STUMP - Death and Taxes Mary Pat Campbell (aka Meep)

Ohio State Teachers Retirement System (STRS) is having some drama, as a consulting firm has resigned due to power struggles between competing interests. The plan participants, whether current teachers or retirees, are angry about STRS investment staff getting bonuses while they do not get cost-of-living adjustments for retirement benefits. All of this while in an economic environment of high inflation… they aren’t the first and will not be the last.

Episode Links
Ohio STRS media coverage
1 May 2024, Pensions & Investment: Ohio State Teachers loses Aon as consultant amid board turmoil
Ohio State Teachers’ Retirement System, Columbus, has lost Aon as a governance consultant after the firm resigned from the assignment, according to people familiar with the matter.
The $94 billion pension fund’s board recently tilted to a majority of self-proclaimed reformers who want to gut investment staff and move the pension fund to all index funds, citing a desire to restore a permanent 3% cost-of-living adjustment.
At the April 18 board meeting, Trustee Wade Steen reclaimed his seat after the 10th District Court of Appeals earlier that day ruled that Ohio Gov. Mike DeWine did not have the authority in May 2023 to remove Steen as his appointed investment expert on the STRS board before the completion of his four-year term.
5 May 2024, Toledo Blade: Editorial: STRS got fired
The State Teachers Retirement System of Ohio needs a new fiduciary governance adviser. The $92 billion retirement fund for 500,000 Ohio teachers was effectively fired by Aon Fiduciary Services over the chaos on the STRS board.
When the 10th District Court of Appeals ruled that Gov. Mike DeWine acted outside his constitutional authority in firing his appointed investment expert Wade Steen, there suddenly was a 6-5 board majority in support of reforms first advocated by Mr. Steen.
STRS Board Chairman Dale Price, a Toledo Public School teacher, abruptly ended the April 18 meeting without the procedural norms of a motion to adjourn and a vote that supports the motion. The reform majority on the STRS Board was left to sputter in outrage as Mr. Price raced out of STRS headquarters.
April 2024: Ousted STRS member makes dramatic return to board, armed with court ruling
COLUMBUS, Ohio (WCMH) – The governor overstepped his authority when he removed a member of the state teacher pension board, a court has ruled. 
Ohio’s 10th District Court of Appeals sided with ousted State Teachers Retirement System investment expert Wade Steen on Thursday, ruling that Gov. Mike DeWine did not have the constitutional authority to remove Steen from his position on the pension board. The decision cements a magistrate’s recommendation that Steen be reinstated to the board to complete his term.
….
Steen’s presence on the board gave a faction of reformers a majority, allowing them to make desired changes to the state’s teacher retirement fund. But the board chairman called a sudden adjournment of the meeting and left, effectively ending it.
December 2023: Math doesn’t add up – Retired teachers denied 3% COLA increases while some STRS staff get huge bonuses
The images of smiling retired teachers on the screen painted a different picture than the reality faced by Kathy Foster, who retired after teaching 32 years in Findlay.
Despite promises from the State Teachers Retirement System of Ohio, Foster said she has received only one 3% raise since retiring 10 years ago.
“I got one cost of living wage,” said Foster, who lives in Wayne.
Meanwhile, the STRS investment staff has been handsomely rewarded for their work, she said.
“They have gotten millions of dollars in bonuses,” Foster said. “They lost billions of dollars last year, and they are still getting bonuses.”
“We haven’t gotten the money we were promised. I just want the 3% that I was promised,” she said.
STRS is not being good fiduciaries, said Foster, who in retirement has taken on a part-time job at the Wa

Back in December, somebody asked me how many people alive now would be alive in 75 years. The answer: about 15% (for the U.S.). This is not a trivial question — it relates to questions of political decision-making for the long-term, such as public finance. In this episode, I look at the survivorship for 10 years, 25 years, 50 years, and 75 years, and think through what this means.
Graphs and spreadsheet below.
Episode Links, Graphs, and More
Data and Assumptions
Population Estimate
Released 11 April 2024: 2023 Population Estimates by Age and Sex
Social Security Mortality Cohort Projections
2023 Social Security Trustees Report Life Tables, Cohort by Age and Sex, based on the Alternative 2 mortality probabilities used in the 2023 Trustees Report.
Survivorship Projections
First, here are the graphs of the original population in 2023, and how many of them survive to 2033 (10 years), 2048 (25 years), 2073 (50 years), and 2098 (75 years).
This is ignoring any new immigrants or births, just focusing on the current U.S. population and projecting into the future, looking at survivorship.

