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Weighing In On The Public Pension Dilemma

Your story, "Sinkhole!" (Special Report, June 13) estimates unfunded pension liabilities for the 125 largest public plans to be $278 billion, or, using Barclay's more conservative assumptions, $700 billion. We think this is only the tip of the iceberg. Unfunded retiree health-care liabilities will be much greater. In anticipation of the new Governmental Accounting Standards Board (GASB) reporting requirements, at the request of the Auditor General for the City of Detroit, my firm recently completed a report on the funding of the city's retiree health-care and pension benefits. We estimate the net present value of Detroit's retiree health-care liabilities to be $7.2 billion (equal to $188,000 per participant), all of which is unfunded. This is essentially equal to Detroit's $7.3 billion total pension liability (of which $1.7 billion is unfunded).

Extrapolating the Detroit data to 23 million state and local employees and retirees (where an estimated 82% receive retiree health-care benefits) and assuming a reduced cost of only $125,000 per participant, the total unfunded retiree health-care liability would be approximately $2.4 trillion -- which suggests that many states and cities already are effectively bankrupt.

John Boyle

J.L. Boyle International

Ann Arbor, Mich.

Too many public pensions have fixed payments depending only on the number of years worked. Someone with 30 years' service who retires at age 50 should get substantially less than someone with 30 years' service retiring at age 65. Few plans can afford to pay retirees top payment for 30 or more years without going bust. All pensions should be actuarially corrected.

Lawrence Briskin

Centerville, Ohio

The focus on a looming taxpayer bailout of pension plans distracts from the point that many families will also suffer once a pension plan becomes underfunded. While such benefits may be protected [by state constitution] from being reduced or taken away in the public sector, it is often difficult for participants to actually receive the full benefit entitlement. Pension plans have layers upon layers of rules regarding application procedures and benefit distributions that can work against participants and their families if a deadline is missed or the distribution options are not fully understood. We are likely to see a rise in such rules or stricter enforcement as pension plans become underfunded.

Nilesh P. Pastel

Upper Midwest Pension Right Project

Madison, Wis.

Stanley Holmes's perspective on the initial impact our investment in music may have on our core business ("Strong lattes, sour notes at Starbucks," Marketing, June 20) mischaracterizes this exciting venture for Starbucks Corp. Holmes's story does not reflect how much we have accomplished in influencing the way consumers discover, experience, and acquire all genres of great music. His story is incomplete, as it ignores customer feedback or insight from music-label executives.

Starbucks Hear Music media bars play an important role in helping customers experience the benefits of customizing their own music through digital technology. However, the media bars are just one element of a much broader strategy that has already made some very real and radical changes in the way music is marketed and delivered to consumers. Our success in co-producing the multi-platinum Ray Charles Genius Loves Company album, which received top honors at the 2005 Grammy awards, exemplifies the transformative impact we can have on the music industry. Starbucks accounted for one-third of total Genius Loves Company sales -- more than any traditional music retailer. We will continue to work with major and independent labels like Maverick, Lava, Warner, Interscope, Vector, Rounder, Virgin, Sony, BMG, and Concord, to name a few, to make music discovery a part of our customers' Starbucks experience.

We are not new to the music industry. Music has always been an essential component of the Starbucks experience. During the past several years we have successfully introduced artists who couldn't find space in conventional music stores or on traditional radio playlists. Our music library is rich and unique. Our current technology partners, XM Satellite Radio Holdings Inc. (XMSR) and T-Mobile, are among the most innovative and entrepreneurial companies in the world. XM Satellite Radio is introducing Starbucks Hear Music's expansive playlist to more than 4 million subscribers. Through the T-Mobile wireless hot spots at nearly 4,000 Starbucks stores, customers have the ability to access unique, proprietary content.

The music world is changing, and Starbucks Hear Music will continue to be an innovator in the industry. It takes passion, commitment, and even a bit of experimentation to maintain that position.

Howard D. Schultz


Starbucks Corp.


I was quoted in "Biotech, finally" (News: Analysis & Commentary, June 13) as saying that academic researchers pushed biotech forward. I did not mean that corporate research and development has no role. Academic researchers are responsible for the majority of work on disease pathways, yielding the majority of the best drug targets for development. Academic researchers have continued to play a leading role in the development of such technologies as genomics. However, biotech and pharmaceutical companies do the great majority of the chemistry needed to make drugs that address these targets. They also do the vast majority of drug development, from preclinical animal studies through human clinical trials (the latter in collaboration with academic medical centers), and bear its economic risk.

A key challenge for the pharmaceutical industry is making corporate R&D more productive in terms of output of marketed drugs. One way to do this would be to collaborate more effectively with biotech companies and with academia. One example is the Novartis Institutes for BioMedical Research Inc. in Cambridge, Mass., mentioned in the article.

Allan B. Haberman

Wayland, Mass.

Re "Betting the farm on free trade" (Government, June 6), on the Central American Free Trade Agreement: Imperial Sugar Co. (IPSU) represents almost 20% of the production capacity of the sugar industry. Unlike our brethren in this business, we are solidly pro-CAFTA. We think additional imported sugar will provide for a more stable supply and save jobs at independent refineries. I cannot imagine how a 1% rise in imports can harm growers when changes in supply and demand occur every year and move the needle more than 1% in either direction.

Our Savannah (Ga.) refinery is very dependent on imported sugar. There are no growers in Georgia, one of the two states you mention. Jobs in that state related to sugar processing, packaging, and distribution -- not to mention food manufacturers who use sugar in their products -- are the issue in this debate.

Robert A. Peiser

President & CEO

Imperial Sugar Co.

Sugar Land, Tex.

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