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County Looks To Fund Pensions With Bonds

County Administrative Officer Fred Homan asks to fund pension liabilities with $255 million in debt.

 

Baltimore County officials are asking the County Council to approve the issuance of $255 million in bonds to fund the pension system.

County Administrative Officer Fred Homan told the council during a Tuesday lunch briefing that he wants to use the money to invest in the pension system.

"There are market risks to a pension bond deal," Homan said, adding that the risk is not achieving the 4.25 to 4.5 percent rate of interest the county believes the bonds will sell for.

Currently, the nearly $2 billion pension system is funded at nearly 77 percent.

Homan said the move is expected to lower long-term pension system costs over the next 30 years.

The request will be part of a two-bill package introduced Monday night with a vote expected in October.

Homan is expected to present the same plan to union officials later Tuesday afternoon following a council work session.

Stay with Patch for updates on this story.

Related Topics: Baltimore County Employees Retirement System, Bryan Sears, Fred Homan, Unions, government pensions, and insider politics

Joe

2:51 pm on Tuesday, September 11, 2012

Give some cash to Bain Capital like the State of Maryland and a dozen other state retirement funds do for a good return on the investment.

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JDStuts

3:47 pm on Tuesday, September 11, 2012

Someone in the bond market must have Fred's ear.

Sure you free up current budget dollars with the issuance but at the expense of long term debt. In 30 years Fred will be long gone, but if the pension return rate preforms badly you have to pur more tax dollars into the pension while servicing the debt. This hamstrings you ability to issue bonds for other projects. You stall and then quickly sink.

For a bondseller you make the commission up front. The politicians get to claim they solved a problem indicative of their Solomon like wisdom. (KK can continue to aspire for the Governorship.) The only losers are the taxpayers who have to foot the bill down the line. Plus KK has political cover - "It was all Homan's idea! He was the one to pitch it!)

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KAG

9:36 am on Thursday, September 13, 2012

JD, so true. They are playing with fire and our future generations will get burned.

Tim

10:41 pm on Tuesday, September 11, 2012

Pension system? What a joke.

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John T.

7:14 am on Wednesday, September 12, 2012

What benefit has the taxpayer received by allowing government workers to unionize. I never saw the reasoning, except union votes to the politicians, and unions looked to the public sector to address the losses they were feeling in the private sector. Government workers work for the best employee in the world - the taxpayer. What we've got is cities going bankrupt due to these contracts and once again the people that agred to this and represented the public are long gone and we're stuck paying for it. Obviously, these pensions are not sustainable and I believe you will see a big change in government pensions in the very near future. The day for the need for unions is over and everywhere you see financial problems in businesses and cities, there is a union involvement.

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Tim

8:54 am on Wednesday, September 12, 2012

I want to know why everyone who works for 30 years doesn't get pensions?

When all of us are entitled to pensions from our employers, on top of Social Security, you'll see me support this. Only then.

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Joe

9:09 am on Wednesday, September 12, 2012

Great point Tim. These employees have their retirement funded from your paycheck even BEFORE you get to put any aside for your own.

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Joe

9:11 am on Wednesday, September 12, 2012

Wait until the Great Unfunded Retirement Crash happens in many states and localities,. All hell will break loose when the taxpayers are put on the hook for the failure of the politicians to fund the plans.

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fred

1:21 pm on Wednesday, September 12, 2012

well joe you have that part right, its not the unions causing the problems ,its the politicians that do not correctly allocate the funds brought in.

DARRELL HAMMERBACKER

7:27 am on Wednesday, September 12, 2012

Stop paying out for NEW AMERICANS and maybe you wouldn't have to,wish I had a Job where I only worked 10 Months a Year with the type of retirement they get.

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Steve

1:34 pm on Wednesday, September 12, 2012

We have to pay out for New Americans. They are citizens too.

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Glen

1:40 pm on Wednesday, September 12, 2012

Public employee union contracts are obviously a major part of this. But let's not overlook the impact our elected officials' pensions have on the budget as well. Kevin voted to keep his fat cat pension benefits intact, along with Dutch, Jim, Sam, Vince and others who ran for office to "serve" the public. The County should not be borrowing money for their benefit.

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John T.

4:37 pm on Wednesday, September 12, 2012

Agreed. Our "public servants" do pretty well for themselves once they get into public office, and they should be the first ones to take a cut in pay or contribute more to their pensions. However, they represent a small portion of the problem, because there are so many public employees represented by unions, their representatives do not care if the contracts they are negotiating are sustainable. Once again, the taxpayer, many of whom don't even receive a pension have to foot the bill, and asking them to pay more in taxes for someone else's pension takes some kinda balls.

John T.