You can see all the weird peaks, and especially, the steep drops in old age.
But let me simplify the survivorship understanding with this table:
While 15% of the overall population of 2023 makes it to 2098, you can see that is primarily those currently age 20 and younger.
Let’s make it even more apparent:
Again, this is just projecting the current population. In 75 years, of the current population still around, 93% will be those currently 20 and younger, 7% will be 21-40 years old now, and those of us over 40 will have been long gone.
Spreadsheet

Related Posts
May 2015: Illinois Pensions: How Did We Get Here? The 1970 Constitution  
This is the relevant section of the 1970 Illinois State Constitution:
SECTION 5. PENSION AND RETIREMENT RIGHTS
Membership in any pension or retirement system of the State, any unit of local government or school district, or any agency or instrumentality thereof, shall be an enforceable contractual relationship, the benefits of which shall not be diminished or impaired.
That section has not been amended since 1970.
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I’ve got five decades on me now, and five pieces of advice/themes to share:
* Be a good animal
* The universe is stranger and more wonderful than you can imagine
* Never pay retail!
* You can try anything once OR Risk is Opportunity
* It’s not about you (or me)
Episode Links
Be a Good Animal
2015 LinkedIn: Best Advice: Be a Good Animal
Battling Cognitive Bias, reprint in 2018
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In this episode, I look at the most recent revelations re: Francesca Gino’s academia malfeasance, but other tales of academic malpractice. Such as: filling in missing values in datasets with Excel’s autofill functionality, and not sharing data in chemistry/material science or cancer research in what may be fraudulent research. How can we depend on the data and results from what is supposedly hard science research?
Episode Links
Francesca Gino
Science, 9 Apr 2024: Embattled Harvard honesty professor accused of plagiarism by Cathleen O’Grady
Harvard University honesty researcher Francesca Gino, whose work has come under fire for suspected data falsification, may also have plagiarized passages in some of her high-profile publications.
A book chapter co-authored by Gino, who was found by a 2023 Harvard Business School (HBS) investigation to have committed research misconduct, contains numerous passages of text with striking similarities to 10 earlier sources. The sources include published papers and student theses, according to an analysis shared with Science by University of Montreal psychologist Erinn Acland.
Science has confirmed Acland’s findings and identified at least 15 additional passages of borrowed text in Gino’s two books, Rebel Talent: Why it Pays to Break the Rules at Work and in Life and Sidetracked: Why Our Decisions Get Derailed, and How We Can Stick to the Plan. Some passages duplicate text from news reports or blogs. Others contain phrasing identical to passages from academic literature. The extent of duplication varies between passages, but all contain multiple identical phrases, as well as clear paraphrases and significant structural similarity.…Debora Weber-Wulff, a plagiarism expert at the Berlin University of Applied Sciences, says Science’s findings are “quite serious” and warrant further investigation by the publishers and universities. HBS and Harvard Business Review Press, which published Sidetracked, declined to comment. Dey Street Books, a HarperCollins imprint that published Rebel Talent, and Guilford Press, publisher of the edited book The Social Psychology of Good and Evil that includes the co-authored chapter, did not respond to a request for comment.
Acland says she decided to “poke around” into Gino’s work in September 2023, after the researcher filed a $25 million lawsuit against HBS and the data sleuths who uncovered the misconduct. Acland focused on plagiarism, rather than data issues, because of her experience detecting it in student work. She searched phrases from Gino’s work on Google Scholar to see whether they matched content from other works.
She says she found apparent plagiarism in the very first sentence of the first work she assessed, the 2016 chapter “Dishonesty explained: What leads moral people to act immorally.” The sentence—“The accounting scandals and the collapse of billion-dollar companies at the beginning of the 21st century have forever changed the business landscape”—is word for word the same as a passage in a 2010 paper by the University of Washington management researcher Elizabeth Umphress and colleagues.
I didn’t talk about the person who found the plagiarism in this case.
This is what gets me so often — the tenured profs just assume nobody will ever check.
For various reasons, perhaps all the top profs shouldn’t assume that anymore. And maybe they should start crediting all their research assistants with the real work…. but that’s for another time.
Prior Gino posts/episodes:
Material Science/Chemistry Non-Replicable Experiment
Chemistry World, 11 April 2024: Holes in the ‘holey graphyne’ story
Recently, the journal Matter published a paper describing a novel form of carbon.2 This purported allotrope, ‘holey graphyne’, is comprised mainly of cyclooctadiyne rings. Moreover, the synthesis was supposedly accomplished using a simple copper catalyst. Typically, the C–C bond-forming reactions of the kind claimed i

Let’s look at the condition of Minnesota Teachers, Connecticut state funds, and Chicago pensions, and three different (actually more) proposals to fix what ails these systems.
While Chicago is actually in the worst situation, the proposals for Chicago sound the most realistic in terms of fixing its problems.

