“Public Pensions Need Gamblers Anonymous,” blared the op-ed by the American Enterprise Institute’s Andrew Biggs in the Wall Street Journal last week.
Can it be true? Did the trustees of CalPERS just take retirement funds for 1.7 million Californians – backed up by our tax dollars – to Las Vegas and put it all on black?
Of course not. Biggs is probably talking about speculating through black box investments and shadowy hedge funds, right?
Wrong again. The risky investing strategy we are warned against: the stock market.
As a measuring stick, Biggs trots out the “100 minus age rule,” which says that an individual should invest no more than that percentage amount in stocks and other so-called risky assets. (So a 30-year-old might have 70 percent of his or her investments in stocks and 30-percent in things like bonds,
» Read more about: Pension Cutter Confuses Stock Market With Las Vegas »
California pension cutters suffered another setback last week when a state appellate court rejected their claims that ballot language written by Attorney General Kamala Harris showed political bias.
The decision by Sacramento’s 3rd District Court of Appeal “dismissed as moot” San Jose Mayor Chuck Reed’s appeal of a lower court ruling. This effectively leaves in place Sacramento Superior Court Judge Allen Sumner’s March decision that Reed had failed to prove Harris’ ballot summary was misleading.
“We’re not going to get a hearing on the merits,” Reed told Capital & Main. “It shows how difficult it is to try to get through the court system in an election cycle; it means you have to start earlier.”
Legally, the two rulings sound a final death knell for Reed’s contentious statewide campaign to put his self-described Pension Reform Act of 2014 before California voters. In practical terms,
» Read more about: Pension Cutters Lose in Court, Vow 2016 Ballot Bid »
“California pension funds are running dry,” warned a recent Los Angeles Times headline.
“The unfunded liability— that’s the difference between promised benefits and projected funds to fulfill those obligations — grew from about $6.3 billion in 2003 to a little more than $198 billion in 2013,” Santa Rosa’s Press Democrat chimed in, helpfully doing the math to point out that’s a 30-fold increase in 11 years.
“The system, in short, is completely, utterly broken,” concluded the Orange County Register.
Despite nothing significant changing in the retirement plans themselves, public employee pensions are back in the news, and apparently panic is in the air.
Why? In late October State Controller John Chiang posted data on 130 state and local pension funds as part of his new By the Numbers website.
» Read more about: California Pensions: Encouraging News v. Scary Headlines »
A 40-foot fall isn’t necessarily fatal for the average adult. But for California’s public employees whose jobs require them to routinely work on ladders or mechanical devices at heights more than 40 feet, it was deemed enough of a threat to life and limb to offer them a modest premium in their monthly pay packet.
In the case of firefighters, it also seemed sensible to kick in a little more for the tiller operators that control the 100-foot aerial ladders from which their brothers occasionally rescue a taxpayer from a burning building.
In fact, 99 such hazard premiums and professionalizing workforce incentives that have historically been considered pensionable compensation for public workers were deemed to be such no-brainers that they passed the scrutiny of the legislature and the governor when Jerry Brown signed into law 2012’s Public Employee Pension Reform Act (PEPRA). Today the average public pension in California is $2,945 per month.
» Read more about: Pension Envy: What the L.A. Times’ CalPERS Story Got Wrong »