4:44 pm on Wednesday, September 12, 2012

Fred. You must work for the county or are a union worker somewhere to believe that the unions are not causing the problem. Sounds good, but allocating funds brought in will not be enough to continue supporting public unions and their pensions. This problem has been festering for quite some time and it will only get worse. No matter what side you are on - the taxpayers paying the bills or one of the recipients of these pensions, it is NOT sustainable and anyone that thinks otherwise is in denial. The numbers simply do not lie.

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fred

11:46 am on Thursday, September 13, 2012

union and proud of it.thank you. also funding my own retirement.

BlutAusNord

6:50 pm on Wednesday, September 12, 2012

Unions used to be great for this country & now they are nothing but part of the Democrat entitlement machine.Also way to go Homan & Kamenetz for spending 25 million dollars of the workers pension fund on the recycling center.Typical democrats,spend money that you don't have.

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Tim

7:09 pm on Wednesday, September 12, 2012

Unions are a real conundrum. If you don't have them, workers get abused. If they get too powerful, they kill profits unfairly. Striking the balance between the two is damn near impossible with all the clout they have with the donkeys.

However, please, BlutAusNord - let's not pretend Republicans both state and federal haven't spend as badly as Democrats. Ehrlich's spending went up 30% over the life of his term in office, for example (just going from memory, I looked it up a couple months ago and was shocked).
Then there's Republicans and their reckless war spending and tax cuts in the 2000's.

Historically, Republicans haven't spent like drunken sailors...but they are every bit as guilty for the mess this country is in today as any Democrat. In fact, I'd argue they are worse. At least Democrats TAX and spend. Republicans in recent history cut taxes and still spend.

BlutAusNord

10:02 pm on Wednesday, September 12, 2012

Tim:You make some good points,but like the bailout w/Government Motors where the shareholders got sent to the back of the line to wait for their money the unions got their money 1st.Sure Bush 43 did spend a little than more than he should have but the spending in the last 3 1/2 years has been astronomical.The Solyndra fiasco,killing the Keystone pipeline,Obamacare.Where does it end ?.

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Joe

9:44 am on Thursday, September 13, 2012

A GREAT story about Solyndra. Here is a great American.
"Many Americans were upset when solar-panel maker Solyndra filed for bankruptcy last September owing taxpayers more than $500 million, but retiree Robert Grady Jr. was different. The more he read about the failed company, the more irritated he became.

Finally, weeks after the bankruptcy case began, Mr. Grady did something he’d never done before. He filed a claim in U.S. Bankruptcy Court. It turned out to be the biggest single claim in the case — $535 million — but it wasn’t on behalf of himself. Rather, Mr. Grady, 57, made the claim on behalf of U.S. taxpayers because he said he didn’t trust Department of Energy lawyers to look out for taxpayers’ interests.

The retiree said he wasn’t looking for any money. He just wanted the loan money returned to the U.S. Treasury. Now, after more than a year, the bankruptcy case finally is grinding to a halt. Among the thousands of claims filed in the case, Mr. Grady’s is perhaps the most unusual."

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Joe

9:44 am on Thursday, September 13, 2012

"Mr. Grady filed his $535 million claim on a one-page handwritten form submitted to the U.S. Bankruptcy Court in Delaware on Nov. 11, 2011. In response to a question with regard to the basis for his claim, he wrote, “Money Loaned by DOE, representing U.S. taxpaying citizen.”

Solyndra received $535 million in federal loan guarantees in 2009 and was championed by, among others, Vice President Joseph R. Biden, but its bankruptcy last year fueled an ongoing congressional probe and turned into a big political headache for the Obama administration.

In the 10 months since Mr. Grady filed his claim, he has followed the case closely from his computer at home in Redmond, Wash., and he has read just about all of the more than 1,000 docket entries filed so far during the proceedings. Yet he has never had any contact with anybody from the bankruptcy court or with any of the many lawyers in the case.

Still, a few weeks ago, Mr. Grady noticed finally that somebody in the case was paying attention."

http://www.washingtontimes.com/news/2012/sep/12/solyndrasuit-fullrefund-totaxpayers/

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Tim

1:36 pm on Friday, September 14, 2012

BlutAusNord: Fair concerns. I do support several major Democrat 'planks', and I support some Republican ones as well that liberals generally can't (or refuse) to see reason on.
I'm not a fan of this reckless spending, nor am I a fan of QE3, which isn't going to help anything imho. It's only the Fed panicking, and it's only going to make matters worse for this country going forward. Printing more money is what banana republics do.

Look, I'm not an apologist for either party these days. For most Democratic spending fiascos, I can probably name a Republican one, like Haliburton.

The Keystone Pipeline is an interesting situation. Clearly, it benefits the country more then it harms - because it's Canadian oil. Obviously, there are environmental concerns, but for me personally, as long as we aren't mining our own country largescale, I'm fine with it. If Canada wants to strip mine its own country and sell us the oil...then I'm all for it.

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