purposes equally well.  Fraternal Order of Police v. Prince George's County, Maryland, Case No. AW-08-2455 (D. Md., August 18, 2009). 


Paul Dannenbaum has been working as a stockbroker since 1935, and has no plans to retire anytime soon. According to, the 93-year-old works from 7 a.m until 4 p.m. every day.  Dannenbaum, who got his start at a firm in Philadelphia in 1935, works out of his Delray Beach home and is very computer savvy.  Once the market closes, the great-grandfather of two works out with a trainer.  He has been working with weights for three and a half years, and can do pushups on his fingers and toes.  Go ahead, try it.  (When we came across this item, it reminded us about Roy R. Neuberger, who turned 106 in July.  Neuberger, founder the eponymous investment firm Neuberger Berman, was orphaned at age 12 and arrived on Wall Street in 1929, seven months before Black Tuesday.  He is still there.) 


A Montana police officer who wrote on his Facebook page that there should be a law allowing police to take people to jail for being "stupid" has resigned. reports that former officer Cody Anderson said his resignation was in the best interest of the police department, apologized for his online comment and said it did not reflect an attitude or atmosphere within the police department.  The brilliant posting came to light after a lawsuit against the city, Anderson and other officers, alleged deprivation of rights stemming from a wrongful arrest.  The lawsuit alleged that entries in Anderson's Facebook profile indicated he had a lack of respect for citizens' rights and a willingness to abuse his position of authority.  First person actually charged with stupidity:  Cody Anderson. 


Sanford Kahn, business author and speaker, has published a new little book entitled “The 7 Basic Precepts that Govern Life and Events.”  Here are the 7 precepts, which were developed to give people a different and realistic view on life and events -- devoid of popular myths and seductive illusions: 

Precept #1. The eternal truth of the universe is that all actions provoke reactions.  In human terms these reactions or consequences may be positive or negative.  Someone or something has to pay a price or cost.  There are no free lunches. 

Precept #2. In physics there exists a law entitled the “conservation of matter.”  It basically states that matter can not be easily created or destroyed.  However, the states of matter can be changed.  For example, by applying enough heat to a solid you can transform it into a liquid; a liquid heated to the boiling point can be changed into a gas.  In all cases they are still the original matter, but in a different state. 

Precept #3. The purpose of life is to grow and prosper within the rule of law and the bounds of morality. 

Precept #4. All movement in the flow of life is turbulent and, therefore, unpredictable.  In other words, life isn’t linear (a straight line). 

Precept #5. The purpose of ANY investment is to increase one’s net worth.  The term “net worth” applies to more than stocks, bonds or real estate.  You, your family and your community can also be viewed as an investment. 

Precept #6. God is no tyrant.  He enforces no preordained plan for the conduct of  human affairs but, instead, has bestowed upon the people the power to create heaven or hell on earth.  Whether man thrives or perishes is dependent on the choices he makes. 

Precept #7. Mortals can’t be perfect.  We are not designed that way.  You might say this is by definition.  Only God (however you define it) is perfect.

Incidentally, Sanford Kahn and your editor graduated high school and college together, many moons ago. 


Most of the stuff people worry about ain't never gonna happen anyway. 


One nice thing about egotists: they don't talk about other people.


“You can live to be a hundred if you give up all the things that make you want to live to be a hundred.”  Woody Allen

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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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