A Modest Start To Cuts
The current expense cutting proposals by the city manager and department heads is commendable. However, with the predicted large revenue deficit looming, they are, at best, very modest. It is time for city officials to fully address the investment strategy for the employee pension plan funds.
A recent report by Wilshire Associates (a global investment consulting firm) has the national median return for public pension funds down 14.9%. Locally, the Ocean City General Employee Pension Fund is down 16% and the Public Safety Employee Fund is down 14%. In dollar terms, this means, depending on the day and market conditions, both funds combined have lost between $12 and $15 million in fund value. Because the loss in the funds value is substantial and possibly grows larger each day, it may take years to recoup even when the economy recovers.
From the information presented in the town’s 2008 financial report, it appears both funds are fairly heavily invested in the equity (stock) markets. Going forward, the following historical facts should be noted: 1. When the same political party occupies both Congress and the White House, equity markets tend to under perform. 2. With any new president, the stock market does not perform as well in the first half of the term as it does in the second.
Based on the town’s financial report, both employee pension plan funds are currently invested 65% in equities and 35% in fixed income securities. While equities can have attractive multi-year growth and rates of return, they can also have much more risk, especially in today’s economy.
As the employee pension plans are a defined benefit, the Ocean City taxpayer has a right to know what future liabilities they may be facing in covering the millions of dollars in shortfalls in the pension plan funds.
It would be a good idea to have the town’s investment manager and city officials inform the public as to what specifically is being done to minimize any future loss in the value of these funds. It would also be prudent to obtain a second opinion on the funds asset allocation and investment strategy.
Hear From Fishermen
Congressman Wayne Gilchrest is advising Mr. Obama and Mr. Kratovil on fisheries. The only thing Gilchrest knows about fisheries is how to put fishermen out of business. His fisheries bills were so harsh that other congressmen of both parties rejected them. Draconian regulations and high fuel costs have nearly destroyed both recreational and commercial fishing.
Mr. Obama says he wants to overturn President Bush’s executive orders. He should overturn Bush’s order permanently banning rock fishing in federal waters. Fisheries managers protested this unnecessary order. They know rockfish are plentiful and not over-fished. What difference does it make whether quotas are landed in state or federal waters?
Gilchrest lost the election because sanctimonious environmentalism deafened him to his constituents’ concerns. Mr. Obama and Mr. Kratovil should consult working fishermen if they really want to understand fisheries.
Beverly R. Lynch
Prayer Breakfast Set
On Friday Dec. 12, we will be holding our 19th Annual Ocean City Mayor’s Prayer Breakfast at the Clarion Hotel. Our guest speaker this year is Maury Davis who was arrested for armed robbery and murder. The prosecutors in this case showed no mercy and wanted the death penalty. Mr. Davis was found guilty as charged, he thought his life was over, but God had other plans. Come hear the exciting story. While Mr. Davis was sitting in a prison cell, God touched his life and he was changed forever.
All are invited to attend. Tickets and tables of eight or 10 people may be reserved at the following locations: Ocean City, City Hall, Long and Foster Realty, 118th Street. And Cropper Oil Co., Route 50.
Additional information please call 443-235-2669