Edward Siedle’s links
Mar 2024: Minnesota Teachers Fundraise Forensic Audit of State Pension System
Apr 2024: Minnesota Teacher Pension Forensic Investigation Invites Whistleblower, Expert And Public Participation
Minnesota Teachers in Public Plans Database
Minnesota Teachers Retirement Association - contains two plans in the database: Duluth Teachers and Minnesota Teachers. Duluth is small in terms of participants, so I will just link Minnesota Teachers plan.
Minnesota Teachers pension plan.
Some selected graphs:

Connecticut pension links
Hartford Courant op-ed
10 Ways to reform public pension funds
Improvements in the state's historical investment underperformance can alleviate the crushing income tax burden of transferring $7.7 billion in surplus contributions from state tax revenues to pay down the pension burden, and relieve state public employees and teachers from being docked an additional 2% of their wages each year to cover the investments hole. With even average performance in the past, Connecticut's income tax might have been sliced in half or more.
Given the scale of this challenge, it is remarkable that decades of underperformance of Connecticut's pension funds escaped public notice and scrutiny for as long as it did, until last year, when we revealed in a 113-page research report how Connecticut's pension funds have had one of the worst investment track records of all 50 peer states, across all timeframes, which garnered significant attention and calls to action from across the state. Given the asset management and endowment investing expertise in Connecticut, this was a tragic paradox.

Yale Business Report
113-slide version: The Investment Challenges Facing Connecticut’s Pension Funds - Jan 2023.pdf
Shorter version: Why Connecticut’s Investments Are Underperforming
Pie charts w/ the Excel defaults:
They actually cleaned it up a little bit from the originals.
Washington Pensions
Connecticut Pensions
As you can see, there is a very salient different between the two states.
And here we go:

Chicago pension links
Press Release, 5 Apr 2024: Harris School of Public Policy Announces Policy Innovation Challenge's Winning Student-Led Pension Proposal
Op-eds from the finalists
Read each team's op-ed via the links below: 
The winning team: Opinion: Here's a roadmap to financial stability with Chicago's pensions
By Syed Ahmad , Anthony Beaupre , Liam Gluck , James Karsten , Greg Rudd
Opinion: To fix Chicago's pensions, consider a change in public opinion
By Eddie Andujar , Andy Fan , Andre Oviedo , Alberto Saldarriaga
Opinion: Two paths to funding Chicago's pension future
By Anna Weiss , Purva Sarkango , Devyanshi Dubey
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That life expectancy was around 64 when Social Security was started is misleading. That is also irrelevant for making decisions for making Social Security sustainable now. The parameters involved are more complex: we need to look at life expectancy age 65, the size of the working population compared to the retired population, and how many children are coming to add to that working population. Decisions must be made within the next decade — raise taxes, cut benefits, or some combination. People will not be happy.

Episode Links
Prior STUMP posts related:

On Life Expectancy
That was the claim.
Here are the facts.
2023 OASDI Trustees Report — Table V.A4.—Period Life Expectancy: Historical Data
First, while period life expectancy from birth increased about 15-16 years from 1940 to 2019 (ignore the pandemic for now), the key life expectancy - from age 65 - didn’t extend quite so much — only 5-6 years. That’s because you have to survive to age 65 in the first place.
A chart from the American Academy of Actuaries based on the historical, plus projected, from the report:
Social Security History
Frequently Asked Questions
Q1:  When did Social Security start?
A: The Social Security Act was signed by FDR on 8/14/35. Taxes were collected for the first time in January 1937 and the first one-time, lump-sum payments were made that same month. Regular ongoing monthly benefits started in January 1940.
American Academy of Actuaries
An Actuarial Perspective on the 2023 Social Security Trustees Report
Social Security Committee issue brief on 2023 Social Security Trustees Report examining the latest detailed annual assessment by the federal government of the program’s solvency.
(February 02, 2024)


Issue Brief: Reforming Social Security Sooner Rather Than Later
Social Security’s combined trust fund reserves are projected to become depleted around 2034,1 at which time its income would be able to pay only 80% of the benefits scheduled for its 80 million beneficiaries. It is important that Congress immediately focus on this issue because delay makes the solution more difficult, as it gradually limits the viable options to those relying on increasing taxes. 
(October 31, 2023)

STUMP - Meep on public finance, pensions, mortality and more is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber.




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